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The Growing Pains of the State of Texas

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The Texas economy has experience rapid growths, and declines throughout history. This essay will chronologically explore the circumstances which placed the state of Texas on to its way of becoming a booming economy. It starts with the early settlers that came to Texas to cultivate the land to produce cotton and the cowboys herding cattle on its way to the north. To the discovery of oil which redefined the leading industry in Texas for the next few decades until the recent technology boom. Texas has always been a beacon for immigrants seeking opportunity to make a good living through hard work. This essay will conclude with predictions for Texas’ population and climate change, and what they hold for the future. The discovery of oil in east Texas played a tremendous role in the boom of the Texas economy during the 1930’s.

What was once a predominately agricultural state, Texas would soon be pushed in to the 20th century thanks to the industrial sector that was advancing because of the production of petroleum which helped provide for mechanical labor that had not been widely used before the 1930’s in Texas. With mechanical labor, production sky rocketed. For example, the invention of the tractor which could produce more corps than a team of men working on a farm. However, this did drive the farm hand out of a job but from a progressive stand point, it certainly helped industrialize the Texas economy. What ensues is that the working class suffers at the hands of progression. As McFarlane explains, “Despite the unparalleled size of the East Texas oil field, so many people came looking for employment that contractors were able to cut wages. In the same way that a “surplus population” made it possible for southern agriculture to depend on cheap labor, oil contractors found that the underemployment of the Great Depression provided them with their own supply of cheap labor. ” (865). In the terms of Schumpeter’s theory of creative destruction, the mass production of oil in Texas caused a disturbance to the cotton and cattle industries.

These two once prevalent industries would soon diminish as people flocked to the boom towns that sprang up across east Texas. Going forward in time, the enactment of the NAFTA trade agreement has also made its impact to the Texas economy which is still a source of controversy in today’s political economy. NAFTA is the free trade agreement between the U. S. , Canada, and Mexico. Since Texas borders Mexico, this trade agreement played the biggest role in the Texas economy. What essentially played out is the outsourcing of Mexico’s cheap labor to produce industrialized goods on the other side of the border which could then be easily transported back in to the U. S. because of the free trade deal. This caused a disturbance to the working class in Texas as they soon experienced a loss of jobs in the industrial sector. As Klier and Rubenstein demonstrate in accordance to the automobile industry “Among Mexico’s five leading producers, at the high-end VW had 82 percent of its North American production in Mexico in 2016, whereas the Detroit Three producers’ shares ranged from 13 percent to 20 percent. Nissan, which fell between the extremes, with 45 percent of its North American production in Mexico in 2016, more than doubled the share of its North American production located in Mexico in 1995. ” (6).

This causes political tension between the U. S. and Mexico as we start to see the rise in outsourcing of cheap labor and even illegal immigration at the border. Racial tension soon follows and so does xenophobia. The most current wave of creative destruction in the Texas economy comes from high-tech industries. Texas is the home of some of the most advanced medical facilities. In addition, the economy is also impacted by the prevalence of the computing industry in the San Marcos-Austin area. In 2002, the Texas government allowed for the expansion of electric companies by allowing consumers to pick their own provider. What ensued was a competitive market driving the cost of electricity down. This in turn would appeal to big companies looking to establish their headquarters in an area where electricity costs are low. As Preuninger explains, “In Texas, both electricity-generating operations and investments in plants are driven by prices. Wholesale and retail prices are set by competitive market rates –and, in turn, drive market rates. The role of the wholesale market is to allow trading among generators, retailers and other financial intermediaries for short- and long-term electric delivery. …electricity is almost always on the short list of cost considerations when companies scout locations for offices, manufacturing plants, and e-commerce hubs. With Texas’ competitive market, businesses gravitate here for its low prices, reliability, and accessibility. …these facilities require a massive amount of power from the state’s grid – and they come here because they know they can get it affordably and reliably. ” (42).

The Texas economy is facing multiple threats that will affect the growth in the business industry. The major threats Texas faces are overpopulation and a lack of resources which can impact the economy with the increasing need to provide more services such as water, power grid, roads, and larger schools. The population boom in Texas calls for action in order to avoid shutting down major services due to the pressure of providing more electricity and clean water as the population grows. Also, the number of cars in Texas is rising so that the need to have larger roads is also a priority to plan for. Urbanization in Texas changed the state’s future. As more people move to Texas, the pressure of growth in major metropolitan areas such as Dallas-Fort Worth, Houston, Austin, and San Antonio continues to rise. This will make lawmakers change their strategy in each city to adjust to the booming population in order to meet the needs of the housing industry. In recent years, the Texas economy has faced disastrous impacts due to climate change which is a threat that is slowly rising every day.

