California and Texas
The mother ship has a big feature on Texas this week, kicked off with a Leader on the changing fortunes of Texas and California. While there are lots of interesting things in the overview, I’m not particularly fond of the Leader, which works way too hard to squeeze the states’ diverging fortunes into a small government good/big government bad framework that leaves out all the interesting parts of the story. It’s incredibly hard to explain California’s success, for example, without referring to: 1) its significant geographical advantages, and 2) the role of government in building a world-beating technology economy based on top-notch state universities, government grants, and billions in defense spending.
It’s also remarkable how little housing and climate feature. The most damaging regulations in California are the ones that limit housing construction in its dynamic metropolitan areas. The pieces in the paper mention the massive internal migration from California to Texas, but they don’t really explain why thousands of people would leave the natural beauty, pleasant climate, and riches of the Bay area for the heat and low relative pay of Texas — it’s the housing regs. And they don’t mention the fact that when a Californian ditches San Francisco for Houston, he seriously increases his carbon footprint.
Anyway, I think the development of Texas is fascinating, but the whole will Texas nip its growth in the bud by increasing spending like California thing is not a very complete way of examining the issue.
I do know that I have both California and Texas partisans in my audience, so you all feel free to have at it. I for one will register my view that among the more promising regional economies in the country is the one concentrated in the mid-Atlantic, from Charlotte to Washington.
July 11th, 2009 at 1:06 pm
One of the things that California has to figure out is how to do denser growth while protecting that one part of the California aesthetic that are so important: sunlight.
Californians are sunlight aficionados — especially in the Bay Area where it’s cooler, places without much sunlight are almost uninhabitable as the ambient temperature of the air never warms enough to warm the shadows. And just like the Bay Area and LA have intense microclimate — with different plant life and temperature ranges within miles of each other. (Side note, it’s Sunset magazine that figured it needed to identify this for people in the 1920s and 30s and so the invented the zoned planting maps that every gardening book now uses.)
And it’s true, I loved living in Oakland and Berkeley as I thought the sunlight was better. San Jose has a much harsher light. San Francisco is better on the East than on the West side of town.
I’ve actually heard people say about new construction: it’s very nice but they didn’t plan for sunlight well enough.
The added problem you have is that buildings under 80 feet can be built with woodframe, and generally are. And over 120 (or 130) they have to include steel framing. And of course height brings added cost because of Earthquakes.
Now don’t get me wrong, SF is specifically a great model of how you can build densely without a lot height. Tightly building things together as if it was Tokyo. There are many, many areas in parts of Berkeley and Oakland and even SF that were once industrial and are seeing smart growth and increased density. But some of those areas are also pre 1906 and filled with queen anne style woodframe houses.
So finding the kind of development that is going to work in the Bay Area and LA while maintaining it’s unique characteristics and sunlight is a process that’s maybe ten years behind the East Coast, but it is happening.
Urban limit lines have helped. Especially the Bay Area which has an enviable amount of open space — but California is going to need, and perhaps finally is tackling this issue — a statewide plan. Because generally people were just leaving the Bay Area and moving to Sacramento and Modesto — hotter, drier — and commuting back.
I guess to me then, I think California needs more regulation in terms of building and planning and even more of the super-regional perspective — they are pretty good at regional. Much better than Metro Washington.
July 11th, 2009 at 3:58 pm
I suppose Research Triangle Park does have its advantages.
July 11th, 2009 at 4:13 pm
I had mixed feelings about the comparison. Some of the assertions were kind of vague. I’m not a California partisan and I am a small government partisan, but I’m skeptical that it’s the size rather than the massive screwed-upness of CA’s structure of government that’s killing us now. Do remember, though, that a lot of California’s housing restrictions result from out-of-date proactivity against earthquakes rather than backward-looking social engineering. Other than in the the least populous quarter of the state, high-density housing has historically had a pretty high death toll.
That’s for historical context. I accept that engineering has made a lot of those restrictions obsolete and many could be changed.
July 11th, 2009 at 4:36 pm
*cough* texas consumer financial protection can’t take out a home equity loan that exceeds 80% of house value *cough*
July 11th, 2009 at 6:55 pm
So, to recap- California had great universities. But it turns out you don’t need great universities, because you can attract all the workers you want with cheap housing.
Wait- that can’t be right. Detroit and Pittsburgh have cheap housing but they’re not doing a land-office business like Houston.
Maybe this is a “leap-day” when you can say anything you want on the internets.
July 12th, 2009 at 10:09 am
Texas limits downtown housing construction like California does - maybe even more.
Houston, for example, while it doesn’t have zoning, has government-enforced protective covenants that limit density and land use. Protective covenants differ from zoning mostly in that they are undemocratic - changing them usually requires a supermajority vote and there is a property restriction on voting which would be unconstitutional in other contexts.
Houston also has minimum lot sizes and extreme parking requirements - a four bedroom apartment needs five parking spaces.
July 12th, 2009 at 10:36 am
Serial, don’t be an idiot. Go read what I’ve written about housing supply versus housing demand and stop being a troll.
