Limited government works

More than three decades ago, my father took ownership of the smoking ruins of the American economy armed with nothing more than four very basic principles: Keep taxes low, restrain government spending, minimize the amount of regulation on private enterprise and keep the money supply sound.

His approach may have appeared basic, but the results were unassailable. Over the next eight years, more than 16 million new private-sector jobs were created, a payroll expansion of 17.6 percent.

It was called the “American Miracle” and was replicated by world leaders across the globe, who met with similar success.

Looking back at it from a distance, it’s remarkable to me that the concepts that worked so amazingly well just a short time ago have fallen so far to the wayside.

Perhaps during this time of unrivaled Keynesian influence - an era of bailouts and budget-busting “stimulus” packages - the idea that you can improve the future by revisiting the lessons of the past seems overly simple, even quaint.

However, if America is going to pull out of the economic death spiral in which it’s locked, we have to return to the basics Ronald Reagan preached.

If you don’t believe Reaganomics can still work in this day and age, for whatever reason, I say you should look no further than the state of Texas.

Under the leadership of Gov. Rick Perry, Texas has championed and built upon the concepts my father used to rebuild America in the 1980s.

The results, again, are unassailable.

Over the decade between April 2001 and April 2011, more than 730,000 private-sector jobs were created in the Lone Star State. During that same stretch of time, the next-best state added just over 90,000 and the nation as a whole lost 2.2 million.

By almost any measure, Texas survived the global economic recession in dramatically better shape than any other state, continuing to add employers seeking to expand or relocate from across the country or around the world.

What’s the secret behind the Texas Miracle? Low taxes, predictable and limited regulation and restrained government spending. Sound familiar?

Texas stands as an example the rest of the nation should be emulating. In fact, many states want to do so. Earlier this year, a contingent of lawmakers from California traveled to Austin to meet with Mr. Perry to try to figure out just what Texas was doing to make it such an attractive destination for relocating California businesses and residents.

As the son of the former governor of California, I can appreciate the irony of a Golden State contingent traveling to Texas to learn the lessons originally taught by Ronald Reagan.

Texas has not slowed down, either. Analyzing weaknesses in its already jobs-friendly climate, Mr. Perry and other state leaders recognized the need for further tort reforms to make the state even more attractive. Just last month, shortly after signing off on a budget that dramatically cut state spending, Mr. Perry put pen to paper and signed into law a “loser pays” component to the Texas court system that adds further protections to victims of lawsuit abuse.

Mr. Perry is smart enough to realize that endless - and often frivolous - lawsuits are just another hurdle standing in the way of private companies seeking to grow their businesses.

Dallas Federal Reserve President and CEO Richard Fisher described the importance of tort reform earlier this week on CNBC, saying companies pay close attention to such things. “The most important thing that’s happened to [Texas] is tort reform,” Mr. Fisher said. “Regulation-making, rule-making and the way the law works and how it’s applied have a tremendous impact on capital formation and employment.”

Mr. Perry is continuing the Reagan tradition of removing senseless roadblocks and allowing free enterprise to do what it does best: hire employees and generate wealth.

During a time when most companies appear to be insecure about adding to their payrolls because of the uncertainty surrounding our economy, this country would be wise to carefully study why Texas employers seem to be largely immune to this insecurity.

In short, the Reagan Revolution is alive and well - deep in the heart of Texas.

Michael Reagan, the son of the 40th president of the United States, is author of “The New Reagan Revolution” (Thomas Dunne, 2011).