Kyle Paoletta - American Oasis

30:02I mean, it's, you know, before it again, it's this kind of agricultural village. And when the railroad arrives, they actually were first going to build the railroad a little ways north in a town that's called Bernalillo. And when they went there, there was this kind of, you know, old Spanish gentleman who was known as Don Perea. And when they are trying to negotiate for land to build the railroad depot, he quotes them, you know, a couple hundred dollars per acre, which, you know, this is 1879. So this is a sizable sum. And the railroad like packs up and just head south and Albuquerque is the next town south.

30:48And there, there was like a set of Anglo merchants who had moved there. And I mostly write about Franz Hunting, who was a German immigrant who, like many, had come after the California gold rush and tried to get to California, but run out of money. And so ended up in Santa Fe running like a dry goods store. But him and two other Anglos had acquired a fair amount of land kind of outside the village of Albuquerque. And they make a deal with the AT &SF where they're basically sign over this huge tract of land for$1 in exchange, whatever the railroad doesn't use, then they, you know, will see a return on the back end from it.

31:34So they very savvily are like, once the railroad is here, this land is going to be enormously more valuable than it is now. whereas Perea up north had gotten rich running wagon trains. And so he recognized like part of why he wanted so much money was like the railroad's going to ruin me. Once the railroad's here, the wagon train isn't going to be profitable anymore. But anyway, so you have this really interesting thing where there's actually the original Via de Albuquerque, which is now Old Town, and then there's new Albuquerque one mile east where the train station is. And very swiftly, new Albuquerque outgrows old Albuquerque.

32:14And, you know, with that question about Einstein, like where I mentioned him in the book is like, so the AT &SF, like all of these railroads in the 1880s is spending a tremendous amount of money to, you know, build this infrastructure. But now they need people to actually ride the railroad. Yeah, they got us commercial passengers. Yeah, they were all basically real estate companies. So they needed ridership. They needed these cities to grow in order for all that real estate that was associated with the railroad to be worth enough that then they'd be able to pay back their investors in New York.

32:52And so what the AT &SF does is it really taps into like the indigenous history and the indigenous culture of New Mexico. And this is they renamed their trains. You know, they have like the Big Chief. That is the name of one of the trains. They run these so-called Indian tours where when you're laying over in Albuquerque or Flagstaff, they'll take you up to a pueblo, take you to the Grand Canyon, take you to the Hopi. And so it becomes this kind of voyeuristic tourist experience for people from the East who, you know, may not have had any interaction with Native Americans to go to the West. And on their way to California, you know, they'll stop for a night or two and then go visit a village.

33:44And there's something that Einstein does. There's something Eleanor Roosevelt does. Many, many of the kind of leading lights of the term century America. they do these Indian detours because it's just kind of part of the part of the vacation when you're when you're heading west on the railroad. And why I'm kind of fascinated by this is that it very much feeds this idea of New Mexico, especially, but also Arizona as this sort of like place of the past or place of this kind of like sort of foreign version of America. And, you know, the railroad is partially why you get these art colonies in Taos and Santa Fe.

34:27And a lot of those early artists are hired by the railroad to, you know, make calendars that they can then advertise the railroad with. And I'm sure we'll get into talking about the history of Arizona a little bit more. But it's also, you know, this is a time when people are first starting to see images of the Grand Canyon, first starting to see images of Monument Valley, and first kind of realizing like, oh, after the Mexican American War, this region was thought of as basically just kind of the land bridge to California. and in the 1890s, 1900s, they're really waking up to like, oh, there's like this whole world here that like doesn't quite, doesn't quite sync up with their ideas of America.

35:16Yeah. Yeah, so the other thing that, and this shares in common with a lot of other major cities is post-World War II, suburbanization explodes across America and every social history in every city, you can literally track with suburbanization. It causes major social upheaval because we started to say, hey, our cities are getting a lot bigger geographically. How do we plan those? And then the thing that comes in on the back end of that is the interstate system. And in every city, I've yet to see a social history where this went well for the record. I mean, I just got to put that up there. But could you maybe explain how some of those issues, the idea of suburbanization and then also interstate highways, because we had to take our cities, We had to literally cut a route in the middle of these cities to fulfill a federal mandate in some respects that was planned and deemed and we used eminent domain for.

36:09Can you kind of teach us about, say, in Albuquerque, how suburbanization, the interstate highway changed the city? Yeah. Yeah, well, I think all of these cities, the interstate highways very much follow the railroads. So in Albuquerque, the, you know, it's I-25 follows the route of the old AT &SF railroad. In Tucson, it parallels it. In Las Vegas, it parallels it. It's just in Phoenix. I-10 mirrors exactly where the Southern Pacific Railroad came through, which was, and basically Basically, you get this real pattern of basically segregation where that old idea of like the wrong side of the tracks.

