THE BLOG

California: Blue State, Boom State

06/18/2015 09:44 am ET | Updated Jun 18, 2016

In January, it was widely reported that California had become the world's seventh largest economy. Among the top ten economies the Golden State (with an estimated 2013 GDP of $2.20 trillion) surpassed Brazil, Italy, and Russia and trailed only the U.S., China, Japan, Germany, France, and the United Kingdom. Many factors contribute to California's preeminence; one being its liberalism.

Republicans don't like to acknowledge California's success. In 2012, Republican presidential candidate, Mitt Romney quipped: "Entrepreneurs and business people around the world and here at home think that at some point America is going to become like Greece or like Spain or Italy, or like California." It was typical Republican propaganda lumping California with Greece because supposedly the Golden State's taxes and regulations would drive it into an economic death spiral. Notably, the poster child for Republican economic policy is Kansas (31st among the states with a GDP of $140,367 billion), which has gone into the tank while California has boomed.

There are multiple reasons for California's success. Bloomberg News noted:

California leads U.S. states in agriculture, technology and manufacturing revenue growth... It's home to more companies on the S&P 500 than any other state. The state's job growth outpaced the nation's in the first nine months of last year. California's non-farm employment of 15.7 million people is at an all-time high.

California has abundant natural resources that contribute to the vibrant agriculture business. Since 1913, Southern California has been the home to the motion-picture industry (which now includes television production as well as content for the Internet). Since 1956 (the invention of the transistor by William Shockley), Northern California has been the home to the information technology business in all of its forms. In 2014, California was the number one state in manufacturing output ($239 billion).

Nonetheless, we do have taxes and regulations. California is the 17th state in terms of taxes per $1000 of income; New York is number 1 and Tennessee is number 50.
According to Forbes California is ranked 36th in terms of a positive business environment (business costs, labor supply, regulatory environment, economic climate, growth prospects, and quality of life). California ranked 46 in business costs, 28 in labor supply, 43 in regulatory environment, 26 in economic climate, 3 in growth prospects, and 25 in quality of life. The number 1 Forbes state iss Utah and the number 50 is Mississippi.

And Californians care about the environment. In 2005, Republican Governor Arnold Schwarzenegger signed a series of executive orders responding to global climate change. One of these mandated that, by 2020, 33 percent of California's energy would come from renewable resources. These actions led to a wide array of environmental regulations. However, rather than deter California business, it spurred it. For example, in the past five years, California has sold more than 100,000 plug-in hybrid and electric vehicles, making the state a global leader in this technology. (Since 2008, Tesla Motors, a California automobile manufacturer, has delivered more than 70,000 electric cars.)

California's economy has thrived in spite of relatively high taxes and stringent regulations.

It wasn't that long ago that California was a red state - remember Richard Nixon and Ronald Reagan? The tide began to turn during the reign of Governor Arnold Schwarzenegger (2003-2011). In 2008, California passed the California Redistricting Act, which mandated an independent commission that would redraw all electoral districts with an eye to making them competitive. Redistricting was opposed by both political parties, but ended up benefitting Democrats.

When Schwarzenegger was "termed" out of office, he was succeeded by Democrat Jerry Brown. Brown defeated the Republican candidate. Meg Whitman, by 11 percentage points despite being outspent by $178.5 million to $36.5 million. Democrats swept the other major state office and seized a commanding majority in the legislature (Currently 26 to 14 in the state senate and 52 to 27 in the state assembly). Not surprisingly, Republican Party membership declined -- it's currently hovering around 28 percent.

But California's economy hasn't thrived because it's run by Democrats, but rather because of liberal culture. Not liberal values in the classic sense - equality, peace, and justice - but rather the liberal mindset that's open and flexible. There's a considerable body of psychological literature that says liberals and conservatives process information differently:

liberals consistently score higher on a personality measure called "openness to experience," one of the "Big Five" personality traits, which are easily assessed through standard questionnaires. That means liberals tend to be the kind of people who want to try new things, including new music, books, restaurants and vacation spots -- and new ideas.

Californians "want to try new things... and new ideas."

Conservatives, of course, are resistant to change. That's okay. Vive la difference. But conservative Republicans shouldn't pretend their ideology is good for the US economy. It isn't.

California has the world's seventh largest economy because it is a bastion of liberalism.