Thursday, September 1, 2011

The Great California Slump - Brown v Bezos

Two names - celebrities really - are playing games with The Great California Slump and the future well-being of California families.

Governor Jerry Brown was in Las Vegas on Tuesday at a green energy conference where commenting on the lack of new investment in California infrastructure he said: "It's dangerous, it's shortsighted. But it's a product of this notion that taxes are like some kind of a sexually transmitted disease, and government is all the problem."

Brown was at the green energy conference because he (and his national policy doppleganger Obama) are believers in the concept that the tech industry, the newest being green energy technology, is going to somehow save the economy and pull California out of The Great California Slump.

While Brown was in Vegas making smart remarks dutifully and amusingly reported in the California press, Solyndra shut its doors and laid off 1,100 workers. Solyndra, the Fremont maker of solar technology that President Obama visited May of last year, because it was a model for green jobs in America admitted in a news release that it could no longer compete with foreign manufacturers. Obama said last May "companies like Solyndra are leading the way toward a brighter and more prosperous future."

Essentially, Brown and Obama have yet to figure out that in the Bay Area/Silicon Valley - the area of the technology booms - the number of jobs in 2010 were the same as in 1990. The technology business model does not create permanent jobs as I explained in a previous post under the section Small Lie 1.2 - Technology will save us.

It makes venture capitalists and founders rich. Yes, venture capitalists lost money on Solyndra. They do that. That's what venture capitalists do - lose 19 times and win big on the 20th. But in this case, the U.S. Department of Energy also lost a half a million dollars.

The reality is, these ventures don't create jobs in America. They hire engineers and other tech types. They succeed or fail. In either case, they lay off engineers and other tech types. New ventures hire the engineers and other tech types. No real job boom is created.

Sometimes they set up manufacturing operations. Intel recently shut down its last plant in Silicon Valley laying off a few thousand workers. Now so has Solyndra.

The fact is Silicon Valley and the Bay Area are not the place to look for a model of how to put Americans back to work. It's that simple. Except Governor Moonbeam (he likes the name) and the President don't seem get it.

Jeff Bezos is the founder, President, Chief Executive Officer, and Chairman of the Board of Like it or not, Bezos company is the most successful internet retailer ever. He and his company have been made the face of evil by Brown and California Democrats, out-of-state internet companies that don't collect California sales taxes.

At the behest of Brown, the Legislature passed a bill in an attempt to force Amazon to collect those taxes. Amazon has been attempting an end run around that law by seeking an initiative to effectively repeal it. The Legislature plans to pass another bill which would repeal the first bill and adopt a similar but different law thereby thwarting the initiative efforts of Amazon which have already cost millions.

Last week Amazon reportedly offered to open six new distribution centers in California in the next three years that would create an estimated 7,000 jobs. In return, Amazon wants an exemption from having to collect sales taxes until sometime in 2014.

On Thursday morning Brown indicated to the press that he's leaning against's proposal. He says we need the $200+ million revenue. He says this even though someone on his staff knows the State is looking at a $10+ billion and growing deficit, a deficit that wouldn't even miss $500 million if Californians can't get jobs.

Two problems with this scenario should make everyone in California, including the press, angry with Brown and Bezos.

First, Brown is incompetent in everything but being a winning politician, winning meaning he panders to the press and wins elections. If he weren't that way, he would not be at green conferences as they will produce nothing for California families during The Great California Slump.

Second, if Jeff Bezos can in the next three years open distribution centers in California employing 7,000 people, it would be nearly a criminal act if he does not do so even if his political extortion attempt fails. California's economy is failing at levels significant to the national economy. The biggest single problem is unemployment. Whether or not his company has to collect sales taxes should not determine if he will give 7,000 Californians jobs.

Obviously, there is no auditorium, hall or stadium big enough to hold these two men and their egos, but somehow someone should get them together, force them to work out an agreement.

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