Texas is the new California, But it won't last
There’s a lot of talk these days about how Texas is the new California. There’s a great deal of truth to this assertion. Just check the migration route of people and businesses leaving Los Angeles and the Bay Area for Houston, Dallas, and Austin. But you need to take that concept with a grain of salt. It’s a short-term phenomenon.
What made California so great in the twentieth century? Land was abundant, cheap, and easily developed right near the ocean where people really wanted to be. Nature was always close at hand from the beach to the mountains. Productive farmland was created up and down the Central Valley with massive irrigation projects that made the desert bloom. California was a major oil and natural gas producer. Industry and innovation thrived as talented people poured in from across the country and around the world, each adding to the dynamism of the economy and culture. Massive government investments were made in horizontal infrastructure everywhere. Taxes were low. Regulations were light. Public education was first in the nation. The middle class expanded outward in every direction.
Then… things changed. Drought pitted farmers against cities and industry against wildlife. Oil and gas production peaked and declined. The easily developed land in desirable places filled up. Traffic congestion increased. Pollution got out of hand. Prices rose dramatically. Each newly arrived resident looked a lot like a burden to be avoided. Each new home and car was a problem to be restricted. Tax revolts ensued. Schools were starved of funding and deteriorated. California loaded up on regulations and a no-growth agenda.
Conservatives love to blame pointed headed liberals and their tree-hugging tendencies for the decline. Liberals love to blame conservatives and their thinly veiled racism and greed. But it was absolutely a group effort with plenty of overlap. They weren’t mutually exclusive. Not In My Back Yard was the common cry from Tarzana to Palo Alto. Don’t tax me was the middle ground everyone coalesced around from Marin to Orange County. Don’t change the character of our community echoed from San Francisco to Costa Mesa. “I’ve got mine. You go get your own somewhere else.”
So Texas is now the golden child – for the moment. But it won’t last. Texas isn’t different. Texas is just a generation behind the curve. It’s on the same trajectory as California whether it knows it or not. There may be an endless amount of flat easily developed land in Texas, but the cost of maintaining an equally endless amount of horizontal infrastructure will inevitably outstrip tax revenue over the next generation. The Texas Department of Transportation is already hitting the wall in terms of revenue-to-expenditure. And there aren’t many municipalities that can actually afford to maintain their own water and sewer systems without state or federal assistance – and the higher ups are already broke and in debt. Texas may not take the California approach of mandating efficiency and imposing convoluted allocation schemes, but it may just end up letting places dry up and fail. Tick tock.
Texas has long enjoyed the booms of hydrocarbon production and muddled through the busts of low oil and gas prices. But the cheap, easily extracted stuff is mostly gone after a century of drilling. In 1901 the Spindletop well in Beaumont near Houston gushed 100,000 barrels a day under its own pressure. Now it’s all fracking, horizontal drilling, billion dollar deep water platforms, and processing other people’s tar sands in aging refineries. Texas isn’t going to run out of fuel anytime soon. But it’s going to be a much dirtier, more expensive process than it used to be, with ever thinner margins.
At a certain point, even Texas will have to start making hard choices about how to keep all the cars and air conditioners humming along in a low cost, low tax, low regulation environment. Texas won’t take the California approach of Big Government and endless micromanaging. But it may just fizzle and decline in its own Texan-sized way when the cost of supporting what was built becomes a liability.
My advice is to move to Texas and enjoy the bounty while it lasts. You’ve got another twenty or thirty years – if you’re lucky. But keep a bag packed for when it’s time to relocate to the next semi-disposable hot spot. The Texas Miracle is on borrowed time.
(All photos by Johnny Sanphillippo)
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