Will Texas really replace California?

Will Texas really replace California?
Source: Brian Snyder, Reuters
Texas’ major appeal to both individuals and corporations is its regulations, or more accurately, its lack of regulations.

The Texas-California rivalry is a long-standing one. The two biggest states in the continental United States have become havens for entirely different political philosophies, with California shaping the very core of peace-and-love liberalism while Texas is seen as an oasis for deregulation conservatives.

But in recent years, Texas has gained traction as a popular place for Californians to relocate to.

Since 2010, nearly 700,000 Californians have made the move to Texas seeking an idealized future there. The move seems to be, according to Texas Governor Greg Abbott, a sort of political self-sorting of Americans, with those moving to Texas being more conservative than those already there.

Polling data from 2018 reinforced this, showing that native born Texans had voted for Democrat Beto O’Rourke for Senate, while those from out-of-state had voted for the incumbent, Ted Cruz.

California exodus?

Among the immigrants from California to the Lone Star State have been a number of high-status business leaders and celebrities.

Last August UFC commentator and celebrity podcaster Joe Rogan announced his move to Texas, saying that he moved there in search of “a little bit more freedom.” December saw a move by Tesla’s chief executive officer Elon Musk, who cited overregulation and complacency as his reasons for the move.

With the mass migration of people, the tide also seems to be shifting as companies move their headquarters from California to Texas. The tech giant Oracle Corporation, the hardware company Hewlett Packard Enterprise and even the financial services corporation Charles Schwab Corporation have all recently announced that they would be moving their central operations out of California and setting them up in Texas.

Texas’ major appeal to both individuals and corporations is its regulations, or more accurately, its lack of regulations.

When compared to California with its deeply cut regulatory standards and high tax rates, Texas can come across as a low-regulation utopia for wealthy individuals and large companies, with its crown jewel being the absence of any state income tax. That’s all on top of the low cost of living and low property costs that Texas provides its residents, while California has the fourth-highest cost of living in the US behind Hawaii, Washington DC and New York.

“Don’t California My Texas!”

But not all Texans are interested in the mass exodus from California – in fact, many are opposed to it. Texas GOP chairman Allen West, who moved to Texas from Florida in 2014, urged Texas conservatives to give a strong, “Go back to where you came from,” to Californians who were out of touch with Texan values.

The anxiety for many, though, is the fear of Texas becoming as highly regulated and expensive as California is, a fear that Governor Abbot played up in his 2018 gubernatorial campaign when he used the slogan “Don’t California My Texas.”

Texans fear becoming the failure they perceive California to be, but that image isn’t entirely justified.

California is far from a failed state. California’s GDP is US$3.1 trillion, making it the world’s fifth biggest economy when ranked as an independent nation, placing it behind Germany and before India. Its high real estate cost is so high because of how many people want to live there, not because of overabundant regulation.

As Texas Monthly writer Christopher Hooks put it, “Calling California a failed state is a bit like saying of a restaurant, as the philosopher Yogi Berra once did, that nobody goes there anymore because it’s too crowded.”

So then, the real fear might not be from Texans themselves, but from the politicians that represent them. State and local politicians don’t know how the changing demographics of Texas will affect them and, despite Governor Abbot’s theory that the incoming Californians are more conservative than the average Texan, the state is beginning to see some of the problems that states like California and New York have faced previously.

As the population of the state rises, so does the cost of real estate. Rent has gone up significantly over time. From 2010 to 2020, median rent in Houston went up 34%, it went up 45% in metro Austin and Dallas saw it rise 49%. The result is a growing gap between those who moved from California, for whom the cost of living in Texas is relatively low, and the born-and-raised Texans who have been forced to accommodate the rising costs.

But even as prices rise in Texas, they haven’t yet begun to fall in California, something that will, according to some, signal the downfall of the state.

“You will know that California has truly crossed a line when home prices start falling,” Christopher Thornberg, a Beacon Economics founding partner, told The New York Times. “There is more demand to live in California than to not live in California.”

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