Houston, we have a Problem

A recent article in Time about Texas caught my eye (28^th October edition). On first reading, it gives the impression of trying to extol Texas. Now I have some biases against the place, so it was healthy to read something rowing in the other direction. I suspect many Time readers are coastal liberals like me so well done the editor for including the piece so prominently.

Now most of my impressions of Texas are negative. Just now we are swamped in the US by retrospectives about the assassination of JFK. One thing I didn’t realize was that back then Texas, and especially Dallas, was almost a country within a country, with mutual disrespect on both sides. It was quite a statement by JFK to even go there, and of course the outcome only entrenched the negative view of the place from New York or California.

Ten years ago we had Enron. Nowadays we have Ted Cruz. These are not positive role models to people like me. More, I have actually spent some time in Houston, while working for Shell, and now I have some meaningful comparison from my time in New York City. Houston does not come out well.

Once I had a spare day during a Houston trip. I read the guides, and asked many people what I should do. The response was one I had never received before. Nothing. At least nothing that would interest me. I was told I could drive to Galveston, but it had been damaged by a storm and there wasn’t much there even before that. Apparently West Texas is beautiful and has interesting features, but it would take hours and hours to drive there. The city had an art gallery, but with no current exhibition and little to recommend the core collection. Time and again, I was directed to shopping malls. Shopping malls! No thanks. In the end, I stayed in the hotel and read.

From many visits, Houston left other impressions. Sure, the people were pleasant, and more relaxed than in New York. I visited some private houses, and they were mainly sumptuous. Restaurants were great, albeit with appalling waste from ridiculous portion sizes. But mainly I remember the place as one enormous concrete shopping mall. The city sprawls over huge distances, traversable only by car, and anyone driving a regular saloon in the heavy traffic would feel intimidated by all the SUV’s. Obesity is everywhere. And, while the place is ethnically diverse, it seems much more segregated than NYC, many whites living in the gated communities and the rest serving them.

So I came to the article with certain preconceptions. In the end, I read it several times. Actually, on closer inspection, it is more of a horror story than an advertisement for the place.

The starting point is that people are moving to Texas. Three of the five fastest growing US cities are in Texas. The question is, why? Are they being pushed, or pulled?

The main pull is jobs, specifically in energy, as the US shale boom gathers pace. Now, fair is fair, the US has managed this opportunity well, and Texas especially so. Even here there is a caveat. We are quick to argue for lighter regulation. But do you remember the fatal fire at the chemical depot in Waco, Texas, earlier this year? The owners may well have been cavalier with safety, cheered on by the light regulatory environment.

The other pull elements from the article are less convincing. Essentially, the pull is that people of modest means can live more cheaply there. Taxes and duties are low, and housing costs are lower due to plentiful land. So people priced out of the market in other states can at least get by in Texas.

But at what cost? OK, the cultural void that I referred to from my own experience is not so critical. But it seems that the way Texas makes things affordable is to sacrifice other more important things, essentially anything that can be deferred. Education is underfunded and weak, so investing in one’s kids is sacrificed. Welfare is rudimentary and healthcare more expensive, so insurance against ill health or job loss is sacrificed too. The article does not mention pensions, but for sure many of the newer jobs will provide less pension benefits than unionized work in NYC, so comfort in old age must be sacrificed too.

So, as individuals and families, people move to Texas to survive today at the cost of tomorrow. And the sacrifice may be wider than for families. Infrastructure is neglected. The model seems to maximize carbon emissions. And there is another unmentioned critical commodity – water. US water usage is unsustainable, and the south and southwest are the reason. A combination of population growth in arid climates and underpricing of water stores up a monumental problem for the next generation.

So all these pull factors are perhaps really push factors. To be fair, the article acknowledges this possibility. It is not that people rush to Texas because they want to. It is because their only way to afford life today is to sacrifice everything else, and Texas is where that is most possible. In the desperate need for a job and reduced expenses right now, people sacrifice their old age, health security, kids, culture, and safety. Oh yes, all this and the planet too.

The article is clear why this is happening. The reason is inequality, specifically the hollowing out of middle-income jobs, driven by globalization and technology. I fear that this is not just cyclical. The Economist recently tracked the share of GDP taken by labour and capital. This had been essentially constant for generations, but now shows a decisive and continuing shift in favour of capital.

The article makes an attempt at the end to derive some things other states could learn from Texas. The list betrays the real problem. Top is education. This must become smarter and cheaper. This is true, but hardly an advert for Texas, a state of poor and unequal education attainment, one of only five to reject the national core curriculum. Smart education is good, but less education is not.

The second purported lesson seems to be about reducing housing costs by simplifying zoning laws. Perhaps there is some scope here, but also a lot of risk. Houston has land to spare, and sprawls further every year. NYC and San Francisco do not, and perhaps are more pleasant, and environmentally sustainable, as a result.

The other lessons are all about accepting the sacrifices. We can deregulate, and anticipate more Wacos. We can cut tax, and accept more homelessness, addiction, traffic queues, crime, early death, and much else.

So for me the article is powerful, and its real lesson is wider than its headline message. The article accepts the new reality, and shows how some states are adapting to it with a race to the bottom. But such adaptation, especially as advocated by firebrands like Mr. Cruz, does not just accept the new reality, it accelerates and embeds it.

What we must do instead is to confront this reality, and not just with platitudes about education. Fighting globalization and technology is for fools, not least because of the wonderful benefits for all of us. But structurally fighting its negative side effects is eminently possible. We can price common but finite assets like water more logically. We can remove perverse tax advantages for wealthy people and capital. We can extend pre-school education for all. We can explore a living wage. We can renew investment in infrastructure. In short, we can look to Texas, and do the opposite.