Standing on the Shoulders of Diversocrats

Another academic year, another fattening of campus diversity bureaucracies.  Most worrisomely, the STEM (science, technology, engineering, and math) fields are now prime targets for administrative diversity encroachment, with the commercial tech sector rapidly following suit.

UCLAThe most significant new diversity sinecure has been established at the University of California, Los Angeles, where the engineering school just minted its first associate dean of diversity and inclusion. The purpose of this new position is to encourage engineering faculty to hire more females and underrepresented minorities, reports the Daily Bruin, UCLA’s student newspaper. “One of my jobs,” the new dean, Scott Brandenberg, told the paper, is “to avoid implicit bias in the hiring process.”

The new engineering-diversity deanship supplements the work of UCLA’s lavishly paid, campus-wide Vice Chancellor for Equity, Diversity and Inclusion, Jerry Kang, whose 2016 salary was $444,000.  Kang, one of the most influential proponents of the “implicit-bias” concept, already exerts enormous pressure throughout the university to hire for “diversity.” Even before his vice chancellorship was created, any UCLA professor hoping for the top rank of tenure had to write a “contributions to diversity” essay detailing his efforts to rectify any racial and gender imbalances in his department.   The addition of a localized diversity bureaucrat within the engineering school can only increase the focus on gender and race in hiring and admissions decisions. (Brandenberg, of course, expresses fealty to California’s beleaguered ban on racial and gender preferences in government. But it would be naïve to think that the ubiquitous mandate to increase “diversity” does not inevitably tip the scale in favor of alleged victim groups.)

No evidence exists that implicit bias is a factor in the engineering school’s gender and racial composition. Its percentage of female undergraduate and graduate students—about one quarter—matches the national percentage reported by the American Society for Engineering Education. I asked the school’s spokesman, Amy Akmal, if UCLA Engineering was aware of any examples of the most qualified candidate being overlooked or rejected in a hiring search because of implicit bias; she ignored this fundamental question. (She also ignored a question about the new dean’s salary.)  Every science department in the country relentlessly strives to improve its national ranking through hiring the most prestigious researchers. It would be deeply contrary to their interests to reject a superior candidate because of gender or race. And given the pools of federal and private science funding available on the basis of gender and race, hiring managers have added incentive to favor “diverse” applicants. Contrary to the idea that females are being discriminated against in hiring, Wendy Williams and Stephen Ceci found that female applicants for STEM tenure-track positions enjoyed a two-to-one advantage over similarly qualified males in paired résumé experiments.

The director of UCLA’s Women in Engineering program trotted out the usual role model argument for gender-and race-conscious decision-making. Audrey Pool O’Neal told the Daily Bruin that she never saw anyone who looked like her (black and female) when she was an undergraduate and graduate student. “When I do teach classes, the female students let me know how much they appreciate seeing a woman in front of their classroom,” O’Neal said.

Why not appreciate seeing the best-trained scholar in front of your classroom?  Any female who thinks that she needs a female in front of her in order to learn as much as she can, or to envision a career in a particular field, has declared herself a follower rather than a pioneer—and a follower based on a characteristic irrelevant to intellectual achievement. If it were really the case that a role model of the same gender is important to moving ahead, it would be impossible to alter the gender balance of a field, assuming such a mission to be worthwhile, which—absent a finding of actual discrimination—it is not. Marie Curie did not need female role models to investigate radioactivity; she was motivated by a passion to understand the world. That should be reason enough to plunge headlong into the search for knowledge.

The Columbia University Medical Center has just pledged $50 million to diversify its faculty and student body, reports the Wall Street Journal, part of a new $100 million diversity drive across the entire university. Never mind that Columbia University has already fruitlessly spent $85 million since 2005 toward the same end. Never mind that there is a huge gap between the MCAT scores of blacks and whites, which will affect the quality of subsequent hiring pools. Columbia’s vice provost for faculty diversity and inclusion regurgitates another classic of diversity boilerplate to justify this enormous waste of funds. “The reality is that you can’t really achieve excellence without diversity. It requires diverse thought to solve complex problems,” says vice provost Dennis Mitchell.

Mitchell’s statement is ludicrous on multiple fronts. Aside from the fact that the one thing never sought in the academic diversity hustle is “diverse thought,” do Mitchell and his compatriots in the diversity industry believe that females and underrepresented minorities solve analytical problems differently from males, whites, and Asians? A core plank of left-wing academic thought is that gender and race are “socially constructed.” Why then would females and underrepresented minorities think differently if their alleged differences are simply a result of oppressive social categories?

Columbia’s science departments do not have 50/50 parity between males and females, which, according to Mitchell, keeps them from achieving “excellence.” Since 1903, Columbia faculty members have won 78 Nobel Prizes in the sciences and economics. The recipients were overwhelmingly male (and white and Asian); somehow, they managed to do groundbreaking work in science despite the relatively non-diverse composition of their departments.

The only thing that the academic diversity racket achieves is to bid up the salaries of plausibly qualified candidates, and redistribute those candidates to universities that can muster the most resources for diversity poaching. The dean of UCLA Engineering, Jayathi Murthy, laments that of the 900 females admitted to the undergraduate engineering program in 2016, only about 240 accepted the offer. “There are (about) 660 women there that are going somewhere else and the question is . . . is there an opportunity for us to do something differently,” she told the Daily Bruin.  Presumably, those 660 non-matriculants are getting engineering degrees at other institutions. If the goal (a dubious one) is to increase the number of female engineers overall, then it doesn’t matter where they graduate from. But every college wants its own set of “diverse” students and faculty, though one institution’s gain is another’s presumed loss.

The pressure to take irrelevant characteristics like race and sex into account in academic science is dangerous enough. But Silicon Valley continues to remake itself in the image of the campus diversity bureaucracy. Dell Technologies announced in September a new “chief diversity and inclusion officer” position. Per the usual administrator shuffle, the occupant of this new position, Brian Reaves, previously served as head of diversity and inclusion for software company SAP. Reaves will engage the company’s “leaders” in “candid conversations about the role of gender and diversity in the workplace,” said Dell chief customer officer Karen Quintos in a press statement. “Candid” means:  you are free to confess your white cis-male privilege. “Candid” does not mean questioning Dell’s diversity assumptions, as this summer’s firing of computer engineer James Damore from Google made terrifyingly clear to any other potential heretics.

