Bring the disruptive entrepreneurship of Silicon Valley to California politics

Berlin, Germany, March 19, 2014. Hy! Summit - Image by Dan Taylor. www.heisenbergmedia.com

California has been a one-party state for longer than most memories will allow. For four decades, with the brief exception from 1995 to 1996, when the GOP held the state Senate by two seats, the California Legislature has been the exclusive kingdom of Democrats. The last Republican moment of clout was 1969-70, when Ronald Reagan was governor and the party held both the Assembly and the Senate. Three GOP governors have been elected since, but only six Republicans have held statewide office since 1998, while Democrats have occupied 23.

The congressional delegation is a reflection of the statehouse. Both senators are Democrats, and voters sent 39 Democrats to the House. Only a little more than a quarter of California voters are registered Republicans, so it’s hardly a surprise that the Democrats exercise such dominance.

This single-party regime, however, has led to a destructive public-policy agenda, along with inattention to pressing needs. The state’s political class has advocated vanity projects such as Governor Jerry Brown’s costly and needless high-speed rail plan; neglected a tangle of transportation infrastructure that is now going to cost $52 billion to repair; failed to address effectively a housing crisis that drove the cost of homes out of reach for many; fed a public-employee pension plan threatening to bankrupt the state; and created a tax structure that is pushing out the middle class. California’s governing party now proposes to force a single-payer health-care system on residents and promotes unyielding regulation on business and development, impeding job creation. Progressive leadership in Sacramento and at the local level is obsessed with “resisting” the Trump administration and fighting climate change.

California’s single-party rule has damaged the state to the point that it hasn’t been able to escape unflattering comparisons with its neighbor to the south. “Forty years ago, Mexico was a one-party dictatorship . . . hobbled by slow growth, soaring inequality, endemic corruption and dead politics,” writes demographer Joel Kotkin. “California, in contrast, was considered a model American state, with a highly regarded Legislature, relatively clean politics, a competitive political process and a soaring economy. Today these roles are somewhat reversed.”

When one party has such a dominant political position, destructive public policy is not the only problem. Corruption has fewer hurdles when members of the ruling party believe that they stand above the law. Democrats recently passed new rules governing the timing of recall elections solely to protect one of their members, State Senator Josh Newman, who is facing a recall. But corruption in California Democratic politics is not new: Rod Wright, Leland Yee, and Ron Calderon were all elected Democratic legislators who thought their party’s power gave them license to break the law. Two wound up in federal prison, the other in the Los Angeles County jail.

The political status quo deserves to be disrupted in California, though it’s unlikely that anyone from the ranks of elected Republicans can break the Democrats’ grip on power. What’s needed is someone who would effectively and unapologetically oppose the agenda of the majority party but who is also an outsider; whose appeal is cross-partisan; who understands Silicon Valley, which has immense political strength; and who is sympathetic to the cause of attracting more business and capital to areas outside of the tech center.

Three years ago, Republican Neel Kashkari, a former Goldman Sachs investment banker who didn’t align fully with establishment Republicanism and had never held elected office, shook the political foundations a bit when he ran against Jerry Brown. Kashkari took only 40 percent of the vote, but maybe he was the Goldwater candidate who laid the groundwork for another, who will truly rock California politics.

Peter Thiel is no stranger to disruption. The PayPal cofounder supported Donald Trump in 2016, spoke at the Republican National Convention (where he announced that he is proud to be gay), and worked on Trump’s transition team. He’s been part of one of the most convulsing events in U.S. political history. “Like Trump,” Michelle Cottle wrote in The Atlantic just before last year’s election, “Thiel himself takes great pride in being a disruptive force. He favors revolutionary ideas and people with big plans for blowing things up and remaking the world.”

Thiel has said on multiple occasions that he is not running for governor next year, though there were indications early in 2017 that he might enter the race. If he were to run, he could be the candidate who would break the Democrats’ political stranglehold, the force who could revive the moribund California Republican Party sufficiently for it to challenge Democratic dominance. But even if Thiel decides not to seek the governorship, it’s clear that the Golden State needs someone equally willing to challenge conventional thinking and promote a new approach to the major fiscal, economic, and development questions that California faces. The alternative is more of the same.

Thousands still forced from homes by flooding in California tech hub

As reported by Reuters:

The mucky water flooding a section of San Jose in Northern California forced officials on Wednesday to widen the area under mandatory evacuation orders, with about 14,000 people barred from returning to their homes following drenching rains.

