Much of the action in Texas politics takes place at the intersection of government and economics - sometimes subtly, other times boldly. This shouldn't be too surprising, since state and local government is enmeshed in the economy at all levels and across all sectors. Government activities in the economy range from the most basic like employing people to run its operations, to the arcane like regulating telecommunications companies, to the ambitious like planning and building our system of state roads or fostering the high technology industry. When we examine the interactions that connect political decision making with economic outcomes, and economic decisions that involve politics and government, we are studying the political economy.
With government so involved in the economy, private economic actors, in turn, have every incentive to get involved in politics - in essence, to become political actors. From the earliest settlement promoted by land grants to the oil production bonanza fostered by supportive state laws, to the government backed technology booms of the past two decades, the state government has been instrumental in promoting and protecting economic interests. And it has done so with the active political participation of the representatives of those interests. This enduring marriage of business and politics has always been blessed in the councils of Texas government.
The stability of this union rests on a clear-eyed pragmatism that has been both the cause and result of the state's boom-and-bust economic history. In a state, the culture of which has made heroes of politically savvy entrepreneurs as well as entrepreneurial politicians, the government has nurtured and protected established businesses and industries with incentives, subsidies, exemptions, and state contracts - during both good economic times and bad.
But the resulting inefficiencies and distortions in the structure of the economy and the relative neglect of the public interest have slowed the development of a diversified and modern economy. The absence of an income tax, the reluctance to raise funds for the broad delivery of social services and education, and the failure to free up funds that by statute or constitutional provision are dedicated to narrow uses benefiting small constituencies, have distorted the state's development - robust in some areas, undernourished in others - and undermined its ability to promote the long-run interests of the people.
While the consensus that the business of government is to support business has been consistent throughout the state's history, the delivery of public services like education and public health has been uneven despite legal and constitutional mandates. If it is no surprise that the linkage between government and the economy is political and dominated by the influence of well-organized, well-financed private interests, it is equally unsurprising that state government perpetually struggles to deliver public goods such as quality education and a level of social services that might raise the relative position of Texas among the states.
These patterns of interaction between economic interests and policy making are expressed in the "low taxes, low services" approach to government that dominates both the halls of government and the broader body politic. Political leaders, business leaders, and many voters view a state income tax as beyond the realm of the reasonable. As a result, the services provided by the state remain minimal because the pool of money to fund them is limited. If thousands of interactions between politics and economics make up the fabric of Texas politics, the broad pattern that emerges from these interactions is the low taxes, low services consensus that dominates business, political, and policy making circles in the state. While there have always been dissenters from this consensus, their opportunities to effect policy in sustained ways have been few and far between.
It can be easy to lose sight of the ways in which interactions between politics and the economy impact people's lives. Our discussion of the political economy inevitably involves discussion of highly placed decision makers, of economic statistics and high-level characterizations of the settings in which policies are made. At the outset, take a moment to click through the interactive pie charts in the feature How Other People Spend Money. These charts enable you to make your own comparisions about how taxes as well as other costs inpact different social groups. As we consider the Texas political economy from an aggreagate, statewide perspective, it can be helpful to keep in mind how the "big picutre" of the political economcy provides the economic context for households across the state. As the pie charts suggest, the view can differ considerably depending on your economic situation.