The announcement that Tesla is moving its headquarters to Texas may not be a surprise, but it confirms trends that California’s progressive gentry simply refuse to acknowledge. Tesla, among the diminishing number of large manufacturers based in the state, joins a growing exodus that includes such tech giants as Oracle and Hewlett Packard, financial firms like Charles Schwab, and a host of high-end engineering and business service companies.
None of this will change the “What, me worry?” crowd in Sacramento, fresh off an impressive recall win, and their media claque, who see no “exodus” despite the fact that since 2000, 2.6 million domestic migrants — a population larger than the cities of San Francisco, San Diego, and Anaheim combined — have moved from California to other parts of the United States.
These same geniuses also insist that California “always” comes back from setbacks, following the gubernatorial line about the state “roaring back”. California’s amazing wealth creation makes a few very rich but does not work for most Californians. As of now, the state suffers the country’s second worst unemployment rate, the highest percentage of poverty and the second worst rate of homeownership. A clearly struggling national economy, with far slower job growth than expected, will likely not make things better.
Tesla is quick to point out that it is not abandoning the state. There remains the legacy plant in Milpitas, which is expanding. It also touts that it will expand its Gigafactory but much of it is in Nevada. What’s more, the building of a truck plant in Austin and the rapid expansion of Space X in the Lone Star State does not bode well for California’s future.
Now other companies may be on their way, including such lynchpins as Wells Fargo and Chevron, the state’s last remaining large oil company. More important still may prove the accelerating shift of small and medium firms out of the state. Between 2018 and 2019 — economic boom years — 765 commercial facilities left California. The pandemic only seems to have made things worse: California exits have more than doubled in the first six months of 2021.
In some ways, the thumping of the cash-short and brain-dead GOP in the recall could accelerate this process. With Newsom safe and the Democrats ever more dependent on their public sector union allies (who helped mightily with the recall), expect new initiatives to drive out business. This may take the form of “wealth taxes”, already under discussion, or a continued drive to impose draconian energy policies, including the annihilation of the last remnants of the state’s high-wage, blue collar oriented energy industry.
California cannot look elsewhere to salvage its collapsing middle- and working-class economy. The Biden Administration is becoming too weak to advance their hopes for Californization of America, even if it depends on Washington’s largesse, such as a revival of write-offs for local taxes. California’s great dilemma, then, is how to save its own population from a feudal future — something that can only be solved ultimately by its own thorough reformation.