Tuesday, September 6, 2011

Is California Crumbling?

With the recent unemployment figures showing California behind only Nevada in jobless rates, the excellent observer of all things California-related, Joel Kotkin, presents a bleak and dark picture for the Golden State. It is hard to disagree with many of his criticisms (namely, how the primary constituencies that control the state seem and actually probably are disconnected with business realities), I do believe many of the state's comparative advantages remain and continue to make California, much like America, a compelling story whose best days still lie ahead. These advantages include: a) world-class research institutions (Stanford, Berkeley, CalTech, UCLA); b) the world's technology sector is still squarely centered in Silicon Valley; c) the State's rich ethnic backgrounds, with deep roots and connections with the world's leading economies like Japan, China, Mexico, the Republic of Korea, India, Brazil, Russia, Israel, among many others, which only enhance trade and commerce, create jobs, and grow wealth; and d) some of the major corporations in the world like Disney and Apple, yes, but a whole slew of small and mid-cap companies few have ever heard of, but someday, at least for some, will become household names.

California, and by extension, the U.S., is in a funk and has been since at least 2008, following the financial crisis. This funk will likely continue and probably will get worse before it gets better. But it will get better. A lot better. We are an innovative and risk-taking people and so long as that remains, we will be just fine. If we also simplify our tax code, reduce regulations, and do a better job of educating and training our people, we will be all the better.



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