A Taste of Bastiat
By Bryan Caplan
Sometimes you hear Texas described as a “low-wage” economy, perhaps
contrasted with the high wages of California. But there are some subtle
wage effects from the Texas approach that often go unnoticed. By
drawing people out of high-rent areas, Texas keeps the lid on land rents
elsewhere, thereby boosting real wages in say San Francisco.
Furthermore, San Francisco employers must pay their workers more, the
more attractive is the “move to Texas” option. So the full positive
effect of the Texas model on wages is considerably higher than you can
see by looking at Texas wages alone. Once again, the distinction
between the seen and the unseen turns out to be relevant.