Texas was followed, in order, by North Carolina, Florida, Tennessee and Georgia.
Ranking 46th through 49th in the rankings were Michigan, New Jersey, Illinois and New York, respectively.
I would attribute this to the amount of local taxes and labor laws that these states have. The "Worst" rankings are for states that have taxes and robust labor laws/strong unions.
Let's face it, they don't like Texas for their education systems. They like it because their overhead is much cheaper. Plus, East Texas is patent troll paradise.
Not that there is anything wrong with those motives, but it is useful to keep in mind.
It's worth noting that Toyota has its plants primarily in the states that have scored the highest in this survey. San Antonio is one of their biggest plants, IIRC?
If you want to be in tech, OTOH, the two worst states are the only ones with VCs you actually hear about on HN.
It does make you think about American management culture.
[edit: I just noticed Illinois is third worst, hehhehheh. I wonder what DHH is thinking.]
I think this 'study' presents more useful information about the CEOs polled than anything else. Namely, that their insight into the health of an economy doesn't go much further than 'low taxes and corrupt government good, labor protection and regulation, bad'. Honestly, Tennessee is a better place to do business than New York? Moreover, it's one of the best while New York is one of the worst? So why does New York have a substantially larger economy? That is just a ludicrous statement, and it is empirically false.
This is little more than another exhibit to show how little American CEOs do to earn their ridiculous salaries.
New York in many ways is living off of past glories. There are two New Yorks... NYC and the rest of the state. The rest of New York is more like West Virginia. Read about places like Utica, Amsterdam, Jamestown and Binghamton. Buffalo is like Detriot -- 75% decline from its peak population.
Even much-vaunted New York City is not as strong as it might appear at first glance. NYC in 2011 is a single-industry town... finance IS NYC. Even the feature that defined NY for centuries -- New York Harbor -- contributes almost nothing to the state, as the freight terminals fled overegulation to New Jersey (of all places) in the 1970's.
30-40 years ago, the city had a diversified mix of finance, manufacturing and service industries. There were over 10,000 manufacturing firms in the city in 1970. Now both the NY state and city are living off of a sole benefactor -- Wall St.
Listen to yourself. It's people with radical views such as yours who drive businesses out of a state. You're very narrow-minded. Put yourself into a CEO's position.
"why does New York have a substantially larger economy?"
Well, location, history (it was there first), a port (its not land-locked), huge population, and many other factors you've disregarded might be the reasons, for starters.
The only quote you give
'low taxes and corrupt government good, labor protection and regulation, bad'
is not in the article: it isn't a quote so why the quote marks? That's outright deception.
Since when has supporting taxes and labor laws ever been considered radical? Opposing laissez-faire has been OK since the end of the 19th century, I believe.
I think the view that what makes a place a good place to do business is primarily low taxes and a government hostile to labor (i.e. most of its constituency) is narrow-minded, personally. It shows a total disregard for what the long term effects of pandering to business interests at the expense of education and health might be. Sure, educated workers from other states can move to Texas, but what if those states follow Texas' lead as well?
So I disagree that my post is ignorant or vicious. That is not a direct quote, sure, but looking at the how the various states were obviously 'scored' it is pretty clear what is going on: CEOs value short-term and unsustainable business incentives, which may be fine as far as it goes but if you can't see why that precludes them from having a good influence on government policy then I don't have much else to say to you, I'm afraid.
You attempt to control the discussion by framing* the argument in biased terms. For example, you frame CEOs as seeking "low taxes and a government hostile to labor".
That is not true (as the article shows). CEOs use many factors in choosing a state within which to locate their business.
If everyone believed as you, would that be a good thing? Did you expect, in a democracy, that everyone else would see things as you do? If you are over the age of 12, it is late in life to realize that other people do not think as you do.
*The Political Mind: Why You Can't Understand 21st-Century American Politics with an 18th-Century Brain by George Lakoff
How do you get the impression I'm unaware other people have different opinions? If you disagree with me obviously I will think you're probably wrong, that's the nature of having an opinion, but I do try to stay relatively informed and am open to differing opinions and changing my mind. What I am not open to is people claiming I am being deceptive or that I am being ignorant and vicious based on relatively uncontroversial statements.
