Musk Is Building a Company Town in South Texas. What Does He Want?

“They could fund infrastructure that is beneficial to the company, but on the public dime.”

By Brooke Shuman, More Perfect Union

While Elon Musk is busy dismantling the federal government, he’s also been building his own private cities to surround his company headquarters in remote parts of Texas.

In April, employees at SpaceX’s South Texas location will vote on incorporating their private space tourism campus into a city called Starbase. Located 40 miles east of the border town Brownsville, Starbase was already encroaching on the unincorporated town Boca Chica Village, a small community of snowbirds that lived in nearly-off-grid bungalows surrounded by state and federal parks.

Boca Chica Village has become unrecognizable over the last decade since Musk brought his company to South Texas. SpaceX has built two launch pads for its Starship, the largest and most powerful rocket ever built, as well as a sprawling production facility and a cluster of houses and airstream trailers with perks for employees like Tesla chargers, e-bikes, a medical facility, and a private bar called Astropub.

In 2019, SpaceX tried to buy out the winter Texans in Boca Chica Village, saying that it was no longer safe to live near the SpaceX launchpad. At the same time, SpaceX was slowly moving employees into the homes and building new blocks parallel to the original streets.

Musk has also established a town outside of Austin called Snailbrook, where he plans to move X headquarters. Snailbrook is already home to a SpaceX campus and his tunneling company called Boring and Musk has spent hundreds of millions of dollars to establish a private school for his employees’ children.

What's the purpose of these standalone cities that are excluded from the politics and infrastructure of neighboring Austin and Brownsville? We talked to Brian Highsmith, an academic fellow at Harvard Law School, about the historical company town, how the new, modern “municipal model” is different, and what it can tell us about corporate power and how the billionaire class is working to opt out of local democracy.

This interview has been edited for length and clarity.

More Perfect Union: How did you become interested in company towns? Why was this research important now?

Brian Highsmith: I became interested in this topic because I was studying Amazon's HQ search and all the competition between local governments to attract capital. That actually brought me to the historical perspective. I did a project that looked at the railroad trust efforts in the 19th century to basically shake down local communities and say, look, we'll run our route through your town, but only if you give us all of this land, and invest directly in us. It was responsible for really harmful consequences for local communities even though they got the benefit of the railroad development.

And then I started thinking about, well, what does this look like today? How should we think about this in terms of democracy and what it means for a corporation to be able to write its own rules, how local government law has provided a vehicle for this in a way that is not immediately obvious?

MPU: When people think of the historical company town, what are they usually thinking of?

Highsmith: The company town is usually associated with manufacturing and extractive industries during the Gilded Age and Progressive Era. So mining towns and lumber towns.

Researchers usually emphasize the sole consolidated ownership of an entire residential community, where everyone in a community is working for a single employer and the employer has the ability to suppress wages as a result. At the time, authorities like the Labor Department, and contemporary researchers, defined it as employer ownership of housing.

There was also the utopian model that is represented by Hershey, Pennsylvania or Pullman, Illinois. Those were some of the first planned communities in America. Employers like [designer of the sleeper railroad car] George Pullman described their motivation as creating a place where workers and management would live together. George Pullman sort of self-consciously designed this town as a way of avoiding the problems of violent labor unrest that were common in Chicago at the time, which is very close to where he started his model town.

MPU: How is what Elon Musk is doing in Snailbrook and Starbase different?

Highsmith: What's interesting is that actually, historically speaking, company towns were not towns at all in the sense of being incorporated communities. They operated without a municipal charter. There was no mayor, in fact, there were no representative bodies of any kind. And that was a conscious decision in order to avoid democracy. So what’s different about Snailbrook and Starbase is that in the eyes of the law, Starbase will become a local government. So that means, for example, they could fund infrastructure that is beneficial to the company, but on the public dime through the issuance of tax-exempt municipal bonds.

The company would no longer have to go through the types of democratic procedures to get permission for zoning or environmental impacts. They would not have to have a town hall. And it’s a way to hoard wealth through the withdrawal of the tax base from the larger political community. So children attend underfunded public schools as a result, local infrastructure suffers.

Also, in this new model, the residents of the community don’t tend to be workers or, if they are, they tend to be management, high-level management. When they participate in democratic processes, they can reliably be counted on to vote in the interest of the company. Disney actually has a special district outside of Orlando, for example, and they have elections, but the outcome is already determined by the institutional arrangement.

MPU: Brownsville in particular is the poorest city in Texas and one of the poorest cities in the country. Part of the reason that the local government really courted Musk was because of the promise of economic growth and jobs. Do you think the trade off is worth it?

Highsmith: I'll just make a historical point, which is that in the mining towns in Appalachia, you had a very similar dynamic where these communities were starved for investment, for economic opportunity. And so the company would come in and that would, on the one hand, create jobs that maybe didn't exist before.

But on the other hand, they would allow these companies to exercise an incredible amount of control and labor suppression. There's been research that shows there are long-term negative impacts of company towns because instead of investing in public goods, like public schools and infrastructure, the company would fund its own services. And then when the company picks up and leaves, which could be decades later, that infrastructure is gone with it. And so this has lasting impacts for a community. Whatever benefits of development there are, it's all conditional.

Elon Musk is only in Texas because he picked up and left California when they attempted to democratically regulate the operations of one of his facilities there. And so if you are a local official and you're seeing labor violations or environmental harms or you're not actually experiencing the promised benefits of development, you might be far more reluctant to actually impose any form of regulation or demand accountability if you think the company will just pick up and leave.

And so that is just another similarity between this version of the company town and historical versions. Companies are saying, we will come to your jurisdiction, invest in your community, but only if you give us our own government.