MARIA: WELCOME BACK.
GETTING AWAY FROM THE GOLDEN
STATE, BUSINESS AND INDIVIDUALS
FLEEING CALIFORNIA IN DROVES.
THE HOOVER INSTITUTE IS FINDING
3.5 MILLION PEOPLE HAVE LEFT
CALIFORNIA SINCE 1990.
THIS AS LARGE FIRMS INCLUDING
ORACLE, TESLA, HEWLETT-PACKARD
ARE ALL ANNOUNCING RELOCATION
PLANS OUT OF CALIFORNIA.
JOINING ME NOW IS HOOVER
INSTITUTION SENIOR FELLOW LEE TO
HAND ON.
THANKS SO MUCH FOR JOINING US.
WE’VE TALKED A LOT ABOUT
INDIVIDUALS AND BUSINESSES
FLEEING HIGH-TAX STATES LIKE NEW
YORK, NEW JERSEY, CONNECTICUT,
BUT LET’S TALK ABOUT CALIFORNIA.
WHAT IS THE REASON BEHIND THIS
EXODUS, IN YOUR VIEW?
>> GOOD MORNING, MARIA.
THE ROOT CAUSE REALLY IS A
FAILURE OF GOVERNANCE BY STATE
POLICY MAKERS THAT’S CREATED THE
48TH WORST TAX CLIMATE IN THE
COUNTRY AND THE 48 WORST
REGULATORY BURDEN, AND THOSE
INCLUDE REGULATIONS THAT MAKE IT
EXTREMELY DIFFICULT AND
EXTREMELY EXPENSIVE TO BUILD
HOUSING.
AND WHAT’S HAPPENED IS THAT THE
IMMEDIATEN JANUARY PRICE --
MEDIAN PRICE IN SAN FRANCISCO,
SILICON VALLEY, LOS ANGELES,
THAT MEDIAN PRICE TONG IS ABOUT
$1.3 MILLION.
MANY OF THOSE BUSINESSES, YOU
MENTIONED, ARE MOVING TO TEXAS
WHERE THAT $1.3 MILLION HOME
MIGHT BE $400,000.
SO IT’S JUST A MATTER OF SIMPLE
ECONOMICS.
CALIFORNIA’S BECOMING TOO
EXPENSIVE AND TOO INEFFICIENT
COMPARED TO ALTERNATIVES.
ECONOMIC ACTIVITY’S BECOMING
INCREDIBLY FLUID, AND NOT
SURPRISINGLY PEOPLE AND
BUSINESSES ARE LEAVING.
MARIA: YEAH.
I MEAN, LOOK, WE ALWAYS SAY, I
ALWAYS SAY ON THIS PROGRAM THAT
MONEY IS MOBILE, ANDS IT IS
GOING TO GO WHEREVER IT IS
TREATED BEST.
SO AS THESE LARGE ARE FIRMS
ANNOUNCE THEIR PLANS TO MOVE,
ARE YOU EXPECTING OTHER
COMPANIES TO ALSO FLEE THE THAT
STATE IN THE COMING MONTHS AND
YEARS?
ASSESS THE IMPACT.
WHAT DOES THAT MEAN FOR
CALIFORNIA, FOR THE SERVICES
THAT ARE OFFERED, FOR THE
BUDGET, ETC.
>> YES, ABSOLUTELY.
THE STORY OF CALIFORNIA IS THAT
MANY TECH FIRMS ARE CREATED
HERE, INCUBATED HERE BECAUSE OF
THE ENORMOUS AMOUNT OF VENTURE
CAPITAL THAT EXISTS IN SILICON
VALLEY, SAN FRANCISCO AND ALSO
LOS ANGELES.
SO THOSE BUSINESSES START HERE,
BUT ONCE THEY’RE UP AND RUNNING,
THEY TEND TO SKEDADDLE.
FOR EXAMPLE, ZOOM IS A
RELATIVELY NEW BUSINESS THAT’S
MADE IT VERY POSSIBLE FOR ALL OF
US TO CREATE VIDEO CONFERENCING
AND WEBINARS.
WE’LL SEE IF ZOOM FOLLOWS THAT
SAME PATTERN AND UPS AND LEAVES
AND GOES TO TEXAS OR ANOTHER
FRIENDLIER STATE.
AND THIS HAS ENORMOUSEN
CONSEQUENCES FOR CALIFORNIA’S
BUDGET.
OUR BUDGET TOLD IS ABOUT FIVE
TIMES HIGHER PER PERSON
INFLATION-ADJUSTED THAN IT WAS
50 YEARS AGO, TWO-THIRDS OF THAT
BUDGET JUST GOES TO K-12
EDUCATION, THE PRISON SYSTEM AND
LARGELY MEDICAID WHICH IS THE
INSURANCE PROGRAM FOR LOW INCOME
INDIVIDUALS.
ABOUT 14 MILLION CALIFORNIANS
ARE ON MEDICAID, NEARLY 40% OF
CALIFORNIANS ARE AT OR NEAR THE
POVERTY LEVEL.
AND STATE LEGISLATORS NEED TO
WAKE UP AND UNDERSTAND THAT
THEY’RE NOT USING TAX REVENUE
VERY WISELY AND THAT IF THEY
DON’T MAKE CHANGES, MORE AND
MORE BUSINESSES ARE GOING TO
LEAVE.
MARIA: ANOTHER REASON TO TAKE
OUT GOVERNOR NEWSOM.
ARE YOU EXPECTING HIM TO GET
RECALLED?
>> WELL, THE RECALL CAMPAIGN
NEEDS JUST UNDER 1.5 MILLION
VALIDATED SIGNATURES.
TYPICALLY THERE’S ABOUT 20% OF
SIGNATORIES THAT CAN’T BE
VALIDATED.
RIGHT NOW THAT CAMPAIGN IS RIGHT
AROUND THAT 20% PREMIUM.
THEY’RE AT ABOUT 1.IF 9 MILLION
VOTES -- 1.9 MILLION VOTES.
SO IT’S VERY POSSIBLE NEWSOM
COULD BE RECALLED WHICH IS JUST
SHOCKING GIVEN THAT ONLY ABOUT
THREE MONTHS AGO HIS APPROVAL
RATING WAS 67%.
IT’S NOW DOWN TO ABOUT 48%.