Red vs. Blue Battle Continues, as Money Flows From California to Texas

Red and blueNiccolò Caranti / Foter.com / CC BY-NCThe Washington Post continues the recently popular sport of contrasting Texas and California political styles and attitudes toward the size of the state, and then posing the federalism-defying question: Which is the better model for America's future? (Cue ominous music in the background.) Strictly speaking, there should be room in the United States for a variety of policy experiments, so long as basic liberties are respected. People can then vote with their money and their feet. And, in fact, as the article and data from elsewhere indicate, Americans have favored Texas with their votes for many years.

From Dan Balz at the Washington Post:

Perry ran for president in 2012 championing Texas as an economic model for the nation, pointing to the tax and regulatory structure of the Lone Star State as the engine that had helped produce more new jobs in the post-recession America than any other state. His campaign faltered, but that did little to dim the story of “Texas rising.”

“California declining” was the narrative Brown inherited when he returned to Sacramento in January 2011. The Golden State, once the envy of the nation, was beset with problems, including high unemployment, persistent budgetary imbalances and political dysfunction in the state capital. Today, with the state’s fiscal situation stabilized, Brown is described as the Democrat who is giving the country a new model of progressive governance.

Perry continues to promote the contrasting narratives. “These are big, powerful economic states,” he said in a recent interview. “Twenty years ago, California was considered to be the absolute economic center of America. You pointed to California and said, ‘Gee, wouldn’t you like to be like them?’ And I would suggest that’s not the case, and I will suggest to you that’s because of the burdensome tax environment, a regulatory climate that is very unpredictable and unstable and public schools that are continuing on a downward trajectory.”

Brown and his advisers find the Texas-vs.-California story tiresome. “Shakespeare said comparisons are odious,” Brown quipped in a recent telephone interview. “Another version was that they’re odorous.”

He was quick to counter Perry’s claim that Texas should be the nation’s model. Yes, he said, if you want to build something, you can do it faster in Texas than in California, where there are more regulations and governmental red tape. “That’s true,” he said, but he added, “Would you rather live in Houston or Santa Barbara, or maybe Santa Monica or San Francisco?”

There's a reason Brown and company find the comparison "tiresome." That is, more people seem to prefer the Texas model over the California model. That's despite the real advantages that California historically has held as a refuge for people looking for open minds and social elbow room. Stephen Levy, director of the Center for the Continuing Study of the California Economy, insists, “If you look at the areas that are the most tolerant — the Bay area and Hollywood — you find the highest clusters of creativity and innovation.” That's long been true, but it's probably not enough in an era when Texas and California aren't as far apart on the tolerance issue as they were in the past (a plurality of Texans now support gay marriage).

And, in fact, the Post points to Census Bureau figures showing that, last year, "63,000 people moved from California to Texas, while 43,000 in Texas moved to California."

Just as important, money moved, too. Travis H. Brown, author of How Money Walks, points to IRS figures that track the flow of wealth from some states and to others. From 1992 -2010, California was a net loser of $45.27 billion in adjusted gross income. $6.02 billion of that went to Texas. Texas, on the other hand, gained $24.94 billion in AGI during those years, with California the top source for transfers.

How Money WalksHow Money Walks/Travis H. Brown

Reason's Matt Welch chatted with Travis Brown last summer to discuss the things that inspire people to move themselves, their businesses, and their money from one place to another, no matter what pundits think they should be doing. The video is below.

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  • Brett L||

    Ah yes, the tolerant Bay Area where you aren't allowed to smoke or have wood fires in your own home. At least Hollywood is still nakedly capitalist and you can be a statutory rapist or open racist as long as you apologize and continue to make money for the studios.

  • Pulseguy||

    You can't wash your car in Carlsbad unless your yard is lower than the road. If your driveway slopes down to the road you are fined.

  • Brian D||

    You see a similar effect in all the people from MA moving to NH.

  • EDG reppin' LBC||

    ... but it's probably not enough in an era when Texas and California aren't as far apart on the tolerance issue as they were in the past (a plurality of Texans now support gay marriage).

    Gays can get married! I'm pretty sick of this issue being the barometer for how tolerant people/governments/society is. Sarcasmic will be by shortly to explain why.

  • Fist of Etiquette||

    I'm right there with you on lack of same-sex marriage recognition not equaling a same-sex marriage ban, but Texas did fight a Supreme Court case to continue to actually criminalize sodomy.

