06/02/2011 09:16 am ET Updated Aug 02, 2011

Job Killer: California's Social Networking Bill

For anyone who has followed the budget debate in Sacramento, one thing is certain. After all the agony and drama of cutting programs and raising revenues, the most reliable and least painful way to pay for schools, parks, public safety and other services taxpayers value and want from state and local government is to create jobs.

At nearly 12 percent unemployment, it's clear we would have a lot more money to spend on popular government programs if more people were paying taxes to support them.

Recently, the Public Policy Institute of California, a non-partisan think-tank devoted to the study of California, came out with an interesting report called "Business Climate Rankings and the California Economy."

Their study essentially asked, "If California is such a lousy place to do business, why does overall economic growth in California still keep pace with the rest of the country?"

Their conclusion was fascinating. It said our natural advantages of mild weather and geography help make up for the fact that, yes, California really does have a bad business climate and our state would be growing more jobs if leaders did something about it.

A polite way to restate what's obvious to anyone trying to bring jobs and investment here -- California's taxes and regulations are stifling growth and innovation.

Case in point -- California's tech sector.

California leads the world in Internet commerce; this sector employs more than 100,000 people, generates billions of dollars in revenue and is one of the fastest growing sources of jobs in the state. Companies no one heard of five years ago -- Facebook, LinkedIn, Zynga, Twitter -- employ tens of thousands of Californians, while companies that are slightly older, like Google and Yahoo!, have created brands that are household names around the world.

So what California companies will we be talking about in five years? Probably the ones that started here but felt overtaxed, overregulated and unappreciated, and took their act on the road, to Austin or to Raleigh-Durham or a host of other regions that can't rely on weather or geography to make up for a poor business climate.

But instead of coming up with ways to bring more jobs and investment to California, we come up with bills like SB 242 by San Leandro Senator Ellen Corbett, which would direct the state to regulate the websites of Google, Facebook, Groupon and others and threaten them with massive fines for failure to comply. Just California's way to unfriend cutting-edge businesses.

How would SB 242 stifle innovation and chase jobs?

First, it would undermine company relationships with consumers by setting bureaucratic state standards for the "look and feel" of online sites and making it harder for consumers to manage online preferences on their own. This wouldn't "empower" consumers -- it would infuriate them.

Second, the bill creates an impossible standard requiring Internet firms to remove certain material that any other registered user deems objectionable within just a few days of her request or face fines of up to $10,000 per occurrence, potentially creating millions of dollars in liability -- a legal swamp where trial lawyers and shake-down artists thrive.

Third, the damage would not be limited to a few well-known social networking sites. SB 242 may also affect California-based application developers that depend on social networking platforms for their revenue and growth. The definition of "social networking sites" is so broad that the measure would likely capture the web presence and business operations of a wide swath of Internet companies, ranging from membership-based non-profits to online dating and travel sites.

Protecting an individual's privacy on the internet is a shared duty of the website companies, individual users and government. This legislation adds little to those responsibilities except more unnecessary and unproductive burdens that could chase jobs and innovation offshore.

For California to resume its place as an international leader in innovation and employment, we need to let people know we're open for business. Bills like SB 242 don't do that. Instead, they slam the door shut.