In the same post, AtlanticBlog mentions Thomas Sowell on economic and demographic change in California. Sowell asks this question:

After years — indeed, generations — of being a magnet for people and businesses, California is now exporting both, including particularly young people. Why?

His hypothesis:

One reason is that California’s politicians are following a strategy which has worked well politically in New York City — milking the productive people in order to support the unproductive, whose votes count just as much and are easier to get.

He notes that between 1995 and 2000, California had a net population loss of 600,000 (not counting foreign in-migration). For evidence on the detrimental nature of California’s business climate (beyond the anecdotal references to the failed electricity restructuring policies and the budget fiasco), this California Business Roundtable California Business Survey from January 2002 indicates that business is indeed looking elsewhere:

Compared to two years ago [2000], two-thirds of California Business Leaders agree that business conditions in the state have worsened; … [California} companies looking to expand in, rather than relocate to, other states jumped from six percent in 2000 to twelve percent in 2001. … About two-thirds of business leaders agree that taxes and regulations are worse in California than other states. …

And a finding that is of great interest to me:

Despite the higher costs, a majority of Business Leaders believe California’s energy system should continue to be investor-owned. Fifty-eight percent say private utilities and corporations should provide electric and gas service, while twenty-six percent believe public agencies should once again take over the system (See Fig 12).

When asked specifically whether the state should re-regulate or stay the course on deregulation, fifty-six percent of California Business Leaders agreed with the statement that “even though the California deregulation plan was flawed, we should stay the course and not re-regulate” (See Fig 13).

In fact, a majority of Business Leaders (61%) do not blame the private utilities for mismanaging California’s energy system, but instead believe the energy crisis resulted from poorly conceived and implemented plans to deregulate energy markets so that once the crisis is past, private utilities and generators will be more effective and efficient.

The report also cites government involvement as the most frequently mentioned negative factor affecting business in California. I hope the 240-some candidates for governor of California are paying attention to such issues.