>Contrary to the prevailing perception of business dysfunction and exodus of people since the start of Covid-19 pandemic, the San Francisco Bay area accounts for 78% of the market capitalization of all publicly-traded companies in California, up from 70% five years ago.
In essence, tech is fueling California more so than anything else, from what it seems. The growth is almost entirely due to tech industry wins.
It'll be interesting to see what it is like 12-18 months from now, because the headwinds in tech are just starting to roll in full force before these statistics were finalized. California may see a bit of a down round next year.
I will say though, despite a very lopsided and sometimes actively regressive tax structure and real estate problems in California, it does seem that this is still one of the best places in the world to grow a technology business. Non SV VCs never materialized with the strength the Silicon Valley VCs still command.
I think Oregon and Washington are also seeing a pretty strong outgrowth from this, but at a much smaller scale.
I feel like most of Texas tech scene wins have come from companies want to take advantage of the tax structure, and not from structural growth afforded to the region by lush VCs and risk taking entrepreneurs. Doesn't mean they don't exist (they really exist everywhere, see Mailchimp for instance) but it just isn't the same ballpark.
It seems Texas has mostly only attracted well established companies looking to take advantage of structural tax advantages rather than growth opportunities.
Of course, you may ask, why am I choosing to single out Texas? Because they made very public statements about coming after and luring in California businesses, especially tech businesses. Its clear that they didn't really put a big dent in this.
Also, this is a lagging indicator. A lot of this growth is occurring in companies that were founded before the worst dysfunction occurred. It doesn't mean dysfunction is not here now and won't affect future growth.
It'll be interesting to see what it is like 12-18 months from now, because the headwinds in tech are just starting to roll in full force before these statistics were finalized. California may see a bit of a down round next year.
To your other point, regarding headquarters not being a good measure. I think the tech employee driven inflation of housing prices in the Bay area and surrounding metros (sometimes as far out as Sacramento. For non natives, that's ~2 hours away by drive, usually a more consistent 1 hr 30 minutes by train in my experience. Some corporate buses even go out to these farther out metros to pick up employees) is strong evidence that they're still hiring pretty locally, though with remote work in stronger force than ever, it is changing a bit, but those effects are yet to be determined in the common case, but it will upend some of this, 100%
EDIT: I 100% agree about dysfunction in San Fransisco proper. Its a thing.
Lived in SF for 9 years (2012-2020), and visited many places in the whole bay area. I don't know what you're talking about, really.
Bullet train? Slower than the slowest train in Italy.
Homeless people? Try Mountain View, try San Jose. Only Marin County is a bit spared by it.
Dirty? Expensive? Pretty much everywhere. Few exceptions, like downtown Palo Alto, around the Apple store.
Really, you can't say it is "not that bad", unless you're forgetting there's the rest of the (civilized) world to compare it to.
That’s arguably ending and dwindling down.
I hope people in Texas and Florida, maybe the Georgia, Colorado and Carolina make a stiff competition with California. It’s good for CA and good for United States.
Where is economic growth in europe happening despite degrading social indicators? Are there really countries with significantly degrading social indicators & economic success over the last 20 years in europe? All countries I know some social indicators of are actually improving. Maybe inequality....I think that was increasing
As might Germany. High energy cost hurts a lot of German industries, so it could be about "who hurts more", and I'm not sure who wins if you're looking at bureaucracy being dysfunctional.
I feel like at some point we'll have to force the spread of tech businesses across the United States. You can already see the effect of not doing so; SF is utterly unaffordable even for techies. The standard and cost of living are obtusely different from the rest of the country. I wager there's a lot of baggage that will come with this given that economics have a tendency of not observing state borders.
So... Every single company?
Here are some other arbitrary subsets of the USA that would be interesting viewed as separate economies.
- The original thirteen states. - The Amtrak electrified rail corridor from DC to Boston - The Mississippi watershed - The great lakes watershed (include the relevant parts of Canada, why not?)
In other words, in this particular case, it's a wash.
