Silicon Valley Makes Too Much Money, and That's Why California's Government Has No Incentive to Get Better
California has been a one-party state for 16 years — not because voters want big government, but because Silicon Valley's tax payments are so generous that the government doesn't need to survive on results. Gubernatorial candidate Steve Hilton says the price is the highest poverty rate, unemployment rate and cost of living in the country.
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The argument · tap a timestamp to hear it
The rules aren't written, they're piled up every year
Hilton gives a countable form to the consequences of one-party rule: Sacramento passed 1,118 bills last year, and when he printed them out, the stack was twice his height. "Nobody's reading this" — do you think Gavin Newsom reads them all before signing? The result is that California has accumulated more than 420,000 regulations, and he promises to cut that below 200,000 within his first term. Who are the bills written for? He says for the narrow interest groups that control the process: unions, plaintiff's attorneys, and the people who donate to politicians — which is why California is the highest litigation-risk place in the country, and why starting a company in California carries a 90% chance of ending up in court. Structurally, over those 16 years Democrats took all eight statewide elected offices, a two-thirds majority in the state legislature, every big county and big city, and a 6-to-1 state Supreme Court.
— Steve HiltonThe key is that 26% of undecided voters
What he offers isn't a "Republicans flip it" story but an arithmetic problem: his internal poll at the start of the campaign was 33% firmly for him, 41% firmly for Becerra, 26% undecided. That 26% is the whole ballgame — mostly people who have voted Democratic but aren't die-hards, overwhelmingly non-college, financially maxed-out working people whose top concern is the cost of living. So the platform is all priceable line items: cancel high-speed rail, cut the government payroll by 10%, stop funding the nonprofits that make homelessness worse, and that adds up to "the first $150,000 free of state income tax"; gas goes from $6 toward $3, because the low carbon fuel standard and cap and invest add roughly 150 dollars to the price, and cap and invest money is flowing to high-speed rail; vehicle registration capped at 73 dollars, by abolishing the DMV. The polling gap has narrowed from 30 points on primary night to 8 points recently.
— Steve HiltonSilicon Valley's money removes the pressure to perform
This is the most counterintuitive stretch of the whole piece. One host cites Peter Thiel's observation from years ago: Silicon Valley is to California what a resource curse is — it generates so much wealth and tax revenue that the place doesn't need a good government, and that is also why one-party rule persists. Hilton adds the evidence: before the primary, Becerra was asked on CNN what policies he'd change given homelessness, the highest poverty rate, the highest unemployment rate, and a terrible cost of living, and his answer was that this is the world's fourth-largest economy, people still love coming to Disneyland and the beaches, so things must be heading in the right direction. Hilton's rebuttal is that the fourth-largest economy figure includes the size of the government itself — which doubled in a decade — while net private-sector job creation in California since the pandemic is essentially zero.
What worked was the content, not the AI
Spencer Pratt is running for mayor of Los Angeles as an independent and got a mountain of free media off a batch of AI-generated videos. He breaks down the mechanism himself: what actually worked was what the videos said — he went on every platform and just told the truths he knew, and then creative people across the country started throwing ideas into this "machine." "I don't think it was the AI that worked; it was just one piece of a lot of puzzle pieces." He thinks there's evidence for this: most of the people who voted for him are Democrats. He also claims that if Los Angeles's 200,000 registered Republicans had actually turned out, he would have won.
— Spencer PrattTaxpayers are paying for needles handed out in the park
Hilton and Spencer together describe MacArthur Park: last Tuesday at 10:30 in the morning, sunny in downtown Los Angeles, and in every direction you look people are smoking crack, injecting drugs, hunched over from fentanyl. The reason is that four nonprofits show up every day handing out crack pipes, needles and drug supplies, and the money comes from taxpayers. Spencer adds the follow-up: one of the needle distributors was found to be selling drugs at the same time. Hilton stresses this isn't a case of nobody being in charge — Los Angeles has a new DA cracking down on drugs and crime, and there are federal prosecutors chasing gangs and cartels — but the scene in the park is the same every Tuesday.
— Steve HiltonDo the right thing and you're punished; do the wrong thing and you're rewarded
A Latino couple in South Los Angeles ran a shoe store for 14 years. The shop was spotless, and they paid every tax, license, electricity bill and ever-more-expensive permit. They asked Hilton to step outside and look at the sidewalk two blocks away: it's entirely vendors selling shoes, clothing and T-shirts who pay no tax, no electricity, no rent, no license. That's why the couple is closing. When did it start? In the last six or seven years — in 2018 Sacramento passed a bill legalizing street vending statewide, and cities and counties have no power to regulate it. His conclusion: here doing the right thing is punished and doing the wrong thing is rewarded, and the whole situation is upside down. Spencer adds the numbers: 50,000 food vendors, a permit costs just 21 dollars, yet the city council allocated 500,000 dollars to buy them carts, while the unbuilt Palisades reservoir cover would have cost 200,000 dollars.
