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Chief Executive Magazine: “California, once a business friendly state, continues to conduct a war on its own economy.”

Chief Executive Magazine has released the latest version of its survey of of CEOs ranking the business friendliness of states:

More than 500 CEOs considered a wide range of criteria, from taxation and regulation to workforce quality and living environment, in our annual ranking of the best states for business. The charts and articles in this special report show how each state fares on the factors most essential for a business-friendly environment—as well as what states are doing to attract and retain companies in the increasingly competitive battle to win site selection.

While the Lone Star State may not be perfect—many leaders would like to see improvements in its education system—it is Periclean Athens compared to California in the eyes of the 550 CEOs surveyed for Chief Executive‘s seventh annual report on the best and worst states in which to do business. It’s the seventh time in seven years running that Texas has led the states, and the seventh year California—to no one’s great surprise—ranked as worst state.

The article spends a fair amount of space specifying the problems executives are finding in California:

California, once a business friendly state, continues to conduct a war on its own economy. According to the Pacific Research Institute, it has the fourthlargest government of all U.S. states, with spending equal to 18.3 percent of GDP. The comparable figure for Texas is 12.1 percent. Survey respondents uniformly say the state’s regulators are hostile. “No one in his right mind would start a new manufacturing concern here,” said one California CEO.

Although California is not unique in pursuing policies that prompt wealth and job creators to expand elsewhere, (New York being a good example), the Golden State seems uniquely oblivious to the effect its labor and other regulations are having on its innovative and growth-oriented Silicon Valley. Job growth in the Valley has flatlined. Firms keep their HQs there, but pursue growth in friendlier states. Google, Intel, Cisco and other companies locate new plants in states such as Arizona, Utah, Texas, Virginia or North Dakota.

Sacramento seems to take perverse delight in job-killing legislation, of which the pair of bills known as California’s “Green Chemistry Initiative” that former Gov. Arnold Schwarzenegger signed into law in September 2008 serve as an example. The regulations mandated that “manufacturers seek safer alternatives to toxic chemicals in their products, and create tough governmental responses for lack of compliance.” When the 92-page final set of commands was issued, the “green community” demanded a rewrite with even tougher requirements. Writing in the Washington Examiner, Chapman University Law professor Hugh Hewitt said that the new rules will mandate testing and labeling changes on tens of thousands of products, likely triggering product recalls. “Take whatever you think is the worst regulatory regime out there, and expand it exponentially.”

Then there is the state’s carbon emission law (AB 32), which the Small Business Roundtable and PRI say will cost half a million in foregone jobs in 2011 and up to 1.3 million jobs by 2020. What’s more, it is by no means certain the law will reduce carbon emissions since it only applies to California.

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