Freakonomics Radio XX
[0] Last week, we got on a plane and flew to Dallas, Texas, because we wanted to know why everybody else is going there.
[1] Over the past decade, more people have relocated to the Dallas Fort Worth metro area than anywhere else in the U .S. It is on track to become the third largest metro area in the country, jumping ahead of Chicago and trailing only New York and Los Angeles.
[2] In that episode, the first of two, we focused on the city of Dallas itself, how it grew over the past century despite the lack of traditional attributes like a port or even a big river.
[3] We heard about Dallas's history of racism and its continuing inequities around income, housing, and education.
[4] We learned that the city's reputation of friendliness is well -deserved.
[5] We also learned that real estate developers have too much leverage in City Hall and that the mayor has too little leverage.
[6] Along the way, we ate way too much barbecue, saw some wonderful art, and we sulked a bit when the mayor said he would pick us up at the airport and then didn't.
[7] Today on Freakonomics Radio, we zoom out to look at the bigger metro area and the bigger issues, including Texas politics.
[8] A really big part of the state population lives in places that are really quite purple.
[9] We visit one of those rapidly purpling areas, which also happens to be the suburban outpost of the Dallas Cowboys.
[10] We were a city of 6 ,000 people.
[11] We're now up to 215 ,000.
[12] We ask how the city of Dallas feels about those booming suburbs.
[13] We are absolutely competing with them.
[14] And how Dallas natives feel about all the newcomers.
[15] I don't like it.
[16] I'm just being honest.
[17] It's too congested for me. Well, it's going to be a little bit more congested, at least for the rest of this episode, as we continue our visit.
[18] Freeconomics Radio does Dallas, part two, coming up right now.
[19] This is Freakonomics Radio, the podcast that explores the hidden side of everything with your host, Stephen Dubner.
[20] Cullum Clark is an economist and a fifth -generation Dallasite who studies the economic development of cities.
[21] And he's trying to persuade me that Dallas is the kind of city that can appeal to people who live in more traditional cities.
[22] I think all too often people in New York, San Francisco, D .C., have stereotypes that are really outdated.
[23] Oh, we do.
[24] Believe me, we do.
[25] If you like a walkable urban area where you can walk from your apartment building to a variety of coffee places, there are a number of places where you can live and achieve that.
[26] Not quite at the Upper West Side level, but to a much greater degree than you probably think.
[27] So you can actually have a fun, walkable, culturally interesting life.
[28] I would go to the Arts District of either Dallas or Fort Worth and see that in both cases there are concentrations of really amazing museums and arts facilities that, if not quite New York, are among the best of, you know, any city in the United States.
[29] We have a great location.
[30] We have no income taxes.
[31] We have no snow to speak of.
[32] We have great margaritas and Tex -Mex.
[33] And that's Laura Miller, who was the mayor of Dallas in the early 2000s.
[34] I think that the reason that Dallas will continue to attract companies to the city, not just the suburbs, is because we have incredible cultural and sports and nightlife options.
[35] It's a very vibrant city.
[36] But it's really unfortunate because we will fall behind, we've already fallen behind, the northern suburbs that are doing much better and where all the companies are really moving to.
[37] The relationship between the city of Dallas and its northern suburbs and the rivalry between the city and its suburbs, this topic came up in multiple interviews.
[38] we did.
[39] Eric Johnson is the current mayor of Dallas.
[40] At one time, it was safe to describe the surrounding municipalities as largely bedroom communities that were there because folks there wanted a cheaper housing alternative to living in the city, but still close enough to the city to their job that was in Dallas and lived their life that was largely in Dallas, but they laid their head down at night in one of our suburbs.
[41] For the record, Johnson is Democrat, as is Laura Miller.
[42] Dallas voters lean heavily Democratic, unlike Texas as a whole.
[43] Now, getting back to those former bedroom communities...
[44] The reality is what used to be bedroom communities, Frisco, McKinney, Plano, are now legitimate cities in their own right.
[45] They're developing entertainment options.
[46] They're developing all the amenities that a city would have that doesn't expect you to leave.
[47] And if the residents of Frisco and McKinney and Plano don't leave those places, then Dallas does not directly benefit.
[48] The city of Dallas has taxing jurisdiction within its city limits only, and every other municipality is the same.
[49] We don't share any revenue.
[50] When an asset is physically located within the city of Dallas, we are able to tax it.
[51] And so there really is a competition for people and housing stock.
[52] We want it here.
[53] But the suburbs have been winning.
