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

The 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.

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.