I love federalism. Which is to say, really, that I love competition. When states, like businesses, compete for their desired goals in a free-market scenario, everybody wins in the long run, because the policies that really work and appeal to the most people will come out on top.
Texas and California are often compared as polar opposites in terms of their business-friendly policies; i.e., Texas is reliably ranked number one and California usually comes in around dead last. There are plenty of traditional and cultural factors that keep California an attractive place for venture capital investment, but an incoming raft of even more onerous regulations and higher taxes planned by the Californian government might mean that any businesses on the fence will reexamine their location options — and hey, just throwing this out there — Texas just wants them to know that the Lone Star state is a pretty great place.
In the 30-second radio advertisement — which highlights Texas’ low taxes, predictable regulations, fair legal system and skilled worked —Perry says, “Building a business is tough, but I hear building a business in California is next to impossible.”
The one-week advertising schedule will run in six media markets, namely San Francisco, Sacramento, Los Angeles, Inland Empire and San Diego. TexasOne, a public-private partnership that markets Texas nationally and internationally as a business destination, will pay for the advertising.
California Governor Jerry Brown was not impressed.
“It’s not a serious story, guys,” the Democratic governor told reporters at a business event here. “It’s not a burp. It’s barely a fart.”
The ad buy Perry announced Monday is relatively small, at about $24,000, but it gained widespread attention in the media. Brown called the amount “the smallest entry into the media market of California.”
“If they want to get in the game, let them spend $25 million on radio and television,” Brown said. “Then I’ll take them seriously.”
Eloquent. Here’s the slightly more persuasive response from Brown’s Office of Business and Economic Development, via HuffPo:
I can understand why Rick Perry is interested in California. We were the national jobs leader for most of the last year with 257,000 new private sector jobs,” said Kish Rajan, director of the Governor’s Office of Business and Economic Development. “But business relocations only account for 0.03 percent of annual job losses in California. At that rate of growth, it would take 20 years to lose just 1 percent of our businesses to relocation. The reports show that no state has ever poached their way to long-term prosperity. Real job creation comes from California’s history as a national leader in start-ups and the expansion of homegrown businesses.”
Poaching doesn’t work. This is something so many governors have done before and with the same ineffective results. One of the only real studies that’s ever been done on this, by the Public Policy Institute of California (PPIC), called it insignificant. During the two years of the highest departures in the study, California lost just 0.05 percent of the state’s total establishments.
Er, poaching doesn’t work, really? Maybe not, and it’s true that, historically, not many of California’s job losses stem from relocation — but they better tell that to these guys, who clearly find it worthwhile to spend their time convincing Californian businesses that it would be more profitable to expand their businesses elsewhere, via the WSJ:
Now, states that have traditionally staffed external business-development offices only overseas are adding manpower in the Golden State. …
Companies rarely relocate purely at a recruiter’s suggestion. But states are hoping to capture the attention of Silicon Valley venture capitalists as well as California’s large number of entrepreneurs and CEOs, and to make sure they are on the shortlist for any expansions or relocations. Arizona opened its first two domestic out-of-state offices in October—one near Los Angeles, the other in Silicon Valley. Tennessee in November posted an ad for a new government position looking for California businesses to poach. Nevada hired its own representatives in California two years ago.
Recruiters say most of their work centers on companies that are expanding, not relocating altogether. Ron Frierson, a Los Angeles-based representative for Kansas, says he spends his days scouring the state for businesses that may want to open out-of-state plants, warehouses or data centers. Doug Kiggins, one of Arizona’s two new California recruiters, said he has been spending about six hours a day driving around to promote Arizona’s business-friendly climate.
Next up from Perry in the governors’ feud: A classic “Bless their hearts,” perhaps?