The timing could hardly be better. Just as New York prepares to install a radical democratic socialist as mayor, Nasdaq Texas is being launched. It will join NYSE Texas and the Texas Stock Exchange in turning Dallas into a serious financial center. Indeed, the city’s mayor, Eric L. Johnson, confidently predicts that “Y’all Street” will replace Wall Street as the beating heart of American business. And the really interesting possibility is this: That might be an improvement.
It remains to be seen how Zohran Mamdani’s experiment in creating East Berlin on the Hudson works out. One point is clear, however: If he is successful in imposing the higher corporate and income taxes he wants, not everyone will stick around to pay them. Florida would be one potential alternative. But Dallas is starting to look even better. Nasdaq Texas expects to open for business early in the new year, the NYSE announced in February that it would relocate its Chicago operation to Dallas and the new Texas Stock Exchange has backing from big hitters including BlackRock and Citadel. If you want to spend the morning trading Tesla and Nvidia before heading off to your ranch, you won’t be short of options.
True, it might not work. Most equities will be dual-listed with the New York headquarters. And in a business world powered by Zoom meetings and remote work, where a stock is listed doesn’t matter as much as it did when guys in suits used to shout at each other across a noisy trading floor. Y’all Street could prove about as durable as last week’s meme stock. But there are good reasons why moving America’s main financial center more than 1,300 miles south might turn out well.
For one, it’s well known that the economy of the United States has been shifting toward the Sun Belt for decades. Texas’s GDP is already equivalent to the eighth largest national economy in the world, larger than Canada’s or Italy’s. New York became the dominant financial hub at a time when the northeast was the center of an industrial economy. But things have changed. With the top five destinations for corporate relocations from 2018 to 2023 being in the South, Texas is a lot closer to the nation’s new center of industrial gravity.
Next, Texas’s freewheeling, pro-business culture is far more likely to turbocharge growth than an increasingly left-leaning New York. Elon Musk may be controversial, but he is the greatest entrepreneur of his generation and it is significant that he has moved his headquarters to Texas. And the state has long been home to such giants as Dell and American Airlines. We can all debate whether New York’s Gen Z-driven shift to the left is justified. But it is hard to argue it will be good for business. What kind of entrepreneur wants to make their career in a place where they are seen as an enemy? In Texas, which has just voted to permanently ban financial transaction taxes, no one will ever have to feel embarrassed about making their next billion.
Finally, Texas is far more likely to focus on real engineering instead of the financial sort. New York finance is increasingly dominated by hedge funds, private equity, leveraged credit and mutual funds, all of which are more about making money from existing assets instead of creating new ones. When its critics accuse it of casino capitalism, they have a point. At their best, the capital markets exist to raise the money to build new enterprises. That’s more likely to happen in Texas. Why? Because it’s closer to the places where stuff gets made — such as the Taiwan Semiconductor Manufacturing Co.’s site in Phoenix and Toyota’s hybrid vehicle plantsin Tennessee, West Virginia, Kentucky and Missouri. That was true of New York’s finance center for much of the 20th century, but it has steadily drifted away from those roots.
Location matters. It impacts people’s mood, their appetite for risk and their desire for hard work. Dallas will prove subtly different from New York in ways that, so far, we can only guess at. The important point, however, is this: Financial centers don’t last forever, nor should they. After all, capitalism thrives on creative destruction, and that applies to its own infrastructure. It may well be time that America’s financial center moves to the South — and Mamdani may well be doing the U.S. economy a favor by driving it out of New York.
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