Sunday, June 17, 2012

The Business of California Is...Not Business

Whenever people bring up California's dead-last-in-the-nation reputation for having an atmosphere conducive to business, state liberals always point to Sillicon Valley, and especially Facebook as proof of their pro-business bona fides, but this only shows how truly clueless and out of it they really are:
This collective turning on of the civic light bulb comes at the same time that the primary economic delusion that has dominated progressive politics — the myth of the high-tech savior — has fallen into disrepute. Under Brown and his monumentally incompetent predecessor, Arnold Schwarzenegger, state officials maintained a belief that Silicon Valley’s money machine would be able to bail the state out of its budgetary morass. 
In this context, the underwhelming performance ofFacebook’s IPO last month takes on major political significance. Not only will there be fewer puerile billionaires to inflate the Valley real estate market and bankroll “progressive” candidates and causes, scores of hip wannabe start-ups suddenly may find themselves no longer the darlings of venture capital investors or the stock market. Like California’s budget itself, the social media boom is now looking like something of a fraud.
Jerry Brown, for one, loves to talk up California's high tech industry, as it gives him a chance to sound visionary and forward thinking, even if he couldn't tell you how social media will produce the billions in revenue that the state needs to dig itself out of its hole. But, Brown's singular focus on Facebook comes at the exclusion of even those other high tech titans who have been, and could be, even more valuable to the state, 

Take, just as an example, H-P. When CEO Meg Whitman announced H-P would be firing 10% of its workforce, I was surprised that the number amounted to about 30,000+ people. You mean H-P employs 300,000 people?! Apparently, it does. (by contrast, FB has about 3,000 employees. Whoa! is that an economic engine I hear revving?)* Granted, these are people spread around the world - often because California's regulatory environment and high cost of living make local manufacturing unprofitable - but, still ... you would think companies the size of H-P (and Intel, Apple, Oracle, etc.) could kinda, maybe be more important than FB. At the very least, you would think that truly forward-looking policy makers would want to make sure they are not actively  discouraging the true money-makers in the Valley, but that's not the sort of policy makers we've got now. 

Ultimately, none of this truly matters to Brown et al. All they cared about from the Facebook IPO were the tax bonanza they hoped to reap from an IPO "pop" that never was. They understand taxes and spending very well, but have no clue as to the economic potential in their own state. 

* Whitman has also pointed out that H-P's PC business, standing alone, would be a Fortune 50 company

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