Why Austin and the Texas Triangle is Poised for Success: A Conversation with Cullum Clark

[00:00:00] Michael Scharf: We're happy to welcome back Cullum Clark, the Director of the George W. Bush Institute and SMU's Economic Growth Initiative, as well as an adjunct professor of Economics at SMU. Within the Economic Growth Initiative, Cullum leads the Bush Institute's work on domestic economic policy and economic growth. [00:00:19] Cullum earned his Ph.D. in economics at SMU in 2017 after a 25-year career in the investment industry, and he subsequently joined the faculty in the Department of Economics. His research focuses on monetary and fiscal policy, markets, economic geography, and of course, what we're most interested in, economic growth. [00:00:39] For 2023, Austin Next is pivoted to looking forward. We wanted to spend more time looking at what's next and how do we get there. So after reading Cullum's recent article, the Texas Triangle: An Emerging Metropolitan Model in the Lone Star State, we had to ask him back. Cullum, welcome to the Austin Next Podcast. Or I should say, actually, welcome back. [00:01:00] Cullum Clark: Michael and Jason. Thanks for having me back. Great to be with you. [00:01:03] Michael Scharf: I just finished reading your essay on the Texas Triangle, and you put out two ideas that I found both interesting and troubling. I mean, first, you've got the economic quandary. Let me quote here. [00:01:14] "Successful cities enable productivity and quality of life for their references. But in these inflationary times, they also need to succeed in containing the high costs of living and doing business." And then you talked about growth, where you said, "The triangle also depends on continuing expansion since housing growth in the outer edge suburbs play a pivotal role in preserving the cost of living advantages, and the triangle experiment may falter if it's growing suburbs turn against development, or if Texas fails to address these areas' complex infrastructure needs." [00:01:54] Okay. That's a lot of work that needs to be done, and a lot of it has to be done at the local government level. I mean, yes, the state can get involved a little bit. The feds can get involved a little bit, but primarily when you're talking about infrastructure, you're talking about local governments. So I guess my first question is, can they do this? [00:02:15] Cullum Clark: Well, gosh, Michael, you're raising great, profound questions about the future of the Texas Triangle Metros. As you all know, I co-authored a book with Henry Cisneros, William Fulton, and David Hendricks a couple years ago on the Texas Triangle, the four big metropolitan areas of our state. I think to start into your question, Michael, I think it's important, first of all, to recognize there's more than one model for cities to succeed and what we've seen in recent years, there's what you might call the Silicon Valley model, which thinking of it just in basic urban economics terms, is a place that has extraordinarily high cost of living but is so very productive that at least highly skilled people in the tech sector and so forth actually can afford to live there. All in all, you have a very, very expensive, very, very high productivity place. [00:03:01] At least for many, it's been a great success story, notwithstanding its challenges. But a different way to succeed has been to be a somewhat more productive than average city combined with somewhat lower than average, or let's say around average costs of living and cost of doing business. Very different model in a nutshell. [00:03:20] That's been the Texas Triangle model. Now, I would say Austin is a little bit in between on, based on the numbers, certainly a more expensive place and a more productive place than Dallas Fort Worth, Houston, or San Antonio. Kind of a middle zone as it is in so many ways, a middle zone between the rest of Texas and the West Coast. [00:03:38] Anyway, so the question is, can we get it done? The first answer just on that is, well, we've done pretty well so far. We've lived through this enormous expansion in the Texas Triangle metropolitan areas. You could say, has the infrastructure, has the housing, and so forth kept up? At the infrastructure level, certainly it's straining. It's creaking a little bit. But one simple way to measure, at least on the transportation side, whether we've kept up, is, what's happened to commuting times? Because explosive increases in commuting times are almost surely evidence that most likely the population has grown, but the infrastructure hasn't kept up. [00:04:14] In general, commuting times have gone up some over the last decade in big metropolitan areas all over the United States, although they took a dip down in the first year of Covid. But actually, all four of the Texas Triangle metropolitan areas have had, let's say, kind of average increases in commuting times, even though they've had way above average population growth. [00:04:35] And in absolute terms, the commuting times, we all wish they were lower, but they're actually kind of average by the standards of relatively large cities, even though in particular Dallas Fort Worth and Houston are really big metropolitan areas. So actually we've been more successful than most other places in the United States. [00:04:51] You could say the same thing on water. We can get into