California Population Trickles Up Amid AI Boom

The Samsung vice president of product management unveils new flagship Galaxy phones packed with artificial intelligence features at a media event in the Silicon Valley city of San Jose, Calif., on Jan. 17, 2024. Glenn Chapman/AFP via Getty Images

Commentary

A possible ray of sunshine for the Golden State: It looks like California’s overall population exodus has ended. It comes just as artificial intelligence (AI) is booming in a new rivalry with communist China.

On April 30, the Department of Finance announced the tally increased by 67,000 in 2023. There are now 39,128,162 Californians enjoying the fun in the sun.

“People from across the nation and the globe are coming to the Golden State to pursue the California Dream and experience the success of the world’s 5th largest economy,” enthused Gov. Gavin Newsom. “From the Inland Empire to the Bay Area, regions throughout California are growing—strengthening local communities and boosting our state’s future.”

The reversal also takes away a stain on his record that could be used against him in a 2028 presidential run. Now he can blame the 2020-22 yearly declines on COVID, even though other states grew despite suffering deaths from the disease. Rivals Texas and Florida saw their populations continue to rise much faster in 2023, by 473,453 and 365,205, respectively.

The 67,000 California increase also was a rise of just 0.17 percent. Compare that to the 1980s, when the population rose from 23.7 million in 1980 to 30 million in 1990. That was an increase of 6.3 million for the decade, averaging 630,000 year. In 1987, the year I came here, it rose by 700,000 to 27.8 million, or 2.6 percent.

The 1980s were a fantastic time in California—almost like the 1960s, but without the Vietnam War raging and campus protests, which we have again. The Proposition 13 tax cuts from 1978 set the stage for low-tax economic growth. They were followed by the 1981 and 1987 national tax cuts by President Ronald Reagan, formerly California’s governor. George Deukmejian, governor from 1983 to 1991, kept state taxes low in the spirit of Prop. 13.

Housing still was fairly inexpensive, although interest rates began the decade higher than 20 percent, as President Reagan and Federal Reserve Board Chairman Paul Volcker wrung the 1970s-era inflation out of the economy. In 1983, national economic growth soared at 7 percent.

President Reagan’s defense buildup to counter the Soviet Union’s immense military especially powered Southern Californian’s aerospace industry, providing good, high-paying middle-class jobs to hundreds of thousands.

No wonder, Apple, Intel, Oracle and other high-tech companies flourished in an environment of low taxes and regulations.

10-Year Exodus

Another measure is “net domestic migration,” meaning circulation among the 50 states. During the decade of 2013-22, California lost a net 1.84 million people to other states. Only New York was worse, losing 1.97 million.

However, that also seems to be ending. According to the Finance Department report, “Net migration from California in 2023 dropped in two years to roughly one-fourth of its rate in 2021.”

Manhattanization and Sorting

It was inevitable California’s population decline would reverse. The U.S. population overall keeps increasing every year, by 1.6 million overall last year, and not all of them are going to Texas and Florida.

There’s also what I wrote about in my January Epoch Times article, “Manhattanization of California Advances.” I noted how people moving to the Big Apple don’t expect quiet streets and low taxes. In fact, New York City’s 14.8 percent combined state and city top income rate is the only one in the country higher than California’s 14.4 percent, where most cities have no income taxes.

People go there for the work in the publishing or finance industries. Or they like the electric atmosphere, the museums and concerts and Broadway, and think, as Frank Sinatra warbled, “New York, New York ... if you can make it there, you can make it anywhere.”

In a similar way, California still offers much, beginning with the incomparable balmy weather. Then there’s Hollywood, Disneyland, Orange County’s world-leading medical devices industry, and surfing.

AI: Silicon Valley vs. China

And let’s not forget Silicon Valley. It’s still the Shangri-La of the global high-tech industry. As it has been since Bill Hewlett and David Packard founded their company in a Palo Alto garage in 1939.

From Intel releasing its 4004 microchip in 1971, to the late Steve Jobs unveiling Apple’s legendary Macintosh in 1984, to the amazing boom of the internet in the 1990s, to the iPhone’s release in 2007, to the mushrooming of social media in the 2010s—almost all of it, except some offshoots such as Microsoft in Redmond, Wash., was centered in Silicon Valley or its neighbor, San Francisco.

California’s government budgets benefitted from all of that—albeit suffering the boom-bust cycle of massive surpluses followed by massive deficits that mirrored the ups and downs of Valley stock prices. Which we’re going through once more this year with a state budget deficit estimated at as much as $73 billion.

Now California is lucking out again. Just when it seemed there was nothing new to invent, along comes AI. In the past, Japan and recently South Korea provided some competition for Silicon Valley. This time, the top rival for AI is much more serious: communist China, with its raw production capacity and vast armies of engineers.

But Beijing lacks something possessed by Silicon Valley: the American spirit of freedom, exploration, and reckless innovation. It’s a Midwesterner like Robert Noyce leaving Iowa and founding Fairchild Semiconductor in 1957 and Intel in 1968. It’s Mr. Jobs founding Apple in 1976 in the garage of his adoptive parents with his pal genius engineer Steve Wozniak. It’s a hundred thousand nerds today working in corners of the Valley and San Francisco, hoping to make it big with AI.

Signs of Recovery

Instead of startups in garages, now it’s “hacker homes.” Mind the Bridge reported, “Silicon Valley and San Francisco are (as usual) leading the pack on the innovation movement, with 2,101 AI scaleups that raised $143.7B in total.
Therefore, it does not come as a surprise that Open AI’s president Sam Altman has called San Francisco ‘the best place to start an AI company.’ A new zone designated ‘Cerebral Valley’ or “HAIyes Valley” (with hacker houses operated out of historic Victorians near Alamo Square) is attracting AI startups from across the country, and expanding AI companies are growing their office footprint in the City.”

Given how the Russia-Ukraine War rapidly has developed AI weapons, along with China’s AI military threat, the U.S. military and intelligence agencies also will be investing many more billions in Silicon Valley and Cerebral Valley.

Young geniuses aren’t going to care much about paying high California taxes to be at the center of the AI universe. But as in the 1980s, it would help if taxes and regulations were cut to turbocharge the boom—and to help the rest of us who are just plain middle-class folks trying to keep our heads above water in this expensive place.

Finally, it’s ironic those who most benefit from America’s capitalist economy, California entrepreneurs, are among the most left-wing people in the country. Maybe, like Elon Musk, now longer a resident, some of them will realize what’s really going on and lead a 1980s-style restoration.

With the Beijing AI train coming right at us, we’re going to need it.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.