San Jose, a hub of high-tech Silicon Valley, suffered major flooding on Tuesday triggering evacuation orders when Coyote Creek overran its banks, swamping the Rock Springs neighborhood. Water at some sites engulfed the entire first floor of residences while in other places it reached waist-high.

Officials said the city of about 1 million residents has not seen a flood approaching this magnitude since 1997.

The gush of water inundating San Jose flowed down from the Anderson Reservoir, which was pushed to overflowing by a rainstorm that pounded Northern California from Sunday to Tuesday, officials said. …

Click here to read the full article

California’s Government Unions are the Most Powerful in the U.S.

The Commonwealth Foundation, a think tank based in Pennsylvania, has recently released a study entitled “Transforming Labor – A Comprehensive, Nationwide Comparison and Grading of Public Sector Labor Laws.” It ranked every state in terms of the relative power of public sector unions. California, along with tiny Maryland, were the only states that got an F.

public-sector-labor-lawsIf you view the map presented in the Commonwealth study, there is a strong correlation between states controlled by the GOP vs those controlled by Democrats. Nearly all the Democrat controlled states with large urban populations get D grades, with the notable exceptions of Florida (C), and Texas (A). We can perhaps learn something from the outliers – why did Texas get an A and why does Montana get a D? But California is in a class by itself.

When performing this analysis, the studies author, Priya M. Abraham, created a checklist called “State Labor Comparison” that provides criteria for grading each state. California failed in every category:

(1) Is collective bargaining legal for government workers?  –  Yes.

(2) What items may be negotiated in collective bargaining?  –  Salaries, Hours, Pensions, Fringe benefits, Other terms.

(3) How are unions certified?  –  Mandatory card check, Optional card check.

(4)  Do unions have a right to exclusive representation of workers?  –  Yes.

(5)  Are there provisions for union release time?  –  Yes, by law.

(6)  Are there union membership opt-out windows?  –  Written in union contracts.

(7)  Are union contract negotiations open to the public?  –  May be closed.

(8)  Is binding arbitration required during collective bargaining impasses?  –  Yes, for some.

(9)  Is there paycheck protection?  –  No.

(10)  Right to Work?  –  No.

(11)  Legality of public worker strikes?  –  Legal for some.

Most everyone understands the obvious consequences of California’s status as the most enabling state in the U.S. for government unions. By the time most people read this, there is a good chance that Democrats will have captured a super-majority in the state legislature, allowing them to raise taxes at will. Also obvious, decades of increasing political control by government unions has lead to a state judiciary that consistently favors government unions. This happens not only in nearly all cases involving pension reform, but also in those cases addressing education reform. For example, the recent ruling against the Vergara plaintiffs who, gasp, wanted to reform the union work rules that have nearly destroyed public education in California.

There’s a deeper corruption, however, that is less obvious but even more consequential, and that is the effect union controlled government has on California’s business and financial communities. Corporations that want to do business in California understand that all legislation goes through the unions for approval. All of it. So they make deals, and implicit in any deal is that the union agenda – more government pay and benefits, more government employees, and more taxes and borrowing – is never challenged by the business community.

The financial sector also must adapt, and they’ve outdone themselves. In lieu of pension reform or proper bond oversight, financial firms make billions investing money for the union-controlled government pension funds and underwriting government bonds. For any partner at a financial firm in California to advocate pension reform would be financial suicide. They do what they’re told, or they go out of business.

The high-tech community in the Silicon Valley is probably the most tragic example of how government union power has corrupted an industry. A nefarious convergence of interests has evolved between government unions, utility companies, and high-tech entrepreneurs, to create artificial scarcity of land, energy and water. Hiding behind overstated environmentalist concerns, they have imposed de-facto rationing on Californians. This enables tax revenue that might have been used for infrastructure to instead go to paying government worker salaries and feeding the pension funds. At the same time, it takes the utility rate hikes that might have financed additional infrastructure and feeds it to Silicon Valley “entrepreneurs,” who develop expensive “green” energy solutions, along with systems that eventually will mandate every major household appliance be internet enabled, connected to smart meters, and capable of charging punitive rates if a consumer, for example, runs their clothes dryer at the “wrong” time.

If one refers again to the map showing public union power by state, another correlation becomes clear – union power, generally, is concentrated in states with the highest costs of living. California is again champion in this respect. Artificial scarcity has rendered prices in California for land, energy and water among the highest in the nation. State and local taxes are also among the highest in the nation. California is Exhibit A for how public unions and elite oligarchs have combined forces to create challenges for ordinary people that amount to outright oppression.

