Silicon Valley

California Job Cuts Will Hurt Gavin Newsom’s White House Run

Joel Kotkin — Wed, 10 Dec 2025 19:28:14 -0500

California Governor Gavin Newsom loves to describe his state as “an economic powerhouse”. Yet he’s far more reluctant to acknowledge its dramatically worsening employment picture. According to new outplacement figures, Golden State employers announced over 170,000 job cuts this year, up 14% from last year. More than 75,000 of these cuts were made in the all-important tech sector.

No other state outside Washington DC has been cutting so many jobs, and California now suffers from America’s highest unemployment rate at 5.5%. But this is nothing new. The state has been haemorrhaging jobs in fields such as manufacturing, construction and business services since Joe Biden’s presidency.

Michael Bernick, who previously served as the director of California’s labour department, has pointed to the state’s “Upstairs, Downstairs economy”, in which a wealthy college-educated class relies on service economy workers. California manages to be at once the state with the most billionaires and the nation’s poverty capital. Its teenage unemployment rate tops 21%, just short of twice the national average; for those under the age of 30, it ranks second nationally behind Mississippi.

This shortage of jobs, particularly high-quality ones, has steadily built into a crisis in recent years as politicians look away. Affordability, particularly for housing, is a big issue but California is also by far the worst state at creating jobs which pay above average, losing 1.6 million such roles in the last decade. In the past year, the only jobs created in California were in government-financed healthcare and government itself.

Tech is supposedly California’s strong point, yet even here things are murky. While venture-financed AI startups descend on the Bay Area, the overall picture is one of tech job losses. This year, according to the LA Times, thousands of workers at the likes of Amazon, Meta, Paramount and Warner Bros have been laid off. Worse still, many tech jobs are headed elsewhere. Texas is leading the charge, followed by Florida, as Southern states including Tennessee and Georgia make significant gains.

One factor here is that California’s nationally high energy prices are undermining its AI industry. Firms such as Nvidia and Samsung are now looking to establish data centres in locations with lower prices, so that they’ll be better placed to develop advanced chips and processors. For instance, the University of Texas at Austin is planning a substantial new quantum computing centre, while energy-rich states such as Pennsylvania are now seeking AI growth as a way to reanimate traditional industrial sectors.

Read the rest of this piece at: UnHerd.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and and directs the Center for Demographics and Policy there. He is Senior Research Fellow at the Civitas Institute at the University of Texas in Austin. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Photo: Felton Davis, via Flickr, under CC 2.0 License.

California's Billionaire Tax Could Bring Down Gavin Newsom

Joel Kotkin — Mon, 17 Nov 2025 19:18:28 -0500

Gavin Newsom’s run for the White House is going from bad to worse. Last week, his former chief of staff was arrested for allegedly siphoning off campaign funds for personal use, raising questions about the California Governor’s control of his inner circle. Now a bigger challenge looms: a rising socialist tide.

After Zohran Mamdani’s sweep to the New York mayoralty and a similarly high-profile win for Katie Wilson in Seattle, California progressives are eyeing a new billionaire tax initiative — a policy Newsom is staunchly against. The union-backed legislation would see the state’s richest residents hit with a one-time, 5% tax on the net worth of individuals — including everything from investments to property value, and even other assets like jewellery and paintings — worth over $1 billion. The revenue would go into a special fund with 90% reserved for healthcare spending and 10% for the state’s ailing K-12 education system.

Newsom likes to claim that California is “the envy of the world” when it comes to social justice. In reality, the state suffers from the highest poverty rate in the country and maintains the highest unemployment, which is particularly acute among young people under 30. To top it off, the level of inequality is greater than Mexico and closer to countries such as Guatemala and Honduras: hardly the envy of the Americas, let alone the world.

In the past, Newsom sought to stifle debate about the dire condition of the state by building what The Nation called an ideal “blue welfare state” — a model of government based on European democracies that prioritises welfare. But economic and budget conditions suggest the state is running out of money and cannot continue handing out ever bigger subsidies to poorer residents. California spends more of its budget on welfare than almost any other state, twice as much as arch-rival Texas.

