“I’ve always held the belief that the fate of the nation mirrors that of California,” stated Governor Gavin Newsom.
When Gov. Gavin Newsom assumed office in 2019, California businesses were burdened with over half a million regulations, which was more than three times the number in many other states. Despite being a progressive leader with a diverse array of special interests and identity groups to appease for political survival, the number of regulations has only increased in the past five years.
Related posts
As new regulations continue to be implemented, businesses in California are increasingly looking for economic refuge in other states. This wave of migration began in the same year that Newsom was elected, with many business owners citing regulatory burdens as the primary factor driving their decision to relocate to more tax and business-friendly conservative states.
The regulations that cause the most harm are the ones driven by political motives. These regulations are often enacted as favors to Democratic Party backers, which can include public service and labor unions.
“We are committed to building the groundwork for America’s future right here in California,” stated Governor Gavin Newsom.
Once seen as the embodiment of the American Dream and a hotspot for innovation, the escalating expenses and regulatory restrictions in California have driven many Californians to seek greener pastures in states located as far away as possible from the progressive stronghold on the West Coast.
According to a report from the Hoover Institute, the number of businesses leaving California in 2021 was twice as high as in both 2020 and 2019, and three times higher than in 2018. The report also highlighted Texas as a favored destination for many California companies, with names like Tesla, Oracle, Hewlett Packard Enterprise, and Charles Schwab making the move. In fact, a total of 153 companies relocated their headquarters in just the past year.
Cormac McCarthy once said, “The best way to live in California is to be from somewhere else.”
According to U-Haul, data collected from over 2.5 million one-way truck, trailer, and portable container rentals has revealed the top ten destinations for businesses relocating from California. These destinations include Texas, Florida, North Carolina, South Carolina, Arizona, Washington, Virginia, Colorado, Idaho, and Tennessee.
Business exits have a detrimental impact on the states and communities they leave behind. When businesses close down or relocate, their employees also leave, resulting in a decrease in demand for goods and services within the affected communities. As a result, the local economies suffer. Moreover, the loss of corporate tax revenue and property taxes, along with the collapse of travel industry companies like car rentals and hotels, creates a negative economic ripple effect.
Politics, often referred to as the second oldest profession, has a long history of rewarding supporters. However, there are instances where these actions can have devastating effects on entire sectors of the economy. This goes beyond the typical realm of “politics as usual.”
Mark Twain once famously said, “Loyalty to country always. Loyalty to government, when it deserves it.” This quote highlights the importance of being loyal to one’s country and government. However, Twain also emphasizes that loyalty to the government should only be given when it is deserving of it. This sentiment reminds us to critically evaluate the actions and decisions of our government, rather than blindly following it.
One of the most harmful regulations that have been passed are the ones that create “carve-out exceptions,” allowing influential political supporters to be exempt from those regulations. An example of this is California’s AB 1228, which came into effect on April 1, 2024. The law mandates a minimum wage of $20 per hour for fast-food eateries. However, what makes this law particularly absurd is the fact that it includes an exemption for on-site bakeries. This kind of legislation clearly reflects the influence of pay-for-play politics.
In a recent report, Bloomberg disclosed that the provision in AB 1228, which pertains to the bakery industry, was influenced by billionaire Greg Flynn. Flynn, the owner of 24 California Panera franchises, has a significant connection to Gavin Newsom, as he has been a generous donor to the governor. He contributed a substantial amount of $100,000 to Newsom’s recall campaign in 2021 and an additional $64,000 to his re-election campaign in 2022. Moreover, Flynn Restaurant Group has maintained a personal business relationship with Newsom since 2014.
“Politics has a way of bringing together unlikely allies,” as famously stated by Charles Dudley Warner.
Flynn has expressed strong opposition to the regulation of California’s fast food industry. In a 2022 article for Capitol Weekly magazine, he passionately argued that implementing additional legislation on fast food would have a detrimental impact on business franchising in the state. He firmly stated, “Businesses would leave the state in large numbers.”
Flynn denies ever requesting the bakery “carve-out” in AB 1228 when asked about the Bloomberg story. Newsom dismissed the story as “absurd.” However, according to Sacramento’s KCRA news channel 3, “multiple sources” informed the station that Newsom advocated for the exemption under Flynn’s influence.
The bakery melodrama came to a swift conclusion, thanks to the free press. Shortly after the story broke, Newsom made it clear that Panera did not qualify for the bakery “carve-out” because their dough is produced off site and delivered to the stores. It seems that the bakery carve-out was merely a way for Flynn to play the system.
California’s AB 1228 was a clear example of political favoritism, passed as a result of Governor Newsom’s close ties with his campaign donors. It is concerning that Newsom believed he could sneak this legislation past the media and voters without scrutiny.
Franchise owners are already dealing with narrow profit margins and fierce competition when it comes to hiring workers, as the industry has an annual turnover rate of over 100%. The significant rise in minimum wages for fast-food workers will further shrink job prospects, particularly for students, immigrants, and ethnic minorities seeking part-time employment. Consequently, this will accelerate the fast-food industry’s shift towards automation. In fact, numerous franchisees have already embraced automated technologies for tasks such as deep frying, burger flipping, and ordering through self-service kiosks.
Napoleon Bonaparte famously stated, “In politics, stupidity is not a handicap.” California, once a beacon of hope for immigrants, dreamers, and fortune seekers, has undergone a distressing transformation from the Gold Rush to the tech boom. Unfortunately, this transformation has turned the state into a waking nightmare, thanks to the collaboration between progressives and the state’s elites. Under the leadership of Governor Newsom, California is experiencing an unprecedented population decline, with no signs of improvement on the horizon. The power dynamic remains firmly in the hands of progressives, leaving little room for a political turnaround to restore the California dream. Unless there is a revolt from liberal tech oligarchs and minorities, the future seems bleak.
Escalating labor and food costs, as well as high interest rates, have put a strain on the profits of fast-food franchisees. The impact of rising costs has been felt across various industries that heavily rely on discretionary spending, with the current economic situation being referred to as “Biden-flation.” To exacerbate matters, California’s Legislature has further added to the burden faced by these franchisees. Governor Newsom’s signature legislative victory is expected to result in revenue losses and job cuts.
The California Legislature consistently supports the state’s powerful unions, prioritizing their interests over the state’s economy. In their pursuit of political support from the ruling class and unions, Governor Newsom and other progressives have made a detrimental agreement that neglects the economic wellbeing and future of California.
California, it’s time to wake up! Modern liberalism is actually a form of capitalism, while progressivism represents modern socialism.
