California Cronyism and its Consequences

Crony capitalism is an economy in which businesses thrive not as a result of risk, but rather as a return on money amassed through a nexus between a business class and the political class. This is done using state power to crush genuine competition in handing out permits, government grants, special tax breaks, or other forms of state intervention.
– Wikipedia, Feb. 2019

If the goal of public policy is to optimize the role of government, cronyism must be identified and curbed wherever possible. Cronyism wastes the limited resources of governments, at the same time as it reduces the efficiency of the private sector by using subsidies and other incentives to undermine healthy competition.

The harm caused by crony capitalism can best be illustrated by example. In California, cronyism is a major culprit in one of the worst policy failures in recent decades, the housing and the related homeless crisis. Several types of cronyism played into California’s housing debacle. The most significant was cronyism that took the form of regulations that favored the wealthiest, most established corporations, while driving the smaller, emerging competitors out of the housing business entirely.

This form of cronyism through regulations was originally described by Bruce Yandle, now with the Mercatus Center, back in 1983. Yandle, writing for the American Enterprise Institute, coined the phrase “Bootleggers and Baptists,” to describe how during prohibition, the bootleggers who profited from the trade in expensive illicit liquor, would support the temperance movement’s Baptist activists and others, who lobbied against legislation to restore affordable legal booze. This concept applies perfectly to California’s punitive legislation that restricts land development.

For the past 30-40 years, and especially in the last decade or two, a growing assortment of laws and regulations have driven control over all major land development into the hands of a shrinking group of very large corporations. Using Yandle’s analogy, these are the bootleggers. Smaller landowners and construction companies have to sell out or subcontract to these large corporations, because there is no way they can afford the thousands or millions of dollars in fees and litigation, nor the years or decades of regulatory delays. And the Baptists in this example? The environmentalist lobby and its army of trial lawyers, who have seen to it that housing is restricted to ever smaller slices of California’s otherwise vast reserves of land, at the same time as they’ve successfully promoted building codes that make building a home far more expensive than it would otherwise cost.

Tent of homeless person on 6th Street Bridge with Los Angeles skyline in the background. California, USA. (Photo By: Education Images/UIG via Getty Images)

California’s homeless crisis is certainly caused in part by unaffordable housing, but it is exacerbated by another type of cronyism, “nonprofit cronyism.” These are rent seeking nonprofits that develop scandalously expensive “permanent supportive housing” for the homeless. In Los Angeles today, apartments for the homeless – palatial abodes by any reasonable comparison to the squalor of living on the streets – are being constructed in some cases for as much as a half-million per unit. The government pays a portion of these costs through grants, using taxpayers money, while other funds are secured through tax deductible donations. And when these units actually are opened to a microscopic fraction of the homeless population, because they are owned and managed by nonprofit corporations, they pay no income or even property taxes.

Crony capitalism in its most obvious form is exemplified by massive public works projects of dubious value to society. California’s grandiose and possibly doomed high speed rail project is the classic example. Even if the final project is restricted to the segment from Merced to Bakersfield, tens of billions will have been spent on a project that never passed any reasonably unbiased cost/benefit analysis, which is why it never attracted matching funds from the private sector.

There are plenty of similar examples. One noteworthy case of a massive, and dubious public work, is the costly rebuild of San Francisco’s Transbay Terminal, which for over 50 years had functioned as the central bus terminal connecting downtown San Francisco with other points in the city as well as routes extending into neighboring counties. In 2010, the terminal was demolished to make way for an expanded, “multi-modal” transit hub for the 21st century. Not only would a new tunnel bring commuter trains into the rebuilt terminal from the existing Caltrain station, 1.3 miles away, but the new terminal would also serve high speed trains.

The probable demise of high speed rail hasn’t diminished enthusiasm for the project which in total is estimated to cost around $10 billion. Yet the design of the station itself, already mostly complete at a cost so far of $2.1 billion, is no longer considered sufficient to handle the projected volume of commuter trains. After eight years of construction, the new terminal opened for bus service in 2018 – essentially performing the same service as the old terminal – and then shut down a few months later because of structural defects. Nobody knows when it will reopen. And even when it does reopen, trains won’t be arriving until the $6 billion connecting tunnel is completed, sometime around 2029.

The enthusiasm that informs persistent supporters of dubious projects, which would certainly include high speed rail and San Francisco’s Transbay Transit Center, brings into focus one of the central questions about crony capitalism. How does one distinguish between a project of dubious value, and one of compelling value? Paul Rubin, a professor of economics at Emory University, expresses this question in his own humorous but revealing alternative definition of crony capitalism: “Crony capitalism is lobbying by someone I don’t like for something I don’t like.”

This question of one person’s good cronyism being another person’s bad cronyism is easily recognized in the allocation of subsidies to manufacturers. Ideally, there should be a level playing field between market participants. The government shouldn’t be, as they say, “picking winners.” To choose another obvious example, California’s legislature is determined to increase the number of zero emission vehicles in the state, via rebates, incentives and mandates. The cost to taxpayers – and benefit to manufacturers of electric vehicles – over the next ten years is estimated to range between $9 and $14 billion.

But what if electric cars aren’t an unmitigated good thing, so good they are worthy of subsidies? What if electric vehicles produce illusory environmental benefits? What if the embodied energy in an electric car, far exceeding that of a conventionally powered car, represents an environmental cost that isn’t made up for during its useful, zero emission life? What if the environmental costs of recycling these cars and their massive batteries, or the environmental costs of extracting the resources needed to manufacture these batteries in the first place, represent an unrecoverable environmental cost? What if the emergence of some even better, cleaner transportation technology is being suppressed by the proliferation of subsidized electric cars?

This sort of debate surrounds any subsidized product. And it is fair to say that sometimes subsidies are necessary. But in crony capitalism, those debates are hijacked and skewed by the special interests in the private sector with the strongest connections to government policymakers.

There are myriad forms of crony capitalism. Incentives offered by California’s state and local governments for manufacturers to relocate to California, or stay in California, have cost taxpayers billions. A report published last year in the San Jose Mercury described how public money subsidies have poured hundreds of millions to Silicon Valley giants including Google ($766 million), Facebook ($333 million), Apple ($693 million), and Tesla ($3.5 billion).

These sorts of arrangements repeat themselves across California, and while there is an economic payback to keeping those companies and their jobs in-state, there is also a great irony. California is consistently ranked as the worst state in the U.S. to do business. Why not change the laws and regulations that make California such an unwelcoming place, which would help retain and attract all businesses, instead of pouring compensatory money into the hands of a favored few?

Speaking of the favored few, another problem that consistently accompanies crony capitalism is that it usually benefits the cronies more than it benefits whatever deserving group or cause the deal supposedly supports. The environment and open space is protected – or overprotected – enabling rich developers to get richer, and nobody can afford homes. Palatial “permanent supportive housing” is built for a handful of the homeless, while well heeled nonprofits collect subsidies that could have been used instead to house tens of thousands of homeless using tents and porta-potties. Billions are poured into monumental, landmark, “signature” transportation projects, while ordinary people sit in traffic on pitted, congested, inadequate roads. Taxes are raised so wealthy people can save money on electric cars that remain priced well out of reach of an ordinary Californian. High tech corporations earn hundreds of billions for their shareholders, yet taxpayers support subsidies to keep them from pulling up stakes and moving to Texas.

