California was once the epitome of the American Dream. People migrated there in large numbers, lured by jobs and good services. It still has the glamour of Hollywood and the technology innovation of Silicon Valley, but it is fast going bankrupt. Its roads are falling apart, schools are producing poor results, and prisons release criminals early in order to save money.

Unemployment is nearly 12% and 100 000 people leave the state every year.

Readers of Chief Executive magazine rate it as the worst state in America in which to do business.

By contrast, Texas is their choice as the best place for business. Its economy is growing and attracting entrepreneurs and creative people.

It has virtually no racial problems despite a broad mix of Hispanics, whites, blacks and Asians.

What, then, is right with Texas and what is wrong with California?

Trends magazine answers this by looking at fundamental differences in their value systems.

Firstly, Texans believe more in free markets with an emphasis on individual responsibility.

California shifted in the 1980s to big government programmes that pushed up taxes hugely and lost jobs to other states.

Whereas Texas has streamlined regulations and has no state income tax, California has the second highest state income tax in America, and regulations that discourage new businesses.

Another factor identified is that California has placed "ethnic diversity" above "assimilation," while Texas has done the opposite.

According to Trends magazine: "Identity politics has created psychological ghettos that have prevented many of California's diverse ethnic groups and subcultures from integrating fully into the mainstream. Texas, on the other hand, has proactively encouraged all the state's residents to join the mainstream."

This is fascinating stuff, with some applicability to South Africa.

We seem to have imported America's worst ideas, as exemplified in California, rather than its best ideas as practiced in Texas.

America's strength is that its federal system allows states to pursue different policies so that successes can be imitated and failures avoided.

In many cases, people "vote with their feet" by moving to more attractive states, and businesses do so as well.

Provincial powers are unfortunately fairly limited in South Africa, and centralist ANC rule does not encourage even the little diversity that is still possible under our constitution.

The great exception is the Western Cape, most strikingly in providing anti-retroviral treatment for HIV-positive people years ahead of other provinces.

It will be interesting to watch the progress of the DA-governed Western Cape as it provides a distinct alternative to the other provinces.

Already the standard has been set by Premier Helen Zille's modest inauguration ceremony and other cost-cutting measures like using government garage vehicles instead of fancy new cars.

We had better hope that identity politics loses its force as the great irony is that most of those who move to the Western Cape still vote for the same party that gave them the misery that they sought to escape.

The question is whether President Jacob Zuma sees DA innovation in this province as an asset for South Africa's development, or whether he stirs up destabilizing protests in order to get the ANC back to power there.

We have far less room for error than an advanced country like America, so our future may hinge on this critical issue.

This article by Jack Bloom, Democratic Alliance member of the Gauteng legislature, first appeared in The Citizen.

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