We all know that as California has failed, Texas has prospered. We all know that jobs and people are fleeing Paradise for Hell. We all know that it costs about 3 times as much to rent a truck from California as to make the return trip from Texas. What I haven’t seen is an analysis of the role that exports have played in this reversal.
In fact, Texas exports more that California does, and has since 2002:
Both states have suffered from the global recession, but California on a percentage basis has suffered more, losing roughly 1/3 of its exports, while Texas has lost only about 25% of its exports year-to-date. The numbers will be at year’s end, but Texas won’t be nearly as bad off.
Some of this is accountable to a general growth in exports over the last decade, but to the extent that’s true, California hasn’t benefitted, and Texas has outperformed the rest of the country, even as its exports have outperformed the rest of its economy, while California’s have languished (watch out for the color switch):
Now technically, tourism is an export, but this isn’t a result of Mexican day-visitors coming across the border for shopping and Six Flags. The biggest contributors to Texas’s export growth have been Chemical Manufactures, Petroleum and Coal Products (yes, exporting oil products), Machinery manufactures, and Computers and Electronics. Petro exports had multiplied 7x from 1999 to 2007, even before the 2008 run-up in oil prices. Over the same period, Chemical exports tripled, and Machinery exports grew by 150%.
In the meantime, California’s Silicon Valley hardware exports suffered after the dot-com bubble burst in 2000, and have never recovered. In 1999, over 50% of California’s exports were Computers & Electronics. They now constitute just under 30%, down 16% in dollar terms from 1999, and almost 1/3 from their 2000 peak. The diversification in California’s exports should be a benefit, and may yet be. But the exports are going to have to actually grow and be competitive for the state to benefit.
Here’s the comparison between a couple of sectors of the two states’ exports over the period in questions:
All of this might be moot if it were just a matter of underselling the competition and running sweatshops. But in fact, Texas’s GDP has been growing, and over the last decade, its per capita CDP has caught up with California:
All these numbers, by the way, are from the Census Bureau, which also operates an fantastic site for cruising a state’s export numbers.
Now before we go all gaga about this, and show how this proves that under current conditions, Americans can compete with anyone overseas, these numbers don’t show how much of Texas’s exports come from cannibalizing from the rest of the country. And a State Business Tax Climate ranked #11, compared with California’s #48, would indicate that some of these exporting businesses have relocated. Still, there’s no doubt that exports are a major – and under-reported, factor in Texas’s move past California as an economic engine.
