Rise of the Nation-States

Since the Great Recession, the Texas model – built around lower taxes, less-stringent regulation and pro-business politics – has been the clearly ascendant of the two, with growth seen along a broad array of industries, including construction, manufacturing and technology, as well as energy. This economic diversity helped the state emerge from the recession far earlier than the rest of the country, recovering its 2007 jobs level by 2011. (California barely crawled into positive territory on jobs this past year.) Texas contributed 23 percent of U.S. economic growth in 2012 and 22 percent in 2011. Without Texas’ growth in this decade, the country could well still be in recession. . . California’s “boom” has come later in the cycle than Texas’, and is far more narrowly based, depending largely on the social media bubble, stock gains among its many wealthy residents and a surge in prices of high-end, coastal real estate. From October 2007 to October 2014, California gained a net 162,000 jobs; Texas in the same period added more than 1.2 million. Surprisingly, notes economist Dan Hamilton, the California tech industry has added barely 10,000 net jobs since 2007.