Houston Strategies

The Economist special report on Texas and TX vs. CA

The Economist magazine has a 10-page special report on Texas this week (pdf), only the second state they've ever covered in such detail (after CA). In fact, the cover and lead op-ed is about CA vs. TX.

Yours truly is in the Sources and Acknowledgments, based on an interview John and myself did with their U.S Editor Christopher Lockwood over a long dinner at Beaver's BBQ right after he flew in from London for his multi-week trip through Texas in early May. I have to say, it's quite a challenge to try to convey the essence of Texas to an Englishman in just a couple hours. My tendency was to keep talking about Houston (of course), and I may have had an impact, as Houston gets the most mentions across the 6 articles in the section. Based on a quick pdf word count search:

• Houston 37
• Dallas 20
• Austin 15
• San Antonio 8
• Fort Worth 5

There's a lot here to get through, so moving on to excerpts from the Leader op-ed on CA vs. TX to open the issue:

Indeed, high taxes, coupled with intrusive regulation of business and greenery taken to silly extremes, have gradually strangled what was once America’s most dynamic state economy. Chief Executive magazine, to take just one example, has ranked California the very worst state to do business in for each of the past four years.

By contrast, Texas was the best state in that poll. It has coped well with the recession, with an unemployment rate two points below the national average and one of the lowest rates of housing repossession. In part this is because Texan banks, hard hit in the last property bust, did not overexpand this time. But as our special report this week explains, Texas also clearly offers a different model, based on small government. It has no state capital-gains or income tax, and a business-friendly and immigrant-tolerant attitude. It is home to more Fortune 500 companies than any other state—64 compared with California’s 51 and New York’s 56. And as happens to fashionable places, some erstwhile weaknesses now seem strengths (flat, ugly countryside makes it easier for Dallas-Fort Worth to expand than mountain-and-sea-locked LA), while old conservative stereotypes are being questioned: two leading contenders to be Houston’s next mayor are a black man and a white lesbian. Texas also gets on better with Mexico than California does.

It also gets into some of our weaknesses: primary education, health care for the poor, and Tier 1 research universities - also repeated in the special report. The good news is that the Tier 1 problem got addressed in the last legislature, Obama is tackling health care at a federal level (where it belongs), and they have an article on the education solution: a profile of the KIPP and YES charter schools that started in Houston, and have a 90+% success rate getting poor and disadvantaged students into college. Why aren't we just handing over the failing urban schools to these guys?

My favorite excerpt from the report:

Housing repossessions are still very rare; the state budget is still in surplus even as California and New York teeter on the edge of bankruptcy. Unlike those fellow states with large populations, Texas levies no personal income tax, and with almost unlimited space on which to build, its houses are big and affordable.

All this has brought people flooding in and made Texas America’s fastest-growing state. Net domestic inflows have been running at around 150,000 people in recent years, whereas California and New York have seen net outflows. Next year’s national census is expected to show that flourishing Houston has replaced struggling Chicago as America’s third city (an unfortunate error by TE, as we are expected pass the Philadelphia metro in 2010, but it could be decades before we pass Chicago as either a city or metro - see here). Of the ten largest cities in America, three are in Texas.

Those three, Houston, Dallas and San Antonio, together with the state capital, Austin, and Fort Worth, make up what the boosters call the Texaplex: a densely packed triangle, with each side measuring about 300 miles, that is home to roughly 80% of the state’s population of 24m (second only to California’s 37m). This “Texas triangle”, containing America’s third-largest airport (Dallas-Fort Worth) and its second-busiest port (Houston, despite being 50 miles inland), has emerged as one of the most dynamic regions in all of America.

Joel Kotkin, an urbanologist based in California, recently compiled a list for Forbes magazine of the best cities for job creation over the past decade. Among those with more than 450,000 jobs, the top five spots went to the five main Texaplex cities—and the winner of the small-cities category was Odessa, Texas. A study by the Brookings Institution in June came up with very similar results. Mr Kotkin particularly admires Houston, which he calls a perfect example of an “opportunity city”—a place with lots of jobs, lots of cheap housing and a welcoming attitude to newcomers.

He is certainly right about the last point: not too many other cities could have absorbed 100,000 refugees, bigheartedly and fairly painlessly, as Houston did after Hurricane Katrina struck New Orleans. With vibrant Asian communities alongside its balanced Hispanic, white and black mix, with no discernible racial tensions, and with more foreign consulates than any American city except New York and Los Angeles, Houston is arguably America’s most enthusiastically cosmopolitan city, a place where the future has already arrived.

Pretty nice. Moving on:

...Texas’s biggest advantage: its sheer size. Larger in area than any country in the European Union and than any American state bar Alaska, Texas has huge amounts of space into which its cities can expand. This has allowed Houston to sprawl over some 600 square miles; it is probably the most spread-out big city in America and has no zoning restrictions, allowing the market to determine the best balance between retail, commercial and residential uses.

California is constrained by its mountains and the ocean, to say nothing of the demands of environmentalists keen to preserve its remarkable natural beauty. Texas, says Michael Lind, a fifth-generation Texan who writes about demography, identity, history and much else, “is flat and ugly. The Sierra Club is not going to kick up a fuss if Houston or Dallas keeps on growing.” He is being a little harsh; most of central Texas is perfectly nice-looking grassland. But there certainly is a lot of it. (some of that droll Economist humor)

I'm going to take an issue with "the most spread-out big city in America", as this table shows that 4 of the 10 largest cities in America have lower densities than we do. And if you look at metro areas, Atlanta (among others) is substantially less dense and more sprawling than we are.

Wrapping up with the special report conclusion:

Don't mess with Texas

So Texas has a huge challenge to cope with. But it seems wrong to end on a pessimistic note. Texans above all are optimists, and few of them seem to doubt that Mexico’s proximity is a huge long-term source of strength for the Lone Star state. That optimism, rooted in a profound sense of local pride that can sometimes jar with outsiders, is Texas’s dominant characteristic.

It is the reason why the wildcatter, the independent oilman whose test drillings might come up dry 20 times before gushing in the end, is an enduring Texas symbol. And it explains why risk-taking is admired and failure no disgrace. Most of the Enron executives who lost their jobs when the firm went bust in 2001 quickly found new ones. The company’s offices in Houston were swiftly re-let. Enron Field baseball stadium became Minute Maid Park. “Don’t mess with Texas” was once a slogan for a wildly successful anti-litter campaign. It is now the state’s unofficial motto.

To visit America in the midst of the worst recession for decades can be a disheartening experience, but a tour of Texas is quite the reverse. Since suffering that big shock in the 1980s, it has become a well-diversified, fiscally sensible state; one where the great racial realignment that will affect all of America is already far advanced; and one whose politics is gradually finding the centre. It welcomes and assimilates all new arrivals. No wonder so many people are making a beeline for it.

Labels: density, economic strategy, economy, education, growth, headquarters, opportunity urbanism, perspectives, port, rankings, sprawl

posted by Tory Gattis @ 4:49 PM