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Has So-Cal Lost Its Mojo?

I'm at the Milken Institute State of the State Conference, and the state of the state in California isn't good. Pimco's Bill Gross refers to our way of managing money as "Doo Doo Economics".

Next year, however, we will elect a new Governor, and each candidate believes he or she can fix things.

Miracles do happen.

But there is one sign of real change in California—the power is shifting north.

For most of the last half century, the Governor's mansion has been occupied by Southern Californians, nearly all of them Republicans: Reagan, Deukmejian, Wilson, Davis, Schwarzenegger.

Golden Gate Bridge
Photo by: Thierry
Golden Gate Bridge

Only the father and son team of Pat and Jerry Brown came from Northern California. Northern California was the Golden State's first power center, thanks to the gold rush.

Last century, power shifted south with the growth of the defense industry and a little business called Hollywood. Sure, tech in the Silicon Valley made a good run and recapturing the state's center of gravity, but that boom went bust.

Now, however, tech has made a comeback, and it's also nurtured a new generation of political hopefuls: Ebay's Meg Whitman, Insurance Commissioner Steve Poizner, former HP CEO Carly Fiorina (who is contemplating a run for Senate). Interestingly enough, all three are Republicans. The Silicon Valley is not what I would call a conservative stronghold. Perhaps liberalism has morphed into libertarianism there—government should help entrepreneurs, or get out of the way.

The other gubernatorial candidates also hail north of California's Mason-Dixon line (which I draw north of Paso Robles and Bakersfield). Jerry Brown is back, and also vying for the job is San Francisco Mayor Gavin Newsom, along with former US Congressman Tom Campbell.

Not a single southerner on the list. I'm sure there are minor candidates from down south who will file to run, but the answer is clear: the north will win this war. Tech has rallied, while So Cal's dependence on real estate and, well, a bunch of other industries, has lagged.

Will the power shift last? "I think it may just be a blip," says State Controller John Chiang (whose home is in Southern California). Ross DeVol of the Milken Institute points out that while the candidates hail from the north, "look where the go for fundraising." South. This is still where the money is, and that has to count for something. Will the south rise again?

Correction: This post has been updated to include Mr. Campbell's correct title.

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