Credit: Thomas Broome for The Telegraph
The words on the board hanging from the pole simply read «Welcome Snailbrook Texas . , est. 2021.” There's only one problem: you'll have a hard time finding Snailbrook on any map of Texas. Theoretically, there is no such place.
The impromptu sign is one of the very few signs that Elon Musk is building a new city from scratch at breakneck speed and under a veil of secrecy on farmland near the city of Austin.
Over the past three years, organizations associated with various companies billionaire entrepreneur, have bought at least 3,500 acres of land in the area, about 10 times the size of Hyde Park in London or 4 times the size of Central Park in New York. York — according to a Wall Street Journal investigation.
Musk appears to be creating a metropolis on the outskirts of the Texas capital, not far from where he also builds facilities for companies including SpaceX and Boring Co, his underground public transit business.
The name «Snailbrook» Probably this is a reference to Boring's mascot, which was adopted after Musk challenged employees to develop tunneling machines that move «faster than a snail».
The new town is reminiscent of Bournville, a model community in Birmingham built by George Cadbury in 1893 to house workers in a nearby chocolate factory. Drone footage captured by locals and posted to YouTube suggests that Musk's version includes modular homes, a swimming pool, an outdoor sports court and a gym. The idea is that employees will be able to live in new homes at below market prices.
The entrepreneur, who is believed to have lived in a friend's mansion in Austin for the past two years, also appears to be planning his own apartment complex and has reportedly considered incorporating the new city into Bastrop County along the Colorado River.
According to the WSJ, this will allow it to set its own rules and speed up planning. This certainly gives new meaning to the concept of «work from home».
Elon Musk is building the new city of Snailbrook. , on the outskirts of Austin. Credit: Brandon Bell/Getty Images
This is the strongest sign to date that Texas has become the center of Musk's rapidly expanding universe. After a dispute with California authorities over Covid-related restrictions, he moved the headquarters of Tesla, his electric vehicle company, to Austin in December 2021.
At the time, he described California as a country of «over-regulation , excessive litigation and excessive taxation». Musk is also building a 10 million-square-foot Tesla plant nearby, known as Giga Texas.
Later this month, the huge new SpaceX spacecraft that Musk has designed to carry astronauts and cargo to the Moon, Mars and who knows where else will launch its first-ever orbital test flight. It launches from Boca Chica in South Texas in the Gulf of Mexico, where SpaceX has built Starbase, its first private launch pad.
Where better to reach for the stars than in the Lone Star State? Texas has fewer planning laws than California and less onerous labor and environmental regulations. It also has a large amount of undeveloped land close to major cities. Importantly, it does not charge corporate income tax, capital gains tax, and personal income tax.
Texas tax rates compared to California
Texas is booming. The key question for politicians around the world, not least for British Chancellor Jeremy Hunt, is whether this is primarily the result of luck and the state's vast oil wealth, or the result of low taxes and minimal government intervention.
< p >Hunt has stated that he wants to turn the UK into a «new Silicon Valley»; perhaps a better aspiration would be to turn this country into the new downtown Austin.
The story of two cities
The battle of the two states has been brewing for a long time. During 2013, radio listeners in California were bombarded with political ads.
There is nothing strange about this, except that this advertisement was from the governor of Texas. “Building a business is hard, but I heard that building a business in California is next to impossible. This is Texas Gov. Rick Perry, and I have a message for California businesses: Come check out Texas.”
Jerry Brown, then Governor of California, called Perry's radio campaign «barely a fart.» But whether Musk heard the ad or not, the billionaire entrepreneur definitely got it. And he was not the only one.
From 2020 to February this year, 139 companies moved their headquarters to Texas, according to YTexas, an organization that tracks corporate relocations. In the 12 months to last July, the state's population increased by half a million new residents.
A quarter of that number was from births, and a quarter came from overseas, but a good half came from other parts of the US.
Texas' gross domestic product is now over $2 trillion (£1.6 trillion) and its economy would be the ninth largest in the world if the state (again) became independent.
Dallas and Fort Worth used to be separate cities but have grown so fast that they have now merged into a single «metroplex» that is expected to overtake Chicago and become America's third largest city by the middle of the next decade.Musk said that Austin, the state capital and most liberal city that has experienced tremendous growth thanks to its own technological prosperity and the arrival of Californian expatriates, will become «the biggest prosperous city America has seen in 50 years.» «. He works hard to make his own prophecy come true.
