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Tuesday, February 12, 2013

Texas v. California: Backsides and Heat

A previous post discussed an effort by Texas Governor Rick Perry to draw businesses from CaliforniaAP reports:
Texas Gov. Rick Perry brought his brash pitch for jobs to California on Monday as he sought to lure businesses to his state with the promise of lower taxes and fewer regulations.
Perry's private meetings with business leaders in the San Francisco Bay Area weren't his first effort to tempt companies to leave the Golden State, but this three-day trip has certainly drawn more attention than previous attempts, and the failed Republican presidential candidate welcomed the spotlight.
In an interview with the San Jose Mercury News, he criticized California's regulatory environment, and said Austin, Texas, is poised to become the "next Silicon Valley."
"Twelve years ago, California wasn't looking over its shoulder," he told the newspaper. "They're not looking over their shoulder now — they're looking at our backside."
[California Governor Jerry Brown] wondered whether Perry might have a change of heart after arriving.
"A lot of these Texans, they come here, they don't go back," he told reporters. "Who would want to spend their summers in 110-degree heat inside some kind of a fossil-fueled air conditioner? Not a smart way to go."
According to the Farmers' Almanac, Riverside, California, is the third-hottest city in the United States, with an average of 24 days a year with temperatures topping 100 degrees.  Dallas is fourth, with 17 days.

In The Sacramento Bee, Dan Walters writes:

All this gamesmanship aside, however, maybe Brown et al. reacted so defensively because they know that Texas' economy has been booming while California still struggles with a slow recovery from a deep recession.
Yes, some of Texas' prosperity is due to the oil boom. In fact, the California region that most resembles Texas – Bakersfield and environs – is also seeing a surge for the same reasons.
But that merely points up the fact that California has vast potential reserves of shale oil that it is moving very slowly, if at all, to tap.
The differences are more than oil. Texas has a much lower tax structure, including no personal income tax, a much more permissive regulatory climate, and a much lower cost of living, especially housing. That makes it attractive to business of a certain type.
California has its attributes as well, including a much better climate and unmatched natural scenery, as well as first-class research universities and – in and around Silicon Valley at least – a powerful entrepreneurial impulse and access to capital.
The question for California – one that its politicians don't even acknowledge, much less answer – is whether the state's assets outweigh its deficiencies in the global competition for investment capital.
We always assume that today's bust will morph into tomorrow's boom. But Detroit also assumed that it always would be the nation's industrial Goliath.

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