A new exchange-traded fund focused on public companies in the state of Oklahoma recently launched as OOK Inc. (OOK), consisting solely of public companies based in the Sooner State. That may strike you as odd -- until you realize that the economies of many states in America are as big as smaller countries. Oklahoma's economy is just about the size of Hungary's. Another new ETF, focused solely on large companies in Texas, is slated to roll out tomorrow as TXF Large Companies ETF (TXF).

This got me wondering whether an ETF for California could be far behind. After all, for all the press that China gets in today's media, California probably has a much bigger impact on your life than China does. Many of the things in your life are “Made in China.” But, to borrow a phrase from Apple, much of how you live that life is “Designed in California.”

California Dreamin': California Nightmare

If China can do no wrong, California can seem to do no right. Headlines about California are all about raging wildfires, sky-high unemployment, mass foreclosures and political paralysis. Teetering on the verge of bankruptcy, California has to hand out IOUs while its politicians debate how many criminals it will be forced to release into the general population. Gangs, architecturally numbing urban sprawl, highway shootings, threat of earthquakes, cloying Paris Hilton pop culture, and water shortages all combine to paint a picture of a state in crisis. With Ozzie and Harriet's house from the 1950s TV show recently selling for $2.5 million, tens of thousands of Californians have abandoned the state in search of cheap housing. I once saw free market economist Arthur Laffer give a speech entitled “Why I Left California for Good”. Even here in the United Kingdom, the Economist magazine devoted a recent issue anointing Texas as America's future.

California Dreamin': California Everywhere

For all of the ink spilled on how the BRIC economies (Brazil, Russia, India and China) are set to dominate the global economy, it's worth reminding ourselves where we stand today. California (population 38 million) has a bigger economy than three of the four BRIC economies -- Brazil, Russia and India (combined population 1.48 billion). If California were its own country, Arnold Schwarzenegger would have a seat at the table as the head of one of the G-8 economies. California embodies a big chunk of what the rest of the world thinks about the United States -- Hollywood, Silicon Valley, Napa Valley and Disneyland; leadership in environmental, green technology and stem-cell research; beaches, mountains and redwoods. The state is an unparalleled engine of innovation, the mecca of high tech, biotech and clean tech.

For all these plaudits, California's influence on the world is massively underrated. As a resident of Europe for the past 18 years, I am quite happy to make my home in the culturally vibrant, living museum that is London. I get a kick out of living down the street from Churchill's old digs, around the corner from where John Stuart Mill wrote "On Liberty", and a stone's throw away from where Mozart composed his first symphony. Yet, I am astonished how much I owe to California for making this lifestyle possible. Whether it's my Apple computer; my iPhone; Intel microchips; Firefox browser; Google; Facebook; You Tube; Twitter or even the P90X exercise videos I force myself through every day, Californian inventions and culture dominate my life. What's shocking is that practically none of this was around even a decade ago.

California Dreamin': A Culture Like No Other

California embodies more genuine American values than any other state. Perhaps that's exactly what irks the rest of the world. Having lived in California, the East Coast and Europe, I've come to think that as California is to the East Coast, the United States is to Europe. Just as Europeans love to thumb their noses at the United States as an uncultured teenager, the East Coast “establishment” thinks of California the same way. Meanwhile, California looks at the rest of the world as always being about 10 or 20 years behind the times.

Europeans have a particularly tough time relating to California. After all, it stands for disruption of the status quo. A lot of my Stanford classmates are on their 4th or 5th start-ups. Yet in California business culture, failure does not ban you from the right country club for life. An entrepreneur without a few busted start-ups on her résumé is almost suspect.

I can almost see my British friends rolling their eyes, tongues ready to unleash a sarcastic comment. But here's what they don't get. Think of California's most prominent industries, Hollywood and Silicon Valley. Every movie, like every high-tech venture, is a high-risk start-up. Each requires both enormous amounts of effort, creativity and just plain luck to pull off. And what happens on the off chance you succeed? Your movie is forgotten by next year and today's cutting-edge technology is obsolete in three. In California, you've got to keep re-inventing yourself because you have no choice. That's why Silicon Valley or Hollywood could never happen in Europe or Japan -- or even the East Coast of the United States. The shame of relentless failure would be too much to bear.

Governor Arnold Schwarzenegger, of course, is the ultimate embodiment of the American dream. Where else would it be possible for an Austrian-born actor to run the world's 8th largest economy--making him the most powerful Austrian since Adolf Hitler. Schwarzenegger himself thinks California attracts negative press in the United States for the same reason that the country is hated worldwide. We love to carp at those who are most successful. Even East Coasters can accept Schwarzenegger. Contrast that with Austria's treatment of its most successful citizen of the last 50 years. The local fathers at Schwarzenegger's Austrian hometown of Graz moved to take the Guvernator's name off of a local stadium because they disagreed with his stance on the death penalty. Schwarzenegger, showing the initiative typical of Californians, trumped that ploy by asking for his name to be removed from the stadium before city leaders could do so.

At the same time, just as Europeans and East Coast denizen often look at California with barely concealed disdain and envy, they love taking credit for California's successes. The foreign press gleefully points out that over half the start-ups in Silicon Valley were launched by immigrants. (As if the whole country wasn't!) In his BBC documentary, “Stephen Fry in America” the snippy British social critic takes visible glee in his discovery that Apple's lead designer is a Brit. From the East Coast, MIT grads like to boast about the number of their alums in Silicon Valley right in Stanford's backyard. But what they all had in common was that they all came to California -- and, despite the charms of each locale, stayed neither in Cambridge, Mass., nor in Cambridge, England.

America is a land of dreamers, and California is America, but more so. California is on the cutting edge of the American (and hence world's) future -- economically, environmentally, demographically, and culturally. And that's why California deserves its own ETF.

Sign up now to receive The Global Guru e-Newsletter FREE! Email Address: Yes! Please send me Nicholas Vardy's FREE weekly newsletter, The Global Guru.