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State Government Economic Performance

State Government & Economic Performance those need for me the best. State of the State In this paper we are asked to read the text by Dr. Paul Brace, “State Government & Economic Performance,” from that we are to decide as if we were the governor of the state of Kansas, which economic development strategy would be best for Kansas. Out of the four choices we were given, Arizona, Texas, Michigan, New York, I have chosen to argue for the example of Michigan. Before I go into great detail of the particular example I have chosen, let me give you a brief description of the governmental economic strategies of each state.

Arizona: Arizona’s economy started out with great funding from the government and also from it’s abundance of natural resources. With the growing number of people moving to the new hot bed of economy, Arizona officials began to take more of a Laissez Faire approach to government. With WWI and eventually WWII, Arizona received several governmental contracts to build ships, planes and new military bases due to Arizona’s natural closeness to the pacific campaign. Not long after that Arizona’s economy started record numbers of economic increase, due vastly to the tax breaks and other incentives used to bring big business to the area. Large manufacturing, technology and automobile companies looked to relocate to the booming state. This change in opportunities left the natural resources industry in Arizona a distant memory of importance. With big business booming, who needed the small time industry that carried them from its creation to where they were just after WWI.

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On top of that, governmental procedure had to go along with this change. After all with every action there is a equal and just as great reaction that occurs. With the hands off approach the government had implemented there were also cut backs! Lower spending on education being the biggest one. If they cut taxes, were are they going to find the money to fund the schools that are going to be needed to support the vastly growing population that would come with these businesses. And that’s no even mentioning anything about the several other governmental agencies that would be effected by the lack of revenue to the state.

These changes, that made Arizona the hot bed that it was, would ultimately be the same thing that would cause they downfall of the economic resurgence for Arizona. Soon after businesses stopped coming. They claimed that because of the lack of schooling available in major programs, particularly engineering, it had became increasingly hard to find the engineers that were needed to run these plants and sustain profit. Ultimately, Arizona’s economic future according to brace, depends on two factors. As long as conditions elsewhere stimulate migration to the state, and as long as Arizona retains a relatively low cost of living compared to other states, Arizona can grow. But it is overwhelmingly convincing that Arizona’s entire economy it based and virtually dependent on help from other states as well as a need for government intervention.

Texas: Texas like many other southern states relied heavily on slavery and it’s institution of such, to help stimulate it’s economy through the manufacturing of cotton and other harvest “cash crops”. Prior to the civil war, Texas was among the biggest slaves states in the union. Shortly after the Civil War, Emancipation left them with an abundance of under skilled, in a educational sense, workers seeking jobs in a already economic hardship stricken industry. This was due mainly to the lack of incentives in the South to invest in education which would lead to the training of jobs for manufacturing type industry. The South still was going to rely heavily on its agriculture bases economy and at the time had no need nor desire to change.

Economically speaking, the supply side of the economy was well fed but the demand side was undernourished. Shortly after the discovery of oil on Spindletop, Texas began a run on one of the most flourishing economies in the union. Oil and gas would become the big industry in Texas, and governmental regulations on oil would soon be the only real source of governmental influence to be had in a politically week state. With large Tax breaks at the federal level, including the percentage of depletion allowance and the provision for expensing of allowable drilling cost, helped to stimulate the industry’s growth. Shortly after WWI Texas like Arizona would receive several defense contracts as well as, military installments which would lead to the beginning of a relocation of big business to Texas. Eventually with the Cold War and the space race, the emergence of aerospace and electronic firms would lead to even bigger economic growth.

The competitive nature of Americans and the federal government would begin pushing the space race to such highs that companies like Texas Instrument and many others would emerge. Even more so, when economic crisis hit the country, and gas prices skyrocketed, Texas cam out smelling like a rose due to the overwhelming resources at it’s disposal. Inparticularlly in 1973 with the Arab oil Embargo, Texas’s oil supply helped to bring down oil prices and supply oil for much of the Untied States. Texas seeming with its hands off governmental approach had no worries. However, even with no state income tax, and virtually no other real major taxes on it’s citizens, Texas was able to support it’s public programs through taxes on oil and other governmental defense contracts. But a week government would lead to major impediments to Texas’s broad based public programs including education.

Education was still low, at one time as low as 31st in the country. With fewer quality schools and more people coming to such a hot bed of economic prosperity, educational statistics would continue to drop until courts forced the spending of money’s on education in 1988. Unlike Arizona, Texas has not yet seen it’s major crisis in economic prosperity, however, its hands off approach still seems to depend greatly on the needs of others and help from the national government. Perhaps without the vast oil resources at it’s disposal, our findings on Texas …

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