Ten‐Gallon Economy: Sizing Up Economic Growth in Texas Edited by Pia M.Orrenius, JesúsCañas, and MichaelWeiss, New York: Palgrave Macmillan. 2015. xvii, 248 pp. $120 (hardcover), $89 (eBook). ISBN 978‐1137530165.

The progression of time highlights the relevance of Ten-Gallon Economy. When the essays were first presented in 2014, Texas was booming. Before the book was published in September 2015, oil busted. Between June 2014 and January 2015, oil prices fell by half from $107 per barrel to $53. By February 2016, prices had dipped to $28, although they were back to $52 by 2016's end (USEIA 2016). Fortunately, Ten-Gallon Economy discusses both the strengths of the Texas economy and its precariousness and peculiar weaknesses. Texas GDP trails only California within the U.S. and rivals that of Canada. As the book notes, the Texas economy has diversified considerably since the oil bust of the 1980s. Today, the mining industry, including oil and gas drilling, makes up only about 12.3 percent of Texas GDP. Thus, the state's annual GDP growth slowed in recent years but was still almost twice the national average in 2015 (BEA 2016a). Texas experienced negative GDP growth in two quarters of 2015 and the second quarter of 2016 even as the U.S. has a whole experienced positive growth (BEA 2016b). Still, people and companies continue to pour into the state; Texas ranked second only to Florida in attracting migrants from other states in 2015 (Census Bureau 2016a). In Part 1 (Introduction), Pia Orrenius, Jesús Cañas, and Michael Weiss provide background and weave the set of 13 essays into a cohesive narrative, discerning themes that would be easy to miss in either casual reading or, as academics often do, piecemeal reading of chapters or sections. In the first chapter of Part II (Public Policy and Business Climate), David Neumark provides an overview of research on the general effects of hiring tax credits, enterprise zones, minimum wages, and earned income tax credits and explores how these policies may promote economic growth but also income inequality. He also looks at how business climate indices capture selected policies. Jason Saving then considers why Texas has experienced faster growth, concluding that in addition to many industrial and demographic advantages, the state's small government (read favorable business climate and small public safety net) is significant. Still, he warns that low but regressive taxes and limited expenditures may in fact hamper future growth, a theme Alan Viard explores further in the context of the state's margin tax, which has brought in less revenue than expected and has proven inefficient. Lest you think the book may succumb to Texas exceptionalism, Part III (Human Capital and Labor Markets) delves into some of the state's biggest challenges. Texas is a majority-minority state, with Hispanics making up 38.9 percent of the state's population (Census Bureau 2016b), a figure expected to grow, as Murdock et al. describe compellingly in their 2013 book. Marta Tienda builds on her own work and that of others to present the educational opportunities and challenges presented by a growing Hispanic population. While Saving notes that Texan black and Hispanic children generally outperform their ethnic peers according to education benchmarks, Tienda focuses on how disparities between Anglo and minority students could negate the benefits of the state's population, which is younger than the national average, and jeopardize the state's future earning power. Of course, there are historic, cultural, and economic reasons for educational and income disparity. Anil Kumar provides an interesting exploration of how oil booms are associated with lower human capital investment in the state. The section concludes with Melissa LoPalo and Pia Orrenius's research on wage polarization and increasing wage inequality with low-paid, low-skill positions posing a threat to the state's long-term economy. Part IV chronicles the state's industries and exports. John Duca, Michael Weiss, and Elizabeth Organ review the history of the Texas oil industry, noting how greater economic diversification and lessons from past busts have made the economy more resilient. Mine Yücel, Michael Plante, Amy Jordan, and Nicole Lake find that energy price shocks still have substantial impacts on the state's employment and GDP. Kory Killgo and Kenneth Robinson explain how the state's lively and unique banking history helped the industry weather the housing crisis and recent recession. Jesús Cañas, Luis Bernardo Terres Ruiz, and Christina English analyze factors affecting comparative advantage of Texas manufacturing and exports across industries. A section devoted to the Texas-Mexico border (Part V: Border and Economic Development) highlights the economy and demographics of a region unique within both the state and the U.S. Roberto Coronado, Marycruz De Leon, and Eduardo Saucedo explore the employment spillover effects of the maquiladora industry on the economies of border cities. Keith Phillips and Christopher Slijk consider why the border economy lagged the state's economic growth in recent years but remains poised for future growth. Jordana Barton, Emily Ryder Perlmeter, Elizabeth Sobel Blum, and Raquel Márquez present the significant housing and poverty challenges facing the residents of the more than 2,200 Texas colonias. They close the book on a positive note by discussing successful efforts to improve colonia conditions. Barton et al. identify four elements of successful colonia improvement: resident participation, an integrated approach to problem solving, asset-based development grounded in individual and community resources, and ownership of resources in the formal economy. Not coincidentally, these elements will also impact economic growth, quality of life, and opportunity in the rest of the country. The current political climate at the state and national level seems to favor small government with limited regulation and expenditure, while a more diverse workforce adapts to changing needs, realities, and technologies. This book is not anecdotal or a quick, easy read. It is packed with data and thoughtful analysis that take time to digest. When Texas booms, a book explaining its success can seem braggadocios. When the book released in 2015, the idea of “Tipping our Hat to the Ten-Gallon Economy” (the title of Part I) felt like political hype, despite the inclusion of chapters chronicling weaknesses expected to limit future growth. At the beginning of 2017, the Texas economy is still strong but has faced major setbacks in the energy and agriculture sectors. A less robust economy actually makes the book more palatable. Contemplating the state's economic strengths and weaknesses through a lens of resilience, as opposed to unfettered growth, improves the clarity and balance of the discussion. In their introduction, Orrenius, Cañas, and Weiss note that many people ask two questions about the Texas economy: why it grows so fast and whether this growth comes at a cost to the future. The book provides a satisfactory answer to the first question. There are holes, of course. One might think a book entitled Ten Gallon Economy would address the farm and ranch economy; it does not, but agriculture is a relatively small part of the state's economic base. The oil and gas industry is directly addressed in three separate chapters, but the state's refining capabilities are largely ignored. Similarly, authors give little attention to the state's tech industry, strong domestic migration and international immigration, or sea ports and ports of entry along the Texas-Mexico border. Still the book highlights important ways (both for better and for worse) in which Texas differs from other states. In response to the question of whether today's growth comes at a cost to the future, the book lays out the state's challenges, including a lagging border economy, income inequality, limited progress in closing the education gap between Anglos and the racial and ethnic minorities that make up growing shares of the state's population, and the instability of the energy sector combined with disincentives to invest in human capital during energy booms. The authors consider policy alternatives and possible outcomes, such as how increasing rates of higher education among minorities may affect economic competitiveness and how an asset-based approach to community development could alleviate poverty along the Texas-Mexico border. Whether citizens and policymakers will take action now to address these challenges remains to be seen. As the editors state in their introduction (p. 11), “Texas perseveres because it changes when it has to.” Ultimately, this book raises important questions about what policies and principles underpin a sustainable economy that works for the people as opposed to trading short-term growth for inequality and stagnation in the long-run. In other words, how can policymakers ensure a Ten-Gallon Economy isn't all hat and no cattle?

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