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Escape from the big cities–updated

As one drove halfway across the country not using the interstate he saw a completely different America.  Lawns were maintained, people were smiling and friendly.  This is not the image of the cities on TV as they are burned, looters run amuck and normal citizens are assaulted.

The financial news for the big cities is also a disaster:

  • Rents for accommodations are down
  • Property prices are following
  • For most taxes are due to go up significantly
  • Jobs are no longer dependent upon location

The last point is one of the big lessons from the China virus.  Because of bandwidth and coordination technologies we learned that people could work from home.  They no longer needed to be all collocated in large offices.

The escape from West coast cities like Los Angeles sees companies moving to Las Vegas and elsewhere in Nevada which has no income tax.  Texas is also a state with no state income tax and is seeing a migration from the West coast.  Both Texas and Nevada are seeing a migration from the cities to more rural locations with security (no defund the police movements) and space.

New York and New Jersey are experiencing a migration south.  Many people are relocating to the south.  The migration of companies is sure to follow.  For states  such as this with significant social welfare programs the economic realities are inescapable.  The tax base is leaving.  Governor Cuomo of New York haws even asked the wealthy to return.  It is doubtful that they will.

During this trip through many small towns one is struck with the potential that is everywhere.  A potential for the growth of company towns.  Such growth needs to be welcomed by these small boroughs.  This means that capital needs to be invested in the required infrastructure and social systems.  Many years ago we watched the growth of Lake Havasu, CA.  The now city was built by McCullough properties.  The McCullough Motors Company built chain saws and outboard motors.  It moved all of its production facilities to Lake Havasu and challenged its LA based employees to follow their jobs—many did.  To attract tourists they rebuilt the London Bridge there.  The city on the Colorado River now thrives and with the casinos across the river has become a tourist alternative to Las Vegas.

Lake Havasu may not be the perfect example, but we can find others.  The point is that small town USA and the states that they are in should seize on the opportunity that the death of the large cities provides.  They should encourage companies to migrate from New York, LA, Chicago, Portland, Seattle and other large cities which have been so mismanaged and now ravaged that there is not a climate for their organizations to thrive.

If I were a company looking to relocate I would focus on medium sized towns that have a social and educational infrastructure.  A town with a small state college or junior college would be perfect.  A corporate and educational partnership would guarantee an educational base for training new employees.

The people who can’t escape from the cities for whatever reason pose a significant social / welfare problem.  Jobs will be gone. Taxes to support them will be eliminated.  The large governmental bureaucracies will of necessity be a thing of the past.  There will be a need for physical workers but getting folks to move to do the work may be difficult.  However, this actual situation creates an opportunity.  The Obama administration tried to break up neighborhoods by its housing policies.  This did not succeed.  However, if one were to take Reston, VA, whic began its growth 50 years ago, as an example he would see what can be done with integrated housing when planned in advance–not imposed on people.

As this escape from the cities grows there will come a complete realignment of political power.  This realignment depends on the people who are escaping.  If they bring their liberal predilections with them then conservative small towns will become potential liberal bastions.  Conversely, the values of rural America could infect the new residents.

The movement from the big cities will continue.  How this movement is managed is critical to the future look of the country.  I can only hope that some great planners and investors will read articles like this and see opportunity.

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