Even larger infrastructure projects are facing problems. Many state transit agencies and hospitals have huge deficits and are seeking for more state aid, while the troubled “bullet train” is also short of financing. To make matters worse, it could take upwards of $100 billion more to address the state’s consistently awful homelessness situation. In the long run, some have noted that California and Newsom face a tsunami of payments with trillions of dollars in pension debt set to rear its head. It’s therefore no surprise that, despite the tech boom, California places 42nd in fiscal health among the American states.

But will a levy on billionaires fix the situation? Although the wealth tax could help to address the budget deficit, it could also ramp up the departure of the wealthy residents — the top 1% of taxpayers pay more than 40% of California’s personal income. California, like New York and New Jersey, has suffered a drain of wealthy taxpayers already, losing over $300 billion in tax revenues over the past decade. This is mainly to the benefit of other — usually red — states.

Newsom, then, finds himself in a bind. The California Governor must look to keep his historical support base while simultaneously making himself the self-appointed leader of the Resistance. His stance against the wealth tax will not be popular with progressives, but massive income redistribution resonates with many voters in the home base of some of America’s wealthiest citizens.

Read the rest of this piece at: UnHerd.

Photo: Gage Skidmore via Flickr, under CC 2.0 License.

Gavin Newsom's American Dystopia

Joel Kotkin — Mon, 13 Oct 2025 20:28:38 -0400

‘President Gavin Newsom met today in Carmel, California with the representatives of the “Ten” – a consortium of giant tech and finance firms who control most of America’s business assets. Facing a challenge from front-running New York senator Alexandria Ocasio-Cortez, who is pushing for a radical redistribution of wealth and property, Newsom has struck a deal with the oligarchs. He has imposed a universal basic income to head off a mounting populist revolt.

Some have called it a second Magna Carta – an accommodation between state and oligarchy. Others see the outlines of a new feudalism, or a technocratic fascism, rather than anything resembling liberal democracy.’

Implausible? Hardly. At a time when a handful of firms now dominate industries from tech to entertainment and media, and incomes for all but the wealthy are stagnating or falling, ever fewer see the system as working for them. According to Edelman, a strong majority in 22 countries now believe capitalism does more harm than good.

In the US, rising inequality and fear of downward mobility are fuelling support for state expansion and redistribution. Most under-40s favour socialism. Worse for the oligarchs, a majority of young people also favour limiting higher incomes. A new radical politics is incubating in cities like Oakland, Minneapolis, Seattle, Los Angeles and, most obviously, New York – its likely next mayor, Zohran Mamdani, is a self-described ‘democratic socialist’.

The rise of artificial intelligence (AI) could accelerate this trend, cutting even white-collar and graduate employment while boosting the profits, as well as the market share, of a handful of giant firms. Like Mickey Mouse, as the sorcerer’s apprentice in Fantasia, techies have unleashed forces that threaten many in their own class of educated professionals. Some 82 per cent of millennials believe AI will damage their careers. The displacement could soon reach 30 per cent of the workforce. Skilled professionals in finance, media and the arts could be undercut as AI trains itself on their past work. As one Marxist writer put it, no power on Earth is more fearsome than ‘the swelling population of college graduates caught in a vice of low-paying jobs’.

AI evangelists like McKinsey insist it will enrich society. But such elite enthusiasm for the future is not widely shared. A Wall Street Journal-NORC poll recently found that only 25 per cent of Americans believe they have a good chance of improving their living standards – the lowest proportion since 1987. Almost 70 per cent say the ‘American dream’ – that if you work hard, you can get ahead – no longer holds true. Among Democrats, pessimism is overwhelming, with 90 per cent holding a negative view of the future, almost twice as many as Republicans.

Having foreseen these trends, much of the Silicon Valley elite sees the mass of humanity, some of whom already eschew the value of hard work, as increasingly redundant. As they automate everything – even companionship – the oligarchical elites rarely mention mobility or opportunity. Researcher Gregory Ferenstein, who interviewed 147 digital founders, found little interest in expanding property ownership or entrepreneurship. The preference is for redistribution sufficient for the masses to subsist while the elites luxuriate. At the same time, unions are suppressed by ‘progressive’ firms like Apple and Amazon, and responsibility for workers’ incomes is shifted to the state.

