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Ask the Experts — Revitalizing California’s Business Climate

You are invited to join Chapman University’s Vice President of Research Thomas Piechota who will host the next Ask the Experts Town Hall on Friday, January 22, from 11 – 12:30 P.M. (PST). Read more

Virtual Town Hall — Revitalizing California’s Business Climate

Join Chapman University’s Vice President of Research Thomas Piechota as he hosts the next Ask the Experts Town Hall. The installment this month will be moderated by Dean Thomas Turk of the Argyros School of Business and Economics. It will cover how best can California’s business climate be revitalized to avoid the loss of companies, Read more

Can California stop Big Tech from decamping to cheaper places?

For the past half-century, California has dominated America’s tech industry. From the development of precision farming to the incubation of aircraft, space, semiconductors and computer systems, this state has emerged time and again at the cutting edge of future industries.

That is, perhaps, until now. In a stunning procession in December, California lost the leadership of three iconic firms — Hewlett Packard Enterprise, Oracle and Tesla — all to Texas, which this year even took the Rose Bowl’s place in hosting the college football playoff. In addition, many California tech firms, including Uber and Lyft, as well as Apple, have been shifting jobs outside the state.

This has been widely described as California’s “tech exodus.” Though it’s still less than a torrent and more a steady, long-term drip, it augurs some very bad trends. In recent years, California has been losing market share of innovative industries compared with 11 states with high concentrations of innovation-oriented firms, according to research by Ken Murphy, a professor at UC Irvine’s business school.

Since 2005, California’s share of the number of firms in the innovation sector (composed of 13 of the nation’s highest-tech, highest R&D advanced industries) has shrunk while competitors like Florida, Oregon, Arizona and Utah have expanded their share slightly.

The pandemic-induced push to move work online could hasten this shift. With 2 out of 3 tech workers willing to leave the Bay Area if they could work remotely, Big Tech could readily spread talent and wealth to other states.

Increasingly, California’s cities must compete with metro areas in Texas, Tennessee and even parts of the Midwest. Housing prices are a particularly critical concern: California has all three of the most unaffordable metro regions for first-time home buyers, according to a recent AEI survey, and six of the top 10. The flow of tech workers during the pandemic has gone to places like Phoenix, Dallas-Fort Worth and Raleigh, N.C., and away from big coastal cities with higher living costs.

Software-based tech companies can access knowledge workers outside California, and often at lower costs. At the same time, states like Texas and Arizona have been sought to replicate the California formula for tech industry growth — public university expansion, more suburban housing and public investment in downtowns, all meant to appeal to workers and their bosses.

California’s early emergence in both the aerospace and computer-related industries was strongly tied to physical proximity. The development of the aerospace sector, largely funded by the federal government, required close cooperation between designers and suppliers. This made the state, notably the Los Angeles area, unmatched as a center of aerospace development.

The semiconductor industry grew out of related companies like Fairchild Semiconductor, Intel, National Semiconductor and Advanced Micro Devices working together with customers like Hewlett Packard. That formed the basis for Silicon Valley’s remarkable growth and created lots of well-paying jobs for a generation.

But more recently, as the tech industry becomes more virtual and services-based, the companies’ workforces have less of a need to all be in one place. While these companies create vast wealth for a relatively small group of people, this is not a formula for broad-based economic prosperity.

Read the rest of this piece at Los Angeles Times.


Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Marshall Toplansky is a clinical assistant professor of management science at the Argyros School of Business and Economics at Chapman University. He is a research fellow at the university’s Hoag Center for Real Estate and Finance and at the Center for Demographics and Policy.

Photo credit: TahoeGuy via Flickr under CC 2.0 License.

Will the Cultural Revolution Be Canceled?

It’s an article of faith among many conservatives, and some liberals, that we’re being swept by a Maoist cultural revolution destined to transform American society into a woke collective. Yet before surrendering basics like equality of opportunity, social order, and free speech to leftist authoritarians, we should consider whether they’re the ones who will wind up getting canceled.

Most Americans don’t favor defunding police or instituting race quotas; they are wary of the costs connected with the Green New Deal and of allowing Washington to control local zoning. Many are already voting with their feet, fleeing places that promote these ideas and seeking out areas aligned with more recognizable American values. Over the past 20 years, virtually all the most progressive large states—New York, New Jersey, Illinois, and California—have suffered massive outmigration, while red or purplish states like Florida, Texas, the Carolinas, or Arizona welcome more and more Americans to resettle there. On the metropolitan level, even before Covid-19 accelerated the trend, a steady, largely unacknowledged, movement from the deep-blue core to the less progressive suburbs or exurbs has been underway.

Political correctness—the secular religion of elite liberal society—turns out to be enormously unpopular, something President Trump has exploited politically. Some 80 percent of Americans, notes one recent survey, including most millennials and minorities, see political correctness as “a problem,” not a solution for the future. Progressive social activists, a survey by the liberal research organization More in Common found, account for barely 8 percent of the adult population, less than a third of the number who identify as traditional conservatives.

The fact that most Americans—Democrat and Republican—fall between these two categories suggests that social attitudes may be far less polarized, and less susceptible to political correctness, than has been widely assumed. As seen in the reaction to the George Floyd case, most Americans generally back the police but also embrace the notion of police reform; they are increasingly hostile, however, to the wave of violence that has accompanied some of the protests. Rather than support growing attempts to limit free speech, almost four in five Americans, according to Pew, support protecting it. These attitudes extend well beyond the base of Trumpian conservatives to include most Americans, regardless of ethnic background.

The media epitomize the gap between the public and the nation’s dominant institutions. Subjectivity, notes a recent Rand study, has replaced the world of shared facts with approaches that lead to “truth decay.” Reporters once believed that their mission was to inform the public, but now many journalism schools, including Columbia, embrace progressive groupthink, openly advancing a leftist social-justice agenda in which reporters are advocates. Even Teen Vogue has taken a neo-Marxist tack. “Moral clarity” replaces objectivity. Free speech is somehow linked to white privilege.

These partisan attitudes have dramatically eroded trust in media, according to a new Knight Foundation study. Public trust in most large media has declined steadily over the past four years, with the biggest drops among Republicans; the New York Times, the publisher of the 1619 Project takedown of American history, is trusted by less than half of the public, compared with almost 60 percent in 2016. Gallup reports that, since the pandemic, the news media has suffered the lowest ratings of any major institution, performing even worse than Congress or President Trump.

Certainly, the shift leftward has not helped the progressive-dominated newspaper business. Between 2001 and 2017, the publishing industry (books, newspapers, magazines) lost 290,000 jobs, a decline of 40 percent. Endless partisan sniping and countless crises have boosted CNN, but the network lags well behind right-wing Fox. NPR has seen its ratings drop as many listeners gravitate to less predictable, livelier voices like Joe Rogan.

The new media also suffer from a credibility crisis. Controllers like those at Facebook, Google, Apple, and Twitter are increasingly determined to curate “quality content” on their sites, or even eliminate views they find objectionable, which tend to be conservative, according to employees. The idea that managers of huge social-media platforms aim to control content is more than conservative paranoia. Over 70 percent of Americans, according to a recent Pew study, believe that such platforms—as demonstrated in the case of Reddit, Facebook, and Google—“censor political views.” In California, the center of Big Tech, people express more trust in the marijuana industry than they do in social media, according to a 2019 survey.

Read the rest of this piece at City Journal.


Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Photo credit: City of St Pete via Flickr under CC 2.0 License.