Silicon Valley isn’t dying — it’s decentralizing. Tech firms are expanding in lower-cost states and taking jobs with them.
For much of the last half-century, California benefited from a powerful first-mover advantage. Dense networks of talent, capital, and research institutions allowed the state to absorb policy mistakes that would have crippled competitors. High spending and taxes, restrictive housing rules, and regulatory complexity were treated as nuisances rather than binding constraints, because growth could outstrip their costs.
That margin of error has narrowed dramatically.
What California is now experiencing is not a cyclical tech downturn or a post-pandemic anomaly. It is a measurable, policy-driven decline in relative competitiveness. The most important evidence is not that tech employment has fallen in absolute terms, but that California’s share of national tech employment has been shrinking, while other states gain ground.
Markets are responding to incentives exactly as economic theory predicts.Employment Share, Not Headlines, Tells the StoryEmployment Share, Not Headlines, Tells the Story
Migration as a Labor Market SignalMigration as a Labor Market Signal
Founding Versus Scaling: A Crucial DistinctionFounding Versus Scaling: A Crucial Distinction
AI Regulation as a Binding ConstraintAI Regulation as a Binding Constraint
Regulation, Market Structure, and IncumbencyRegulation, Market Structure, and Incumbency
Costs Complete the Incentive StructureCosts Complete the Incentive Structure
Opportunity Costs and Distributional EffectsOpportunity Costs and Distributional Effects
A Predictable OutcomeA Predictable Outcome
...read more at thedailyeconomy.org
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California's downfall is going to be very hard to reverse. There's no discernable appetite for corrective policies and the people who would be open to them are just leaving.
Sadly, Trump's shenanigans are going to turn California voters further left. Nevermind that it makes zero sense to base local policy preferences on what the Federal government is doing.
My dream scenario for California is that once it's been pushed to the brink it finally goes through with splitting into several smaller states.
Local economic interests should be better able to apply enough pressure on a smaller local government to keep things somewhat functional.
Outsiders do not really understand California has always had massive conflicting interest groups. Its always been this way. These long term divisions have little to do with right/left politics but today those divisions play in as well. Water is the big and long lived divide. SoCal, CenCal, and the Bay Area all conflict over water rights.
Cultural differences also play in. The middle of the state is Ag focused and more conservative. Northern California is far more rural and is hard to pin down politically. But these two regions are steamrolled and have been for decades by SoCal and the Bay Area regions. There are conflict between LA and SF. Between LA and the Central coast.
The state is too big and diverse even if they all voted the same in national elections. Depending on where you live in SoCal you might be OK though. I have seen maps that would divide the state including Orange county and the land east of it in with Bakersfield and Fresno.
Sadly, I think the state breakup will either never happen or be VERY ugly and messy. Most people have never thought deeply or even close to deep about this stuff. You don't have to be an anarchist or libertarian to see it. The left runs this state and has for decades and I don't see that changing. Where I'm different is that I don't see other places going the opposite way. I see them as just a few years or maybe a decade behind it. History shows this to be true. Unless the right realizes that most institutions are fully owned by those that hate them it will not shift in a meaningful way. Many institutions need to be torn down before other states can actually alter their direction. They will just continue to follow California.
Yes, but I still think that's the best case scenario.
I do see this changing trajectory. Just as a microcosm, many middle America states have reversed course on the public school trans insanity and never went as far as California.
California is now widely seen as a policy failure and as a result it's no longer acting as the object of imitation. This changed a while ago in the Midwest because of how successful Mitch Daniels was in Indiana. The neighboring states (Illinois excepted) have sought to imitate, or at least pay lip service, to that approach.
That is like the nightmare scenario to me because I'll surely be caught up in the Peoples Republic of California
I mean... I think people exaggerate how bad California is politically. In reality its more like a left led European nation. Not China or North Korea. When I visit states like Texas all I hear is "how can you live in California?". Its funny to me because I do comparisons between states taxes/fees and laws. And states like Texas, Idaho, and Oklahoma are less than the freedom loving havens right wingers like to believe.