If that's the case, then why are so many founders flocking to the Valley? Why does the state of California have the 8th largest GDP in the world? Why does the Market Cap of all the companies within a 1 mile radius of highway 101 between SF and SJ top $500B?
Methinks that study is missing something. I suspect the regulations make starting a certain type of businesses (manufacturing, mining, logging) pretty miserable here. But those regulations also force executives to focus on starting a certain type of high risk/high reward type of business like software, bio tech, entertainment business's essential in the state.
There are many, many, many reasons I'd like to live in CA, specifically san diego, la, or sf. None of them have anything to do with the government, in fact the government & its costs are a significant downside.
Why do industries concentrate in any area? It's called preferential selection and has strong historical/inertial ties. This can be seen in all sorts of other areas, for instance in NYC when building a new bridge back in the day it replaced the ferry dock, because that was where the roads already led to and it could handle the traffic. California is one of the most resource rich, and beautiful places to live in the entire country. It's easier to kill off industries than people think, and the advantages of being in a hub are getting less and less as technology improves.
I suspect the survey's polling a large variety of industries, many of which wouldn't do well in California at all. If you limit it to the music, movies, microcode, and high-speed pizza delivery that America does best, California's a much more appealing place.
I can assure you that SV executives flock to SV because of talent, in spite of California's tax system and business policies. We'd flock to Wyoming if Wyoming had more talent.
The value proposition for network and resources in the Valley outweigh the government problems. It is a fine line though. Check the recent SF / Twitter tax situation. If California makes the wrong decisions on how to deal with debt and unpaid obligations (public pension), then expect the scale to tip.
There's a huge difference in the needs of CEOs of large enterprises, where a 1% reduction in taxes can make a significant and material difference, and the needs of startup CEOs, who need access to risk capital and risk-tolerant employees.
Tell that to the millions of your fellow citizens who are unemployed. California can be a great place to start a tech or entertainment company while being a miserable place to run any other type of business. Inertia is the only reason it's still good for those sectors. That state's current trajectory is unsustainable, so something will have to change for it to still be a great place to start a tech business in twenty years.
Tech is very different from most other businesses.
Say you manufacture toilet paper. Then you probably do want to locate your business in some state with friendly tax policies, and where you will find a ready supply of workers who will be quite happy to work for $12 an hour.
But for economic reasons, good tech people have the ability to be picky. They can move anywhere, and most of them prefer to live in beautiful places with a lot of diversity and culture. Hence places like the Bay Area. True, you can't buy a house here for a sane amount of money, but that doesn't matter either to the very rich, or to the very ambitious (who are happy to cram into some tiny apartment in their twenties).
Meanwhile, the successful and ambitious will draw many others who wisely choose to follow the action. California has a dysfunctional government, but it has a lot of things going for it. Silicon Valley isn't going anywhere anytime soon.
i have a feeling, that these same CEOs would pick Nigeria as a better place to do business than United States...just because they get to pay a few bucks less in taxes
…at the expense of the rest of the world. If you built a perfectly legal way for companies to get billions of dollars of income into the US tax-free and all it requires is a holding company on your island, you can be sure that you're going to be a profitable little island in short order.
Do you really think they would still have the world's highest GDP per-capita income with a 0% tax rate if major international companies were somehow not able to exploit it?
If the rest of the world was smart they would prevent that tax arbitrage by eliminating corporate income tax, and increasing taxes on corporate owners (shareholders) to make it revenue neutral. This would increase growth by preventing corporations from wasting resources on tax avoidance.
Why do you think wealth is a zero-sum game? Just because one country benefits economically means other countries have to lose? The pie is not fixed. It grows bigger when economies grow.
I don't think wealth is zero-sum. That doesn't mean that wealth cannot be transferred. In this case I believe that international companies and Bermudians gain and the average US taxpayer loses. I am more sympathetic to the average US taxpayer. I have no idea what the sum is.
You seem to be arguing against an idea of what I am saying rather than what I am saying. Let's just agree to disagree and leave it at that.
That's simply not the case because U.S. taxpayers can buy goods and services at cheaper prices. Sure, they might lose out on tax revenue, but their consumption -- and accordingly, standard of living -- grows because they can spend more on more goods. GDP grows as a result.
Learn some econ. Trade isn't zero sum under specialization, but that's not what's going on. This is just shuffling income around to wherever some shyster of a lawyer has figured out a way to avoid paying taxes while still enjoying the benefits of operating in countries where people and corporations do have higher tax burdens, and it is zero-sum.
