Why California's Major Cities are Crumbling
California’s major cities once shaped American culture, technology, and innovation. Today, they are case studies in dysfunction. This is how San Francisco, Los Angeles, and San Diego lost their way.
California’s largest cities—San Francisco, Los Angeles, and San Diego—each claim to have shaped modern America, but their supposed influence is collapsing under the weight of their own dysfunction. San Francisco once positioned itself as the global hub of technology and finance. Los Angeles, the undisputed capital of entertainment, claimed cultural dominance through Hollywood’s global soft power. San Diego, bolstered by its military presence and biotech industry, prided itself on being California’s most "livable" big city.
Yet today, all three are unraveling.
San Francisco, once synonymous with innovation, is now a case study in decline. The city’s venture capital ecosystem and tech giants revolutionized industries, reshaped global communication, and created enormous wealth. It sold itself as the intellectual and financial core of California. But today, dysfunction overshadows influence—homeless encampments line the streets, businesses flee, and the very industries that once made the city powerful are questioning whether they should stay. Tech leaders, who once touted the Bay Area as the future, are now pouring money into Austin, Miami, and Denver instead.
Los Angeles, meanwhile, has never been a city of substance—only spectacle. It thrives on the illusion of influence, selling the world a curated fantasy of wealth and status. But behind the palm trees and movie lots, L.A. is a decaying metropolis of skyrocketing crime, crumbling infrastructure, and worsening inequality. The entertainment industry, once its great economic engine, is bleeding jobs as productions relocate to cheaper, business-friendly states. Hollywood no longer dictates culture. Decentralized content creation—independent creators, influencers, and streaming platforms—has shattered its monopoly, leaving the old studio system increasingly obsolete. Like San Francisco, L.A. clings to its past relevance while failing to provide even basic governance.
And then there’s San Diego—the city that markets itself as the last "functional" major city in California. For years, it sold an image of pristine beaches, economic opportunity, and a balance between urban life and nature. But scratch the surface, and San Diego’s reality looks much like its neighbors: a housing crisis that has priced out the middle class, skyrocketing homelessness, and a growing reputation as a city where only the wealthy can afford to buy—whether retirees, vacation-home investors, or L.A. transplants escaping even worse dysfunction. The biotech industry, once its crown jewel, is already looking elsewhere as California’s business climate worsens.
This is the central myth of influence—the belief that past greatness ensures lasting relevance. California’s largest cities shaped industries, culture, and policy, but influence alone isn’t enough to sustain them. A city that cannot govern itself, cannot hold onto its people, and cannot adapt to new realities is not a city of the future. These cities are relics, clinging to the myth of their own importance while the rest of the country moves on.
San Francisco: From Influence to Instability
San Francisco built its reputation on finance, venture capital, and cultural sophistication—offering a deeper, more established legacy than Southern California’s obsession with wellness and image. Unlike Los Angeles, which thrives on entertainment-driven influence, San Francisco projected intellectual depth and financial power. It was the city where fortunes were made not through spectacle, but through innovation, risk-taking, and the kind of visionary thinking that defined industries.
For decades, the Bay Area dictated the direction of global technology and finance. From the rise of investment banking in the early 20th century to the explosion of venture capital that fueled Silicon Valley, San Francisco’s influence extended far beyond California. The city was the financial engine behind the startup economy, a place where capital and talent converged to build the next great company. Unlike the Hollywood elite, who sold fantasy, San Francisco’s elite built reality—designing the digital infrastructure that would reshape the modern world.
But what happens when a city built on influence begins to unravel?
Tech leaders are no longer tethered to San Francisco the way they once were. Remote work, punitive taxes, and aggressive regulation have eroded the city’s appeal, forcing even the wealthiest firms to reconsider their loyalty. The very people who once championed San Francisco as an intellectual and economic powerhouse are now leading the exodus. Companies once synonymous with the Bay Area—Tesla, Oracle, and Hewlett-Packard—have either relocated or dramatically scaled back their presence, favoring states with fewer constraints and lower costs. Venture capital, the lifeblood of the city’s economy, is no longer confined to Sand Hill Road, with investors increasingly funding startups in Texas, Florida, and even Europe.
The shift is not just economic—it’s cultural. The San Francisco that once attracted the world’s brightest minds with promises of innovation and upward mobility is now infamous for deteriorating infrastructure, rising crime, and an inhospitable business climate. Once a city where ideas flourished, it has become a place where bureaucracy stifles progress and where wealth is viewed with hostility rather than admiration.
For years, San Francisco’s defenders argued that influence was its greatest asset—that as long as the city controlled the flow of capital and innovation, it would remain indispensable. But influence alone cannot sustain a city. Power means nothing if those who wield it decide to leave. And as the exodus accelerates, one question lingers: if influence doesn’t create stability, does it really matter?