Read the rest of this piece at: Spiked.

Photo: Fabrice Florin, via Flickr, under CC 4.0 License.

Economies with Anglo-Saxon Roots Dominate Technology

Nima Sanandaji — Tue, 19 Aug 2025 20:28:38 -0400

A systematic mapping of where the world’s global leading companies in deep tech are located shows that the UK is second best in the world. More importantly, the four dominant deep tech countries all have economic models based on an Anglo-Saxon legal tradition – shows the Deep Tech Index.

Currently Santa Clara Valley by itself hosts a fifth of all globally leading deep tech companies. The region has had a first-movers advantage, since Thomas Edison created the world’s first industrial innovation laboratory there 150 years ago. This massive lead is gradually normalizing, due to rising costs and talent shortage. Other parts of the US, and more importantly other parts of the world, compete with growing deep tech companies.

The USA has fully 62 percent of the world´s leading 500 deep tech companies, a large but falling share. The UK is second best in the world, hosting 6.6 percent of all global deep tech. In the areas of fintech and clean tech, the UK is world leading. Also, in photonic & electronic as well as space & advanced materials, a relatively large share of the world´s leading deep tech companies are found in the UK.

Further 5.6 percent of the deep tech companies of the world are located in Canada and 5.4 percent in India. These four countries which share an Anglo-Saxon legal tradition dominate global deep tech, far surpassing any rivals. Adding in Australia and Ireland, fully 80 percent of the deep tech companies in the world are found in these four nations.

It is astonishing that four out of five world-leading technology companies exist in Anglo-Saxon economies.

The five urban regions with most share of global deep tech companies are Santa Clara Valley, Boston, New York, London and Los Angeles. London is the only top 5 deep tech region outside of the USA. Other leading regions outside of the USA include New Delhi, Vancouver, Mumbai, Singapore and Toronto. These regions all exist in countries with an Anglo-Saxon legal tradition.

Zurich, Eindhoven, Tel Aviv and Stockholm are examples of globally leading deep tech hubs that exist in countries that have a legal tradition other than Anglo-Saxon.

There is a close link between having a high share of globally leading deep tech companies per million adults, and having a high share of the world´s leading top 100 universities in mathematics and engineering. Currently 23 of those top universities exist in the USA, 4 in Canada, 5 in India and 8 in the UK. Further 6 are found in Australia, a nation which is very successful in attracting students from abroad. Combined with an Anglo-Saxon business tradition and competitive taxation, Australia is likely to keep growing with deep tech in the coming years.

The UK and countries that used to be its colonies and therefore have an Anglo-Saxon legal tradition, have a strong lead in knowledge when looking at the university level. They have an even more impressive lead when looking at the level of deep tech company success. While other parts of the world are catching up gradually, this strong Anglo-Saxon dominance can explain why English is the predominant business language.

Historically, the Anglo-Saxon business model has had a strong focus on venture capitalists interacting with entrepreneurial capitalists. This model, popularized today in tv-series such as The Dragon´s Nest, existed in early form already during the industrial revolution. The strong venture capital sector and its interaction with specialized technology firms can explain why countries with Anglo-Saxon legal tradition have such a massive lead in global deep tech.

Already the world´s first entrepreneurs, the tamkãrum of ancient Babylonia and Assyria, had a division between those entrepreneurs who were manufacturers and traders, and those who were investors. This concept existed already some 4 000 years ago, but in today´s modern economy it is Anglo-Saxon countries that do it best. The key is allocating capital to technology development, and keep the funds growing to fund more technology. This form of investment capital is very sensitive to taxation, since so high risks are involved risk and reward have to be balanced. This form of innovation ecosystem ultimately flourishes if the revenues are taxed once they are finalized, not if return from one project is invested in another innovation activity. Building a tax environment conductive to innovation funding remains a challenge for many countries that do not have an Anglo-Saxon legal tradition, and explains the strong continued dominance.