Finding examples of crony capitalism is an endless task, somewhat shrouded in ambiguity and contradictions. Whenever the government interferes in the “free market,” a subjective assessment is made that the interference is in the public interest, and an even more fraught decision is made to undermine one set of private concerns while creating an advantage for another. Apart from the the impossible extremes of anarchy or communism, good governments have to find that balance in between.

In California’s case, there is a great deal of room for improvement. Support efforts to increase transparency in contract negotiations and contract oversight to expose and deter overt cronyism. Recognize that the impact of environmental regulations has crippled the aspirations of low and middle income Californians, and repeal them, starting with the most extreme. Pay attention to the reports that expose the waste and corruption surrounding attempts to house the homeless. Fight for precedent setting court rulings that will make it easier and less costly to get things done – from building homeless shelters to constructing new roads and related housing infrastructure. Repeal CEQA; there’s plenty of regulation at the federal level. Most of all, make the state’s regulatory climate more inviting so it’s easier to keep and attract all businesses.

Tax Free Policies to Increase California’s Housing Stock

affordable housingOne of the most frustrating contradictions inherent in the policies being enacted by California’s one-party state goes something like this: We are inviting the welfare cases of America and the expatriates of the world to move here, while simultaneously enacting environmental policies that make it extremely time consuming and expensive to build anything.

No wonder there’s a “housing crisis.” Until demand decreases, or supply increases, housing in California will remain unaffordable for most of its residents. But don’t expect demand to slacken any time soon. The political consensus in favor of increasing California’s population has a strong moral justification – why shouldn’t the wealthy, innovative, compassionate people of California be willing to share their wealth with millions more people who are less fortunate? But there are other less high-minded upsides to population growth and obstacles to new housing.

Currently, real estate prices and rents are on the rise, favoring investors and landlords. Banks enjoy higher lending volumes, while borrowers enjoy greater liquidity, however precarious, as the property bubble offers them more collateral as security. The government agencies profit from higher property tax assessments and higher capital gains collections on sales of real estate. Large land developers that have the political clout and financial heft to build housing despite the many obstacles, enjoy unusually high margins that they could never achieve in a normal competitive market. Finally, as an expanding population increases demand for housing, at the same time public school districts can increase attendance-based revenue – which will make it somewhat less urgent that they reform their union work rules and spending priorities.

Efforts by California’s policymakers to increase the supply of housing have to be viewed in this context. They want to increase the supply of housing. Yet they also want to keep happy the special interests that pay for their political campaigns. Therefore, strict – and very self-serving – parameters are likely to limit what new laws are enacted to stimulate new housing. For example:

Negative Consequences of Special Interest Defined Development in California

(1) Additional open land outside of urban boundaries will remain off limits to development, in order to ensure that existing municipal jurisdictions are able to retain access to the new property revenues that will accrue to new stocks of residential and commercial real estate. This will be justified as necessary to protect the environment.

(2) Most obstacles to housing construction will remain in place – in particular, excessive fees to government agencies and onerous CEQA requirements. This will ensure that only the most powerful corporate and financial entities will be able to take advantage of new opportunities to build housing, while cutting out the small landowners and developers.

(3) Major land developers will be given financial incentives by state and local government entities to build “affordable housing” and eliminate “blight,” but these incentives will be out of reach for smaller landowners and developers.

(4) In order to keep the real estate asset bubble fully inflated, housing prices will only fall marginally as development occurs, which pretty much helps nobody, but massive programs of taxpayer funded rent control and rent subsidies will be enacted to make up the difference for qualifying low income families.

(5) “Densification” will be imposed on residential neighborhoods, with the primary victims being any neighborhoods that are situated close to bus stops or light rail stations. Developers will be permitted to build multi-story, multi-unit buildings on small residential lots and will not be required to offer parking; all of this will greatly increase their profits.

(6) Building code requirements will relentlessly increase in the name of energy efficiency and safety, with the practical effect being to lock out small landowners and developers from being able to afford to upgrade their properties or develop new properties; these same more stringent regulations will not seriously impact large development corporations and financial investors.

It is wrong to be entirely cynical about the laws that are coming. Slamming the door completely shut on newcomers to California would be cold hearted, unpopular and probably cause more economic harm than good. Zealously enforcing residential zoning densities that were put in place several decades ago would be overly sentimental, ignoring the disruptive adaptations and radical transformations that have defined and enriched urban life since settlement began. Completely embracing a new wave of suburban sprawl would needlessly eat up more open land than a more balanced policy approach might cost. While the new building code mandates are now excessive (if not ridiculous), nobody wants to go back to toilets with seven gallon tanks, or insulation with an R value of 2.0.

Unfortunately, balance is not what we’re finding in the new laws. Last year, the State Senate considered a bill – SB 827 – that would have removed local zoning control and allowed multifamily housing to be built in well-established single family neighborhoods. This would have allowed those multifamily housing projects to be as tall as 55 feet. Against heavy opposition, SB 827 never made it out of committee, but this year it’s back. The new legislation, again sponsored by Democrat Scott Wiener, is SB 50.

Reading through the text of SB 50 grants insight into just how entrenched the collusion is between public officials and developers seeking subsidies and waivers. Consider this introductory language:

Existing law, known as the Density Bonus Law, requires, when an applicant proposes a housing development within the jurisdiction of a local government, that the city, county, or city and county provide the developer with a density bonus and other incentives or concessions for the production of lower income housing units or for the donation of land within the development if the developer, among other things, agrees to construct a specified percentage of units for very low, low-, or moderate-income households or qualifying residents.

In plain English, the “Density Bonus Law” forces taxpayers to subsidize not only developers who are already making more money by being allowed to pack more units on less land, but also low and “moderate” income households who will occupy a percentage of housing units. Bring ’em in! Paying artificially high prices for housing while also paying for someone else’s inflated rent will never wear thin with taxpayers.

The Coalition to Preserve LA, “a citywide movement of concerned residents who believe in open government, people-oriented planning, equitable housing and environmental stewardship of Los Angeles,” produced this summary of SB 50.

Densification a la SB 50:

  • Forces cities to allow luxury towers in single-family areas.
  • Upzones thousands of beautiful streets to 6- and 8-story apartments if an area is “jobs-rich with good schools.”
  • Upzones thousands of single-family areas within a 1/4 mile of a frequent bus stop or 1/2 mile of a rail station.
  • Lets developers sue any city that tries to stop them.
  • Cuts parking to zero, claiming rich residents “use transit.”
  • Falsely claims to protect renters & sensitive communities.
  • Strips protections of many HPOZs and historic buildings.
  • Lets developers wipe out setbacks, backyards, green belts.

