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Joel Kotkin
The Third Coast « Back to Story

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marketing products December 09, 2012 at 2:46 AM
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Regulations on business, construction, and resource exploration/extraction certainly affect the economies of states, but I suspect that a lucky (i.e. not controlled by politics or ideology) combination of ideal climates, natural resources, and geographical advantages have had far more of an effect on the South's rise than any strict "business friendly" ideology.

Plenty of northern states - Michigan, Indiana, Ohio, Wisconsin, New Hampshire, Maine - are reasonably "business friendly" too (their Republican politicians certainly advertise them as so) and they've either continued to stagnate or seen very mild growth (at least when compared to the Sunbelt) because they have lousy climates (awful winters), fewer resources (at least in terms of oil, coal, and gas), and fewer geographic advantages (as good access to export markets and southern hemisphere shipping lanes as the southern states have). Before WWII industry only clustered up north because it had to: the South's slave-based (and later sharecropping-based) economy was not conducive to industrialization (which is why their cotton was sent to New England mills to be processed), there was little access to the skilled labor that the northern vocational schools and universities produced in spades (slavery and sharecropping also discouraged immigration, which only reinforced the rapid industrialization of northern cities), and a lack of AC made the southern climate far less tolerable for snowbirds, retirees, and transplants than it is today. The gradual, century-long reversal of these historic shortcomings has had far more of an effect on the Sunbelt's growth than any contemporary "business friendly" ideology of the last few decades. Consider:

(1) A "business friendly" climate did not prevent the paper mill industry from collapsing in New Hampshire and Maine. In fact, whatever prosperity that Southern NH and SW Maine have is largely thanks to high-reg Boston's bio/tech/medical/university prowess. Libertarian New Hampshirites like to dump on "Taxachusetts" and "Massholes," for example, but they don't realize that NH would probably be a lot like Appalachia (as northern NH and Maine - out of the reach of Boston - still are) if Mass wasn't there. "Business friendly" Manchester NH, for example, enjoys its relative prosperity by poaching business from Boston rather than by generating any new ideas itself; this is largely true in much of the South too, which is dependent on poaching businesses and ideas developed elsewhere rather than on creating its own, save for exceptions like Texas (discussed in this article) and NC's Research Triangle Park area. What happens if the distant "idea generator metros" that large parts of the South depend on wither and die? Will places like Alabama, Kentucky, and Tennessee be able to create their own new industries or will they still be dependent on waiting around for other places to develop them before trying to poach them?

2) Before the discovery and extraction of shale oil and gas, the Dakotas and the northern Midwest in general were losing population and "brains" for generations. They have awful winters too. A "business friendly" approach didn't propel those states into their current booms, because they had already been "business friendly" long before the energy boom with little consequent economic development. Energy deposits are solely responsible for their current prosperity, but what happens after those resources are eventually depleted someday? Will these places just revert to being depressed backwaters? You can't bank on being an extraction colony forever.

(3) As discussed in another article in the most recent CJ, California, despite being an over-regulated hellhole, is still an industrial and agricultural powerhouse. Superb climate, excellent natural resources, a ready supply of cheap Mexican labor (which Texas enjoys too), and fortuitous geographical advantages (access to Asian markets and a dominant role in serving as the US' "conveyor belt" freight rail and truck system for distributing cheap Asian goods to Midwestern and Eastern markets) have enabled California to prosper despite its absurd regulations and wacky politicians.

If only things were as simple as 'business friendly states led by Republicans = prosperity' and 'regulation and tax-laden states led by Democrats = stagnation' paradigm commonly espoused in these CJ articles and comments. But it's not that simple: location, natural resources, and climate play a more important role than ephemeral regulations and taxation policies (even though I definitely agree with the general CJ premise that a lighter touch is usually better), and history shows us that locational advantages change over time and resource deposits don't last forever:
http://www.zompist.com/jacobs.html
What a fantastic LONG article!

If the area can keep out craven, parasitic Democrats, and the feds lay off, maybe this will continue.

Or maybe the people here will decide that maybe the area is better of on its own -
yes it is coming to that - Texas has a very lively independence movement.