Author: Nima Sanandaji, Director European Centre for Entrepreneurship and Policy Reform

Lead image: by Andrew Bossi; aerial view of London central business district via Wikimedia under CC 3.0 License.

The Shifting Geography of US Deep Tech

Nima Sanandaji — Sun, 08 Jun 2025 20:28:38 -0400

A systematic mapping of where the world’s global leading companies in deep tech are located shows a massive lead for the USA – however the leading edge of particularly Santa Clara Valley shows signs of gradual normalization relative to the rest of the world.

The vast majority of globally leading deep tech companies are found in North America. North America has particularly strong dominance in the areas of artificial intelligence, biotechnology, robotic & communication, quantum & computing and pharmaceuticals. In these five fields of deep tech, around four out of five of the world-leading deep tech companies are found in North America.

In the USA alone, fully 61.6 percent of the globally leading deep tech companies are located. This is the finding of the Deep Tech Index, conducted annually by the European Centre for Entrepreneurship and Policy Reform (ECEPR) with the support of Nordic Capital, which maps and evaluates the global deep tech landscape.

However, while the latest data from the end of 2024 shows that close to two thirds of the world-leading deep tech companies are located in the USA, this is less than the previous year. At the end of 2023 fully 68.4 percent of the world-leading deep tech companies existed in the USA.

Santa Clara Valley, Los Angeles, Austin and Chicago are the leading robotic & communication tech regions. Santa Clara Valley, Boston as well as Vancouver in Canada are centers for quantum and computing development.

The share of global deep tech companies in North America has fallen by 5 percentage points since last year, representing a normalization process. Particularly the USA but also Canada remain dominant, but competition is on the rise.

Besides Santa Clara Valley, the USA also has numerous other world-leading deep tech companies. In Boston fully 6.4 percent of the world-leading deep tech companies are located. Also New York (6.0 percent), Los Angeles (3.8 percent), Chicago and Seattle (2.2 percent each), and Austin (1.8 percent) each host significant share of the world´s deep tech companies. These regions have more deep tech companies in them than most European countries individually, as comparison.

There are also numerous other deep tech companies spread throughout the USA outside the main hubs. Fully 18.8 percent of the world-leading deep tech companies exist in the USA outside of the main urban tech regions.

The share of US-based world-leading deep tech companies that exist in Santa Clara Valley has between the end of 2023 and the end of 2024 fallen from 35 to 33 percent. The share of all world-leading deep tech companies in the USA that are located outside the major urban hubs has also been reduced slightly, from 32 to 31 percent. At the same time the share in the other major urban hubs except Santa Clara Valley (Boston, New York, Los Angeles, Chicago, Seattle and Austin) has grown from 33 to 36 percent.

Two different economic forces are influencing the development. The first is the advantages of specialization. Thomas Edison founded the world’s first industrial innovation laboratory in this valley 150 years ago, and it has since become the most significant region for development of new technologies. The capital, knowledge and entrepreneurship networks needed are in place in Santa Clara Valley, more than any place else in the world. Similarly, the USA is dominant as a nation, compared to the rest of the world.

Yet, the success brings higher costs, for Santa Clara Valley as well as the USA. There are ample talents around the world, at lower prices than the talents of the USA and particularly of the expensive main tech hubs. Current policies relating to trade and international talents is also likely to influence. The trend is that Europe which is second best in deep tech and willing to trade, is catching up somewhat to the USA. Institutional competition will also be significant gradually more from places such as India. Much of globally leading universities in technology and mathematics, as well as global technology firms, are strongly dependent on Indian students and researchers.

The USA retains its dominant leading position, particularly medium-sized regions such as Boston, Los Angeles, Chicago and Seattle. Yet the global competition is growing, hinting at gradual further normalization. Within the coming years, it is likely that we will pass a milestone where less than half of the global deep tech companies are situated in the USA, while no other single country can catch up all the rest of the world combines will do so within coming years. However, the USA can still remain dominant particularly in specific areas. Deep technology is closely linked to prosperity, lower unemployment and national security. Countries around the world need constructive policies to foster deep tech.

