On April 3rd, the Rose Institute hosted an academic panel at the Marian Miner Cook Athenaeum entitled “As Texas Goes . . . How California Lost Its Edge.” The panel featured Chuck DeVore ’85, a Visiting Senior Scholar for Fiscal Policy at the Texas Public Policy Foundation; Erica Grieder, the southwest correspondent for The Economist; and Eric Helland, the Robert J. Lowe Professor of Economics at Claremont McKenna College. Focusing on policy and demographic differences between California—a state that has witnessed significant economic decline—and Texas, the panel aimed to facilitate a discussion about what California can learn from Texas’s pro-growth policy model.
Erica Grieder began the panel with a presentation focusing on how the history of Texas has shaped its modern economic and demographic identity. In particular, she highlighted the events surrounding the annexation of Texas as significant to the state’s modern development, as the demographic and territorial diversity of the area proved controversial to the process of assimilation. Grieder asserted that these differences, in part, contributed to the rugged individualism crucial to Texas’s identity that manifests itself today in the state’s free market attitude. In contrast, Greider illustrated the political evolution of California that came to favor experimental, liberal policies. California citizens, in particular, built up a tolerance for higher taxes and spending.
DeVore was perhaps the most vocal critic of California policy, citing Texas statistical contrasts at every opportunity. He claimed, for instance, that the impotence of teacher unions in Texas was crucial to the state’s good test score results. Pointing to California as an example of overbearing bureaucracy, DeVore noted that California’s per capita education spending was significantly higher than Texas ‘s with worse test results (Ms. Grieder also noted, the Texas high school dropout rate is lower than California’s). Perhaps DeVore’s most vociferous critique was aimed at the potential California high speed rail project. DeVore cited the project’s utility, high costs, special interest involvements, and poor timing as a microcosm for the bureaucratic failure in California.
All of this discussion, as DeVore pointed out, should lead to the question of where business will want to operate. Professor Helland included some brief discussion on each state’s business climate while Grieder agreed with DeVore’s assertion that a friendly business climate will be crucial in California’s future economic success. Following this, the panel fielded questions from student audience members. The subsequent discussion included how California’s direct democracy procedures of initiative and referendum have affected business climate—Professor Helland’s response indicated that no discussion of California economics can be complete without acknowledging this nettlesome issue.