  • Winston||

    Seriously are there only 3 issues that Reason considers to be evidence of "tolerance"? It's not like society is more tolerant of drunk driving or smoking.

  • EDG reppin' LBC||

    Yep, America is more tolerant because abortion, weed, and gay marriage.

    Of course, I have to smoke on the sidewalk like a hobo. I have to show ID to buy Sudafed, like a criminal. I can't criticize the President or the government, or I'm racist.

  • Bill Dalasio||

    But, that only reinforces the article's point, doesn't it? It says to me that the areas where California had an advantage are eroding while the areas Texas might have had an advantage are expanding.

  • OldMexican||

    Re: EDG reppin' LBC,

    Gays can get married! I'm pretty sick of this issue being the barometer for how tolerant people/governments/society is.


    Well, it has been the litmus test for universal tolerance according to the cosmotorians, especially those in The Independents. If you can't stand seeing Cameron and Mitch kiss on screen, you might be a redneck too!

  • Cytotoxic||

    Sarcasmic will be by shortly to explain why. engage in sophistry and angry bullshitting.

  • ||

    I am pretty sure a person who says he/she is a christian will be far more tolerated in Austin then in San Fran.

  • OldMexican||

    Yes, he [governor Brown] said, if you want to build something, you can do it faster in Texas than in California, where there are more regulations and governmental red tape. "That’s true," he said, but he added, "Would you rather live in Houston or Santa Barbara, or maybe Santa Monica or San Francisco?"


    The above is the kind of question posited by those idiots you find around the water cooler, for instance: Who would you rather fuck, your wife or Angelina Jolie?

    The response from governor Brown is idiotic, because it is clear that people HAVE MADE their preferences known by MOVING from San Francisco or Santa Monica to Houston or Dallas. The evidence is right in front of you.

  • ||

    Not only is it absurd for that reason, but I don't even know what it's supposed to mean. Is Houston some kind of shithole on the lines of Detroit and somehow I didn't know it? It's not cold or something in Texas, and they have coastlines, so I don't even know what CA thinks they have on them that way. It amounts to absolutely nothing more than assuming your interlocutor already just likes California better.

  • wwhorton||

    On the east coast it seems like NYC is that way. I'm from the DC area, and have never had the slightest desire to even visit NYC. Apparently that's shocking and nigh-reprehensible, because New York has museums, and bars, and..and...it's just so cool. All I see is an overcrowded, overpriced nanny-citystate filled with pretentious hipsters that's in love with its own legend. Apologies to any NYC residents--I'm sure *you're* ok.

  • Spoonman.||

    Houston has a pretty unpleasant climate, but until the recent house price explosion it was an awesome place to make money. It's still better than California, I'm sure.

  • Spoonman.||

    Added bonus: Houston has no zoning.

  • Brett L||

    Can't build a new adult business within 1000 feet of a school. That's when it all went to shit.

  • prolefeed||

    It's not cold or something in Texas

    For some values of "not cold" -- lately the nighttime lows here in Austin have been around freezing. And the summers here are really hot.

    CA has better weather along the coasts, but I used to live in SF, and then I voted with my feet and moved to Texas because the CA govt is crazy stupid.

  • OldMexican||

    Re: Nikki just says no,

    It amounts to absolutely nothing more than assuming your interlocutor already just likes California better.


    Or another way of calling "stupid" or "crazy" those that chose the better economic conditions of Texas.

    Either way, his question is stupid.

  • Bill Dalasio||

    I'll add that the things he's trying to call to mind - better climate, better scenery - have nothing whatsoever to do with the state's political choices.

  • Live Free or Diet||

    Is Houston some kind of shithole on the lines of Detroit and somehow I didn't know it?

    I know people who certainly think so. "No zoning there!" (Gasp!)
    I've spent a good amount of time in and around Houston and it would not break my heart to live near there. Living anywhere around San Francisco or Santa Monica would be strictly a desperation move for me.

  • ||

    If I were to eat myself would I become twice as big or disappear completely?

  • Live Free or Diet||

    You would become indigestion.

  • Pro Libertate||

    Good for Texas. Thank God we have at least one big state that isn't totally in love with fascism/socialism.

  • Fist of Etiquette||

    Today, with the state’s fiscal situation stabilized, Brown is described as the Democrat who is giving the country a new model of progressive governance.

    Commence the turd shining.

  • Specail Sauce||

    "Stabilized fiscal situation" is nothing more than a semi-successful attempt to delay the pain. Get back to me when California is faced with a 30% increase in energy rates (due to renewable energy subsidies), the coming pension meltdown, the burst of the student loan bubble, and the fiscal impact of Medicaid expansion. I give it five years tops before the proverbial can is kicked right back in the face of California.