If the 2016 election will be remembered for anything, it will be remembered as a time of populist awakening. Americans in unprecedented numbers have registered their discontent with a system they consider rigged. But not once in what was one of the most visible national elections in American history did anyone, anywhere, identify the root cause of government overreach and capitalist corruption:  Government unions.

Ed Ring is the vice president of policy research for the California Policy Center.

This piece was originally published by the Flash Report.

Peter Thiel Faces Retaliation in Silicon Valley for Trump Support

peter-thielThe Silicon Valley Thought Police are demanding retaliation against top venture capitalist Peter Thiel for making a $1.25 million contribution to Republican Donald Trump.

Thiel co-founded the wildly successful PayPal and Palantir, and was an early stage venture capital investor in Facebook, Airbnb, Stripe, Spotify, SpaceX, Lyft and many more. He has also helped numerous companies and mentored many of Silicon Valley’s top entrepreneurs. As part of the small circle of Silicon Valley tech royalty, his net worth is $2.7 billion, which puts him at number 246 on the Forbes 400 list of the world’s richest individuals.

He then used his wealth to sponsor philanthropic activities through a nonprofit he created called the Thiel Foundation, which organizes and sponsors nonprofits that are working on radical new ideas in technology, government, and human affairs. Thiel has also been the main financial backer of the “Machine Intelligence Research Institute,” which is a world leader in pursuing technological singularity and artificial intelligence.

As a Silicon Valley insider, it would be assumed that Thiel would be a typical progressive who supports unlimited open borders and the full left-wing agenda. But Breitbart News reported, Thiel — who had written conservative criticisms of political correctness as a student — became more publicly political after he was viciously outed by Nick Denton’s Gawker in a 2007 article titled, “Peter Thiel is totally gay, people.”

Milo Yiannopoulos, Breitbart’s tech editor, described Gawker’s political slant under Denton as “doubling down on the hateful feminist and race-baiting claptrap so loathed by anyone outside of Manhattan and American colleges, giving indications that its poisonous, lunatic feminist organ Jezebel will be the primary lens through which Gawker interprets popular culture.”

Thiel seemed to respond to the pain of his Gawker experience by becoming an open supporter of Ron Paul. Since 2007, Thiel has funded GOP outreach efforts to the gay community and been a solid contributor to Republican presidential campaigns.

Thiel also spent $10 million to fund litigation against Gawker victims, including the iconic professional wrestler Hulk Hogan, who was the subject of surreptitious filming and the Gawker release of a private sex tape. “The Hulk” in March won $115 million in compensatory damages and $25 million more for punitive damages against Gawker for violating his privacy rights. The since-bankrupt Gawker is in the process of being liquidated.

All of this is anathema to supposed free speech progressives. But in the ultimate sin to the “Left,” Thiel served as a Trump California primary delegate and became one of the few large donors to the Trump presidential campaign, which has set records by raising $360 million mostly from small donors of under $140.

Led by the infamous Ellen Pao, who lost a 2015 gender discrimination and retaliation suit against the prestigious Silicon Valley venture capital firm of Kleiner, Perkins, Caufield and Byers, the Left moved to retaliate against Theil by starting an Internet campaign to have Thiel fired from his positions as a board member of Facebook and a venture capital partner of Y Combinator.

Pao, through her organization “Project,” also called on consumers, job candidates, partners and other fellow progressive travelers to retaliate against Thiel’s friends and business associates by ending relationships with any organization that associates with him.

The anti-Thiel witch hunt is patterned on the 2014 chaos generated when Mozilla co-founder and then-CEO Brendan Eich gave a $1,000 donation to Proposition 8, California’s successful anti-gay marriage ballot initiative. Leftist viral attacks quickly forced him to step down; since then, the Mozilla Firefox desktop browser’s market share has tanked from 13 percent to 8 percent.

Facebook and Y Combinator’s CEOs are both staunch Hillary Clinton supporters, but they know Thiel is one of the most brilliant strategists in Silicon Valley and his loss would cause real turmoil in their organizations.

This piece was originally published by Breitbart.com/California

High-speed rail’s first route segment will end in an almond orchard

As reported by the Los Angeles Times:

The state’s plan to build an initial stretch of high-speed rail line, from San Jose to a map point in the midst of Central Valley farmland, came under renewed attack at an oversight hearing Monday.

