The State of Being Ready
It won’t be news to you that the stock market is experiencing a bit of a rotation. That happens constantly. One or more sectors will dominate for quarters or even years, only to be replaced by other sectors as rates, geopolitics, and the economy send signals to investors.
There’s also a rotation underway among US states. States and regions that once dominated big sectors of the US economy are losing ground, with others taking market share in the form of relocating businesses and taxpayers.
This is one of the more unique aspects of America. We are running 50 economic experiments at once. Each state sets different tax systems, regulations, energy policies, workforce programs, and rules for doing business. Americans, for the most part, we can choose among them.
Capital flows to where it is treated best. So do businesses, and eventually, individuals.
Ken Griffin, founder of the massive hedge fund Citadel, is a recent example. He and his fund moved from Chicago to Miami, reportedly to flee crime and high taxes. With him moved dozens of highly compensated members of his team. Today Miami is referred to as “Wall Street South.”
Florida and Texas are well known success stories when it comes to welcoming companies from California and the northern US. North Carolina is also successful in this arena.
One state less often mentioned, but on the move, is Tennessee. The more I learn about the state, the more intrigued I become.
People are moving in. Companies are bringing factories, distribution hubs, and corporate offices. Young workers are arriving alongside retirees. There is no state income tax. Compared to the northeast, houses remain affordable and roads aren’t overcrowded. State leaders are committing hundreds of millions of dollars to prepare for the growth ahead.
Maybe it is just me, but lately it seems everyone knows someone moving there. Sure, “no income tax” is part of the answer. But plenty of states have low taxes, warm weather, or cheap land.
How did the land of Rocky Top and smoky mountain ridges become one of America's most effective machines for attracting capital, companies, and families? I went looking for what, exactly, Tennessee is doing differently, and whether the rest of America should be paying attention.
Tennessee’s ‘It’ Factor
Most every state has some sort of competitive advantage – be it natural resources, beautiful scenery, rich farmland, or access to population centers. Tennessee is unusually good at turning its advantages into economic activity.
Every state has an economic-development agency, and every state actively recruits companies, offers incentives, and tries to sell its advantages.
But Tennessee approaches economic development more like a business than a government. It recruits companies, coordinates local officials and utilities, structures incentives, and oddly, solves practical problems before they kill an investment. As a New Englander, this boggles my mind! Note the sarcasm.
Take site readiness. A company needs usable land, power and water, road access, and fewer surprises involving permits, utilities, or environmental conditions. Figuring all of that out takes time and money. And what a company finds can determine whether it builds there at all.
So Tennessee decided to do much of that homework up front. The state began developing its Select Tennessee Certified Sites program in 2011. Qualifying properties must have developable land, documented environmental and geotechnical conditions, truck-quality road access, and utilities on site or formal plans to extend them.
One of the program’s earliest certified sites was in Clarksville. Hankook Tire chose it for its first U.S. manufacturing facility, an $800 million investment initially expected to create 1,800 jobs. A later $199 million expansion lifted expected employment there to roughly 2,300.[1][2]
What started as an experiment has spread across the state. By 2025, Tennessee had 78 certified sites in 44 counties, giving prospects a growing inventory of locations where much of the homework tied to property development had already been done.
Tennessee funds the work that makes sites build-ready. Since 2016, its Site Development Grant program has awarded 220 grants totaling nearly $150 million; Tennessee says projects on improved sites account for 8,471 jobs.[3]
Tennessee's other advantage is location. Sitting near the center of the country's eastern half, it has interstate highways, rail links, commercial waterways, and Memphis International Airport — the busiest cargo airport in the Western Hemisphere. From most of Tennessee, a truck can reach nearly 70% of Americans in a day.[4]
But getting a site shovel-ready only solves part of the problem. There are ongoing operating expenses to consider. For industrial and now increasingly tech businesses, a steady supply of reliable, affordable power is a prerequisite for investment.
