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When It Comes to Government, California Is Stuck in the Industrial Age but Texas Is in the Tech Age

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Highlights
As technology unchains the creative and hardworking from old traditional centers of commerce on the coasts, look for a quickening of movement to the lands of the free and lightly taxed—places such as Texas.

This article originally appeared at Foxnews.com on August 16, 2012.

Fox News ran a piece recently about the 1957 test of a nuclear-tipped air-to-air missile. The rocket detonated two to three miles over the heads of a few volunteers, assembled for the purpose of showing a skeptical American public that such weapons, needed to hold the communist Soviet Union at bay, were safe to use above U.S. soil.

That we had such weapons in our military inventory until 1988, but don’t today, speaks of the rapid pace of technological innovation and its unforeseen consequences. It also reveals a generation gap—tell a 25-year-old that the US deployed air-to-air tactical nuclear weapons in their lifetimes and they will likely stare at you with disbelief.

Shortly after I joined the US Army in 1983, I was trained on how to determine the size and distance of a detonating nuclear weapon and its “radiation downwind hazard.” A few years later, with the advent of the PC and relatively inexpensive precision guided munitions, battlefield nuclear weapons began their slide into obsolescence.

In the early 1960s, more than 97 percent of solid state electronics were made for the military and NASA—forty years later, the ratio was reversed and more people had personal computers than had TVs in the 60s (black and white ones at that). Further, the typical and ubiquitous laptop is more powerful than were computers larger than living rooms 40 years prior.

The rise of the PC came before the rise of the Internet—at least the Internet we know today. AOL for DOS, the first attempt to offer e-mail to non-tech savvy consumers, launched in February 1991. 

In December of that year, then-Senator Al Gore saw his High Performance Computing and Communications Act of 1991 signed into law by President George H.W. Bush. The president predicted a host of positive effects from the new law which picked up where the Defense Department’s ARPANET left off at its decommissioning in February 1990, with the most important innovation being the provision for the commercialization of the web.

Today we shop online like we used to go to the corner store and the Yellow Pages, when delivered, are promptly thrown into the recycling bin.  But government, both in organization and function, is still fixed firmly in the Industrial Age. An age where, it is instructive to note, the atomic bomb was just a huge bomb—a brute and logical extension of industrial age bombs, but just a bomb nevertheless.

A few months ago I had a Twitter exchange with an entrepreneur who consolidated his tech company from locations in California and Pennsylvania into Texas. Why did he move? He said that the tax and regulatory environment in Texas makes it easier for him to grow his company.

In July, CNBC published a survey that ranked America’s top states for business. As with many surveys of the type, Texas was number 1 overall. Tellingly, Texas scored #2 in technology and innovation, based on “the number of patents issued to their residents, and the deployment of broadband services…” New York captured first in that category, California was third.

But New York and California scored poorly in other categories, such as the cost of doing business, the cost of living, and business friendliness—the latter accounting for the regulatory and lawsuit environment. 

This, of course, raises a question for any entrepreneur with access to the Internet and a few minutes to do some reflective research: if the three biggest states offer similar technology advantages, why operate in a state that takes more of your profits and erects more regulatory roadblocks in the way of your success? Why not operate in Texas?

The US Census Bureau tells us that almost two million more Americans moved out of California than moved into California from 2000 to 2010; New York lost a net of 1.57 million people. Texas has gained almost 800,000 people in the last decade.

While the rates of internal interstate migration have slowed in recent years, the nature of that that migration might be changing. Studying IRS tax return data appears to confirm that people who make money tend to move to states where they can keep more of that money while people who absorb government services tend to congregate in states that give out more such services.

What you tax, you get less of; what you subsidize, you get more of.

As technology unchains the creative and hardworking from old traditional centers of commerce on the coasts, look for a quickening of movement to the lands of the free and lightly taxed—places such as Texas.

Oh, and one more not-often-thought-of advantage Texas enjoys: it’s the only state with its own, independent power grid, so, if an old-fashioned atomic bomb is ever used to produce an electro-magnetic pulse (EMP) to take down America’s electric system, Texas will be the first state back online.