California Politicians Turn Against Their Most Loyal Business Supporters

September 21, 2019:

For some time I’ve been thinking about how the deterioration of California’s business climate continues unabated based on my knowledge about headquarters and manufacturing plants leaving the state for friendlier environments.

Now, we see that a string of big San Francisco and Silicon Valley tech companies are finding themselves targeted by politicians whose very campaigns have benefitted from cash, rhetorical support and professional assistance from those very companies. Here, we’re talking about companies such as Google, Apple, Uber, Lyft, DoorDash, Yahoo, Facebook, Instacart and Postmates.

But I needn’t write such an article about those elected officials because the brilliant writer Joel Kotkin did so in “Silicon Valley’s Useful Idiots.” I’ll provide a link to the full column, but here are some exceptional excerpts:

“Tech elites paid for the rope that may hang them.”

“The term ‘useful idiot,’ often credited to Vladimir Lenin, applies to people supporting a cause or movement injurious to their own self-interest. Nowhere is this more relevant these days than in Silicon Valley, a place dominated by [people] who often seem to have the social and political acuity of middle schoolers, as evidenced by their strong support for progressive Democrats poised to destroy the underpinnings of their businesses.”

The column’s focus is on Assembly Bill 5, “which will effectively turn many contractors into employees. The legislation’s prime backers are the state’s unions, which see it as an ideal way to organize now out-of-reach workers.” Gov. Gavin Newsom signed the bill into law on September 18.

This report identifies 242 companies like Google, Yahoo, Uber, Lyft, Snapchat, ZipRecruiter, Hulu, Twitch, Womply, Airbnb, Salesforce, Facebook and lesser-known similar businesses that have relocated facilities in full or in part to out-of-California locations. Simply search for #DO in the report and see details about each company’s move.

“The new measure is potentially devastating, though, for companies like Uber, Lyft, and Postmates, all built around part-time employees, and none yet profitable. Many other tech firms—including profitable ones—use contractors for everything from app development to catering to cleaning. As many as 2 million Californians are employed in so-called gig work. [With AB5’s passage], job losses won’t just be felt by the ride-hailing firms but also by many other businesses, including newspapers, small trucking firms, some medical providers, and even franchise owners.”

“The Californian ruling caste’s progressive sentiments have not translated into broad-based economic benefits. … California has created surprisingly few high-wage jobs over the past decade, with 86 percent below the median pay and some 40 percent paying under $40,000—in one of the nation’s most expensive states. In a tech-dominated economy, virtually every other sector has grown slowly, well below results in such key competitors as Texas and Arizona.”

“The tech elite has financed a Democratic Party that now appears to favor socialism over capitalism. A socialist movement is even percolating among Silicon Valley tech employees, many of whom see little opportunity to amass enough wealth to buy a house in the exorbitant Bay Area. Like those French aristocrats who backed revolutionary ideas in the late-eighteenth century … tech elites have spent a fortune promoting ‘woke’ politics that is turning against them. They may not lose their heads, but they could find their riches fleeced by former allies. It couldn’t happen to a more deserving, self-involved, and cognitively gifted group of . . .  well, idiots.”

The writer, Joel Kotkin, is the presidential fellow in urban futures at Chapman University and executive director of the Center for Opportunity Urbanism. The full column is on NewGeography here: Silicon Valley’s Useful Idiots.

Apple, Lyft, Uber, Google, Facebook (a total of 242 such digital-based companies) have shifted some or all of their operations out of state. To more fully understand the types of companies that leave the state, the industries they are in, where they left and where they went to, see a summary of Joe Vranich’s most recent comprehensive report Why Companies Leave California.

Joseph Vranich is a Site Selection Consultant providing location advisory services to companies looking to enhance the success of their enterprise through location or relocation projects. His motto is “Helping Businesses Grow in Great Locations.” In recent years, he has discussed California’s difficult business environment with countless businesses and more than 100 economic development agencies located in North America and Europe. See more at Spectrum Location Solutions LLC.