that in a little bit if you want. So far we've gotten it done. Will we get it done going forward? Well, there are some pretty significant challenges because as I argue in the paper that you've brought up, the growth is all in the outer edge or overwhelmingly on the outer edge of these metropolitan areas, and that means entirely new infrastructure. [00:05:12] Really, really far from traditional city centers. It's a changing physical model out there. And at the margins, is it creaking a little bit in some of these high-growth suburban places? Yes. You periodically hear about like new master plan communities that went up unbelievably fast. But if someone's trying to drive out of the master plan community onto the arterial road or the highway, actually it's kludgy. [00:05:34] And they can't quite get there the right way. And it adds a whole lot of time. So you could say a lot has happened in a hurry and there needs to be a little bit of backfilling. On the whole, I'm optimistic that we can get it done. Certainly, there is tremendous political support in Austin for the state to play its role on the physical infrastructure side, at least some kinds of infrastructure. [00:05:54] The state's not gonna be enthusiastic about core city public transit. That's just not in the DNA of the Texas legislature, but it's plenty enthusiastic about building out a road network that can support the growth of the state and all of this influx of people. So actually I'm kind of optimistic on that front. [00:06:13] And then the housing side, we can talk more about this. The question is out there on the table. Will we, in the Texas Triangle Metropolitan areas allow enough housing to get built to actually maintain some reasonable degree of affordability? We've always clearly had a tremendous decline in affordability i.e. big increase in home prices relative to incomes throughout the Texas Triangle and on steroids in Austin. [00:06:36] That does reflect in my judgment as it does generally in cities any place, anytime that what we economists call the elasticity of housing supply with respect to demand. That is to say, when demand goes up, does the housing supply go up kind of fairly quickly with it? We have clearly had a decline in that responsiveness in the housing market. [00:06:55] I think that decline is centered in the core cities. I think in particular Austin and Dallas, the cities now, not the metro areas, have made it increasingly hard to build. It's a common story around America, but it does mean at the margin starting to undermine what has been a major competitive advantage of the Texas Triangle model. So the question arises, are we gonna somehow address that? And crucially, something we raised in the paper, is this kind of unusual pro-growth, pro-housing dynamic in the outer edge, suburban places of the state going to stay intact. Will we still build new suburban places really, really fast in a way that kind of is the pressure vow for the whole state that absorbs the people at the margin and allows the state to at least have some reasonable degree of affordability? Open question. [00:07:42] Jason Scharf: So the census data just came out for ‘21 to ‘22. And it's interesting cause you're talking about, on the outer edges and we generally are talking here about the Triangle a little bit as the Triangle. [00:07:54] But what I found interesting is when you look at, and there's this great map that was produced, right? Overall across the San Antonio and Austin Metros, every county grew. So it was a positive number versus if you looked at Houston and Dallas, the core urban counties actually lost versus the, to your point, suburban and outer all grew. [00:08:21] So overall it was all up, but you saw a definite migration out in the Dallas and Houston area versus San Antonio and Austin. The growth rate changes much higher in the out, right? It was like 3%, 4%, 5% in the outer regions versus the internal. And just looking at that difference between those areas of the Triangle and how we might approach it differently. [00:08:48] Cullum Clark: Well, one thing I'd love to talk about if you all would like is I've been studying those numbers very closely, in fact, just over this last weekend. And the census, I gotta say, they got the wrong lead, the wrong headline on their data. They seriously misreport many takeaways from the data. [00:09:05] And what do I mean by that? They said correctly that the giant movement of people into the Sub Belt continues, but they said incorrectly that data shows this kind of revival for core urban counties at the expense of suburban counties. Absolutely wrong. They were grabbing hold of one single, very dramatic data point, which is that New York County, i.e. Manhattan Island. [00:09:26] There was actually a very slight net movement in instead of out. But keep in mind, that's after a gigantic movement out over the previous year, the first year of Covid, the combined two years, it's still one of the biggest outflows of any county in the United States, including even percent terms adjusting for the size of the place. [00:09:43] So the big trends we've seen remain very much in place. People moving to the big Sun Belt metropolitan areas. And within metropolitan areas everywhere in America, including in the Sun Belt, rapid growth in suburban places, low growth or even negative growth in some cases in core