Here's a prediction: unless someone finds a way to rein in Washington this is an issue you will hear more and more about in the next few years.
I've lived in Houston for 10.5 years now (I jokingly tell people 11 summers as I count those that I've endured moreso than mere calendar years). In that time, I've really come to love living here but for reasons I continue to find it hard to explain to someone asking. I'm from WI originally, have lived in 6 states and this is now home.

Besides the cost of living being fabulous, it's a favorable taxation and regulatory environment. While there are so many expats or adoptive Texans here, there is still a very tangible sense of place here: it's TEXAS. We get things done. People are nice. It combines the best of a big city (theater, arts, museums, sports, etc) and a smaller town feel culturally and attitudinally.

One of the very critical things that wasn't touched upon in the article, however, was the lack of zoning laws in Houston. Once considered a weakness and fatal flaw, it has, over time, allowed a natural equilibrium to develop that has been a boon for business. there's a LOT to be said about this and more erudite heads can certainly elaborate on it.

I'm not a big Houston cheerleader, but have come to enjoy this place even in despite of the climate. As long as there continues to be some clear expectation for newcomers about what it means to be a Houstonian (and a Texan) in order to preserve the attitude, culture and approach to business, society and live, this place will continue to grow and prosper.

The New South cities (I-20 corridor plus Nashville, the Carolinas, etc) represent the future. Houston represents the future more than Chicago. The FL Gulf Coast represents the future more than much of the Rust Belt. Welcome to the future. See what liberalism hath wrought.
Hallelujah! I always knew it was coming! The South's gonna rise again!
Tortuga, amusing comments and as a Californian who was once bitten by fire ants during a stay in San Antonio I’d have to agree with you. San Franciscans and Angelinos wouldn’t like Texas anyway, the Lone Star folks keep their state's taxes low for some bizarre reason.

According to a story in today’s Los Angeles Times, left coast millionaires don’t mind California’s high taxes, which will soar even higher after this election – in fact, they actually prefer high taxes. And millionaires from points north, east and south are presently flocking to California to get in on these new higher tax burdens before this not so recent California fad lures in all those foreign millionaires.

The LA Times has been fussing and whining non-stop over California possibly earning an undeserved reputation for low taxes, a good business climate and mild regulatory burdens - and perhaps losing our millionaires to other states like Texas. But, according to a recent university study sponsored by a California politician, there’s nothing to worry about in that regard. Our millionaires aren’t as smart about their money as the wealthy among the other states, they’re staying put come whatever their new tax brackets may bring. And perhaps you Texans should be grateful for that minor blessing, a passel of millionaire Californians moving in Y’alls direction could be worse than finding your bed infested with an army of fire ants.
Go South, Young man!
We've got property for sale in Louisiana, if you're interested!

Another great article by City Journal....my favorite to share.
You could be talking about Michigan....except for the fire ants, but the pols make up for them by biting the public with taxes every chance they can...and crazy governors like Gandholm...she was not out of character at the convention....but then we have ice starms and blizzards too.
You California and Yankee folks thinking on moving to Texas. Wait a minute,there are some bad issues in the state of Texas: we have tornadoes every spring and hail storms a lot of spring and summers, it’s a red state, with conservatives everywhere except in the state capitol which has more than enough unrepentant democrats lurking in the shadows, there are black widows, tarantulas, brown recluse spiders, rattlesnakes, scorpions, ticks, chiggers, mosquitoes with WEST NILE virus,fire ants, we have the death penalty for killers, pickups that have full gun racks, it’s a right to work state with very low unemployment benefits, the Federal Govt is always suing us because we believe in the Constitution, we pay property taxes so you never “own” your home and sales taxes, it’s hot in the summer, it takes 10 hours to drive across the whole state, north to south or east to west, our legislature only threatens us every 2 years whether it’s Dumblicans or Republicrats; So, help me out here fellow Texicans, it’s getting crowded on the morning commutes.
Interesting that the most Democrat, political machine controlled areas and the centers of the welfare state are the most poor and violent.