Granted, Gov. Gavin Newsom has a lot on his plate now, but hasn’t he noticed the flow of business leaving California is turning into a tidal wave? Many, especially big brand name companies, are headed to Texas. Newsom should fight against the loss. But unlike when Gov. Jerry Brown took on Texas governor Rick Perry over business raids nearly a decade ago, Newsom hasn’t be visible on the recent departures. Maybe that is because Newsom’s problem with business is not an external challenge but California policy, itself, when it comes to business.
In 2013, Texas Governor Perry created a campaign to bring California businesses to the Lone Star State. Texas ran radio and magazine ads while the Texas governor made numerous trips to California to coax business leaders to move their operations to his home state. California governor Jerry Brown dismissed the offensive, labeling the campaign no more than passing gas.
At least, he notably confronted the challenge.
But with news that big name California companies such as Charles Schwab, Hewlett-Packard, and Oracle are moving to Texas, and Elon Musk is personally moving there and establishing plants for his Space X and Tesla products, truly representative of California’s reputation for innovation, why isn’t the governor standing up and screaming: “Halt!”?
The big difference between Brown’s response to Texas and Newsom’s non-response is that Brown was opposing a campaign created by Texas, while the California companies leaving now are making the move with little prompting from outside the state. They are reacting to California policies. As UCLA professor and Hoover Institution senior fellow Lee Ohanian wrote in an article for Hoover’s Eureka publication about businesses leaving California, “The reason? Economics, plain and simple. California is too expensive, and its taxes and regulations are too high.”
Newsom’s recent effort to prop up the California economy is to bring aboard Dee Dee Myers as Senior Advisor and Director of the Governor’s Office of Business and Economic Development (GO-Biz). Myers has a stellar and long resume in business and particularly in politics. (I remember talking to her when she was on the staff of Los Angeles Mayor Tom Bradley in the 1980s.) But as talented as she is, Myers can’t legislate away the problems that the big Texas-bound companies and the many lesser-known companies have cited for hightailing it out of the Golden State.
Taxes, regulations, bureaucratic compliance and dangers imposed on businesses by restrictive labor laws that often encourage frivolous lawsuits can only be corrected by the legislature. Its Governor Newsom’s responsibility to take a leadership role to make the necessary changes to keep more and more businesses from fleeing the Golden State.
When the governor stands up to oppose the business exist and cry “Halt!” he should address his comment directly to California’s legislature.