urban areas. That's very much the case. [00:10:02] Still largely speaking in the Texas triangle. Now, if we wanna put a little bit of nuance on it, the two core places that clearly show a tendency to see net outflows of people are Dallas County, the part of the Dallas Fort Worth metro, and Harris County, where the city of Houston is. [00:10:18] That's pretty consistent with a national story. In fact, in absolute numbers, the Dallas County and Harris County, they're not quite as bad as the big core counties of like LA, New York, Chicago, and so forth. But they're actually kind of high up the list of core counties that are seeing significant outflows of people. [00:10:35] So a very common story. We can get into the details of some of the things that maybe are going a little bit wrong in those places, but I think that maybe the better thing is to recognize that the continued growth in Travis County, Bear County, and the San Antonio Metro, and also Tarrant County, where Fort Worth is, that's actually the anomaly. [00:10:53] The anomaly is to see growth is as strong as we're still seeing it in those core areas. Remember, the Suburban Place is still growing way faster in the Austin Metro, way faster in the San Antonio Metro, and also on the Fort Worth side of the Dallas Fort Worth area. Fort Worth and San Antonio are kind of special cases cuz they annexed a whole lot of land over the years and they kind of have a lot of spare land to build on, in outer edges of the core city. And that has given them a little bit of a positive dynamic, I would argue, that is is not as present in Dallas and Houston. And then Austin is like nothing else, right? I mean, the city of Austin is this, I defer to you all that it's a special case where the core city has certain strengths that other places can't match. Having being the only big city in the state with a really, really big public university right near downtown and the state capital, that's kind of a potent mix. Plus it's probably, at least relative to its size, the biggest tourist destination, the music scene and all that. [00:11:53] So Travis County keeps growing, but nowhere near as fast as Hays and Williamson Counties. [00:11:59] Michael Scharf: And that's one thing I wanted to focus in on for a minute because we've been talking primarily about population moves as represented in housing because that's how you tag people when you're doing census type work. [00:12:10] But one of the things we've seen in Austin as it becomes a multi-hub city and area is it's not just population as multi-hub, but you've got industries that are multi-hub. You've got the space industry in general, vehicle assembly and the like in Cedar Park and north of the city of Austin. Southeast, you've got the Tesla Gigafactory and some of the other new car manufacturers and John Deere and its tractor testing bed is on the west side and we talked about housing, we talked about traffic flows, but I think a lot of the things that are mitigating that traffic issue is the fact that people don't all go downtown when they go to work. We don't have the kinds of factories in downtown Austin that my father used to work in downtown Los Angeles when he was in the garment industry. [00:13:08] So I think that multi-hub kind of situation works to Austin's benefit in both housing and mitigating traffic flows and some of the other infrastructure issues. [00:13:23] Cullum Clark: Well, I think we've done a lot of Bush Institute work looking very closely at this exactly what you're saying, Michael, I think what you call a multi-hub sort of physical form for the metro area economy. [00:13:33] What we sometimes called polycentric form. Same thing. I would argue the data just supports the idea that that's working in 21st-century America. I oftentimes say if a central planner had decided to try to build it out that way, they would've fallen on their face horribly. No way. You could have thought it all up somehow. [00:13:52] But I think places that kind of are a combination of lucky and smart, maybe lucky in the historical legacy of maybe kind of preferable not to have built up a big garment industry like downtown LA or downtown New York or something. Good reasons why it happened more than a hundred years ago. [00:14:07] Good reasons why it doesn't make any sense today. So luck is good, but so is smart and I think what's been a smart thing to do in general is to simply allow more of the hubs to come into being. Don't sort of zone them out of existence or regulate them into becoming infeasible. And I think the Texas Triangle metropolitan area were not alone. [00:14:26] I mean, other places that are succeeding, particularly in the Sun Belt, they generally look pretty similar. We were just in Nashville over the weekend and Nashville's kind of a like not-so-unlike Austin and has pretty explosive growth rates to show for it, plus the cool music scene. [00:14:40] They, by the way, claim to be the live music capital of the world. So lots of disputes there. [00:14:45] Michael Scharf: We've had that discussion with people in Nashville. Yes. [00:14:48] Cullum Clark: Yeah, yeah. Well, they both have pretty great live music scenes. I'd happily rather have the hand that is dealt to Austin or in Nashville than just about most other cities, but it's working. And I think that this is something that urban economists are only beginning