37:00Yeah. Like the south side of Chicago kind of idea. Exactly. And like, I'll put that like in Phoenix terms, like south of the railroad tracks was where all the farm workers lived at the time when Phoenix was very agricultural and you have this huge explosion of the cotton industry and all the farm workers live south of the tracks. So then when the interstate comes in, it kind of like reifies that line again. And that, again, remains like the part of the city with the least investment. And in Phoenix, you have through the 1960s, there's houses don't have running water. In Las Vegas, there's a very similar history where it's running more north-south, but what's now west Las Vegas was on the wrong side of the tracks from downtown Las Vegas, where the original casinos were.

37:50And there, there's no paved streets. There's, again, very little plumbing. And it's actually the interstate highway system, part of the deal to route that interstate of 15, where it is right next to the railroad tracks, was that some of the money from that project would go to pave streets on the west side of Las Vegas. So the interstates very much follow the railroad, but by doing that, they kind of, you know, reinforce this pattern of segregation that's felt. Which, again, is not just a Southwest problem, as you say. This is true in Chicago, in Boston, in Atlanta, like, you name it. This is just like American urban history is like when you have these neighborhoods that are mostly black or mostly Hispanic.

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39:20Read and consider it carefully before investing. Smead Funds distributed by Smead Funds Distributors, LLC, not affiliated. Let's talk about the origins of Phoenix. I hadn't thought of this just until he reminded me. Uh-oh. I was in the grocery store. We were in the grocery store. This was a number of years ago. And I was with a friend and I said, in 1960, there was 100 ,000 people in Phoenix. And by 1970, there was 400 ,000 people in Phoenix. The window-mounted air conditioner was adopted and allowed people to live year-round here in the heat. Which, by the way, used to be an add-on to a vehicle.

40:06It wasn't standard, but I think it was by 1980, 90 % of the vehicles in the Southwest had air conditioning in them. Yeah. So let's go back. Who was here along the banks of the Salt River originally? Yeah. So there's people that have been called like the Hohokum culture, also known as the ancestral Sonoran peoples, that from about like 400 to 1500 had this kind of vast agricultural society along the Salt River. And, you know, archaeologists now think that it was the largest agricultural society of North America. You're 30, 40, 50 ,000 people living in the area, which, you know, at a time when most indigenous peoples lived a little more nomadically, was a lot to be concentrated in one place.

40:59There's, again, some kind of climactic changes where most of those people go to the Gila River and the Santa Cruz. And then basically after Mexican-American War and the Gadsden Purchase, you have Anglos starting to come out to Arizona. And so you have that kind of first generation finding these canals that were left behind by the ancestral peoples and saying like, aha, like we can farm here because look at these ancient canals. And I think Phoenix often has this story of kind of this like vanished people. One thing I write about in the book is that at the same time, these canals are being found and first kind of being put to use again, just south along the Gila River, you have a U.S.

41:50Army captain who's visiting the Tohono O 'odham farms there and describes them as kind of the most verdant farms he had seen west of the Mississippi. So there was sort of still plenty of agriculture happening with Native Americans in Arizona. Was that when they started cotton? Wasn't cotton a big crop? So that was basically the early years of agriculture in the Salt River Valley. It's a little bit of a mix at first, but around World War I, almost all of the fuels get turned over to cotton. because during the war at that time, the only source of cotton globally is really Egypt. But suddenly, you know, the world is at war.

42:37You can't get Egyptian cotton. So there's this huge cotton boom where I don't have the stats in front of me, but basically there's like a 400 % growth in the amount of cotton that's produced in Arizona. Pima cotton. Pima cotton, yes, which is a form of Egyptian cotton that's kind of been genetically engineered for Arizona. But there's a huge bust after the war because in 1919, World War ends. Suddenly you can get Egyptian cotton again. And so there was all of these farmers completely lost their shirt because they had planted only this thing. They thought they were going to get like$1.50 per bale for it.

43:19They ended up getting about like 20 cents, 30 cents. And so this is one of the, to me, one of the precipitating events that's like, oh, we need a less boom and bust economy here. We've said that a few times here in Arizona before. Yeah, right. You know, it's funny you mentioned this because I know water and making good use of water is what we'll talk about i'm sure later in in the book but but uh when you convert cotton farm into residential area i'm told the the homes use less water than well yeah that's in the but we'll get that later we'll get that later okay so teach our listeners about the arizona highway magazine how big was the publication and how important was it to the mind of the person that might come this might be the like the best part of your book because this is like a social history i'd never heard kyle so i think this is like major kudos to you because it totally as soon as you wrote it i I was like, this makes sense.