For millions of Californians who live in bucolic suburbs, with tree lined streets and spacious private yards, SB 50 unchecked is going to be a holocaust. It will utterly destroy their way of life. Many victims will not have the ability to move. The greatest insult of all: Their taxes will be paying for it. And as a “solution,” it is completely unnecessary. There are better ways, that leave established neighborhoods intact and cost taxpayers nothing.

Reforming the California Environmental Quality Act (CEQA)

There are two ways to mitigate the impact of CEQA, the law that requires “environmental impact reports” on any land development in California, including “climate change” impact along with a host of metastasizing additional requirements. The first, being practiced increasingly, is to grant CEQA waivers to politically connected developers that are proposing projects deemed politically correct. The second, far preferable solution, is to fundamentally rewrite CEQA.

An excellent summary of how to reform CEQA appeared in the Los Angeles Times in Sept. 2017, written by Byron De Arakal, vice chairman of the Costa Mesa Planning Commission. It mirrors other summaries offered by other informed advocates for reform and can be summarized as follows:

  • End duplicative lawsuits: Put an end to the interminable, costly legal process by disallowing serial, duplicative lawsuits challenging projects that have completed the CEQA process, have been previously litigated and have fulfilled any mitigation orders.
  • Full disclosure of identity of litigants: Require all entities that file CEQA lawsuits to fully disclose their identities and their environmental or, increasingly, non-environmental interest.
  • Outlaw legal delaying tactics: California law already sets goals of wrapping up CEQA lawsuits — including appeals — in nine months, but other court rules still leave room for procedural gamesmanship that push CEQA proceedings past a year and beyond. Without harming the ability of all sides to prepare their cases, those delaying tactics could be outlawed.
  • Prohibit rulings that stop entire project on single issue: Judges can currently toss out an entire project based on a few deficiencies in environmental impact report. Restraints can be added to the law to make “fix-it ticket” remedies the norm, not the exception.
  • Loser pays legal fees: Currently, the losing party in most California civil actions pays the tab for court costs and attorney’s fees, but that’s not always the case with CEQA lawsuits. Those who bring CEQA actions shouldn’t be allowed to skip out of court if they lose without having to pick up the tab of the prevailing party.

Unfortunately, California’s new governor, Gavin Newsom, while acknowledging problems with CEQA, has put responsibility for recommending changes to CEQA in the hands of a task force consisting of labor union officials and land developers. It will be a surprise if a group dominated by these two special interests will be capable of coming up with the solutions recommended by De Arakal and others.

Principles of Appropriate Development in California

There is a moral imperative to increase the supply of housing in California. As noted, California’s policymakers have awakened to the fact that construction of new housing is not nearly meeting demand for new housing. But the way they’re going about stimulating housing construction is flawed. It will not appreciably lower the cost of housing and it will needlessly enrich special interests. Here are some ways housing could be more appropriately developed in California:

(1) Eliminate all forms of government subsidies, incentives or waivers to any developers. All players in the housing industry should be unsubsidized, and playing by the same set of rules.

(2) Stop requiring diverse types of housing within the same development or neighborhood. Mixing high-density, subsidized housing into residential neighborhoods devalues the existing housing, and this social engineering is unfair to existing residents who have paid a high price to live there.

(3) Roll back the more extreme building codes. Requiring 100 percent of homes to be “energy neutral” or include rooftop photovoltaic arrays, for example, greatly increase the cost of homes.

(4) Lower the fees on building permits for new housing and housing remodels. Doing this might require pension reform, since that’s where all extra revenue goes, but until permitting costs are lowered, only billionaire developers can afford to build.

(5) Speed up the permitting process. It can take years to get permits approved in California. Again, the practical effect of this failure is that only major developers can afford to build.

(6) Reform the California Environmental Quality Act as noted. Better yet, scrap it altogether. Federal laws already provide adequate environmental safeguards.

(7) Make it easier to extract building materials in-state. California, spectacularly rich in natural resources, has to import lumber and aggregate from as far away as Canada. This not only greatly increases construction costs, it’s hypocritical.

(8) Increase the supply of land for private development of housing. Currently only five percent of California is urbanized. There are thousands of square miles of non-farm, non critical habitat that could be opened up for massive land development.

(9) Engage in practical, appropriate zoning for infill and densification in urban cores, but only after also increasing the supply of open land for housing, and only while continuing to respect the integrity of established residential neighborhoods.

California has unaffordable housing because extreme environmentalists have imposed an agenda onto state policymakers that, unfortunately, dovetails perfectly with the agenda of special interests – in particular, public sector unions and bureaucrats, and large corporate land developers and construction contractors. This coalition is also responsible for the related problem of neglected infrastructure in California. Until California’s voters wake up and break this immoral, self-serving coalition, there is little hope that housing prices in particular, or the cost-of-living in general, will come down in California.

This article originally appeared on the website of the California Policy Center.

Is Gavin Newsom California’s Denier-in-Chief?

Gavin NewsomCalifornia’s newly elected governor, Gavin Newsom, gave his first “state of the state” address on February 12, and it was a speech more noteworthy for what he didn’t than for what he did mention. Were Newsom’s sins of omission the conscious choice of a seasoned politician, or is he in denial, like so many of his California leftist cohorts?

Before criticizing the content, and the omissions, of Newsom’s speech, it’s necessary to make something clear: Nobody can deny California’s accomplishments; its great universities; its vibrant, diverse industries; its global economic and cultural influence. But California’s accomplishments are in spite of its state government, not because of it. That cannot be emphasized enough.

Newsom began by saying Californians had to make “tough calls” on the issues of transportation, water, energy, migrants, the homeless, healthcare, and the cost-of-living. He proceeded next to make no tough calls.

Forget About Fixing Roads, Let’s Build Half a Bullet-Train

With respect to transportation, Newsom made no mention of California’s crumbling, clogged freeways and connector roads. To be fair to Newsom, when you don’t have to commute day after day during rush hour — and even when you do drive, you have a driver so you can sit in the back seat of a very quiet, very smooth ride, and conduct teleconferences — you don’t really think about “roads” the same way the rest of us do. So understandably, Newsom chose to talk about high speed rail, and even on that topic, he hedged his bets. He proclaimed the project would cost too much and take too long to build a track from Sacramento all the way to San Diego, or even from San Francisco to Los Angeles. Instead he committed to focusing on completing the track from Merced to Bakersfield, where work has already begun.

Is this denial? Or just the out-of-touch priorities of an extremely wealthy man who doesn’t have to drive? Merced? To Bakersfield? Along the entire 163 mile stretch between these two cities, including everyone living in all the five surrounding counties, there are only 2.8 million people. How much will that cost? $10 billion? $20 billion (more likely)? Has Newsom considered how much highway improvement could be done with all that money? For that matter, might we ask the voters of Fresno and Kern counties, as if all that money should be spent there — “would you rather have $20 billion spent on road improvements, or that train?” Or are we afraid of the answer? Does Gavin Newsom understand that even if high-speed rail were built in all its original scope, it would still do virtually nothing to ameliorate California’s transportation challenges, which can only be solved by building new roads and widening existing roads?