  • Bill Dalasio||

    Well, that and a reprieve from the asset price meltdown from QE-permanent.

  • AdamJ||

    Well since they've made it impossible for the poor to live in Santa Monica and San Francisco, I'd imagine the rich might like to live there instead of Houston. But maybe the rich can make and keep more of their money in Houston. Hey, Dwight Howard just chose Houston over LA, right?

  • prolefeed||

    But maybe the rich can make and keep more of their money in Houston.

    No question about the "keep" part, with double digit top marginal state income tax rates in CA, and 0% in TX.

  • Sugarsail||

    and a 9.5% sales tax in Santa Monica

  • NoVAHockey||

    I saw this in the paper yesterday. the really good quote from Brown was: "California has been able to make progress after many years of stalemate in Sacramento because Democrats have the power to act, Brown said. But he also pointed to a downside of unified Democratic power — an almost limitless appetite by legislators to keep spending. “If I took my foot off the brake, we’d be back in the red within six months,” he said.

    okay then.

  • Mercutio||

    "California has been able to make progress after many years of stalemate in Sacramento because Democrats have the power to act, Brown said. But he also pointed to a downside of unified Democratic power — an almost limitless appetite by legislators to keep spending. “If I took my foot off the brake, we’d be back in the red within six months,” he said.

    But at least they're Doing Something, unlike those obstructionist Teathuglicans!
    /proggie

  • Red Rocks Rockin||

    “If I took my foot off the brake, we’d be back in the red within six months,” he said.

    Pretty much tells you all you need to know right there. Dems are playing nice with Brown because of his rep, but I can see the state party pushing some weak, compliant candidate when he leaves office just so they can turn the spigot on again.

    I've actually seen people say that California rejected austerity and that's why their economy's recovering. Bullshit--Brown raised taxes AND cut spending, which is pretty much the definition of a state austerity program, and that's why he said what he did above.

  • Richard Rider||

    CA never got OUT of the red. It's a fiction. To make it work, the state makes unrealistic, rosy projections while largely ignoring huge state and local unfunded liabilities.

  • Ken Shultz||

    "From 1992 - 2010, California was a net loser of $45.27 billion in adjusted gross income."

    Within that time frame, you're not even talking about the housing bust. I mean, you've included both the bubble and the bust, and you've included the rise of silicon valley and biotech beach.

    You don't lose a net $45 billion by accident. You've gotta try real hard to lose $45 billion.

  • AlbertP||

    I have been living in CA for about 55 years, though up here we like to prefer to our area as the State of Jefferson. California has been trying, very hard, to do many things. Mostly bad things. And, they are pretty good at doing it :)

  • jester||

    Coastal California has a huge aesthetic advantage for a vast majority of people over coastal Houston (bayous, really) and the landlocked metropolises of inland Texas. It has the blue Pacific next door and the beautiful Sierras two to three hours away. The fact that people move away from such an ideal setting, trading it for the milk chocolate waters of the Upper Texas Coast says a lot.

  • Brett L||

    Mmm, mmm. Give me Pasadena Beach and the Ship Channel any day, brother.

  • R C Dean||

    Yeah, if you actually want to get into the water, instead of just look at it, the Gulf Coast has a pretty significant advantage.

  • Live Free or Diet||

    What, 10 steps from the beach in CA and you're submerged?
    Sometimes I can walk out a couple hundred yards where I am in VA. I recall the Gulf waters resembling VA a lot more than CA.

  • Mike M.||

    Coastal California is an awesome place to live... if you're either one of those evil "one percenters", or a hobo determined to survive without actually working.

    But if you're one of those members of the broad middle class trying to make an honest living and perhaps move up in the world, the quality of life (other than the weather) is a nightmare.

  • Brandybuck||

    An inland city like Fresno is still only two hours away from the coast and one hour from the high Sierras. It's the area where I grew up. But in terms of jobs San Antonio is still your better bet.

  • LifeStrategies||

    Yes the California scenery is very beautiful. Shame their politicians have made it such an unpleasant place to live that so many people are chosing to move away...

    Competition between the States is working fine, and eventually Brown and his advisers will realize you can't fool all of the people all of the time.

  • MiloMinderbinder||

    I still don't understand how when the Feds are running deficits of hundreds of billions year in and year out, how any state doesn't get back more in spending than it paid in taxes.