44:18Like, no wonder people have been kind of dying to come here for years. Yeah. Yeah. I mean, one of my huge questions, like just growing up in Albuquerque was like, why is Phoenix so much bigger? Right. And like in the book I write about before World War II, all of these cities have around the same amount of people. Like Phoenix, Albuquerque, Tucson, El Paso all have around 100 ,000 people in them. And but you just said it like after World War Two, there's this explosion in Phoenix and it grows much more rapidly than the other cities. So so I was really trying to answer, like, how did that happen?

44:57What explains Phoenix's relative success, especially over cities like Albuquerque and Tucson that were much older and had a much more kind of established urban pattern? And I think Arizona Highways is sort of part of the key to the answer, that this is a magazine owned by the State Department of Transportation that was initially founded basically just to say like, okay, we're building a new county road out in La Paz County. It's going to connect to this. Like very kind of schematic, very boring engineering. Yeah. But there's a guy named Raymond Carlson who, you know, he grows up in Arizona and that goes to Stanford, comes back, is working as a journalist.

45:42And that when the Great Depression hits, he's out of work. But he has the great luck that his wife's uncle is elected governor. And so he gets this direct line to basically like a state job running this magazine. And in that role, he kind of reinvents it as a tourism magazine and says it's not just going to be kind of for road engineers. It's going to be for anyone who uses Arizona's highways, hence the name Arizona Highways. And so in pretty short order, this magazine goes from having a circulation of like a couple thousand people in the transportation industry to over a half million people. Over 90 % of them live outside of Arizona.

46:28And the way he does that is mostly through photography, that he's publishing color photography on the cover of Arizona Highways long before any other magazine. They have a color cover before National Geographic does. And these photographs are of the Grand Canyon, Lake Havasu, of, you know, blooming Ocotillo cactus. Sedona. The petrified forest. Sedona, exactly. And the photographers he's getting are like Ansel Adams, Esther Henderson, like very, very talented, famous photographers. and it sort of helps the rest of the country see Arizona through new eyes where before there was that stereotype we started with of like nothingness, vacancy, sand.

47:23And now there's these places that people may have heard about or seen kind of like an old, you know, I don't know, black and white photograph of, but now they're seeing it in color. They're seeing these kind of panoramic shots. And then Carlson writes in this very evocative style and has other writers do the same that kind of really taps into that like Zane Gray Western novel, like romance of the West. Yeah. And at the same time that he's really kind of showing the rest of the country how beautiful Arizona is, there's also these features about water infrastructure, about dams being built, and about Phoenix and very much sort of these embedded advertisements for Phoenix as a city and as a destination where, you know, I think I quote one ad that literally says like, get twice the house for half the money.

48:19Like, so like, this is the same thing you hear today. It's still true. Yeah, it is still true. So I want to pivot a little bit because you make a, so, and by the way, like as a side discussion. I think a whole, there could be a whole department of study at a university around this, but you touch at something that I think is a very important. You talk about like Mesopotamia, for example, was an arid land. And there's a lot more history in arid lands than people claim to. And so as you were talking about like the East coast and the Southwest, I would argue, as you said that, I was like, oh, the Southwest is going to win this game.

48:55Because you look at the movement of people, you look at the development of capitalism, things like that. The Southwest West is the best form of that in America today, I would say. Now, I'm biased. I live here, but I say that because I was thinking a lot about that paradigm. I want to shift a little bit, though, because, again, another paradigm that you said, you were telling kind of the history of planting here and developing the agriculture and the canals, and you quote a line that they used at the time, which was rainfall follows the plow. Okay. Which by the way, if I was going to give you a theme of what I've seen in Arizona, like you mentioned, that was an A dot publication, Arizona highways, rainfall follows the plow.

49:38So what are they plowing? They're plowing pictures and storytelling of Arizona. What happens? Rainfall is people show up eventually. And when you said that, I mean, that is such a true paradigm for what we witnessed here, where this isn't just like, oh, it randomly happened. No, there was plowing going on in advance of this. And I would say, is that something you think of as you think across the Southwest? Or what I took away from your writing is that's more dominantly true from what we've seen in Las Vegas and Phoenix, hence why the growth has been so much stronger. Yeah, absolutely. And I love you taking that quote and kind of thinking of it beyond agriculture, because it's absolutely the case that at the same time that Carlson is editing Arizona Highways, he's buddies with the Goldwater family, with Dwight Hurd, with Del Webb, this whole class.

50:29Bimson was in there too? Yeah, Walter Bimson, the chairman of Valley National Bank. That like all of these businessmen who are basically making the land fertile for development by offering tax breaks, by recruiting companies to come, like mostly aerospace and technology. And so like they outcompeted the rest of the region. And El Paso actually, you know, El Paso once upon a time was sort of the leading economic center of the Southwest, mostly because of the railroads and its proximity to Mexico. And they in the 70s, they commissioned a study that's basically like, wait, how did Phoenix surpass us?