Forget About Increasing Water Supply, Let’s Build Half of the “Twin Tunnels”

On the issue of water, Newsom also split the difference on what promises to be California’s second biggest infrastructure money pit after high-speed rail. That would be the two proposed “delta tunnels” that would transport runoff from Northern California, under the Sacramento River Delta, and onward to thirsty farms and cities in arid Southern California. But the governor didn’t call for two tunnels, nor did he kill the project. Like Solomon, Newsom is going to give the “water fix” advocates half of their baby. He wants to build one tunnel.

Newsom correctly stated that demand for water exceeds supply in California, but he was firmly in denial as to the solution, which is to create more supply. For the cost of even just one delta tunnel, massive desalination plants could be constructed on the Southern California coast. Those facilities, combined with runoff capture and sewage reuse projects throughout California’s coastal cities, could make them water independent. Seismic upgrades to levees along with new fish hatcheries could preserve cost-effective, environmentally acceptable movement of northern water to southern customers through the delta, something that’s worked for decades. And more storage via new off-stream reservoirs, aquifer recharge, and raising the Shasta Dam would supply additional millions of acre feet. Instead? A tunnel that will cost at least $20 billion, and add zero water to California’s annual supply.

Never Mind the Shortages We Created, Let’s Invite the World to Migrate Here

California’s politically sacred mission these days, of course, is to invite the migrants of the world to settle here. Newsom didn’t disappoint his crowd, trotting out dubious statistics to prove that undocumented immigration is a “manufactured problem.” But again, Newsom is denying the big picture: If California rolls out the welcome mat for the destitute masses of the world, where does it end? There’s good, accurate data available on this.

More than 800 million people in the world live in extreme poverty — defined as living on less than two dollars per day. What about Latin Americans, who according to Newsom’s equally photogenic counterpart in the U.S. Congress, Alexandria Ocasio-Cortez (D-N.Y.), “must be exempt from immigration laws because they are ‘native’ to U.S. lands”? Over 150 million Latin Americans live on less than $4 per day. Hundreds of additional millions of Latin Americans struggle economically. Why not form “caravans” to bring them all here? Newsom, along with the entire California Legislature, will cheer them on and let them in, no matter what the cost.

As it is, currently 2.6 million undocumented immigrants live in California. Even the liberal website politifact.com acknowledges that 55 percent of immigrant households in California benefit from welfare, with their only supposedly debunking caveat being that some of these households have U.S. born children. Other recent studies put the California total as high as 72 percent. There is a cost to Californians for all this, estimated as high as $25 billion per year, so where does Gov. Newsom draw the line? Three million more migrants? Five million? Ten million? One hundred million? Or is he in denial?

And What About Those Politically Created Shortages?

Newsom mentioned “overcrowded classrooms,” and talked about “too much demand, too little supply” for housing. But his solution for education was, what a surprise, more money and “accountability for all public schools, traditional and charters” (a slap at the charter schools, well received based on the applause from the union-controlled audience). Newsom remained in denial as to the real reason California’s public schools are failing, the fact that teaching professionals have been unionized, and the unions have used the dues revenue to exercise nearly absolute control over state and local politicians. Thanks to the teachers union, bipartisan reforms to union work rules (dismissal policies, layoff criteria, lengthened tenure) are watered down or completely squelched, and charter schools are under constant attack.

As the old cornball adage goes, denial ain’t just a river in Egypt, Gov. Newsom. Public sector unions destroyed public education in California. Do something about that, if your thousand watt compassionate smile is doing anything more than hiding a vacuous brain, guiding a feckless, morally indifferent human, attracted to nothing more than publicity, power, money, and beautiful women. That’s probably an overly harsh, unfair and inaccurate assessment of the Governor. So maybe he will silence his skeptics, by doing something that takes actual courage. Take on the teachers union. Don’t talk about it. Fight them. Fight them tooth and nail. Fight them on the beaches. Fight them in the streets. Fight them in the hills. Never give up.

Wasn’t Newsom’s campaign slogan “courage for change”? Offer that slogan, but nothing else, to the semi-literate, totally innumerate, thoroughly indoctrinated products of California’s public schools, and see how much good it does. They are the victims of the teachers unions. They need courage from the Governor. Not a pretty face. Not a pretty phrase.

Newsom’s solution for the housing shortage, so far, is to sue cities and counties that won’t build government subsidized “affordable housing.” But “affordable housing” is never affordable, and everyone knows that by now. It’s just a money tree for connected developers. To make homes “affordable” doesn’t have to cost taxpayers a dime. Just deregulate the private housing industry, making it easier to develop land. Then, strip away the overreaching design mandates that turn ordinary homes and apartments into hermetically sealed, stupefyingly expensive, miniature Borg cubes with embedded, connected chips in everything from the toilets to the coffeemaker, festooned with phony “gingerbread” eaves and trim that some marketing department tested with focus groups.

Newsom, to his credit, did mention the need to modify the California Environmental Quality Act (CEQA), an absurdly intrusive law that is a gold mine for trial lawyers and unions who use it to stop land development in its tracks. But his solution? Turning CEQA reform over to a task force consisting of union officials and large home developers.

Newsflash, Gov. Newsom! Union officials and large home developers won’t benefit from CEQA reform, so they won’t come up with anything useful. They like CEQA just the way it is. Because CEQA is the reason the median home price in California is $547,400. That is an absolutely obscene amount for anyone to have to pay for a home. But it further enriches the billionaire land developers who have the political clout and financial heft to withstand the avalanche of CEQA lawsuits and regulatory hurdles. Who is harmed by CEQA? The average Joe who owns ten acres and knows a building contractor. Those guys can only dream of meaningful CEQA reform. Better yet, they should move to Texas which is still open for business. Or, that is, move to Texas before Gov. Newsom’s other photogenic counterpart, “Beto,” and his gang of Leftists with a twang, manage to turn that state into another California.

Charisma Can’t Make Up for Denial, But Redemption is Possible

On every topic, Newsom’s theme was at least consistent. Let’s be tough, let’s be honest, let’s do our duty to ALL Californians. But he wasn’t tough, and he wasn’t honestly choosing the right questions to ask, so it’s hard to see how he was doing his duty to all Californians. And for a man leading the biggest state in the United States, who could very well end up being inaugurated as the next U.S. President in January 2024, we need more. Much more. Here are three topics of bipartisan urgency that Newsom should have, but didn’t touch.

He didn’t talk about how on the next economic downturn, state and local public employee pensions are poised to bankrupt half of California’s cities and counties and totally blow up the state budget.

He didn’t talk about how California’s public employee unions have formed a coalition with extreme environmentalists and Leftist billionaires to stop all development of land and energy in order to create an asset bubble that benefits public coffers and private investments while screwing everyone else.

He didn’t talk about how, even if you believe all the alarmist hyperbole regarding climate change, you can’t possibly go “carbon free” without more hydro-electric and nuclear power.

