Ryan Avent blogs on the possible sources of the Texas Economic Miracle and concludes: “I think all of these factors contributed. Take a tech-oriented region like Greater Boston or the Bay Area, subtract out a housing collapse and add in an energy boom, and I suspect you’ve covered most of the discrepancy in performance.”
I’d go stronger than this. If instead of comparing states you compare metropolitan areas, you sort of wonder where this miracle is. Here’s unemployment by metropolitan area. How’s Greater Boston doing? Well, they’re at 8.2 percent and faring better than Texas’ large Dallas and Houston metro areas. Indeed, Houston’s doing worse than Milwaukee, Seattle, Kansas City, and a bunch of other large cities I’ve never seen described as miraculous performers. The top-performing Texas metro area is the rather small Midland, TX which is still in worse shape than Madison or Honolulu or Omaha.
States, for better or for worse, aren’t real economic units. So state-level statistics often represent somewhat meaningless aggregation effects. Massachusetts happens to aggregate Boston (better than any large Texas metro) with a bunch of smaller metros (Worcester, Springfield, etc.) that are doing terribly. But it doesn’t make sense to say that Boston shows liberalism works while Springfield shows that it’s failed; Boston is just a very different kind of place.