51:09Like, how did we how did we lose? And I think it is very much that they didn't have that kind of forward thinking vision and this idea that we can kind of fill this valley up if we like orient ourselves right. And I think Las Vegas does the exact same thing. I mean, Las Vegas is the only one of these cities where there's no real indigenous history. I mean, people were nomadic and would stop there for water from the springs, but there's no kind of settlement there. When the Mormons are first coming to the West, they send a party to settle and they abandon the Las Vegas Valley after a year and they call it the land the Lord has forgotten.

51:57Yeah. It was like so sort of hostile. But with Las Vegas, between the railroad coming in and then especially the Hoover Dam being built, and suddenly you have the largest reservoir in the country next door, there was that opportunity again to kind of build something out of nothing, which to me is like the definitive Southwest Act. And they just follow the blueprint of Phoenix, except replace, you know, agriculture and aerospace with gambling. But it's the exact same playbook. Yeah, yeah. Yeah, so that leads us right into teaching our audience about the agreement struck in the 1920s on the Colorado River.

52:37Because this is just so important. I mean, like that debate is going on right now. Yeah, Vegas and Phoenix are very much connected by that agreement. Yeah, so this is the Colorado River, as probably a lot of your listeners know. This is the main water source for 40 million people between California and the rest of the Southwest. And so it all, yeah, it starts in 1920, which is a period when, again, these cities are starting to first grow. There's a lot of agricultural development happening in like the Imperial Valley of California and around Yuma and Arizona. And there's this recognition like California is bigger than the rest of the states that Colorado flows through combined.

53:23We have to come up with some kind of plan to manage how the water is going to be shared because otherwise California is just going to use it up. And so there's a series of negotiations that kind of culminate in Santa Fe where there's a delegate selected by each governor of the seven states and is overseen by Herbert Hoover at the time, who's like a secretary in that presidential administration. And they hash out the Colorado River Compact, which basically divides the basin into a so-called upper basin and lower basin, where the lower basin is California, Arizona, and Nevada. Upper basin is the state of Colorado, Wyoming, New Mexico, and Utah, where the two basins split the river 50-50, maybe a little extra goes to the lower basin because it is a larger existing population.

54:21And that's sort of the basic framework for how the river is shared. And then within the state, it's like each state from its half, then they kind of negotiate with each other about who gets what. But that's sort of the, that is the founding document. And the problem with the Colorado River Compact is it was signed after a relatively wet period in the basin. So all of the estimates from the Bureau of Reclamation about the annual flow were off and off by a lot. And so they're starting by the 50s. Everyone knew like, oh, we on paper, there is more water than there is in reality. But it's not a huge deal really until the 80s and 90s because the region just isn't big enough yet.

55:17But it's only in the 80s and 90s when, you know, Phoenix crosses the million mark, then the two million mark. Las Vegas begins growing really, really rapidly. And then you still have this huge amount of agriculture. And then in 2000, so 2000 is the last time that Lake Mead was full and the other big reservoir, Lake Powell, was full. 2000 starts what's been called like a mega drought, which really since then we have seen the level of these reservoirs drop and drop and drop. And so for the past couple of years, we really are reaching, we have reached the limit of how much water is in the river to be shared.

56:05And so I write about in the book kind of the negotiations that are now going, where going off this 1920 document, like how do you use this sort of imperfect agreement to adjust to the current conditions where, you know, as the basin is drying out because of climate change? change, there's just less and less water available. How do you share in that time of scarcity? It was like a huge question overhanging all of us. So Kyle, like as you were, you're telling all these histories and you talk about some of the former sports that were played by the indigenous people and Native Americans that were here.

56:43And so like, I was like, if the Martians came back like 10 ,000 years from now, and they look down at Arizona, or I even say like Nevadans, they say, what was their favorite sport they played and they'd be like, it was obviously California bashing because they were really good. But here's why I say it because, and again, I think this says something about the lack of, you know, we've always lived in places of scarcity as Southwesterners. So it's like scarcity doesn't bother us because we live in light of scarcities, to your point, versus like California, because it was the original settlement in many respects to benefit from the Colorado River, it grew up in abundance, right?

57:23It did grow up in scarcity. And so I point that out because as I read your book, I thought, gosh, New Mexico, even Utah, Nevada, and Arizona, I don't worry about those places because we have to plan. Like Bill said, I think if you, you know, we use less water here in Phoenix today than we did in the fifties, because as you talk about in your book, agriculture's coming down, which means as you replace agriculture with single family houses, the use per home is just far less than the same acre of agricultural use. But even down to, I want you to touch on this because I have this later in my notes, but I want to put it together with this.

