What California and Texas Have in Common - Bloomberg View

What California and Texas Have in Common - Bloomberg View

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What is the California-Texas secret? Well, most obviously, it's that, as economic activity in the U.S. has become increasingly concentrated in a few big, vibrant metropolitan areas, they are both states with big, vibrant metropolitan areas. Of the 10 biggest urban agglomerations in the U.S., two (Los Angeles and San Jose-San Francisco) are in California and two (Dallas-Fort Worth and Houston) are in Texas. Each state also has two others in the top 35.

Big metropolitan areas are doing so well in large part because cramming lots of people together increases the interactions that fuel innovation and growth. The impact is especially big if these people bumping into one another are highly skilled. Educational attainment is a useful if imperfect proxy for skill, and among the nation's metropolitan areas with 1 million people or more, San Jose and San Francisco score No. 2 and No. 3 for the percentage of the adult population with at least a four-year college degree, while Austin, Texas, is in sixth place. Houston, Dallas and Los Angeles are in the middle of the pack, but they're all so big as to allow for major concentrations of talent in certain industries (energy in Houston, entertainment in Los Angeles) that in turn attract more talent....

... In past decades, private- and public-sector leaders in both California and Texas made big investments in their states' futures that have paid off richly. As a result of investments in higher education, for example, California and Texas lead the nation in the number of institutions on the brand-new ShanghaiRanking 2016 list of the world's top research universities:...

...In recent years, both California and Texas seem to have pulled back on that investment, at least on the public level. In California this is mainly because the state has loaded itself up with too many obligations to the past (pensions) and present (health care). In Texas the issue appears to be more ideological -- the state's Republican majority really, really wants to keep taxes and spending low.