The deep tech index demonstrates that countries with a high density of deep tech firms per million adults typically enjoy robust property rights, low capital gains taxes, strong educational outcomes in PISA tests, and prestigious universities specializing in mathematics and engineering disciplines. Boosting universities remains a key challenge now, given the current development in the USA. It is important to remember that Europe and Asia each already have a higher number of the world´s 100 leading universities in mathematics and engineering, the competition is already underway.

Nima Sanandaji, Director, European Centre for Entrepreneurship and Policy Reform (ECEPR)

Photo: cover of Deep Tech Index, 2025 edition.

Musk Outbursts Reveal a Deeper Rift in MAGA

Joel Kotkin — Thu, 05 Jun 2025 12:20:36 -0400

The deepening split between Elon Musk and the Trump administration speaks to broader divisions within an increasingly shell-shocked GOP. Musk, who left the White House only last week, has since denounced Donald Trump’s hodgepodge budget bill – the so-called Big Beautiful Bill – as a ‘disgusting abomination’, as it will add almost $4 trillion to the federal deficit. He had previously called Trump’s pro-tariff chief trade adviser, Peter Navarro, a ‘moron’, reflecting the gulf between the populists and the oligarchs in the MAGA coalition. Oligarchs, whatever their party, do not favour tariffs, curbing immigration or raising taxes on themselves.

It turns out that this incoherence, married to one-man rule under Trump, has consequences. MAGA is a coalition based largely on a shared detestation of the ‘progressive’ agenda, but it has little else in common. It includes people concerned about free speech and anti-Semitism, as well as Christian humanists. And it also contains deeply troubling elements that appeal to a stew of authoritarian, nativist, racist and anti-Semitic ideas – tropes long peddled and platformed by Trump supporters such as the pro-monarchist Curtis Yarvin and the ubiquitous, ever-ugly Tucker Carlson.

Not surprisingly, the broader base that elected Trump is now fracturing into its constituent parts. This is not to say that there has been a shift to the self-righteous and rightfully ignored ‘Never Trumpers’ in the GOP. Nor have Republicans suddenly embraced the leftist meme that Trump is a ‘fascist’ with a plan. He is nothing of the sort: lacking any real ideology or disciplined movement capable of advancing a particular programme.

In essence, Trump is a grifting narcissist with a keen sense of how to take advantage of the sustained imbecility of his opponents. But there is no fixed core to Trumpism – only impulses more expected from a toddler with ADHD than a presidential administration. He may have been a builder in his past career, but he appears clueless when it comes to constructing a clear policy agenda beyond revanchism and grift.

This incoherence is now undermining his own coalition. The tariff blitzkrieg, for instance, could be seen as justified in response to the undoubted mercantilism of Canada, the EU and, above all, China. Yet instead of leading to concessions from other countries, the chaotic rollout of the tariffs has the potential to paralyse large swathes of the US economy, including the all-important auto industry – winning few allies beyond a handful of labour-union leaders, many of whom will probably never support him anyway.

One can feel the wheels coming off, as many of the key constituencies that elected both Trump and the GOP Congress resist his impetuosity and persistent dishonesty. Like most political movements, MAGA is a fragile alliance of groups that often have little in common – and in some cases, loathe each other. This is already evident in the widening chasm between Trump’s tech bros, who favour cutting government spending and care chiefly about personal enrichment, and the working- and middle-class voters who twice put him in the White House.

Beyond the loss of Musk, whose support was crucial to his 2024 electoral success, Trump is slowly dissolving one key alliance after another. One critical rupture has occurred with traditional, small-government conservatives, epitomised by the Federalist Society, which played a pivotal role in judicial appointments in Trump’s first term. As strict constitutionalists, they are naturally sceptical of Trump’s federal power grabs. In the future, he is more likely to appoint not principled conservatives but the kind of partisan hacks found in the district courts of blue states – or worse, the judges of the People’s Courts in socialist regimes.

Read the rest of this piece at: Spiked.

Photo: Elon Musk speaks at 2025 CPAC, by Gage Skidmore, via Flickr, under CC 2.0 License.