Republicans on the House rail subcommittee had sought to hold the hearing in the Silicon Valley but ran into Democratic opposition, according to sources familiar with the matter. So the group convened around folding metal tables in a nondescript basement room in a San Francisco federal building.

Rep. Jeff Denham (R-Turlock), chairman of the panel, chided the state for lacking a plan to complete the Los Angeles-to-San Francisco bullet train system.

“You could be stuck in a field somewhere between Shafter and Wasco … and … out of money,” Denham said.

The apparent absurdity of the abbreviated route was not lost on supporters. …

Click here to read the full story

Quality Education Remains Thwarted by Teachers Unions

shocked-kid-apAn article in today’s American Prospect, of all places, offers an in-depth look at just how little progress has actually been made toward restoring quality education to California’s public school students. Because the article appears in a publication that is “dedicated to American liberalism,” and because “American liberalism” depends more than anything else on billions in annual political contributions from government unions, you almost have to read between the lines to realize who the bad guys are.

Nonetheless, “California’s Ed Reform Wars,” by Rachel Cohen, all 3,200 words of it, is a fine piece of work. Read it closely, if you can stomach the facts. The bad guys – a matter of opinion, of course – are the government unions. The victims? California’s students, and the future of this great state.

Covered first is the uncertain fate of the Vergara case, funded by wealthy activists – many of them liberals – in the Silicon Valley. The plaintiffs are public school students whose case was founded on the argument that union work rules, specifically the policies governing tenure, layoff and dismissal policies, cause disproportionate harm to students in low-income communities. During round one, two years ago in a Los Angeles courtroom, reformers were mesmerized by the brilliant closing arguments of the lead attorney for the plaintiffs, along with the ruling by the judge in the case, who emphatically agreed.

That was then. In April of this year, by a 3-0 vote, the California Court of Appeals unanimously struck down the original Vergara v. California decision. The case will now go to the California Supreme Court. Its chances aren’t great.

But shouldn’t elected officials, not the courts, make policy decisions? In a perfect world, that would certainly be true, but in California’s state Legislature, as Cohen herself writes, “Following the original Vergara decision, Republican lawmakers introduced a package of three bills to extend the time it would take a teacher to earn tenure, to repeal the “last-in, first-out” statute that makes layoff decisions based on seniority, and to establish an annual teacher evaluation system. These bills, however, got nowhere in the Democratic-controlled statehouse.”

Here’s where the story gets interesting. Because then a democratic assemblywoman who takes money from government unions, Susan Bonilla, tried to push legislation through that might reform at least some of the employment statutes that protect bad teachers. Cohen writes:

“Bonilla proposed, among other things, giving principals the option of waiting until a teacher’s third or fourth year to grant tenure, and placing poorly performing teachers in a program that would provide increased professional support. If the ineffective teacher received another low performance rating after a year in this program, Bonilla’s legislation would enable schools to fire the teacher through an expedited process.”

Might that be watered down enough? Might that not have a chance? For the children?

Forget it. Despite endorsements including one from the editorial board of the Los Angeles Times, the teachers union issued an “action alert” to their members, calling the bill “an all-out assault” by “corporate millionaires and special interests.” The bill was going to go nowhere in California’s union-controlled legislature. So Bonilla tried again. As Cohen reports:

“In June, Bonilla introduced an amended version of her bill, one that would require new teachers to work for three years before becoming eligible for tenure. Her bill no longer included provisions to create a new teacher evaluation system, to require teachers with poor performance reviews to be laid off before those with less seniority, and to remove many of the dismissal rules that administrators found frustrating.”

Not much left there. Just a bill to marginally extend the probationary period before teachers acquire tenure. But still it was opposed by the unions, and it died in committee by a vote of 9 to 2. The two legislators who voted in favor were due to be termed out and therefore could vote their consciences.

When it comes to government unions, perhaps the teachers union most of all, the lack of support for bipartisan reform is not a mystery. Government unions in California collect and spend over $1 billion each year, which gives them the ability to financially dominate any election, anytime, anywhere, whenever they choose. But there’s more to it. These unions use their financial and organizational power to anoint not only politicians, but also bureaucrats, teachers, and anyone in the business community who may have any need to work with the government bureaucracy. They can anoint, or they can target. Best friend or worst enemy? Take your pick.