July 12th, 2009 at 11:32 am
This Texan is in California right now, and I’ll quibble with the “pleasant climate” vs “heat” description. Texas is pretty damn nice nine months of the year, and everybody had blankets at the Giants game last night, in the middle of freaking July (we didn’t, and froze our asses off).
Do you have data on the carbon footprints? Somebody living in the city of San Francisco likely isn’t going to move to Katy, and someone living in Montrose and working downtown isn’t driving a hell of a lot. And while we use a lot of air conditioning in the summer, we also have virtually no heating needs.
I think the “low pay” note is also a red herring–people want to know what they can buy, not how big their salary number is. Obviously I don’t have a job offer in hand to know what my value would be in the Bay Area, but I seriously doubt that it would leave me with as much money left over as I have in Houston (so not just housing costs but goods and services, too). So it doesn’t surprise me at all (indeed, I think it explains) that droves of people are moving to Texas even with lower nominal salaries. (Besides, that’s just an area aggregate–anecdotally, I’ve heard that college-educated professionals make similar money in Texas, which would mean that the difference is among everybody else.)
To me the question about Texas is, will we make the necessary investments in a) poor kids and b) good schools. Right now we do way too little of either; some of that will mean higher taxes, but some of it just means improving what we do now–comparing the endowment sizes of the UT system vs the UC system is enough to make any Texan sick at the difference in what the systems achieve. (FWIW, we’re here visiting my sister, a grad student at Berkeley.) It’s not just UT and A&M aren’t anywhere near a Berkeley, or really even a UCLA; it’s that we only have two top research universities compared to 7+ in California.
July 12th, 2009 at 11:34 am
Addendum to clarify that “everybody else” (non college-educated professionals) is also moving from California to Texas, and I think there the lower cost of living leaves them better off despite lower nominal pay.
July 12th, 2009 at 11:49 am
An interesting datum from this weekend’s news results. Poorer Californians are leaving the state at a higher rate than richer Californians. At least a shred of evidence that it isn’t taxes driving people away.
Bottom, sorry about that. I’d have warned you. For what it’s worth, I broiled at a Dodger game a couple weeks back.
July 12th, 2009 at 12:30 pm
Bottom of the 9th, see here for data on variations in gasoline use and here for data on variations in carbon footprints.
July 12th, 2009 at 12:51 pm
Well, Ryan, I just spent about an hour reading stuff you’ve written, and hardly even found the assertion, let alone the proof, that everyone’s moving from California to Texas because housing regulations make housing more expensive. (On June 16 you called it “surely a coincidence”.)
I did find myself wondering- if 140,000 people move out, isn’t that the equivalent of building housing for 140,000 people?
What seems obvious to me is that somebody leaving California could, for cheaper housing, move to Houston, or, for order of magnitude cheaper housing, they could move to Detroit. We can see they’re not moving to Detroit, so what is the difference?
And getting the answer right could be of particular importance to people on fixed incomes who don’t actually need to work- in other words, the Boomer cohort which will soon be retiring. Do we really want the largest cohort in our history to retire to Houston because we think that not having regulations will make their housing “cheaper”?
Now, if I have missed a deeper post you’ve done, I’ll be happy to read it. Skeptically, of course.
July 12th, 2009 at 1:33 pm
The population of CA is still growing, folks, even faster than the U.S. as a whole. See the link for rates of components of population change for the year ended July 2008.
http://www.census.gov/popest/states/tables/NST-EST2008-06.xls
And we managed to build an awful-lot of $500K cracker-boxes here in the past 10 years BTW, despite those onerous housing regulations. The cost of housing in CA is due to market failure (due to a lack of regulation), NOT to regulation.
July 12th, 2009 at 6:35 pm
You’d expect an article that complains that California’s public schools have declined since the 1960s to at least mention Prop 13. I’m not saying the Economist should blame it all on Howard Jarvis, but at least putting the words “Prop 13″ together in print would make the article a lot more serious. Instead of doing that, the article decided to quote a hack like Arthur Laffer on taxes.
July 12th, 2009 at 7:55 pm
Serial, I said it was a coincidence that net migration out of California was the exact number into Texas, not that the movement itself was coincidental. Sheesh.
Start here. I must have linked to this paper and other like it twenty times.
July 13th, 2009 at 8:46 am
Unfortunately, I do not support pdf. So I will apologize for having upset you on this beautiful weekend.
July 14th, 2009 at 3:48 pm
The valid question from my point of view is still the old one: If high taxes provide good government services, will businesses simply move to where the taxes are lower?
Is there a way to cut taxes just enough to keep businesses but still provide decent government services? For eight years, the national answer has been “No.” Dramatic tax cuts have not stopped the stampede of jobs to China.
California has seen the same trend, just with different employers. Texas is a low-cost low-service state, and employers are moving there to save money on taxes. If Alaska had good weather, the migration would be northward. If employers could pay sub-minimum wages in Hawaii, the migration would be westward, no matter what the housing cost.
This was clearly evident in Key West during the housing bubble. The cheapest one bedroom apartment cost about $2000 per month, and median employee wages were about half that. Each morning, about a hundred workers came to Key West from Miami, in busses. The trip is about 150 miles each way, and it takes what seems like 150 hours.