California’s Future Still Shines Golden

It seems like the perennial pastime of many a pundit, news organization, or modern “influencer” is to announce the imminent collapse of California (or at least the Bay Area).

If the title didn’t make this apparent, let me be clear: I disagree.

On one hand, California certainly faces a whole host of issues: climate change exacerbating wildfires, and the temperate environments Californians hold dear; snowpack and aquifer overuse affecting Central Valley farms and suburban front lawns; rising discussions and debates on tackling pressing societal problems related to housing and homelessness, race and restorative justice, education and economic realities, taxes and Tech.

On the other hand, California maintains major staying power in broader geopolitical relevance. With top schools generating top talent, a wide array of highly-desirable locations, and strong network effects that continue to drive innovation, I believe that California is a strong bet on the world stage.

Top Schools

The heart of our economy depends on companies finding talented workers to fulfill requisite roles and responsibilities. In major hubs across California, there’s plenty of talent to find.

Part of this stems from California’s higher education system. In particular, California not only has a community college system and a Cal State 4-year college system, but it also is host to a suite of “flagship” colleges under the University of California umbrella. Public universities like UC Berkeley, UCLA, UCI, and UCSD are international household names, and their graduates contribute tremendously to their local economies.

Some of the top private schools in the world also happen to be located in California. USC, located in Los Angeles, consistently ranks as among the top private schools in the nation. In the Bay Area, Stanford University has attainted near-legendary status worldwide, and its influence certainly contributed to the flourishing of Silicon Valley over the decades.

Location, Location, Location

It depends on where exactly you live, of course, but California’s general mediterranean climate and famous sunny-to-partly-cloudy skies are a fair sight better than other potential hubs in the US and across the world. For large clusters of Californians, perks include:

California also realizes that climate change (and catastrophe) threatens these perks, and is actively working on policies to build resilience while also reversing harmful emissions. In 2018, the Air Resources Board reported that California had successfully brought emissions down to 1990s levels, two years ahead of schedule. Also in 2018, California hit its goal of 33%+ renewable energy (excluding large hydroelectric dams), and is heading towards 60% renewable energy by 2030.

Network Effects

California’s central hubs (most notable in San Diego, Los Angeles, and the Bay Area) attract both strong talent pools and large pools of capital in close proximity. Over the decades, California has witnessed the rise of Hollywood and digital media entertainment in SoCal, the rise of Silicon Valley and Tech preeminence in NorCal, and the rise of biopharma and biotech all across the state. There’s a lot to be said about serendipity and in-person relationships that drive long-term innovation.

With pandemic-triggered movement and the rise of online work comes the question of whether these exogenous shocks will be enough to break the network effects of California’s major hubs. I’m skeptical for a few reasons:

  • The “California exodus” or even the narrowed Silicon Valley “techxodus” is overrated
  • Anecdotally, most people I know and most online personalities who have followed through with a permanent move to another state either retain property in California (and are therefore not truly going through with the whole “exodus” thing) or lack strong networks in the area
    • They are also overwhelmingly white, which is something that’s often left unsaid in popular discourse: it’s a lot easier for them to move to Boise or Houston or Raleigh and settle in with the neighbors
  • California is a diverse state across a wide variety of factors (race/ethnicity, religion, country of birth, and more)
    • And with a population of 40 million, California has many residents with strong familial ties to the state who would prefer to stay in proximity
  • Top Schools + Location
    • The prior two reasons factor into how network effects were nurtured over time, and neither of them are going anywhere
    • Just as in the past, new flows of migration intermingling with long-term California residents provide additional strength to networks that make people want to stay in California

You can’t move the ocean to Idaho. You can’t put Stanford University into a U-Haul and drop it off in West Virginia. And you certainly are going to find it hard to replicate the network effects that drive innovation across the state.

I’m not saying that people will remain in California for their entire lives, forsworn from exploring other locales, and there’s a lot that still needs to be done to ensure long-term prosperity. When it comes to long-term staying power, long-term opportunity, and another day of sun, I still believe that California’s future still shines golden.

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