I have a PhD in Economics, and any economist will spot holes in your argument immediately. It's not shuffling money around. When a country can produce goods and services at a lower cost, another country can buy those goods and services at cheaper prices. Thus, both countries benefit and their economies both grow as a result. This is simple, basic economics.
The benefit has nothing to do with trade, though. It happens simply because taxes are lowered. We could grow the economy in exactly the same way by just eliminating taxes on corporation A, without the corporation moving to Bermuda. Therefore, we may view the moving aspect as zero-sum.
He's not setting up a straw man argument; the original article is a poll of 500 top CEO's asking which state they prefer and he's saying the results are not surprising. He's not trying to refute the results of the poll.
In fact, it looks like you're now starting to set up a straw man by bringing in property rights and economic freedom which are so general and irrelevant to the article as to be nothing more than a dog whistle.
No. He's using Nigeria's tax system as the only basis for choosing the best place to locate one's business. Many other factors contribute to a a CEO's preference.
Countries with the highest economic freedom scores in the world have the highest GDP per capitas in the world. That's factual proof that friendlier economic environments make better businesses, which benefit workers who receive the highest incomes in the world. Hong Kong and Singapore are great examples.
Absolutely agreed. Social, political, and moral issues are just red herrings. Workers only care about two things: 1) How much they make and 2) How much economic freedom their employers have.
Please, read some econ besides at heritage or cato. The correlation is not that strong, see [1] and specifically [2] [3] and [4]. [2] demolishes your argument -- look at the horizontal spread in the developed countries. These indicators are hard to measure, too; for an alternate measure, look at [3]: examine the vertical distance between Portugal and Australia. Or, if you prefer, in the middle of the graph between Ja/UK and Ireland. Or on the right side between NZ and the US. It's safe to say that economic freedom doesn't correlate all that well with GDP, not to mention that correlation neq causation.
Not to mention for every Singapore there's an Ireland to match.
This is getting a little absurd trying to argue with you since it seems like I would have to break down economic concepts to you because I know you do not come from an economics background.
Any economic index, regardless of its source, will show that freer trade shows more economic growth. Singapore surpasses Ireland in terms of economic growth; also, Ireland adopted more free market principles to achieve its growth when it started to privatize its industries. All the countries you mention that have high GDP per capita and high GDP growth have high economic freedom scores.
Trying to argue against freer trade for economic growth is like trying to argue with someone who says the Earth isn't round. China, India, Poland, Russia, etc., etc., grew their economies rapidly by moving to privatization and eliminating barriers to trade. Economists across the aisle support free trade; for example, read Paul Krugman's views on free trade in his Wikipedia entry (or research Goolsbee's, Geithnner's, Stglitz's, DeLong's, Sach's, Summers', etc, etc, etc, -- not to mention the plethora of economists' from across the other aisle -- views on free trade's effects on economic growth). This concept is not even debated anymore among the world's leading economists.
I would like to see methodology on this. If Calif. and Texas CEOs were merely asked "rate your tax policy environment, work force quality, quality of living etc in your home state on a 1 to 10 scale" and then the results were compared across states, then the study would be filled with bias based on the respondent's frame of reference (e.g. in their mind they could be comparing/weighing their own state against number of variable things that need to be controlled for).
A study asking them to rate tax policy in each of 50 states would also be inadequate since the average CEO probably does not have enough knowledge to answer that question about all 50 states.
California is lawsuit friendly, has high taxes, very expensive to live, has high cost of talent, is saturated with competitors for the same talent pool thanks to the SV, and has poor public transportation.
I live here but if you just took a raw numbers, by simply moving your business to dallas you can improve your bottom line by about 30 percent. But then again who wants to live in Texas anyway? I'd do Florida though! :)
Poor public transportation, compared to which of the states that did well on the survey?
I grew up in Durham, NC and went to college in Texas. Everybody drives in both places. Now I live in SF and take the train every day to Stanford. Transit here could be better to be sure, but it could be a lot worse.
I was talking about public transportation in absolute terms not relative (because for anything someone complains about one can always find something worse - that isn't justification, inadmissible as evidence in court and unacceptable to me ;) ). Yes, you are lucky my friend, you have landed in the lap of California’s finest public transportation system. I love it too (when I visit). Unfortunately its impact is small when you’re talking about the state of California and therefore cannot give it state-level credit (everywhere else in California public transportation sucks like NC).