According to the Austin-American Statesman, over the last three years Dell’s existing diversity programs have not changed the company’s gender and racial balance. Dell’s share of women (28 percent) and “people of color” (27 percent) is consistent with the academic pipeline. But magical diversity thinking holds that adding another administrator will somehow conjure forth previously overlooked “diverse” hires. If they don’t materialize, one can always fall back on racial and gender double standards.

Apple CEO Tim Cook has similar confidence in the power of diversity bureaucrats. Cook said in 2015 that diversity is a “readily solvable issue,” according to CNN, and announced that he would hire more women. Failing that, he can at least hire more diversity functionaries. In May, Apple created a new vice president of inclusion and diversity, who will report directly to Cook. This new executive position comes in addition to Apple’s existing director of inclusion and diversity.

Official scientific organizations have all turned obsessively to the diversity agenda. Any academic scientist who wants to move up in administration—or apply for grants, leave, or access to the conference circuit—must be on a crusade against his fellow scientists’ microaggressions and implicit bias. This is good news for the diversity industry, but bad news for America’s scientific competitiveness.

Charters Under Attack – California’s Teachers Unions Go On The Offensive

ULTA protestFor years, teachers’ unions have tried to kill charter schools — but only on odd-numbered days. On even-numbered days, they tried to organize them. Things lately have become very odd, at least in California; the unions are in full-assault mode.

United Teachers of Los Angeles president Alex Caputo-Pearl has long groused about how charter schools don’t play by the rules. Teachers’ union talking points effortlessly roll off his tongue — billionaires this, accountability that. But on May 4, despite pleas by charter school parents, UTLA, in concert with the Alliance to Reclaim Our Schools — a union front group — planned a major protest outside schools where charters share a campus with traditional public schools. “We will stand with Los Angeles parents, educators, students, administrators, and community members for fully funded public schools and call on corporate charter schools to pay their fair share to the district,” AROS said in a statement. Of course, charters are public schools, not “corporate.” And charters are the ones that aren’t fully funded, which is why they frequently have to share facilities. But UTLA and AROS don’t bother with those minor details. The rally mostly fizzled, so school kids were thankfully spared the sight and sound of angry protesters marching and chanting.

UTLA wasn’t finished. In what it thought would be a coup de grâce, the union released the results of a “study” it commissioned, which, among other things, asserted that the Los Angeles Unified School District “lost more than $591 million dollars to unmitigated charter school growth this year alone.” The school district countered by pointing out that it actually makes money due to the existence of charter schools. Undaunted, Caputo-Pearl was at it again in August. “With our contract expiring in June 2017, the likely attack on our health benefits in the fall of 2017, the race for governor heating up in 2018, and the unequivocal need for state legislation that addresses inadequate funding and increased regulation of charters, with all of these things, the next year-and-a-half must be founded upon building our capacity to strike, and our capacity to create a state crisis, in early 2018,” he told the annual UTLA leadership conference in July. “There simply may be no other way to protect our health benefits and to shock the system into investing in the civic institution of public education.”

In late August, just weeks after Caputo-Pearl’s tantrum, UTLA hit the streets with a media campaign. Empowered by a massive dues increase, the union began spreading its venom via billboards, bus benches, and the media. The timing was particularly bad, as the just-released 2016 state standardized-test results showed that charters outperformed traditional public schools in both English and math. Los Angeles, where one in six students is enrolled in a charter, saw 46 percent of its independent charter-school students meeting or exceeding the standard on the English Language Arts test, versus 37 percent for students in traditional public schools. On the math test, the difference was smaller: 30 percent versus 26 percent. Despite the unions’ perpetual “cherry-picking” mantra, 82 percent of charter students qualify as low-income compared with 80 percent for traditional schools. Charters also match up closely in areas of ethnicity, English-language learners, and disabled students.

The California Teachers Association jumped into the act on August 31 by unleashing “Kids Not Profits,” an “awareness” campaign calling for more “accountability and transparency of California charter schools and exposing the coordinated agenda by a group of billionaires to divert money from California’s neighborhood public schools to privately managed charter schools. These same billionaires are spending record amounts of money to influence local legislative and school board elections across the state.” In a press release announcing the launch of the campaign, the union quotes from its new radio ad, which claims to lay out the “billionaires’ coordinated agenda”:

  1. Divert money out of California’s neighborhood public schools to fund privately run charter schools, without accountability or transparency to parents and taxpayers.
  2. Cherry-pick the students who get to attend charter schools—weeding out and turning down students with special needs.
  3. Spend millions trying to influence local legislative and school board elections across California.

While Numbers One and Two are outright lies, there is some truth to Number Three. CTA has become fat and happy. It is by far California’s biggest political spender. It drives the union elite crazy that philanthropists are pouring unprecedented amounts of money into edu-politics in an attempt to balance the playing field. The union is finally facing some stiff competition in Sacramento, as well as in some local school board races.

Second only to its obsession with billionaires is the union’s incessant harping about accountability. “It’s time to hold charter schools and their private operators accountable to some of the same standards as traditional public schools,” CTA president Eric Heins says. This is laughable. Charter schools operate in accordance with all state and federal laws. They must meet rigorous academic goals, engage in ethical business practices, and be proactive in their efforts to stay open. If a school doesn’t successfully educate its students according to its charter, parents will pull their kids out and send them elsewhere. After a specified period—usually five years—the school’s charter is revoked. A failing traditional public school, by contrast, rarely closes. Union-mandated “permanence” laws ensure that tenured teachers, no matter how incompetent they may be, almost never lose their jobs.

The CTA and other unions can’t deal with the fact that non-unionized charters typically do a better job of educating poor and minority students than do traditional public schools. So they lie and create distractions in order to preserve their dominion. But all the yammering about charters “siphoning money from public schools,” grousing about billionaires “pushing their profit-driven agenda,” and bogus cries for “accountability” simply expose the unions as monopolists who can’t abide competition. But that’s just what children, their parents, and taxpayers deserve—less union meddling and more competition and choice.

