Texas Gov. Greg Abbott talks big about his love, love, love for private enterprise — how his state doesn’t tax big incomes and regulates with a light hand. The actual performance of Texas companies — relatively mediocre of late – will not be helped by Abbott’s lust to invade corporate boardrooms and give orders.
One recent law bans state investments in companies that cut ties with the oil and gas industry. Prominent targets for punishment include JPMorgan Chase, Bank of America, Citigroup and Goldman Sachs.
Another stops local governments from working with banks that limit investment in gun companies: A twofer of hypocrisy by self-described conservatives, the law lets Texas politicos inject themselves into the judgments of business executives while curtailing the power of local governments.
As far as one can tell, Texas lawmakers have the right to bar companies from getting state business based on their social priorities. Liberal cities and states have not been above trying to apply their own political litmus tests for government contracts.
But really, is this good for business? Doing backflips to portray themselves as the ultimate right-wingers, Abbott and other defenders of the MAGA nanny state seem to think that the lure of lower personal taxes will overcome any corporate reluctance to move operations to hotbeds of offensive politics.
Texas may be playing with fire. Dell Technologies, Apple, Facebook, Microsoft, American Airlines, IBM and HP have already criticized the Republican leadership for dragging them into some of their right-wing games.
JPMorgan is not some little fast-food chain easily pushed around. As Cullum Clark, who runs the Bush Institute-SMU Economic Growth Initiative, told Bloomberg, “Wall Street is strong. These are not weak entities that have no resources. I think they’re watching closely.”
Some of the more enlightened civic leaders in Texas share concerns that the new law virtually banning abortions in Texas — on top of others seen as rigging elections in favor of Republicans — might repel the young, educated workers companies want to bring to their Texas operations.
Then there’s Abbott’s order forbidding private companies to require proof of vaccination. What business is it of his to stop companies from protecting their operations against COVID-19 infections? The Greater Houston Partnership, a business group with Exxon Mobil and Chevron as members, criticized the decree. American Airlines and Southwest are openly ignoring it.
As for the presence of young, educated workers, one of Abbott’s selling points: Some tech companies have moved operations, not so much to the red Texas heartland, but to the blue bubble cities Houston, Dallas and, above all, Austin. These bastions of political moderation can try, but they really can’t close off the right-wing weirdness coming down on them in battalions.
As for its appeal to investors, Texas has a far better public relations department than actual results. The shares of publicly traded Texas companies in the Russell 3000 Index rose 383% since 2010. That number was dwarfed by the 2,760% jump in California companies’ stock in the same period. Even companies based in New York, where shares rose 493%, outpaced those in Texas.
During the pandemic year of 2020 — when U.S. office leasing activity plunged 36% from the year before — the top market for big office spaces leased by tech companies was the Seattle area, according to CBRE. No. 2 was Manhattan, which suggests that the deepest talent pools are not tied to the lowest tax rates.
So much for Abbott’s nonstop boasts that Texas is best for business. When it comes to corporate performance under his leadership, Abbott is a lot of hat, only a few cattle and a ton of B.S.
Follow Froma Harrop on Twitter @FromaHarrop. She can be reached at fharrop@gmail.com.