AI Could Turn Democrats Into the New Welfare Class

Joel Kotkin — Wed, 04 Jun 2025 20:28:38 -0400

The New York Times’s jeremiad last week about AI’s impact on entry-level jobs — particularly in tech — merely underscores trends that have been clear for well over a year. Silicon Valley firms have been slashing jobs despite record profits, and since 2022 California has actually shed positions in the information sector. An astonishing 82% of millennials fear AI will drive down their compensation. They have every reason to be concerned.

This trend could create a political storm of massive proportions. In recent decades the Democratic Party has been able to compensate for its ebbing support among blue-collar workers by winning over college-trained professionals. Almost all college-educated professionals — excluding those in the military and airline pilots — lean overwhelmingly Democratic. College degrees, particularly graduate ones, are among the strongest indicators of a Leftist tilt, yet are becoming ever less salient in terms of garnering higher salaries.

This base is under increased assault, as universities are forced to confront declining enrollments and ever less public approval. At the same time, the supply of entry-level graduate jobs at major firms such as Salesforce, Meta, Amazon and Lyft are dwindling due to the introduction of AI. Google, most notably, has recently laid off 12,000 workers — a number that is expected to grow to 30,000.

The damage may be even greater at the grassroots level. Within months of AI’s emergence, freelance work in software declined markedly, along with pay. In a survey earlier this month, two-thirds of business leaders suggested that ChatGPT will lead to large layoffs of white-collar workers over the next five years. Already, new AI programmes are allowing software firms to do without lower-level programmers, particularly new hires.

To be sure, Americans without college degrees are not immune to the effects of AI. But in the near term, it’s college professors, administrators, lawyers, accountants, and psychologists — largely Democratic-leaning professionals — who are increasingly in the crosshairs. Even Hollywood, a traditional Democratic stronghold, faces mounting threats: as entertainment becomes more digitised, layoffs have accelerated, and studios find it far easier to shift production to lower-cost regions such as Eastern Europe.

Who wins here? It will be those professions that use AI to build things, such as drones, spaceships and robots. These firms are not as heavily concentrated in places like Silicon Valley, which has largely embraced software, social media and consumer services, leaving its once proud industrial heritage behind.

This is a huge opportunity for Texas in particular, since the state has always been oriented towards tangible engineering. Texas may have missed the social media boom, but its industrial legacy has left it well placed to dominate the “deep tech” builder space. This field often requires reliable and affordable energy — something not easy to get in states such as California or New York.

Beyond elite AI engineers, the other likely winners may be those in physical, hands-on jobs — mechanics or oil rig workers — that are much harder to automate. AI pioneer Rony Abovitz told me that the big winner in the coming years will be the “sophisticated, technically capable blue-collar worker”. Young people might be better off ignoring Joe Biden’s famous advice to “learn to code” and instead consider trade schools which teach practical, in-demand skills.

Read the rest of this piece at: UnHerd.

Photo: Province of British Columbia, via Flickr under CC 2.0 License.

Gavin Newsom’s California Has Become a Neo-feudal Nightmare

Joel Kotkin — Fri, 02 May 2025 20:28:38 -0400

Never one to miss a reason to crow, Gavin Newsom, the governor of California, was out in front of the media at the weekend, bragging about how his state now boasts the world’s fourth largest GDP, surpassing Japan. This is a natural posture for a potential presidential candidate, a chance to show how under his leadership California has thrived.

Unfortunately, few are likely to believe him. Newsom must realise that the notion that California is a model for the rest of the United States – the rationale for the Newsom-led “resistance” against Donald Trump – is no longer widely accepted. In a national 2024 survey, only 15 per cent of respondents felt that California is a model other states should copy; 39 per cent said the state should not be emulated. Barely one in three state residents – and only one in four younger voters – now thinks of California as a good place to achieve the American dream.

Even the GDP news has to be taken with a grain of salt. For one thing, Japan’s downgrade is likely to be partly a result of the decline of that country’s currency, which has been weakening against the dollar for several years.

But beyond GDP, the illusion of Californian success is also a product of high asset values, like real estate, exacerbated by regulatory policies, with house prices typically more than twice as high as the national norm. Add to this the huge capital gains accruing to a handful of tech firms, who over the past decade have doubled their share of the S&P, and you have a large part of the explanation for California’s asset boom.