Golden State Democrats Divide Over Race

The California Republican Party—an institution accustomed to embarrassment—suffered a novel and stinging indignity in the June 7 Golden State primary. Once the votes were tallied, it was revealed that the GOP’s candidate for the U.S. Senate seat being vacated by Democrat Barbara Boxer in the November election would be . . . nobody. It’s not that Republicans failed to recruit any contenders. Two former (and relatively obscure) state party chairmen, Tom Del Beccaro and Duf Sundheim, competed in the primary, as did activist businessman and one-time gubernatorial candidate Ron Unz. Rocky Chavez, a state assemblyman from San Diego County who led the GOP field in early polling, had also been in the mix before abruptly withdrawing—at the beginning of a debate, no less—in February. So how does a party enter a race with four candidates and still emerge without a nominee?

Like most riddles associated with California politics, the answer is direct democracy. In 2010, voters approved Proposition 14, a ballot measure that abolished conventional party primaries for statewide and congressional races. Instead, the initiative created a system wherein primary voters get to cast their ballot for any candidate, regardless of party—but where only the top two finishers compete in the general election. This year, that process yielded a U.S. Senate contest between two Democrats: Attorney General Kamala Harris and Orange County congresswoman Loretta Sanchez.

Among California’s political and media elite, the result is being discussed mainly as a sign of the GOP’s irrelevance in the nation’s most populous state—a reading with plenty of evidence to support it. Higher office has now been out of the party’s grasp for a decade, with Arnold Schwarzenegger’s 2006 reelection as governor marking the last time that a Republican won any statewide contest.

Democrat DonkeyYet, while public attention is focused on the GOP’s deathbed vigil, another equally consequential trend is unfolding largely under the radar: California Democrats, far from enjoying a frictionless ascendancy, are finding themselves sharply divided along racial lines. The breakneck demographic shifts in the state over the past few decades partly explain the tension. In 1990, California was more than 57 percent white, while Latinos made up just over a quarter of the state’s population. By 2014, however, Latinos had surpassed whites as the state’s largest ethnic group. At the same time, the state’s Asian population (the nation’s largest) had grown to 14.4 percent, more than double the number of California’s African-Americans. In a minority-majority state dominated by a party that practices identity politics, each group now finds itself in a zero-sum competition for a handful of positions at the commanding heights of Golden State politics.

Those spots don’t come open very often, making competition that much fiercer. Boxer and her Senate colleague Dianne Feinstein were both first elected to the upper chamber in 1992, a time when California was, in demographic terms, an entirely different place. They’re not the only members of California’s governing class who seem like relics of a bygone era. While the state’s population is ethnically diverse and young (in 2014 the median age was 36, sixth-lowest in the nation), its most visible political figures—Boxer, Feinstein, Governor Jerry Brown, and House minority leader Nancy Pelosi—are lily white and have an average age of nearly 78.

When Boxer announced her retirement in early 2015, it unleashed a frenzy of activity among California Democrats aiming to make their leadership more reflective of the party’s diversity. The problem was that no one could agree on exactly how to fulfill that mandate. Certainly Harris, born to a Jamaican father and an Indian mother, represented a break from the past. But the swiftness with which she attracted endorsements led to a backlash from Latinos, who felt they were being taken for granted. When the attorney general garnered near-instant backing from influential national Democrats such as Elizabeth Warren and Cory Booker, California State Senate president pro tem Kevin de Leon told Politico,“National figures should slow their roll a bit.” Arturo Vargas, head of the National Association of Latino Elected and Appointed Officials, cautioned, “Hispanic leaders are concerned about some kind of coronation, as opposed to a real electoral campaign.”

The coronation, however, largely proceeded apace. Harris’s substantial war chest and stack of endorsements deterred some of the state’s most prominent Latinos—namely former Los Angeles mayor Antonio Villaraigosa and House Democratic Caucus chairman Xavier Becerra—from mounting a challenge. Sanchez, previously more of a comic figure than a serious political force (her main contribution to California politics has been a series of increasingly bizarre Christmas cards featuring her cat), exploited the vacuum for a Latino alternative, riding the discontent all the way to a spot on the November ballot.

Most observers—though not all—expect Harris to prevail in November, but the underlying tensions show little sign of abating. In May, Texas Democratic congressman Filemon Vela blasted the California Democratic Party for endorsing Harris, calling the act “insulting to Latinos all throughout this country” and “a disrespectful example of wayward institutional leadership which on the one hand ‘wants our vote’ but on the other hand wants to ‘spit us out.’” California Hispanics may share that sentiment. Though Harris won 40.3 percent of the vote to Sanchez’s 18.5 percent in the primary, a USC/Los Angeles Times poll released shortly before the contest showed 43 percent of Hispanics supporting Sanchez to just 16 percent for Harris.

Status anxiety is now pervasive among the racial caucuses within California’s Democratic Party. Hispanics worry that their votes will be taken for granted, while their elected officials are passed over for higher office. African-Americans, outnumbered two-to-one by Asians and six-to-one by Hispanics, fret that they’ll be relegated to junior-partner status within the party. Asians, meanwhile, chafe at certain liberal orthodoxies—a tension that became public in 2014 when a small band of Asian Democrats in the legislature blocked their black and Hispanic colleagues’ efforts to revive racial preferences in California college admissions.

Intra-party friction, of course, isn’t exclusive to California. However, with the Republican Party in steep decline in the state and the top-two primary system as the law of the land, the situation in California is particularly combustible. California Democrats have long dreamed of the unfettered power that would accompany vanquishing the state’s rump Republican Party. Few, however, seemed to anticipate the stress fractures that inevitably emerge in a political monoculture. With no worlds left to conquer, they’re now left warily circling each other. And no one seems inclined to slow his roll.

L.A. Has Fallen Far Behind the Bay Area — Perhaps Permanently

Photo courtesy of channone, flickr

Looking at Los Angeles and San Francisco, two successful California cities in 1970 whose fortunes have since diverged radically, The Rise and Fall of Urban Economies tries to answer an old question: Why do some cities thrive while others stagnate? The authors chose their subjects wisely. Had they paired up any other American cities — say, Chicago and Dallas — too many disparate factors would have come into play. Cities in the same state, however, share a universe of government policies, whether concerning income-tax rates or right-to-work rules, grounding the comparison and lending credence to the conclusions.

