Krugman: Poor Texas

[antigop]

http://krugman.blogs.nytimes.com/2009/04/19/poor-texas/

Blog entry:

Matthew Yglesias notes that Tom DeLay is under the strange misapprehension that Texas is rich thanks to its low taxes and lack of regulation.

Just one minor issue: you really shouldn’t use median income, which can be distorted to the extent that inequality differs across states. You should instead use income per capita. As it happens, the comparison is even more striking. Texas, with its glorious free market regime and deeply incentive-creating 25 percent rate of health uninsurance, has a per capita income of $37,187; nanny-state New Jersey, with its oppressive taxes and regulation of everything (what it takes to get permission to cut down a dying tree … ), has a per capita income of $49,194.

[ananda]

1. Misleading

I agree that Texas is regressive in some ways..
particularly regarding healthcare and social
services, and also in its deregulations and
non regulations.

However. as to income or quality of life..
that part is not as bad as you think.
The cost of living here is much lower than it
is in the Northeast.

I can live just fine on an income of less than
$3000 a month.

[baldguy]

3. Low cost of living is not equal to higher quality of life.

And with no health insurance the outcome would be the same.

[Egnever]

5. its certainly not a given but it is part of the equation

[AllieB]

8. Minimum wage workers have a difficult time affording utilities and basics

like food and clothing. It doesn't matter what state you live in. And the rate of poverty in some of those 'low cost of living' states is much higher than in the Northeast.

[Egnever]

4. agreed totally misleading

for a "nobel prize winning economist" his grasp of reality seems to be fairly tenuous. By his example any state where the cost of living is higher than texas's will also come with a higher per capita income. Otherwise they wouldn't have a higher cost of living.

It is not uncommon at all for people that live the the bay area to make over 75k per year but their expenses offset most if not all of that extra income.

It makes me wonder what his nobel prize was for. He should know better than to try to distill it down to such simple measurements. if thats the sort of simplistic thinking he has been using for his recent criticism of Obama bailout/stimulus plans. its no wonder he doesn't agree with Obama.

The article saying texas is richer isn't any better however.

[RoyGBiv]

10. What article?

There was no "article" in this context claiming Texas was richer.

There was Tom Delay on Hardball, who, in the words of Matthew Yglesias, "went on a strange neo-secessionist binge. . .DeLay’s conceit is that Texas is a “wealthy state” because of it’s right-wing business-friendly policies, a situation that he specifically contrasts with the environment in California, New York, and New Jersey which have allegedly impoverished themselves with high taxes and overregulation. . ."

Yglesias then pointed out that even using median income as a measurement, Texas ranks 28th. But then Yglesias seems to confuse the matter by using "per capita" income to mention that 8 of the top 10 in per capita are blue states.

Yglesias then goes on to point out how Texas is the benefactor of abundant resource wealth, which skews the perception.

Clearly the "wealth" of a state is far more than individual household income, however it is measured. But given the simplistic measurements of median or per capita income, per capita is superior, which is the only point Krugman was making.

[AllieB]

6. I used to think the cost of living was lower in states like FL

until I went grocery shopping there. They also tax everything but the air you breath. My parents electric rates are 2x what they are in Mass. I live in the Boston area, and while our housing prices are higher than the south, we don't tax necessities like clothes and food. I was truly shocked that the prices in the Winn Dixie and Publix near where my parents live in the winter are on par with the Whole Foods in my affluent town in MA. Regressive sales taxes hurt the least among us.

[Fla Dem]

13. Sales Tax vs Income Tax......No State Income Tax in FL.

This accounts for the 6% across the board tax on almost eveything (food & prescriptions are exempt)in Florida. If by food you mean eating in restaurants, then yes, that food is taxed. Groceries are not. We collect alot of that tax from out of state visitors. Actually, this allows individuals to keep more of their income and make decisions regarding discretionary purchases. Mass sales tax is 5%. Florida's gasoline tax is 14.5% vs 23.5% in Mass. State income tax is 0% vs Mass 5.3%. I grew up in Mass when it was known as Taxachusetts.

[AllieB]

14. Your food prices and gas prices are much higher than in MA

I was really shocked. MA has no tax on clothing, and is currently around 30th in overall tax burden.

[angstlessk]

2. yeah, the same as 'median' income goes up by millions as soon as Bill Gates walks into

a store!..median says nothing about 'average'

[Egnever]

7. true but krugmans form of measurement is no better.

I don't know if it is possible to do it but a comparison of average disposable incomes would likely be a better indicator but even that is flawed there are far to many things to factor in to make it so black and white.

[angstlessk]

11. I agree in the USA budget it is called 'discretionary'..so is all the money left over

after we pay all our necessary bills...mortgage, utilility, food, health insuance, medicine..add what is our necessities I left out...the rest is discretionary...THAT SHOULD BE THE GOLD STANDARD!

[dkf]

9. Actually, the median is the middle, so if

Bill Gates walks into a store, he would take the top slot and maybe the median jumps up from the previous middle person to the person above them.

The mean would leap up as it is the average of all salaries including him.

The mode would be unaffected.

[Telly Savalas]

15. No it doesn't.

The mean skyrockets when an outlier is entered into the data.

The median isn't affected much. It just points to the guy in the middle.

[Captain Hilts]

12. Imagine if New Jersey didn't lose over 30cents of every tax dollar sent to DC. nt