What works

The buzz around town today is about whether Color is going down or not. Color launched in March 2011 as some sort of social-photo-location app for iOS – basically the perfect storm of buzzword compliance. It went nowhere, reinvented itself as a live-self-video-streaming app, and now is allegedly on the brink of shutting its doors.

And it’s based in Palo Alto, which is the point of this exercise. Of course it is.

What are the things that have transformed American life in recent years? Google: Mountain View.  Apple: Cupertino. Twitter: San Francisco.  Facebook: founded in a Harvard dorm room, but incorporated in Palo Alto.  When they moved, did they move to Texas?  Did they move to Alabama, or Mississippi?  Hell no.  They moved to Silicon Valley.

It’s become fashionable of late for certain conservatives to point to California as a dysfunctional, financially doomed canary in the coal mine of the American economy, on the verge of going down like Greece.  I’ll set aside the fact that if California only paid as much federal tax as it gets back in federal services, the budget would be in surplus (you’re welcome, rednecks) and I’ll also set aside the preposterous clusterfuck created by Prop 13 that requires a 2/3 vote of both houses to pass a budget when 50%+1 of a referendum vote can change the state constitution.  Instead, I’ll just ask: if California is a horrible place to do business, why hasn’t Apple decamped to Austin? Why didn’t Twitter relocate into a nice set of lofts overlooking Railroad Park? Why didn’t Facebook take over a shiny new campus hard by the future Interstate 22 in the scenic bit of Mississippi?

This doesn’t even require an answer. In fact, it probably leads to a lot of guffaws at the notion of, say, Knoxville as the new home of Gewww-gull. But to hear everyone from Newt Gingrich to the Economist tell it, businesses are dying to get away from places like California and relocate to the low-tax laissez-faire paradises of the Deep South.  But there’s a hell of a lot more to it than that.  If that’s all it took, manufacturing wouldn’t be overseas and design wouldn’t be in the Bay Area.

Fact of the matter: the Southern approach to economics doesn’t work. You can cut taxes to the bone, cut services to nothing, offer billion-dollar tax incentives to the likes of Mercedes and make up the difference with 9% sales tax and income tax starting on $5000 a year, but it’s not going to deliver the New Jerusalem to your notional Silicon Holler.  Too many people are trying to sell us the idea that the race to the bottom is the only way to turn the economy around – but that only works if you think Alabama is heaven on Earth.

Of which…you know.

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