Study confirms exodus from Golden State

September 26, 2012 - By admin

Sept. 27, 2012

By Steven Greenhut

Anyone who has lived in California for some time realizes that middle- and upper-income Californians frequently talk about where they are going when they leave California. Most people never actually leave, of course, and birth rates and immigration mostly from Latin America and the Pacific Rim assure that our state’s population keeps growing. But it’s still wise to figure out the root of Californians’ very real angst.

The liberal Democrats who run California mock the idea that people would leave this beautiful state simply because of its tax and regulatory climate. Then again, these people who “run” the state government and make these policies are almost entirely creatures of state government. They tend to have been lifelong government employees and union activists, or attorneys and lobbyists who feed off of the government. They don’t understand or like the private sector and they have no understanding of incentives.

Some researchers insis that businesses are not fleeing the state in large numbers and that whatever business loss California has experienced is not the cause of the state’s enduring job problems.

Such arguments conveniently ignore that most businesses do not actually shut down their brick-and-mortar operations and move to Nevada and Texas. Instead, they stay put but expand in other states. CEOs and their spouses rather live in Newport Beach than Fort Worth, for some odd reason. Apologists for big government ignore that people respond to incentives and disincentives. They don’t think about all the jobs that never were created because of California’s governmental hostility to private enterprise.

Sure, lawyers and lobbyists and even people such as me, journalists writing about the state government, would be foolish to trade California’s beauty for the Nevada desert or the Georgia humidity. But it’s a different story for entrepreneurs. The sad thing is California, known as a worldwide magnet for energy and creativity, is only such a magnet in localized areas, such as in Silicon Valley. Even there, businesses are outsourcing and expanding their operations elsewhere. Even there, executives seem to spend as much time finding tax loopholes as inventing new products.

New study

A new study by the Manhattan Institute, called “The Great California Exodus: A Closer Look,” does indeed take a closer look at the migration numbers and concludes that people really are leaving in droves and businesses are fleeing to lower-cost locales.

Per the study:

“What has caused California’s transformation from a ‘pull in’ to a ‘push out’ state? The data have revealed several crucial drivers. One is chronic economic adversity (in most years, California unemployment is above the national average). Another is density: the Los Angeles and Orange County region now has a population density of 6,999.3 per square mile—well ahead of New York or Chicago. Dense coastal areas are a source of internal migration, as people seek more space in California’s interior, as well as migration to other states. A third factor is state and local governments’ constant fiscal instability, which sends at least two discouraging messages to businesses and individuals. One is that they cannot count on state and local governments to provide essential services—much less, tax breaks or other incentives. Second, chronically out-of-balance budgets can be seen as tax hikes waiting to happen.”

The first factor is the direct result of government intervention. Compare California’s economy to the economies of states with friendlier business climates. No doubt, the third point is true. Thanks to massive pensions and misspending by local governments, the public services in cities here have suffered and it’s only a matter of time before taxpayers will be forced to pay lots more.

Congestion

The second factor, congestion, is not entirely related to public policy, of course. I know from my years in Orange County and the San Gabriel Valley, that many people just get tired of the traffic and the urban problems and head for quieter places. That’s natural. But this would be far less of a problem had policy makers done better transportation planning. In Texas, Colorado and other pro-growth states where Californians tend to move, transportation planners are far more likely to construct roads and freeways. Here, road construction is viewed as an evil, and planners have been more success than in many other places in enforcing a strict New Urbanism that emphasizes light rail and bike lanes over asphalt. Thanks to our global-warming law, high-density land use is the in thing and the high-speed rail boondoggle will supposedly lure us out of our cars. Other states pursue this nonsense, too, but California takes it to a more aggressive level.

One of the great aspects of federalism is that like-minded people tend to move to places that best reflect their values. Californians who value freedom, low taxes, limited government and private enterprise realize that they aren’t particularly welcome here any more. That’s why Nevada — despite having a terrain that looks more like Hades than the Garden of Eden — has been attracting many of California’s best and most energetic people.

Immigration

I’ve always been a fan of immigration, which has put me at odds with some of my newspaper readers in Southern California. As I see it, the people who pull up roots from, say, some hovel in rural Mexico and move to California to better their lives tend to be the most industrious people in their society. Likewise, Texas, Nevada and Utah are receiving some of the most industrious Californians (along with many of its indolent government retirees, who prefer to spend their large pensions in cheaper places, so it is a mixed bag).

