On the Economy, Texas Should Not Mess With California

Froma Harpop

A funny thing happened on the way to California’s collapse. It didn’t happen.

We keep hearing that the Golden State is going down, down, down. Last year, it suffered the first drop in population since records have been kept. And there’s that parade of natural plagues — the droughts, catastrophic wildfires and infernal heat.

A largely hostile right-leaning media go on and on about California’s high taxes and various liberal excesses. Californians, their story goes, are leaving in droves for low-tax, lax- regulation places like Texas. And it’s true that some big California names – – Oracle, Charles Schwab, Hewlett Packard and Tesla CEO Elon Musk — have moved their headquarters there.

But is this the whole pic- ture? It is not. As Bloomberg News reports, California’s economy is hardly headed for disaster. On the contrary, it is No. 1 among the states by most economic measures. Furthermore, it is emerging from the pandemic in very good shape.

And so when Texas Gov. Greg Abbott said last February that California uses “heavy-handed government tactics that drive away businesses,” California Gov. Gavin Newsom had to respond. “We remain the fifth largest economy in the world,” Newsom’s office said. “No. 1 in Bloomberg’s Innovation Index and home to 20 of Fortune’s top 100 fastest growing companies in the world.”

California’s small population loss last year largely reflected former President Donald Trump’s curb on new visas. While some people do leave California, others arrive. Many of the new- comers are immigrants with grand ambitions and a desire to live in a welcoming place.

As the pandemic draws to a close, California is sitting pretty with an operating budget surplus of $75 billion. This is the product of a surging economy and the collection of capital gains taxes. It would seem that a few rich Californians did not move to Texas after all.

Thanks to this surplus, California has embarked on what Newsom calls the “largest state tax rebate in American history.” Two- thirds of Californians are receiving Golden State stim- ulus checks totaling almost $12 billion.

What about economic growth? California’s gross domestic product has jumped 21% over the past five years, leaving Texas’ 12% gain in its shadow. Even New York state, another of Abbott’s targets, out- did Texas with a 14% rise in state GDP.

If California were a coun- try, its growth rate would have exceeded that of Japan, Germany and the entire U.S. Only China grew faster.

“For all its bluster as being ‘best for business,’ Texas can’t match California’s innovation,” Bloomberg said. Some 18% of California’s corporate locations are dedicated to research and development. The percentage of Texas facilities for research and development are just under half that of California’s.

During a heat wave last August, parts of California suffered rolling blackouts, leading Texas Sen. Ted Cruz to predictably snark that the state was “unable to perform even basic functions of civilization, like having reliable electricity.”

Six months later, of course, blackouts left millions of Texans in darkness

without heat or electricity or, in some cases, running water. Abbott used the occasion to troll green energy advocates, blaming the crisis on freezing wind tur- bines. Wind supplies only 20% of the state’s energy, and it was noted amid laughter that Greenland’s turbines do just fine in subzero weather.

Some of the coolest people I know live in Texas — and California is home to a variety of moronic woke campaigns, such as the attempt to take Abraham Lincoln’s name off a San Francisco school. But right-wing efforts to portray California as an economic failure due to its liberal politics wither in the heat of facts. On eco- nomic prowess, Texas really should not mess with California.