Los Angeles and San Francisco have much in common: top-notch climates, natural amenities like oceans and mountains, thriving arts and culture communities, and major international airports. In 1970, both cities boasted powerful industry clusters, similar concentrations of manufacturing firms, and highly educated and technically oriented workforces employed by innovative companies (Amgen in L.A., Genentech in the Bay Area). Prior to the 1990s, Los Angeles actually produced more patents than the Bay Area.

Over the last 45 years, however, while the Bay Area’s economy has soared, with per capita incomes raising rapidly, incomes in L.A. have trailed those in America’s other big cities — in fact, they were on par with those of metro Detroit. The authors dismiss many popular explanations for the trend, from housing costs to immigration to government spending levels. One after another, these theories are investigated and rejected as effects rather than causes. What, then, accounts for the difference?

The authors draw conclusions broadly similar to those made by U.C. Berkley’s AnnaLee Saxenian in her 1996 book, Regional Advantage: Culture and Competition in Silicon Valley and Route 128. The influence of San Francisco’s counterculture, they say, inspired the Bay Area’s tech sector to develop a new approach to management oriented around collaboration, distributed development, labor mobility, and open networks. In Los Angeles, by contrast, the entertainment industry emulated Silicon Valley’s networked organizational structure, but remained disconnected from — and in many ways indifferent to — the larger Southern California economy. As indicated by measures like interlocking board memberships, Los Angeles’s corporate community is less interconnected than San Francisco’s.

The authors offer another reason why Los Angeles failed to keep up with its neighbor to the north. Unlike the Bay Area, which pursued a “high wage specialization strategy,” Los Angeles, in the interest of social justice, deliberately focused on lower- and middle-tier economic sectors. “Los Angeles’s leaders generated a low-road narrative for themselves, while Bay Area leadership coalesced around a high-road vision for their region,” they write. Such decisions have consequences, many of which are demographic. Had Los Angeles followed the same path as San Francisco, Southern California would have attracted far fewer working-class Latinos. The authors don’t directly state this, but it’s a clear implication of their findings. It’s logical to conclude that any region looking to replicate San Francisco’s success should take an exclusively high-end focus — social justice be damned.

Though academic in style, this is a fascinating book, especially for leaders thinking through development challenges in their own regions. It is narrow in focus, however. The authors leave job creation out of their definition of economic development. Instead, they focus on per capita incomes. That’s fine, but many readers will equate development with employment.

The Rise and Fall of Urban Economies paints a picture of a tough economic future for any region with a high-cost environment but a low- to medium-skilled labor force. “Los Angeles can never belong to the club of regions that can attract manufacturing back from cheaper regions of the United States or abroad,” the authors note. Though true, this will be painful for L.A.’s boosters to swallow. Retooling such a gigantic economy won’t be easy.

Kamala Harris might be in for a surprise in November

Atty. Gen. Kamala Harris urges funds for tracking prescription drugsIn the wacky world of California politics, it’s a virtual certainty that no Republican will make it past the June 7 primary in the race to succeed retiring U.S. senator Barbara Boxer. California attorney general Kamala Harris has a comfortable — but not overwhelming — lead over fellow Democrat Loretta Sanchez, a congresswoman from Orange County. Three Republican candidates trail far behind. Due to California’s unusual election rules, the top two vote-getters in the primary — regardless of party affiliation — will face each other in November. If the current polling stands, the general election to fill the senate seat Boxer has held since 1992 will likely be a contest between two liberal Democrats: Harris (now at 27 percent) and Sanchez (at 14 percent).

The most popular Republican currently in the race — with a scant 5 percent in the polls — is Ron Unz. A gadfly businessman-activist and former 1994 gubernatorial candidate, Unz espouses an eclectic platform that includes raising the minimum wage to $12 an hour, restricting immigration, and challenging the science behind “climate change.” Unz, who admits that his primary reason for running is to head off efforts to repeal Proposition 227, the 1998 ballot measure he championed to dismantle California’s ruinous bilingual education system, has the endorsement of Ron Paul. Former California Republican Party chairman George “Duf” Sundheim, a Bay Area attorney, languishes at 2 percent. The previous Republican “frontrunner,” GOP state assemblyman Rocky Chavez, who had been polling in the single digits, dropped out in February due to fundraising difficulties.

The Democrats’ poll rankings have remained relatively steady for months, despite the millions raised and spent by Harris. Demographic shifts and an exodus of middle-class voters have turned California into a one-party state. In statewide races, the GOP has become irrelevant; Republican candidates regularly lose by over a million votes. Accepting the “lesser-of-two-evils” reality of California politics, the right-leaning Orange County Register recently endorsed Sanchez, largely because of her opposition to the Iraq War, USA PATRIOT Act and the $700 billion bank bailout.

It’s a testament to liberal hegemony in California that Sanchez is considered a moderate. She has a 100 percent score from Planned Parenthood, a zero rating from the American Conservative Union, an “F” from the National Rifle Association, and a record of voting with Nancy Pelosi (when she was House speaker) 97.8 percent of the time. Sanchez has taken flack for her suggestion — based on experts’ estimates — that between 5 and 20 percent of American Muslims are potential radicals who support the establishment of an Islamic caliphate. Her statement, issued in the wake of the San Bernardino terrorist attack in December, was immediately (and predictably) criticized by the Council on Islamic-American Relations and other Muslim groups. Harris, by contrast, has called opposition to resettling Syrian refugees “purely anti-Muslim rhetoric.” “We have to embrace our Muslim brothers and sisters wherever they are and not assume that because of the God they pray to and believe in that they are terrorists that are going to harm us when they come here,” she declared in a recent debate.

Given the Left’s dominance in California, Republican Sundheim’s warning that the stylish Harris is an unprincipled tool of the public employee unions, trial lawyers and environmentalists — not to mention an enemy of law enforcement — won’t have much effect on her support among Democrats. She is a popular two-term attorney general and the media’s darling. Her record as a consumer advocate who favors gun control and comprehensive immigration reform has great appeal to her party’s core voters.