Florida's weather is a problem (hurricanes really _do_ disrupt business). Texas, north of Houston (which has extremely humid summers), is very nice. If you worry about the educational system then put your children in a private school.
CA's educational standards (as well as other standards) cannot be maintained in the long run: the political system won't allow it. Within a few years we'll see significant downsizing of CA government and government services. For some this will be a lowering of standards but it is necessary.
I'm biased - my fiancé wants us to live in Miami (her hometown). You can buy a place in Miami under $300k that does not suck – nice 3 bdr place in a nice neighbourhood or a 2 bdr ocean side condo (look it up, I was shocked), really! By Cali standards that’s l-o-w!!
I was talking to a friend of mine a few days ago and we were talking about the best place to live in the US. We were thinking in terms of a) reasonable cost of living (a million dollars should buy a mansion not a house), b) good weather (all four seasons at worst - no harsh summer/winter), c) low crime rate, d) high average IQ (no 'steel towns'), e) not under the constant threat of natural disasters and f) race not an issue (I don’t back down from racists which makes my fiancé nervous and ruins my day a bit ;)).
I have lived in the Pacific NW (rain sucks! I often joke I'd rather be in prison ;)), lived in So Cal (traffic sucks, homes cost way too much, the crowd is whack mostly, the air quality is bad, nothing is close etc.), short stint in Chicago (living there despite the weather is an act of arrogance against Mother Nature).
Long story short we concluded the best spots are 1) Denver, 2) San Diego, 3) Atlanta, 4) Salt Lake City.
If you have heart disease in your family (I do), don’t move to Denver. I’ve been told high altitudes are bad for heart patients (even future heart patients like myself.)
(Atlanta native) I agree with you about Atlanta on everything except 2 things.
1) The weather here can get kinda crazy. Schizophrenic even, one day it could be 80, then 50 or 30 then 70. Mostly when the seasons change, and it can get really hot 80+ all summer (which I personally love as a southern native. I just spent at summer in California last year and found out that alot of people don't though). And in the winter we have a few really cold days but its mostly 30s.
2) If you are living in the suburbs crime rate is low to negligible, the city is another story.
But aside from that on cost of living, tolerance, etc. you are very correct.
We were trying to avoid harsh climate - like Chicago winters or Miami summers. I'd rather deal with 'schizophrenic but cut off before the extremes' spikes than constant, months long punishment.
Look for a place in Marietta, Alpharetta, or near Emory's campus (Druid Hills i think they call the area) for the nicest places to have homes and Midtown and Atlantic Station for the nicest condos (in the city, we just call it downtown here).
The talent to company ratio is much lower in California vs. say Texas (can be proven by the number of foreign worker visas petitioned by California companies as a ratio of its population).
I'd rather have (near) first picks from the University of Texas Austin, than third or fourth round picks from Stanford.
The top 10% of a top tier school beats trying to compete with Google, FB, MS and every known tech company in the world while being in the Valley, or paying for huge relocation costs to bring people in from other states or countries while being under the constant threat of them being picked out by recruiters for other companies.
I wonder what the correlation looks like between these rankings and an objective measure of business activity, like per-capita GDP of the states, or total business revenues. Eyeballing it, it looks like a negative correlation: their top-5 states are all poorer than the national average by per-capita GDP, while 4 of their 5 "worst" states are above the average (Michigan is the exception).
So the CEOs are either predicting future changes, or mistaken in their analysis of what's good/bad for business. One way to distinguish those two cases would be to look at an older survey and see how the rankings fared as predictions of future state prosperity.
It's almost as if people prefer not to have poisoned water, air, and land; to eat safe food without chemicals; to not ingest carcinogens; etc. This is a real pain for polluting corporations, yes.
Makes me feel better about staying in Austin as opposed to moving to California. I know there is less talent and risk capital here but UT-Austin is a big school with some great talent. For example, there's a bunch of honors program students that choose UT over other schools for scholarships, proximity to home, and lifestyle. In terms of risk capital, if you can't find an investor in Texas then raise capital in California and come back to Austin :D
It's not a matter of viewing them as an adversary, it's a matter of balancing your interests with the interests of the company.
