Technology, Economics, and Governance Working Paper 21101
Abstract: The nearly coincident announcements in December 2020 by Silicon Valley giants Hewlett Packard Enterprises, Oracle, and Tesla that they all were relocating their headquarters and future operations to Texas brought international headlines to businesses, particularly high technology businesses, leaving California. This paper documents business and household exits over time and analyzes why they are occurring. I find that economic policies—including tax, regulatory, and housing policies—are the key factors that have led technology firms, as well as other businesses and residents to leave California. These policies drive up business and consumer costs and reduce efficiency. If California is to reverse this dangerous trend, then regulatory and tax policies must change to become competitive with other states.
This paper is published as part of the Technology, Economics, and Governance Working Group which seeks to understand the drivers and dynamics of technological innovation in the 21st century, assess the opportunities and risks that breakthrough technologies are creating, and develop governance approaches that maximize the benefits and mitigate the risks for the nation and the world. Facts and objective analysis are the keys to the approach.