Readers of Chief Executive magazine were asked this question.
- The worst: California
- The best: Texas
As stated in Trends magazine, In the 1950s and '60s, California was the embodiment of the American Dream, offering great schools, roads, jobs, and communities with all the latest amenities, not to mention good weather, beaches, and quick access to the mountains and wilderness for recreation. As home to Disneyland and the movie industry, the state represented all that was glamorous and new.
Today, California is $26 billion in the hole and has recently been paying its bills with IOUs. Its once-proud schools are suffering and the prison system is releasing criminals early because the state can't afford to keep them. Social services are being cut right and left. Infrastructure is aging and falling apart.
Its state income tax is the second highest in the US, and government regulations seem perversely aligned to discourage people from doing business there.
People are fleeing California at the rate of 100,000 per year!
Texas, on the other hand, was considered something of a backwater in the 1950s and '60s, and certainly not a glamorous destination for the upwardly mobile masses. How things change.
Texas created 70 percent of all the new jobs in the United States in 2008, and it has a budget surplus. No wonder it's the fastest-growing state in America, with 150,000 new residents arriving each year.
Both the Brookings Institution and Forbes Magazine studied America’s cities and rated them for how well they create new jobs. All of America’s top five job-creating cities were in Texas. And here are the results as seen in the unemployment statistics.
One out of every eight people in the US live in California. Much of the US housing crisis is concentrated in just a few states, including California, Nevada and Florida. California serves as a drag on the entire nation, with an overall effect of slowing recovery from recession for the whole nation.How did this happen? What’s wrong with California, and what’s right with Texas? It has a lot to do with values. Here are observations from Trends magazine.
- Texas: Believes in laissez-faire markets with an emphasis on individual responsibility.
- California: Favors central planning solutions and a reliance on a big government social safety net.
- Texas: Views environmentalism as one component among many in maximizing people's quality of life.
- California: Treats environmentalism as a “religious sacrament.”
- Texas: Proactively encourages all the state’s residents to join the mainstream.
- California: Places ethnic diversity above assimilation which has impeded many of California’s diverse ethnic groups and subcultures from integrating fully into the mainstream.
- Texas: Focuses on streamlining the regulatory and litigation burden on its residents.
- California: Attempts to use regulation and litigation to transfer wealth from its creators to various special-interest constituencies.
OK, this is where things stand now. But just what are the guideposts you can look for in the wake of California’s meltdown and Texas’ ascendancy? Trends magazine offers six forecasts:
Expect to see California’s loss of jobs to Nevada accelerate. It’s difficult for most employers to make a solid business case for starting up or expanding a business in California, when nearby Nevada offers so many advantages. Over the longer term, this high-profile debacle will serve as a wake-up call not just to California, but to states across the country.
Expect to see a backlash in California and across the country against regulations, especially green initiatives that can’t clearly demonstrate a positive ROI. Everyone agrees that doing more with less and cleaning up the environment are desirable objectives. But they're not so desirable when they take away jobs or take down whole industries.
Watch for the smart money, including venture capital, to begin migrating to Texas for start-ups in many areas, including energy, info-tech, manufacturing, and biotech. Unless California revamps dramatically, expect to see its economy languish, even as the recovery takes off.
Texas will invest heavily in secondary education and work hard to attract the best talent to its research universities. Keep an eye especially on the University of Texas, which already has a first-rate campus and faculty. Within 10 years, UT may well rival Stanford or Berkeley.
Other states will adopt tort reform measures pioneered in Texas. Unlike California and most other states, Texas has been aggressive in minimizing the enormous burden of frivolous lawsuits.
Look to Texas to become a cutting-edge cultural mecca.
Right on partner,
ReplyDeleteI moved from Texas to San Francisco in 1985, and thought I had moved to another country. My apartment rent in Texas was $300 at the time. It was $1000 in San Francisco. A garage cost an extra $100. California was landscaped. Texas was not. Signage rules in California were so stringent, one couldn't find a restaurant or a grocery store.
The assimilation comment in your article rings true. In Texas I was a welcome guest at fiestas and ate Tex-Mex cusine at least once a week. Notice I did not say Mexican food. It was Tex-Mex, a shared mixture of recipies.
In California, people of Mexican heritage were my gardeners, in Texas they were my friends and collegues.
When I left Houston, it was the largest city in the United States with no zoning. If you owned a piece of land, you could build what you wanted to build on it.
In California, it took an act of congress to get approval to add a room to your house.
Texas is not a place, it is a state of mind. I like calling myself a Texan.
Phil Beaver
Read your blog on California vs. Texas. As a former Cal resident for 12 years, I had to "chipin!"
ReplyDeleteLooking at the condition California is in today, it is easy to overlook its good points. Many places all over the globe have tried to copy the entrepreneurial spirit and innovation-no one has come close.
Silicon Valley still thrives and now has also become the capital of genetic research.
It as incubated several ground breaking companies, such as Google, Ebay, Netflix-the list goes on.
I still recall what a remarkable place Silicon Valley was-and yes, dysfunctinal as well by most "common sense" measures.
A recent cover issue of Time (maybe it was Newsweek) convincingly documents the magic of California much better than I can. Not a great place to make a lot of semiconductor chips at a low price, but still a lot of chip innovations come out of California.
Mike Verbeten