57:58You talk about how Vegas use their water resources differently. They use conservation as the main pact, if you will, versus in a classic, like, you know, rainfall follows the plow, in a classic free market way, Phoenix just says, you want to use water, you're going to pay the toll for it. And yet they still have been highly efficient. Yeah, this is, I mean, To me, these are kind of the two paths towards using less water, where in Phoenix, it's just starting in 1990, they started charging more for water in the summer. Correct. And it's a really, really simple reform that has had a tremendous effect.

58:36Price, right? Price. Price, the ultimate regulator. Yeah. Yeah. Whereas in Las Vegas, it's been a little bit more of the stick. I mean, there's a little bit of carrot where they pay you to like - Take out your grass and we'll pay you. Yeah. So it's kind of a supply side idea. By the way, it's so ironic. So Cole and I are members at Phoenix Country Club, which, of course, you got mentioned in the book, which is great. I love walking in there and looking at the original Phoenix Open features. The history is wonderful. And so there'll be an event at the golf course. And you have to sign up the moment it opens because it fills up almost.

59:11They're rationing it versus just saying, hey, let's pay a market price. Well, Bill and I are like, hey, let's pay market prices. Constantly telling the guys in the pro shop and the member committee, you got to charge a lot more for these events because if somebody wants to play, they should have to pay more. And you were tugging at my heartstrings because just so you know, we come from the Northwest. We moved here five years ago. I actually graduated high school here in the state of Arizona. So we'd spent some time here before. But I love grass. I will be the first one to tell you, you do not want my water bills in the summer.

59:40But you know what? I'm really proud to be able to have the economics to pay those water bills. And you know what? What does that mean? We're going to invest that extra profit I'm giving them into the supply of the future for water. It's all about charging prices to invest for the future, which I find, again, it's rainfall follows the plow. Yeah. Well, and I think the thing that drives me crazy as a journalist who covers this stuff all the time is every time there's a story about the Colorado River or water scarcity, including stories I've written, the art is usually of a subdivision. right and often yeah it's a housing thing yeah yeah and 80 of the water in the region goes to agriculture i know i know and it's just like if you're like the i just think you need to be looking at an alfalfa field in the imperial valley well yeah that's owned by the saudis that people would tell you about here in arizona where the saudis are the alpha field and it's like oh it's a national security and a water crisis it's like it's everything wrapped into one and it's coming from a journalist in Manhattan.

1:00:42And you're like, I don't know if this adds up, but okay, we'll read it. So the Imperial Valley uses more watering or is entitled to more Colorado water than the entire state of Arizona. And I don't want to pick a fight with the farmers. But to me, if you want to talk about rational water uses. And I have the head of Las Vegas's water authority, John Ensminger, in the book saying, we are not going to get into a situation where 40 million people don't have water so that we can keep growing alfalfa, keep growing cotton in the desert. Like it's just fundamentally irrational. And so to me, like, yes, residential users should be using less water if they can.

1:01:36But to me, there is actually plenty of water to go around in the region. It is just used really inefficiently. It's allocated really inefficiently. And so when people, you know, when I'm talking about the future, I'm not worried about water, actually. Like water is a problem we can for sure solve. Like Las Vegas recycles 40 % of its wastewater. LA spending$8 billion to do its own version of that program. Phoenix is in an earlier stage of having water recycling program. Like we will, there will be water for people who need water. In Las Vegas, they want you to drink alcohol anyway. Yeah. They don't want people to sit down to dinner and have a glass of water.

1:02:25Hey, I want to give a big shout out to everyone who's been working so hard on this show. You know, we recently hit the top 10 in investing podcasts on Apple Podcasts and even number one in the business category in several countries. As you may know, the show is brought to you by Smead Capital Management. Smead Capital Management understands how frustrating and illogical the stock market can be. If you're searching for funds with a proven track record, give the Smead funds a look or better yet, reach out at SmeadCap.com. And don't forget to mention your fan of the podcast. Past performance is not indicative of future results.

1:02:59Investing involves risks, including loss of principle. Please refer to the prospectus for important information about the investment company, including objectives, risks, charges, and expenses. Read and consider it carefully before investing. Smead funds distributed by Smead Funds Distributors, LLC, not affiliated. You point out one of the most understated facts. When you get a single family housing permit here in the state of Arizona, you have to have rights to 100 years of water to get a permit. Doesn't mean the house is built. So we've already taken out of the water allocation houses that have never been built yet.

