Sleeping your way to the middle

I wrote yesterday on the race to the bottom — how corporations play states, and even cities, off one another in pursuit of the most lucrative benefits. At the same time, they complain about the burdensome taxes and regulations of California. But, as my colleague Martin Kenney so nicely notes in a recent column,[1] California seems to be holding its own in spite of playing hard to get. 

• On education: “Despite serious problems in the K–12 system, according to the most reputable global university ranking index, California has three universities in the Global Top 10… and a total of ten universities in the global Top 50… The closest competitor nation is the UK with five universities in the Top 50 and the closest state is New York with four universities in the Top 50”

• On intellectual property: “In 1998, California was the home of 19.6 percent of all the [U.S.] inventors being granted a patent. In 2011, [that] share had increased to over 25.9%. Moreover, only inventors in Japan and Germany file more patents in the U.S. than did those from California.” 

• On university-based startups: “In addition to the well-documented case of Stanford spin-offs [e.g., HP, Sun, Cisco, SGI, Yahoo, Google]… Nearly all of the major biotechnology firms including Amgen, Chiron, Genentech, Hybritech, and many others have roots in University of California campuses. In electronics, UC-related firms include Cadence, Broadcom, Digital Instruments, Qualcomm, Sun Microsystems, Sybase, and Synopsys, to name a few of the most famous…”

• On investing in new startups: “In the early 1990s, Silicon Valley received slightly over 30% of the VC invested annually in the US while California regularly received approximately 40 % of the total venture capital disbursed nationally. For the first three quarters of 2012, California received 54% of the national total and Silicon Valley received 41% of all US VC investment.”

• On company success (in the form of IPOs): “Of all emerging growth firms (defined as an entrepreneurial firm less than 15 years old at the time of the IPO) that listed on US markets between 2006–2010, California was the home to nearly 35 % of all new listings and 46% of newly listed firm that had received venture financing.”

• On building regional economies and communities: Aside from the Silicon Valley, there’s also Hollywood (and the connections between them that run from Disney’s first order for eight oscillators from Hewlett-Packard in 1938 to Disney’s acquisition of Pixar, which spun out of Industrial Light & Magic) and the wine industry (and its close and historic ties to UC Davis). 

And speaking of Hollywood… when Michelle Pfeiffer was just getting successful as an actress, rumors spread that she was sleeping her way to the top. She supposedly responded, “Nobody sleeps their way to the top. You can only sleep your way to the middle.”

Cities and states trading their tax revenues for low-wage jobs (and short term tenants) are — at best — sleeping their way to the middle. If the local and state political leaders can look past the next election, or even the next press release, they may find the long view demands higher expectations from corporate partners, but brings smarter growth as well.

[1] Martin Kenney, “California’s unrivaled capacity for innovation,” San Francisco Daily Journal, 11/27/12