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Texas Politics - Political Economy
2.    The Politics of Political Economy

Two related questions dominate debates about the relationship between the government and the economy: how much should the government be involved in the functioning of the economy (and in business in particular), and how much should the economy (especially business) be involved in the functioning of government?

The first question has been pondered since at least to the middle ages when private merchant interests became economically powerful enough to compete with the hereditary wealth and authority of royal rulers in Europe. As markets (and business) carved out their own independent space in society, they prompted considerable reflection on the proper balance between public authority and private interest. Indeed, the struggle for national independence for what became the United States in the 1770s was in part rooted in a struggle over the authority of King George III of England to impose various taxes and other restrictions on trade and commerce. Similar issues shaped the struggle for Mexican independence from Spain in the early decades of the 1800s.

Contemporary examples of the intervention of government in the economy include the regulation of prices and service levels for electric utilities, rules for sharing local communications trunk lines by telephone companies and cable operators, the promotion of professional sports franchises through tax breaks, and use of eminent domain to acquire privately owned real estate, just to name a few.

The second question - to what degree business and other powerful private interests should be involved in government and the shaping of public policy - is a central concern for liberal democracy. The tendency for market economies inevitably to produce an unequal distribution of economic resources directly undermines the ability of citizens to compete equally in the political arena. Is this a uniformly bad thing, or is it part of a necessary trade-off between democratic participation and personal freedom that societies must make?

The question also has deep roots in our national history and beyond. The famous ideological struggle between the Hamiltonians (after Alexander Hamilton, the first U.S. Secretary of the Treasury) and the Jeffersonians centered on whether the United States should be a nation of powerful commercial interests or of small landholders and merchants. The Hamiltonians wanted powerful commercial interests in part as a way to make the country an international power in both politics and economics. The Jeffersonians preferred a nation of small entrepreneurs out of concern to minimize differences in political power among competing interests.

President Andrew Jackson (1829-1837), a Tennessean from what was then the country's western frontier, took up the Jeffersonian cause when among other things he eliminated the Second Bank of the United States, the national bank at the time. Many of his fellow Tennesseans emigrated to Texas bringing their own particular brand of frontier populism that has evolved into a general distrust of government (the low taxes, low services consensus) and a preference for promoting business regardless of size - a unique mix of both Jeffersonian and Hamiltonian views, perhaps.

The politics of the political economy in Texas, as elsewhere, have been hotly debated, but there has been a longstanding baseline view that can only be described as conservative. Despite the growth of government in recent decades, the "low taxes, low services" consensus in Texas has held firm even as the state, and state government, have grown. For more information on the size of Texas government, see the discussion in the Financing Government section in this chapter. The Bureaucracy chapter also provides extensive coverage of the size and reach of government administration in Texas.

In practice, the twin questions of how government intervenes in the economy and how economic interests are incorporated into democratic institutions are frequently intertwined. Texas has a long tradition of providing business interests, large and small, with wide latitude in both economic and political ventures.

Economically, the state subsidizes or otherwise permits public expenditure on a variety of industries and activities ranging from road building to professional sports, manufacturing, and real estate development. Additionally, the state has encouraged oil extraction in environmentally sensitive areas, outsourced customer service functions for health and human services, and begun to consider selling subsoil water rights on state owned land in west Texas to private interests.

In terms of latitude granted to business to shape public policy, the state permits extensive lobbying of elected officials while requiring only light reporting of such activities. It only minimally regulates and enforces the timing, sources and amounts of electoral campaign contributions, and it imposes only loose restrictions on contacts and exchanges between private interests and executives in the bureaucracy.

In summary, Texas has developed a decidedly pro-business political culture that eschews public expenditure on social programs, while permitting huge contracts, subsidies, and sales to business interests. The flip-side of this political-economy coin is that the state tolerates wide disparities in political access between ordinary people and powerful economic interests.

Texas Politics:
© 2009, Liberal Arts Instructional Technology Services
University of Texas at Austin
3rd Edition - Revision 115
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