[54] at least if you look at the rate of growth.
[55] Over the past decade, the population of Dallas itself grew 9%.
[56] The suburban counties to the north grew 36%.
[57] Cullum Clark again.
[58] These very fast -growing suburban places are among the best places in America to build new real estate.
[59] And what makes these areas such a great place for new housing?
[60] Well, I think it's a combination of supply and demand coming together.
[61] On the supply side, these are communities.
[62] that have on the whole really growth -oriented policies, you know, in general, cities don't necessarily like new housing.
[63] There's always strong, not in my backyard, NMB sentiment.
[64] These are places that have generally had very pro -growth policies.
[65] It's not like it's not controversial.
[66] They still have big arguments in their city council meetings about zoning policy and whether to approve this or that new development.
[67] But net, net, they've been really growth -oriented.
[68] So the supply side is strong.
[69] and then the demand side, I would argue that these cities, they get the big three things that families are looking for really right.
[70] High quality schools, affordable homes, and public safety.
[71] So that's the suburbs where growth is particularly strong.
[72] Dallas itself, meanwhile, has lower quality schools, less affordable housing, and more crime.
[73] This city suburb split will not surprise anyone who has ever lived in any American city or an American suburb.
[74] We talked to with Mayor Eric Johnson about the Dallas neighborhood where he grew up, historically a low -income high -crime neighborhood with subpar schools.
[75] But there's now on the edge of that area some development that's really exciting, and it's bringing a lot more economic development, but it's also bringing a lot of concern.
[76] Folks are worried about being priced out, and I still have a lot of family.
[77] I have cousins and all that live there.
[78] The church I grew up in I don't want to stop people from being able to do that.
[79] But what I am concerned about is folks who want to stay, who can't stay because property taxes are going up at a rate that they can't keep up with.
[80] And if their property values are quadrupling or quintupling and their tax bill is too, you end up getting folks who may fall victim to one of those unscrupulous developers who wants to buy up a bunch of land to throw up some expensive condos.
[81] And Cullum Clark again, talking about urban redevelopment more generally.
[82] What tends to be happening most of the time is either no new capital is coming into the place.
[83] Nothing's happening.
[84] Or alternatively, there's a catastrophic flood of new capital that comes in and sweeps everything before it.
[85] Clark and Johnson are both talking about a style and pace of gentrification where a poor neighborhood changes so fast that longtime residents can't keep up.
[86] You all have seen in New York, some of that in parts of Brooklyn.
[87] San Francisco has seen a lot of that, D .C. In Southern Dallas, the problem is clearly, for the most part, no new capital has come in in decades.
[88] And so the challenge is how do you actually coax new capital to come in, but not turn into a catastrophic flood that sweeps everything before it and displaces all the people who are already there?
[89] Clark is less concerned about gentrification in Dallas than Johnson is, at least for now, because most of the capital isn't flowing into Dallas.
[90] It's going to the northern suburbs.
[91] This may not directly improve southern Dallas, but Clark argues, it does help keep the whole region more affordable.
[92] The fact that there's so many homes going up essentially means there's less ferocious competition for scarce space within the city of Dallas.
[93] That acts as a pressure valve.
[94] Between 2010 and 2020, just over half a million people moved to the Dallas -Fort Worth metro region from another state in the U .S. Many of them are living in the new homes, Cullum Clark, is talking about.
[95] What's bringing them?
[96] A lot of this growth has come from corporate relocations.
[97] As of 2019, there were 44 Fortune 1 ,000 companies in the region, but only 16 of them within the city of Dallas.
[98] A number of big companies have moved their headquarters to the area within just the past five years.
[99] Toyota North America, Jacobs Engineering, the McKesson Healthcare Company, Coldwell banker Richard Ellis, or CBRE real estate, the engineering procurement and construction firm Fleur, and Charles Schwab.
[100] You'll notice those firms don't have much in common with one another, auto manufacturing, real estate, pharmaceuticals, financial services.
[101] That is one sign that the Dallas Fort Worth Metro is humming.
[102] All kinds of companies want to be there.
[103] But only two of those companies, Jacobs and CBRE, have settled in Dallas proper.
[104] The rest are in the neighboring suburban cities.
[105] And tenant health care, which relocated to Dallas in 2004 from Los Angeles, just left Dallas for the suburb of Farmers Branch.
[106] I asked Cullum Clark to describe how the different cities in this region compete against one another for corporate relocations.