to look at. Like, why is it working so well? Because all of urban economics has been kind of built around an old theory of the core center and everybody commuting into it. [00:15:10] And that just turns out to be I think an inefficient way to do things in the 21st century. There's some degree of spreading out that seems to make it possible to move around. Okay. And the internet connects us all and it seems to work. [00:15:23] Michael Scharf: Yeah, and I can't let you get away from this without talking about water. I had heard, and I have no idea where this saying came from, but my old business partner told me it was a Texas saying that water was fighting over and whiskey was for drinking. And we have a water issue here. It looks like we're headed towards the drought again. How do you see our water issues, especially in central Texas? [00:15:49] Cullum Clark: Well, I get asked that a lot, and I was kind of unsatisfied with my own answer. So I went and did some research. I've talked to a number of knowledgeable people and I have done something I don't necessarily recommend, which is reading the once every five-year plan of the Texas Water Development Board, like the Chief Authority for the State. [00:16:08] And when you put it all together, I don't think it supports a whole lot of pessimism. I think it maybe raises challenges, but they seem to me surmountable in the context of a wealthy state with 30 million people and growing fast. So basically, if you look out there, the Texas Water Development Board goes out to 2070 and it forecasts the demand that we'll have at that time for water and also how much supply we will have based on existing reservoirs and existing aquifers and so forth. And then how much of a gap is there and what will we need to do to fill it. In a nutshell, they do forecast that the population of the state will grow fast. Demand will grow somewhat more slowly because we will get better at conservation, maybe almost despite ourselves. [00:16:50] But the technology for conservation keeps on getting better and it really is doable. And it's been accomplished in a lot of places, some places quite dramatically. The Las Vegas metro has been enormously successful in much tougher conditions than Austin or San Antonio phase in achieving a whole lot of conservation. [00:17:08] So they think that'll be part of the story. They actually do project that agricultural use of water in the Western dry part of the state will decline over the next several decades. So that’s not good news for, I guess, people who expect to keep on doing agriculture there for decades to come, but it takes a little bit of pressure off the cities. [00:17:25] And then on the supply side, they basically show where the supply is. They do call for some new infrastructure to be built. One thing that they rely very heavily on in their forecast is building something called the Marvin Nichols Reservoir in the northeastern part of the state that is probably more relevant to Dallas Fort Worth and Houston than it is to Austin and San Antonio, but it's all interlinked. [00:17:46] So that's actually politically very, very difficult to build another source that is, as you say, and people like to fight over water in the state of Texas. They also like to fight across state lines. [00:17:56] One fight that is sort of out there likely to grow more intense is over the water of the Red River, between the state of Texas and the state of Oklahoma, which is due to a strange historical quirk. The water of the Red River almost entirely belongs to the state of Oklahoma and I think Texas will sort of push against that and we'll see where that goes. [00:18:16] Austin and San Antonio rely more on drawing water from deep underground, from the Edwards/Ogallala Aquifer than the eastern half of the state. And that is slowly going downwards. So on a very long-term view, there is a problem, but also on a very long-term view, you can imagine addressing it. [00:18:37] I recently in a Bush Institute event had the opportunity to interview, Ed Glaeser, who's a great urban economist at Harvard, and a wonderful guy as well, and asked him about not just the future in Texas, but the future in places that have far more immediate challenges, notably in the Colorado River Watershed. Think giant Phoenix area, growing super fast that just has no reason to exist if I don't do massive movements of water. [00:19:01] And I said, “So is Phoenix gonna empty out?” And he said, “Absolutely not. It's gonna become more expensive to live in Phoenix because we will figure out new technologies. We will reduce the cost of desalination, for example. It'll get more expensive, but we're a wealthy society now. [00:19:19] Cullum Clark: We're probably gonna be a lot wealthier society by the 2060s or 2070s. And we'll figure it out.” So I'm not an alarmist on that. I mean, there are other environmental issues I would probably raise to as bigger challenges. That one is a giant technical challenge, but we've surmounted giant technical challenges for a long time in Texas and I think we'll still do so. [00:19:40] Jason Scharf: So I want to kind of focus in a bit on the challenges as we think about for innovation, right? And one of the quotes from the paper was, “Historically, successful cities have always been places that achieve strong agglomeration economies—productivity and innovation benefits