When I first moved to California in 1998, Republicans still had hope of winning statewide office. In 1988, George H.W. Bush actually carried the state. Currently, President Obama — who is running a tight race nationwide with Mitt Romney — is ahead by 24 points in California. This is becoming self-selecting, with those who work for government or dependent on government (through contracts or welfare) staying here and those who are more entrepreneurial heading to places that welcome them rather than torment them with endless regulations and increasingly surly regulators.

Soon enough, California Democrats will have two-thirds control of both houses of the Legislature, and they can then raise taxes as much as they choose and as often as they want. Think about that while you browse through Movoto looking for real estate in the Carson Valley.

I love California and take every opportunity to explore its wonderful culture and geography. I’ve traveled to 56 of its 58 counties (I’m still missing Del Norte and Modoc) and even my family has some back-up plans elsewhere if taxes keep getting worse and freedoms continue to erode. Many of my friends and neighbors are far less enamored of the state (mainly because they are from here and haven’t spent the winters I’ve spent in Ohio, Iowa and Pennsylvania), and so many of them are at least actively exploring their options. Do an informal poll of your friends and neighbors and it’s likely that most of them have at least considered moving to another state.

This is a tragedy, the result, as Manhattan Institute’s report explains, of politics. The state can be put “back on track,” the authors wrote. “All it takes is political will.”

Unfortunately, political changes can be among the toughest to create. I’m all for staying put in this magnificent place and working to change the economic trajectory, but it’s wrong to hold any illusions. The exodus is as real as it is understandable.

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Comments(22)
  1. Dyspeptic says:

    Steven, I really wish you hadn’t let the cat out of the bag about the Carson Valley area. Please keep that under wraps so the place doesn’t get Californicated. It’s a lot like my beloved Owens Valley but in a much more libertarian state. As an added bonus it’s just a short drive from Reno or Carson City to the state line in case I get an urge to urinate on California :-)

    Also, I need to chide you a little about your masochistic love of Kalifornia. As a libertarian are you really saying that you prefer mild winters to lower taxes, fewer noxious regulations and fiscally responsible state government? If so, that tends to add credence to the claims of the ruling elites in this state that people will stay here no matter how badly the politico’s treat them.

  2. Paul says:

    That’s not news been happening since it’s a liberal STATE with no BRAIN in power! Not only that it’s controlled by LIBERALS who could care less about it’s citizens but more about illegal allies. Plain and simple

  3. Steven Greenhut says:

    Dyspeptic — You are right about Carson Valley. We like Minden and Gardnerville, but there I go again spoiling it. I love California’s geography and history. It’s my home. Not to exaggerate too much, but I know people who loved their homes (Romania, Vietnam, etc.) but eventually chose their freedom over their homeland. We’re not nearly there yet, but it’s the same idea.

  4. us citizen says:

    “As I see it, the people who pull up roots from, say, some hovel in rural Mexico and move to California to better their lives tend to be the most industrious people in their society.”

    Are you freakin serious!!! People sneaking across the border and invading CA are not industrious or they would do it the RIGHT way. They have no intentions of becoming citizens. Their goal is to make the most money they can, and send it back to Mexico and/or leach what they can off of the citizens of this state. Many end up on welfare. More join gangs. Wait for the surname of some criminal on the news. More than enough……..they are Mexican. 30% fill our prisons. And the majority of our fine friends from the south are illegal.

    Just look at that stats on this. Good grief this is ONE of the major reasons this state is in the pits! They are not melting into our culture. They want to change it to theirs. Why are we celebrating stinko de mayo and Mexicos Independence Day here!

    Oh I could go on and on and on about this.

  5. Ted "Eddy Baby" Steele, Associate Prof. says:

    I guess we might as well all leave now because last year Rex the Dog predicted the “end of Calpers”–

    Rex The Wonder Dog! Says:
    November 30, 2011 at 7:52 pm
    Yes, the truth can be painful to seesaw and Teddy. I hope they place blame where it belongs when their house of cards falls apart, and it will, very soon.

    News Flash– 2012—- now the poodle says it will go bk in 30 years!

    Phew!

    0 for 13 ™
    The poor doggie!!!

