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Comment by asow92 | Hacker News Reader

Was listening to a Peter Zeihan video yesterday about what makes Texas economically successful and he was saying that these big firms love Texas so much because it's a red state with blue cities: https://www.youtube.com/watch?v=K__yDAix51Q

Tl;dw: One of the key points in his hypothesis was that Texas is a Goldilocks zone where firms receive attractive tax breaks from the state and the workers receive attractive services from the cities.

Thoughts on if this model makes sense and if this could make sense for states like NY and CA to follow if so?

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Pretty much all cities are “blue” cities. But also, state laws have an outsize impact on quality of life, for things such as paid leave laws, minimum wages, other minimum labor standards, legal cannabis, education funding, women’s healthcare (abortion access), gun laws, assisted suicide, etc.

So a city being “red” or “blue” does not seem like it would make much of a difference.

To stay on topic: does it seem to be making a difference in Texas? How or how not?

Companies are moving to Texas, and cities like Austin seem to be popular amongst people who agree with leftist perspectives.

fwiw, I'm from up upstate NY and what we've seen is companies and people leaving over the decades while taxes increasing. It doesn't seem sustainable.

I think, unfortunately, the insulating effect of wealth can explain some of the individual-level decision making. If we assume these companies are relocating professional, full-time staff, it's very possible those folks are making much, much more than the locals. When I lived in Texas, I made several times more than the median income for my metro area, and that's while still being paid less than my coastal peers. Someone in that situation may not agree with local policies around housing, or healthcare, or transportation, or whatever; but they're also likely to be able to spend their way out of any problems that they encounter with those policies.

Likewise, a professional couple relocating from New York may not agree with state or local policies around schools, or gun control, or air quality; but they can probably afford private schools (which they were probably already using in New York, even if they largely agreed with NY's public school policy), and a home in a secure neighborhood, and an electric car. They may have delayed having kids, or had fewer kids, or maybe they don't have kids at all and live the DINK life where there DI goes much, much further.

Cities like Austin have all the amenities that a "lifestyle leftist" would want: local stores selling local goods and produce; farm-to-table restaurants; a vibrant arts scene; plentiful EV chargers; etc. Such a person will probably live near like-minded people, with whom they will lament that Abbot has to go and that it's unfortunate that the state government is so hostile to teachers, or the environment, or trans people; but they're not going to take meaningful action that might bite the hand that feeds, like pushing to reduce corporate subsidies or increasing financial or environmental regulations.

I've lived in Austin for about a quarter century. All of my extended family are from upstate NY (parents/grandparents from there originally).

Totally agree with what you've said about upstate NY - it's pretty depressing to visit these days. Taxes and regulations aren't the only aspect, but they're a huuuge part of it. Have seen some valiant efforts to turn things around (e.g. SUNY), will have to see how that works out.

With regard to Austin and TX, will be interesting to see how that plays out. Austin has always been more liberal ("The People's Republic of Austin" was a nickname), but now essentially all the major cities in TX (not to mention everywhere else) are liberal. TX State Leg and Austin used to fight a lot, but things have gotten decidedly worse recently with the state trying to neuter all local control (and even doing some particularly gross things like passing voting legislation that only applies to Houston). See https://www.texasobserver.org/death-star-hb-2127-democracy/

I used to love Austin, but not so much anymore, and it's not just a "back in my day" story. When I first moved here, I thought "yeah, it's smack in the middle of Texas, and it doesn't have anywhere near the amenities (arts, sports, architecture, transit connections, etc.) of a larger coastal city. But it's so much cheaper than those cities, so you can actually afford to take a lot more advantage of the things it has. And from a weather perspective, sure you've got 2 months of super hot summer, but then you get 10 months of great weather."

Those tradeoffs have started to go rotten. Austin is now expensive as fuck (with the traffic to match) but it still lacks the amenities of a larger city. The state government has really started negatively affecting the day-to-day lives of citizens. And from a weather perspective, this is not just a hellish summer - we've never had anything like this continuous onslaught of 105+ days, and it's only going to get worse.

The "red state" part will eventually bite the "blue cities". Sure, Austin and Houston are blue - but the gun laws in Texas practically encourage gun purchases, you still can't get an Abortion in Austin, the state is still out to get you if you're LGBT, weed = jail, and companies are constrained in what they can say.

Look at Disney and Florida as a good example. Big firms (and the employees that want the personal freedom to love who they want, and make the medical decisions they need to make). This is a very (unsurprisingly) short minded perspective. It matters if the states are blood red.

Despite these concerns, Texas and Florida are gaining population and firms while California and New York are losing population and firms.

How might this play out over the years ahead? What might this mean for the long term prosperity of these states respectively as capital (human and material) shifts from blue states to red states? Will CA and NY maintain their entitlements and policies as their tax base moves out? Will FL and TX eventually turn blue and this happens all over again?

It's a lot of questions, but trying to leave it open ended and as unbiased as possible.

As a resident of the SF Bay Area, I am constantly reading doom and gloom stories about CA and the Bay Area losing population to FL and TX. The numbers are usually manipulated, taken out of context, or represent temporary blips like COVID.

Counter-balancing those stories are when people move to Texas for the lack of income tax, they discover that TX Makes up for that with higher property tax, and the weather is terrible.

It would be great if there was an exodus of people out of the Bay Area, then the place might become less insanely expensive.

There probably are too many people in SF and spreading out would increase much needed housing supply in that market.

On the topic of property tax, that very well might be true for CA, although NY and TEX property tax seems similar despite the average home in TEX being almost half as much. https://www.rocketmortgage.com/learn/property-taxes-by-state. Additionally, there may be other cost of living factors that make TEX more or less attractive.

SF needs more housing, and is facing a problem because they went all-in on tech, and most people aren't returning to those expensive SF offices. Those problems are all manageable, but there will be pain in the short term.

The big win by moving out of CA is affordable housing. However, most of the cool alternatives like Austin and Portland have also gentrified (and they hate Californians, at least in Oregon)

That’s all well and good, but the Texas legislature is working overtime (well, as much overtime as can be worked, given they meet for a few weeks every couple years) to wrest as much control from the cities as possible. Houston no longer gets to run its own elections or school system, and in a few days an expansive, vaguely worded law is coming into effect that basically strips home rule away from the cities. No animal welfare laws for you, Texas cities!

To be fair, the cities were passing draconian laws like “outdoor workers must receive periodic water breaks” so I, for one, am glad that the legislature is standing between us and the jackbooted thugs of the regulatory state.

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