California: Easy to Love, Impossible to Do Business In
California is beautiful. Many parts have great weather. There are a lot of smart people there and some good schools. Both my kids live there right now, though it is really expensive given the state and local governments' propensity to take many steps to limit the supply of housing.
But it is simply impossible to do business in. Every single legislative session brings a series of new time-consuming and expensive regulatory requirements. Despite California having some of the best recreation spots in the world, we have systematically reduced our business in California by 50%, and I have a moratorium in place on accepting new business (I won't even look at RFP's and proposals to avoid being tempted.) I wrote about this process a number of times, including here.
This week, Hans Bader covers this ground and more in his article about businesses fleeing California to places like Texas.
It does not surprise me that service industries, particularly those that provide high-margin services to the wealthy, stay in California -- service businesses have to be close to their customers. But it always blows me away when I see anyone manufacturing in California. Why? Move over the border into Nevada or Arizona or Mexico and costs go down a lot without any real increase in logistics costs. California does not even want you there -- I am convinced they achieve most of their environmental goals merely by chasing folks over the border, exporting these issues rather than solving them.