[107] Well, it's a complex dynamics, Stephen, because the suburban cities vis -a -vis the city of Dallas are both partners and competitors.
[108] Frenemies.
[109] Frenemes, yes, they're frenemies.
[110] And so it really is both good and bad for the city of Dallas to see this explosive growth in these suburban areas.
[111] Do individual cities or counties compete against each other in terms of tax incentives and things like that that older cities historically use?
[112] Do they compete on the basis of tax incentives?
[113] To some degree, yes, but every one of them would tell you the same thing, Stephen.
[114] They would say that the tax incentive is a side show.
[115] The thing that we're going to win or lose on when we're trying to attract families and attract employers, it's the issues of affordable quality of life.
[116] It's creating a place where people want to be.
[117] For example, in some of these northern suburban cities, when I've talked to people who are on the front lines, they will say, you know, it used to be that we talked to people from the finance function of a company, or they're trying to figure out where the cheap location can be had.
[118] That's not the case anymore.
[119] They're increasingly talking to the human resources people who know the kinds of talent that the company is trying to recruit, and they know where these kinds of people, particularly the younger ones, want to live.
[120] And they say, show me your neighborhood, show me your walkable urban places that are interesting and culturally diverse.
[121] And if these cities don't score high on that, they lose out.
[122] They're also competing with each other in their schools.
[123] And Eric Johnson again.
[124] As the mayor of Dallas, I have to be supportive, of course, of any win that the region gets in terms of a corporate relocation.
[125] But it really, really makes a difference whether or not that relocation occurs in the city of Dallas.
[126] So do you find yourself competing with your nearby Dallas area cities for corporate locations and offering tax incentives and so on?
[127] We are absolutely competing with them.
[128] And I think We're doing a good job, but what we have facing us as a challenge, you know, the school system is something that people are definitely looking at when they're making decisions about relocating, but the tax rate is another.
[129] We have to constantly make sure we're not hurting ourselves from a competitive standpoint by taxing people out of our city.
[130] Obviously, we have to compete in things like infrastructure.
[131] It really hurts if people feel like the roads or the sidewalks in the suburbs are nicer than in the city.
[132] People care about that.
[133] You don't have to be an economist to appreciate the idea that competition between Dallas, Fort Worth, and the other nearby cities is a good thing for the region overall.
[134] In fact, it may account for a lot of the overall growth because just as firms in competition tend to produce a better product, cities do too.
[135] That's the theory at least.
[136] I asked Eric Johnson for a recent example of where Dallas beat out its neighboring cities and landed a corporate relocation.
[137] Well, we were successful in getting Uber to basically open a second headquarters here versus one of our suburbs.
[138] Uber prided itself on being a cutting -edge technology company where mobility and an urban environment was appealing to their employee base.
[139] There's a feel, a cultural feel to being in a major city as opposed to being in a former bedroom community that has become a larger suburb, but still.
[140] still a suburb.
[141] If you really want live music and you want to be able to walk from a restaurant to an incredible downtown park and eat at a food truck and taking a show or something like that, that's the city.
[142] If you want anything like real, genuine diversity from a socioeconomic standpoint, racial standpoint, and every other type of diversity, that's really the city.
[143] And I think a lot of folks who come from the coast, who are used to a more dense experience.
[144] Dallas is nowhere near as dense as our big coastal city competitors.
[145] So it feels like a good compromise for those folks.
[146] They're looking to leave maybe the density of New York or Chicago or Philadelphia or Los Angeles, but they're not necessarily looking to go from that to green acres.
[147] So Dallas is a softer urban experience, but still an urban experience.
[148] But I understand that with Uber, they had planned to have a huge office there, and then backed it way back, that there were supposed to be about 3 ,000 jobs in Dallas, and it ended up being more like 500, to the point where they even returned, I've read 30 million dollars of government incentives that were promised for those 3 ,000 jobs.
[149] So what happened there?
[150] I mean, it's pandemic -related.
[151] Let's just call it what is.
[152] This is about the pandemic impacting everybody's economic plans.
[153] I mean, people just stop taking Ubers.
[154] So they're still coming, but they're just coming with just like, a sixth the workforce for now at least, correct?
[155] Correct.
[156] For the time being, that is the plan.
[157] So the city of Dallas got Uber, sort of, but increasingly Dallas is losing out to the fast -growing former bedroom communities to the north.
[158] Prime example, the city of Frisco, about 30 miles north of downtown Dallas.
[159] We made that drive up to Frisco and met up with a man named Jason Ford.