Newsom’s mannerisms might remind one of Chris Collinsworth, a tall and well-liked sportscaster who talks with a perpetual smile on his face. But Newsom isn’t a sportscaster. He’s presiding over a state — with 40 million people and “the fifth largest economy on earth” — that has been taken over by a gang of money grubbing, power-mad, opportunistic, platitude-spewing con artists.

If Newsom’s intentions are half as benevolent as that compassionate smile of his tells us they are, and if his “courage for change” is sincere, then here’s another way he can redeem himself in the eyes of his skeptics. He can live the life that his political comrades have imposed on California’s hardest working residents. Instead of moving into a 12,000-square-foot mansion, located on an eight acre compound in one of the wealthiest ZIP codes in Sacramento County, Newsom should move his family into one of those California median priced $547,400 homes, situated on a 3,200 square foot lot, surrounded by other homes on 3,200-square-foot lots, and send his four children to a public school.

Redemption is good for the soul, so there’s more: for Newsom to fully live the California dream, and prove he cares about “ALL Californians,” he should give his personal wealth away to charity — or better yet, send it to the CalPERS public employee pension fund because they’re going after every dime they can get their hands on. Then, Newsom should cut his governor’s pay to $71,805, which is California’s median household income, and refuse all outside honorariums and fees. And he should do this not for two weeks to make a statement, or even for the next four years. He should do this for the rest of his life.

He would be in denial no longer.

This article originally appeared on the website American Greatness.

California’s Green ‘Bantustans’ Are Coming to America

If the “smart growth” urban planners that dictate land use policies in Democratic states and cities have their way, the single family dwelling is an endangered species.

In Oregon, proposed legislation would “require cities larger than 10,000 people to allow up to four homes to be built on land currently zoned exclusively for single-family housing.” In Minneapolis, recent actions by the city council mean that “duplexes and triplexes would be allowed in neighborhoods that only previously allowed single-family housing.”

The war on the detached, single family home, and — more to the point — the war on residential neighborhoods comprised exclusively of single family homes, is on. And it’s gone national.

In California, ground zero for this movement, state legislation now requires cities and counties to fast track permitting for “accessory dwelling units.” This scheme will allow developers and ambitious homeowners to construct detached rental homes in their backyards, but since they’re called “accessory dwelling units,” instead of “homes,” they would not run afoul of local zoning ordinances that, at one time, were designed to protect neighborhoods from exactly this sort of thing.

“Smart growth,” however, began long before the home itself came under attack.

First there was the war on the back yard. Large lots became crimes against the planet — and if you doubt the success of this war, just get a window seat the next time you fly into any major American city. In the suburbs you will see a beautiful expanse of green, spacious, shady neighborhoods with lots designed to accommodate children playing, maybe a pool or vegetable garden, big enough for the dog.

But you will also see, plain and obvious, those suburbs that were built after the smart growth crowd came along. Tight, treeless, and grey, with homes packed against each other, these are the Green Bantustans, and there’s nothing green about them.

The image below shows homes packed roughly 15 per acre — including the streets — on private lots that are 40-feet wide by 80-feet deep. As of January, these homes were selling for $350,000. Such a deal! Smart growth!

Why call neighborhoods with mandated ultra-high density “Green Bantustans”? Because the Bantustan was where a racist elite used to herd the African masses during South Africa’s apartheid era. The commonality between the Green Bantustan and the Racist Bantustan becomes clear when you step back and ponder what is happening. In both cases, a privileged elite condemn the vast majority of individuals to live in a concentrated area designed to minimize their impact on the land.

But in America, the “smart growth” advocates aren’t racists, they’re misanthropic environmentalists.

The image below is fascinating, because at the same scale, it shows a neighborhood in the township of Soweto, once touted as a poster child for one of the most chilling warehouses for human beings in history. But notice the size of the lots—40 feet by 80 feet—are identical in size to that Green Bantustan in California. Also, please note, it’s probably much easier to get a building permit in Soweto.

In the name of “smart growth,” urban planners have succeeded in creating policy that has drawn lines around American cities, “urban service boundaries,” which make it nearly impossible to start new home construction outside these lines. While the purpose of these boundaries ostensibly is to protect open space, farmland, and wilderness habitat, not only are those goals only marginally fulfilled, but other negative unintended consequences abound. Consider the following:

Urbanization just takes a different form. Creating these greenbelts of protected open space mean instead of leapfrog development, you have super-leapfrog development. People who want to get out of the city now build and purchase homes on the other side of the greenbelt. Instead of suburbs on the perimeter of cities, you have exurbs, whole new cities, constructed just beyond the protected areas.

Quality of life is ruined in older suburbs. Homes within these cities are concentrated onto tiny lots in order to get as many people into each new development as possible. Often these new developments are imposed in the middle of semi-rural suburbs where the way of life for the people already living there is destroyed.

Traffic congestion gets worse. These dense new neighborhoods are designed to be “pedestrian friendly,” but what they really are is car unfriendly. There is no room to park, inadequate roads, and expensive light rail that most people can’t make practical use of.

Housing becomes unaffordable. The winners in “smart growth” are never people who need affordable homes, because prices always go up when you reduce the supply of developable land. The winners are those landowners lucky enough to have property within the arbitrary boundaries where growth is permitted, and the public sector bureaucrats who keep development within their jurisdictions, in order to collect property taxes and fees on artificially inflated home values.

Basic Facts Contradict the Arguments for “Smart Growth” 
If the proportion of land consumed by people, even in low density suburbs, is compared to the amount of land available for development, the case for high-density “smart growth” weakens. For example, even with nearly 40 million residents, California is a sprawling, relatively unpopulated state where harsh restrictions on land development are unnecessary.

Encompassing 164,000 square miles, California is only 5 percent urbanized. According to the American Farmland Trust, California has 25,000 square miles of grazing land (15 percent), 28,000 square miles of non-irrigated cropland (17 percent), and 14,000 square miles of irrigated cropland (9 percent). The rest, 54 percent, is forest, oak woodland, desert, and other open space.

The above chart depicts three urban growth scenarios, all of them assuming California experiences a net population increase of 10 million, and that all new residents on average live three people to a household (the current average in California is 2.96 occupants per household). For each scenario, the additional square miles of urban land are calculated.

As the chart shows, adding 10 million new residents under the “low” density scenario would only use up 3.2 percent of California’s land. If all the growth were concentrated onto grazing land—much which is being taken out of production anyway, it would only consume 21 percent of it. If all the growth were to fall onto non-irrigated cropland, which is not prime agricultural land, it would only use up 19 percent of that. Much growth, of course, could be in the 58 percent of California not used either for farming or ranching.

Two key points about these data bear emphasis. First, there is plenty of room for low-density development for millions of new residents, not only in California, but elsewhere in the United States. As shown in this example, moving 10 million people into homes on half acre lots, with no infill within existing urban areas, would only consume a small fraction California’s land area.

Second, even the dense scenario depicted on the first column the chart, cramming ten homes onto each developed acre, is not acceptable to the smart growth crowd. The policy goal in California, and elsewhere as noted, is to channel as much new development as possible into the confines of existing cities, and overwhelmingly favor multi-family dwellings over single-family detached homes.