One of the most interesting aspects of the growing rivalry between California and Texas is the similarities between the two states. First, they are among the largest in the country, both in terms of land area and population. Each shares a border with Mexico and has large immigrant communities, a long coastline, and an abundance of energy.
But politically, the two states occupy different ends of the spectrum. California is one of the bluest Democratic states where liberal values thrive; Texas is a fiercely conservative Republican stronghold that has voted for the party's nominee in every presidential election since 1980. Thus, these two states offer the closest economic control experiment you could hope to find in the wild.
Traditionally, California has held the upper hand, and Silicon Valley has become an incubator for many of the world's largest and fastest growing companies. But after years of reckless spending and unsustainable budget deficits, coupled with rising crime and astronomical real estate prices, the Golden State appears to have lost some of its luster.
Texas and California crime rates
California has been particularly hard hit by the opioid epidemic that has gripped the Americas. Fentanyl overdoses in the state have jumped 2,100% in the last five years. Parts of San Francisco have become open-air drug markets and camps for the homeless. Many residents who wonder how a city can ban plastic straws but allow plastic needles are voting with their feet.
Texas, known for «nodding donkey» style oil pumps, huge herds of cattle, and the soap opera «Dallas,» was one of the main beneficiaries of the West Coast exodus. Musk's move is simply the most notorious example.
The Lone Star State has many advantages. The unemployment rate is consistently lower than the national average. It added more jobs last year than anywhere else in the US. Indeed, between February 2020 and the end of last year, Texas accounted for more than a third of all new jobs in America.
This is an outstanding track record that conservatives regularly use as an economic model for others to copy.< /p>
As Newt Gingrich, a Republican politician and former speaker of the House of Representatives, once said, all politicians are in favor of more jobs, but “Texas legislators have also made it clear that they love work enough to love the people who create jobs.” American business reciprocated.
Low taxes, Texas 
Elon Musk is just one of many business owners moving to Austin. Photo: SUZANNE CORDEIRO/AFP via Getty Images
Last year, engineering giant Caterpillar moved its headquarters from Deerfield, Illinois, another Democratic stronghold and home to Barack Obama. home state, Dallas. Meanwhile, Chevron, the largest oil company, has reduced staff in California and increased its presence in Houston.
They both followed in the footsteps of companies such as Oracle and Hewlett-Packard, looking for a new home in cowboy country.
The influx has helped Texas recover from the pandemic-driven economic downturn much faster than other parts of the US, and has helped the state's economy diversify away from the over-reliance on oil and gas that has left it subject to past boom-and-bust cycles.
The Dallas Federal Reserve's index of leading economic indicators for the state, which includes employment growth, manufacturing activity and oil and gas drilling, is at its highest level since the data was released. for comparison in the 1980s.
Texas is projected to post a $32.7 billion budget surplus in 2023. Of this, $10.2 billion will go to a rainy day fund created by the state in 1988 and known as the Economic Stabilization Fund.
Record budget surplus
The Texas legislature meets every two years, and then only for 140 days.
A local joke is that Texans dislike the government so much that they would rather have their politicians meet for two days every 140 years. However, this is already less than in any other state, and this means that local politicians should effectively manage agenda items, set a two-year budget, and not constantly mess around and make a career in other areas.
< p> It looks like it is. Job; Since 2003, Texas has managed to balance its books every year.
The state's finances contrast sharply with those of California and New York, which are expected to run big deficits again next year. These states are debating whether to raise taxes to make ends meet.
Economist Arthur Laffer, whose famous «curve» was supposed to show that lower taxes can lead to higher incomes, argues that many «blue states» think exactly the opposite.
His research. shows that California, Illinois, New York, Washington, Connecticut, Maryland, and Massachusetts—the seven highest-taxing Democratic states—have experienced an exodus of nearly five million residents over the past 10 years.
Laffer, whose theories helped shape the economic policies of Ronald Reagan and Margaret Thatcher, calculated that these states lost a quarter of a trillion dollars in total taxable income.
«It's just income tax money,» he wrote in an op-ed for the Wall Street Journal . «It does not take into account lost profits from corporate profits or sales.»
He noted that Texas, Florida, and Tennessee do not charge state income taxes, and they all have significant surpluses.
