Tex-ternalities and the China/Europe Spectrum

I’ve recently come across these three facts about Texas:

1) About 60% of US executions occur in Texas.

2) About 20% of children in Texas do not have health insurance–almost twice the national average.

3) Texas produces more greenhouse gas emissions than California and New York combined.

When I first saw these figures, I thought that Texas may be burdening the US with some “reputational externalities” abroad, manifest in books like Vernon God Little. The judges who awarded it the Booker Prize called it a “coruscating black comedy reflecting our alarm but also our fascination with America.”

Some economic theories predict that these externalities will eventually be internalized. For example, there are many stories about a European condo-buying boom in New York; I haven’t seen as much on residential real estate purchases by overseas buyers in Texas. According to Anup Malani, “The value of a law [may] be judged [in part] by the extent to which it raises housing prices.” So perhaps more highly valued laws elsewhere in America will push up housing prices, comparatively enriching those property owners.

On the other hand, perhaps Texas’s policies are a bid to flatter China by imitation. Pollution in places like Shenzhen is a big problem (and that’s just the tip of the iceberg). Executions are common. And China’s decisions about health care in the 1980s and 90s might warm many laissez-faire hearts: “From 1978 to 1999, the central government’s share of national health care spending fell from 32 percent to 15 percent [and] the central government drastically reduced its ability and commitment to redistribute health care resources from wealthy areas to poor areas.”

Looking at world trends, a modern-day Tocqueville might think that the US’s future lay in political development of either a Chinese or EU variety. Texas appears to be a red state in more ways than one.

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