4
The new war between the states
Just about every state has budget wounds. Some, like California, look like they've been shot more than Sonny on the causeway. In California's case, its neighbor, Nevada, smells the blood and is attacking with ferocity.
Check out these ads telling California businesses to get out while they still can:
At least one California assemblyman is offended by this campaign. His website California is Golden urges businesses to sign a petition that "I love California and am not leaving the state." There's also a Facebook page. It has 117 members.
And of course, there's a counterattack ad: "Let's face it, what happens in Vegas, stays in Vegas. But what happens in California makes the world go 'round."
The Los Angeles Times has an op-ed piece today saying this aggressive courting of business is a spectacular waste of time and money:
The fact is the come-hither look is useless: Relatively few businesses, once they're formed, pick up and move across state lines. Over the last several years, the nonpartisan Public Policy Institute of California has done exhaustive research trying to measure precisely how many jobs California has lost because of such moves, while also measuring the offsetting number we have gained from businesses moving into the state. The conclusion? The impact is tiny. The researchers found that the average annual job loss was only .06% of California's total employment. Just to be clear, that's not 6%; it's six one-hundredths of 1%...
In other words, most businesses live and die where they are born, thriving or failing on the merit of their product, the wisdom or imprudence of their managers' decisions and the luck of the marketplace.
When that truth is ignored, often because of the kind of one-upmanship foolishness embodied in both the Nevada and California ads, states can participate in a tax-cutting competition that does them more harm than good. Taxes, after all, fund things that businesses need.
The ads reek of desperation, and I suppose that's fitting, considering that one state has been issuing IOU's and the other has pinned its hopes on roulette wheels and now-foreclosed subdivisions.
Know of any other states trying to tear each other to shreds?
The problem with the approach is that Businesses locate based on criteria that have nothing to do with what the ads are about.
A new business often locates where the person starting the business and his/her investors and partners live. Businesses also locate where based on where their suppliers are and their market is and where their labor force is.
For example, I notice a lot of states try to lure high tech jobs while at the same time they do nothing to increase their supply of high tech labor.
The biggest growth comes from business start-ups. Start-ups tend to be formed where young entrepreneurs move to live after college. The key to increasing start-ups in your state is to build modern cities and neighborhoods that will attract young tech graduates to want to come and live there, so they'll stay and start businesses for you.
Those ads are hilarious, especially the one with the chimp. I was thinking ... maybe they should run some of those ads in China & India. See if they can't entice some of those outsourced AMERICAN jobs back to the states. With all the money Bernanke is printing, the US Dollar must be worth less than the Chinese yuan and the Indian rupee by now. Surely it must.
In response to the question of state by state bickering:
#1: Wyoming (Montana?) biting off Michigan: Michigan Radio (southern MI public radio) has done more than one article on it. (can't find a link at the moment for Michigan Radio, but here's one from Mlive from a while ago: http://www.mlive.com/business/mid-michigan/index.ssf/2009/04/michigans_u... )
#2: California biting off Michigan and Wisconsin:
a) Michigan: similar to the Wyoming ads, inviting people to come to California for all the supposed glories available there.
b) Wisconsin: "Happy Cows"?!? I don't have enough expletives for this ridiculous garbage. We in the midwest should buy California dairy products, irrigated by a very scarce resource (out there!) in the middle of what should be a desert. Why should we? Because CA cows wear shades and talk with a CA accent?!? Apparently, our cows are "backwards" cows because they live in an area that can support them without anywhere near the environmental damage. Oh, and way to insult people who talk like that, but they speak with an upper midwest accent (way upper, mostly Minnesotan/Wisconsinite/Michigan accent).
In watching the CA response to Nevada advert, and thinking (again) about the (expletive) CA Cows ads, it's starting to become pretty clear to me how much Californians respond to insulting people from less "citified" areas. (Note in the anti-Nevada ad: "Las Vegas - 5" in what appears to be the middle of nowhere.)
Do people think this arrogance goes unnoticed?
So: If Nevada's ads are successful: my empathy has been beaten down too much to use it on Calfornia as a whole. It's not as nice in their state as Californians apparently think it is.
