And what it will take to turn things around

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** How California ended up with the worst business climate in America
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Dear John,

For anyone operating a business in California — small, medium or large — the experiences of the last twenty years have been challenging, and it gets worse every year. California’s regulatory environment, its high taxes and exorbitant fees, and the overall cost of doing business are the toughest in the nation. Many businesses have voted with their feet, moving their operations to more welcoming business environments.

According to a list of “Cali-Formers ([link removed]) ,” companies compiled by the Sacramento-based Center for Jobs and the Economy, since 2020 over 500 companies have either left California completely, or opted to expand their operations in a different state while shrinking their operations here.

The list includes scores of household name companies: Aerojet, Aligent, AirBNB, Alphabet (Google), Amazon, Amgen, and Apple, and that’s just the As. It spans the gamut from high-tech and aerospace, to energy (Chevron) and civil engineering (Bechtel), to arts and entertainment (Academy of Country Music, Disney).

When including companies that have simply downsized their presence in California, opting to expand in other states instead, it’s a challenge merely to find a large company that wouldn’t be on this list.

Even companies that are intrinsically bound to remain in California because they are tied to the land — agriculture, logging, housing — are getting out.

Soper-Wheeler, once a major logging company in Northern California, in 2001 began to move their operations to New Zealand, a process they completed by 2020 ([link removed]) . Publicly traded housing developers, accountable to shareholders, lack a strong incentive to invest ([link removed]) in California because the returns are so much greater in states with less regulation and less litigation.

And as California’s beleaguered farmers struggle to stay competitive, markets in the state are increasingly stocked with avocados from Mexico and beef from Brazil ([link removed]) . In 2020, California imported $14.3 billion ([link removed]) worth of food products.

What happened?

The best universities and the birthplace and epicenter of high tech in the world, and yet California is losing its high-tech companies.

The best farmland in the world, and millions of acres of marketable timber, and yet California imports most of its lumber and a growing percentage of its food.

Arguably the most beautiful scenery and best weather on earth, but homebuilders avoid California in favor of other states.

Something has gone terribly wrong.

In a new report ([link removed]) , From Worst to Best: How California Ended Up with the Worst Business Climate in America, and What it will Take to Turn Things Around, by Golden Together founder Steve Hilton with California Policy Center’s Edward Ring, the authors identify some of the primary causes of California’s evident hostility towards businesses in all sectors and of all sizes. They also recommend reforms that would restore California to a place where entrepreneurs, corporations, and investors are again attracted to the state instead of being driven away.

The perception among most businesspeople in California today is that their state and local government are not trying to help them, but are out to get them. This must change.

Government agencies should be partners with businesses, assisting them with permits and offering productive oversight. Even with meaningful regulatory reform, and a streamlined bureaucracy, it is essential to also have a culture within government that views business as a vital partner, not an adversary, and strives to communicate that to the public.

Each time a state legislator proposes new legislation, or prepares to vote on it, they should ask themselves: Will this help businesses thrive? Will it foster competition between businesses to provide services and products that are — to borrow a mantra from the Silicon Valley — better, faster, and cheaper? When businesses can thrive and compete for customers, the cost to customers goes down, and when this happens, it benefits everyone, especially California’s low income communities.

Californians want a brilliant future, and they want to be the ones to build that future. They want to make the world a better place. With that motivation intact, there is great hope that California can bring back opportunities for businesses and families. California can be number one again, a magnet for business, an example to the world.

This is an extract from the Golden Together report. Read ([link removed]) the ([link removed]) full report and recommendations here ([link removed]) . ([link removed])
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** Radio Free California #329: Central Valley of the Dolls
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CPC president Will Swaim and CPC Board Member David Bahnsen consider the limits of private equity in farming. United Farm Workers union fends off charges it ripped off farmworkers. Gavin Newsom celebrates another bold step for “clean energy” but admits it’s unlikely to stop blackouts. And, California’s largest teachers’ union calls for an end to capitalism. Listen now. ([link removed])

More from CPC ()


** How California's College System Lost Its Way
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Incremental state legislation over the years has reduced the once independent and robust tiered system — California Community Colleges (CCC), California State University (CSU) and the University of California (UC) — to an amalgamation of misaligned and competing colleges and universities where academic excellence and student needs have been deprioritized while administrative budgets have ballooned. Read CPC intern Peter Constant's excellent explainer here ([link removed]) .


** The Case for Oil Drilling in California
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The regulatory war on oil production in California threatens to destroy the oil industry in the state within a few years. As in-state production is abandoned, imports will increase — an abdication of environmental responsibility inconsistent with California’s values. CPC's Edward Ring explains why we should extract more oil in-state in a manner that permits California companies to pioneer cutting edge clean drilling and refining technologies that can be exported to the world. Read now. ([link removed])
SUPPORT CPC ([link removed])

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ABOUT THE CALIFORNIA POLICY CENTER

The California Policy Center promotes prosperity for all Californians through limited government and individual liberty.

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