Is California Open For Business?

Charles Laverty on California and how we risk our edge to Texas

Systemic Advantages Won't Last Forever

One year ago I wrote about how, in spite of California losing businesses, I still believed in it.

California has long been blessed with great natural and man made advantages. Entrepreneurs, government and Universities collectively spawned some of our most dynamic industries here. And in many of those, California has held up as the center of their respective universes.

The California Way vs. The Texas Way

I think the only thing that has changed in that time if that the deep, difference in the "Texas" model and the "California" models have become even more clear.

Demographically and culturally the chasm between Texas and California is not as huge as you might expect. But their political and business approaches are almost opposite.

My adopted home state of California has suffered from decades of vote getting by over indulging our residents. While Teas works on Texas, California feels that each person can and should save the world.

Most silly taxes and anti business moves made by California in the last century were transparent vote getters. The way California uses ballot initiatives to push its own half-baked version of direct democracy is the largest single offender.

In short, California is the epitome of the tail wagging the dog. We have "suffered" by such an embarrassment of riches for so many decades that it is antithetical to Californians that the state could ever do anything but get richer and more influential.

Those lessons are about to get learned in a big and painful way. California is simultaneously doing everything possible to make it uncompetitive to other US states and to both emerging and developed countries.

California and the art of self delusion

At the core of California's problem is two root causes. One, Californian sit in traffic jams and maneuver crowded beaches and secretly want to close the door. In spite of all the shallow support for immigration, Californians don't really want more people in their state.

Second, from aerospace to computer chips and from movies to internet startups, California has benefited from massive wealth creation and that hasn't just meant taxes it has meant spending and rising housing process and jobs and jobs and jobs.

The more other states lost to globalization and the shrinking manufacturing base, the more California appeared immune to that. It is so deeply ingrained and the first mover advantage so strong that even when tech clusters boom in Seattle or Boston or Zhongguancun or Bangalore we just didnt care. Too fast growing an industry to be greedy. Right?

Well we cannot see it but these industries are not immune. When was the last time you saw a blockbuster filmed exclusively in California? Sure Google, Apple and Microsoft have big facilities in California, we have too much talent to ignore. But, don't think those companies don't eye all the upstart Silicon Valleys for larger growth.

California still attracts amazing, innovative businesses who either have their headquarters there like Nuzuna Fitness or substantial business operations there.

The Golden State has shown that can compete not just in traditional industries like aerospace, entertainment and high tech. It is increasingly critical to many green technologies businesses like electric vehicles and bikes as well as other industries including household goods, apparel and food and beverage among others.

California had, for decades every imaginable advantage from natural resources to great people to institutions and more. But only recently one of those things have become the biggest threat to California dreaming and that is us.