The 'Great State' of San Francisco

The public stock offering by Twitter reflects not only the current bubble in social media stocks, but also the continuing shift in both economic and political power away from Southern California to the San Francisco Bay Area, home to less than one in five state residents. Not since the late 19th century, when San Francisco and its environs dominated the state, has influence been so lopsidedly concentrated in just one region.

The implications of this shift are profound not only for the ascendant northerners, but also for the increasingly powerless, rudderless regions that are home to the vast majority of Californians. With some 16 million residents by far the state's largest region, Southern California long dominated both state politics and the economy. Today it, along with virtually all interior parts of the state, is effectively ruled by the Bay Area's admixture of venture capitalists, tech moguls, political and environmental activists.

This is very bad news, not just for conservatives and Republicans, a species close to extinction in the Bay Area, but for many working and middle-class Democrats. The Bay Area ideological grip – fiercely green and politically correct to a fault – has separated California from its historic commitment to economic diversity and into a one-size-fits-all approach.

The current shift of political power has been building for the last decade, and has put to an end a Southern California ascendency that ran from the days of Richard Nixon and Ronald Reagan to Pete Wilson, Gray Davis and Arnold Schwarzenegger. Today, there is not one Southland politician with any true state-wide influence. Indeed, the only politicians of any influence from Southern California have been a steady procession of union-influenced politicians: Fabian Nunez, Herb Wesson, Karen Bass and John Perez – all who have served as State Assembly speakers. And all of them will eventually fade into well-deserved obscurity.

In contrast, notes long-time analyst Dan Walters, the Bay Area has established a “near-hegemony in California politics.” Home to both of the state's U.S. Senators, San Francisco's Dianne Feinstein and Marin's Barbara Boxer, it also domiciles the state's most important House leader, Nancy Pelosi, again of San Francisco. But the real domination is at the state-wide level where Bay Area residents control virtually every key political office, including Lt. Gov. Gavin Newsom, former mayor of San Francisco and Attorney Gen. Kamala Harris, San Francisco's former district attorney.

Astute observers of state politics, such as Joe Matthews, note that the “machine” nature of Bay Area politics, most epitomized by former San Francisco Congressman Phil Burton and his brother, John, has shaped a political class with sharper elbows. Urban San Francisco, in particular, he suggests, has a rough-and-tumble aspect missing from Southern California's more dispersed and largely indifferent variety.

This bizarrely lopsided configuration could prove a temporary and random phenomena, but the long-term economic and demographic trends favor a growing Bay Area ascendency. The current boom in Silicon Valley is minting billions in new riches for denizens of high-tech companies and their financiers at a time when office parks across most of the state, including Los Angeles and Orange Counties, are suffering significant vacancies. In contrast, those in Palo Alto and San Francisco are filling up even at ever-rising prices.

This reflects in large part the secular decline of Southern California, which has never fully recovered from the loss of its landmark aerospace industry as well as the Los Angeles riots. The area's dependence on manufacturing, where it remains the nation's largest center, has suffered huge damage – down 18 percent just since 2007. Some of this can be terraced to the very regulatory policies backed by Bay Area politicos and pundits.

Race is a factor here, too. For its part, the Bay Area's population is increasingly dominated by well-educated Anglos and Asians – while historically underperforming African Americans and Latinos, largely immigrants, are concentrated in southern California. San Francisco, for example, is only 22 percent black or Hispanic; in Los Angeles, this percentage approaches 60 percent.

There is also a vast chasm which has developed in terms of both job creation and unemployment rates. Over the past six years San Francisco and Silicon Valley, after losing many jobs in the 2000-2001 tech bust, have created 44,000 new jobs and now have recovered their losses from 2007. In contrast, Los Angeles and Orange counties, even after some recent growth, are stuck almost 300,000 below their 2007 levels. Not surprisingly unemployment in Santa Clara county sits around 7 percent while San Francisco county and San Mateo county unemployment numbers are under 6 percent. In contrast Los Angeles, the state's largest county, stays at roughly 10.8 percent.

Even worse off are places like the Central Valley and the Inland Empire, that have large numbers of under-educated people, and have long depended on such basic industries as construction, agriculture, manufacturing and logistics. Riverside-San Bernardino counties and Sacramento county together are still almost 200,000 jobs below their 2007 levels. Some of the rural counties in the Central Valley still suffer double-digit unemployment rates and staggering levels of poverty even as mid-twenties Bay Area nerds – often heads of companies with no history of profit – engage millions, and even billions, in IPO wealth.

The confluence of Bay Area political and economic power is not coincidental. Increasingly the Silicon Valley oligarchs are rapidly replacing Hollywood as the primary source of cash for Democratic politicians.

Energy provides the clearest example of the Bay Area's ability to determine policy. Many major tech firms and venture capitalists have made millions backing renewable energy ventures made profitable by state mandates and subsidies. With the high energy-consuming industrial part of the Silicon Valley increasingly eclipsed by social media and software segments, high-priced electricity matters less and less to tech oligarchs who can easily place their servers in lower-cost states. Opposition to oil and gas development, which could resuscitate some of the state's hard-hit quarters, is predictably strongest in the Bay Area.

Similarly, strict controls over water use, although expensive for the Bay Area, hit agricultural and industrial users mostly located in the interior the hardest. These, measures do not much impact the ultra-rich buyers in places like Palo Alto, much less in lawn-less San Francisco.

Is this reconfiguration a permanent one? Certainly the Bay Area's swagger will decline once the current tech bubble, as is inevitable, implodes, likely within a year or two. The “tech glitz” around concentrations of start-up companies is a movie we have seen before. Back in the early years of the decade, similar firms fell victim to flawed business models and rapid industry consolidation. In San Francisco, for example, tech employment crashed from a high of 34,000 in 2000 to barely 18,000 four years later.

But even if the Bay Area's economic edge recedes, its political influence is unlikely to be challenged in the near future given the dearth of talented politicians. Indeed the only possible governor candidate from south of San Jose, Antonio Villaraigosa, is lightly regarded for his less-than-successful term as mayor of Los Angeles; his only hope in a primary lies in bloc voting by his fellow Latinos.

Instead, most likely, our next governor will be either Gavin Newsom or state Attorney General Kamala Harris, progressives from San Francisco. Until Southern California can develop new leaders to replace today's mediocrities, and starts to push an agenda appropriate to our poorer and more diverse population, we better get used to living in what has become the Great State of San Francisco.

This story originally appeared at The Orange County Register.

Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.