Why has Texas with only 8% of the nation’s population created 48% of the jobs?

Why has Texas with only 8% of the nation’s population created 48% of the jobs from June 2009 to April 2011? This is an embarrassment to the left and a mystery to Keynesian economist like Paul Krugman. To the rest of the world and Austrian economist it is no secret. Fewer resources in Texas are devoted to government and more are in the private sector where these resources are allowed to be allocated efficiently to create job growth. How much more?

Below is a list of the states and the percent of the economy, state, and local government, devoted to the nonproductive sector of their economies, respectively. For a listing of spending, debt numbers and GDP go here.

The first number is the state and local government % of GDP

The second number is the state and local government share of the GDP and adding the public debt to the percentage.

States that consume less than 16% of the GDP 1. Delaware 14.5% 27% 2. Virginia 15% 28.7% 3. Connecticut 15.5% 31% 4. Texas 15.6% 33.5% 5. South Dakota 15.9% 29.8% States that consume less than 18% of the GDP 6. Colorado 16.3% 35.4% 7. Nevada 16.4% 34.5% 8. New Hampshire 16.7% 34.7% 9. North Carolina 17.3% 29.2% 10. Maryland 17.4% 29.8% 11. Minnesota 17.4% 32.3% 12. Georgia 17.5% 29.8% 13. Illinois 17.7% 36.1% States that consume less than 20% of the GD 14. Kansas 18.1% 34.6% 15. Missouri 18.2% 33.8% 16. Indiana 18.2% 35% 17. Iowa 18.3% 28.6% 18. Louisiana 18.3% 32.3% 19. Massachusetts 18.3% 43.7% (5) 20. Oklahoma 18.5% 30.4% 21. New Jersey 18.6% 37% 22. North Dakota 18.7% 30.2% 23. Arizona 18.7% 35.7% 24. Arkansas 18.9% 31.1% 50% average 19.1% 36.5% 25. Idaho 19.2% 28.8% 26. Utah 19.2% 35.1% 27. Hawaii 19.3% 36.4% 28. Florida 19.6% 36.1% 29. Tennessee 19.7% 34% 30. Washington 19.7% 39% States that consume less than 22% of GDP 31. Wisconsin 20.3% 36.2% 32. California 20.3% 38.9% 33. Wyoming 20.4% 26.5% 34. Nebraska 20.5% 34.7% 35. Oregon 20.5% 38.8% 36. Pennsylvania 20.5% 42.3% 37. Rhode Island 20.7% 42.5% 38. Kentucky 20.9% 45.4% (3) 39. Montana 21% 38.1% 40. Michigan 21.1% 40.1% 41. Ohio 21.3% 35.6% 42. Maine 21.9% 37.7% that consume more than 22% of GDP 43. Alabama 22% 36.6% 44. West Virginia 22.4% 38% 45. New York 23.3% 47.9% (2) 46. South Carolina 23.3% 45.3% (4) 47. Vermont 23.3% 39.6% 48. New Mexico 24.5% 40.9% 49. Mississippi 25.7% 38.7% 50. Alaska 28.3% 51%

It needs to be noted property rights, tort reform, natural resources, and a multitude of other factors play a role in a states ability to create jobs and wealth. Still from this list it is apparent that the stereotypes of Republican state less spending and Democrat state more spending do not apply. Delaware lead’s the list followed by toss up state Virginia and another Democrat state Connecticut. Texas ranks fourth on the list. It is clear from this list that a state can be efficiently run by Democrats. “Low tax” Florida ranks 28. Not a surprise to anyone who has seen the massive increase in government spending during the housing boom years.

From an Austrian economist perspective any government spending, federal, state, and local over 25% is counterproductive. Currently 43% of our GDP is consumed by local, state, and federal government according to the Wall Street Journal that reported total revenues at $6.4 trillion projected for 2011. That means 18% of the economy is wasted on too much government.

The list also shows state, local, and debt combined as a percent of GDP. Doing this exposes financially irresponsible states living beyond their means. For instance Massachusetts ranks 19 out of 50 for consuming GDP for state and local operations but falls to 46 out of 50 when debt is added to the states consumption of resources.

In an ideal world, when we reorganize the United States, or form new countries out of the United States, we need to limit federal, state, and local government share of the GDP to less than 25%. How the split is made des not matter much but one would suspect local government should consume the vast majority of resources.

The federal government is consuming about 25.1% of the GDP. That means for a state like Florida its citizens pay for 44.7% of every dollar to government. There is little Floridians can do about Washington spending except legalize gold and silver as legal tender and wait for the inevitable bankruptcy and imposition that will follow. Americans who desire freedom and liberty will condemn the reckless behavior of Washington and will adopt the attitude that was adopted by the former citizens of the USSR when they turned their back on the thugs in Moscow.

State and local consumption of the GDP, while in economic terms is extravagant, is consistent with past consumption of GDP. Generally in the past couple of decade’s state and local consumption has been around 19% to 19.7%. Currently it is 19.1%.

As should be obvious the genuine explosion in government growth has been at the federal government level. Clinton and Gingrich balanced the budget and consumed 18.2% of the GDP at the federal level and the Obama Administration is currently consuming 25.1% or a 37.9% growth rate over those years. The dept has grown 26% in just the Obama Administration.

With all the government growth under Bush and Obama the poverty rate, 14.3%, is at a 45-year high. The labor force participation rate, 64.2%, is at a 26-year low. Our debt is at 95% of GDP. It reached 121% during WWII. All this government growth and spending for an official 9.1% unemployment rate and the looming specter of volatile and destructive inflation just on the horizon. When Washington goes bankrupt the people need to turn their backs on the regime.

This blog also appeared in the Florida Political Press on 6-21-2011.