I think that people forget that US States are States in a Union. The Federal Government is there to regulate commerce and provide for common defense, even if it gained some extra responsibilities post-New Deal. US states have their own laws, executive, market policies, constitutions, and all; they are not just departments of the federal government. So California<->Germany seems like the only fair comparison, just as it wouldn’t make sense to compare the United States to Germany, but the EU as a whole.
Either count US states as independent entities or don't, but not both.
Community college is very cheap in California, and the quality is extremely high. I know because I went to community college in CA.
93% of Californians have health insurance, which is not perfect, but not as horrible as I often hear people describe it.
Public transportation does really suck though in California.
I have no idea what it is that you are comparing or where you pulled those numbers from. The systems are not the same and we have a lot more than "universities" for higher education, such as Fachhochschulen and Hochschulen.
Overall, statistics says the number is 55% for the share of youth starting higher education in Germany: https://de.statista.com/statistik/daten/studie/72005/umfrage...
We also have what "Facharbeiter" for most non-higher education professions, which take 2-3.5 years. https://www.bmbf.de/bmbf/en/education/the-german-vocational-...
There is some discussion that there are now too many in the higher education track and too few in the vocational training track. We have too few "Facharbeiter" and "Meister" for a lot of important professions for the practical work.
Personally, having done both tracks - in 1992 I obtained what would now probably be called "mechatronics engineer" after three years of training in a school and a huge chemical fiber plant for the practical on.the-job parts. Afterwards I studied CS and half of business administration. I think almost two thirds of youth every year going to higher education is way too much. Again, we have this vocational training, if there was nothing and Bachelor degrees count both as higher education and are used in place of where Germany uses our vocational training system - again, 2 to 3.5 years! - than it makes sense to get at least a Bachelor. But here in Germany I think we actually could use shifting some of those 55% into the other track.
If you get such a vocational training degree, e.g. "Facharbeiter", you are already pretty well educated and qualified. If you add a "Meister" on top of that after getting some work experience you are on a path to really good earnings and don't have to hide at all from comparisons with top engineering degree holders. Those people would not show up at all in your comparison, because you don't have that system.
California has 3 of the world's top-10 colleges according to US News and World Report's questionable ranking. I'll admit CA's K-12 education leaves much to be desired. It's actually a little weird how different college and K-12 are in the state.
Not sure how I should think about homelessness in CA. I think the problem is that the climate attracts homeless people.
CSUs aren't cheap, but if you are only there for two years the damage is limited and grants might take care of it.
This article is much like the "rich get vastly richer this year" stories that come out when the stock market rises. For some reason the opposite stories do not get written when the stock market craters because that's not "fun."
Expect "California falls to 5th place in the World's economy" articles if the exchange rate trend reverses.
I do agree that it's a very lazy form of news generation. Most of the (publicly) richest people tend to hold most of their wealth in stocks, which have always had volatile prices. So "the rich got richer/poorer" is largely synonymous with stock prices went up/down.
Exchange rates tend to be a bit less volatile, but they do fluctuate quite a bit, so that accounts for quite a bit of the changing fortunes of California vs Germany. Still, it's quite remarkable (if true) that California has similar nominal production/income as Germany which has twice the population, implying that the people are on average twice as productive.
You can imagine a talking point like “under my leadership, California overtook Germany as the 4th economy in the world…”
The reality is Newsom had almost zero impact on it, his leadership should be judge by the growing homelessness issue we’ve seen in SF and rest of California and not take credit for tech economy.
Yes, solving the homeless problem is a huge and complex challenge, but the country now needs leadership that is able to solve the big challenging problem.
We’ve lost our ability to fix hard problems and we need to do that if we want to have a chance in a more competitive world.
Back then, it was largely on the back of tourism, farming, and entertainment, too. Tech is a nice boon, but hardly necessary. California is not and has never been a single-industry economy, which is part of the reason it is so robust, and part of the reason it has recovered from the housing collapse better than most other places hit hard by it. Florida is another case there, with, at least for the US, much different tax policies and cultural traits, but also a very well diversified economy. It goes to show how little some of the things politicians and voters are always making a fuss about actually matter.
