It Starts with, Deception on Texas Wages

Krugman’s miraculous deception on Texas
From TexasInsider.org, By Philip Klein, 08/23/11Ross Douthat came to the defense of Texas’s economic performance under Gov. Rick Perry today, and Paul Krugman was quick to fire back. But Krugman’s 3-point assault misses three times. Krugman’s first two arguments frame the debate in maximalist terms to lower the threshold he has to meet as a critic.

“First, the debate over the alleged Texas miracle is not over whether Texas is in fact a miserable failure,” Krugman writes. “All the critics need to show is that Texas is not in fact the miracle Perry claims. And it isn’t.”

To start, it’s pretty absurd to set up a standard wherein critics only need to show that Texas’s economic performance can’t be likened to an act of divine intervention. I could be wrong, but based on the searching I’ve done, I can find no evidence that Perry has actually described his record as a “miracle.” Perry certainly didn’t do so in his presidential announcement speech. He did point out that,

“Since June of 2009, Texas is responsible for more than 40 percent of all of the new jobs created in America.”

But the actual references to the “miracle” I do come across tend to be from writers attempting to expose it as a myth. Writers, in fact, like Krugman.

“Second, defenders of the miracle claims seem remarkably unwilling to confront the key argument,” Krugman laments. “People like me point out that Texas has not, in fact, been immune to the recession.”

However, nobody, from what I can tell, is arguing that Texas has been immune from the nation’s economic downturn. The argument has been that the state has weathered the recession better than most states. And that’s backed up by the facts.

Krugman’s third argument is that even though Texas’s median wages are higher than the national average, they’re lower than the blue states of Massachusetts, New Jersey, New York and California. Yet the chart Krugman created to illustrate his point is deceptive.

It starts at $10 as its base rather than $0, a trick that makes it visually appear that wages are twice as high in Massachusetts, when they are in fact just 33 percent higher than in Texas. More significantly, Krugman doesn’t adjust for the fact that the cost of living is substantially lower in Texas, which means each dollar has more actual purchasing power.

To give you an idea, I checked out the cost of living data from the Missouri Economic Research and Information Center, a division of the state’s department of economic development. Texas ranked 2nd behind Oklahoma as the lowest cost state for the second quarter of 2011, when looking at the composite cost index for groceries, housing, utilities, transportation, health care and other “miscellaneous goods and services.”

By contrast New Jersey was 44th, California was 45th, New York was 46th and Massachusetts was 49th. That is, the four states Krugman cites are not only more expensive than Texas, but among the costliest states in the country.

See the chart below, with the numbers indexed to 100.

Putting the index figures into percentage terms, the data suggests, for example, that even though Massachusetts’s median wages are 33 percent higher than in Texas, its residents have to shell out 55 percent more for essential goods.

In an update, Krugman snipes, “Yes, I know about the cost of living. Read my actual argument.”

But his link back to his original piece doesn’t get him off the hook for trying to dishonestly pass off wage data without context.

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