For the past few years, the high temperatures are causing major damage to the Texas economy. Notably, hurricanes like Harvey made a devastating impact on Texas that has caused tremendous damage amongst people and businesses. These hurricanes have brought rising waters and powerful winds that destroy anything in its path. Climate change, according to multiple scientific facts, state that the earth is warming, and for this reason there has been a rise in deadly hurricanes in the Gulf of Mexico. This is because hurricanes form and strengthen in warm waters. The water levels at the shores of Texas are also significantly increasing in recent years. Texas will be one of the states to significantly feel the impact of climate change. According to The Houston Chroncile “Among the findings of the study, Texas will probably see by the 2050s: The number of extremely hot days per year – with temperatures exceeding 95 degrees – more than double, from an average of 43 to 106. About 4,500 additional heat-related deaths per year with nearly half that increase coming in the next five to 15 years. (For comparison’s sake, the study points out there were about 3,400 total automotive fatalities in Texas in 2013. )

A sea level rise of up to 2 feet in Galveston. A $650-million-per-year increase in storm-related losses along the coast, bringing the state’s total annual damages to more than $3. 9 billion. A marked decrease in both worker productivity and crop yields. ” (Baddour 2016). Air pollution that factories are releasing in to the air is also causing changes in climate by increasing the percentage of poisoned air and oxygen. This issue is also impacting people’s health and it causes less productivity and a higher budget to provide for medical treatment in hospitals and other medical centers. Climate change is very important to prepare for before it causes more damage to the economy. Texas can face this problem by educating and bringing awareness to climate change and the potential threat it can bring to everyone.

Texas has faced multiple disasters in recent years and they have taken a toll on the economy. After Hurricane Harvey, people lost their belongings, including their homes and cars. This lost impacted a certain industry in that area. Despite the trauma and headache, the auto industry boomed right after because people were buying new cars after the flood damage. According to The Houston Chronicle, “Though devastating to the cities, counties and families of southeast Texas, has created a small, macroeconomic boom for the state. Since so many Texans lost their cars to floodwaters, there was a short-term boom in new car sales, leading to a 13 percent growth in motor vehicle tax revenue over the last quarter. Ditto a small bump in sales tax revenue, as flood victims rushed to replace items lost to the storm” (Baddour 2016). Another issue facing the budget crisis is the funding of government programs.

The Texas Department of Health and Human Services is one of the major branches that serve low income families in Texas. According to The Houston Chronical “during a special session called by Gov. Greg Abbott over the summer, state lawmakers shifted another $500 million away from the Texas Health and Human Services Commission to pay for public education programs. As a result, lawmakers could face a $2. 5 billion Medicaid bill shortly after they reconvene in Austin in 2019. Then there are the additional drains on Texas coffers from Hurricane Harvey recovery efforts, Hegar said. That’s bad news for lawmakers given the comptroller’s prediction that the state will only have a $94 million “beginning balance” when lawmakers convene in 2019. By comparison, lawmakers had an $880 million beginning balance in 2017, which was ultimately a tight year for the state budget. Two years before that, lawmakers enjoyed a $7. 3 billion beginning balance. ” (Baddour 2016) The Texas Tomorrow Fund is an educational program to help fund public university tuition and one of the most important programs in Texas. There is no certainty that this program will continue to last.

According to Houston Chronical, “The Texas Tomorrow Fund, a public university tuition payment program that stopped accepting enrollment in 2003, is projected to face a $240 million budget shortfall. The state treasury will also soon feel the effects of an amendment to the Internet Tax Freedom Act passed by Congress, which is expected to cause a $440 million loss in sales tax revenue. ” (Baddour 2016). An economy that lacks the resources to provide for affordable higher education will stagger as the number of professionals, engineers, and doctors drops. As we have seen throughout history, the greatest civilizations placed great importance on education, for example, Rome, Greece, and Egypt. Without this, innovation and creativity become scarce which ultimately hinders progress in technology and all other things. It can be argued that education is one of, if not, the most important factor in an economy. What has made Texas a booming economy in short, is innovation and technology.

The bountiful natural resources that Texas offers had set the economy on to its course for financial prosperity. But to get there, the technological advances in mechanical labor had to of taken place so that there was a shift in the working class to help sprout the industrial growth in the economy. Political actions like NAFTA would soon hinder this growth as more and more factories relocated to Mexico. What Texas must look forward to is a population of professional and skilled people in order to push the economy in to a megalopolis of the modern age. This can only be achieved by placing more resources to make higher education affordable and accessible. Texas is relatively young only being about two centuries old, what has been mentioned in this essay are only growing pains of an early economy. Texas is arriving in to its early adulthood life and has far more opportunities if planned for accordingly.

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