Covid over-reach did wake some people up and reversed the drift in red states but honestly I don't think enough woke up. It simply delayed the drift left in all states. I hope the people in other states wake up fully but I don't really see it. I for sure don't see it in California. Things have to get a lot worse sadly.
Texas is the biggest freedom LARP'er.
The unsung heroes are TN, IN, and the Dakotas.
I agree. Don't know much about IN or the Dakotas but I love Tennessee. Still... I don't think TN has reversed course long term. Not yet. Seems to me they have only slowed the drift more than other states.
Do you see the State of California as a positive check on what the City of Los Angeles would do on it's own?
More like the conservative areas of the state putting a check on what the state does.
The state would be gone, though. My guess is that one of the states would just be the LA metropolitan area and you're already subject to all the nonsense they want to do.
I can't remember off the top of my head, but there were definitely some crazy state level ballot initiatives that failed (thankfully) that probably would have passed if it was just SF and LA voting
No, both are governed by corrupt politicians and controlled by government employee unions
My dream scenario is voter ID in CA
I don't trust elections in CA especially the cities
Yeah... sadly I agree with this. The masses on both sides of red and blue seem so dumb to me. I get why they react the ways they do but it really gets old how easily they are played up into a frenzy over stuff that has limited impact on their lives and how little focus is on things they could improve. Blinded by politics, manipulated by media and social influences.
Exactly how the TPTB want it
Yep.
I'm beating a dead horse but it really annoys me. TPTB also love for people to look over at their neighbors and focus on the issues in their schools, government, and institutions. This is what Christians do as well. Instead of looking at failure and success and trying to learn, then see what we can do in our own areas of influence and control we just stoke our egos about how much better we are.
This is why movements and institutions just keep drifting leftward. We have hit a point where people have been awaken from their slumber but they have a comical level of over-confidence that things are shifting in a more than temporary way.
Sadly, California voters would have turned left with or without Trump
40 percent of the state is on Medicaid
There is no rule of law in CA, only left wing judges and lawyers
Go onto reddit everyone is just celebrating "good riddance". So fucking short sighted. Who will replace those taxes that flee... this is already playing out in the UK.
The "good riddance" people are childish and more interested in expressing their anger & frustration than in solving problems.
Yeah they're so stupid. I don't care for billionaires but I care for their tax and economic stimulus if they can move elsewhere.
Hot off the press....
Looks like Sergey Brin is joining Larry Page in the exodus...
I'm not convinced its fall will be as dramatic as many in other states hope for.
The reason I say this is because I have seen areas bouncing back faster than I expected from the Covid fiasco. I think it will be a long drawn out affair. I'm hoping to pick up cheap land if it does happen in my lifetime.
Either way, California will bounce back for no other reason than it is one of the most amazing chunks of land on the planet and there are still many good people here that aren't insane. Just not enough to sway elections/politics.
What I don't see enough of is people that like to mock California applying lessons to their own areas. Their own towns, counties, and states. Several times I've talked to people in other states that mention news stories about California that are unaware of similar things happening in their own freaking backyards. I want these people to avoid going down the road California is on. It would be great to have a place to flee to if it gets really bad.
Its just easier to point at others and mock vs. look at your own place and fix it up. Complaining is easy. Talk is cheap. Our towns and businesses have real problems and I don't think most people have as much skin in the game as they should.
This is basically the resource curse. More corruption and inefficiency will be tolerated because the geography can't be moved.
I'd love for a bounce back. My impression is based on the ideological trajectory and not seeing where course correction would come from. If I'm wrong about that and sanity is welcomed into the public discourse, I'll be celebrating right alongside you.
Exactly California’s first mover advantage used to absorb mistakes, but now the costs actually matter firms follow the path of least resistance.
Where are tech companies moving to? Texas?