California vs. Texas: The Power Struggle
May 20, 2002 -- Forget the North and the South. Throw out that East Coast-vs.-West Coast stuff. In the United States, in 2002, there's only one regional rivalry that matters.
California vs. Texas.
It's a head-on collision at the intersection of politics, business and culture, and nothing else in America can match it.
It's Democrat-dominated California, the biggest of the blue states you saw on those election-night maps, pitted against rabidly Republican Texas, largest of the red states. It's President George W. Bush's administration, loaded with Texans, trying to unseat Calif. Gov. Gray Davis in his current re-election campaign while wondering if the president can carry the state in 2004.
It's the year's biggest business story, the Enron scandal — a kind of political proxy battle in the economic world, pitting California's power-hungry consumers against Texas' apparently price-gouging energy traders.
It's former Enron chief Jeffrey Skilling, at the height of the California energy crisis last year, comparing the state, unfavorably, to a sunken ship: "At least the Titanic went down with the lights on." It's Calif. Sen. Barbara Boxer, at a congressional hearing this year about Enron's collapse, telling Skilling he was one of "the robber barons of the 21st century."
It's computer companies from California and Texas — Hewlett-Packard and Compaq — announcing a seemingly straightforward corporate merger, and having it blow up into a bitter public-relations battle and court case, highlighting a schism between contrasting corporate cultures.
Look around, and clashes between Texas and California seem to be everywhere these days — even the basketball court, where the Los Angeles Lakers and the Sacramento Kings tag-teamed to eliminate the San Antonio Spurs and Dallas Mavericks from the NBA playoffs last week.
"You've got these two cultures opposing each other," says Kevin Starr, the state librarian of California. "Wine and cheese against beer and nachos, greenfields vs. brownfields, skeptics against practicing believers, the uprooted and the traditionalists … granola against grits."
Eyes on the Political Prize
However you want to characterize it, the California-Texas rivalry essentially revolves around power, in its political and physical forms.
Taking its power struggle with Democrats west from Washington, the Bush administration jumped into this year's California governor's race, targeting Davis, an administration critic over energy policy — and a potential (if longshot) presidential candidate himself.
But in the GOP primary, the White House backed moderate former Los Angeles Mayor Richard Riordan — who promptly suffered an upset loss to his more conservative opponent, William Simon Jr.
It was just another setback for Bush in California, whose 54 Electoral College votes are one-fifth of the total needed to gain office, and which has traditionally been kind to Republicans. This is the state that sent Richard Nixon and Ronald Reagan to the White House, after all
But California has tilted heavily to the Democrats in recent years, to the point where only one Republican, Secretary of State Bill Jones, holds statewide office. In 2000, Bush spent $12 million on TV ads in California during the presidential campaign; Al Gore, who spent nothing on TV ads in the state, won by 12 points.
"I still think they still view California as an object of frustration," says Cal Jillson, a professor of political science at Southern Methodist University in Dallas, speaking of the Bush administration. "It's like foreign territory, hard to understand — from the Texas perspective, it just makes them grit their teeth."
The Bush administration can take consolation in surveying the Republican stronghold that Texas has become in the last two decades — an equally historic shift in the state that sent Lyndon Johnson to the Oval Office and was controlled by Democrats for a century.
Enron and On: Electric Power
And then there's the spectacular Enron mess, a political and regional war by other means involving California's electrical power supply and Bush's chief corporate backers. Last week, the Senate held hearings on alleged energy price-fixing in California by Enron, while the company remains the subject of a series of sprawling government investigations.
When California's electricity prices hit record levels in early 2001, Davis and other Democrats blamed Enron for price-gouging. Enron and the Bush administration blamed California's flawed energy deregulation plan.
California Attorney General Bill Lockyer even said he wanted one-time Enron CEO Kenneth Lay locked in "an 8-by-10 cell that he could share with a tattooed dude who says, 'Hi, my name is Spike, honey.'"
In short, it got nasty — well before Enron's financial house of cards collapsed last fall.
"For three months Gray Davis did a very good job of blaming us," Enron spokesman Mark Palmer told the Texas Monthly after California prices dropped. "We were a Texas company. There was a Texan in the White House. California was a state that didn't put him in office, and his biggest contributor was a Texas energy company … the truth will take care of Gray Davis."
But with Enron memos coming to light this month that, critics charge, clearly document price-fixing schemes in California, the truth may well favor Enron's critics. Looking ahead to November, says Jillson, "I think Davis is in good shape on the energy issue. There is a smoking gun."
On the other hand, Republicans seem to have been untouched by Enron fallout. An ABCNEWS.com poll in February showed that 70 percent of Americans are no less likely to support a candidate who received a campaign contribution from Enron in the mid-term election.
Culture Clash in the Computer World
Meanwhile, there may not have been a political dimension to the recent Hewlett-Packard and Compaq merger brouhaha — but there sure was a cultural one.
When the two companies announced plans to merge last Sept. 4, all seemed routine, although many industry observers criticized the plan. Then board member Walter Hewlett — son of a company founder — began his campaign to stop the union, both because he thought it was a poor strategy for HP, and it would destroy the famed "HP Way" of business that has long been a Silicon Valley ideal.
Hewlett implied he was sticking up for the virtues of employee input and innovation, as opposed to Compaq's supposed hierarchical, bottom-line approach to manufacturing generic PCs. At the same time, merger proponents cast Hewlett as an "academic" and "musician" (he has a music PhD) out of his depth in the business world.
"It's Texas big hair vs. California crunchy granola," jokes Mark Specker, an analayst at the Soundview Technology Group in San Francsico.
More seriously, Specker thinks the merger generally makes sense. But even with the merger approved — after a close vote and brief court battle — he notes the company will have a challenge in blending its distinctive elements together: "The Texas Compaq culture has typically been a little more production-oriented and the Hewlett culture has been a very engineering culture."
Same Difference?
The HP-Compaq case, agrees Starr, represents another example of the disparate cultures of California and Texas — and underscores the concerns Californians have about losing control of the businesses that have helped shape the state's identity, from the aerospace industry to the Bank of America, which is now based in North Carolina. And when it is Texas that seems to be encroaching on California's business, Starr believes, Californians are all the more wary.
"In the case of California and Texas, you have two nation-states," says Starr. "You have states, but they're of such size and power that when you bring them into conflict, it's consequential."
For all that, he readily acknowledges the broad similarities between the states, which have been beneficiaries of the post-World War Two economic boom and vibrant immigrant cultures.
"That's where you stop and look at it from the national perspective," says Starr. "These are growing states with dynamic economies, have been profoundly transformed by the Hispanic presence, they have great state universities, are hungry for formal culture, and are coming into their own as dominant presences."
Which is why we can expect the rivalry to continue.