Gov. Rick Perry Will Be Missed

By Bloomberg Businessweek, anyway. The magazine praises Perry, who won’t seek re-election next year, for his business recruitment skills, helping to convince companies like Google, Apple, Toyota, GM, and others to set up operations in Texas.

Perry admits he started out as a terrible pitchman. In 2001, Boeing (BA) announced it would move its Seattle headquarters and was considering Dallas. On the job for only five months, Perry lost the prize to Chicago’s more aggressive offer. “I gathered my staff up,” Perry recalls. “I said, ‘We really suck at this.’ ”

He decided to get good at it. First, Perry persuaded the Texas legislature to place the state’s economic development agency within the governor’s office. Then he started weekly meetings to identify companies to pitch and seduce. He formed the Texas Enterprise Fund—referred to internally as the “deal-closing fund”—a cash reserve that has distributed close to $500 million among 106 companies since 2004. Often it’s used to offer companies a bonus for each job they bring to the state. Perry says it helps that he has an easy product to sell. Texas has no personal income tax, limits awards in lawsuits, and is famously skeptical of regulation. Aaron Demerson, who’s run economic development on and off for the Perry administration, describes the various efforts to attract business as building a “strike force capacity.”

Though some question what benefit it is to the U.S. as a whole just to have jobs moved from one state to another.

Many governors focus their charms on the CEOs of large companies actively considering a relocation. Perry calls everyone—even CEOs who aren’t contemplating a move. “I call John Chambers, CEO of Cisco (CSCO)—I call John often and ask him to consider,” says Perry. “I talk to California technology chairs, CEOs, CFOs, on a fairly regular basis.” In January golfer Phil Mickelson publicly mused about leaving California’s taxes behind. “I called Phil,” says Perry. “I said I just want you to know I would love to have you in Texas.”

Texas also runs ads in other states urging companies to move. “It’s brazen, I’ll give him that,” says Greg LeRoy, who runs Good Jobs First, a group in Washington that tracks money states give to businesses. But LeRoy argues the time and money spent luring companies to the state is largely wasted. Texas has seen a net inflow of 80,000 jobs between 2001 and 2010, not much in an 11 million-job economy. Leroy describes the zero-sum game of moving jobs among states as “job redistribution.” States get bragging rights, but the U.S. economy doesn’t see any new net growth.


  • Wes Mantooth

    The latter part of LeRoy’s analysis is pretty facile. He’s correct that in the very short run in the macroeconomic view, jobs moving from high-taxation states to low-taxation states are a zero-sum game. However, as the high-taxation states realize that they are losing jobs, they will either raise taxes until they go out of business (California, Illinois), or they will adopt more pro-growth strategies, which results in more new jobs.

    From a less-macro perspective, jobs moving to Texas from outside the state are not a zero-sum game. Texas is better off with even 80,000 net jobs that moved here from elsewhere. Even assuming that LeRoy’s statistics are correct, at $500M for 80k new jobs, that’s only $6,250 expended per new job. Texas will recoup that expenditure in tax receipts, both from the business itself as well as the personal taxes (sales, property, etc.) paid by the job recipients. That doesn’t seem like such a bad investment.

  • sooieeehog

    When talking to Phil, what exactly did Perry mean by “I would love to have you in Texas”?

  • Than Nguyen

    Texas’ low-tax, limited government approach has done wonders for the state economy and few places know that better than the Dallas-Fort Worth area.
    Than Nguyen