California Republicans announced a road trip yesterday. They plan to head to Reno, Nevada to hold a hearing about why businesses choose to leave California. Nevada is a good place to look for such businesses in exile.
The Republicans will not only have former California business people testifying at their hearing; Nevada’s governor and some of its legislators will also be in attendance. I imagine there will be a few zingers fired California’s way from that crowd. But, they have a right to crow – California businesses move out of state because of poor policy choices by our state’s lawmakers.
Not only can the condition of chasing businesses from the state be turned around, it must be turned around. The answer to solving California’s budget problems is to free up the job creating power of business. And the best way to do that is to encourage ENTREPRENEUR CALIFORNIA, a place where the entrepreneur can thrive without the burden of difficult regulation and high taxes.
In the next week or so, we’ll be hearing more about the regulation drag on small business when a report ordered by the legislature is expected to be issued. This report is well overdue. The law authored by Democratic Assemblyman Juan Arambula to study the costs of regulation on small businesses was originally to be delivered by October 1, 2007. Better late than never, we will soon see how regulation slows California business.
Entrepreneurs are the engines of economic growth. Growth is the way to solve the budget problems in the state. As tax historian Dave Doerr told me for my Fox and Hounds Daily piece of October 10, 2008, “The big increases in revenue the state has enjoyed have come from economic growth not so much from tax increases. That’s pretty clear if you look all the way through history.”
Bob Litan of the Kauffman Foundation, which supports entrepreneurship was quoted in a Wall Street Journal article last year that the way the new president can maximize economic growth is to unleash diffuse networks of entrepreneurs. Litan said, “Government can’t compel growth.”
The entrepreneurial spirit is native to California. It was the character of the Gold Rush. It is the strength of the Silicon Valley.
Noted authority on economic, political and social trends, Joel Kotkin, now a Presidential Fellow at Chapman University, wrote in Forbes a few months ago,
“A policy of raising taxes on entrepreneurs (as opposed to the accumulated wealth of the gentry class), increased regulation on small businesses and spending on an ever-expanding public sector bureaucracy does not bode well for a strong economic resurgence.”
The entrepreneur theme is a powerful one. Take down the barriers to entrepreneurship and innovation. Let the economy grow to build better lives and bring in more revenue for individuals and for government.
The Republicans are on the right track in trying to make California business-friendly. The quest to improve California’s economic condition just might start, of all places, in Nevada.