The Summer 2010 edition of City Journal contains a Joel Kotkin article on the economic decline of California entitled, "The Golden State's War on Itself." According to the piece, California liberals of the 20th century generally respected and approved of private enterprise. As a result of its splendid economy and climate, California was a destination. Everything changed during the 2nd half of the 20th century and has gotten "progressively" [pun intended] worse ever since and now the tipping point has been reached.
Between 2003 and 2007, California state and local government spending grew 31 percent, even as the state’s population grew just 5 percent. The overall tax burden as a percentage of state income, once middling among the states, has risen to the sixth-highest in the nation, says the Tax Foundation. Since 1990, according to an analysis by California Lutheran University, the state’s share of overall U.S. employment has dropped a remarkable 10 percent.
Since the financial crisis began in 2008, the state has fared even worse. Last year, California personal income fell 2.5 percent, the first such fall since the Great Depression and well below the 1.7 percent drop for the rest of the country. Unemployment may be starting to ebb nationwide, but not in California, where it approaches 13 percent, among the highest rates in the nation.
So why did the economy change? Liberals have always dominated the states' politics.
The answer lies in a change in the nature of progressive politics in California. During the second half of the twentieth century, the state shifted from an older progressivism, which emphasized infrastructure investment and business growth, to a newer version, which views the private sector much the way the Huns viewed a city—as something to be sacked and plundered. The result is two separate California realities: a lucrative one for the wealthy and for government workers, who are largely insulated from economic decline; and a grim one for the private-sector middle and working classes, who are fleeing the state.
Well now, that all sounds very familiar. Barack Hussein Obama is running his regime with the same outlook toward the private sector. Corporations and whole industries are being taken over by government fiat. Obama's
New World Order has taken control of mortgage markets, the banks and the financial markets.
How can we forget the takeover of GM and Chrysler and the inexplicable closing of independent car dealerships? We have also seen Obama at work
illegally taking $20 billion from BP and
closing down Gulf oil wells. Next we might expect to see the shut down of the
coal and
oil industries. Finally the liberals have lassoed the
health care industry.
Note that California was heavily invested in big government infrastructures replete with union-supported and highly-compensated government employees. Obama's support of the UAW, SEIU and of course, ACORN follow this same pattern ... and California is heavily invested in a "green" economy.
The second engine that could supposedly keep California humming was the so-called green economy. Michael Grunwald recently wrote in Time, for example, that venture capital, high tech, and, above all, "green" technology were already laying the foundation of a miraculous economic turnaround in California. Though there are certainly opportunities in new energy-saving technologies, this is an enthusiasm that requires some serious curbing. One recent study hailing the new industry found that California was creating some 10,000 green jobs annually before the recession. But that won’t heal a state that has lost 700,000 jobs since then.
At the same time, green promoters underestimate the impact of California’s draconian environmental rules on the economy as a whole. Take the state’s Global Warming Solutions Act, which will force any new development to meet standards for being "carbon-neutral”" It requires the state to reduce its carbon-emissions levels by 30 percent between 1990 and 2020, virtually assuring that California’s energy costs, already among the nation’s highest, will climb still higher. Aided by the nominally Republican governor, the legislation seems certain to slow any future recovery in the suffering housing, industrial, and warehousing sectors and to make California less competitive with other states. Costs of the act to small businesses alone, according to a report by California State University professors Sanjay Varshney and Dennis Tootelian, will likely cut gross state product by $182 billion over the next decade and cost some 1.1 million jobs.
Meanwhile, on a national scale, Obama and company have invested heavily from the $787 billion stimulus package in new jobs related to a "greener" economy. Boondoggle seems to be the best word to describe abject failures in efforts to turn the economy "green" in the areas of
home weatheriztion jobs,
solar power,
wind power and
ethanol production. It is
heartwarming to know that a
Government Accountability Office report released Thursday [8/19/10] shows that the Department of Energy has spent more than $1.9 billion in stimulus funds to create 10,018 jobs through May, an average of $194,213 spent per full-time job created.
It now appears that Californians and the American people are headed deep into an economic quagmire. California is furthest into the muck and has less rope to pull itself out because, unlike the federal government, it does not have the authority to print money ... but has been known to issue
I.O.U.s.
City-Journal author Joel Kotkin believes that California can save itself:
Blessed with resources of topography, climate, and human skill, California does not need to continue its trajectory from global paragon to planetary laughingstock. A coalition of inland Latinos and Anglos, along with independent suburban middle-class voters in the coastal areas, could begin a shift in policy, reining in both public-sector costs and harsh climate-change legislation. Above all, Californians need to recognize the importance of the economic base, particularly such linchpins as agriculture, manufacturing, and trade—in reenergizing the state’s economy.
The changes needed are clear. For one thing, California must shift its public priorities away from lavish pensions for bureaucrats and toward the infrastructure critical to reinvigorating the private sector. ... Lower electrical costs would help preserve industrial facilities—from semiconductor and aerospace plants to textile mills. Reinvestment in trade infrastructure, such as ports, bridges, and freeways, would be a huge boon to working-class aspirations, since ports in Southern California account for as much as 20 percent of the area’s total employment, much of it in highly paid, blue-collar sectors.
Another potential opportunity lies in energy, particularly oil. California has enormous reserves not just along its coast but also in its interior. The Democrats in the legislature, which seems determined to block expanded production, have recently announced plans to increase taxes on oil producers. A better solution would be a reasonable program of more drilling, particularly inland, which would create jobs and also bring a consistent, long-term stream of much-needed tax revenue.
Still, it isn’t certain that California’s inept and often clueless Republicans will mount a strong challenge. For them to do so, business leaders need to get back in the game and remind voters and politicians alike of the truth that they have forgotten: only sustained, broadly based economic growth can restore the state’s promise.
On a broader scale, California-like solutions would also benefit America as a whole. Unfortunately, an economic plan from Republicans in Washington near the mid-term elections is not going to be published.
Paul Ryan has issued a Roadmap Plan worthy of consideration that tackles:
However, as in California, action is required to stop government spending and make government smaller and less costly. Public unions with exorbitant pay-scales and benefits have to be whittled down or disbanded and government must get out of private business areas such as healthcare, education, mortgage banking, and the automobile business. Excessive regulation of banking, securities and environmental issues, have be slowed considerably. In these economic times everything should be on the table, including the 400.000 troops stationed oversees and the massive foreign aid payment going to our enemies.
If California does not turn its economy around, we can expect the state to become the ward of the federal government. If the U.S. does not stop its economic slide, we can expect it to slip to the level of third-world countries. The revolution must start now.