California is learning the hard way that anti-business policies tend to flush out businesses.
In 2018 and 2019 — which were years of economic expansion across the United States — 765 major commercial facilities fled California. Stanford University’s Hoover Institution points to high taxes, government red tape, and other policies that discourage economic activity. Occurrences of companies fleeing the state have become commonplace enough for the California Policy Center to track the moves through its “Book of Exoduses.”
As one young tech entrepreneur who recently left California explains, “I’ve struggled with a government that is notoriously business-unfriendly — with everything from high taxes on earning to badgering businesses to work more to comply with bureaucracy.”
Here are five notable companies and entrepreneurs bolting from the Golden State.
Instead of expanding its production capacities in Palo Alto, electric car manufacturer Tesla built a new factory in Austin.
In May of 2020, Tesla CEO Elon Musk grew frustrated with the continual shuttering of his company’s main factory in Alameda County. He tweeted that the “unelected & ignorant ‘Interim Health Officer’ of Alameda is acting contrary to the Governor, the President, our Constitutional freedoms & just plain common sense!”
“Frankly, this is the final straw,” he continued. “Tesla will now move its HQ and future programs to Texas/Nevada immediately. If we even retain Fremont manufacturing activity at all, it will be dependen[t] on how Tesla is treated in the future. Tesla is the last carmaker left in CA.”
“F*ck Elon Musk,” retorted one California state representative. “Message received,” Musk responded.
Within a few days, Alameda County rushed to accommodate Tesla — a move that persuaded the firm to continue its remaining operations in California.
Nevertheless, the company has since emphasized moving future production to Texas. Tesla is currently working to build a $1.1 billion factory east of Austin; last month, details emerged of an additional manufacturing site planned for the area. SpaceX — another venture led by Musk — is also establishing roots in Austin.
Accordingly, Musk — currently the third richest man in the world — moved to Austin himself.
Financial services company Charles Schwab is likewise moving to Texas.
“As part of the integration process, the corporate headquarters of the combined company will eventually relocate to Schwab’s new campus in Westlake, Texas,” said the company in a statement announcing its $26 billion merger with TD Ameritrade.
Charles Schwab’s stock price instantly rose by more than a dollar.
Two years earlier, Chairman Chuck Schwab warned that the tax climate in California could push the business out of the state. Citing his company’s facilities in Texas, Colorado, New York, and Orlando, Schwab stated that “the cost of doing business here are so much higher than some other place, we’ll have to move there.”
The firm launched its operations from San Francisco in 1971. By 2000, Charles Schwab employed 20,000 people in the Bay Area. In 2019, however, it employed 1,200.
Software company Oracle announced a move out of its historic home in California.
“Oracle is implementing a more flexible employee work location policy and has changed its Corporate Headquarters from Redwood City, California to Austin, Texas,” said a company spokesperson to CNBC. “We believe these moves best position Oracle for growth and provide our personnel with more flexibility about where and how they work.”
The company added that they would “continue to support major hubs for Oracle around the world, including those in the United States such as Redwood City, Austin, Santa Monica, Seattle, Denver, Orlando and Burlington, among others, and we expect to add other locations over time.”
Oracle — one of the first companies to establish roots in Silicon Valley and participate in the area’s business renaissance — was launched in 1977 and had remained in California since its founding.
Co-founder Larry Ellison announced that he would also be leaving California.
“I’ve received a number of inquiries about whether or not I will be moving to Texas,” he told Oracle employees. “The answer is no. I’ve moved to the State of Hawaii and I’ll be using the power of Zoom to work from the island of Lanai.”
Hewlett Packard Enterprise — another technology company — announced a move to Texas last year.
“HPE has made the decision to relocate its headquarters from San Jose, California, to Houston, Texas,” said the company in a 2020 earnings report. “HPE’s largest U.S. employment hub, Houston is an attractive market to recruit and retain future diverse talent, and is where the company is currently constructing a state-of-the-art new campus.”
CEO Antonio Neri cited “our business needs, opportunities for cost savings, and team members’ preferences about the future of work” as reasons for the relocation. Gov. Greg Abbott (R-TX) welcomed the move: “Texas offers the best business climate in the nation. Our low taxes, high quality of life, top-notch workforce, and tier one universities create an environment where innovative companies like HPE can flourish.”
Hewlett Packard Enterprises — which spun off from HP Inc. in 2015 — is a business-to-business organization focusing upon consulting, cloud computing, and financial services. In 1939, Bill Hewlett and Dave Packard launched the business from a Palo Alto garage.
Software firm Palantir also announced a move from Silicon Valley.
Beyond tax policies and business climate, Palantir — which was founded by conservative-leaning entrepreneur Peter Thiel in 2004 — cited California’s political culture.
During an interview with Axios, CEO Alex Karp cited the region’s “increasing intolerance and monoculture” — a reality that also extends to the firm’s employees.
“I’ve had my favorite employees yell at me,” he said. “I’ve had some of my favorite employees leave. I had people protesting me. People protesting me, some of whom I think asked really legitimate questions. I’ve asked myself if I were younger, at college, would I be protesting me? And you know, it depends?”
The company has faced criticism for contracting with the federal government — especially United States Immigration and Customs Enforcement (ICE). In 2018, protestors from 15 activist groups gathered in front of Palantir’s headquarters to “call on any and all employees of Palantir to demand that the company drop its relationship with the agency.”
The views expressed in this piece are the author’s own and do not necessarily represent those of The Daily Wire.
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