The fall of Eric Swalwell following accusations of sexual misconduct has turned the California governor’s race on its head. To pick up Swalwell’s scraps of support and funding, each contender is now scrambling to appear more progressive than their rivals. A hard-Left candidate winning the Democratic nomination seems increasingly likely, and the result could have a devastating impact on the state economy — especially Silicon Valley.

Many of Swalwell’s prominent backers hailed largely from southern California and Hollywood, where he spent much of his free time. Now he’s out of the race, momentum appears to be shifting to two of the most Left-leaning candidates: former Congresswoman Katie Porter and billionaire Tom Steyer, who made his fortune through fossil fuels and private prisons before becoming a devout, climate-obsessed progressive. Porter stands to gain some of the progressive vote from the Swalwell collapse, based on her more radical agenda. But she is also damaged goods, with a reputation for expletive outbursts and an incident in which she allegedly poured hot mashed potatoes on her ex-husband’s head.

Paul Mitchell, a leading Democratic consultant, thinks Swalwell’s departure most helps Steyer, whose billions allow him to saturate the airwaves. Steyer has already spent $130 million on his bid, easily dwarfing his competitors. This could prove decisive, given he faces a largely disengaged electorate where only the most committed go to the polls.

Steyer also seems to be locking down “institutional support”, including the teachers’ unions and others representing public employees — these groups had previously thrown their weight behind Swalwell. By not relying on wealthy, moderate donors, Steyer can pander to the Left, which he has done by calling for the arrest of ICE agents. His proposals, such as specifically taxing AI firms and data centres, may infuriate the tech establishment, but he doesn’t need their money. Crucially, Steyer’s surge almost guarantees that the Republican ideal of winning the two top spots in the June election, crowded with Democrats, is now off the table.

Where does this leave the established tech oligarchs? Apple may have a higher valuation than the GDP of almost every country in the world, but the company feels increasingly threatened in California. The industry is paying particular attention to the race, trying to figure out what to do next.

Incumbent Gavin Newsom has remained close to the tech establishment. His embrace of progressive policies relating to transgender people and race reparations did not bother tech bosses much, as he was otherwise willing to promote their interests. Similarly, the large tech companies also embraced green energy and climate doomerism. But what was crucial to executives’ support for Newsom was his opposition to the proposed wealth tax, which has driven some of California’s biggest taxpayers out of the state. In contrast, Steyer has backed the measure, which is currently enjoying a slim lead.

Now, the alliance between the Democrats and the Valley is showing signs of fraying as the party takes a hard-Left turn toward Bernie Sanders-style socialism. This is being driven by a new coalition of increasingly radicalised public employees and those otherwise dependent on state largesse. Completing the coalition is a disillusioned young college-educated electorate, whose jobs are disappearing faster in California than anywhere else.

The last great hope for the tech oligarchs may lie with San Jose Mayor Matt Mahan. He could pick up some of Swalwell’s business backing, selling himself as the competent manager the state needs. He has already demonstrated these credentials with proposals to address homelessness in his city. His brand is that of a pro-business pragmatist with a dislike for the kind of waste and fraud that blossomed during the Newsom years.

Mahan has raised $10 million over the last week, largely from tech sources, as well as hoovering up $1 million from LA developer Rick Caruso. But even with his cash, he will struggle to compete with Steyer or Porter in tapping the “emotions” of the powerful “anti-Trump” constituency. That could be the deciding factor in who wins this race.

This coming gubernatorial election could be the most consequential in the state’s history. At stake is the exodus of high-wage earners, as well as some of the talent that has caused the California economy to boom. The tech oligarchs know this, and will put vast resources into trying to sway the election in their favour. But a radicalised electorate could prove to be too powerful in a state that is crying out for change.

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Joel Kotkin is a Presidential Fellow in Urban Futures at Chapman University and a Senior Research Fellow at the Civitas Institute, the University of Texas at Austin.

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