arising from people and ideas coming together in concentrated locations.” [00:20:04] “Urbanist Jane Jacobs argued that it also helps to have diverse industries, since innovation often arises from serendipitous collisions of ideas from disparate fields.” All right, so both the nodes of the triangle are not concentrated. We were talking about the outer edges, multi-hub, polycentric, and the Triangles themselves in the mega regions are not concentrated. [00:20:23] Right. We're not very well connected. So if we're that's spread out, we have remote work, how do we actually take advantage of agglomeration effects that drive innovation? [00:20:35] Cullum Clark: Well, that's a great question, Jason, and I think something I'm wrestling with a lot as well. So urban economics has this kind of basic insight. [00:20:44] It asks why do we even have cities? And the answer pretty much is cities help us to be more productive and innovative. And also cities are fun. Nice places to live. The downside is historically, they were centers of disease and so on, but we've gotten better on that front. And then the question arises, “Well, okay, so they make us more productive. [00:21:01] Well, which ones do the best job at making people productive and why?” And I think we know a couple things that maybe are at least hence to the question. One thing we know is that it's good to be a relatively large place. It's just good to have a lot of people. People are creative. We should be thrilled about the fact that the populations of the Texas Triangle metropolitan areas are growing because a lot of innovative, enterprising people are coming in and they not only will do good things themselves, but they'll in some sense raise up the productivity level of all of us. [00:21:32] So size is helpful. Number two is the point you quote from Jane Jacobs, of course. Jane Jacobs, great urban author, arguably America's greatest ever, who wrote classic book The Death and Life of Great American Cities in 1961 really is as relevant in 2023 as it was then. She makes the additional point that it's not only is it helpful to be large, but it's helpful to have a lot of different kinds of activities, that monoculture is bad. [00:21:58] You don't wanna only the automobile industry, even if it is a very innovative industry in some respects, or it certainly has been and a lot of times in history, you also would kind of prefer not to have nothing but like high tech. It's good to have a variety. So she was not an economist and she made that point by observation, like walking around New York. [00:22:16] She didn't make it with data, but economists like Ed Glaeser and others ever since then have done a really good job of showing statistically that she was very, very correct. So those were kind of some hints as to your question. But as for truly thinking about if somebody has it in their power to change something, to increase productivity and innovation benefits from people coming together in concentrated places in Texas Triangle. [00:22:43] Whether it's mayors and city councils, chambers of commerce, real estate developers who want to create an attractive place where people will gather. Whoever it is, I think the short answer is we don't really know exactly how to accelerate innovation. We know generally that Jane Jacobs is right, but what exactly do you do? [00:23:03] The good news is there's lots of experimentation going on, and we're gonna learn from all that experimentation here in Texas and elsewhere. We have the creation of several very, very new intentional innovation districts adjacent to universities here in our state such as the Ion, created by Rice University. [00:23:23] In Houston, not so far from downtown, such as Pegasus Park here in Dallas. These are being tried all over the country with varying degrees of success. But I think that in a lot of cases they show promise. So here what you have is an intentional effort to create a place where innovative people will want to work and maybe even live, work, play in relatively close proximity and bounce ideas. So maybe that's a kind of accelerant of innovation. [00:23:48] Jason Scharf: It's interesting because we look at history. And there was a great word that one of our former guests, we went to Houston and talked about was like the naturally occurring innovation centers, right? When you think about Silicon Valley, so much of it was non-intentional, right? [00:24:03] You had everyone just kind of went to Sandhill Road and all kind of outgrowth of Stanford, so you didn't have these intentional innovation districts, they kind of occurred like you had everybody went there because once you hit a certain level of density of everyone's there, well then everyone's gonna go there. [00:24:19] Right? It was, it was those coffee shops near Stanford and the like, and so it's an interesting case now trying to—When you look at Silicon Valley, you look at Boston, or you look at Detroit in the ‘50s, right? You didn't create these places to have it. You just kind of had them naturally occur. [00:24:37] So now if we're trying to create the places, is that too much forcing it? While at the same time, we all agree you want those random coffee shop encounters. That's where the real magic happens, right? And so it's an interesting tension we were fighting against. [00:24:54] Cullum Clark: Yeah, I think in this issue of to