Tesla’s Texas Move Is Latest Sign of California Losing Tech Grip
bloomberg.com
bloomberg.com
And the big thing they're doing in Texas, the giant factory beginning to ramp in Austin, has been known for years. It's not like they were going to build a second Bay Area gigafactory...
Hotspots like California rarely stay on the very top for more than 3-4 decades. After that, a certain rot starts to set in and new players find it easier to pitch up their tent elsewhere, where NIMBYism isn't as strong, landlords are less extortionate and governments more friendly.
Now it's simply too damn expensive to live in the Bay Area, too expensive therefore to hire.
That's the cost of success and why the 3 to 4 (5 to 7?) decade trend.
Austin will become too expensive and everyone will head to North Carolina (or wherever) in a few decades....
Where I live, the regions that have less investment and fewer people fight over investments (including railways and roads), while the richer ones like Prague often find reasons why to slow down or even stop such developments.
But yeah, this awaits Texas too and 2050 will have a new champion. Perhaps North Carolina, who knows.
It's not like Texas is that much better in any of these aspects. NIMBYism is a huge problem in the Austin area, which is seeing massive increases in rents and inability to keep up with housing demand due to entrenched real estate ownership.
The rent problem extends to the commercial side as well, which has seen so many local businesses fold due to rent pressure.
And yes, the government is much more business-friendly in Texas than it is California from a financial perspective, but major failures to govern during situations like the "Winterpocalypse" this year raise serious questions about Texas' long-term business viability. Case in point: according to Texas' own energy grid operator, the state was less than 5 minutes away from total failure during the winter storm, which would have results in statewide power outages lasting on the order of months. Not days, not weeks... months. Imagine for a minute what that would have done to one of the largest economies in the country[0] had it actually happened.
0: https://www.texastribune.org/2021/02/18/texas-power-outages-...
That's a moot point in a disaster scenario where the grid is down and traffic systems and utilities are disabled, etc. Tesla can't generate its own water, and that was one utility that was knocked out for much of Texas during the storm. There's a lot more that goes into keeping a manufacturing operation like that functional than just energy self-sufficiency.
Of course they could -- in theory they could drill a well and put in their own septic system. That's probably illegal in Austin proper but the Tesla facility is sufficiently far away that it might be legal there.
But people have been predicting this kind of Downfall of California for essentially all of those four (more like five now) decades! And they were wrong every time.
So, are you correct now because you are predicting Californian Doom from proper first principles? Or are you, like all your forebears, constructing those principles to argue for the conclusion you want to see? I think simple numbers (from your own post!) give you at best a 2-3% chance of being right.
California is fine. You'll know it's lost when somewhere else is better.
California's neuralgic point is Silicon Valley. IMHO if SV corporations start moving out in larger numbers, that will be the definite indication that somewhere else is better.
It is my impression that cost of living in and around SV is absolutely crazy, even for FAANG employees.
And they're not. Ergo...
I mean, its not like they will just drop all their current engineers. That would not be smart or wise. So they will keep them, but slowly transition to remove or TX employees as either new positions are created or old people leave and new openings arise.
The whole thing feels like a narrative attempt at scapegoating versus the more direct hypothesis: you can not constrain supply to near flat in a growing region and expect things to work out, but of course this is very hard to address since current policies benefit existing property owners.
Density would be contentious anywhere; the coastal housing crisis cities are unique in that it's their only option.
Now that remote work has accelerated into the mainstream, there is zero reason to base in CA, and many reasons to go elsewhere.
Edit: also, the CA of today is very different from the one that cradled the computing industry.
It it is the higher property tax rates that cause property prices to be lower, so that the actual property tax paid is not too high compared to a low property tax rate/high property value state like California.
Effectively a lot of the money that, in California, goes to landlords or housing investors, in Texas goes to the state via taxes on land.
This is due to the superior efficiency of land taxes versus income taxes. Land taxes are "free" money that do not hurt economic activity. But property taxes cover both land and structure, so it's not the perfect tax system - however it's pretty close.
Registration is about $50 plus local surcharges, maybe another $10-$20. There is list here:
https://www.txdmv.gov/sites/default/files/body-files/FeeChar...
In terms of it funding schools, it's fungible money going into state or local coffers, so that's more of a political thing to justify the fee. Schools get some funding from the state and the rest from local government. The fungibility of money must be one of the best kept secrets in politics.
The property taxes (now climbing to about $10k/year for a decent size family home in metro area) and still kinda lower sales tax (effectively climbs to 8.25% (state set maximum, includes state + county/city)) just don’t add to to California’s income tax + property taxes.
Granted there’s much more to all of it. Texas salaries is much lower then CA.. and then you also have the polar opposite of left vs right :(
Conservatives don’t like California. Electric cars are a “liberal” thing. Except when a guy like Elon says government bad, California bad, taxes bad, I’m moving to Texas to hang out with the cool kids and then all of a sudden he’s made it acceptable culturally for conservatives to own electric cars because hey he’s a Texas guy now. Pair that with his maverick reputation and now he’s yet again accelerating EV adoption by reducing cultural barriers. It’ll be telling if Texas reverses their anti-market laws preventing Tesla from being able to sell cars in Texas. That’s the first sign.
Elon doesn’t need to win over liberals - they’re on the EV train already. But he does have to make friends with and win over conservatives.
Does he have this master plan? Doubt it. But it’ll work out this way anyway IMO.
But it’s going to be an economics choice. Electric for now (ever?) is just way cheaper.
No, the government deciding what kind of car you are allowed to drive is a liberal thing.
If there are externalities, then tax them, get the prices right, and let people decide for themselves based on those prices. As my grandmother said about speeding tickets, drive as you can afford.
But letting people decide for themselves is not a liberal thing. Hopefully still kind of a Texas thing though.
And a conservative would say "no because there's a victim involved" and they'd be right, that's what this is about: is the impacts of non-ev cars on the people around us something that we should care about, take seriously, and regulate - if conservatives think it is then they will want more rigid laws as they do for other serious infractions.
Are Republicans coming around to carbon taxes? If so that’s good and new to me.
> But letting people decide for themselves is not a liberal thing. Hopefully still kind of a Texas thing though.
Are you naive to how electric vehicles and caring about the environment have been turned into a liberal identity thing?
Also, my sense is that the whole country is experiencing unaffordable housing for many (he says while watching real estate prices in Omaha skyrocket in the past year).
@LorenaSGonzalez: F*ck Elon Musk
@elonmusk: @LorenaSGonzalez Message received
SF Chronicle: BREAKING: Tesla will move its headquarters from Palo Alto to Austin, Texas, CEO Elon Musk said at the company's annual shareholder meeting Thursday.
https://twitter.com/micsolana/status/1446248026540896262?s=2...
There is this amazing thing that happens in California, where culture and technology go to war with each other and engage in a death match that creates better technology and (sometimes, like in the 90s) better culture. This doesn’t really happen anywhere else. And if this is the end of that cycle, it’s sad for a whole lot more than the people who live in California. So, I hope it fails once again.
I wish these stories were written as they should be: “economic migrants who became rich off California decide to leave the state, try to turn it into a social movement.” For some reason that only happens when right-wing politicians want to paint non-members of a certain ethnicity as a bunch of parasites...
I was surprised though at how high property taxes are in Texas (relative to California where I have lived for some time). Also, toll roads.
It's almost like you got to pay for things somehow. ;-)
The cost of housing is so far down the ladder with regard to the Bay Area though that even with the higher property tax rates, it's still probably a money-saving move to head to Texas.
(The toll road thing is a crazy regressive tax though, IMHO.)