America looms large from the British perspective. We're not as important to Britain as we are to Canada, of course, but the British press spends many column-inches discussing what's going on here across the pond. They look at America from a different perspective; what British media such as the Economist say about America often has an unexpected twist or two, which is part of what makes it so fascinating.
Their July 11 article "America's Future", which compared state finances in California and Texas, offers instruction to us all from the point of view of an interested foreigner - one with biases, of course, but different ones from those generally found here. After reminding us that California's debt has the lowest rating of any state whereas Texas' finances are in good shape, the article explained why California is in such trouble:
Indeed, high taxes, coupled with intrusive regulation of business and greenery taken to silly extremes, have gradually strangled what was once America's most dynamic state economy. [emphasis added]
The Economist went on to point out that California is rated the very worst state in which to do business whereas Texas is rated #1. Texas has an unemployment rate 2% lower than the national average while California's rate is 2% above the national average. This is partly because Texas banks did not turn themselves into casinos, but the Economist gives the main reason:
Texas also clearly offers a different model, based on small government. It has no state capital-gains or income tax, and a business-friendly and immigrant-tolerant attitude. It is home to more Fortune 500 companies than any other state - 64 compared with California's 51 and New York's 56. [emphasis added]
The Economist explains that Texas' prosperity is because of low taxes. It seems that they agree with Mr. Obama's statement that businesses are reluctant to invest when the government skims 20% off the top. So far, so reasonable.
At that point, the Economist points out that Texas' situation might not be quite so rosy in the future:
To begin with, that lean Texan model has its own problems. It has not invested enough in education, and many experts rightly worry about a "lost generation" of mostly Hispanic Texans with insufficient skills for the demands of the knowledge economy. Now immigration is likely to reconvert Texas from Republican red to Democratic blue; Latinos may justly demand a bigger, more "Californian" state to educate them and provide them with decent health care. But Texas could then end up with the same over-empowered public-sector unions who have helped wreck government in California. [emphasis added]
The Newsweek article "Death of the Dream," March 2, 2009, p 38 agrees with the Economist about the high cost of unionized state employees:
The public-sector unions, once relatively poorly paid, now enjoy wages and benefits unavailable to most middle-class Californians, and do so with little regard to the fiscal and overall economic impact. Currently barely 3 percent of the state budget goes for building roads or water systems, compared to nearly 20 percent in the Pat Brown [governor of California in the 1960's] era; instead, we're funding gild-edged pensions and lifetime guaranteed health care.
Although they don't want to come right out and say it - Newsweek didn't mention immigrants in terms of cost and the Economist doesn't highlight the issue - the Economist can't help but hint that many of California's problems are due to unlimited illegal immigration. California courts ruled that the taxpayers had to pay for social services such as education and health care for illegals, even through the illegals are not citizens and have no right to the privileges of citizenship.
Providing more services required hiring more state employees who joined state employee unions. The additional numbers gave the unions more political power which made it possible for them to demand higher wages, pensions, and other benefits that have helped sink the California state budget.
The key to Texas' prosperity has been their immigrant-tolerant attitude. Welcoming hard-working immigrants is obviously going to be good for an economy. Advocates of open borders don't have to hunt hard to come up with countless examples of people who came to the United States and became extremely successful, starting with the Pilgrim Fathers.
The problem with California isn't that they have immigrants per se; as the Economist pointed out, Texas has plenty of immigrants. The trouble is California's immigrant-funding attitude.
If immigrants can pull their own weight and pay for their own selves and their needs, they benefit the state budget instead of harming it. Unfortunately, California decided to extend to immigrants the same rights, benefits, and privileges as citizens, without holding them to the same obligation to obey and fund the law - leading to today's budgetary collapse.
If Texas decides that the state has to provide the benefits of citizens to people who are not citizens - if the state starts spending more money on immigrants, legal or illegal - taxes will go up because it's expensive to convert immigrants to knowledge workers. The resulting hordes of "over-empowered public-sector union" employees will likely bankrupt the state of Texas just as California has been bankrupted.
Texans would do well to hold taxes down and keep the teeming hordes and grasping unions at bay. Immigrants who follow the laws and pay their own way, as countless millions have done over three centuries, are and always will be welcome. Immigrants who arrive in violation of the laws and with a hand out expecting benefits, though, have no place here. Their presence can only lead to disaster.