Liberals know this, but they tolerate the teachers union because along with all that money the union gives their candidates, the union political agenda matches their own – bigger government, more regulations. They don’t understand, course, that more regulations favor big business and destroy entrepreneurs who deliver the competitive innovations that have improved our lives. And they certainly don’t put enough importance on innovation in education.

Someday liberals may care enough “for the children” to stand up to the teachers union. Don’t hold your breath.

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Ed Ring is the president of the California Policy Center.

Silicon Valley Moving Toward Alliance With Big Labor

Apple headquarters

Artists rendering of Apple’s new headquarters (public domain image)

Back in the late 1970’s something happened to the Santa Clara Valley. Increasingly it became referred to as the Silicon Valley, because the emerging silicon based semiconductor industry found its first home in plants nestled along the southern shores of the San Francisco Bay. Boasting what are among the finest universities in the United States – Stanford and Cal Berkeley – and the best weather in the world, high technology companies began choosing the San Francisco Bay Area in the 1940s and never looked back. Where once there were endless orchards of Prune, Apricot and Cherry trees, a sprawling ecosystem of high tech companies and venture capital firms now attracts talent from everywhere on earth. The Silicon Valley became, and remains, the epicenter of the most dramatic technological advances in history.

For the first 25 years or so, certainly through the end of the 20th century, the mantra in the Silicon Valley was “better, faster, cheaper.” Entrepreneurs were creating entire new industries, as digital technology enabled “mini-computers” to replace mainframes, and “work-stations” to replace mini’s, which were in-turn replaced by PCs and laptops, which are themselves being replaced for many applications by smart phones. But as we move to the “internet of things,” and as the Silicon Valley ecosystem matures from a jungle of creative destruction to a forest where a handful of gigantic firms wield unprecedented economic power, the “better, faster, cheaper” mantra is fading away.

Silicon Valley’s new breed of entrepreneurs have realized they don’t necessarily have to compete for customers who will voluntarily choose their products over those offered by their competitors. They have realized the government is a customer with very deep pockets, that more regulations will empower big companies and destroy the emergent ones, that environmentalist mandates will force consumers to buy their products as they forge OEM relationships with manufacturers of durable goods, that the security state is a voracious consumer of high technology, and that public bureaucrats can be sold billions of dollars worth of educational hardware and software.

The Silicon Valley’s new breed of “entrepreneurs” have realized something else, too. They’ve realized that as they evolve from competition to cronyism, big labor can be a powerful political ally.

A recent report in the San Francisco Chronicle entitled “Unions and tech: A most unlikely political alliance forms,” sums up the new reality. Author Joe Garofoli writes:

“Led by the 1.4 million-member Teamsters union, some in labor are ready to support friendly tech companies when the corporations face regulators in San Francisco, Sacramento and beyond. Support from the Teamsters will make labor-backed Democrats much more receptive to the needs of a tech company. ‘Labor supports their employers in a lot of cases,’ said Rome Aloise, Teamsters International vice president. ‘We fight with them, but we support them — because they’re the creator of jobs, which creates members for us. On the other hand, for the ones that don’t pay decent wages and benefits, we’re not going to be supportive of them.'”

This has little or nothing to do with wages and benefits. The firms where the Teamsters have already gotten a foothold, eBay, Zynga, Yahoo, Genentech, and Apple, can easily afford to offer their drivers pay and benefits that render union dues a superfluous drain on their paychecks. And if these well heeled high-tech corporations haven’t granted their drivers and other service employees stable hours and competitive pay, that is a shameful omission they ought to correct without union intervention. They should, they could and they would. But they don’t want to. Because what this is really about is acquiring political power.

A few examples should suffice to convey the nauseating threat heralded by this new reality:

When the crony “greens” want to force every toilet and faucet manufacturer to install sensors to micro-monitor indoor water consumption, when the crony “education reformers” want to force every home school parent to purchase laptops wired with approved educational software, when the crony security and law enforcement “innovators” want to sell more drones and remote sensors to look into our backyards and listen in on our living room conversations – the unions will be there, adding their political muscle, public and private, to make sure our elected representatives do the right thing.

If union activism in the Silicon Valley was merely about wages, benefits, work hours, and dignity, they would have a legitimate role to play. Ideally, in those situations, private sector unions earn their clout by acquiring and retaining members voluntarily in a right-to-work environment. But unions, unfortunately, care just as much about power and organizational aggrandizement as the big corporations they purport to fight. That’s why they thrive in the powerful places where they are needed the least, in monopolistic entities with captive markets who can afford them – government and giant corporations – entities that realize union alliances will help them intimidate the political objectors, appease the union controlled pension funds, and obliterate the commercial competition.