what degree do these highly innovative places come about, on the one hand through serendipity, just natural market forces organically, it just happens on the one hand versus the other. [00:25:05] Somebody thought it up and went out and made it happen. I would say I come down pretty darn hard on the side of serendipity organic market developed growth for sure. So I think there's no question and just essentially every story of highly innovative, like hot hotbeds of new business and technological progress and so forth, over history, that I think that argument is pretty strong. [00:25:27] And the argument for forcing it through some kind of government action, generally speaking, isn't so great, other than maybe in a handful of cases, like the US government was arguably able to build on the shoulders of giants, all the prior work that had been done, and force the development of a covid vaccine by making nearly infinite money available, or the Department of Defense in the Cold War able to force the development of certain places that were great innovators in weapons, technology and so on. [00:25:52] But on the whole, I'd bet on organic all day long. That’s it. The people who are in charge in different respects, do have options available to them. For example, state and local governments have very large roles to play in educating the workforce of the future, and they have all kinds of policy choices to make that will result in the cities of Texas being somewhat more highly educated and prepared to do 21st-century work in hopefully innovative places or less so. Those choices are really important that Texas state legislature is wrestling with them as we speak, week after week now, hearings about which education bills they might or might not pass. [00:26:29] And local governments as well, I think have important decisions. Maybe arguably their most important power is over land use. And one simple thing would simply allow things to be tried, take a sufficiently light touch approach to land use that lots of experiments can flower and we'll see which ones really work out in terms of creating particular spaces. [00:26:51] I think that it isn't that hard when you go around specific cities and you really look around about how land is being used when it seems to make no sense, when it seems like it's just not well designed to create a prosperous economy. Very oftentimes it doesn't make sense because the government made it that way. [00:27:08] It's through sometimes inexplicable zoning decisions of the past or the all too explicable current politics. And then I'd say finally, cities have another really important decision to make, and that is just to what degree are they going to value be in good places to live? That's up for grabs right now. [00:27:25] I think there are some basic things people want, like most people actually prefer a certain amount public order, not rampant criminality or I think on the issue of homeless encampments in our cities in the United States, I think it is consistent to have a humanitarian degree of concern for the plight of so many people living in very tough conditions. [00:27:48] And at the same time, to say, if you want your city to be a place where lots of different kinds of people are gonna wanna live, you're gonna have to address this problem. You're gonna have to do it in a humane way, but you're gonna have to actually address it and not sort of wish it away. And I think a number of cities around the country are making choices on essentially on public safety and public order that are very self-destructive. [00:28:10] And so far on the whole, the big cities of the Texas Triangle seem to hav navigated a mostly sensible middle way on these things that, at least in comparative terms, makes them look pretty good. [00:28:24] Jason Scharf: Well, and I think the, the Triangle as a mega-region is a new concept. The polycentric geography is a relatively new concept. [00:28:32] And we even started the podcast, our intro for about a year and a half was, we don't wanna be the next Silicon Valley. We wanna be the first Austin. All that being said, there's been amazing innovation centers in the US throughout history, Silicon Valley, New York, Boston, Detroit in the ‘50s. [00:28:48] So without necessarily trying to copy them and say we're gonna be the next that, but I'm sure there's a lot of learnings that we can have from those cities and things that we can in the way that they're thinking. What do you think the kind of a learning is in, that we can take away the dynamism that those regions had, that we can apply here while being uniquely what we are? [00:29:12] Cullum Clark: Sure. I think every success story and every not-so-successful story has its lessons. I think just in the history of the cities of the United States that have been really successful at certain points of time, I think that there's pretty clear lessons. I think that a very recurring theme has been censored on education and human capital. [00:29:31] I think that in each of those places when they were really riding high, they were actually outperforming most other places, both in educating their own people to take on these then cutting edge jobs and also attracting talented people from elsewhere. The idea that in that New York, for all of its craziness and all of its challenges, did focus pretty hard, on again, off again. [00:29:52] But