Would it be a Bowie Knife?

November 23, 2010

Joel Kotkin – blogging at Forbes New Geographer – puts a humorous title to a theme that has been well covered here and elsewhere:California suggests suicide; Texas offers the knife.

CEO's 10 Best States for Business

Kotkin suggests 2010 will be used by future historians to mark the end of the California era and the beginning of the Texas one, citing as evidence this survey in Chief Executive magazine which ranks the states for their business environments.  CA not only ranks last, but is the only state to receive an ‘F’ in any category.

The Top 10 looks familiar to us, as it constitutes most of the geography in which we have focused our investment efforts for over twenty years now, and it’s not the first time Texas has led the pack.  Kotkin writes:

Even more revealing is California’s diminishing preeminence in high-tech and science-based (or STEM–Science, Technology, Engineering and Mathematics) jobs. Over the past decade California’s supposed bulwark grew a mere 2%–less than half the national rate. In contrast, Texas’ tech-related employment surged 14%. Since 2002 the Lone Star state added 80,000 STEM jobs; California, a mere 17,000.

Of course, California still possesses the nation’s largest concentrations of tech (Silicon Valley), entertainment (Hollywood) and trade (Port of Los Angeles-Long Beach). But these are all now declining. Silicon Valley’s Google era has produced lots of opportunities for investors and software mavens concentrated in affluent areas around Palo Alto, but virtually no new net jobs overall. Empty buildings and abandoned factories dot the Valley’s onetime industrial heartland around San Jose. Many of the Valley’s tech companies are expanding outside the state, largely to more business-friendly and affordable places like Salt Lake City, the Research Triangle region of North Carolina and Austin.

… Ultimately the “green jobs” strategy, effective as a campaign plank, represents a cruel delusion. …Without subsidies, federal loans or draconian national regulations, many green-related ventures will cut as oppose to add jobs, as is already beginning to occur. The survivors, increasingly forced to compete on a market basis, will likely move to China, Arizona or even Texas, already the nation’s leader in wind energy production.

By the way, we have nothing against California.  It’s a beautiful state and a great place to visit.  We just wouldn’t choose to try and build a business there.

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