Los Angeles: Power Through Illusion
Paul Thomas Anderson, one of Los Angeles’ most astute cinematic chroniclers, once described the city as “a city of private fantasies connected by freeways: its real life takes place behind closed doors.” In a single sentence, he distills the paradox of Los Angeles—an expanse where ambition and self-mythology reign, yet the true lives of its inhabitants remain hidden behind walls and gates. The city’s sprawling geography fosters isolation, and its culture of reinvention allows people to craft public personas that often bear little resemblance to reality.
Los Angeles runs on illusion. It offers endless sun-drenched vistas of possibility, yet those who live there quickly learn that most of its promises are either unattainable or carefully stage-managed. The freeways—those arteries of movement—do not connect people so much as keep them apart, ensuring that the city remains an archipelago of private lives rather than a true urban collective. Wealth and fame exist here in staggering concentration, but access remains tightly controlled, leaving most on the outside looking in.
Nowhere is this clearer than in Hollywood, where influence depends not on raw talent but on the ability to construct the right image. The entertainment industry perfected the art of myth-making—not just on-screen, but in the way it controls access, careers, and power itself. For decades, Los Angeles dictated global culture through film, television, and media, exporting American ideals while ensuring that real opportunity remained confined to a select few. The industry mastered the illusion of meritocracy while operating as an exclusive club, where networking trumps ability and the right connections matter more than originality.
Yet, like San Francisco, Los Angeles’ influence is not as invincible as it once seemed. Hollywood’s grip on culture is slipping, challenged by streaming platforms, social media influencers, and decentralized content creation. Filmmaking itself is fleeing to Georgia, Canada, and parts of Europe, where lower costs and fewer regulations make production more feasible. The city that once set the agenda for global entertainment now competes with TikTok stars who don’t need the Hollywood machine to succeed.
Los Angeles still holds power as a trade hub, with the Port of Los Angeles serving as one of the country’s largest entry points for goods. But even that advantage is eroding. Automation is replacing port workers, global supply chains are shifting, and California’s relentless regulatory burden is making it more expensive to operate here. Like San Francisco, L.A.’s standing is tethered to industries that may no longer need it. And as those industries evolve, the myth of Los Angeles as an indispensable power center fades with them.
San Diego: Stability with Limited Influence
San Diego, while not an economic powerhouse on the scale of San Francisco or Los Angeles, has quietly maintained its relevance through defense and biotechnology. The city houses key military installations, research institutions, and a growing biotech sector, making it a crucial player in national security and medical innovation.
However, its influence remains highly specialized. Unlike the tech giants of San Francisco or the cultural exports of LA, San Diego’s impact is confined to its core industries. While its stability is enviable, it lacks the broad economic or cultural influence that the other two cities claim to possess.
Geographically, San Diego is in a bind. Hemmed in by the Pacific Ocean to the west, Camp Pendleton to the north, and mountains and desert to the east, its only real avenue for expansion is southward—into Tijuana. But deeper economic integration with Tijuana presents more challenges than benefits. Aside from logistical and security concerns, it would fundamentally alter San Diego’s economic landscape, tying its fortunes to a city with an entirely different set of political, economic, and infrastructural issues. Rather than looking for growth through cross-border entanglements, San Diego’s best path forward is strengthening its core industries while resisting the pressure to merge its future with that of northern Mexico. This is discussed in depth, later in the book.
The Crumbling Myth of California’s Leadership
For decades, California has sold itself as the leader of the future—the epicenter of innovation, culture, and progress. But the myth of influence rests on the assumption that leadership translates to sustainability. If San Francisco is the beacon of progress, why is it deteriorating? If LA is the world’s entertainment capital, why are studios, productions, and talent fleeing?
The tech industry revolutionized the world, but it is no longer loyal to California. Companies and entrepreneurs now have better options elsewhere, and the state’s political leadership has done little to stop the exodus. The same is true for entertainment—Hollywood remains influential, but its monopoly on storytelling is weaker than ever.
San Francisco, more than any other California city, has embodied the illusion of lasting influence. Its tech dominance made it feel untouchable. Its wealth and power made it seem invincible. But in the face of high crime, collapsing infrastructure, and economic flight, it is clear that influence alone is not enough.
California still holds tremendous economic power, but its grip on cultural and financial dominance is slipping. The dismantling of its influence was not a sudden collapse but a slow unraveling, decades in the making. The only question now is whether the state can reverse the decline, or if its influence will become just another relic of the past.