for the most part over the decades and being a good place for high end finance sector people and also other sectors that are significant there, like advertising and so on, media. Just to be a good place for them to be—they threw a lot of effort at it. [00:30:06] They threw effort at cleaning up Times Square and having a lively theater scene and they have hands down, far and away, the greatest restaurant scene in America. They really did allow a lot of quality of why things to happen. They did a spectacular job with Central Park and Prospect Park in Brooklyn and so on. [00:30:24] So there were all these actually pretty effective measures to make New York livable and attractive and to be an unusually, highly educated place. And then finally the big takeaway was they came to dominate America's financial sector and international finance by building the far and away the biggest single galaxy of financial talent in a relatively concentrated place anywhere. [00:30:46] It became the case that if you really wanted to learn to be an investment banker, private equity person, hedge, fund manager, whatever, you were, at least for a long time, better off learning how to do it there, even if you then leave and go do it, move off to Texas or Florida or whatever and do it someplace else once you're middle-aged. [00:31:04] To learn it in New York? Just better. Don't just take my word for it. There's actually very good economic studies about the wage premium people have if they work in tech in Silicon Valley or in finance in New York and then move on. I think Detroit is a really interesting story because it did actually show the effect of a very intentional innovation in the hands of big enterprises. [00:31:26] It makes all the difference to have big well-managed enterprises in your locality. There's no question. So the last thing in the world you'd wanna do is run the ones that are already there out. And so that would be one something I worry about west coast cities that are clearly creating conditions in which a lot of companies are moving away. [00:31:42] For now, the Texas cities are all attracting big enterprises, and that's a gigantic plus because those enterprises will carry out a lot of really cutting-edge innovative activity here in the Texas Triangle. I think the total amount of innovative activity going on in the Texas Triangle is exploding upwards because of that. [00:31:59] So they all have their own stories. LA, of course, giant concentration of entertainment, world talent, as well as if we go back far enough, defense sector related, manufacturing talent. So they all have their stories, problems that have emerged all have their own stories as well, but it does come down to educate your people, be a good place to live, work, have a good life, and be reasonably business friendly. So whether it's the startup companies or the very large enterprises, they'll actually want to operate in your city. [00:32:29] Jason Scharf: So is it good? Kind of jumping off point to something that we had, so you talking about like the companies that are moving here, lots of people are moving here. [00:32:36] We had Roy Spence on who's famous for the Domex with Texas campaign, another memorable kind of marketing advertising campaigns here as well. During our conversation with him, he identified the core challenge that we had as navigating the tension between preserving the core and stimulating progress. [00:32:54] Each of the top metros in the triangle ranks in the top 10 for net domestic in-migration over the last 10 years. As you mentioned, we have major companies both on tech and non-tech, moving to each of the major cities here. So change is constant. We were joking, met somebody recently who said, “I'm a unicorn. [00:33:16] I was born in Austin.” Right? So you have that kind of constant new people moving in. We only moved here two years ago, so it's not just an Austin challenge to navigate this tension. How does the Triangle balance this? [00:33:30] Cullum Clark: And by core, I assume Mr. Spence means not necessarily the urban core, but the kind of the core of what we are. [00:33:35] Jason Scharf: Exactly. Yes. Preserving the core of who we are. Yes. [00:33:38] Cullum Clark: Yeah, I think he has a really important point. There is no question that as people move all around and companies move and so on, change is certainly a constant. And there may be a certain tendency, which is maybe some of the best observers of this would be like people who study architecture for example, or architecture and urban design. [00:33:56] A certain tendency for big cities to kind of converge, become sort of more like one another as we get into a more interconnected world. But I think he has a really important point about the core attributes, cultural features that made us all what we are. And I do think it's really important to not throw that away. [00:34:11] So if we think of it in Texas terms, I think that there is no question. We lead historically with a kind of a small government relatively, hands off libertarian, pro-rugged individual, pro-entrepreneur spirit. That is obviously deep in the Texas DNA going way back. Sometimes I'm sure it can go too far. [00:34:30] I'm sure there's a lot of people who are here in our state don't like it at all. But the truth is that's kind of who the state has been to a certain degree, and there's