A tale of two states: California and Wisconsin

Governor Scott Walker took office in Wisconsin on January 2, 2011. He declared Wisconsin “open for business” and initiated numerous business friendly reforms. He was immediately labeled Public Enemy #1. TV screens showed massive labor protests and the Capitol was occupied. Posters of Walker with a Hitler mustache popped up and frightening headlines were everywhere. A Huffington post article by Steven Cohen, Executive Director, Columbia University’s Earth Institute stated, “Governor Scott Walker is attempting to destroy public sector unions in Wisconsin”.

Fast-forward to August 3, 2011 –seven months into Walker’s term. The protesters and signs have disappeared. The headlines have changed. “Wisconsin has added 39,300 private-sector jobs since Governor Walker declared Wisconsin open for business,” said Scott Baumbach, Department of Workforce Development Secretary. Wisconsin has 7.6% unemployment, far below the national average. Wisconsin’s total private sector job growth of 1.7% has been almost twice the national rate.

Compare that to California. Governor Jerry Brown also took office on January 3, 2011. In January, there were 2,246,073 Californians out of work (12.4%). According to the Economic Development Department, 2,183,100 Californians remain out of work (12.1%). Underemployment and those who have given up make the figures much worse. There are no pictures of Brown with Hitler’s mustache. There are no scary headlines of Brown destroying the public sector, nor protestors occupying his Capitol. That is because Brown is seen as an agent of the public employee unions that dominate California politics.

Business is less enthusiastic about Governor Brown. Chief Executive Magazine ranks California as the worst place to do business for seven years. “California, once a business friendly state, continues to conduct a war on its own economy,” the magazine reported. Companies are “disinvesting” in California at a rate five times greater than just two years ago, said Joseph Vranich, a business relocation expert based in Irvine.

In response to announcements that PAYPAL and CARL’S JR. would take their businesses and employees elsewhere, Lt, Governor Gavin Newsome has set out to alter the “perception” that California is anti-business. Lorraine Yapps Cohen, a San Diego Conservative Examiner, responded, “Oh, this is priceless! In hopes that he would get the message that the state of California overtaxes, overburdens, over-

regulates, and overwhelms business, we discover that it is the “perception” of those maladies that need to be changed.  Not the maladies themselves!”

Will California awaken from its slumber and recognize what other states like Wisconsin have learned, or will the Golden State continue its inexorable slide to a future of never ending financial crisis like Greece and Portugal?

 

Robert J Cristiano PhD is the Real Estate Professional in Residence at Chapman University in Orange, CA, Senior Fellow at The Pacific Research Institute and President of the international investment firm, L88 Investments LLC. He has been a successful real estate developer in Newport Beach California for thirty years.