Enter the Tennessee Valley Authority…
Power, Logistics, and TVA
The Tennessee Valley Authority is the country’s largest public-power provider, serving more than 10 million people across seven states. It works with state and local partners on site selection, technical assistance, and business recruitment.[5]
Granted, TVA is not uniquely Tennessee's. It also serves parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina, and Virginia. Nor is Tennessee alone in offering competitively priced industrial power.
But cheap power is still one of Tennessee’s economic advantages, and unlike many business incentives, the benefit extends beyond the factory gate. Tennessee households pay less too.
In 2024, Tennessee’s average residential electricity price was 12.42 cents per kilowatt-hour, compared with 16.48 cents nationally. Its industrial rate was 6.21 cents, compared with 8.13 cents nationally, roughly 25% lower in both categories.[6]
For a company consuming 100 million kilowatt-hours a year, that gap works out to roughly $1.9 million. That about the amount of electricity a mid-size data center or an auto factory would use. The cost of electricity, at this scale, influences where you build. And price is only half the question. Factories and data centers also need to know whether enough power will be available when it is needed.
As I wrote a few weeks ago in “Is America Energy Rich, Power Poor?”, America has abundant fuel. The problem is building enough electricity generation and grid capacity where demand is growing. TVA is pursuing 6.2 gigawatts of new generation and has created a separate rate structure for large data centers, intended to limit cost shifting onto households and smaller businesses.[7]
As if cheap power and plans for more generation were not enough, Tennessee has another card to play: Oak Ridge National Laboratory.
The Future is Nuclear
Oak Ridge National Laboratory is a federal research complex in East Tennessee, created during World War II as part of the Manhattan Project and still central to nuclear science, advanced materials, supercomputing, isotope production, and energy technology.
Tennessee did not create Oak Ridge. But it is doing what it has done throughout this entire piece: identifying an existing advantage, then building the infrastructure, workforce, capital, and partnerships needed to turn it into an economic one.
Its $70 million Nuclear Energy Fund supports manufacturing, workforce training, research partnerships, and site development.[8]
And companies are responding.
Oklo has announced $1.68 billion for an advanced fuel recycling and manufacturing center in Oak Ridge.
LIS Technologies plans another $1.38 billion for laser uranium enrichment. Orano is developing a multibillion-dollar enrichment facility described by the Department of Energy as the largest private investment in Tennessee history, recently backed by a $900 million DOE grant.
More than 230 nuclear-lifecycle companies operate in Tennessee, with roughly 150 clustered in the Oak Ridge–Knoxville corridor.[9]
Sure, other states are betting on nuclear too. Texas, for example, has committed $350 million to its own advanced-nuclear fund. But what makes Tennessee interesting isn't that it is spending money on nuclear. It’s that like they’re developing an entire nuclear supply chain.
The pieces are there: Oak Ridge research, TVA generation, fuel enrichment and fabrication, manufacturing, workforce, and private capital.[10]
The Lesson?
Tennessee is proving that a state government can act in a way that facilitates job growth.
Almost nothing described here is uniquely Tennessean. Other states have advantages, ports, energy resources, universities, capital markets, transportation networks, manufacturing clusters, or specialized workforces.
Tennessee’s “it” factor may not be something it has, but something it does. It creates the conditions for the advantages it already has - cheap power, good locations, research institutions, private capital - to create more opportunity for the people who live there.
That is different from just cutting taxes or handing out incentive checks.
Oak Ridge cannot be copied. TVA cannot be copied. Tennessee’s location cannot be copied. But perhaps the conditions Tennessee has created around those advantages can. And that raises a different, maybe more pointed question: What does a successful state owe the people who already live there?
Where This Leaves Us
Tennessee hasn’t solved every problem. Far from it. According to US News & World Report rankings, TN has serious challenges with crime and health care, but those categories are showing year-over-year improvement. CNBC went so far as to rank Tennessee the worst state to live in, for quality-of-life measures. They cited crime rates, drug-related deaths, worker protections, and other metrics as justification for their assessment.