Rather than the exemplar of a new “progressive capitalism”, or a model for social justice, as Newsom and his cadre assume, the beneficiaries of the state’s growth have been very much concentrated on the upper crust. It may be springtime for Apple, Google, Nvidia and Meta (formerly Facebook), but the prospects for most Californians are anything but sunny. In reality, modern California increasingly resembles a feudal country – like Qatar, Brunei or the United Arab Emirates – where fantastic wealth is largely owned by a small elite.

Once an example for upward mobility, today California manages to be both home to the highest number of billionaires and the highest cost-adjusted poverty rate. The state’s poverty rate continues to worsen. Seven in ten Californians say economic inequality is getting worse, according to a recent survey. The Public Policy Institute of California (PPIC) estimates nearly a third live in poverty or near-poverty – roughly 13 million people in total.

Even the geography of growth since 2017 has been highly concentrated in three Bay Area counties, bolstered by four of the world’s seven companies with trillion dollar valuations. By some counts, real GDP in these counties rose at four times the rate of the US average while the rest of the state, home to the vast majority of the population, has grown well below. The same can be said about race; California may talk boldly about “equity” but in reality, its economy is remarkably unequal, with majority black or Hispanic counties growing well under the national average.

Overall, California today is one of the worst states in the nation when it comes to creating jobs that pay above average, while it is at the top of the heap in creating below average and low-paying jobs. Between 2008 and 2020, the state created five times as many low wage jobs as high wage jobs. In the past three years, the situation worsened, with 78.1 per cent of all jobs added in California from lower-than-average paying industries versus 61 per cent for the nation as a whole.

As tech stocks and housing in Montecito (home of Meghan and Harry) soar in value, Californians suffer the nation’s second highest rate of unemployment, lagging in job creation in comparison to its chief rivals, like Texas and Nevada. In the past year, its GDP growth has also been among the lowest in the country.

This will be in no small part because California has the highest energy prices in the continental US, double the national average, which has also exacerbated “energy poverty,” particularly among the poor and those in the less temperate interior.

Much of this reflects the impact of climate policy, a favourite hobby horse of the state’s dominant elite. But these same policies increase poor and working family costs, and shift billions of dollars to the wealthy, in the relentless pursuit of unilaterally modelled emission targets that even advocates admit cannot possibly “fix” the global climate.

It’s working class jobs – construction, logistics, manufacturing, energy – that have been most severely hit. Even without adjusting for costs, no California metro area ranks in the US top ten in terms of well-paying, blue-collar jobs. But four – Ventura, Los Angeles, San Jose, and San Diego – sit among the bottom ten. They are also far more negative about the future of the economy than those nationally, and particularly compared to people in competitor states such as Texas.

Rather than the land of entrepreneurial opportunity, California increasingly presents a picture of medieval inequality. Huge wealth is concentrated within in few hands while around a quarter of the nation’s homeless population lives in the Golden State, many concentrated in disease and crime-ridden tent cities in Los Angeles or San Francisco.

If this is the model of Newsomian capitalism, it’s unlikely to have many buyers in 2028.

This piece first appeared at: Telegraph.

Photo: GetArchive in Public Domain.

4 Reasons To Be Skeptical OpenAI’s $500B Stargate Project

Robert Bryce — Thu, 30 Jan 2025 20:28:38 -0500

The numbers are nothing short of gobsmacking. On Tuesday, in a splashy announcement at the White House, OpenAI CEO Sam Altman revealed a new company called The Stargate Project that intends to “invest $500 billion over the next four years building new AI infrastructure” in the US. The new company will “begin deploying $100 billion immediately.”

The numbers are so big that it’s easy to lose context. How much is $500 billion? It’s roughly equal to the GDP of entire countries, including — take your pick — Ireland ($529 billion), Israel ($522 billion), and the United Arab Emirates ($507 billion).

