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Why are so many software engineer jobs in California, the highest cost of living state, and not in the lowest cost of living state with lowest taxes then? You

Why are so many software engineer jobs in California, the highest cost of living state, and not in the lowest cost of living state with lowest taxes then? You overlook the value of regional nexuses, and the positive externalities can dwarf the negatives of the taxes or regulations. Ask yourself Nevada isn't Silicon Valley.

imgabe 6y ago
This is an artifact of history and where the companies that started Silicon Valley existed. California in the 50s, 60s, and 70s was a different place than it is today. It's remained a nexus in spite of the taxes and cost of living, not because of it. That doesn't mean you can raise taxes and cost of living arbitrarily high and the nexus will never shift. There is no force of nature keeping it in place, just habit and custom. We're rapidly finding out this year that we don't even need to be in a particular place to continue working together, something that has only become true relatively recently. It is dangerous to assume that things will remain the same as they always have been, regardless of other things that change. There's obviously a breaking point at which people will leave. There's a thread here almost every day now about how everyone is moving out San Francisco.
- cromwellian 6y ago
  It's also dangerous to assume that every business decision hinges on taxes. One of the extremely annoying things about politics is people constantly arguing that GDP growth is a function of some marginal tax rate here or there. The obsession with taxes overlooks so many other facts that govern success. Why isn't Sweden a hellhole? They have higher taxes than many other EU localities, but have a more vibrant startup economy. The artifact that created Silicon Valley was the University of California system, and the location of military and national labs, a nexus of government and academic R&D, with a ready and waiting STEM labor force. It was not because it was a tax and regulatory haven.
  - imgabe 6y ago
    The academic and military labs were definitely big factors. There's also: - California doesn't enforce non-competes - which allows people to leave and form new companies. The "traitorous eight" are as much part of the founding mythos of SV as the acadmic/military labs. That is a regulatory decision. - Founders and early employees get paid largely in stock or stock options, which are taxed less than salary. This provides them with capital to become angel investors in new companies and provide not only funding, but mentorship and connections. That's partly a consequence of the way capital is taxed. If you start taxing capital so that founders aren't left with enough to become investors, you'll break that feedback loop.

imgabe 6y ago

This is an artifact of history and where the companies that started Silicon Valley existed. California in the 50s, 60s, and 70s was a different place than it is today. It's remained a nexus in spite of the taxes and cost of living, not because of it. That doesn't mean you can raise taxes and cost of living arbitrarily high and the nexus will never shift. There is no force of nature keeping it in place, just habit and custom. We're rapidly finding out this year that we don't even need to be in a particular place to continue working together, something that has only become true relatively recently. It is dangerous to assume that things will remain the same as they always have been, regardless of other things that change. There's obviously a breaking point at which people will leave. There's a thread here almost every day now about how everyone is moving out San Francisco.

cromwellian 6y ago
It's also dangerous to assume that every business decision hinges on taxes. One of the extremely annoying things about politics is people constantly arguing that GDP growth is a function of some marginal tax rate here or there. The obsession with taxes overlooks so many other facts that govern success. Why isn't Sweden a hellhole? They have higher taxes than many other EU localities, but have a more vibrant startup economy. The artifact that created Silicon Valley was the University of California system, and the location of military and national labs, a nexus of government and academic R&D, with a ready and waiting STEM labor force. It was not because it was a tax and regulatory haven.
- imgabe 6y ago
  The academic and military labs were definitely big factors. There's also: - California doesn't enforce non-competes - which allows people to leave and form new companies. The "traitorous eight" are as much part of the founding mythos of SV as the acadmic/military labs. That is a regulatory decision. - Founders and early employees get paid largely in stock or stock options, which are taxed less than salary. This provides them with capital to become angel investors in new companies and provide not only funding, but mentorship and connections. That's partly a consequence of the way capital is taxed. If you start taxing capital so that founders aren't left with enough to become investors, you'll break that feedback loop.