Another salutary lesson from California

It seems as if the main service that the state of California is providing the country these days is as an example of what not to do if your goal is to strengthen and build a state's economy. What California desperately needs is for the state's industry's to expand and employ more Californians. But they keep making it more expensive for businesses to conduct their business in the state and, no surprise, businesses are moving elsewhere. The latest to announce a decision to expand somewhere else than California is Intel.

The world's leading maker of microprocessors plans to create 7,000 jobs in new and expanded plants that will churn out computer chips 30% more powerful than the current generation of chips.

But California-based Intel won't make them in California.

Instead, the company is expanding in Oregon, Arizona and New Mexico. Anywhere but California, which is now so unfriendly to business, even its home-grown firms don't want to expand there.

This is bad news for the Golden State, which has one of the worst business environments in the country. And it won't be helped a bit by the recent budget deal reached between Gov. Arnold Schwarzenegger and the Democrat-led legislature.

That deal seeks to shrink an expected $42 billion state deficit with spending cuts of $15 billion, a $13 billion "temporary" tax hike and billions in aid from President Obama's stimulus plan.

Democratic lawmakers were able to get the last Republican vote needed to pass their tax hikes by trading a planned 12-cent-a-gallon hike in gasoline taxes for a quarter-point jack in the state's already-high income-tax rate. Some deal. It will only make living and doing business in the state costlier.

The results of Californinomics is the outflow of middle class workers and businesses while the inflow of poor immigrants increases.

As Intel shows, businesses are struggling to stay and grow in California. In the first 10 months of last year, the state lost 25,000 high-quality manufacturing jobs — and has lost 25% of its industrial work force since 2001, according to the California Manufacturers & Technology Association.

As a story in the Wall Street Journal recently noted, "Several Western states are launching aggressive efforts to poach jobs, talent and industry from California, sensing an opportunity to capitalize on the Golden State's current political and financial woes."

Well-trained, well-educated Californians are leaving in droves — and are being replaced by poor immigrants from Latin America and Asia. Since 2005, there's been a net outflow of middle-class Californians — and 260,000 people left for other states in 2007.

As California continues more of the same policies that have brought it to the sorry state it is in now, the rest of the country needs to watch and learn from their bad example. It's the least that California can do for the rest of us.