With the announcement, Stargate becomes one of the world’s most expensive infrastructure projects. Last month, China announced it would build a massive hydropower project on the Yarlung Tsangpo River in Tibet at an estimated cost of $136 billion. The price tag for California’s beleaguered high-speed train to nowhere is now $128 billion. Of course, those projects are dwarfed by Neom, the city-in-the-desert project now underway in Saudi Arabia, which is expected to cost $1.5 trillion.

Elon Musk immediately trashed the Stargate deal. Musk, who’s in a legal spat with OpenAI and Altman, claimed that the initial equity funders in the deal (OpenAI, SoftBank, Oracle, and MGX, a tech fund based in the United Arab Emirates) “don’t actually have the money.”

Musk also claimed that SoftBank had secured less than $10 billion for the project. On Wednesday, the ever-charming Musk (net worth: $426 billion) upped the ante by calling Stargate a “fake” and Altman a “swindler.”

Arm, NVIDIA, Oracle, Microsoft, and OpenAI are the “initial technology partners” in Stargate. Asked about the funding for the deal on CNBC, Microsoft CEO Satya Nardella replied, “All I know is, I’m good for my $80 billion.” Such is the staggering power and wealth of Big Tech that its bosses can casually affirm that they are ready and willing to spend such massive amounts of money on AI.

In an announcement posted on X, OpenAI claimed the Stargate Project will “create hundreds of thousands of American jobs, and generate massive economic benefit for the entire world.” It also said it would support the “re-industrialization of the United States” and “provide a strategic capability to protect the national security of America and its allies.”

Those are mighty big claims. Spending $500 billion on an infrastructure project of any kind — and doing so in just four years — is, um, ambitious. Add in the never-ending hype around artificial intelligence, and it appears we may be in the midst of what a former Fed chairman dubbed “irrational exuberance.”

Read the rest of this piece at Robert Bryce Substack.

Robert Bryce is a Texas-based author, journalist, film producer, and podcaster. His articles have appeared in a myriad of publications including the Wall Street Journal, New York Times, Forbes, Time, Austin Chronicle, and Sydney Morning Herald.

Photo: courtesy Robert Bryce Substack

Why Both Sides Are Right in the H-1B Visas Row

Joel Kotkin — Thu, 02 Jan 2025 20:28:38 -0500

The current clashes over high-skilled immigration between Donald Trump’s right-wing base and his ‘first buddy’, Elon Musk, reveal a fundamental divide within the US president’s odd coalition. On one side are the populists concerned with jobs being prioritised for American workers. On the other, libertarians fret about how businesses can compete on a global scale.

The row was sparked last week by a tweet by Vivek Ramaswamy, co-chair of Trump’s Department of Government Efficiency, in which he blamed American culture for celebrating ‘mediocrity over excellence’, causing firms to seek skilled workers from abroad rather than hire home-grown talent. Musk has since chimed in to tell opponents of high-skilled immigration to ‘take a big step back and fuck yourself in the face’. ‘I will go to war on this issue the likes of which you cannot possibly comprehend’, he wrote on X.

Never one to sweat the details, Trump’s views on this issue are often ill-defined and seem ideal for sparking just such an internal conflict between his base and his Silicon Valley backers.

As the populists point out, H-1B visas – temporary work permits for skilled workers, first introduced in 1990 – have a record of abuse. Most notably, in 2014, Disney was accused of exploiting the H-1B programme to replace American programmers en masse with cheaper Indian ones. In an era of depressed growth in tech jobs, in part due to AI, the oligarchs’ claim that we face a profound shortage of such workers may be increasingly strained.

The populists also have it right in that H-1B visas have accelerated class divides, particularly in places like Silicon Valley. Valley types used to hire from local schools, like San José State University, rather than from places like the Indian Institutes of Technology. Today, roughly three-quarters of the Valley’s jobs go to non-citizens. Tech oligarchs may like this arrangement, but taking jobs from people who vote can have severe political ramifications, something those galaxy-brained techies seem not to comprehend.

What’s more, the widening social divides in the Bay Area have already created a progressive monoculture, while the GOP has all but ceased to exist there. Back in the 1970s, when the Valley was a place of upward mobility, its politics were decidedly centrist.

Read the rest of this piece at Spiked.

Photo: TED Conference via Flickr, under CC 2.0 License.