California is unattractive for Palantir co-founders and venture capitalists Peter Thielwho finds many parallels between the Golden State and Saudi Arabia.

What happened: Californians have no choice and people on the margins of society are leaving the state, but it continues to raise more and more revenue, Thiel said in a podcast on the Joe Rogan Experience that aired Friday. California’s top income tax rate has increased to 14.4% since the start of the year, up from 13.33%, which was in place for more than a decade.

“If you raise 10% more revenue and 5% of people move away, you’re still increasing your revenue,” Thiel said. “The crazy thing about California is there’s always some kind of right-wing or libertarian criticism of California that says, ‘This is such a ridiculous place, it should just collapse on its own ridiculousness,'” he said.

The venture capitalist defended the state’s fundamentals, noting that the state’s macroeconomics are good and that it generates a GDP of around $4 trillion for a state of 40 million people. That’s about the same as Germany with 80 million people or Japan with around 125 million people, he said.

“So there’s a level where … California as a whole is working, even if it’s not working from an administrative perspective and it’s not working for many of the people who live there,” Thiel said.

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California-Saudi Arabia connection: Thiel said he sees California as a kind of Saudi Arabia. “They have a crazy religion – ‘wokeism’ in California and Wahhabism in Saudi Arabia, not many people believe in it, but it distorts everything,” he said. “Wokeism” is a pejorative term for promoting liberal, progressive ideology and policies as an expression of sensitivity to systemic injustices and prejudice, while “Wahhabism” is a reformist religious movement within Sunni Islam.

In Saudi Arabia, there are oil wells that finance everything, and in California, there are big technology companies, he said. “Then you have a completely bloated, inefficient government sector, and there are all kinds of distortions in the real estate market, where people also make a lot of money, and the government and real estate are sort of vehicles to redistribute the oil wealth,” he added.

However, he acknowledged that California is fairly stable. Four of the eight or nine companies with a market capitalization of over a trillion dollars, namely Alphabet Inc., Apple Inc., Nvidia Corp.And Broadcom Inc. are based in California, he noted.

Thiel considered other options in zero-rate states. “In theory, a lot of things happen at the state level, but you don’t live in a state, you live in a city. If you tend to live in at least a mid-sized city, there are four states that don’t have cities: Alaska, Wyoming, South Dakota and New Hampshire,” Thiel said.

The entrepreneur dismissed Washington state, along with Seattle, as having the worst weather in the country and said he was not a big fan of Las Vegas, Nevada, either.

The governor of California is Gavin Newsom of the Democratic Party. In June, Thiel said he would vote for Trump but would not contribute to his campaign. Several of his friends from Silicon Valley have been supporting the Republican Party and have also supported Trump’s running mate, Sen. JD Vance (R-OHIO) has close ties to Thiel.

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Photo courtesy: Hubert Burda Media