by Joel Kotkin
Friday, 8
October 2021
Dispatch
18:00

Even Elon Musk is leaving California behind

Tesla's departure to Texas is another sign of the blue state's decline
by Joel Kotkin
Au revoir, Gov. Newsom.

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.

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David Webb
David Webb
8 months ago

The US seems to be slipping into a repeat of the 1850s/60s, when what held the nation together was less than what was driving it apart. The big blue states (CA, NY) seem to have ever less in common with the big red states (TX, FL). If the migration of business from California to Texas, from New York to Florida, accelerates, then these divisions are going to grow inexorably.
The situation is exacerbated by the education system (particularly in the blue states) doing its best to inculcate in its students that the US is a profoundly evil place, built on systemic racism.
The rest of the Biden/Harris term sadly will do absolutely nothing to bring the country together – the administration is not even trying. Let’s hope for some significantly better candidates in 2024 who see the dangers, and have the oratory skills to recover Americans’ pride in their nation.

Cheryl Jones
Cheryl Jones
8 months ago
Reply to  David Webb

Americans have pride in their nation. Democrats don’t. A lot of blue voters have turned red in recent years for that very reason.

J Bryant
J Bryant
8 months ago

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.
This author has contributed several insightful articles about California. I’d like to read a full length article by him on how California might achieve the thorough reformation he mentions. With the Democrats entrenched in the state the only hope I see is a fiscal collapse followed by the hoped-for reformation, and that would be a very unpleasant process both for California and for the nation given the size of California’s economy.
Perhaps California is the future of America and that future is not bright.

Douglas Proudfoot
Douglas Proudfoot
8 months ago

The downward spiral of California is almost guaranteed by the steady exodus of people voting with their feet. With laws like AB5, that make it almost impossible to earn a living in the gig or freelance economy, people are just going to give up and move away. As more leave, it’s harder and harder to defeat the idiots at the ballot box.
We have the same death spiral going on in Illinois. I only stay here in Suburban Cook County to be close to my grandchildren.

Steven Campbell
Steven Campbell
8 months ago

Only one comment. As a Texas resident I welcome all those jobs and all those working folks, but please, please, leave your politics in California as a gift to the grifters. Open yourselves up to freedom and prosper.

Jerry Jay Carroll
Jerry Jay Carroll
8 months ago

Politics are the religion of progressives, so good luck with that.

Cheryl Jones
Cheryl Jones
8 months ago

It’s ok. For every taxpayer avd business that leaves, they are replaced by 2 illegals who will no doubt be of massive benefit to the state.

Judy Englander
Judy Englander
8 months ago

Don’t worry, at least the Duke and Duchess of Sussex were happy to move there.

Aldo Maccione
Aldo Maccione
8 months ago
Reply to  Judy Englander

they will save the world, one act of compassion at a time. Who needs a job ?

Will R
Will R
8 months ago
Reply to  Judy Englander

Could the two events be linked perhaps?

David Yetter
David Yetter
8 months ago

Why does the author think that the political leadership in California, or their donors, what to save California from a feudal future? They have been doing everything they can to create a neo-feudal society.

Jerry Jay Carroll
Jerry Jay Carroll
8 months ago

When the Progressive nose gets under the tent, collapse becomes inevitable.