DURT puts hurt on California

California continues to struggle economically even as other states may be starting to slightly recover. Sure, these are tough times, but Bill Watkins at Newgeography says California’s problems are made worse by DURT: Delay, Uncertainty, Regulation, and Taxes. Such impediments put California at a disadvantage compared to other states.

Here’s a simple example of this. In California, there is no information on the Secretary of State’s website that I could find on how to start an LLC. The process is, as it turns out, ponderous. You download a form, fill it out, mail it, and then wait possibly weeks for a reply. In Utah you can do the whole thing online and it never takes more than 2 days and sometimes as little as 15 minutes. There’s no reason why California can’t have online registration for businesses. A competent web development team could probably have it done in about a month, yet California, supposedly a tech-savvy state, remains in the Stone Age when it comes to the government using the Internet to help its citizens.

This rather aptly demonstrates DURT. Delay: You have no idea how long it will take for the State of California to register your new business. Uncertainty: You may not be able to start and build your business until it is registered. This is made worse by a state apparatus that seems disinterested at best in helping new businesses. Regulation: New (and existing) businesses in California face large amounts of ever-changing regulations, both in their corporate charters and otherwise. Taxes: The cost of renewing an LLC in California is much more than in other states.

Watkins sees increasing economic divides coming in California. Those able to withstand the various costs of DURT will settle in the coastal cities while the working and middle class will be driven out of those areas by high costs. This is unhealthy for California and will lead to class tensions as well as pitting a few coastal cities against the rest of the state. In ten or twenty years, will Santa Monica become a well-guarded enclave for the ultra-wealthy only?

Excessive regulation isn’t just at the state level but is pervasive at the country and city level too. There are also numerous commission and regulatory agencies that all must sign off on projects before they can be started. The Chamber of Commerce recently said that it is as difficult to build a wind farm as it is to build a coal plant, and nowhere is this truer than in California.

Controversially, Watkins’ article suggests that California’s two landmark global warming bills, AB 32 and SB 375, are a misguided, unilateral attempt to solve at the state level a problem that is global, and worse, will unquestionably hurt economic recovery. While it’s certainly clear that substantial numbers of new green jobs will be created by California’s climate change initiatives, it’s uncertain whether these gains will be offset by the substantially higher costs of doing business and more expensive fuel. Yes, the price of gas and that of products made and transported through California will rise as cap-and-trade takes effect. While this might be the ‘right’ thing to do, other states aren’t following suit, and this will put California at a disadvantage economically.

Watkins concludes:

“California seems to be morphing into almost a Hollywood caricature. The self-absorbed hedonistic wealthy live side by side with the poor, like a combination of a Club Med and Leisure Village in a third-world country.”

This is a dismal view of the future. It’s up to us to make another future possible while we still can.

(crossposted from CAIVN)

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