Texas v. California: This Ain’t Over When Toyota Leaves – Forbes

Posted: Wednesday, April 30, 2014

About the only things they have in common are severe drought and the blessings of high-tech-industry havens in really cool cities. So, long-simmering tensions between Texas and California are breaking into the open over the poaching of Toyota’s North American headquarters.

The tone has been set at the top by battling governors. Barbs aplenty also are flying across the miles and over the internet between rank-and-file defenders of the deep-blue Pacific Coast way of life and blood red-state denizens of the tumbleweed who have the upper hand in this particular turn of events.

Typical of the vitriol is the back-and-forth between fans of California and Texas in the comment string attached to this contributor’s first story on the move.

“The State of California is doomed thanks to the liberal voters and their voting choices,” wrote Mike Ladwig on Monday, in one of the very first comments. “California 60 years ago was a wonder to behold.”

Apparently deeply offended, one Ken Wallace responded directly to that comment, “It is now common practice for red states to emulate the 3rd world to attract business. Why go to Asia to exploit labor, the environment and collect corporate welfare when we have states right here with politicians eager for bribes.”

And so on. The point is that, while Californians understand their state is actively hostile to most businesses, many simply believe that’s a penalty companies, entrepreneurs, CEOs and employees are — and should be — willing to pay to live in the greatest place on earth.

So when California splendor proved not to be enough to keep Toyota happy in Southern California any more, after a 57-year stay, it rocked the state’s foundations as surely as any tremor along the San Andreas Fault.

Meanwhile, Texans are only too happy to bring umbrellas to watch it rain on California’s parade. Over the last half-century, California and Texas have traded more Americans than any other states — and almost all of them have moved from the coast to Texas. Since 1990, Los Angeles specifically has lost 3.1 percent of its employment base, more than Cleveland (0.2 percent) and Detroit (2.8 percent), according to new research by UCLA and cited by the Wall Street Journal.

Texas Gov. Rick Perry set a typically aggressive tone when crowing about Toyota’s decision on Monday. “It is the biggest win we’ve had in a decade,” he told the Journal. “Ten years of tax, regulatory, legal and educational policies have now put Texas at the top of the heap.”

In the case of Toyota’s move as in the dozens of previous instances of Texas theft of California businesses, Texans will benefit in many ways. And they can’t think of anyone better than Californians to take the loss.

If you look at a state of Texas economic-development web site and a page titled “Texas vs. California,” you might think no sane business executive could make a different decision than Toyota did. Unemployment rates as of last July: 6.5 percent in Texas, 8.5 percent in California. State income tax: “0″ percent in Texas, 1 to 10.3 percent in California. Building permits issued in 2012: 135,514 in Texas, 58,549 in California. And there’s much more

“California has this ‘gotcha’ mentality instead of asking, ‘How can we help?’” businesses, said John Kabateck, head of the National Federation of Independent Business in the state. “And unlike larger businesses and corporations, small businesses usually don’t have the luxury to leave. Many of our members tell us they feel trapped.”

But an assessment by California Gov. Jerry Brown in the wake of Toyota’s announcement pretty much summed up the approach taken by many Californians. “We’ve got a few problems, we have lots of little burdens and regulations and taxes, but smart people figure out how to make it” in the state, he said at an event in Lancaster, Calif., with Chinese electric-vehicle maker BYD BYD, according to the Journal.

Of course, such bravado only thinly masked the resignation that was felt by other Californians, including the mayor of the city that Toyota largely is abandoning.

“When any major corporation is courted by another state, it’s very difficult to combat that,” Torrance, Calif., Mayor Frank Scotto told the Los Angeles Times. “We don’t have the tools we need to keep major corporations here … A company can easily see where it would benefit by relocating someplace else.”

Meanwhile, typical of the slings and arrows arcing from California to Texas are strong critiques of the general level of learning in Texas by Californians who think their education system is superior.


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