no question it's played a large role even in the 21st-century success of the state. Now, you don't want that to a ridiculous extreme. [00:34:45] Like to be so anti-government that you don't actually adequately fund schools and parks and green space and all the other basic things that modern cities should have. But I think you'd be in great danger to throw that away. There are other places that function pretty well as more highly taxed, high-service places. [00:34:59] Some of them, very great places to live. In many cases, they're attracting people too. But Texas is the way it is and it could potentially throw away the advantage without necessarily picking up advantages of some of those places. So I think that's kind of part of the core. And then I think there's also people do kind of yearn, I think when they're deciding where to live. [00:35:18] They yearn for a certain sense of place, a certain sense that something is authentically kind of what it is, which is always tricky in a world where cities change and grow so fast. But having just been in Nashville over the weekend, there is no question. They full-on embrace their country music identity. [00:35:33] It's interesting, I talked with some highly experienced Nashville people and they said it's interesting, right up until kind of early in the 20th century, the traditional business establishment of Nashville, the business establishment was a little disdainful of the country music industry. [00:35:47] They thought it was a bit embarrassing, like this hayseed people, you're celebrating this old, rusty, rural thing and they're trying to be a modern city. But then they came around and thought, “This is who we are. Let's make the best of it.” And boy do they make the best of it. [00:36:02] I think Austin too comes from this very distinctive place culturally. You all have celebrated and talked a lot about on your podcast, and I think that this idea that it is a little quirky, a pretty fun core urban area compared to most that you have this blend of state capital, [00:36:25] And the music scene and the university and so many things all kind of blended up in a little cauldron there in the middle of the city, I think is totally distinctive, and people like it. So wouldn't wanna blow up any of those aspects. I'll tell you what, Houston, it's sort of classically said there, it's the city that is a great place to live, but you wouldn't wanna visit there. [00:36:44] You have to start to unpack that there's some pretty good reasons why so many people decided it's a great place to live. And the same thing goes for Dallas. So, yeah, I think the core of Texas cities is pretty sound and is an ingredient to our current success and must be treasured. [00:36:58] Michael Scharf: Final question every time is what's next, Austin? But let's be honest, that's what the entire episode's been about today. So I want to ask it I guess slightly differently. Based on everything we've talked about and everything that you've worked on, do you think Austin and Central Texas can succeed given the opportunities and the challenges that lay ahead? [00:37:18] Cullum Clark: I am absolutely bullish to my very core on the future of the Texas Triangle, Austin, and the other three big metropolitan areas. [00:37:28] I think there's an enormous momentum. The momentum's even more powerful in the Austin area than in the other three, and that says a lot. And I think it'd be a very rash and irrational person who would bet against that momentum. I think that when you look at everything that's working in 21st Century America, Austin truly has it all. [00:37:48] And there's not one other place that could say that to the same degree, to be a place that benefits from having a cultural cool factor, benefits from being a center of tech benefits from being a major higher ed center. Some people in Austin may not like this or that policy of the state government, but nonetheless, the fact that the state government is there is an economic anchor as well. [00:38:09] There's so many things that are going right, and although the housing's too expensive, it's still better than a lot of the places people are moving away from. So yeah, I'm absolutely bullish. Are there some ongoing challenges? We've discussed them in this podcast that you can't rest on your laurels in Austin or anywhere. [00:38:24] Some places that are booming today will be bused at some point in the future, unquestionably. But it's not written in stone. It's for each place to keep on making good decisions and at the local government level and for people to keep supporting and building great local institutions. [00:38:41] But yeah, I'm absolutely as bullish as I could be and I would encourage others to be as well. The future of the Texas Triangle is very bright. [00:38:50] Michael Scharf: Cullum Clark, you won't find either Jason or I betting against Austin. Thank you for coming back on the show. Appreciate it. [00:38:57] Cullum Clark: Jason, Michael, thank you for having me. Great to be back on. Let's do it again. [00:39:01] Jason Scharf: So what's next, Austin? We're glad you've joined us on this journey. Please subscribe at your favorite podcast catcher. Leave us a review and let your colleagues know about us. This will help us grow the podcast and continue bringing you unique interviews and insights. Thanks again for listening and see you soon.