The Great Sorting, that growing divide between blue states and red states, along with the inevitable flow of people and economic activity from blue states to red states, seems to be increasing. The blue states are losing this contest for productive people and the economic activity they bring with them, and it's showing. New York, New Jersey, Illinois; many of the blue states are losing people and tax revenue. The winners? Business-friendly red states like Texas, Florida, and Tennessee.
The biggest loser may well be California. In part, that's because they have more to lose; only a couple of decades ago, California was thriving. When I was a young man in the 1970s and 1980s, everyone I'm aware of thought of California as the place to be, the place to strike it rich, so to speak; it was, then, really a Golden State. But now, today? Years of monolithic Democrat control have changed all that. Why is this happening? A recent Issues & Insights (I&) editorial looked into that matter.
Florida Pizza Kitchen. It doesn’t have quite the ring to it that California Pizza Kitchen does. But had the iconic chain been dreamed up in the 2020s rather than the 1980s, it would have been FPK rather than CPK, not because the California Pizza Kitchen’s co-founders moved to Florida, though one did a couple of years ago, but due to the Golden State’s corrosive business policies.
Not that long ago, California was “the greatest place to do business,” Rick Rosenfield, the CPK co-founder who fled to the Sunshine State, told Fox News Digital.
“If it were me today, I would open in Florida before I would open it in California,” Rosenfield said. “California is less business-friendly today, and they make it apparent.”
A lot of businesses are making the choice to leave California altogether. And things have rapidly gotten worse.
California is actively hostile to business. Rosenfield told Fox that the business climate sharply changed after COVID, which is true, but it didn’t begin there. Not dozens, not hundreds, but thousands of businesses have quit on the state and relocated either fully or partially elsewhere since 2008. The list of high-profile and California legacy companies that have fled, according to a Pacific Research Institute report, includes “Hewlett-Packard, whose founding is recognized as the birth of Silicon Valley; entrepreneur Elon Musk’s Tesla and SpaceX; Charles Schwab, founded in San Francisco in 1971; Mitsubishi; Nissan North America; Toyota Motor North America; Oracle; Palantir Technologies; and Jacobs Engineering.”
That, readers, is the Great Sorting in action.
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As I&I notes, this isn't a new thing, but it has accelerated since COVID established the precedent that government can take control of, well, everything. A 2024 report by two California residents makes it clear that, two years ago, this was already in full swing. Those Californians? Policy analyst and writer Edward Ring, and a current candidate for governor of California: Steve Hilton. The gist of their California Policy Center report is simple enough: California, through taxation, regulation, and policies tolerant of crime and unrest, has made California an impossible place to run a successful business. To support that contention, they present an extensive list of companies that have left the once-Golden State for greener pastures.
For anyone operating a business in California – small, medium or large – the experiences of the last twenty years have been challenging, and it gets worse every year. California’s regulatory environment, its high taxes and exorbitant fees, and the overall cost of doing business are the toughest in the nation. Many businesses have voted with their feet, moving their operations to more welcoming business environments.
According to a list of “Cali-Formers,” companies compiled by the Sacramento-based Center for Jobs and the Economy, since 2020 over 500 companies have either left California completely, or opted to expand their operations in a different state while shrinking their operations here. The list includes scores of household name companies: Aerojet, Aligent, AirBNB, Alphabet (Google), Amazon, Amgen, and Apple, and that’s just the As. It spans the gamut from high-tech and aerospace, to energy (Chevron) and civil engineering (Bechtel), to arts and entertainment (Academy of Country Music, Disney). When including companies that have simply downsized their presence in California, opting to expand in other states instead, it’s a challenge merely to find a large company that wouldn’t be on this list.
This has happened, by and large, because of a Democratic supermajority in the state legislature, along with decades of near-universal Democratic rule of the major urban areas - and a staggeringly incompetent governor, named Gavin Newsom.
The problem is largely this: The political left seems incapable of understanding that incentives matter, that behavior that is punished through increased taxation and regulation will move away to friendlier jurisdictions. But behavior that is tolerated or even rewarded - mass shoplifting, expanding homeless enclaves, sloth, indolence, far-left activism - will only increase. Meanwhile, states like Texas and Florida are welcoming California's productive residents in, to a newer, friendlier environment.
That's how incentives work. That's why the Great Sorting is accelerating. That's why, until California returns to some semblance of political sanity, its economy will only continue to bleed. I've lived and worked in California. I have worked on extensive projects, including two years at a facility stand-up and validation in the Los Angeles area and a year working on a start-up in Silicon Valley. I get California's appeal: The climate, the scenery, the wide range of landscapes.
California is a beautiful place. But it's growing uglier politically and economically, with the former leading to the latter. That's what has to change, if California is to be, once more, a Golden State. Until that changes, nobody productive will be, as the song goes, California dreamin'.