In the final weeks of the primary campaign, Harris and Sanchez will campaign as the unabashed liberals they are, almost certainly finishing first and second in a crowded field of 34 candidates. November, however, may be a different story. Harris, who will out-poll Sanchez in June, could nonetheless lose in November. Sanchez has several advantages heading into the general election. Southern California’s large Hispanic population will likely turn out for her. Moreover, Golden State Republicans, having no candidate of their own to support, will be forced to choose between Harris and Sanchez. GOP voters in California are a minority but they still number in the millions. In a presidential election year, they will turn out in force. Expect them to vote for the least liberal of the Senate candidates on the ballot — Loretta Sanchez.

CalPERS Could Get Hands on Billions in Private-Sector Retirement Funds

Calpers headquarters is seen in Sacramento, California, October 21, 2009. REUTERS/Max Whittaker

Instead of addressing the estimated $600 billion in unfunded liabilities in California’s beleaguered public-employee pension system, Democrats in Sacramento have instead decided to “solve” a growing pension crisis in the private sector. In 2012, Governor Jerry Brown signed a measure that created an investment board and authorized a “feasibility study” of various options for a state-backed private-pension system. That study came out last month, and the legislature is now vetting bills that would put its recommendations into action.

The plans under consideration would mandate participation in the new state-run retirement system for firms with five or more workers, though the workers themselves could opt out. Employers that don’t comply would face fines and other penalties. They would automatically deduct 3 percent to 5 percent of each employee’s earnings (the exact percentage is not yet determined) and deposit the money in an IRA, likely managed by the California Public Employees’ Retirement System (CalPERS)—the same union-controlled government entity that uses its investment muscle to promote liberal causes. Unlike the public-employee pension plans (or even Social Security), however, the envisioned private-pension system is a 401(k)-style, defined-contribution plan. It could not accumulate unfunded liabilities, at least in its current design.

After winning assurances that firms won’t be liable for any losses, the state’s business community has stayed mostly neutral on the scheme. A state senate analysis in support of the bill points to a genuine problem. “Today, due to inadequate retirement savings, nearly 50 percent of middle-income California workers will face living in or near poverty during their senior years,” it says. Social Security is inadequate, and more than 7 million private-sector workers “do not have access to a retirement savings plan through their jobs.”

The obvious rebuttals: workers do have access to such plans in the private sector, and it’s not the government’s job to create such a program. Low-income earners might not be thrilled to see their paychecks decline by 5 percent if the new proposal takes effect. Additionally, employers would face unexpected costs and red tape. The plan would almost certainly lead private employers with their own pension programs to dump their workers onto the new state system. And a government-administered pension system would likely crowd out private companies that manage and sell 401(k) investments.

The state’s public-sector unions backed Brown’s bill. As it turns out, union-friendly politicians hatched the private-sector pension plan a few years ago as a way to deflect attention from the public system’s massive unfunded liabilities. The idea was to give private-sector workers some modest benefit as a way to dampen public support for pension reforms.

Union members’ pensions are enormous. Public-safety officials in California typically receive the “3 percent at 50” formula, which means they (and their spouses) are guaranteed 3 percent of their income multiplied by the number of years worked, available at age 50, which translates to 90 percent of their final years’ pay after 30 years. And that’s before myriad pension-spiking gimmicks. Other public employees often receive formulas that guarantee 80 percent or more of their final pay, which is quite generous. The state’s $100,000 Pension Club is expanding rapidly for precisely that reason. Recently, the San Jose Mercury News reported on Alameda County’s top bureaucrat retiring with a $500,000 annual pension.

Should California go ahead and put the new system into place, and see positive results, expect political pressure to build to expand it into a bigger program—one that could eventually put taxpayers on the hook. Would you trust this crowd to solve any pension crisis?

California’s New $15 Minimum Wage Will Accelerate Automation

Minimum wage1California’s Legislature last week voted overwhelmingly to automate most of the Golden State’s fast-food restaurants, supermarkets, and mid-sized retail chains by 2022. No, that wasn’t the stated intent of Senate Bill 3, which sailed through the Assembly and Senate on mostly party-line votes and after little debate. But that will be the likely effect of the law, which is supposed to phase in a $15 hourly minimum wage starting in January.

Governor Jerry Brown signed the bill in Los Angeles on Monday, one week to the day after unveiling the wage proposal at a Sacramento press event where he was surrounded by the Democratic elected leaders and labor union bosses who helped put it together. “I’m hoping that what happens in California will not stay in California, but spread all across the country,” Brown said. “It’s a matter of economic justice. It makes sense.” Assemblyman Sebastian Ridley-Thomas, a Los Angeles Democrat, echoed Brown during Thursday’s floor debate. “This is an argument about economic justice,” he said. “Justice is not something that can be negotiated or compromised.”

As it happens, the bill was the product of several months of extensive negotiation and compromise, almost all behind the scenes and without a word of input from California’s many industry lobbying groups, or from the leadership of the state’s largely irrelevant Republican Party. The law’s most immediate practical effect will be to end a pair of union-backed initiative drives that appeared headed for November’s general election ballot. The Service Employees International Union had been agitating for a measure that not only would have imposed the $15 minimum wage sooner, but would have done so without regard to the state’s fiscal outlook or economic circumstances. Brown, ever the cautious progressive, thought the union’s proposal went too far, too fast.

Under Brown’s plan, California’s hourly minimum wage would increase to $10.50 in 2017 for businesses with 26 or more employees, followed by $11 in 2018, and another dollar each year, arriving at the magic $15 in 2022. After that, the law would let the wage continue to rise with inflation. Smaller businesses would have an extra year to implement the annual raises. Brown insisted on a provision allowing the governor temporarily to suspend the wage hikes in the event of an economic downturn or a large state budget deficit. But the legislation provides a limited window for action: the governor must make his decision in September; the wage hike takes effect the following January. And, the truth is, these emergency provisions are almost always for show. AB32 — California’s ill-named Global Warming Solutions Act of 2006 — included a similar escape hatch, which neither then-governor Arnold Schwarzenegger nor Brown ever considered using during the recession, or during any one of the state’s multibillion-dollar budget crises. They opted instead for budget gimmickry and tax increases. One result? California’s high-skill, high-wage manufacturing sector has never recovered. In February, it experienced its worst contraction since 2009.

