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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

Category: Natural resources
June 27, 2011 at 10:30 AM

What Washington state can learn from Texas (not what you think)

Texas’ economy is doing better than most places. According to the president of the Dallas Fed, the state has accounted for 37 percent of all net new jobs created since the recovery began. Not surprisingly, the editorial page of the Wall Street Journal stated this was because of its “free market and business-friendly climate.” This has become a meme.

The reality is more complicated. Texas remains a petroleum superstate even 40 years after the continental United States entered peak, as well as the entry point for much imported oil and a powerhouse of refining and chemicals. It’s an urbanized state with three of the nation’s largest cities, two of which, Dallas and Houston, have numerous corporate headquarters. Austin is a high-tech mecca and Houston is one of the world’s top medical centers. Texas has benefited most among the states from NAFTA and trade with Mexico.

Government plays a big role, too. The state’s powerful congressional delegation sends home the money, whether dominated by Democrats or Republicans. Houston’s status as a major city was in no small part because of the decades of federal funding steered its way by every Texas leader from LBJ to the Bushes (e.g., the Houston Ship Channel, federal grants for research, the headquarters of NASA). San Antonio’s economy enjoys a stable foundation of big military installations. The state’s universities, especially UT-Austin and Texas A&M, receive huge federal support, as well as consistent state backing even in bad times. The state used tax increases to take UT-Austin from a football mill to a world-class university. Dallas has built one of the nation’s most popular light-rail systems thanks in part to Uncle Sam. Texas’ oil and agriculture sectors enjoy big tax breaks and subsidies.

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Comments | More in Energy, Natural resources, State fiscal conditions, Tax policy

December 14, 2010 at 9:50 AM

Lessons from Weyerhaeuser and the decline of the U.S. economy

If you want a snapshot into today’s American economy and its inability to create productive jobs, look no further than Weyerhauser. The iconic Northwest company was once one of the largest integrated timber and paper companies in the world. It made things. It was the jobs engine for thousands in small mill towns in the Northwest, as well as at its headquarters in Tacoma, and later, Federal Way.

Now it’s preparing to convert to a Real Estate Investment Trust, where most of its profits will go directly to investors. On Monday, it announced a tripling of its dividend ahead of the conversion. Today’s Weyerhaeuser is essentially a large owner of timberland, most of its productive manufacturing operations shut or sold off.

This transformation may be very profitable for investors. (Maybe not, considering how much of the profit base depends on a housing market that may be sick for many years to come; the REIT idea was hatched during the real-estate bubble). For new jobs, productive activity and exports, not so much. The company employed 37,900 in 2007 — the number of jobs had dropped to 14,900 by 2009. In 2008, Weyerhauser eliminated 1,500 well-paid white-collar jobs, most at its headquarters. The damage reached from scores of small towns to metro Seattle.

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Comments | More in Jobs/Unemployment, Natural resources, Sustainability, Trade, Weyerhaeuser


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