The dawning unionization of the Silicon Valley is an ominous development. It must be challenged. The people who run Silicon Valley should consider what will happen when there’s an economic downturn, and labor contracts curtail their options to restructure. They should ask how their new allies will view utilization of self-driving cars and countless other labor saving innovations. They are putting the culture of “better, faster, cheaper,” at mortal risk, a culture that has enabled unprecedented global prosperity, and has the potential to offer wondrous new achievements for decades to come.

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Ed Ring is the executive director of the California Policy Center.

Is Apple Ready To Jump Into Electric Car Market?

appleCalifornia was poised to make automotive history again as Apple met with the state’s Department of Motor Vehicles. As the Golden State grapples with divisive choices over emissions regulations, electric and self-driving cars have emerged as the latest home-grown innovation with big political stakes.

The move put the self-driving car under development by the tech titan — codename: Project Titan — at the center of a flurry of speculation, opinion and analysis. Citing documents it had obtained, the Guardian reported that Mike Maletic, a senior legal counsel, “had an hour-long meeting on 17 August with the department’s self-driving car experts Bernard Soriano, DMV deputy director, and Stephanie Dougherty, chief of strategic planning, who are co-sponsors of California’s autonomous vehicle regulation project, and Brian Soublet, the department’s deputy director and chief counsel.”

Alongside Google and Uber, that makes three Silicon Valley heavyweights lined up to crank out driverless cars at some point in the future, the Guardian added, noting “Google already has a fleet of robot cars on the streets of California and is planning to have several hundred built in the near future.”

Critical mass

But the competition in driverless cars has already heated up around the world. “According to the California DMV,” Fast Company noted, “their autonomous vehicle program has issued permits for testing to Volkswagen, Mercedes-Benz, Tesla, Nissan, BMW, and Honda, along with Google and auto component manufacturers Delphi, Bosch, and Cruise Automation.” That program, begun at the start of this year, “is working on ways to guarantee autonomous vehicles are safe, tested, and meet quality and performance benchmarks.”

The race to deploy a robocar has led those companies, plus Toyota, Ford, and GM, to line the Valley’s main thoroughfare with research laboratories. The Central Expressway, reaching roughly from Stanford University to San Jose Mineta International Airport, has become so crowded with competitors that Apple’s penchant for secrecy may be at risk if it takes its cars out for a neighborhood spin. “Although Apple recently bought a 43-acre parcel in North San Jose, it doesn’t have much room in Silicon Valley to test its automotive ideas with the secrecy that usually surrounds its tiny devices,” the San Jose Mercury News surmised. “The question is: Would it be willing to test in public?”

Busy rivals

Traffic in secrecy has run both ways, however. Whatever Apple has under wraps, the Mercury News concluded, “its actions have contributed to a frenzy from rivals — especially in the auto industry — to take ownership of autonomous technology, in-car mapping software, vehicle-to-vehicle communication and dashboard Internet applications that could reshape the way we get around in the decades to come.”

To vault to the top of the pack, however, Apple would likely have to square off against Tesla, which has enjoyed a substantial head start. “In the next few years, Tesla has the potential to become the Apple of electric cars, even if Apple enters the industry,” according to Quartz. “The company will have four models on the streets — the Roadster, the S, the X, and the 3 — by the time Apple or any other competitor is likely to have a single model. Tesla will also have its Gigafactory — a massive production facility in Nevada that can produce up to 500,000 cars a year — up and running. If Tesla can bring down its prices, its cars could become a common sight on roads.” Of course, Tesla has automotive rivals of its own, with Audi, Mercedes and Porsche all poised to deliver electric vehicles in about five years or so.

Meanwhile, few inside the auto industry have thrown in the towel on more traditional vehicles. “When it comes to actually making cars, there is no reason to assume that Apple, with no experience, will suddenly do a better job than General Motors, Ford, Volkswagen, Toyota, or Hyundai,” GM ex-chairman Bob Lutz told CNBC, predicting that Apple’s labors would become “a giant money pit.”

Originally published by CalWatchdog.com

If You Want a Job, Where Should You Move?

