by Peter Franklin
Thursday, 17
December 2020
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07:00

Has California’s day in the sun finished?

by Peter Franklin
The American dream… against a backdrop of mass homelessness and substance abuse. Credit: LiPo Ching

Oracle is the world’s second biggest software company. It is also an anchor tenant of Silicon Valley — or rather it was. Last week, the company moved its HQ from California to Texas. Meanwhile, Oracle’s legendary founder, Larry Ellison, will be working from home, which in his case is the Hawaiian island of Lanai (most of which he owns).

Oracle isn’t the first tech giant to walk away. Elon Musk is also moving to Texas and taking Tesla’s company HQ with it. Peter Thiel has already expressed his frustration with Silicon Valley property prices — though has yet to quit California completely.

Perhaps the most painful loss is Hewlett Packard Enterprise, which is also off to Texas. Silicon Valley can trace its origin back to a small garage in Palo Alto where Bill Hewlett and David Packard started their electronics business in the late 1930s.

So, what’s driving the evacuation?

Well, I’ve already mentioned the rent. Then, this year, there’s the impact of Covid. With so many people working from home, location is less important, so one might as well move somewhere more affordable. The social decay of Golden State — and especially San Francisco — is a further concern. Your corporate HQ might look nice in the California sunshine, but not against a background of mass homelessness and substance abuse.

Covid has devastated the state’s finances. A record breaking deficit holds out the promise of tax rises to come, and California’s personal income tax rate is already the highest of any state.

The exodus of big names risks becoming a self-propelling process. Each departure narrows the tax base while increasing the costs and eroding the advantages of staying behind. California desperately needs to stop this death spiral before it’s too late.

However, its politicians seem more interested in ideological posturing than effective governance. Every week brings a new story of woke tomfoolery. For instance, there’s the current move to rename San Francisco’s Abraham Lincoln High School — because a man who literally gave his life to abolish slavery is now deemed unworthy of the honour.

One could almost feel sorry for the tech giants. Until, that is, you remember who it is that funds and votes for California’s political establishment. Ellison, Musk and Thiel are known for their conservative/libertarian sympathies; but, on the whole, the tech sector leans Left. Of course, these are people who also profit from their employers’ rampant tax avoidance, but you can assuage any guilt about that by voting the ‘right’ way on social issues.

A horrible scenario therefore presents itself: the knowledge class migrating from one state to another — Californicating its politics and society, and then moving on.

For the moment though, will the last tech company to leave Silicon Valley please turn off the lights?

Join the discussion


  • December 21, 2020
    Public union pensions mostly. Plus don’t forget how many Californians do not pay federal or state taxes because they live in poverty. No state has more homeless and welfare recipients than California. Also, California has more illegal aliens than any other state and they have to be taken care of... Read more

  • December 20, 2020
    The mess on the streets is shocking. And I’m a New Yorker! The panhandling is really aggressive as well, it upset one of my kids really badly. We had to step over homeless if we left before the hotel doormen had moved them away from the doors. every time we left. Unless you live in gated... Read more

  • December 20, 2020
    Honest question. What does the Californian State Government spend all this tax on? Read more

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