  6. Rex the Wonder Dog! says:

    Teddy, CalTURDS is BK right now, I know it, you know it, they know it and so does everyone else, you are going to take a major pension haricut, it is just a matter of when little buddy :)

  7. Ted "Eddy Baby" Steele, Associate Prof. says:

    LOL NOW the Poodle flip flops from:

    1. Calpers will be bk “very soon” (2011)

    2. Calpers will be bk in 30 years (2012)

    to

    3. Calpers is bk “right now” (9-2012)

    Lay off the crack pipe little buddy!

    0 for 13 ™
    Oh my!!!!!!!!!!!!!!!

  8. CalWatchdog says:

    Vegas is looking better all the time, especially after my Elvis sighting.

    — John Seiler

  9. BobA says:

    California’s problems stems from the fact that it is a one party state controlled and ran by the democrat party for the benefit of the democrat party. Although they pretend otherwise, what’s in the best interests of the people of the state of California is at the very bottom of their priority list.

    The opposition is allowed to exist in order to keep of the appearance of democracy but in truth, the democrat overlords keeps the opposition around just in case their schemes blow up in our faces and they need someone or some party to point fingers at and blame.

  10. Edward Steele, Chief Investigator says:

    John— You saw the King????? I need more info on that.

  11. Hondo says:

    Concerning immigration. I can see some rational influx when the unemployment rate is at 5% or so. But when Kali is at 10.3 and Amerika is at 8.3, you are simply adding to the welfare rolls.
    Back in the early 60’s immigrants to this country, both legal and illigal, were much less likely to be on welfare than american citizens. That number has turned around to the point where I read where 70% of immigrants are getting all kinds of aid.
    Back in the 30’s the midwest was in an epic drought and so many from that part of the country joined Tom Joad to immigrate to Kali. Now there is another epic drought in the midwest and the Tom Joads ARE GOING THE OTHER WAY, BACK TO THE BURNING MIDWEST.
    Thanx Moonbeam.
    Hondo…….

  12. Rex the Wonder Dog! says:

    Teddy- I am shocked you didn’t bring “Uhaul” back out since John poste dhis pic in this article!!!!!

  13. Rex the Wonder Dog! says:

    BTW Teddy- calTURDS is BK right now.

    There are two ways to measure solvency- 1) asset/liability and 2) positive/negative cash flows.

    CalTURDS is BK using an assets-liability BK analysis, as their assets are not enough to cover long term liabilities.

    Why do I ALWAYS have to be right?????

    33-0 BABY ;)

  14. Edward Steele, Chief Investigator says:

    zzzzzzzzzzzzzzzzzzzzzzz

    The poor Poodle HATES the archives!

  15. Rex the Wonder Dog! says:

    Teddy, my hand is hurting so bad from smacking you around I may need a hand massage for it! :)

    It’s OK lil buddy, just b/c you can’t back up your lies I won’t smack you too much longer ;)

  16. Rex the Wonder Dog! says:

    BTW- ASSET LIABILITY-rad up on it lil one ;)

  17. Edward Steele, Chief Investigator says:

    zzzzzzzzzzzzzzzz same old drivel—– But I bet you DO need a hand massage!

  18. Rex the Wonder Dog! says:

    Bring back “Uhaul” teddy ;)

  19. Ted Steele says:

    Shun Him!

  20. behonest says:

    Whenever I read about Cali, I feel sad. Then relieved that I moved. There is a news blackout and even the writer of this article doesn’t really get to anything tangible. The CA State Controller, Chiang, posted that Corporate tax revenue was down 70% in August 2012. Had to read the report summary on his website because there was no news about it. Is it propaganda that all is well in California? I have no idea, I’m just glad the Liberals aren’t running my life now…and it is worth the effort.

  21. daisy says:

    shocker. to think that companies would leave states like california, illinois, and new york due to taxes in unbelieveable. why would these companies even think that they should be entitled to make a profit and not support the unsustainable union benefits in these states and the out of control spending.

  22. NowTexan says:

    We got so tired of the one-sided politics, high taxes, firearm bans and socialist elite Pelosiites in Commiefornia that we voted with our feet. Absolutely the best decision we ever made. The clincher for us was Texas reserving the right to secede when they became a state by treaty, not annexation. Good riddance!