More than a half century ago California passed New York to become America’s most populous state. It was not only first in population, but an industrial, agricultural, and technology behemoth that also provided most of the nation’s entertainment.
Today that primacy is threatened as never before, most powerfully by Texas, whose pro-business policies, low taxes and growing technical skill are propelling its economy.
People are voting with their feet.
A general view of the Golden Gate Bridge and the skyline of downtown San Francisco. USA Today Sports
By 2050, for example, Texas is now slated to pass California in population, driven both by both immigration and domestic migration. Its economy is growing far faster, and it is now the headquarters of many former Californian companies.
This year, for the first time, Texas passed California and New York as a headquarters for the nation’s largest companies. Even the establishmentarian Economist recently proclaimed the Lone Star State is “America Inc.’s new centre of gravity.”
What should concern us are the reasons for this shift. After all, people don’t move to Texas for better weather or scenery. Or for reasonable policies on issues like abortion.
Nor is it that Texas has smarter people. Four of the nation’s leading engineering schools are located in California, including Stanford, Caltech, UCLA, and Berkeley — compared to one Texas school.
Texas did not manufacture California’s decline. To paraphrase Shakespeare, the blame is “not in the stars but in ourselves”.
Start with the mindset. For much of the past 100 years, California provided the nation’s dreamscape. LA differed from the East Coast intellectual establishment, which looked down on the rest of the country. Hollywood embraced America, with Westerns, war movies, detective dramas and tales of small-town life, epitomized by Frank Capra’s “It’s a Wonderful life.”
The Austin, Texas skyline is seen on Sunday, August 16, 2026. Austin is one of the fastest growing cities in America. SCOTT MOORE/Shutterstock
Today Hollywood is occupied by people who often seem to despise their own country. Radical politics creeped into programming, as epitomized by last year’s agitprop Oscar underperforming winner, “One Battle After Another,” which lionized undocumented immigration, the shooting of law enforcement, and revolutionary violence.
Having turned away from the country that nurtured it, Hollywood has been losing audience for years, with the exception of occasional blockbusters. The elite stars may still be well-paid and overcovered, but nearly 42,000 entertainment jobs left town in 2024 and 2025.
Meanwhile, other places — Atlanta, Nashville, even New Jersey — have been expanding their entertainment sectors and building new studios, while Paramount is considering a move out of state.
Taylor Sheridan, the creator of Yellowstone and Landman, is building a massive new studio in Fort Worth, Texas. Sheridan’s work, widely ignored by our progressive Hollywood elite, focuses on American stories, warts and all, but without the condescension of the studio elites.
In other industries, including high-tech, companies increasingly look to Texas. California’s high energy prices could limit the expansion of its AI industry, which requires enormous amounts of energy. With a wealth tax looming, the technology nabobs will also have to face California progressives, and their counterparts elsewhere, who increasingly oppose data centers and impose anti-competitive regulations on AI.
A general view of the skyline of Houston is seen. Christopher Sadowski
Arguably the most serious flub concerns the space industry. By chasing out Elon Musk and Space X, a company started and still dependent on Californian expertise, we handed Texas the keys to arguably the most promising industry of the future.
Musk’s departure has also meant that rocket production won’t be where it should be — San Pedro, the Inland Empire, the Sacramento delta — but in places like Brownsville and Bastrop. Musk also now plans for a new chip factory outside Houston that, if completed, would be the world’s biggest building.
Or go to the Starlink HQ in Bastrop, a small town 30 miles from Austin airport, and marvel at the gleaming headquarters, now expected to expand, looming over the Texas prairie. All I could think when seeing this amazing structure was that it should have been in Long Beach.
Since 2019 the state’s share of high-tech jobs has dropped from 19 to 16 percent.
California still retains unmatched expertise in high-tech industries, but current preeminence is not permanent: New York and Massachusetts used to be big players, too.
To be sure, AI firms are developing an emerging epicenter in San Francisco, but that is highly unlikely to create net new tech jobs. Instead, the latest boom largely produces rewards for the investor class, a handful of entrepreneurs, and well-compensated “genius” programmers .
But there is little opportunity for middle- and working-class Californians in places like San Bernardino, Oakland, or south LA. For them, the only win is that massive capital gains fortunes can support an ever-growing welfare state — at least until the AI bubble bursts and more billionaires head out.
To thrive once again, California needs to refocus not just on elite industries and research, but also on nurturing blue collar and business service jobs for everyone else. Right now, we don’t do that anymore.
Texas, with its crappy weather, unspectacular scenery, and sometimes coarse culture, does.
Joel Kotkin is Presidential Fellow in Urban Futures at Chapman University and executive director of the Urban Reform Institute.
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