I was in Nashville a few months ago, for the first time in 20 years. I was shocked at how much the city had grown and improved. It felt far safer, cleaner, and more vibrant. I know Nashville is only one city, but I’ve heard similar stories about Knoxville and Chattanooga.
Tennessee appears to be doing something unusually well and, more importantly, going in the right direction.
Its real advantage may not be TVA, Oak Ridge, low taxes, cheap power, or location. It may be a way of operating: know your advantages, build around them, remove bottlenecks, coordinate public institutions and private capital where it makes sense, and invest in industries that may matter tomorrow.
I’d love to see this approach to state government migrate north.
Are you in Tennessee? Does this match what you're seeing? If you've watched this happen firsthand, I'd love to hear from you.
Or, if your state could remove one bottleneck tomorrow, housing, power, permitting, workforce training, or transportation, which would make the biggest difference? And if you live somewhere already growing quickly, has that growth made your life better, more expensive, or both?
I especially want to hear what you are seeing on the ground.
Let me know what you think, reply to this note or drop a comment.
Thanks for reading.
Ed D’Agostino
Partner & COO
This letter is dedicated to the memory of Cesar Augusto Murillo, who lost his life in the World Trade Center on September 11. Rest in peace brother.
Never Forget.
[1] https://www.tn.gov/former-governor-haslam/news/2013/10/14/governor-haslam-commissioner-hagerty-announce-hankook-tire-co.-ltd.-to-loca.html
[2] https://www.tn.gov/ecd/news/2022/8/29/governor-lee--commissioner-mcwhorter-announce-hankook-tire---technology-co---ltd-to-expand-manufacturing-operations-in-montgomery-county.html
[3] https://tnecd.com/news/tnecd-announces-new-round-of-site-development-grants/
[4] https://tnecd.com/why-tennessee/why-tennessee/
[5] https://www.tva.com/economic-development
[6] https://www.eia.gov/electricity/annual/html/epa_02_10.html
[7] https://www.utilitydive.com/news/tva-tennessee-valley-authority-nuclear-gas-demand-growth/811306/
[8] https://www.tn.gov/environment/program-areas/energy/tneac.html
[9] https://tnecd.com/news/lis-technologies-to-invest-more-than-1-billion-in-laser-uranium-enrichment-facility/
[10] https://tnecd.com/news/oklo-inc-selects-tennessee-for-advanced-fuel-center-anchored-by-nations-first-privately-funded-nuclear-fuel-recycling-facility/
https://tnecd.com/news/lis-technologies-to-invest-more-than-1-billion-in-laser-uranium-enrichment-facility/ www.orano.group/usa/en/our-news/news-releases/2026/orano-selected-for-DOE-900m-funding-LEU-new-american-uranium-enrichment-facility
https://www.tn.gov/environment/program-areas/energy/state-energy-office/nuclear-energy.html
Ed D’Agostino
Publisher & COO
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We all love to bitch about high taxes and government regulation but in some cases you get what you pay for. Here in Los Angeles County in 1975 we averaged about 115 days a year with air quality emergencies. You could sometime hardly see more than a block down the street from the smog! The last stage 3 ozone alert here was in 2003. That didn't happen because the business owners in LA got together and paid for solutions out of the goodness of their hearts. It happened because the people voted for it, state and local governments created regulations and enforced them. This is one of the essential functions of government. Our lives would be poorer without it.
People vote with their feet. The success of red states and the failure of blue states is the motivating factor behind the unserious CNBC state rankings.
New England, where I lived most of my adult life used to be the jewel of the country…birth of freedom, abolition movement, industrial founding, public education. Cotton mills abounded, machine shops here led innovation in 2 world wars, GM built cars in Massachusetts as recently as the 80s, then the tech boom. All are gone now, biotech is still big here as is higher education but with electric rates 70% higher than the national average business is not coming back. Natural gas supply, a manufacturing requirement, is stalled due to pipeline constraints. And last winter on one weekend the region nearly ran out of power due to a severe cold wave which would have forced rolling blackouts. Why? While committed to green energy/net zero they have not developed enough solar farms or offshore windmills to offset the closure of fossil fuel power plants. They have relied on neighboring New York and Quebec for additional supply during power surges but they have their own requirements. If you can’t supply reliable inexpensive power, regardless of the source, you by will not be able to keep or attract businesses needed for your citizens.
