Monday, May 11, 2009

Geriatric Ghetto California

There is a great analysis of California migration and recent economic woes at New Geography. Domestic out-migration has been particularly tough on the Golden State, hence the derogatory term "Californication." Suffice to say, the economic outlook for California is not good:

The public universities, a major source of innovation over the past two decades, are facing increasingly severe budget challenges. It is unlikely that they will be able to maintain their status even as other states – Texas, Colorado, New Mexico – eye further expansion. Even more ominous are gains in countries, such as China and India, who have long sent their best and brightest to the Golden State.

All this suggests a relative decline in California’s long-term prospects. What should we do? Part of California’s problem is its political process. The state’s chronic inability to do much of anything reinforces stasis. As Dan Walters says, “everyone has a veto on everything.”

But even improving the political process may not be enough. Much of Coastal California is dominated by rich, aging, baby boomers. The residents of this increasingly geriatric ghetto often don’t worry much about economic opportunity. They may have the money and votes to guarantee that growth does not impinge on their lifestyles. Unless these conditions change, it will be unlikely to see a renewal of strong domestic migration to California in the coming years.

The similarities to the Rust Belt are striking, down to the dysfunctional politics. But California's economic Gordian Knot represents huge opportunity for post-industrial centers of innovation such as Pittsburgh. Long ahead of the national trend of an aging workforce, Pittsburgh is at a tipping point and poised to get younger while most other cities get older. California's looming talent shortage is particularly dire.

Anti-growth California will soon be challenged by an economically opportunistic Pittsburgh as the geriatric ghetto in Southwestern PA begins to shrink and yield political power. Silicon Valley software companies will realize that they can get closer to the talent they need and enjoy reduced business costs in revitalizing Rust Belt cities. Pittsburgh is particularly well situated to offer such a value proposition.

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