I've repeatedly made the claim that Texas 2016 is essentially California 1986. Texans pride themselves on having a high growth, dynamic economy, free of legacy costs and burdensome regulations....just like California did a generation ago. Heard of Ronald Reagan? California was once considered a fairly conservative state, at least financially. California got started on the Suburban Experiment three decades ahead of Texas (thanks to a more forgiving climate) and has arrived at the logical destination three decades earlier. The Lone Star State need only look west for a preview of coming attractions.

Texan Andrew Card, former Transportation Secretary under George H.W. Bush and Chief of Staff for George W. Bush, observed that things in Texas are all spread out and that makes it easier to make transportation investments, ostensibly because there aren't all those pesky places people want to go to getting in the way of all that building...and stuff. He contrasted that with the Northeast where, you know, it's more expensive to build (read: property is more valuable).

This exchange does illuminate policymaker's backward thinking on infrastructure investments. We measure success in terms of how much we can build instead of how much return we get for what we build. The transaction is the objective. Full stop. That is to be expected from an economy run in Ponzi scheme fashion (benefits today, consequences decades in the future).

It's fascinating to watch this play out in major cities like Dallas, where a recent budget document reveals the midlife crisis stage of a systems failure. I'll use some slides from that presentation to illustrate the problem hidden in plain sight.

1. Rising Revenues

Property values are climbing -- either from new construction or appreciation of existing properties -- and this means more revenue for the city coffers. In fact, property values are expected to grow at percentages many multiples of the economy and of inflation. This is a situation that has persisted for years since Dallas is in the Illusion of Wealth phase of the Growth Ponzi Scheme. Theoretically such robust growth should solve all ills, but it doesn't. Why? Because the investments they are making gives them growth but also enormous liabilities, essentially a negative return-on-investment.