The Lawyers Who Ate California: Epilogue
Regulatory controversies help explain corporate flight in part, but why else is California struggling?
Washington [D.C.] is not a place to live in. The rents are high, the food is bad, the dust is disgusting, and the morals are deplorable. Go West, young man, go West and grow up with the country.
— New-York Daily Tribune, July 13, 1865
Horace Greeley’s famous injunction held up for a long time. Across parts of three centuries, people flocked to California by wagon, boat, train, car, even on foot, buzzing with dreams of living in a paradise of plenty, free of the “disgusting” dust and “high” rents of the industrial east.
Through the heydays of Hollywood, the Bay Area shipyards, and Silicon Valley, California symbolized freedom, innovation, and the second chance. Here the gangster on the run, the actress with a past, and the crackpot preacher, refugee family, and oft-fired inventor were all able to remake themselves, in this unique place where fame and respectability were somehow the same thing. If you could make it here, you could call yourself whatever you wanted. The Great Gatsby could never have been set in California, a state that agreed with Fitzgerald’s doomed hero, whose belief that “of course you can” repeat the past made him a tragic figure back East.
Thanks to its status at the forefront of everything in our culture, California began decades ago to develop problems other states hadn’t yet. Its entrepreneurial tradition began to cross-pollinate with its hyper-progressive politics, and along with building highways and skyscrapers it began to specialize in growing simple well-meaning laws into vast, ungovernable bureaucracies. As of last year the state boasted an astonishing 396,000 regulations, 100,000 more than its closest competitor, New York.
That number is one bigger thanks to Josiah Zayner, the controversial CEO of a small biotech firm called The Odin. Zayner was amazed to watch the state legislature take the time three years ago to pass a law prohibiting the sale of do-it-yourself genetic engineering kits, a rule that could only possibly apply to his firm.
“They specifically targeted my company,” says Zayner, who joined Oracle, Apple, and Tesla in moving to Austin, Texas. “I was also investigated by the California Medical Board, the California Department of Consumer Affairs, and audited by the California Employment Division. We’re glad to be out of there.”
Multiple other business figures cited CEQA, the California Environmental Quality Act, which accomplished good things at its inception in 1970 but has since seen exponential-to-cancerous growth, making home construction massively more expensive and pushing companies to relocate workforces to locales with more available housing.
Intended to modernize residential building, CEQA to some has instead become a backdoor subsidy to owners of the state’s stagnant pool of mid-century homes, mandating so many lengthy reviews and conditions that petitioners can NIMBY (Not In My Backyard) neighborhood projects to death and kill even environmentally friendly projects like bike paths and public transport. Even progressives have begun to feel empowered to openly hate on this statute. Democratic State Senator Scott Wiener called it the “the law that swallowed California.”
A common complaint is things in the state take forever. California announced a high-speed train in 1996 and the current plan is for service on the L.A-San Francisco line to begin in 2033. One executive I spoke with described the state’s development as “frozen in aspic.”
Stripe CEO Patrick Collison gave an interview to Noah Smith on Substack that compared the push-pull tension between the state’s penchant for innovation and its cumbersome if well-meaning morass of regulations as mimicking the dizzying dynamic of the Christopher Nolan movie Tenet:
California shifted mid century from being the US's fastest-growing state — 50% population growth between 1950 and 1960 — to a state that is somehow, improbably, shrinking… mostly because of the regulations the state’s inhabitants put in place that block the housing that's required to support California’s economic success. As a result, California has lost the “technology” of being able to affordably house its inhabitants. In these ways and many others, technology is both advancing rapidly and yet often receding in the state. (Tenet is a movie about time moving backwards and forwards simultaneously… as a result of its policies, California is the Tenet of states.)
The recent litigations involving companies like Riot Games, Activision, and Tesla similarly became so weighed down by accusations and counter-accusations, disputes and cross-disputes, involving so many different parties, that over time it’s become difficult to follow who’s fighting whom, and why, and in which direction cases are moving. It’s a wonder there isn’t a higher suicide rate among the state’s civil judges. Parts of the public record read like Wrestlemania for lawyers.