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California | Global Justice and Anti-Capitalism | Government & Elections

Tim Draper's Proposal to Split California: Bad for Business Too
by Steven Maviglio
Wednesday May 7th, 2014 4:07 PM
It Will Damage the California "Brand" As Our Economy Turns Around

There’s a story in the Old Testament of the Bible known as the Judgment of Solomon.

However, it’s not clear that Tim Draper has read it.

Draper is a venture capitalist who has devised a plan to split California into six different states. It reminds me of the biblical story, in which two women dispute who is the true mother — and who is best able to raise — a newborn baby. They come before the ancient king of Israel asking for his judgment. After listening to their cases, Solomon declares that the only fair solution is to cut the child in half — two pieces so each woman can have a share and do with it as she wishes.

Similarly, Draper believes that cutting California into pieces will somehow improve the state. The plan, which many journalists believe would be ridiculous to even write about if it weren’t for Draper’s personal wealth seeming to guarantee its placement on the November ballot, would produce some pretty gruesome results.

Consider this: the six-states plan would newly create two of the poorest states in the country, “Jefferson” at our state’s northern border and “Central California” encompassing a huge swath of out Central Valley including the cities of Stockton, Fresno, and Bakersfield. In both states, one of every five people would be living below the poverty line. According to the Legislative Analyst’s Office, “Central California” would become the poorest state in the nation, with a per-capita personal income of just $33,510, or about $150 less than that of Mississippi.

What’s more dangerous about the scheme is the myriad ways it could affect our business climate. The area of California that would become the state of Silicon Valley is currently home to less than 18 percent of our population but contributes a full third of all personal income taxes, about a fourth of all property taxes, and over a fifth of sales taxes. It would directly border a new state, Central California, with less than a fourth as much personal income taxes, less than half as much taxable sales, and less than a third as much property tax income. That would introduce a tax disparity between next-door neighbors so stark it’s near impossible to describe the potential outcomes.

Would businesses relocate? Would the new states, seeking to recoup lost revenues, assess new taxes and fees on commerce crossing newly drawn state lines? Would those living in poverty migrate to where social services are more available? What would the state of public schools be in new states where education dollars that used to come from a broader tax base have simply dried up? These are just some of the many questions to ask before — not after — hacking our state into pieces.

By the way, how long would it take for all this state-making to shake out? Because during the tumult and confusion, no company is going to want to inject money into a region fraught with political uncertainty. That means for a number of years corporations will choose to expand and add employees in places like Austin, Texas and Dublin, Ireland instead of the Californias.

The theory behind this new world order is that smaller states would be better equipped to address water needs, corrections department management, and school quality. But if a singular political body in Sacramento has not solved these issues, how will it be able to do so when negotiating with five newly created political bodies? Especially when these new states will have competing priorities. Does anyone think California’s political and policy problems would all-of-a-sudden be solved if, today, we had to negotiate every piece of legislation with Arizona, Nevada, and Oregon?

Sure, splitting California into six pieces might mean some additional clout in Washington, D.C., but even then, the regional priorities and diverse political ideologies represented by the new U.S. senators will compete, preventing a united voting bloc and any real benefit.

No, splitting the baby will not satisfy either mother. It will only make the one who truly loves the baby miserable. In the biblical story, the true mother sees the threat of the king’s sword and decides she would rather have the other woman have her son before seeing the infant she birthed murdered. I give Draper the benefit of the doubt, and assume he is playing the role of Solomon to elicit a response. However, he’d be wiser to follow the example set by the baby’s mother.