A company attempts to maximize profits while reducing labor costs. An employee attempts to maxamize profit from their labor, which is a fairly static quantity.
New tools can come out that enhance productivity, but that only sets the baseline productivity that much higher. Wages rarely increase to match a jump in productivity.
Does the increase in productivity actually come from the employee or the infrastructure around the employee, developed and paid for - at financial risk, by the employer? If it's the latter, shouldn't the employer and the investors who took the risk on achieving the productivity gains receive the reward?
For most of the last century, wages and productivity — the key measure of the economy’s efficiency — have risen together, increasing rapidly through the 1950’s and 60’s and far more slowly in the 1970’s and 80’s.
So in this regard, Turing_Machine is indeed correct that wages have historically followed increases in productivity. My remarks were imprecise, the word rarely should have had an asterisk to a footnote that states that rarely means within the last decade or so.
But in recent years, the productivity gains have continued while the pay increases have not kept up. Worker productivity rose 16.6 percent from 2000 to 2005, while total compensation for the median worker rose 7.2 percent, according to Labor Department statistics analyzed by the Economic Policy Institute, a liberal research group. Benefits accounted for most of the increase.
The BBC had an excellent graph that displays the trend over time.
The authors of the EPI report argue that low minimum wages, weakened union power, and the loss of both blue and white-collar jobs to off shoring do much to explain the jobs picture.
Which leads us back to why Texas is popular right now. Most of the news articles are from the viewpoint of workers, discussing it in a negative connotation. I'm sure you can find other publications from the other viewpoint, that labor is getting cheaper and profits are going through the roof. Surely someone in the WSJ or The Economist has noticed.
You don't have to view your employer as an adversary to support labor protection, the same way you don't have to think your neighbor is a criminal to support your local police department. Stop it with the false dilemmas.
That is absurd I agree. I don't think that's what the OP was getting at though. Rather that higher taxes and labor protection CEOs tend to reflexively dislike (regardless of whether they are good or bad for business interests in the long term). It could be "actually good for company in the long term but the boss doesn't agree because he doesn't know what he's talking about" == "good for employee".
I wouldn't say that at all. Last January I moved from Dallas, Texas to take a job with Amazon in Seattle. Texas is a great place to work. Plus houses are affordable, and new, and large.
I worked in both places. Texas isn't bad. No income tax and cost of living is a ton lower. My salary is 30% higher but my living expenses (with less SQ feet) is a ton more and I have income tax here so proportionally I make less.
From my observations I would say so. Moved to Texas for job and find even senior Tech people are treated fairly poorly by management. And contractors even more so. That is what prompted me to post this:
http://news.ycombinator.com/item?id=2525345
As a Texan that moved to work on a startup here in SF, Texas does have things a little more streamlined. Problem is talent, resources, and support is much better for tech here. If it was purely based on business economics, Texas is a lot cheaper.
Red states are good, blue states are bad. Seeing how most CEO's are Republicans and most red states have no problem giving huge tax breaks, not surprised.Ask Jerry Jones,Texas is big on corporate welfare.
Methinks you've not seen much of Texas. Piney woods, hill country, the gulf coast, the list goes on. Just google a pic of caddo lake for one example of an extreme definitely non-desert environment. Also, i've not seen much corn nor cotton here, just an observation. So far as business goes, it should stop surprising people already, large companies which relocate from NY and CA are the norm here, have been for the two decades I've resided in Texas.
Hush! Don't tell them! Every time a post like yours goes out another company relocates to Texas.
Please emphasize the Great Texas Desert, the skyrocketing cost of hay (for feeding your horse, of course), and the dangers of rattlesnakes, wild indians, and 200-pound snapping turtles (in the few places in Texas where there is water).
Gotta go clean the horseshit off my driveway now. Later, Dude!
P.S. Texas does produce a lot of cotton and is an important state agriculturally. But it isn't particularly telling in comparison: CA produces lots of fruits!
I would attribute this to the amount of local taxes and labor laws that these states have. The "Worst" rankings are for states that have taxes and robust labor laws/strong unions.
Let's face it, they don't like Texas for their education systems. They like it because their overhead is much cheaper. Plus, East Texas is patent troll paradise.
Not that there is anything wrong with those motives, but it is useful to keep in mind.