1:03:32And again, why? Because when you're desert people, you plan. And I think that's so underwhelmed by a lot. I want to pivot actually, because I want to come back to El Paso del Norte, as I like to think of it. Originally, it was a Spanish mission, but it was torn into two. And I love this. Like you talk a lot about the history of it being torn. It's torn into two by the Treaty of Guadalupe Hidalgo, okay? But yet that divides the town by the Rio Grande, but it doesn't really divide the town yet. Yeah. Yeah, and that, you know, so you have that treaty assigned and basically immediately Americans rush in to settle the north side of the river, which is today's American El Paso.

1:04:19Whereas, of course, Juarez is on the other side and that is the original kind of city of El Paso. And they, it really is like, you know, one city. I mean, I would compare it to like Budapest in Hungary or, you know, one of these, these classic kind of river cities that has two sides that are in constant conversation. And, you know, I write a little bit about like during Prohibition, El Paso becomes a huge magnet because everyone can just go across the river to get their booze in Juarez. And, you know, during the early railroad era, part of why El Paso becomes so synonymous with the Southwest is it's where all these like Hollywood stars are stopping when they're taking the train between California and New York because they want to go to Juarez because Juarez has nightlife.

1:05:11It's very kind of like a real destination. Yeah. My wife and I just watched a movie with a couple of famous actors where they're across the border and there's all kinds of evil being put on them. So how did reigning in Vice ultimately change advantages the town had in the early 20th century? When you talked about it being the capital of the Southwest originally, I thought to myself, if the Great Depression had not come about and Prohibition had not come about, Vegas would not be a town today. Yeah. Oh, I think that's very possible. I mean, like El Paso was the original Las Vegas. And I think you're right.

1:05:52That is the Great Depression. It was a prohibition. I think it also, there was a little bit of, I don't know what I'd call kind of like Texas Puritanism that really became influential. And in many ways, El Paso is the least Texas part of Texas, but it is part of Texas. but, you know, even after prohibition, Texas still outlaws hard liquor for a really long time. Yeah. And so I think it lost that. If you want to think of that as kind of a competitive edge, it loses that competitive edge. Sure. When even, even out to like the story of the Texas Western basketball team, again, it's still the least part of Texas.

1:06:33Yeah. Yeah. Yeah. Which is, I mean, it was just a fascinating. Great story. Great story. Yeah. Yeah. That I wish I could have included more in the book. But then the other big thing in El Paso that is, of course, like the history of free trade. And I have, I talked to a journalist down there, Bob Moore, who's covered the city for a long time. And what he told me is like, El Paso basically made the wrong bet coming out of World War II, where when Phoenix and Tucson and Albuquerque were all betting on high tech, aerospace, El Paso was betting on manufacturing and betting on especially clothes manufacturing.

1:07:14Cheap labor. Cheap labor and built, you know, Tony Llama boots and Levi jeans. And like, it is the, one of the largest garment manufacturing centers in the U S for a long time. But what happens in the 1980s when we start having the maquiladoras in Mexico, And then we get NAFTA, like all of that manufacturing, like this is a story everyone associates with the Midwest, right? But El Paso is one of those cities that got hollowed out by those trade agreements, especially because Juarez was right there. Yeah, yeah. Like it was so easy to move those factories. And so it's a city that, you know, part of that twin personality of El Paso and Juarez is this is sort of like the side of it that wasn't good for El Paso.

1:08:07Or like congenital twins and one ate the other. Exactly. Yeah. And like economically, I think you can really argue that Juarez ate El Paso. Yeah. Yeah. And in more recent years, like you get into the cartel wars and the – yeah, like it gets more and more complicated. And then with kind of the militarization of the border, like it's a fascinating, fascinating place that – yeah, I have like a real love for El Paso having spent a lot of time there. Oh, by the way. So it's the only city I think in the southwest that I have not been to yet. And so I – as I was reading your book, I was like, oh, man, I got a road trip coming.

1:08:45I got a – And I've been to Las Cruces because my sister lives in Las Cruces, but people that live in Las Cruces aren't very anxious to go to El Paso. Yeah. Right? It's 45 minutes south. The last city I want to touch on briefly, another great quote. I mean, you had so many good one-liners. I think you touched the pulse of these cities, and I love this. We love your book. Thank you. Everybody should buy the book and read it. Yeah, yeah. So Bruce, I'm probably going to mispronounce the name, but Bruce, is it Bruce Bagoe? the philosopher Bruce Bago. Oh, yeah, the French philosopher Bruce Bago. Yeah, he said Las Vegas is born to radiate, to flash, to explode, okay?

1:09:26And I thought your story of the Kim sisters explains that. I think of the nuclear testing going on, you know, where literally people would stand in Vegas in like a deck, you know, awning area and watch a nuclear bomb explode. And then you think of like Super Bowl Sunday in Vegas. that is Vegas. That is the most defining history and issue of Vegas. That's where you go to explode. Yeah, right. So you talk about the Kim sisters, which I know we don't have time to go into, but I do want to mention that. But then you also talk about the connection, the most befuddling thing. I could not believe this, but explain briefly the connection between the Mormons and Steve Wynn.

