California Ascendant?

Time Magazine recently published a thought provoking cover story on California. Its worth reading, thinking about and debating. Because if its right – as I believe it is – most everything we think drives state economic growth is wrong.

The article argues that California is and will be in the future a leader in economic growth. With lots of data to back up their assertion. Contrast that to the conventional wisdom that, because of arguably the most dysfunction state government in the country combined with what is thought to be business unfriendly polices, California’s economy is in for long term decline.

Have the folks at Time lost their mind? If you listen to the small government ideologues they have. They argue that the places that will be the economic winners in the future have low taxes, small government and weak unions. Then there are the good government moralizers who argue business won’t invest in places with hyper partisanship and where states and local governments can’t even balance their budgets.

Turns out the stuff on the priority agenda of the small government ideologues and good government moralizers doesn’t matter much to economic success. As Time argues what matters is that California is:

the greenest and most diverse state, the most globalized in general and most Asia-oriented in particular at a time when the world is heading in all those directions. It’s also an unparalleled engine of innovation, the mecca of high tech, biotech and now clean tech.

The central important defining characteristic of California that emerges in the article is their future orientation. No matter how screwed up their politics, its a state which, at its core, is at about creating the future, not protecting the past. What matters most is the talent and entrepreneurialism of the people of California. To the degree that policy matters what matters most is their embracing more than resisting globalization and technology. More free trade oriented, more open to immigrants, at the leading edge of green policies, stem cells and now transportation alternatives to the car.

Its these characteristics that Michigan most needs to replicate. The lesson we need to learn is that aligning with, rather than resisting, a flattening world is what matters most to future economic success.

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