[160] If you go back just 35 years, we were a city of 6 ,000.
[161] people.
[162] For the last 10 years, we've been just exploding with growth, and we're now up to 215 ,000.
[163] Wait a minute.
[164] From 6 ,000 to 215 ,000 in how many years?
[165] 35 years.
[166] Ford is president of the Friscoe Economic Development Corporation.
[167] His job is to build public -private partnerships and persuade corporations to relocate to Frisco.
[168] Ford is a transplant himself from New Orleans originally.
[169] Frisco, he points out, is hardly the only city nearby to have grown very fast.
[170] There are 15 cities over 100 ,000 people in North Texas.
[171] And Friscoe is the one we have come to visit today.
[172] It is one of the best examples of a former suburb that is starting to outshine its core city.
[173] Coming up after the break, we'll hear what Friscoe's done right and will ask If the Texas brand of conservative politics is so detestable to non -conservatives, why are so many of them moving to Texas?
[174] This is Freakonomics Radio.
[175] I'm Stephen Dubner.
[176] We'll be right back.
[177] We've just arrived in Frisco, Texas, a fast -growing city outside of Dallas that recently put up a 350 ,000 square foot corporate headquarters for Kureg, Dr. Pepper.
[178] This is one of two headquarters for the company.
[179] The other is in Massachusetts.
[180] but this counts as Frisco's first Fortune 500 headquarters.
[181] You should not bet on it being the last.
[182] Just how fast is Frisco grown?
[183] As recently as the 1980s, most of the area was farmland.
[184] There was one high school and 6 ,000 people.
[185] Today, 11 high schools with a 12th on the way and more than 200 ,000 people.
[186] So we add on average about 1 ,000 people per month in Frisco.
[187] That, again, is Jason Ford.
[188] who runs Friscoe's Economic Development Corporation.
[189] We are standing on the sidewalk in the midst of Frisco's Crown Jewel.
[190] It's called the Star District.
[191] This is a mixed -use development developed by Jerry Jones and the Dallas Cowboys.
[192] The Dallas Cowboys, if you don't know, are a National Football League franchise said to be worth nearly $6 billion, which makes them the most valuable sports franchise in the world.
[193] This is particularly impressive, considering they haven't won a Super Bowl in 25 years.
[194] years.
[195] The real estate developer Jerry Jones bought the team in 1989 for $140 million and he has marketed them brilliantly.
[196] He married the game of football with the game of real estate in a way that few others could dream.
[197] Years ago, the Cowboys declared themselves America's team.
[198] Their logo is a big star that looks as if it just jumped off an American flag.
[199] And that logo is everywhere in Dallas, including here in Frisco's new $1 .5 billion star district.
[200] This is a 92 -acre development.
[201] There's over a million square feet.
[202] You've got offices, you've got restaurants and bars, retail and shopping.
[203] You've got hospitality with the luxury hotel here on the corner.
[204] You've got health care, both tied to clinical and sports training.
[205] The Star District feels like a mix of bustling community center, Suburban Park and the nicest outdoor mall you've ever seen.
[206] Every part of this project has some ties back to Jerry Jones, the Jones family, or their organization.
[207] The Star District is also home to Dallas Cowboys practice facilities and offices, as well as the Cowboys Club, a private club and restaurant for Frisco's Sporting and Business Elite.
[208] Jerry got a sweetheart deal on the land, but I'll tell you, he under promises and over delivers.
[209] Originally, the investment was in the neighborhood of about $250 million, and today it is multiples of that.
[210] Other big names are flooding into Frisco.
[211] The PGA of America, that's the Professional Golfers Association, is relocating its headquarters here from Florida.
[212] This will be the anchor of a 600 -acre mixed -use development that includes three golf courses and a massive Omni resort, among the biggest resorts currently under development in the U .S. All these amenities are making Frisco less a bedroom community and more of a destination.
[213] It's very infrequent that we have to go to Dallas.
[214] It's easy to stay within our 10 to 20 minute drive and have virtually everything that we need on a day -to -day basis.
[215] You are probably familiar with the new car smell.
[216] Well, Frisco has a certain new city smell.
[217] So we're about to build a new $75 million public -private partnership performing art. Center.
[218] Why?
[219] Because the Fortune 500 headquarters want that.
[220] We need those arts for our students in the educational system.
[221] Our entire city is a laboratory.
[222] We've now had six public -private partnerships with tech companies that come in and test new solutions here in Frisco.
[223] Drive