Atlas Shrugged, Again: The California Exodus of Capital and Talent
More and more people are getting out of the beautiful state of California. This is nothing new. However, what has changed lately is the calibre and the number of those fleeing the Golden State. On September 18th, I wrote about the prospects of the first wealth tax in America, the implications, and the misconceptions of taxation. Now, only a few weeks later, I just read that another big name, billionaire “bond king” Jeff Gundlach, has joined the growing lineup of job creators who prefer building companies, creating jobs, and paying taxes elsewhere. The explanation as to why is quite simple: he is fed up with the return he gets on his tax dollars. Similar patterns are being found in states like Illinois and New York, as well as in countries like France.
We all pay taxes in order to contribute to public service and to the common causes of key and basic life quality elements such as safety, peace, infrastructure, healthcare and/or education. As long as the taxes paid are in proportion to the quality of public services received in return, all is fine. However, when a lack of governance results in a mismatch of tax dollars and regulations vs. the quality of life, frustrated taxpayers will look for better options.
The list of those leaving California now includes the likes of Elon Musk, Ben Shapiro and even Joe Rogan, a self-declared Democrat, one of the more common sense, moderate and patriotic types. But it doesn’t stop there as it also includes small- and medium-sized business owners whose business are hurt and are finding it hard to keep up with the bills.
In the case of California, a state that in terms of its natural beauty and great climate is second to none, messing things up to a point where good people leave in droves seems almost impossible. But it appears as the government of the state may have been able to achieve just that. Thousands of Californians are leaving from the shambles of ever higher taxation, poor governance, high housing costs or the lack of safety, to find a better life in states like Texas, Tennessee or Arizona, all of which happen to be run by governments that lean toward free markets, rule of law and constitutional rights (in their original meaning).
The California government’s response to the exodus of its taxpayers is to tax them more and has put on the table proposals for a new wealth tax, an increase to income tax, and even a new exit tax. These “policy measures” are likely to accelerate the exodus leaving the state, its taxpayers, and the public service worse off. It’s perhaps strong to say, but it almost appears as if the government of California wants to destroy the state….it is hard to explain such lack of common sense otherwise.
All of this reminds me of Atlas Shrugged, the evergreen bestseller written by Ayn Rand. The plot is quite straightforward: as the well-intentioned but incompetent elite steadily and increasingly squeezes the productive, talented, and hard-working entrepreneurs and businesses with more confiscatory regulations and bureaucracy, a California-style exodus starts as well. The job creators, talent, and problem solvers vanish and leave those who had nothing better to do than to accuse, blame, and complain to themselves. If you have not yet read the book, what do you think the conclusion will bring?
You can't blame Californians for moving to Arizona. But let's hope they leave behind the progressive policies that ruined their state. ~ John Gabriel
One of the issues now creating tensions in the destination states is that, apparently, some Californians are bringing with them the values and views tied to the undisciplined spending that lead to California’s fiscal problems in the first place. Much of the anxiety revolves around fears that the new migrants will transform the politics and culture of the states that they are moving to, bringing an appetite for a big, intrusive government. Hope dies last, and as Californians flee their state’s high costs and politics, hopefully they will not be interested in repeating the same mistakes in their new homes.
And, for those of you that don’t have the time now to read Atlas Shrugged, a spoiler alert. Those with money, talent and ambition will only be abused for so long. Then, they will find another option and do their magic elsewhere.