A Tale of Two States: Texas and California
In "A Tale of Two Cities," Charles Dickens depicts the homicidal madness that engulfed Paris during the French Revolution, a fate from which London was spared. Californians may not be suffering a reign of terror, but the state has succumbed to a kind of madness in which entrepreneurs, though not guillotined, are being driven into exile by onerous tax rates and regulations. Many of these California producers-viewed-as-pariahs are fleeing to Texas, a trend Gov. Rick Perry is encouraging. California’s loss is our gain. “Building a business is tough, but I hear building a business in California is next to impossible,” Perry noted in a radio campaign that preceded his recent four-day recruiting tour of the once-Golden State. One successful California-based business that already has announced its intention to relocate to Texas is CKE Restaurants, owners of the Carl’s Jr. franchise. “It costs us $250,000 more to build one California restaurant than [it does] in Texas,” CKE CEO Andrew Puzder explained in a 2011 address at the California Chamber of Commerce. “And once it is opened, we’re not allowed to run it.” According to Puzder, it takes up to 16 times longer in California than it does in Texas to acquire all the permits necessary to open a new restaurant. Getting a new restaurant opened in California is only the first hurdle, however. Managers and employees must comply with union-friendly work rules that drive up costs, reduce flexibility, stifle creativity and make conscientious customer service very difficult. Gov. Perry insists that his recruitment campaign is “not about bashing California." "As much as I talk about California’s high taxes and over-regulation,” he explains, “I also believe the state has to succeed. It’s too important to the country.” Maybe Perry’s aggressive recruitment efforts will serve as a wake up call for California. The contrast is clear: for two states treating their most productive citizens in dramatically different fashions, it is the best of times -- and the worst of times.