Radical journalist Andrew Kopkind once quipped that Arizona and its capital, Phoenix, were “at the mercy of [their] own myths.” That was as true in 1965 as it is today. Local promoters have long credited central air conditioning with making the Valley of the Sun livable. The Greater Phoenix Chamber of Commerce, in particular, has promoted hot, arid Central Arizona as “the air-conditioning capital of the world.” But no matter what anyone tells you, industry did not come to Arizona—and Phoenix did not sprawl—because of air conditioning.
It’s true that coolers had been built in Central Arizona decades before Phoenix exploded in size following World War II, but hardly anyone had them. Window unit prices dropped in the 1940s, but these units were still costly and ineffective in 100-degree heat (no matter how dry). Central air was rarer still. The Federal Housing Authority did not cover the cost of this amenity in new homes until 1957. Even then, Phoenix builders tended to install systems in only the most affluent neighborhoods. As a result, just a third of all Arizona homes had central air by 1970.
In truth, no single consumer product or technology was responsible for Phoenix’s meteoric growth. Manufacturers came to Phoenix because of its “business climate,” a seemingly benign term coined at mid-century to describe an area’s ability to attract, sustain, and keep investment. What mattered most to executives on the move—much more than air conditioning—was the fact that wages were low, workplace rules were minimal, and tax rates were advantageous. Boosters were particularly proud that they had convinced voters to pass a right-to-work law (the first in the American West), to eliminate inventory taxes (both for raw goods used in manufacturing and for finished products ready to be shipped), and to reduce fees on equipment used in manufacturing.
By 1960, the Arizona capital—a farming community of about 11,000 people in 1910—was an electronics and aerospace oasis with a population of nearly 440,000. Phoenicians found work producing an astonishing array of goods for defense and consumer needs, including airplanes and aircraft parts, aluminum products, chemicals, gases, electronics components, gears, controls, scientific instruments, metal parts, missiles, rockets, plastics, tools, dies, sensors, small power sources, tracking devices, and (yes) environment control systems.
But for all these short-term successes, Phoenix’s carefully calibrated business climate was in fact malignant. Bankrolling corporate welfare left Phoenix and many other communities on the verge of bankruptcy, especially when employers decamped for cheaper pastures. Phoenix (like the rest of the country) is now much better cooled than it was before, but that fact has hardly helped it retain businesses or attract new investments. Arizona has lost much of the industry that boosters recruited, most of it finding its way across the border or overseas. Arizonans, moreover, hardly stand out for their business-first credo. Executives can find similar tax advantages, giveaways, and union restrictions across the country (even Michigan has a right-to-work law now).
And it is no coincidence that cities and states across the country now find themselves on the precipice of financial catastrophe, a fact that should be kept in mind as they face the same problems as Arizona and its capital: namely, what to do about municipal debt, persistent unemployment, and sluggish housing markets. Indeed, Phoenix now stands out, writer and social critic Andrew Ross maintains, as “a twenty-first century Detroit in the making.” It certainly looked that way in 2008, when the housing crisis struck the cash-strapped state and its capital particularly hard. Many states and municipalities had, of course, tied their finances to real estate and construction and found themselves offering improbable schemes to raise revenues in 2009.
Arizona’s plight made headlines when the government sold off a collection of state properties, including maximum-security prisons and key buildings in the state capitol complex. The $735 million deal left the legislature in the unique position of leasing its legislative chambers from a private real estate company. “What are our choices?” asked House Majority Leader John McComish (R-Phoenix). “We could cut more, or we could raise taxes more. Borrowing over the long term, we think, is better for the people, better for the economy.” This agreement will cost Arizona a lot in the end, but Republican Gov. Jan Brewer was still unable to convince representatives to buy the capitol back last year after a regressive sales-tax hike provided them with a budget surplus.
Americans should keep this saga in mind this fall. Cooler temperatures will not bring fiscal relief or an end to the Great Recession. And the answer does not lie in one or two new product lines, such as the solar panels or trash-to-energy plants, that many consider a quick cure to what plagues metro Phoenix. Neither technology will make a dent in the city’s 7 percent unemployment rate, which is slightly below the national average but hardly stellar.
Small groundswells and large protests indicate that the free-enterprise myths that created Arizona’s unsustainable past may be losing their power. Many Americans now express support for making businesses pay their fair share of the tax burden. Citizens have likewise been eager to take advantage of Obamacare, whose Medicaid expansion provisions are making a real difference in the lives of low-income Arizonans. Trade unions and immigrant rights groups have also vigorously sought to empower workers, mount legal challenges to anti-union legislation, and enter into coalitions with environmental groups to make sure that new jobs will be good and green. That’s great news, because what Phoenix, Arizona, and the rest of the country need is not another gimmick or technology, but rather a new climate built on putting the public good above corporate welfare.