  • Mike M.||

  • Agammamon||

    So, how long before CA's state franchise tax board institutes an exit tax for those changing their state of residence?

  • Brandybuck||

    “Would you rather live in Houston or Santa Barbara, or maybe Santa Monica or San Francisco?”


    Bad comparisons. How about...
    Los Angeles versus Houston? (The two biggest cities) L.A. for the win!
    Berkeley versus Austin? (The most progressive cities) Austin for the win!
    Bakersfield verus San Antonio? (The most conservative cities) San Antonio for the win!

    To be fair, California has a LOT going for it that's not at all politics related. It's what keeps most Californians here. But the politics sucks worse than even the Texas politics.

  • Brandybuck||

    Hmmmm, I meant Houston for the win. I would rather live in Houston than L.A. Damned server squirrels are hiding the edit button.

  • Response||

    Uhg! I hate California politics - and I would move (to Texas or Florida), but my wife has always lived here. But even she sees that we won't be able to afford to live here forever - we own our own home, but have substantially lower income than our neighbors.

    As the saying goes here in California... It's sunny and 70 degrees - that's your tax dollars at work.

    It pisses me off to no end that Gov Brown is abusing his constituents because California has naturally nice weather. Once a major earthquake comes, California will lose that luster and Brown will simply pooh-pooh all those that leave. Of course he will have to raise taxes to keep the money flowing.

    Instead of the normal progressive plea of "do it for the children", Brown will try "do it for the weather".

  • Sugarsail||

    Yeah, if Moonbeam has to rely on the "but the weather is nicer in California" argument as a retort to bad government policies, he's pretty much admitted failure right there.

  • RishJoMo||

    That would DEFINITELY be an American Spiderman!

    www.BeinAnon.tk

  • Richard Rider||

    According to recent U.S. census figures, the 2009 median household income in California is significantly higher than Texas.
    CA -- $58,931
    TX -- $48,259 -- 18.1% less than CA

    But, ADJUSTED FOR THE COST OF LIVING, the Texas median household income is significantly higher than California.
    TX -- $53,009
    CA -- $44,456 -- 16.1% less than TX
    http://en.wikipedia.org/wiki/H.....ian_income

  • Richard Rider||

    This is indeed a superb Bill Whittle video -- comparing his experience in Texas vs. California. He really is a delight to watch, and makes solid points. He's more conservative than libertarian, but I'm forgiving when watching his wonderful videos.
    http://tinyurl.com/kh6dg75

  • Bill Dalasio||

    Whittle is one of those conservatives (I'm probably one myself) creeping in logic and examination of first principles in fits and starts toward libertarianism. On a basic level, he gets it. He's built up a score of "yeah buts" that I've seen slip away in his videos as he arrives at the fact that, to really be a good conservative, libertarianism is the only real answer.

  • Eric||

    TX is like a third world country sucking the industry from more advanced countries due to their cheap labor, lack of environmental policy, and willingness to give huge compensatory breaks to companies looking to relocate. The only downside...you have to move to Texas* and be surrounded by Texans*

    *perfunctory Austin exclusion inserted here...and here

  • Richard Rider||

    Eric, these are typical talking points from MSNBC. Like MSNBC, you are clueless.

    What do you think the actual DIFFERENCE is in wages in TX vs the other states? Do you know?

    Of course not. You trust MSNBC et al -- regurgitating whatever you hear there.

    Facts are such troubling things. You'd have to -- ya know -- USE The Internet and find stuff out.

    Took me 3 minutes to debunk your nonsense.

    FACTS:
    National median wage: $16.71
    TX median wage: $15.55

    CONCLUSION: TX wages are 93% of the national average. A number of states have lower wages than Texas.
    http://www.bls.gov/oes/current/oes_nat.htm
    and
    http://www.bls.gov/oes/current/oessrcst.htm

    3rd world wages? Really?

    And see my previous post comparing the differences in the COL of TX vs. CA.

    BTW, I must admit, I didn't know that -- in MSNBC's virtual reality world -- OSHA, the EPA and the many other federal agencies don't have jurisdiction over Texas. Good to know.

    The economic incentives Texas offers to get companies is not the PRIMARY reason companies move there. IT's a pittance compared to the other positive factors. While these incentives arguably constitute bad policy, many states offer similar incentives -- belatedly including California.

  • Live Free or Diet||

    All you have to do is know that the poorest State in the union is still among the One Percenters of the world to know he's full of shit.

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