In early May, we like to visit California. It is spectacular, beautiful, and special. Our hero Ronald Reagan once said that “If the pilgrims had landed in California, we would have never found the rest of the country.” He was right. Today, he would be wrong.
Pilgrims were productive settlers, and today successful and productive citizens are fleeing en masse from California. It is a shame.
First stop on our trip is Oakland. Floyd has a meeting with an innovative medical specialty firm trying to start in California. The owner of the firm has started many companies, all in California. Early on the agenda for discussion was talk of moving out of the Golden State to another less regulated, business friendly state.
The wife of the CEO leaned over to me and said, “as soon as our son is out of high school, we are out of here.” Maybe they will join us in business-friendly Arizona or move on to the new Mecca for business, Texas. She continued, “they don’t seem to get it; HP and Intel will never build another plant in California.”
Until the 1990′s, California was run by a coalition of pro-business Republicans and Democrats. Then things changed. A tipping point was hit through a combination of illegal immigration, environmental regulations, and union control of government. Business started to flee, and they took conservative voters with them as they left. Demographics is destiny, and California surged to the left. This surge left compounded the problem, and more business left.
Business leaving caused government revenue to slip, so taxes were hiked. This caused even more to leave. Union control of state budgeting shifted priorities. Salaries and benefits rocketed upward; infrastructure was ignored and neglected. Roads and transportation suffered. And more business left.
California used to be first in airplanes; most aviation companies have now fled. California used to be first in defense, and now this sector is shrinking. California agriculture is suffering from lack of water. This is a direct result of failure to invest in new water capacity. California was a leader in energy production, but now most of costal California is off limits to new oil production.
With all the jobs California used to produce, real estate flourished. Now with empty store fronts and empty factories, real estate is suffering. Even tourism is down.
You would think this string of disasters would teach leaders in government to be more business-friendly. They haven’t learned, and taxes, regulation, and harassment of business is growing.
We continued down the coast, and near Santa Barbara, we met the CEO of another firm. The message was the same. He lamented, “California used to be the best place to do business, now it is the worst, and Governor Jerry Brown is only making it worse.”
Schools, communities, parks, good roads, and all the factors that made California so wonderful can only get better when business does well. If leaders want to lead again in lifestyle, they must first restore the business climate.
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