California smokin’

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“I’d be safe and warm if I was in L.A.  California dreaming on such a winter’s day.”
-The Mamas & The Papas

According to a recent Wall Street Journal op-ed by George Gilder, “California officials acknowledged last Thursday that the state faces $20 billion deficits every year from now to 2016.”  Why is America’s richest and most innovative state unable to balance its checkbook?  Why aren’t the “world-changing” entrepreneurs in Silicon Valley who have created so much economic value for the state and the country doing more to solve California’s fiscal problem?  And why didn’t Silicon Valley do more to elect Meg Whitman, a person who could have addressed these problems with the energy and management ability she used to build eBay into an Internet powerhouse?

California rejected the conservative wave in the 2010 election.  The “Golden State” stands in stark contrast with other populous US states whose economies have been strangled by unions and sclerotic state governments.  Compare the following responses to blue state stagnation, indebtedness and corruption:

  • New Jersey elects Chris Christie governor.
  • Illinois elects Mark Kirk US Senator.
  • Massachusetts elects Scott Brown US Senator.
  • Pennsylvania, New York and Ohio elect about five new GOP House members each, plus two GOP senators and two GOP governors.
  • Michigan elects Rick Snyder governor.
  • In the same cycle as these GOP wins, California elects Jerry Brown governor over moderate Republican and former eBay CEO Meg Whitman and also picks Senator Barbara Boxer over former Hewlett-Packard CEO Carly Fiorina.

Huh?  In a state that has been bankrupted by entrenched unions … in a GOP wave election … California voters turned to 40-year government veteran Jerry “Moonbeam” Brown?  Seriously?  Over Meg Whitman, who turned a tiny startup into one of the world’s most successful businesses?  A woman whose moderate social views are not threatening to California voters?   We admit that Moonbeam is cooler than Meg.  But, one would think Silicon Valley would rather have a governor not beholden to unions.

Economically and culturally, California is America’s most important state.  Californians need to understand the reputation of their state has been damaged by its fiscal mess.  Federal taxpayers are angry about having to subsidize the fiscal recklessness of California’s state government.

Much has been written already about the irresponsibility of California’s government officials and the curious masochism of California voters, who re-elected nearly all incumbents in 2010.  A recent Wall Street Journal op-ed called California the “Lindsay Lohan of states.”  But one important story has not yet been written: the failure of Silicon Valley to fix Sacramento.  The entrepreneurial community in California should fight harder to fix its broken host state.  Think about how seemingly hopeless New Jersey and Louisiana have enhanced their reputations as business centers under the reform-focused leadership of Governors Chris Christie and Bobby Jindal.  That could have been California too.

Listen to Texas Governor Rick Perry, quoted in a recent Daily Caller article:

Perry said if you want less freedom and “a whole bunch of government services,” you can skedaddle over to California. “But if you want to live in a state where you’re more free — free from over-taxation, free from over litigation … come to Texas.”

Even the dark-blue voters of Washington State understand this.  This month, while re-electing liberal Democrat Senator Patty Murray, voters rejected 65%-35% a vote to introduce an income tax on the top 1.2% of Washington State earners.  That’s right, in one of the most liberal states in America, 65% of voters rejected a tax hike exclusively on the richest 1.2%.  Why?  Unlike California voters, Washington State voters recognize the need to spur job creation.  And Washington State’s tech titans such as Steve Ballmer and Jeff Bezos personally invested in defeating the measure.  Before the election, Texas Governor Perry was making recruiting pitches to Seattle businesses.  Now he is focused on attracting California’s job creators.

A number of technology people spent time and money helping Meg Whitman’s campaign.  But none of the brand name technology moguls in California played a leadership role in helping her win.  Rand Paul had the Tea Party.  Marco Rubio had Senator DeMint.  Jerry Brown had the unions.  With all due respect to Mitt Romney, Meg Whitman had herself.

Imagine instead if Meg Whitman, during the peak of her campaign struggles could have stood on stage with the CEOs of Yahoo, Google, Facebook, Cisco Systems, Intel, and Oracle and delivered a pro-jobs message.  She could have defined the narrative of the race.  She would have won despite her other well-documented weaknesses as a candidate.  She could have fixed the state in a way the outgoing governor could not despite years of toil.  Jerry Brown cannot and will not even try to fix California.  He is beholden to the very special interests who have suffocated the state.

The good news is that California, like America, is fixable.  California still has universities, talent, entrepreneurial culture and weather which are the envy of the world.  California still can be America’s shining city on the hill.  So, who out there in Silicon Valley will step up and lead?

Charles Curran and Patrick Ennis have spent over 35 combined years as technology investors and innovators.  We live in Washington DC and Washington State, respectively.