There is a sort of upbeat NY Times article arguing that California — in part, thanks to passing the highest sales and income taxes in the nation — might be coming back, a sort of recovery that can guide the rest of the U.S. to a renewed faith in the Obama/EU/blue state way.
I can also plead guilty of some California optimism, but based on quite different criteria, such as huge new gas and oil finds, record prices for agricultural exports, and a slow downturn in illegal immigration due to the dismal economy (all mostly ignored by the Times piece). So I think it is hard to destroy California, given its natural resources and its inheritance from prior more industrious and wiser generations.
In general, the Times essay has three flaws: One, the good news is a matter of degree, in the sense of things not getting worse rather than becoming good; hence the constant qualifiers such as but and though:
(e.g., “In September, California had its biggest month-to-month drop in unemployment in the 36 years the state has collected statistics, from 10.6 percent to 10.2 percent, though the state still has the third-highest jobless rate in the nation”; “The housing market, whose collapse in a storm of foreclosures helped worsen the economic decline, has snapped back in many, though not all, parts of the state;” “And 38 percent of Californians say the state is heading in the right direction, according to a survey this month by U.S.C. Dornsife/Los Angeles Times. For most places, that figure would seem dismal.But it is double what it was 13 months ago.”; “Yet California still faces major problems. The economic recovery is hardly uniform. Central California and the Inland Empire — the suburban sprawl east of Los Angeles — continue to stagger under the collapse of the construction market, and some economists wonder if they will ever join the coastal cities on the prosperity train. Cities, most recently San Bernardino, are facing bankruptcy, and public employee pension costs loom as a major threat to the state budget and those of many municipalities, including Los Angeles.” And on and on . . .)
Second, the article does not talk about why California’s future, despite mal-governance, is not all bleak: natural resources, such as huge new finds of gas and oil (that have yet to be tapped), and the sort of agricultural exports that are perfect for emerging Asian markets in India, China, South Korea, etc. — along with near insolvency’s forcing state and local governments to either cut back or go broke (unlike the federal government, California can’t print money and we still fear losing residents to nearby no-tax states in a way that Americans cannot so easily flee the country).
The Times piece also deliberately ignores the third rail of all California decline stories — illegal immigration. About 40 percent of all illegal immigrants are believed to be living in California. Probably about a $20 billion share in the much larger figure of annual remittances to Latin America comes from California. And such facts do help explain why once-competitive California public schools now rate 49th in many math/science/English national tests, one-third of all U.S. welfare recipients live in California, 8 million out of the last 11 million added to the state’s population went on Medicaid, and why the Central Valley is suffering from record unemployment, depressed housing prices, and mass exoduses of higher-income residents. In this regard, note the following Times sentence: “California has the worst poverty in the nation. The river of people coming west in search of the economic dream, traditionally an economic and creative driver, has slowed to a crawl.” In fact, “the river of people” long ago ceased “coming west” to California, but rather for 30 years has been coming “north” into the state — a direction that is politically incorrect to note.
Third, there are two Californias: a thin coastal strip where upscale, highly educated elites, in the manner of the D.C./Virginia corridor, profit from managing the vast regulatory technocracy and big-government bureaus, the top universities (e.g., Berkeley, Cal Tech, Stanford, UCLA, USC, etc.) reside and draw in thousands of rich foreigners, Silicon Valley is flush with export cash, and where the climate, ocean, and boutique culture make for the good life — and the vast north, Sierra, inland south, and Central Valley that bear more directly the burdens of lousy schools, regulations on development of resources, illegal immigration, and flight out of state — all of which explains why a 1,500 square foot house in Santa Cruz or Menlo Park sells for about $800,000 to $1 million, while its similarly sized counterpart from Stockton to Fresno goes for around $125,000 to $150,000. A Bakersfield, Tulare, or Selma is simply in a different galaxy from a Palo Alto, Carmel, San Luis Obispo, or Santa Barbara.
In sum, things may not be becoming worse in California, but it is not because of anything that Jerry Brown or the legislature has done, or the expectation that all these new record-high taxes (not yet exacted) have so excited the private sector that we are already anticipating a new recovery. Again, agricultural exports boom despite not because of Sacramento; there is renewed interest from private parties in our vast natural resources, whose prices are at record levels; illegal immigration has slowed; and after four years of recession, there is always a natural American cycle of recovery. But until the state deals with its cumbersome regulations, record taxes, hostility to resource development — and supports closing the border and promotes ethnically blind assimilation rather than serial amnesties and ethnic chauvinism — we will continue to have the nation’s worst schools, worst infrastructure, worst business climate, and highest exoduses, as California plods on, coasting on the fumes of what nature and our ancestors so generously bequeathed to us.