Jon Coupal- Columnist
is an attorney and president of the Howard Jarvis Taxpayers
Association -- California's largest taxpayer organization with
offices in Los Angeles and Sacramento. [go to website] [go
to Coupal index]
East German Solution to California's Business Flight?
jobs are leaving at record rates
[Jon Coupal] 3/8/04
In 1961, the East German regime completed the now infamous Berlin
Wall. This high wall topped with barbed wire was designed to
keep its own citizens from fleeing communist oppression. The
totalitarian government believed that by blocking all avenues
of escape, it could compel the populace to conform to its dead-end
economic policies. But freedom is compelling, and thousands of
citizens perished trying to get through, over or under the wall.
While it may sound far-fetched, the California State may have
to resort to an East German type of solution if it continues
its ceaseless anti-business policies.
Business Roundtable has just released a study showing that
business climate in California is the worst
of all 50 states and this is triggering a "reverse gold
of California Competitiveness conducted by Bain & Company,
found that 27 percent of California jobs, about 4 million, were
in what are called "mobile sectors." These sectors
are easily relocated outside California and include important
industries such as entertainment, computer software and electronics.
sectors tend to be "high value" to
the California economy.
of interviews with company decision makers are disturbing. "Of
the mobile sector companies interviewed," according to Bain & Co., "55
percent have plans to move jobs out of California."
But the problem is even worse, because half of all companies
interviewed have official policies prohibiting the adding of
additional jobs in California. And taking all businesses into
account, 40 percent of decision makers surveyed reported plans
to move jobs out of state.
Bain's research shows that the cost of doing business in California
is 30 percent above the Western state average. The costs attributed
to regulation are 105 percent higher than neighboring states.
Overall, top executives regard California's business climate
as the worst of the 50 states. The high cost of doing business
in California hits small businesses the hardest. Analysts conclude
that a business with an operating income of $200,000 in California
would be earning more than $1 million if relocated to a lower-cost
blames California's regulatory environment for these dismal
results. It is the "most
costly, complex and uncertain in the nation."
To see the hand of the state Legislature in the destruction
of the Golden State's economy, one of the most telling statistics
comes from the area of labor law. California enacted 15 statutory
changes per year between 1992 and 2002. The rate is four times
the national average.
With exorbitant workers compensation costs, mandated health
care to be provided by business and overall high taxes, should
it be any surprise that many of our best and brightest are considering
fleeing the state?
Add to this what could be the last straw for California business,
a split property tax roll. Some of the same public employee unions
that brought you Proposition 56, a sneaky effort to make it easier
to raise taxes, are now collecting signatures to place a measure
on the November ballot to raise property taxes for businesses,
including apartment buildings, by 55 percent.
in the Legislature and among the public employee union leadership
may defend their actions, saying they are necessary
to protect workers from the capitalist corporations and the "evil
rich," every business that leaves the state means fewer
jobs and fewer employed people to pay taxes.
And, by the
way, the comparison of California to a communist block country
as far-fetched as it may appear. On the
very floor of the California Senate, ultra-left Majority Leader
John Burton spoke glowingly of the revolution that "ended
aristocracy" in 1917. For most Americans, the revolution
that freed us was the American Revolution in 1776, not the Bolshevik
Revolution in 1917.
Until we change our ways and recognize the value businesses
provide to our economy and the welfare of all California residents,
we will continue to see a loss of jobs and tax revenue. That
is, unless some of our collectivist lawmakers elect to adopt
the East German solution.
2004 Howard Jarvis Taxpayers association