Two California Images

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Is California a shining star of social togetherness, booming economy, and an envy to the world or a place that’s too expensive to live or do business while suffering with ugly problems of homelessness, disease, filth and poverty? Both pictures contain truth and the public relations feud over the state’s image is in high gear. Just ask Governor Newsom.

In a weekend article by the San Francisco Chronicle’s John Wildermuth, Newsom showed pique over how the state is portrayed.  He complained about the state’s image as drawn by both national media and business leaders. Newsom argued that the cost of doing business in California underpins the opportunity for all to capture the California dream.

He attacked a recent television interview with him, which began with a question about feces in the streets of San Francisco.

Yet, feces on the streets of San Francisco are a reality; filth and disease near homeless encampments in Los Angeles are a reality. Both are prominent parts of California’s story.

Some critics, like historian Victor Davis Hanson, call California a Third-World state.

But he also sees two Californias. “By many criteria, 21st-century California is both the poorest and the richest state in the union,” he writes.

Newsom complained that business leaders continually paint the state as the worst place to do business. “Some of the CEOs have never done better in their lifetime,” Newsom told the Chronicle. “They made all their money here and then move to Arizona before their IPO.” The Chronicle reported that earlier Newsom spoke to a business conference in the city and told business executives, “we’re making progress, and I hope you’ll start focusing on that rather than the 13.3% damn tax rate.”

Yet, California is not all about the booming San Francisco Bay Area, the tech kings and the few rich who fall into that highest –in-the-nation tax bracket.  Small business struggles with costs and regulation obstacles that threaten their enterprises and drives people out of the state.

Maybe Newsom’s defensive act was prompted by an article he read in the Economist last week describing Californians fleeing to Texas.

The article revealed that in the decade ending in 2016 a million citizens left California for other states with more than a quarter ending up in Texas—not the rich but the middle class and those making $50,000 and less who can’t keep up with California’s high cost of living.

Historian Victor Davis Hanson also writes in his article about out-migration: “But by some indicators, the California middle class is shrinking — because of massive regulation, high taxation, green zoning, and accompanying high housing prices. Out-migration from the state remains largely a phenomenon of the middle and upper-middle classes. Millions have left California in the past 30 years, replaced by indigent and often illegal immigrants, often along with the young, affluent, and single.”

Are many of these exiting Californians Republicans leaving the state with its one-sided politics?

Complaints from businesses that the governor seems to reject filled the Economist article. An example here:

“It’s easier to do business in Cuba than San Francisco,” says the boss of one of the Bay Area’s most prominent tech firms, which operates in both places. CNBC, a news company that rates America’s states for business, has ranked Texas as first and California as 25th. California has a more educated workforce and stronger innovation, but when it comes to commercial “friendliness” and the cost of doing business, it is in last place and third-to-last place respectively.

And: Companies with fat profit margins can afford higher taxes, but lower-margin businesses cannot, and these are the ones most likely to consider an alternative location.

Newsom made a point that his budget would not abandon anyone and that the state would provide benefits to all it is able. While he said that people come to the state seeking a piece of the California dream, and they certainly do, he must recognize the inverse is also true. People come to the state for those generous benefits.

The Economist piece revealed that California pales in its efforts to mollify, keep and encourage business compared to Texas. Expanding the pie by working with business is a recipe for creating jobs and capturing new funding for state purposes.

Cleaning up the streets is a basic first step to not only provide a needed healthier environment for the state’s citizens but also to clean up the state’s image as well.

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