“Smart Growth” is Not Smart, It’s Just Cruel

None of this is necessary. The idea that American policymakers should enforce urban containment is a cruel, entirely unfounded, self-serving lie.

The lie remains intact no matter the context. If there is an energy shortage, then develop California’s shale reserves. If fracking shale is unacceptable, then use safe land-based slant drilling rigs to tap natural gas in the Santa Barbara channel. If all fossil fuel is unacceptable, then build nuclear power stations in the geologically stable areas in California’s interior. If there is a water shortage, then build high dams. If high dams are forbidden, then develop aquifer storage to collect runoff. Or desalinate seawater along the Southern California coast. Or recycle sewage. Or let rice farmers sell their allotments to urban customers. There are answers to every question.

Environmentalists generate an avalanche of studies, however, that in effect demonize all development, everywhere. The values of environmentalism are important, but if it weren’t for the trillions to be made by trial lawyers, academic careerists, government bureaucrats and their government-union overlords, crony green capitalist oligarchs, and government pension-fund managers and their partners in the hedge funds whose portfolio asset appreciation depends on artificially elevated prices, environmentalist values would be balanced against human values.

The Californians who are hurt by urban containment are not the wealthy people who find it comforting to believe and lucrative to propagate the enabling big lie. The victims are the underprivileged, the immigrants, the minority communities, retirees who collect Social Security, low wage earners, and the ever-shrinking middle class.

In America, it used to be that refugees from California who aspired to improve their circumstances could move to somewhere like Houston and buy a home with relative ease. Watch out. That is changing. The masses are being herded into Green Bantustans, as America turns into a petri dish for the privileged upper class, backed up by a fanatical Earth First movement.

This article originally appeared on the website American Greatness.

The Destruction of Venice Beach Epitomizes California’s Idiocracy

Venice BeachVenice Beach, California, used to be one of California’s great places. A Bohemian gem, nestled against the sand between big Los Angeles and the vast Pacific Ocean. Rents used to be a little lower in Venice compared to other coastal neighborhoods. The locals mingled with surfers, artists, street performers, and tourists. People from suburbs further inland migrated to Venice’s beaches on sunny weekends year-round. Venice was affordable, inviting, inclusive. That was then.

Today, Venice Beach is off limits to families who used to spend their Saturdays on the sand. It’s too dangerous. On the sand, beached seaweed now mingles with syringes, feces, broken glass, and other trash, and the ocean has become the biggest outdoor toilet in the city. Over a thousand vagrants now consider Venice Beach their permanent home. At the same time as real estate values exploded all along the California coast, the homeless population soared. In Venice, where the median price of a home is $2.1 million, makeshift shelters line the streets and alleys, as the affluent and the indigent fitfully coexist.

What has happened in Venice is representative of what’s happened to California. If progressives take back the White House in 2020, it will be America’s fate. California’s cost-of-living is driving out all but the very rich and the very poor, a problem that is entirely the result of policies enacted by California’s progressive elite. They reduce to two factors, both considered beyond debate in the one-party state. First, to supposedly prevent catastrophic climate change, along with other environmental concerns, California’s restrictive laws such as CEQAAB 32, and SB 375 make it very expensive and time consuming to construct new homes. These laws also decrease the availability of entitled land, which further increases costs to developers.

At the same time, California has become a magnet for the welfare cases of America and the expatriates of the world. According to a 2018 report(presenting 2015 data, the most recent available – ref. page 20) issued by the U.S. Department of Health & Human Services, of the 4.2 million recipients in America of Temporary Assistance for Needy Families and Supplemental Security Income, an amazing 43 percent of them live in California, over 1.8 million people. And according to the liberal Public Policy Institute of California, as of 2016, California was also home to 2.6 million undocumented immigrants. Could California’s promise of health coverage for undocumented immigrants, or sanctuary state laws, have anything to do with this?

When you enact policies to restrict supply (to save the planet) and increase demand (invite the world to move in), which is exactly what California has done, housing has become unaffordable. Supply oriented solutions are relatively simple. Stop protecting all open space, everywhere, from development. Invest in public/private partnerships to increase the capacity of energy, water, and transportation infrastructure, instead of rationing water, “going solar,” and “getting people out of their cars.” Reform public employee retirement benefits instead of incessantly raising taxes and fees to feed the pension funds. It’s that simple.

Unfortunately, in California, nothing is simple. In 2006, the notoriously liberal 9th U.S. Circuit Court of Appeals in Jones v. City of Los Angeles ruled that law enforcement and city officials can no longer enforce the ban on sleeping on sidewalks anywhere within the Los Angeles city limits until a sufficient amount of permanent supportive housing could be built. And how to create permanent homes for the more than 50,000 homeless people in Los Angeles? In 2016’s $1.2 billion HHH ballot measure was approved by 76 percent of Los Angeles voters, to “help finance the construction of 10,000 units of affordable permanent-supportive housing over the next ten years.”

The passage of Measure HHH raises many questions. Most immediately, why hasn’t much of the money been spent? As reported by NPR’s Los Angeles affiliate in June 2018, “so far only three of 29 planned projects have funds to begin construction.” Worse, the costs have skyrocketed. According to the NPR report:

“When voters passed the bond measure, they were told new permanent supportive housing would cost about $140,000 a unit. But average per unit costs are now more than triple that. The PATH Ventures project in East Hollywood has an estimated per-unit cost of $440,000. Even with real estate prices soaring, that’s as much as a single-family home in many places in Southern California. Other HHH projects cost more than $500,000 a unit.”

Spending a half-million dollars to build one basic rental unit to get one homeless family out of the rain sounds like something a bloated new bureaucracy might manage, and even in high-priced California, there’s no other way to explain this level of waste. What about the private sector?

A new privately funded development company, “Flyaway Homes,” has debuted in Los Angeles with the mission of rapidly providing housing for the homeless. Using retrofitted shipping containers, the companies modular approach to apartment building construction is purported to streamline the approval process and cut costs. But the two projects they’ve gotten underway are not cheap.

Their “82 Street Development” will cost $4.5 million to house 32 “clients” in a 16 two-bedroom, 480 square foot apartments. That’s $281,250 per two-bedroom apartment. Their “820 W Colden Ave” property will cost $3.6 million to house 32 clients in 8 four-bedroom apartments. That’s $450,000 per four-bedroom apartment.

Is this the best that anyone in Los Angeles can come up with? Because if it is, it’s not going to work. Let’s accept the far fetched notion that $5.0 billion could be quickly found to construct housing for the 50,000 homeless people in Los Angeles, and this could be finished within a few years. Does anyone think the growth in subsidized housing would keep pace with the growth in the population of homeless? Why, when California is a sanctuary state, a magnet for welfare cases, and has the most forgiving winter weather in America? One may take issue with the whole concept of taxpayer subsidized housing, but that is almost beside the point. There are more urgent strategic questions that aren’t being honestly confronted in California. For example:

Ten Tough Questions for California’s Progressive Elite

1 – Why is the national average construction cost per new apartment unit somewhere between $65,000 and $85,000, yet it costs five to ten times that much in Los Angeles to build one apartment unit for a homeless family?