>“Instead of doubling the highest taxes in the country and inventing new ways to soak up the rich, Is it smarter for the states with the highest taxes to start imitating the winners?” Laffer asked.
Culture War Crisis 
The overturning of Roe v. Wade sparked widespread protests in the US last year. Photo: Brandon Bell/Getty Images
That's a good question. But another question is whether the red states, which are currently doing so well, will continue to win. Greg Abbott, who took over as governor of Texas in 2015, adopted his predecessor's practice of going on the hunt. around the country to lure business to the state.
However, he is also an increasingly visible hero of the national culture wars. That includes the drastic curtailment of abortion rights in Texas after the U.S. Supreme Court ruled in Roe v. Wade last June. The governor also tightened voting rules, loosened gun laws and used political ploys such as deploying state forces to the Mexican border and sending buses of immigrants to New York.
While these moves seem to work well in rural Texas, they are less welcome in urban areas where newly arrived employees from relocated businesses have settled. The tributary is starting to change the political map of the state, making it increasingly purple (a mixture of red and blue) in some areas.
Tesla, along with companies like Citigroup and Meta (Facebook's parent company), said it would cover the cost of any employee who needs to travel out of state to access abortion services. However, the state attorney general vowed to prosecute any businesses that make it easier for their employees.
BIGGEST MOVING DISTANCE INCREASES IF ABORTIONS WAS TOTALLY PROHIBITED
Texas politicians are also fighting financial players like the BlackRock fund manager who choose not to invest in oil and gas companies due to «environmental, social and governance policies» .
“We will discriminate in return against those who discriminate against our oil and gas companies,” Abbott said last month. «BlackRock blacklisted in Texas.»
It remains to be seen whether the standoff between Texas politicians and the business community will escalate, and if so, whether the opening of a new culture war front will damage the state's reputation for convenience for business and an impartial approach to regulation.
A more immediate threat to the Texas boom is rising real estate prices. The median home price in the state is still half that of a similar location in California. However, since 2010 prices have risen 50% more than the national average. Perhaps partly to counter the sizzling real estate market, Musk has decided to build his own city—something suspected not available to every company.
Texas began to try a drug that used to be used in California. Billboards around Austin advertising the virtues of neighboring Arkansas read, «There's more to Texas, including mortgage payments.»
Phil Murphy, Democratic Governor of New Jersey, wrote an op-ed in the Houston Chronicle last summer to local business leaders: The women you hire, may I suggest a solution: come to New Jersey.
Green Power Plant< p>Texas fans love to portray it as low-tax nirvana; skeptics argue that he was just lucky due to the huge wealth of minerals. There is some truth in both views, but neither is entirely correct.
The state's notorious wasteful policies have resulted in poor funding for education, which could exacerbate the state's already high inequalities; a higher proportion of the population than anywhere else in the country lives without health insurance.
The lack of spending on infrastructure also creates problems. Catastrophic outages occurred in the power grid, including during the “snow apocalypse” the winter before last.
The old image of Texas as a geologically blessed oil country is also becoming increasingly outdated; J.R. Ewing, a Dallas oil tycoon, hardly recognized the place. Finance and property are currently the most important branches of the state. Charles Schwab moved its headquarters to Dallas-Fort Worth in 2021 and the city is home to the largest US office of Goldman Sachs outside of New York. Technology companies flocked to Austin, energy companies to Houston, and manufacturing and aerospace companies to south Texas.
Meanwhile, despite what its politicians may publicly proclaim, Texas has turned into a green energy powerhouse; the state produces more solar and wind energy than any other US state.
Texas dominates renewable energy
Ironically, this means that despite traditional antagonism towards the federal government, Texas should be one of the main beneficiaries of President Joe Biden's Inflation Reduction Act, which was designed to stimulate the economy and curb carbon emissions. Clean energy projects in Texas are expected to receive more than $66 billion by 2030.
And while there is more to Texas' claim to the small state than meets the eye, reports of California's death are also somewhat exaggerated. Just look at Musk's empire for proof: Tesla still operates its Fremont plant in the San Francisco Bay Area, is building a new battery plant in Lathrop, and opened its global engineering headquarters in Palo Alto.
The reality is that at any given time, either California or Texas could be on the rise.
American companies are blessed with a wide choice of locations to operate and states vying with each other to attract them. Any business person will tell you that competition is good. This point is perhaps overlooked in all the dreamy British talk about creating a government-backed version of Silicon Valley.
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