An article from The Telegraph posed the question of how California, despite its advantages, has managed to decline so drastically:
"It takes a kind of malignant genius to destroy California, but the state’s ruling elites are well on their way to ensuring its decline. If the downward spiral continues, it will stand as a testament to the variety of progressive policies that have driven middle- and working-class people, as well as numerous companies, out of the state. No place on earth came into this century with more going for it than California. It is naturally beautiful, with some of the world’s mildest climates, enormously fertile land, and creative, driven people. For decades, it was the epicenter of technology, entertainment, and space exploration: the last great Western-dominated industries.
Yet today, California suffers from some of the nation’s highest unemployment rates, the highest percentage of people living in poverty, and a massive net outmigration. The causes are numerous, but they start with climate policy. Since Jerry Brown returned to office in 2011, climate policy became not just a priority but an obsession. Virtually every major state initiative—housing, energy, economic growth—revolves around climate catastrophism and the need for California to lead the global battle against it. These climate-centric policies have disproportionately hurt working-class and minority families (about 40 percent of California’s population is Latino). The state’s highest energy prices and draconian regulations have stifled blue-collar industries such as logistics, manufacturing, and home construction. These regulations have also burdened the middle class, who pay some of the country’s highest taxes while living under one of the nation’s most prolific regulatory regimes. By slowing and even stopping new housing growth in affordable areas, California is now home to seven of the ten least-affordable housing markets in the U.S."[1]
This decline is a direct result of policies that fail to acknowledge economic realities. While San Francisco remains the undisputed economic powerhouse of California, it is also the epicenter of the state’s dysfunction. The irony is that a city responsible for shaping modern innovation is also struggling under the weight of policies that undermine its economic viability.
If California fails to correct its course, it risks losing its greatest asset—the very industries that made it a global leader in the first place. The state’s regulatory and taxation policies are already driving talent, investors, and businesses elsewhere. If venture capital and the technology sector begin shifting to friendlier economic environments, California’s decline will accelerate.
Despite its flaws, California still has a chance to turn things around. But doing so requires a fundamental shift—one that prioritizes economic growth, innovation, and business-friendly policies over ideological experiments. At the very least, the state must preserve its economic foundation. Put simply: protect venture capital and technology. It cannot rely solely on tourism. As long as those industries remain intact, the state can still afford to be zany and upside down.
As I’ve stated before, politically, California is lost indefinitely, but it cannot afford to undermine the very industries that sustain it. I may loathe California’s politics, but I am doing my best to analyze this situation and present a clear consensus.
The future of California depends on whether its leadership can recognize what made the state successful in the first place. Until then, its decline will remain a cautionary tale for the rest of the country.
[1] Joel Kotkin, "Gavin Newsom Turned the California Dream into a Woke Nightmare," The Telegraph, January 30, 2024.
This article has been adapted from my new book: The Myth of California. The Amazon Kindle version is available now. The full book, paperback and audiobook will be released June 6th.
Endorsements for "The Myth of California"
"California was once America’s “Promised Land” where people flocked to find gold, good weather, and opportunities in everything from movies to manufacturing. It was the agricultural epicenter of the world, known as the “salad bowl” of the planet. But decades of leftist leadership has destroyed everything but the weather. It’s become “Paradise Lost” with homelessness, unanswered crime, and choking tax rates and regulations causing people to flee in stunning numbers to get to places where their families can live without the boot of big government on their necks and cultural cuckoos setting the atmosphere of the lifestyle. Chad Hagan details what happened in his riveting book, “The Myth of California: How Big Government Destroyed the Golden State.” It’s the tragic story of how the irrational left destroys everything it touches and how one state exchanged its gold for garbage.
- Mike Huckabee, Former Governor of Arkansas, Bestselling Author, and U.S. Ambassador to Israel Nominee
"My father was a car salesman in a town of 800 people in Northern Minnesota. He had one vacation in his working life, and we took a trip to California. He had a friend who had settled in Carlsbad years earlier and wanted to visit. I was 10. My brother was 11, and our sister was 7. We were in awe. It was a modest home, beautifully maintained, with a yard full of fruit trees. We picked oranges and ate them in the yard. We had grapefruit off the trees for breakfast. I dreamed of moving to California for years. No longer! Chad Hagan’s book, The Myth of California, will make you disappointed, infuriated, and then just plain sad. It is a cautionary tale about how politicians can destroy a paradise in one lifetime. Ultimately, unchecked political power serves only itself. The citizens are included only to pay the bills. It is also a testament to how the crazies run the world. Most of us just want to go to work, come home and relax, and build a family and life. The crazies don’t think that way. They are loud, and they vote. Ultimately, politicians whose only interest is in power, cave in to them. (A government permit needed to wear heels taller than 2 inches in Carmel? Spare me!) As Californians now flee in droves, the stories they tell disabuse us of any notion of paradise. This book does that in spades. Read it!"
- John Linder, Former U.S. Congressman (GA-7)