2 – Is it wise to create subsidized housing that is of better quality than the apartments that many hard working Californians occupy and pay for without benefit of subsidies?

3 – Why hasn’t there been any attempt to get useful statistics on the homeless population, in order to apply different approaches depending on who they are? For example, how many of them are mentally ill, or criminals, or substance abusers, or sexual predators, or undocumented immigrants, or willfully homeless with other housing options, or hard working sane people who have encountered hard times (yes, “intersectionality” would exist among these categories).

4 – Why not immediately allocate open land to create campsites where the homeless can move their tents and belongings, to get them off the streets?

5 – Why not then study the refugee camps set up around the world, an activity where U.S. NGOs have in-depth expertise, and replicate these in areas of LA County where there is cheaper, available land? These semi-permanent structures are far less expensive than solutions currently offered.

6 – Does inviting millions of people from impoverished, politically unstable nations help those nations, when for every person who makes their way to California, thousands remain? And if not, why not directly help the people who are staying in those nations, which would be far more cost-effective?

7 – Wouldn’t it make more sense to moderate the inflow of unskilled workers across the border into California, in order to eliminate the oversupply of cheap labor which depresses wages? Wouldn’t that be better than mandating a higher minimum wage?

8 – Doesn’t offering welfare and subsidized housing to people capable of work make it unlikely they will ever seek work? While striking a balance is a compassionate necessity, has that balance perhaps been violated, since California is home to 43 percent of America’s welfare recipients?

9 – When will California loosen restrictions on land development and building code mandates, striking a balance between compassion for the earth and compassion for human beings, in order to bring the cost of new housing construction back down towards national averages?

10 – When will the elected officials in a major California city stand up to the litigants who use the 9th Circuit to impose rulings such as Jones v. City of Los Angeles, and take a case to the U.S. Supreme Court? While many homeless people have genuine stories of hardship and bad luck, must we be forced to cede to all of them our most desirable public spaces?

What has happened in Los Angeles is a perfect storm of progressive pressure groups and rent-seeking bureaucrats and profiteers, working together to amass money, power, and prestige. If they were efficiently solving the problem, that would be just fine. But they aren’t, and until they accept tough answers to tough questions, they never will.

As Venice Beach continues to reel from the impact of the homeless invasion, Los Angeles city officials are fast-tracking the permit process to build a homeless shelter on 3.2 acres of vacant city-owned property less than 500 feet from the beach. This property, nestled in the heart of Venice’s upscale residential and retail neighborhoods, if commercially developed, would be worth well over $200 million. Shelter capacity? About 100 people.

In a less utopian, less corrupt society, that single property could be sold, and the proceeds could be used to set up and monitor a tent city housing thousands, if not tens of thousands of people. But not in California. Under the warm sun, against the indifferent ocean, the idiocracy endures.

This article originally appeared on the website American Greatness.

Pension Funds, Meet the “Super Bubble”

Earlier this month, outgoing California Governor Jerry Brown predicted “fiscal oblivion” if California’s state and local agencies are not granted more flexibility to modify pension benefits. As if to help Governor Brown make his point, U.S. stock indexes took an obliging plunge. The Dow Jones average cratered in December, dropping nearly 16 percent in three weeks, from 25,826 on December 3rd to a low of 21,792 on December 24th. And whither hence? Nobody knows.

If history and trends are any indication, however, “up” is unlikely. Depicted on the chart below is the performance of the Dow Jones Index from 1995, when the markets began first showing signs of “irrational exuberance,” to the extremely exuberant present day. Clearly shown are the past two bubbles, the internet bubble of 2000, the housing bubble of 2007, and what we may call the “super bubble” or “everything bubble” of 2018.

Dow Jones Stock Index – 1995-2018 

It doesn’t take an economist to notice a pattern here. The Dow Jones Index, which tracks closely with all publicly traded equities in the U.S., more than doubled in the four year heady run-up to its January 2000 peak, than went into decline for nearly four years, before doubling again between 2004 and 2007. Then when the housing bubble popped, the Dow went off a cliff, dropping to half its 2007 peak in little over a year. In the ten years since 2009, the Dow has exploded again, tripling to a high of 26,743 in September 2018. What now? Visually, at least, another correction is past-due.

There are all kinds of economic reasons why what is visually indicated on the above graph is exactly what’s going to happen. At best, we may hope for stocks to merely stop going up, which is sort of what happened after the internet bubble popped. But what’s different this time?

One key difference is that this time, lowering interest rates is not an option. In January 2000 the Federal Funds rate was 5.5 percent. By June of 2003 it had dropped to 1.0 percent. When interest rates drop, stocks become relatively better investments than fixed rate investments. Lower interest rates also induce more people to borrow, creating liquidity, stimulating consumer spending, which helps corporate earnings which drives up stock prices. The cause and effect is reflected in the stock market history – by 2003, after lowering interest rates by 4.5%, the stock market finally began to recover.

In October 2006 the rate had risen to 5.25 percent. In September 2007, as home sales were starting to drop, it was lowered to 4.75 percent. When the housing bubble popped, and the stock market crashed, the Federal Reserve responded by steady lowering of the Federal Funds Rate. By December 2016 it had dropped to 0.25 percent, the lowest rate possible. What should be of concern, is that the rate today, 2.5 percent, is only half as high as it was during the past peaks. During the previous two bull markets, the Federal Reserve was able to bounce the rate up to around 5 percent before the bears came calling. This time, assuming we’ve hit the peak, only half that increase, to 2.5 percent, was achievable.

A consequence of low interest rates is more borrowing, which is a good thing if that borrowing stimulates economic growth that translates into investments in productivity. But borrowing has not been used to stimulate productive investments. Instead, much of the corporate borrowing over the past decade has been used to finance stock buy-backs. This is a dangerous strategy, causing short-term growth in earnings per share, but loading debt onto corporate balance sheets that will have to be refinanced at interest rates that are increasing, at the same time as investment in research and modernizing plant and equipment has been neglected.

In recent years, borrowing has also been an overused tool of government, starting with the federal government. Federal borrowing accelerated in mid-2008, and hasn’t slowed down since, climbing to over $21 trillion by the 3rd quarter of 2018. As interest rates rise, servicing this debt will become far more difficult. Meanwhile, all U.S. credit market debt – government, corporate, and consumer – has continued to increase. After dipping slightly to $54 trillion in the wake of the burst housing bubble, it was up to a new high of $68 trillion by the end of 2017.

When interest rates fall, not only is the stock market stimulated. Bonds make payments at fixed rates, so when the market rate drops, the price of these bonds increases, since they can be sold for whatever price will give the buyer the same return as the current market rate. Interest rate reductions also cause housing prices to rise, since when interest rates are low, people can afford bigger mortgages since they will be making lower monthly payments. The opposite is also true, which is unfortunate for investors. All else held equal, rising interest rates means lower prices for bonds and housing.