JobsSince the U.S. economy imploded in 2008, there’s been a steady shift in leadership in job growth among our major metropolitan areas. In the earliest years, the cities that did the best were those on the East Coast that hosted the two prime beneficiaries of Washington’s resuscitation efforts, the financial industry and the federal bureaucracy. Then the baton was passed to metro areas riding the boom in the energy sector, which, if not totally dead in its tracks, is clearly weaker.

Right now, job creation momentum is the strongest in tech-oriented metropolises and Sun Belt cities with lower costs, particularly the still robust economies of Texas.

Topping our annual ranking of the best big cities for jobs are the main metro areas of Silicon Valley: the San Francisco-Redwood City-South San Francisco Metropolitan Division, followed by San Jose-Sunnyvale-Santa Clara, swapping their positions from last year.

Our rankings are based on short-, medium- and long-term job creation, going back to 2003, and factor in momentum — whether growth is slowing or accelerating. We have compiled separate rankings for America’s 70 largest metropolitan statistical areas (those with nonfarm employment over 450,000), which are our focus this week, as well as medium-size metro areas (between 150,000 and 450,000 nonfarm jobs) and small ones (less than 150,000 nonfarm jobs) in order to make the comparisons more relevant to each category. (For a detailed description of our methodology, click here.)

An Economy Fit For Geeks

Venture capital and private-equity firms keep pouring money into U.S. technology companies, lured by the promise of huge IPO returns. Last year was the best for new stock offerings since the peak of the dot-com bubble, with 71 biotech IPOs and 55 tech IPOs. It’s continuing to fuel strong job creation in Silicon Valley. Employment expanded 4.8% in the San Francisco Metropolitan Division in 2014, which includes the job-rich suburban expanses of San Mateo to the south, and employment is up 21.2% since 2009. This has been paced by growth in professional business services jobs in the area, up 9% last year, and in information jobs, which includes many social media functions – information employment expanded 8.3% last year and is up 28.7% since 2011.

San Jose which, like San Francisco, was devastated in the tech crash a decade ago, has also rebounded smartly. The San Jose MSA clocked 4.9% job growth last year and 20.0% since 2009. Employment in manufacturing, once the heart of the local economy, has grown 8% since 2011, after a decade of sharp reversals, but the number of information jobs there has exploded, up 16% last year and 35.7% since 2011.

Meanwhile, there’s been a striking reversal of fortune in the greater Washington, D.C., area, while the greater New York area has also fallen off the pace. In the years after the crash, soaring federal spending pushed Washington-Arlington-Alexandria to as high as fifth on our annual list of the best cities for jobs; this year it’s a meager 47th, with job growth of 1.5% in 2014, following meager 0.2% growth in 2013, while Northern Virginia (50th) and Silver Spring-Frederick-Rockville (64th) also lost ground, dropping, respectively, five and 15 places.

Job growth has also slowed in the greater New York region, which also was an early star performer in the immediate aftermath of the recession, in part due to the bank bailout that consolidated financial institutions in their strongest home region. Virtually all the areas that make up greater New York have lost ground in our ranking: the New York City MSA has fallen to 17th place from seventh last year, as employment growth tailed off to 2.6% in 2014 from 3.2% in 2013. Meanwhile Nassau-Suffolk ranks 49th, Rockland-Westchester 60th and Newark is second from the bottom among the biggest metro areas in 69th place.

The Shift To ‘Opportunity Cities’ Continues

Not every tech hot spot has the Bay Area’s advantages, which include venture capital, the presence of the world’s top technology companies and a host of people with the know-how to start and grow companies.

But other metro areas have something Silicon Valley lacks: affordable housing. Most of the rest of our top 15 metro areas have far lower home prices than the Bay Area, or for that matter Boston, Los Angeles or New York. And they also have experienced strong job growth, often across a wider array of industries, which provides opportunities for a broader portion of the population.

The combination of lower prices and strong job opportunities are what earns them our label of “opportunity cities.” The Bay Area may attract many of the best and brightest, but it is too expensive for most. Despite the current boom, the area’s population growth has been quite modest — San Jose has had an average population growth rate of 1.5% over the past four years. In contrast, seven of our top 10 metro areas, including third place Dallas-Plano-Irving, Texas, and No. 4 Austin, Texas, are also in the top 10 in terms of population growth since 2000. If prices and costs are reasonable, people will go to places where work is most abundant.

In the Dallas metro area, the job count grew 4.2% last year, paced by an 18.6% expansion in professional business services, while overall employment is up 15.7% since 2009. Job growth last year in Austin, Texas, was a healthy 3.9%, while the information sector expanded by 4.7% and since 2011 by 17.8%.

