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CALIFORNIA PORTFOLIO : The Promised Land Is Not in Our Neighboring States

March 07, 1993|JOEL KOTKIN and DAVID FRIEDMAN | Joel Kotkin, a contributing editor to Opinion, is a senior fellow at the Center for the New West and an international fellow at the Pepperdine University School of Business and Management. David Friedman, an attorney, is a visiting fellow in the MIT Japan program

No economic story has been more overplayed in the 1990s than the supposed mass migration of people and businesses from California to other states. Many of these states--Washington, Oregon, Colorado, Arizona and Utah--have been hyped as new economic Valhallas, offering a superior quality of life and expanding opportunities. Yet, recent events in Seattle, the ultimate in destinations for the anywhere-but-California crowd, indicate trouble is brewing in the Valhallas.

Even so, the extent of both the state's business relocations and net outward migration has been vastly overstated. Relocations are reliably estimated to account for no more than 5% of all job losses during the past few years. Similarly, the exodus of some 100,000 more people than arrived from other states hardly qualifies as a hemorrhage in a state with a growing population now exceeding 30 million.

More troubling, perhaps, are the essentially escapist attitudes bound up in the Valhalla syndrome. Rather than signaling the emergence of new economic power centers, outbound California migration seems more driven by middle-class families, especially white, fleeing the stresses of urban life for calmer, more culturally homogeneous environments. Fear may also be a motivation--fear of a multiracial society in which Latinos, African-Americans and Asians are key players in politics and business.

California quitters who share these attitudes are not the sort of people likely to bring economic dynamism to neighboring states. "The problem is that too many people are coming to retire," laments Thomas Seal, president of Alpnet, a Utah-based software firm. "If you want people to work 40 hours, it's great. But you don't have people who work 70-80 hours like you have in Silicon Valley."

What the Valhalla seekers do stimulate are real-estate prices and jobless statistics. Media reports from cities as diverse as Reno, Albuquerque and Portland indicate that many transplanted Californians are either unemployed or underemployed. In the Reno area, they are widely credited with doubling the ranks of the unemployed between 1991 and 1992. California's neighbors are also discovering that some migrants bring with them extremist attitudes--from Christian rightists to ultraenvironmentalists--that add an element of instability to local politics.

These resentments may be expected to grow as many California migrants find out that the Ozzie-and-Harriet era has faded in even the supposedly pristine Western communities. A Phoenix utility executive recently described Southern California as "the cesspool of the West" whose population was "voting with their feet" and relocating to "oases" like Phoenix. Phoenix, it should be noted, along with Seattle and Albuquerque, have higher per capita crime rates than Los Angeles. Even Salt Lake City, the last refuge of "Leave It to Beaver" patriots, has seen its incidence of serious crime double since 1980, according to 1990 FBI statistics.

Whatever their putative appeal, none of the Valhallas are even remotely capable of replacing California as a source of economic diversity, innovation and business dynamism. Historically, most Western states tend to be heavily dependent on one or two industries. Overreliance on energy and minerals wrecked the economies of Utah, Montana, Wyoming and Colorado throughout the '80s. Today, the most glaring example of a basically one-economy state may be Washington, where Seattle-based Boeing Co. just announced plans to lay off 27,000 aerospace workers because of a decline in commerical-jet orders. The Seattle area, which is three times as reliant on the aerospace industry for employment as is Southern California, will be most keenly affected. But the greatest danger in the California exodus mythology lies in the misguided confidence that our neighboring states can prosper without us. Virtually every major study shows that the economic vitality of most Western states largely depends on the capital, markets and technical creativity of California. With California industries too crippled to relocate or expand elsewhere, neighboring states such as Arizona and Nevada suffered net losses of industrial jobs during the past two years.

Ambitious Valhalla-mongers may find California-bashing cathartic, but it makes little sense as an economic strategy. Beggaring California, in the media or in the marketplace, is ultimately an exercise that benefits no one and leaves the West weaker as it seeks its place in the emerging global economy.

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