Hey everybody, Peter Zion here. This one is on California. Yep. Now, California has been one of the most successful economic cases in the United States for the last four decades, for a mix of reasons that are largely beyond the control of California. The first one is immigration. natural population growth, even among migrants in California has been negative for some time. And it is only been with large scale inward international migration that California has continued to grow in terms of population, we want to the millennials, one of the things that we saw when the millennials came of age in the 2000s, and the 2010s, is they wanted a urban coastal experience. And California, LA San Francisco, were some of the big beneficiaries of that. So you’ve got millennials, going from the middle of the country to the coasts, and La thrived in that sort of environment, it was still not enough to overcome in internal population decline. But having this constant influx of people in their 20s, and then later in their 30s, really helped with tax rates really helped with the labor force. You put these two things together, and then you apply the third factor, which is capital availability, and you get a very different economic model. One of the things to remember about capital availability is it’s determined by the number of mature workers, you have visa vie the rest of the population. Basically, when you’re in your 20s, and your 30s, you’re borrowing a lot to fund consumption for college for raising kids, for buying homes and whatnot. That capital comes from people who are their late 40s, to early 60s where the kids have gone away. And they’re at the height of their earning experience, but their expenses have gone down. So that has been the baby boomers since roughly 1990. And it’s generated a capital environment, it’s been a wonderful, this has been great for economic development for a lot of regions, a lot of states, a lot of countries. But in California, when it came together with those millennials that were influencing, we got the tech sector, because what is technology except imagining things that don’t yet exist. And in order to make the future happen, you need two things. Number one, you need a huge number of people in their 20s and their 30s, to do the imagining to do the design, because it make the prototype to figure out how to operationalize it. But that entire process from idea to operationalization, that generates no income. And so you have to have a lot of cheap capital to pay those people and to pay for the work. Well, that has been the environment in California for the last 25 years. And so we get Silicon Valley. And then fourth. And finally, California has been the gateway to the United States from East Asia in two ways, number one, California with the tech sector with all of that imagining as designed new processes that could be applied to new manufacturing in new new locations, whether that’s Japan, Korea, China, Vietnam or the rest. And so part and parcel, the American D industrialization process under globalization has been made possible by the ideas generated in Silicon Valley. And then California makes money on the other side of things. Because as these products are coming back into the United States, a lot of them go through the Port of Long Beach. So California is the first landfall. Well, folks, all four of these trends that have made California California have now flipped. The American political system, both left and right has turned to anti migration. People forget that the most anti migrant group in the country is first and second generation Mexican Americans who see themselves as having crossed the right way. And everyone else need me to stay on the other side of the border in California, populations of Hispanics coming in from the south has been the single largest source that has now turned flat to negative. In fact, overall migration from the south across the border to the North has been flat to negative for 17 years, there’s just that’s only now hit California. Number two, the capital situation has changed dramatically. The baby boomers are no longer mature workers, they’re majority retired. So capital costs have gone up by about a factor of five in the last 16 months, they’re probably going to go up by a similar amount in absolute terms over the course of the next year and a half, which means Silicon Valley, in its current form has been totally screwed by the elastic capital. And now the lack of people, the millennials are no longer in the age group where they’re seeking those formative experiences. They may be late to the party six years later than most generations to this point so far, but they are doing all of the normal things now getting married, having kids buying homes, and none of them want to do in California. And so they’re moving out of California back to the states that they’re from where to places that have brighter economic horizons, for example, Texas, and that’s why we see Texas grabbing more seats in the Electoral College of California’s extent, because the millennials are no longer better Feeding California on a net basis, they’re moving away. And then finally, there’s Asia. The Chinese system is arguably in terminal decline, their demographics are beyond atrocious. higher capital costs globally make it difficult for companies to justify fresh investment outside of their home. domiciles trade tensions are forcing nearshoring and reshoring. And the Chinese themselves have now entered into kind of a narcissistic political system that is ossified and incapable of making long term decisions or plans. That is weakening the case for exports from the East Asian sphere to the United States. California is the loser for all four of these trends. And just as all four of these trends owed nothing in the original development in the 70s 80s and 90s, to anything done in Sacramento, same with third ed. So California is going to have to reinvent itself. It’s going to have to come up with a new economic model that doesn’t require cheap capital and ample labor and international connections and high IT development. It’s going to have to do something new. Whether it can well that’s a question for different video.