This week, Disney announced that it planned to downsize about 28,000 workers in its California U.S. parks division after failing to come to a reasonable agreement with the state to keep the business open. Bob Iger, executive chairman of the Walt Disney Company and former CEO, resigned from Democratic California Governor Gavin Newsom’s economic recovery task force after receiving the state’s edict.
On Wednesday, it was reported, “Emblematic of the Covid-19-related struggles and tensions between state officials, medical professionals and businesses, Walt Disney reported that it had no other choice but to lay off roughly 28,000 employees from its Disney Parks, Experiences and Products segment.”
Disney, according to the Wall Street Journal, placed the blame on California’s government and asserted that the closure was “exacerbated in California by the State’s unwillingness to lift restrictions that would allow Disneyland to reopen.”
Josh D’Amaro, chairman of Disney Parks, attempted to reach an accommodation with the state and “begged” the legislators to work out a solution to no avail. Health officials said that the Orange County-based flagship theme park did not meet the necessary guidelines to remain fully functional. The secretary of the California Health and Human Services Agency, Mark Ghaly, said that they will soon offer guidelines for the parks—perhaps, indicating that things could possibly change in the future.
The state claimed that they are “taking a data-and-science based approach when it comes to reopening theme parks,” but couldn’t offer specific criteria that had to be met. ” Until there’s a vaccine, the most important things all Californians can do to reduce Covid-19 transmission is masking, keeping physical distance and avoiding mixing when possible,” Ghaly responded to Disney’s pleas.
The California Attractions and Parks Association, a trade group, said, “We ask[ed] the Governor not to finalize guidance for amusement parks before engaging the industry in a more earnest manner, listening to park operators’ expertise, and collaborating with the industry on a plan that will allow for amusement parks to reopen responsibly while still keeping the health and safety of park employees and guests a top priority.” It was pointed out that Disney was permitted to open parks in other locations across the world.
This is not the first time that California’s onerous rules and regulations have clashed with business leaders and companies. Back in May, Elon Musk wanted to continue producing his electric vehicles at a Tesla facility in California. After getting pushback from local officials, Musk announced that he planned on moving his operations out of California and blamed the state’s unfair, capricious and heavy-handed treatment.
Exemplifying the heavy-handed attitude of public officials, Musk’s requests were met with a rude dismissive tweet from assemblywoman Lorena Gonzalez.
Musk, similar to many other business leaders, became angry and resentful over the lack of coherent strategy from lawmakers to restart the economy. The Tesla chief executive wrote in a message to his employees, “Contrary to the Governor’s recent guidance and support from the City of Fremont, Alameda County is insisting we should not resume operations. This is not for lack of trying or transparency since we have met with and collaborated on our restart plans with the Alameda County Health Care Services Agency. Unfortunately, the County Public Health Officer who is making these decisions has not returned our calls or emails.”
Musk added, “Tesla is the last major carmaker remaining in California, and the largest manufacturing employer in the State with more than 10,000 employees at our Fremont factory and 20,000 statewide.”
According to the Hoover Institution, “California businesses are leaving the state in droves. In just 2018 and 2019—economic boom years—765 commercial facilities left California. This exodus doesn’t count Charles Schwab’s announcement to leave San Francisco next year. Nor does it include the 13,000 estimated businesses to have left between 2009 and 2016.”
The reason for the departures is pretty straight forward. “California is too expensive, and its taxes and regulations are too high.” The Tax Foundation cites California as ranking 48th in terms of business climate regulatory burdens.
It’s not just companies. Many people have decided to leave the state too. Joe Rogan, one of the most successful podcasters with his eponymous “The Joe Rogan Experience,” announced that he’s leaving the state and moving to Texas. Rogan shared his reasons on one of his shows, saying that the state is overpopulated, has a huge homeless problem, ever-increasing taxes, official are “incompetent” and mismanaged the state’s finances.
He also complained, “When you look at the traffic, when you look at the economic despair, when you look at the homelessness problem that’s accelerated radically over the last six, seven, 10 years, I think there’s too many people here. I think it’s not tenable. I don’t think that it’s manageable.’
Jeffrey Gundlach, a self-made billionaire money manager, tweeted that he may leave California to get away from even higher taxes that have been recently proposed by the state capital in Sacramento.
It’s understandable that the state needs to ensure the health and safety of its citizens and visitors. However, heavy-handed treatment by elected officials and bureaucrats, coupled with an anti-business environment, high taxes, burdensome regulations and gordian knots of red tape will only serve to drive out companies and people with the means to leave. The result will be that the remaining residents will have to bear an even greater burden of taxes and restrictions.