Many Texas cities, of course, have benefited from the energy boom — the recent downturn in oil prices make it likely that growth, particularly in No. 6 Houston, will decelerate in coming years.

But what is most remarkable about the top-performing cities is the diversity of their economies. Most have tech clusters, but several, such as Houston, Nashville, Tenn., Dallas and Charlotte, N.C., have growing manufacturing, trade, transportation and business services sectors. The immediate prognosis, however, may be brightest in places like Denver and Orlando, where growth is less tied to energy than business services, trade and tourism. Nashville, which places fifth on our list, has particularly bright prospects, due not only to its growing tech and manufacturing economy, but also its strong health care sector which, according to one recent study, contributes an overall economic benefit of nearly $30 billion annually and more than 210,000 jobs to the local economy.

The Also-Rans

Some economies lower in our rankings have made strong improvements, notably Atlanta-Sandy Spring-Roswell, which rose to 12th this year, a jump of 12 places. Long a star performer, the Georgia metro area stumbled through the housing bust, but it appears to have regained its footing, with strong job growth across a host of fields from manufacturing and information to health, and particularly business services, a category in which employment has increased 24% since 2009.

In California, one big turnaround story has been the Riverside-San Bernardino area, which gained six places to rank 11th this year as it has again begun to benefit from migration caused by coastal Southern California’s impossibly high home prices.

Several mid-American metro areas also are showing strong improvement. Louisville-Jefferson County, Ky., jumped fifteen places to 21st, propelled by strong growth in manufacturing, business services and finance. Kansas City, Kan. (23rd), and Kansas City, Mo. (46th), both made double-digit jumps in our rankings. In Michigan, Detroit-Dearborn-Livonia, bolstered by the recovery of the auto industry, gained six places to 59th, while manufacturing hub Warren-Troy-Farmington Hills picked up two to 39th. These may not be high growth areas, but these metro area no longer consistently sit at the bottom of the list.

Losing Ground

One of the biggest resurgent stars in past rankings, New Orleans-Metairie, dropped 17 places to 43rd, while Oklahoma City fell 17 places to 33rd. These cities lack the economic diversity to withstand a long-term loss of energy jobs if the sector goes into a prolonged downturn.

Yet perhaps the most troubling among the also-rans are the metro areas that have remained steadily at the bottom. These are largely Rust Belt cities such as last place Camden, N.J., which has been at or near that position for years.

Future Prospects

Now the best prospects appear to be in tech-heavy regions, but it’s important to recognize that a key contributor to the tech sector’s frenzy of venture capital and IPOs had been the Federal Reserve’s unprecedented monetary interventions, which are now phasing out. As it is, headwinds to expansion in the Bay Area are strong. High housing prices, according to recent study, may make it very difficult for these companies to expand their local workforces. The median price of houses in tech suburbs like Los Gatos now stand at nearly $2 million — rich for all but a few — while downtown Palo Alto office rents have risen an impossible 43% in the last five years.

Companies like Google, which has run into opposition over its proposed new headquarters expansion, may choose to shift more employment to other tech centers, such as Austin, Denver, Seattle, Raleigh and Salt Lake City, where the cost of doing business tends to be less. Similarly the stronger dollar could erode the modest progress made by some industrial cities, such as Detroit and Warren, as it gives a strong advantage to foreign competitors.

Normally we would expect these processes to play out slowly. But in these turbulent times, it’s best to keep an eye out for disruptive changes — a new economic cataclysm, should one occur, could quickly shift the playing field once again.

Joel Kotkin is editor of NewGeography.com and Presidential fellow in urban futures at Chapman University, and Michael Shires is Associate Professor of Public Policy, Pepperdine University

Cross-posted at New Geography and Fox and Hounds Daily

Pentagon to launch cyberstrategy push in Silicon Valley

As reported by the L.A. Times:

Defense Secretary Ashton Carter will unveil a new military cyberstrategy Thursday in the heart of Silicon Valley, reaching out to Facebook Inc. and other companies to help boost the nation’s digital defenses.

The two-day visit underscores a long-delayed shift in Pentagon priorities to recognizing cyberattacks on government agencies, major companies and crucial infrastructure as a major threat to U.S. national security.

Carter’s visit to Silicon Valley is the first by a Pentagon chief since the mid-1990s when the Internet was in its infancy, Wi-Fi and smartphones didn’t exist and America’s digital dominance was unquestioned. …

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