1:10:07I think of Steve Wynn as kind of like, he wasn't Bugsy Siegel, but in the legacy of what Bugsy tried to do in Vegas, Steve Wynn perfected that in many ways. Yeah. Yeah. And in the book, I try to kind of tell the history of like how Las Vegas went straight, like how it went from this mobbed up town to a place where all these companies are traded on the stock exchange. And Steve Wynn to me is kind of the like pivot point. And he's the personality who catalyzes that. But yeah, it's the influence of Mormon money on Las Vegas can just like not be overstated. That from the very beginning, there were all of these, you know, harebrained schemes to build a casino out in the desert at a time when that was an unproven thing.

1:10:54And it was the banks in Salt Lake City were the only ones who were willing to do that. And that continues. So like Bugsy Siegel gets money from the Salt Lake City banks, the other kind of early establishers of these casinos do. And I write that there's a period where there's a plane departing from Las Vegas to Salt Lake City every Monday with millions of dollars that is like these mobbed up casinos paying back their creditors. Well, just to give you a little background. So the Circus Circus Enterprises, which was William Bennett and William Pennington, actually preceded Wynn. And they started with inexpensive room, inexpensive food, circus acts, bring the kids, et cetera.

1:11:45And then they built the Excalibur, the Luxor, and the Mandalay Bay, which actually they were a little bit ahead of Wynn. But Wynn took it, said, heck with these kids. Let's just take these adults to a level of decadence they've never even thought of before. Yeah, absolutely. Yeah. And the way that he gets established in Vegas. So he himself just has like a fascinating story of his father ran kind of small time casinos in upstate New York. And he has he talked about like first going to Las Vegas when he was a kid and being kind of like overwhelmed by it. But he kind of gets connected with another one of these bankers whose name was Perry Thomas, who was, you know, connected to this like legacy of investment in Vegas.

1:12:39And Wynn would later describe Thomas as like a sort of a second father. And Thomas helps him buy into, you know, his first kind of investments that then eventually get into, you know, Treasure Island and then the Wynn and the like, like he sort of Wynn, not only did he kind of recognize he was very good at kind of figuring out like, here's how this city works when he decided he wanted to move there. And that includes where the money comes from. But I think why he's so remarkable is it also, he has such a sense for the visitor experience because he had had that kind of first, just like was blown away by it as a kid.

1:13:26Audacious experience. Yeah. And that's why he's swimming with dolphins and he's wearing these crazy suits and like, you know, not necessarily a guy I would like to spend any time with. Eventually, he got money from Milken, as they all did. Yeah, right. But very much just like someone who, his finger was on the pulse of like what America wanted. And like, he knew how to monetize that. Well, the other thing you mentioned too is Bimson from Phoenix here, you know, he was also taking capital. Obviously, you know, the other people that had some ties. I think Del Webb had some land up there too. So the other current that I don't think we've seen, but I think we will see more of is that idea of like, so for example, we own a bank here locally, a piece of a bank called Western Alliance Bank.

1:14:18Originally, we started in Vegas, moved to Phoenix. I think we're going to see a lot more cross connection of the Southwest because as capital builds, wealth builds, people builds, it will be less resources from the outside and in more, I'll call it intra-region investment, which again has been historic, but not as more prevalent, I would say in the recent past. Yeah, the Boyds started that. Yeah. Yeah. Well, and just to touch on Bimson, like he was a real, again, this idea of like the bankers who are willing to fund this stuff, no one else will. Well, Bimson survives the Great Depression because he's willing to make these kind of smaller loans to individuals to buy cars or, you know, these kind of smaller purchases, which he was a real pioneer on that kind of lending.

1:15:07And it allowed him to build this huge, you know, bank, which then goes on to make like a$600 ,000 loan to Bugsy Seagull to finish the Flamingo in Vegas. Yeah. But I think you're totally right that there is a little bit of that history of the kind of regional banking and those things happening within the region. And I totally agree. It's only going to continue. In 99, we saw Frankie Valli and the Four Seasons at the Desert Inn and played golf at the Desert Inn. And soon that golf course disappeared and that casino disappeared to build another, you know, gargantuan. I was going to kind of leave you as a last question on this, Kyle.

1:15:52But again, this might be what you could answer to is like, you know, again, you touch it. And by the way, it's like tongue in cheek when I say this. I think of – the term that I think of Vegas and Phoenix is like white canvas, and it's kind of a double entendre, right? Because there is truly a quote-unquote white canvas to those cities versus what I'll call the eastern part of the southwest doesn't have that same white canvas. There's more of a story that was entrenched and could kind of like a bigger picture question being like the people that just didn't have a story or didn't care about their story has seen a lot more economic progress.

