What’s The Deal With California’s Regulatory Environment?

A Huge Economy

By some calculations, California is the world’s 6th largest economy. That means the state’s GDP is higher than that of entire countries like France, India, Italy, Brazil, Canada, Korea, Spain and Australia. If you’re at all familiar with California, this shouldn’t come as a surprise. Not only is the state home to some of the world’s biggest players in technology (Apple, Google, Facebook, Lockheed Martin, Intel, Tesla and more) and entertainment (Disney, Fox, Warner Bros., Netflix, etc.), but its varied landscape and major cities draw hundreds of millions of tourists a year.

Fueling the economy is the largest population in any U.S. state. California’s nearly 40 million residents are demographically diverse but all play a role in making the region as prosperous as it populous, and many can afford to live in areas with extraordinarily high costs of living.

The Country’s Largest Legal System

Maybe they can afford it because they’re all attorneys. Not really, of course, but California does have the country’s largest judiciary. The state is a popular place to practice all kinds of law, including business and commercial litigation. However, and perhaps because of their immeasurable competition, lawyers describe the state’s legal milieu as “burdensome,” “cumbersome” and “complex.”

It’s been that way for at least half a century, since politicians and legal architects such as Earl Warren pioneered judiciary and municipal frameworks that expanded benefits for workers and created public resources like highways and hospitals. As time has moved on, these frameworks have been amended and expanded on—leaving the state with the massive constitution and countless regulatory agencies its populace has to contend with today. Yes, the same mechanisms that made it possible for California to grow its economy at an extraordinarily fast rate are also partially to blame for the state’s current legal quagmires.

A Whole Lot to Regulate

Tens of millions of people, employed by 4 million businesses, regulated by hundreds of state and federal agencies—if that wasn’t already enough to wrap your head around, consider the complicating factors. California is almost always in the midst of a crisis, be it related to water, electricity, smog, housing, or debt. Then there are the foreign investors influencing the direction of the state’s real estate, health care, farming, entertainment and technology industries. And speaking of the technology industry, California is ground zero for companies testing their latest innovations—like driverless cars.