I remember hearing this song soon after it came out in 1997. One thing I always disagreed with was when he said "Live in Northern California once, but leave before it makes you soft." My brother lives in Northern California and as far as traffic, the price of housing, cramped quarters, etc.
I find it hard to believe that Baz Luhrmann ever experienced a small Midwestern town. If Northern California is his "soft", he has never felt the relaxing environment a small Midwestern town brings about.
Granted when he is talking about Northern California he may be saying that you need to live in the country of Northern California, away from the city, but then I feel that anywhere out in the country is going to be like that.