1:16:29versus, to your point, the investment, the feeling of ownership of a story has kind of shown more of a lack of willingness to test new theories, if that's fair. Yeah. I mean, I think there's a real deep split between Phoenix and Las Vegas as kind of the new version of the Southwest and Tucson, Albuquerque, and El Paso as kind of the older part of the Southwest. And I think a lot of it does have to do with that kind of, because there was not an existing, you know, Mexican or Spanish speaking population, it just was more easier for people, for namely white people from other parts of the country to kind of see themselves in and to kind of whatever their dream was, say like, yes, I can truly use this like white canvas.

1:17:19Whereas if you were trying to make the same kind of investment in Albuquerque, you know, going back to Dom Perea and Bernalillo, like there were, you know, wealthy people who came from the Spanish colonial tradition or were Mexican businessmen. And even in El Paso, a lot of that history after the city gets split is Anglo businessmen moving, marrying the daughters of the Mexican businessmen who are very successful in order to kind of like get into what were very insular societies. And so I think that's part of the story of why Phoenix and Las Vegas have outgrown them. And it also explains why Albuquerque like never really recovered from the Great Recession.

1:18:05the way Phoenix and Las Vegas did. You didn't mention the guy with the chicken restaurants. Right. Well, it's because it's your point. I find it very interesting. So like you can find flights to tourist destinations into Mexico, but not really business districts in Mexico, which is very interesting to me because it's like, we're so close. And yet commercially, San Antonio is closer commercially than Phoenix is. So I still see those lines where it doesn't make any sense. I mean, all the way up to like, I was befriended with someone. He works with a very wealthy Mexican family. And those relationships are plausibly there.

1:18:45But again, in this part of the Southwest, it's not as close as you'd expect, even though geographically it is. Yeah. There should be five flights a day between Phoenix and Monterey. I think there's like one or two max. And it might even be like part of the year. Kyle, where can people follow you? work over? Because this is your first book. You don't look like an old man. I assume you're a young man. You got a lot to write and I love your storytelling. And so where can people follow you? Where are you at in social media and things like that? Thank you. Yeah. So you can, across social media, it's just my first initial last name, Kate Paoletta on X, Instagram, Blue Sky.

1:19:26I have a sub stack that I, like when I write stuff for magazines or have a new piece coming out or if I'm doing like an appearance about the book, like I was just at the LA times festival of books like that. Usually my, my newsletter is like the best way to, to keep up with all that stuff. So, yeah, or just go to copaletta.com where all my stuff is. Cool. And we also did mention that, uh, obviously two back, which was the original settlement, you know, South of Tucson is where also, uh, the two back resorts where 10 cup was also, uh, I wanted to make sure to give all the, uh, golf aficionados.

1:20:01a little flair. I'm sorry to my Tucson people. We didn't talk nearly enough about Tucson, which is its own fascinating history. I agree. We didn't, but I will say this. And I think the original cattle ranches down near Tubac or down near Nogales are some of the most beautiful lands in all of Arizona or maybe the Southwest. So I have a true hankering at some point to wake up as an old man sitting out on a few hundred acres of parcel and enjoying my life. That one Flintstone Street in Tucson doesn't do Tucson justice. It's a beautiful place, just incredible place, but they got that one road that runs, and it's like being in a Flintstone where the same scenery passes you every four or five blocks.

1:20:47You mean like Speedway Boulevard? Gas station, gas station, gas station. It's the same street for miles. There's no way to skip it. There's no way to skip it. You have to drive. Kyle, thanks for your time. Your book makes me want to go on a road trip, like I said earlier, and want to do a lot more adventuring here in the Southwest. And I also think the other thing your book brings to light is it still sits as a frontier that I would argue is misunderstood. Our listeners should go buy a copy of American Oasis today. I'm not worried about people that have had to deal with, like we talked about earlier, scarcities before.

1:21:21It's the people that have only seen abundance that may not be ready for the next crisis or what I would argue is just the unknown future. If you enjoyed this podcast, go to Apple, Spotify, YouTube, or wherever you listen to A Book With Legs. Give us a review. Tell others about the great books and the authors like Kyle Paoletta that we get to have the opportunity to study and understand the world with and through. For our tribe, if you have a great book that you'd like to recommend, email podcast.smeetcap.com. That's podcast.smeetcap.com. You can also send your suggestions to us on X. Our handle is at SmeetCap.

1:21:54Thank you for joining us for A Book With Legs podcast. We look forward to the next episode. Thanks, everybody.