The California legislature or something like that passed a new emissions law yesterday and it looks like Arnold is going to sign it. I'm all for clean air but, and there is always a but, what is the economic impact of such a move? I don't know. It is always worthwhile though to view what people do since people vote with their feet. They go where they get the best deal. Housing prices in California would say people are dying to get there but they have had a negative migration rate and where are these people going to work if business decides to abandon California? Actually, companies don't abandon places, they usually just don't do continued investment there.
Here's how it works. A company wants to build a plant. The choices are California or, say, Kansas. So the bids go out and Kansas says cheap land, ample energy, 'reasonable' government regulations, tax breaks, a somewhat educated workforce. California says 'screw you. But we have better weather.' Not a real hard choice. The company picks Kansas. But it doesn't happen overnight.
So what is happening? An interesting article in the Wall Street Journal indicates that the current hot spot is...North Dakota. I have some experience with North Dakota. My son's bomber group had two navigator openings--two in Louisiana and one in North Dakota. They had three single nav's--my son, his roommate Tye and another guy. Somebody had to go to North Dakota. So the Air Force did a pragmatic thing--they locked the three guys in a room and said you figure it out. Now my son is from Texas, Tye is from Missouri and the other guy was from Massachusetts (sp?). They said you've been in the cold and you can handle it plus my son and Tye are pretty big guys and the other guy wasn't so...well, you can figure that one out. To my son's credit he later offered to go since he felt bad about putting pressure on the other guy but the other guy said it was ok. I thought that was rather noble but glad he didn't go because you can't get there from here.
But somebody is because here are the states that have had the fastest growth in per capita income-
The losers are-
The growth in the leading states is the result of energy resources (including renewable like wind power), technology, and financial services. The thing about energy I kind of thought of but not the magnitude. Seems that North Dakota, Montana and that part of Canada have a field capable of pumping out 200-300 billion barrels of crude on top of coal coming out their ears. Wow.
But technology and financial services? Great Plains is there as well as Microsoft's business systems division. According to the National Science Foundation, North Dakota ranks number two in academic R&D dollars per $1,000 of gross state product. Financial services? Citibank and other bank credit card operations.
So how do the companies attract people? Good schools, reasonable housing prices -the median is under $150,000, short commutes, the nation's lowest crime rate, and outdoor recreation, at least in the summertime.
The people have voted--with their feet.