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Thursday, August 16, 2012

California Blues

Our chapter on federalism discusses differences among the states.  Lately those differences have not worked to California's advantage, as The Wall Street Journal reports:
California is "an economy of haves and have-nots," says Sung Won Sohn, an economics professor at California State University, Channel Islands. Moving from robust coastal areas to languishing inland regions is "like falling off an economic cliff."
It doesn't help that California also has high costs. The state ranks poorly in many business-climate surveys because of its tax and regulatory policies. Real-estate prices are among the highest in the nation. And a study released in January by the Tax Foundation found that California's business-tax climate was the third worst in the country, ahead of only New Jersey and New York.
"California remains an expensive state to do business," says Heather Siegel, manager of the Kosmont-Rose Institute Cost of Doing Business Survey from Claremont McKenna College in Claremont, Calif. The most recent survey ranked 421 cities; 16 of the 50 most expensive were in California, including San Francisco and Los Angeles.
A decade ago, one-quarter of the jobs in Santa Clara County—the heart of Silicon Valley—were at manufacturing firms. But nearly one-third of those jobs have vanished, as the valley's focus shifted toward software and the Internet. As recently as 1998, 5% of the world's semiconductor factories were in California; today, fewer than 1% are. 
Previous posts have discussed production tax creditsThe Los Angeles Times reports on the impact on California:
The five broadcast television networks will be rolling out 23 new one-hour dramas for the upcoming season. That would normally be good business for Hollywood's hometown industry — with bookings for soundstages and plenty of work for the costumers, camera operators and caterers needed to put a show on the air.
But not this year. Just two of the 23 new fall and midseason shows will be shot in Los Angeles County, as cost-conscious producers seek tax-friendly production havens in New York, North Carolina, Georgia and other states.