Speaking of the latter, old deer-in-the-headlights eyes posted an article this morning promulgating the hypothesis that the massive southern migration from New York City and California is due solely to – are you ready for this? – housing prices.
Krugman suggests that if we would just lower housing prices in New York, we could reverse the exodus to cities like Atlanta and Houston and restore the big apple to its rightful place in the national scheme of things. In support of the advisability of reversing the trend, he offers the observation that wages are higher in New York and that therefore (as everyone knows) productivity is higher.
This is classic Krugman. Fantasize a hypothesis to prove what you have already decided must be true, then conjure up pseudo-economic smoke-and-mirrors fabrications to support it.
First of all, high wages do not equate to high productivity. They do, however, contribute to Gross State Product, since every unit of production costs more. But let’s look at actual wealth production. 2012 Manufactured goods output for New York State was 63.1 billion dollars for a population of 19.6 million. Comparable figures for Texas were 211 billion dollars for a population of 26.4 million. Thus Texas, with a population only 35% higher than New York, produced 335% more wealth. So much for productivity.
In focusing on lower real estate prices as the sole reason for people and companies moving south, Mr. Krugman totally ignores the positive effects of milder climate, low State taxes, and the absence of State interference in the conduct of private business. In fact, he uses his hypothesis of rental cost causation to debunk these obvious incentives as "conservative myths."
Krugman ends his tirade with a dig at Texas Governor Perry. "Rick Perry," he says, "doesn’t know the secrets of job creation , or even of regional growth." Well, Mr. Krugman, for someone who doesn’t know what he’s doing, he sure is doing a good job of beating the pants off New York.