“I’ve always believed, as California goes, so goes the rest of the nation.” – Gov Gavin Newsom
When Gov. Gavin Newsom took office in 2019, California businesses were facing over half a million regulations. That was over three times as in many other states. Considering Newsom is a card-carrying progressive, with a potpourri of special interests and a monthly crew of identity groups he must coddle and cater to for survival, that number has grown substantially in the last five years.
As new regulations are added, California businesses keep seeking economic refuge in other states. This mass exodus started the year Newsom was elected. Business owners cite regulatory burdens as the salient reason why they are fleeing to more tax and business friendly conservative states.
The most damaging regulations are those that are implemented for political reasons. These are passed as payoffs to Democratic Party supporters, including public service and labor unions.
“We will continue to construct the foundation for America’s future within California.” – Gov Gavin Newsom
Once regarded as the epitome of the American Dream and the hub for innovation, California’s soaring costs and regulatory burden have prompted Californians to try and salvage what they can of their future in states as far away as they can get from the progressive kidnapping of the left coast.
According to a report by the Hoover Institute, the rate at which businesses left California in 2021 was twice that of 2020 and 2019 and three times higher than in 2018. They found Texas is a popular destination for many California companies, including Tesla, Oracle, Hewlett Packard Enterprise and Charles Schwab. Hoover revealed 153 companies moved their headquarters just last year.
“The best way to live in California is to be from somewhere else.” – Cormac McCarthy
Data compiled by U-Haul from more than 2.5 million one-way truck, trailer and portable container rentals confirmed Texas, Florida, North Carolina, South Carolina, Arizona, Washington, Virginia, Colorado, Idaho and Tennessee are the top ten destinations for businesses fleeing California.
These business exits negatively impact the state and communities that lose them since employees leave with them. This reduces the demand for goods and services within their communities, which hurts their economies. The loss of corporate tax revenue, property taxes, and the demise of travel industry companies such as car rentals and hotels produces a negative economic domino effect.
Although politics is considered the second oldest profession and rewarding supporters is common practice, when these moves desecrate entire segments of an economy, this is more than “politics as usual”.
“Loyalty to country always. Loyalty to government, when it deserves it.” – Mark Twain
The most damaging regulations passed are those implemented as “carve-out exceptions” so high profile political supporters are exempted from regulations. California’s AB 1228 which went into effect April 1, 2024, screams pay for play politics. It requires fast-food eateries to pay a minimum wage of $20 per hour. The dichotomy of this ludicrous law is an exemption for on-site bakeries.
Last week, Bloomberg confirmed a story that the bakery “carve-out” in AB 1228 was influenced by billionaire Greg Flynn, owner of 24 California Panera franchises. Flynn is a huge donor to Gavin Newsom. He donated $100,000 to Newsom’s 2021 recall campaign and $64,000 to Newsom’s 2022 election campaign. Flynn Restaurant Group has had a personal business relationship with Newsom since 2014.
“Politics makes strange bedfellows.” – Charles Dudley Warner
Flynn has been an outspoken critic of regulating California’s fast food industry. In a Capitol Weekly magazine article in 2022, he energetically argued that further fast food legislation would significantly damage business franchising within the state. He said ”businesses would flee the state in droves.”
When questioned about the Bloomberg story, Flynn said he never requested the bakery “carve-out” in AB 1228. Newsom said the story was “absurd.” Yet Sacramento’s KCRA news channel 3 stated “multiple sources told the station Newsom pushed for the exemption with Flynn’s influence.”
Thanks to the free press, the saga of the bakery melodrama ended shortly after it started. Days after the story broke, Newsom declared Panera was not entitled to the bakery “carve-out” because its “dough” is produced “off site” and delivered to the stores. Since fast food joints don’t make their bread dough on site, this seems the bakery carve-out was only pay for play for Flynn.
We are all aware that California’s AB 1228 should never have been passed. It was an obvious political payback to Newsom’s supporters who donated ovens of “dough” to his political campaigns. The fact that Newsom thought media and voters would not notice this is even more disturbing.
Franchise owners already face low margins and enormous competition hiring workers, with an annual turnover rate over 100%. This huge increase in fast-food minimum wages will reduce job opportunities for students, immigrants, and ethnic minorities who want to work part time. This will hasten the fast-food industry transition even faster to automation. Many franchisees have already adopted automated deep frying, automated burger flipping, and automated ordering kiosks.
Napoleon Bonaparte said, “In politics, stupidity is not a handicap.” From the Gold Rush to the tech boom, California was a Mecca for immigrants, dreamers, and fortune seekers. But that ended with the progressives and the state’s elites partnering to turn California’s dream into a woke nightmare. Under Newsom’s watch, the state is losing population faster than any time in history with no end in sight. All the levers of power remain in the hands of progressives. Until the liberal tech oligarchs and minorities revolt, there’s no chance of a political turnaround to restore the California dream.
Escalating labor and food costs and high interest rates have strained fast-food franchisees profits. Biden-flation has hit every industry reliant on discretionary spending. California’s Legislature only added to their burden. Newsom’s signature legislative victory will lead to revenue and job losses.
We can always count on the California Legislature to do the bidding for the state’s powerful unions, which are committed to boosting their membership no matter what that might mean for the state’s economy. Newsom and other progressives made a deal with the devil for political support from the elite ruling class and the unions with no regard for the economic wellbeing and future of the state.
Wake up California!. Modern liberalism is capitalism. Progressivism is modern socialism.
“The Marxians love of democratic institutions was a stratagem only, a pious fraud for the deception of the masses. Within a socialist community there is no room left for freedom.” – Ludwig Von Mises
