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By Jon Coupal and John Campbell
From its founding, California has been a special place, especially its ability to grow and foster new companies and industries that lead the world in their respective fields. Much of this has been driven by the spirit of entrepreneurship and innovation that found a unique home here.
Of course, the first “Big Thing” for California was the Gold Rush of 1849, attracting risk takers willing to cross two thousand miles of hostile territory with no guarantee of survival, let along success. Following closely behind the prospectors were the blacksmiths, shop keepers, farmers and cattlemen to serve the exploding population.
Once fully industrialized, California maintained its reputation as the place where innovation could fully flourish. But companies and industries have a predictable life cycle and are never static. They start small, and then grow exponentially, after which they mature and stabilize. The growth period, of course, is the most dynamic. That’s when the innovators themselves and ultimately their stockholders make substantial profits and employees grow in number and income.
For the last 60 years, California has always had an industry or two in that growth cycle. First it was the oil companies and the Hollywood studios. Aerospace came next, then the first round of technology companies like Hewlett Packard, Intel and Cisco. As they matured around 20 years ago, along came the current wave of tech companies like Google and Apple to surge past them.
In serial order, one new industry after another grew up in California just as the prior wave had crested and was settling into maturity. This trend has not just benefitted the economy and employment. These industries have powered the revenue to the state for decades. The rapidly growing companies have provided a lot of people with very high incomes from stock, stock options and incentive-based employment. Because California’s revenue is so dependent on high-income earners, the recent budget surpluses have largely been driven by these enormous tech incomes.
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Jon Coupal is the president of the Howard Jarvis Taxpayers Association. John Campbell is a former member of Congress from Orange County.
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