Schumpeter: The not so Golden State

IN THE gold rush of the late 1840s, chancers dreaming of quick riches flocked to San Francisco. It is the same today, only this time they are armed with computer-science degrees rather than shovels and picks. It is boom time again in Silicon Valley. Startups are sprouting like mushrooms after rain. Investors are showering them with cash. Hoodie-clad geeks are quaffing champagne in trendy bars, as they celebrate their nascent firms’ multi-billion-dollar valuations. Meanwhile, Google and Apple continue their march towards world domination.Those observing from afar the valley’s burgeoning entrepreneurial scene could be forgiven for concluding that California must truly be a Golden State for business. But beyond the gilded strip of land between San Francisco and San Jose is another California, an inhospitable place plagued by over-regulation, mindless bureaucracy, high taxes and endless lawsuits. Last May, six months after the state raised its top income-tax rate to the highest in the land, Chief Executive magazine named it America’s worst for doing business—for the ninth year in a row. Four months later Governor Jerry Brown signed a bill…

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