California's regulations, some of the most draconian in the country, may be even harder for businesses to cope with than the state's high taxes. They have contributed heavily to a deep, destructive and long-lasting recession.

• California lost between 600,000 and 800,000 jobs between 1990 and 1993.

• According to a 1994 report by Pacific Gas & Electric of California, most of these job losses are the result of structural, not cyclical, changes — and are therefore not coming back.

In many cases, the regulatory costs of doing business in the state have been the major cause. By the state's own estimate, it costs each of the 67,000 Los Angeles basin small businesses between $45,000 and $90,000 annually to comply with regulations. Red tape and fees constitute much of that cost. For example:

• The Zero Corporation moved two manufacturing facilities to Utah in 1991, saying the move reduced health care costs by 50 percent, workers' compensation costs by 60 percent and utility costs by 40 percent - and eliminated legal consulting costs altogether.

• The Great American Food Stock Company, facing a $40,000 charge for a building permit and an 18-month wait for plans to be reviewed in San Diego, built instead in New Mexico, where the permit cost $2,250 and took four days to obtain.

• A permit for a new manufacturing plant that would have cost Rohr Industries $750,000 in California cost only $750 in Arkansas.

• A "simplified guide" prepared by one company to help businesses comply with state environmental regulations comprised two volumes and 1,200 pages.

Elected officials talk about giving specific companies tax breaks to keep them in California or lure them from other states, but they have not addressed the question of how to encourage new businesses to start up in the state. The only jobs regulatory barriers have created have been in other states, by businesses fleeing California.

Source: Joseph Farah and Mike Antonucci, "Strangled in the Crib: Jobs and Regulation in California," Regulation, 1994, No. 3, Cato Institute, 1000 Massachusetts Avenue, NW, Washington, DC 20001, (202) 842-0200.