From Ed Morrissey of Hot Air:
Posted at 3:35 PM on April 22, 2011 by Ed Morrissey
When California politicians want to visit California jobs, they increasingly have to leave California to do so. That’s why Lt. Governor Gavin Newsom traveled with a small entourage of other Golden State politicians to Texas, the biggest beneficiary of California’s economic policies. So many jobs have fled California to Texas, John Fund writes for the Wall Street Journal, that the governing class needed lessons from Texas Governor Rick Perry on how not to repel business:
“We came to learn why they would pick up their roots and move in order to grow their businesses,” says GOP Assemblyman Dan Logue, who organized the trip. “Why does Chief Executive magazine rate California the worst state for job and business growth and Texas the best state?”
The contrast is undeniable. Texas has added 165,000 jobs during the last three years while California has lost 1.2 million. California’s jobless rate is 12% compared to 8% in Texas.
“I don’t see this as a partisan issue,” Mr. Newsom told reporters before the group met with Texas Republican Gov. Rick Perry. The former San Francisco mayor has many philosophical disagreements with Mr. Perry, but he admitted he was “sick and tired” of hearing about the governor’s success luring businesses to Texas.
In fact, those jobs are moving so quickly that the politicians can’t keep up with them. While California’s delegation visited Texas, another major business announced its intention to move. Fujitsu Frontech, a major high-tech company, will move its manufacturing facilities from Foothill Ranch, California to New York. The announcements of the move didn’t indicate how many jobs this entails, but it’s probably not minimal, and California can hardly stand to lose any at the moment.
- Profit = Revenue – Expenses
- Taxes and Regulations are part of Expenses
- If Taxes and/or Regulations can be reduced by moving, such savings must be calculated against the costs of moving
- If it costs less to move than the amount saved in Taxes and/or Regulations, it makes good business sense, all else being equal, to move.
Now, not every company can move: some companies produce things which must be consumed locally. Some would have serious workforce problems associated with a move. And business decisions are not taken in an emotional vacuum: there are emotional reasons not to pick up and leave home. But, given the four points I listed, at least some companies which meet the criteria will take the decision to move.
But the companies which the former Mayor of San Francisco, Lieutenant Governor Gavin Newsom (D-CA), visited are the ones which he knows moved from the Pyrite State. What he doesn’t know, what no one really knows, is how many companies were formed outside of California which would have been created in that state, and how many businesses were simply never started which otherwise might have been, due to the higher taxes and more onerous regulations that the good, well-meaning progressives imposed, but the answer is virtually certainly greater than zero.
John Fund reported in :
Andy Puzder, the CEO of Hardee’s Restaurants, was one of many witnesses to bemoan California’s hostile regulatory climate. He said it takes six months to two years to secure permits to build a new Carl’s Jr. restaurant in the Golden State, versus the six weeks it takes in Texas. California is also one of only three states that demands overtime pay after an eight-hour day, rather than after a 40-hour week. Such rules wreak havoc on flexible work schedules based on actual need. If there’s a line out the door at a Carl’s Jr. while employees are seen resting, it’s because they aren’t allowed to help: Break time is mandatory.
“You can’t build in California, you can’t manage in California and you have to pay a big tax,” Mr. Puzder told the legislators. “In Texas, it’s the opposite—which is why we’re building 300 new stores there this year.”
Hat tip to Jerome of Cabinet Meeting. And while Mr Newsom and Governor Jerry Brown both say that they are very much pro-business, Mr Fund continued:
California, by contrast, seems to constantly lose focus. Several Democrats who agreed to go on the Texas trip were pressured by public-employee unions to drop out—and many did. And just as Texas business leaders were testifying about how the state’s tort reforms had improved job creation, word came of California’s latest priority: On April 14, the state senate passed a bill mandating that all public school children learn the history of disabled and gay Americans.
One speaker from California shook his head in wonder: “You can have the most liberated lifestyle on the planet, but if you can’t afford to put gas in your car or a roof over your head it’s somewhat limited.
At some point, the elected officials and the people of California have to learn a very basic truth: the best friend that the working man has is the business which employs him. Perhaps, in their heads, they actually do realize this, but it seems that, in their hearts, they don’t. Until that changes, the state of my birth will continue to lose businesses, and continue to lose jobs.