Advocates, including the labor-backed Fight for $15 Coalition and Senate president pro tem Kevin de León, say the raise will benefit as many as 6.5 million workers, or upward of 43 percent of the state’s workforce. Mainly, though, the $15 minimum wage will be a boon for California’s public-sector unions. The state Department of Finance estimates that the wage hike will cost taxpayers at least $3.6 billion a year by 2023, owing to a raise (and new benefits) for in-home health-care workers. But the cost likely will be even higher than that, as many public employees—teachers, most notably—must contractually be paid at least double the minimum wage or receive overtime pay.

Businesses have the most to lose. “I think very few business people will lobby against this bill, because then they will just be cutting their own throat,” Brown said at his press conference the other day. And he was right—the business lobby didn’t put up much of a fight, and its reasonable objections were scoffed at. California is a diverse state. What might appear economically feasible along the wealthier coast may not be such a good idea in some of the poorer inland areas, which have never quite come back from the recession.

Will a $15 per-hour wage really help workers in San Francisco? As the city began phasing in its own $15 minimum wage law last year, locals were shocked to discover the law of unintended consequences. Business owners who supported the city’s ordinance have found themselves raising prices, cutting hours, or in a few notable cases, shutting down altogether. “If you can only raise prices so much,” one political consultant with the Los Angeles Area Chamber of Commerce told the L.A. Times this week, “you’re going to be forced to cut hours, cut employees, change your business model and frankly, automate.”

That — and maybe relocate your corporate headquarters to Tennessee while you’re at it. Last month, Andy Puzder, chief executive officer of CKE Restaurants (owners of the Carl’s Jr. and Hardee’s fast-food chains), announced that the company would leave Santa Barbara for the more accommodating tax and regulatory climes of Nashville. But Puzder’s greater sin, at least judging from the scorn and ridicule he garnered online, was his unapologetic view of how best to boost his company’s bottom line in the years ahead: robots all the way down. “They’re always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case,” he told Business Insider. If labor is the biggest expense on the ledger, then that’s the likeliest target for cuts. “With government driving up the cost of labor, it’s driving down the number of jobs,” Puzder said. “You’re going to see automation not just in airports and grocery stores, but in restaurants.”

In fact, Puzder wasn’t saying anything particularly new or novel. Automation is coming, no matter what. Fast-food kiosks are commonplace in Europe, where labor costs are even more prohibitively expensive than here, with McDonald’s leading the way. But it isn’t just the corporate monoliths that are embracing automation. Smart start-ups are making automation hip. Puzder was overjoyed with Eatsa, a new restaurant chain with locations in Los Angeles and San Francisco that is almost completely automated. Customers order from a screen in the front of the restaurant. A small crew in the kitchen assembles the meals in the back. “The entire process requires zero human interaction between customers and workers.”

Brown may be right that California will lead the way for the rest of the nation. But progress isn’t a $15 per-hour minimum wage. It’s an automat in San Francisco.

CA Pension Reform — A Rigged Game

public employee union pension“Certainly the game is rigged,” science fiction author Robert Heinlein once wrote. “Don’t let that stop you; if you don’t bet you can’t win.” The quip should be the new rallying cry of California’s indefatigable band of pension reformers, who continue to fight to rein in the state’s pension debt. It’s always been a tough battle — but the latest setback shows that the system is rigged at practically every level. Last month, California’s Public Employment Relations Board, the quasi-judicial body that oversees the implementation of the state’s collective-bargaining statutes, invalidated the results of a three-year-old referendum —Proposition B — that passed in November 2012 with 66 percent of the vote and would have reduced pension benefits for most new hires in San Diego and moved them to a 401(k)-style, defined-contribution system. Other reforms have also fallen by the wayside. In June 2012, heavily Democratic San Jose approved with nearly 70 percent of the vote a measure that would have trimmed benefits for current employees. A Santa Clara County judge in 2014 eviscerated the measure, invoking the so-called “California Rule,” a 70-year-old court interpretation of the state constitution that has made it impossible for overburdened cities to trim employee costs.

San Diego’s reform initiative was qualitatively different from San Jose’s. Its authors were careful to craft language that avoided running afoul of the California Rule by focusing on new hires and placing caps on pensionable pay. Prop. B was touted as a model for the rest of the state to follow, and the state needs one. The union-controlled Legislature remains hostile to reform, beyond the expedient passage in 2012 of a pension-reform bill that mainly served as a bait-and-switch to convince voters to hike taxes.

PERB is not an impartial agency. Before the 2012 city vote, PERB had tried to keep the proposition off the ballot altogether. Most of the board’s members have worked for one of two big unions — either the California Teachers Association or the Service Employees International Union. Its administrative law judges aren’t real judges but officials employed by the agency. Nearly two years ago, one of those biased adjudicators issued a lengthy ruling demanding that San Diego return to the 2012 status quo. The full board affirmed the ruling, maintaining that officials were required to bargain the terms of the initiative with the city’s unions before placing the measure on the ballot. But the city didn’t place the measure before voters — voters did it themselves, signing petitions to place it on the ballot. The board elided this vital distinction by pointing to the participation of San Diego’s former mayor, Jerry Sanders, and other officials in the initiative’s campaign. Never mind that Sanders said he was involved as a private citizen.

On Tuesday, the City Council voted unanimously to appeal the measure, even though a leading Democrat said he voted for the appeal simply to get legal clarity. “The people’s right to initiative is guaranteed by the California Constitution,” City Attorney Jan Goldsmith told the Union-Tribune. “This right cannot be bargained away in a back room, or stolen from the people by a government agency.” The appeal will send the matter to the courts.