I was in Memphis TENN a few years back staying at a very nice hotel (the Beale street district) and went to the lobby to get my rental car to head to the airport to fly home. There were about ten cops in the hotel lobby wondering what happened. Five hoteliers cars got stolen in the hotel parking lot. I have no plans to return.
Governments should absolutely focus on process simplification and efficiency. Building homes and constructing businesses should be easy. Paperwork should seamlessly flow to the proper departments and decisions should be swift. Power needs and availability should be matched and resolved. Other obstacles should be easily explained with solutions when obvious.
Texas growth has stalled. People have realized costs are not as low as expected. Weather is bad and scenery can't compare to many areas people moved from. I can't imagine migrating to a southern state as weather appears to be getting warmer every year.
12.42 cents per kilowatt-hour? I live in Edmonton, Alberta, Canada and pay 8.25c/KWH (Canadian Dollars). Think Alberta has Tennessee beat ;-)
Workers can vote with their feet. The sad part is if Tennessee and Texas are attracting and keeping a large influx of out-of-state workers, that the groups conducting the surveys can accurately measure why. In my profession we used to say, "Figures lie and liars figure."
Ed, I live in what is probably considered the greater Seattle area. Whidbey Island is about 35 miles north of the city and separated by a ferry ride that makes a commute problematic. However, it is close enough that our news, the newspaper, etc. all cover the good and bad happenings in Seattle and the state.
We moved here 11 years ago when the tech boom in Seattle was really beginning to energize the city and its growth. It was exciting to see and you could feel the vibrancy of this growth. With this growth in new businesses and the jobs that growth brought, both the city and state expanded social programs as they benefited from the growth in sales tax and business tax revenues that accompanied this business and jobs growth. And then, both the state and city governments began to spend beyond the incremental income that the business were generating and so they began implementing new tax programs targeting the new businesses. Further, the city council in Seattle became dominated by people who viewed the businesses and their growth as a problem rather than a benefit. By 2020, even before COVID-19, Amazon and others were looking to move their plans for expansion both out of Seattle and out of Washington State. Seattle went from one of the fastest growing cities with new high-rise office space being built to keep up with the growth in jobs in the late 2010's to a city with one of the highest office vacancy rates in the nation. All because both the state and local governments lost sight of the benefits of growth in jobs and new businesses and began to view that growth as a problem. Fast forward to 2026, and Starbucks, one of the original growth engines for Seattle announces that it will be building a new HQ in Nashville TN only weeks after the newly elected Democrat Socialist Mayor stated that Seattles businesses were not paying their fare share of the taxes needed to fund the city's operations. Surprise, surprise.
Just yesterday, the Mayor announced the results of a study commissioned by the former mayor regarding the economic future of the Seattle. Like investment portfolios with a concentration in one sector experience dramatic swings as that sector ebbs and flows, they concluded Seattle's business growth had been dominated by the Tech sector and therefore the city's future growth would experience larger economic swings as the Tech sector expanded or declined. But EQUALLY IMPORTANT, they concluded that the city and states "anti-business" tax and regulation policies of recent years had exacerbated the declines resulting in the beginning of an economic decline for the city as new start-ups, both tech based and non-tech based, look elsewhere and existing business plan their expansions elsewhere. Suddenly, the new mayor, who only months ago said big businesses were the problem, is saying that she is developing a strategy to grow existing businesses and attract new ones. Let's hope she looks at how TN and Nashville are approaching this.
Let's not forget that the TVA was a socialist answer to energy shortages in Tenn. Oak Ridge was also a government solution to power needs. More of the same please.