Is Texas A Ponzi Scheme?

Incidentally, while Social Security has very little in common with a Ponzi scheme, one could make the case that the state of Texas itself has a whiff of pyramid scheme about it. As I’ve discussed extensively recently, the combination of proximity to Mexico and (admirable) housing policy has led to rapid population growth in the state far exceeding the national average:

This brings with it a lot of benefits. One is that when you have rapid population growth, you have rapid jobs growth because the people create demand for services. You’ve probably seen gotcha charts noting that Texas has led the country in public sector employment growth under Rick Perry. That’s not because Perry is a socialist, it just illustrates the extent to which the Texas jobs boom has been population driven. More people = more cops and more teachers. Rapid population growth also means that your infrastructure is better. A state with a static level of population needs to tax itself at a relatively high level to maintain all its infrastructure at a high level. But if your population in 2005 was much higher than your population in 1985, then the average age of your infrastructure is going to be much younger than in the static state even at a lower level of taxes.

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None of that is meant as a knock on Texas. I like Texas, I like population growth. I think the RENT IS TOO DAMN HIGH here on the coasts, and I want more immigration. But how sustainable is this? Texas’ 2 percent annual population growth rate used to be higher than the national average, but lower than the world average. But today Texas is growing not just faster than the country as a whole, it’s growing much faster than the world’s 1.2 percent population growth rate. How long is Texas going to keep that up? Ten years? Twenty years? It seems to me that at some point, Texas is destined to converge to the national average at which point certain important elements of its economic model are going to fall apart.