Goldsmith, a strong backer of Prop. B, wrote in a July 2012 San Diego Union-Tribune column that the issue boiled down to constitutional rights. “[N]ever before has any initiative that qualified for the ballot through petition signatures been deemed a ‘sham’ citizen initiative,” he wrote. “Since 1911, the right to place citizen initiatives on the ballot through voter petitions has been a constitutional right in California reserved by the people to bypass politicians and special interests. This right is not conditioned upon the approval of those special interests and is not something to be bargained over.”

PERB isn’t the only agency to try to kill citizen initiatives. Recently, the union-friendly Agricultural Labor Relations Board invalidated an election by Fresno farm laborers who voted against representation by the United Farm Workers. For more than a year, the board refused even to count the ballots before deciding to destroy them. Former San Diego councilman Carl DeMaio, a leader in the city’s pension reform fight, and Chuck Reed, San Jose’s former mayor and a leader in that city’s pension reform efforts, have been working on a statewide initiative for either the November 2016 or 2018 ballots. They’ve faced lots of resistance from entrenched power, and they’re preparing to meet other legal obstacles from unions and their political backers. Yes, the game is rigged, but reformers soldier on. At least they understand that California’s fiscal future is at stake.

A Half-Charter School District for L.A.?

Photo courtesy of channone, flickr

Photo courtesy of channone, flickr

Eli Broad made his fortune in construction and real estate. But he’s building a legacy as a philanthropist and an education reformer. In September, the Broad, a $140 million museum of contemporary art, opened in downtown Los Angeles at the corner of a revitalizing Grand Avenue and 2nd Street, across from the Walt Disney Concert Hall. That same month, the Los Angeles Times published a leaked memo detailing Broad’s proposal to revitalize L.A.’s sclerotic public school system. Working under the auspices of his family foundation, Broad would gather some of the biggest names in private philanthropy — Gates, Walton, Ahmanson, Bloomberg, Annenberg and Hewlett, as well as David Geffen, Kirk Kerkorian and Elon Musk — to open 260 new charter schools in the Los Angeles Unified School District over an eight-year period, with an enrollment goal of at least 130,000 students. The memo discusses how to raise $490 million to pay for the effort, which includes recruiting teachers, acquiring real estate, providing outreach to parents and navigating political battles. If the octogenarian Broad succeeds, half of L.A. Unified’s schools would be charters by the mid-2020s.

Naturally, L.A.’s education establishment detests the idea. The LAUSD board’s president, Steve Zimmer, denounced Broad’s plan as “a strategy to bring down LAUSD.” In November, board member Scott Schmerelson pushed a resolution announcing the board’s opposition to the Broad Foundation’s plan by name. Later, Schmerelson changed the language to say the board opposed any “external initiatives that seek to reduce public education to an educational marketplace and our children to market shares while not investing in District-wide programs and strategies that benefit every student.” As an L.A. Times editorial pointed out, by that standard, “the board would have to oppose many of its own programs — magnet schools, programs to teach students fluency in English and alternative schools for students with chronic behavioral problems.” (In response, Broad’s new educational nonprofit expanded its proposal to support traditional public schools, including pilots, magnets, and other high-performing schools that serve low-income children.)

Former LAUSD superintendent Ramon C. Cortines was more charitable. At a forum with Los Angeles Times columnist Steve Lopez earlier this month, Cortines didn’t ascribe ill motives to Broad, but rather suggested the billionaire was ill advised. “I think somebody brought him an elixir without having it be tested to see if it will really do what it is promised to do,” he said. But United Teachers of Los Angeles president Alex Caputo-Pearl was predictably unsparing in his vitriol. “Billionaires should not be running public education,” he said. The union boss also claimed that charter schools are unregulated and “deregulation doesn’t work.” Not to be outdone, retired kindergarten teacher Cheryl Ortega groused, “Charter schools are destroying public education.”

Broad’s plan is ambitious, to be sure. In addition to fighting the school board and union, Broad and his foundation allies would need considerable community support to succeed. Charters already make up a sizable portion of schools in the district: nearly a quarter of LAUSD students — about 150,866 students — are enrolled in 282 charter schools from San Pedro to the San Fernando Valley. Another 40,000 students languish on waiting lists. The demand is there; it’s the supply that’s lacking, though procuring facilities for 260 new schools would take some doing.

California’s 1992 charter school law gives local districts the power to approve or deny charter applications, though applications cannot be denied without good reason, such as questionable management or shady finances. However, the district doesn’t have the last word. Charter applicants have the option to appeal first to the county board of education, and then to the state board of education, if necessary.

A closer look at many of the antagonists’ complaints reveals less anger about billionaires’ meddling in education than envy that Broad’s largess doesn’t extend to traditional public schools. But the schools already receive plenty of money. Official per-pupil spending in Los Angeles is $13,490, which is greater than the national average and doesn’t include expenses such as the cost of building and maintaining schools, interest on various payments, bonds and so forth. When those expenditures get added in, per-pupil spending comes to about $30,000 per year. If the new California Assessment of Student Progress and Performance (CAASPP) scores are any indication, the money is not being well-spent. Only a third of the city’s students performed at grade level in English, while about a quarter performed at grade level or better in math. The district’s charter school students far outpaced their peers in traditional schools.

Don’t believe the anti-reform hype about lax regulation and looming public school destruction, either. Charter schools are public schools, funded by tax dollars and subject to regulation — just not to the same extent as traditional public schools, which are strangled by bulky union contracts that put seniority ahead of competence. Broad’s plan anticipates that 5,000 union members could be put out of work and replaced with staff hired through Teach For America, TNTP (formerly the New Teacher Project), and other groups that work with young instructors. The proposal makes no mention of recruiting teachers from within L.A. Unified.

Clearly, hundreds of new charter schools would find it difficult to fill their ranks with newbies. And therein lies an important but unstated aspect of the Broad plan. Those rehired from the current crop of experienced teachers would be the good and even great ones working now because they are qualified, not because they are protected by the state’s seniority statute. Needless to say, Caputo-Pearl has a different take. “The charters are specifically looking for educators who have not had the experience of being in a union,” he said, “which means that, by and large, they’re looking for teachers who may find it more challenging to raise their voice about curriculum or school conditions.” That’s absurd, of course. Where is it written that that only unionized teachers speak up about “curriculum and school conditions”?

