The argument that California's policies must be bad, regardless of the fact that they've produced the strongest private sector in the country, is equally fallacious.
Its large subsidies for higher education played a significant role imo, especially during the era (up through the early 1990s or so) when they were larger. The state used to fund the UC and Cal State systems with a larger subsidy than today's (much larger if you account for population growth), and also indirectly supported the state's private universities, by providing very generous scholarships to CA high-school students with good grades, if they chose to attend any in-state university, public or private (the old CalGrants program, which still exists in name, but with much reduced scope).
The "ton of taxpayer money spent on higher education" policy doesn't fully account for the highly qualified employee base and large number of university-research spinoffs and collaborations, but I think it probably accounts for some of it. Interestingly, Texas is another example, despite otherwise being more small-government than California: it imposed an oil-and-gas extraction tax in the early 20th century, with a significant portion of the revenues legally required to go to the state-university trust fund, which in part accounts for the strength of the UT and Texas A&M systems, and the high-tech concentration in Austin.
The policies, good or bad, coexist with the country's strongest private sector, but that doesn't mean they caused it.
I'm pretty sure that this is not true, I'm just emphasizing your point of not reading into it that much. Pretty much any theory you want could be proved from two seemingly related pieces of data.(broad generalization I know.)
It's an open question. California's private sector may actually enable bad government. Some of this is just geography - california has some huge advantages (quality of life) that means people will put up with a lot to live here.
As for government... well, one thing the state gov't did a long time ago was fund an extremely strong system of public universities, a move that continues to pay huge dividends, both in terms of educating large numbers of native-born californians as well as drawing in highly productive people from the rest of the world. I think that to some extent, california is coasting on past investments here, since the amount the state contributes to UC has been declining.
But it would take a lot to wrest high tech away from a region that has stanford, berkeley, and UCSF. So to some extent, you could say california gets away with some very bad decisions because it also made some very good decisions.
California cannot survive without some combination of:
-Huge Spending cuts
-Huge Tax increases (which, if overdone, may result in less tax revenue.)
-Federal Gov't bailout.
You can play cause and effect all you want, but basic arithmetic is really all that matters.
> Also rich people and corporations are leaving the state
> and poor people, mainly Mexican immigrants, are moving
> in.