— Steve HiltonBallot collection is legal, so it can't be audited
Spencer's claim is that it isn't fake ballots, it's ballot harvesting, which California law allows. The mechanism has three steps: a witness signature can be a smiley face or an X; the same witness can witness 43,000 ballots, and there's no verification allowed; and once ballots reach the counting center they're separated from their envelopes, the signatures stay on the envelopes, and the chain of custody is broken — so even if you know who these people are, you can't audit it, and a recount just recounts the same ballots. The other side's rebuttal: voter fraud is a felony and is prosecuted regularly; after Trump lost last time he filed 60 such lawsuits and lost all of them. Asked directly whether he believes he lost because of fraud, Spencer's answer is "without evidence I'd say no," and he lists the 200,000 registered Republicans who didn't vote as one of the reasons.
— Spencer PrattThe empty reservoir and the reconstruction lawsuit
Spencer's house, his parents' house and his neighbors' houses all burned. Reconstruction is stuck on two things. First, that empty reservoir is still empty — even the one across from his house, the one he was sure would never burn, is empty, and Palisades is now supplied by a hose run all the way from Tanga through regrown dry brush. Second, they're pursuing a mass tort suit with 10,000 victims, naming Gavin Newsom's state parks department, the city, and the city's water and power department. His chain of allegations: on New Year's Eve there was an 8-acre fire in Pacific Palisades, state parks was supposed to monitor it per the manual and didn't, letting embers smolder into the known high-wind weather of January 6 and 7; firefighter whistleblowers told him there were visibly smoldering coals on the hillside, and state parks employees produced photos in testimony showing the hillside smoking.
— Spencer PrattIn their own words · checked verbatim
We printed it all out. I mean, I'm not that tall, but it was twice my height.
Steve Hilton6:05
One observation Peter Till made years ago was that Silicon Valley was like a resource curse for the state of California because it generates so much wealth and taxes that they don't need a good government here.
They launder all of our tax money to increase people dying on our streets.
Spencer Pratt22:18
It wasn't the AI. It was what was in these videos.
Spencer Pratt23:19
Because the taxpayers are funding the nonprofits who are handing out the crack pipes, the needles, and the drugs.
Steve Hilton28:22
we've become a state where if you do the right thing, you're punished and if you do the wrong thing, you're rewarded.
Steve Hilton31:23
Again, it's not fraud, Jason. It's that they're following the law that was created to let them do what they're doing. It's legal.
Spencer Pratt41:32
He said under $500,000 to save billions of dollars.
Spencer Pratt48:36
Figures
| Bills passed by the California legislature last year | 1,118 | 5:04 |
| California median home price vs. median individual annual salary | close to $1,000,000 / $65,000 | 10:06 |
| Governor's race polling gap | 30 points on primary night → 25 → 18 → 14 → 8 points recently | 8:06 |
| Campaign internal poll three-way split | Hilton 33%, Becerra 41%, undecided 26% | 13:08 |
| Hidden cost in the gas price | low carbon fuel standard and cap and invest together about 150 dollars | 15:11 |
| Promised cap on vehicle registration fee | 73 dollars per car per year | 16:12 |
| Registered Republicans in Los Angeles | 200,000 | 24:19 |
| Plaintiffs in the Palisades fire mass tort suit | 10,000 victims | 48:36 |
Glossary
- ballot harvesting
- Third parties collecting and submitting other people's ballots; legal in California, but paying per ballot is not.
- resource curse
- The phenomenon where too much resource wealth or money makes governance and the economy worse.
- cap and invest
- California's program that puts carbon auction revenue into projects; Hilton says the money flows to high-speed rail.
- low carbon fuel standard
- California's rule requiring fuel carbon intensity to fall every year; Hilton says it raises gas prices.
- mass tort
- A consolidated lawsuit in which many plaintiffs sue the same defendant over the same event.
How to listen
Founders and investors watching US state-level regulation, tax burden and election mechanics — especially anyone curious why California can't keep its companies.
The candidate introductions at 0:00–3:00 and the fundraising jokes around 17:00 are skippable.