Some of the naysayers claim that a half-charter district would leave too many children behind, but other cities’ experience suggests otherwise. Washington, D.C., and Detroit have moved in recent years to a 50 percent charter model. New Orleans may offer the best evidence of how charter schools can serve a low-income and underprivileged population. After Hurricane Katrina devastated the Crescent City in 2005, a much more vibrant charter system emerged in the aftermath. Today, 92 percent of the city’s students are enrolled in a charter school. Ten years ago, 62 percent of schools in Orleans Parish were failing. Today, just 7 percent of schools are failing. During the same period, the portion of city schools with students performing at or above grade level rose from 35 percent to 62 percent. As it happens, Paul Pastorek, the former superintendent of public education in Louisiana who helped oversee the turnaround, has been appointed to lead Broad’s effort in L.A.

Philanthropy has the power to transform institutions for the better. More charters in Los Angeles would certainly disrupt the dismal status quo—likely to the advantage of good teachers, their students, and taxpayers. Opponents see Broad’s proposal as a way of “bringing down LAUSD,” but building up alternatives to a dysfunctional system may be exactly what L.A.’s children need.

“Temporary” Taxes Forever

tax signNothing is so permanent as a temporary tax. In California, the state’s most powerful public-employee lobbies are preparing two initiatives for the November 2016 ballot that would either extend or simply make permanent an income-tax increase on the state’s highest earners that was scheduled to expire at the end of 2018. Legislators and their union patrons can hardly contain themselves.

Anyone with eyes to see could have predicted this turn of events. In 2012, the Golden State faced a $16 billion budget deficit caused almost entirely by unchecked entitlements, poor revenue estimates, and years of bad legislative choices. Governor Jerry Brown went to voters and said, in effect, he wouldn’t raise their taxes; he wanted them to raise taxes on themselves. But he promised that the pain would only be temporary. And if voters didn’t go along, well, the governor couldn’t guarantee what might happen next to public schools, health care for the poor, and other beloved programs. No pressure or anything — just vote for Proposition 30 and nobody else would get hurt. Brown tramped up and down the state in the weeks before the election, quoting scripture as he often does to make his case. When the ballots were all counted, 55.4 percent of voters went along.

Prop. 30 amended the state’s constitution to raise the sales tax from 7.25 percent to 7.5 percent for four years and retroactively hiked for seven years the income tax on Californians earning more than $250,000. The top tax bracket went from 10.3 percent to 13.3 percent, giving the Golden State the distinction of boasting the highest marginal income-tax rates in America. The “temporary” measure was supposed to raise anywhere from $6.4 billion to $9 billion a year, with the bulk of the money intended for public schools (or, at least, the public school teachers’ beleaguered retirement fund). Brown admonished legislators in his January 2013 “state of the state” address not to let the additional revenues cloud their judgment. “The people have given us seven years of extra taxes,” he said. “Let us follow the wisdom of Joseph, pay down our debts, and store up reserves against the leaner times that will surely come.”

That notion lasted about a year before state officials — the ones not named Brown — began speaking openly of extending the Prop. 30 hikes forever. Then, earlier this year, California’s Service Employees International Union and the California Teachers Association met to discuss a ballot initiative, dubbed the “School Funding and Budget Stability Act,” to extend Prop. 30’s income tax portion at least through 2030, when everyone will have forgotten why the additional taxes seemed necessary in the first place. The SEIU-CTA measure would purportedly raise between $5 billion and $11 billion annually, depending on the performance of the stock market. The state’s nonpartisan Legislative Analyst’s Office has long pointed out that the state relies too heavily on capital gains taxes, making revenues volatile and difficult to predict. “Near the midpoint of this range — around $7.5 billion — is one reasonable expectation of the additional revenue that this measure would generate in 2019,” the LAO’s analysis of the SEIU-CTA initiative concludes. “Thereafter, through 2030, that amount will rise or fall each year depending on trends in the stock market and the economy.”

A second proposal by the SEIU-United Health Care Workers West, the California Hospital Association, and Common Sense Kids Action — cloyingly titled the “Invest in California’s Children Act” — would drop any pretense of sunset dates and permanently enshrine the 13.3 percent bracket in the tax code. It also would impose even higher rates on “super-earner” couples who make more than $2 million a year.

The measure could raise upward of $10.6 billion yearly — again, depending on the market — with 45 percent earmarked for K-12 education, 5 percent for community colleges, 10 percent for child development programs, and 40 percent for Medi-Cal, the state’s version of Medicaid. Common Sense Kids Action is the brainchild of Jim Steyer, brother of billionaire environmentalist Tom Steyer. Jim Steyer contends that early childhood programs such as First 5 California, funded by cigarette taxes and Head Start, are at once indispensable and insufficient. He argues that his measure simply asks the richest Californians to “pay a little more so we can make the investments every California kid needs to have a great start in life.”

Last month, the different groups began a series of meetings to see whether they could avoid an expensive and divisive campaign next year. The teachers unions are keen to expand the 1988 state constitutional mandate requiring at least 40 percent of the general-fund budget be allocated to K-12 education. They’d like to push it to 50 percent. But the health-care lobby, particularly the California Medical Association, has been pushing for the state to increase Medi-Cal reimbursements to doctors. If the CMA and the hospitals can’t get a larger cut from permanently higher income taxes, they might push for yet another $2-a-pack cigarette tax.

Where is Brown in all this? “I said when I campaigned for Prop. 30 that it was a temporary tax,” Brown said in October 2014. “That’s my belief, and I’m doing what we can to live within our means.” He added, “Don’t worry about having too many Democrats in Sacramento. If they get out of hand, I’ll keep them in check.” Brown reiterated his point in January in response to another reporter’s question. “I said that’s a temporary tax,” he said curtly. And when Brown released his revised 2015-16 budget in May, the 104-page summary noted that general-fund revenues are expected to keep growing even without Prop. 30’s additional taxes.

But now the governor is being coy and his spokesmen nonresponsive. The interests that secured Brown’s historic third and fourth terms are taking no chances. Unlike death and taxes, Jerry Brown will be gone in January 2019. The CTA, SEIU, and the alphabet soup of Sacramento lobbyists will be around forever.