Rick Perry’s phony economic miracle.

Is Texas Governor Rick Perry some sort of economic genius? That’s the line from many conservatives, particularly after the Federal Reserve Bank of Dallas recently found that more than one-third of all new jobs created in the United States since June 2009 have been located in the Lone Star State. In a chat that dazzled The Wall Street Journal’s editorial board, Dallas Fed President Richard Fisher chalked Texas’s success up to its conservative policies (no income tax, lax regulations, tort reform), especially when compared with that deep-blue basket case, California. Perry himself hasn’t been shy about taking credit: “In Texas, you don’t have to use your imagination, saying, ‘What’ll happen if we apply this or that conservative principle?’” he remarked at a recent Manhattan fund-raiser. “You just need to look around, because they’ve been in play across our state for years, generating real results.” It’s one reason why so many Republicans are urging Perry to run for president. Here, at last, is the man they’ve been waiting for.

But, before anyone goes too gaga, it’s worth taking a closer look at the Texas miracle. Texas, economists note, has long been a low-tax, loose-regulation state, but it hasn’t always thrived—between 2008 and 2010, after the U.S. economy collapsed, the state’s unemployment rose faster than in high-tax Massachusetts. In May, Texas’s unemployment rate, at 8 percent, ranked twenty-fourth in the country, slightly worse than liberal New York’s. What’s more, not all of those vaunted jobs are great jobs: Texas has the highest percentage of minimum-wage workers in the country, and its per-capita income still sits below California’s.

What is clear is that Texas’s population has been exploding, leading to disproportionate job growth. In the past decade, the state added more people than anywhere else, partly due to fast-growing Hispanic families, but due also to migration from other states. So why are people flocking to Texas? It could be the state’s lower taxes, though that probably isn’t a big driver: As Brad DeLong of University of California, Berkeley, has noted, Texans pay, on average, 26 percent of their income in taxes, not much lower than the 28.5 percent average in California.

More likely, people are moving to Texas because housing is so affordable. In a 2006 survey by the Census Bureau, Texas ranked forty-second in the cost of housing. Conservatives can take some credit—by and large, it’s easier to build houses in Texas’s biggest cities, with fewer land-use and zoning hassles, according to Harvard economist Edward Glaeser.

But conservatives shouldn’t be too triumphal. Texas didn’t suffer from a ruinous housing bubble like nearby Arizona and Nevada, thanks to regulations that limited debt on homes and restricted “cash-out” refinancing (a common practice in states like Florida and California, in which people got free cash for refinancing their homes). As a result, Texas didn’t fare as badly when the housing market cratered this time: Only 6 percent of Texas borrowers were in or near foreclosure, versus a national average of nearly 10 percent. Two cheers for intrusive regulations.