What does this mean for pension funds?

When the super bubble pops this time, all assets will drop in value. Everything pension funds are invested in, equities, bonds, and real estate, will all drop in value. Even if extraordinary measures are taken to stop the decline – such as the fed purchasing corporate bonds – there will be nowhere to run. Public sector pension funds have not prepared for this day of reckoning. CalPERS, for example, in its most recent financial statements was only 71% funded. That would be ok at the end of a bear market, but at the end of a bull market, that is a disaster waiting to happen.

As it is, using CalPERS as an example, government agencies are going to have to nearly double their annual payments. The primary reason for this increase appears to be so the participating agencies will eliminate their unfunded liability on a 20 year repayment schedule. To-date, agencies were making those repayments on a 30 year term, and using creative accounting to minimize the payment amounts in the early years. CalPERS does not appear to have lowered the amount they are expecting their investments to earn, and this is critical. Because while they have lowered their expected rate of return to “only” 7.0 percent, they have also quietly lowered their long-term assumed inflation rate. This means they are still relying on nearly the same real rate of return for their investments.

When the super bubble pops, the challenges facing pension funds will not be the only economic problem facing Americans. Unwinding the debt accumulated during a credit binge lasting decades will impact all sectors of the economy. The last thing the fragile finances of government agencies will need is even higher required contributions to the failing pension funds. Instead those running these pension systems need to try new approaches, including modifying benefit formulas, but also redirecting investments into local infrastructure projects – projects that not only create jobs, but address practical and urgent goals such as building resilient, upgraded backbones for supplying water, energy, and transportation.

In early 2019, the California Supreme Court is about to issue one of its most consequential rulings ever, in the case CalFire Local 2881 vs. CalPERSIt is possible this ruling will grant government agencies (and voters) more flexibility to modify pension benefits. Such an opportunity cannot come too soon, if fiscal oblivion is to be avoided when the super bubble finally pops.

Can Public Sector Union Power Ever Be Stopped?

unionImagine you’re hoping to support a candidate for local office who will enact reforms that will improve your city, maybe even save it. Someone who will fight tirelessly to eliminate work rules that force agencies to hire more people than are actually necessary. Someone who will insist that incompetent public employees are fired. Someone who will finally do something about compensation and benefit packages that are threatening to bankrupt the city.

What do you say to them, when their response to your suggested reforms is this: “That’s all great, and I’d like to do it all, but who’s going to give me the million dollars for my campaign that I’m not going to get from the public employee unions if I actually try to do any of it?”

That is the sort of conversation that takes place, or would take place if anyone bothered to ask, multiplied by thousands, every election cycle in California.

Public employee unions run California. They exercise nearly absolute power in the state Legislature, and in nearly every city, county, school district and special district. Can public sector union power ever be stopped?

Earlier this year, a California Public Policy Center analysis estimated that for 2016, total membership in California’s public sector unions was 1.15 million, and total revenue was $812 million. This equates to a stupefying $1.6 billion that these unions collect and spend every election cycle.

 

California’s Public Sector Unions (including local affiliates)
Estimated Total Membership and Revenues

While the figure of $1.6 billion per election cycle is a credible estimate, attempts to come up with precise information on California’s public sector union dues is nearly impossible. In California there are many hundreds, if not thousands, of individual local public sector union affiliates. All of them file separate 990 forms, often including financial transfers between entities that have to be offset in any thorough analysis.

Determining how much of California’s public sector union revenue is spent on politics is also a nearly impossible task, despite several online “transparency” portals, including OpenSecretsFollowTheMoneyVoteSmart, and the California Secretary of State’s Campaign Finance “Power Search.” These portals are primarily focused on national races, and in some cases, statewide races, but none of them descend to the thousands of California’s local races, where hundreds of millions of dollars are spent every election.

Moreover, the portals can only display the information they’re given. California’s government unions, like most sophisticated political players, mask their total spending through multiple committees and transfers.

An excellent analysis of how much of teachers union dues end up being spent on political campaigns was written in 2015 by RiShawn Biddle, editor and publisher of Dropout Nation – a leading commentary website on education reform. He writes: “The pro bono consultants who went through the unions’ published national, state, and local tax returns estimated based on their research, interviews, and sampling that roughly one third of the unions’ efforts went toward political advocacy.”

One-third. In California, that is equal to approximately $540 million per election cycle. That is, California’s public sector unions likely spend over a half-billion per election cycle. And this spending does not include other “non-political” spending. For example, not reportable as political spending can include massive public education campaigns that are designed to influence voters but aren’t engaging in explicit advocacy.

Also not considered political spending, but having immense political impact, is litigation. There are countless examples of how government union power is exercised in California’s courts. Pension reforms in San Jose and San Diego, approved by voters, were eviscerated through relentless court challenges. Statewide pension reform pushed by Gov. Brown and partially realized in the PEPRA legislation of 2012 was undermined, and continues to be undermined, beneath an ongoing avalanche of lawsuits. Charter schools are the targets of continuous litigation designed to wear them out. You can do this, when you have hundreds of millions of dollars pouring in every quarter, year after year.

California’s political landscape over the past 20-30 years has been defined by public sector unions. While the recent Janus v AFSCME decision by the U.S. Supreme Court has taken away the ability of government unions to compel payment of fees, the unions are resorting to clever contractual gyrations to make it extremely difficult in practice for anyone to stop paying. That too, will have to sort itself out in court, where union money guarantees tenacious defense and endless appeals.

Even if public employees can easily withdraw from paying government unions, in many cases, why would they? These unions have made California’s public employees some of the highest paid public servants on earth. A California Policy Center study in 2017 concluded “The composite average total compensation (pay and benefits) for a full-time city, county or state worker in California during 2015 was $121,843; for the average full-time private sector worker in California, including benefits, it was 62,475, which is 51% of what the public sector worker earned.” As a result, it is no coincidence that California’s state and local governments confront over $1.0 trillion in debt and unfunded pension liabilities.

The political and financial power of public sector unions has transformed California politics. Their influence is felt everywhere; education, environmental policy, the business climate, important cultural issues. In every area, their primary agenda is to grow their membership and influence. The effect of this agenda is pernicious. If schools fail, spend more public money on schools. If crime increases, hire more police and build more prisons. Wherever society fails, grow unionized government.

Perhaps the next major U.S. Supreme Court case concerning government unions will abolish them due to this inherent conflict between their agenda and the public interest. Perhaps someday they will be outlawed entirely. That would be a happy, happy Thanksgiving indeed.

This article originally appeared on the website of the California Policy Center.

California’s Legislators Lack Private Sector Experience

CapitolBack in the days of adding machines and manual ledgers, final election results in California were usually done by midnight on election day. Sometimes there would be a few precincts counting ballots into the wee hours of the morning, and you wouldn’t know a result till the next day. Fast forward to 2018, and the age of global interconnectedness, with instantaneous algorithmic management of everything from power grids to Facebook feeds, yet here in California the complete results of the 2018 midterms won’t be available until December 7th. Go figure.

While California’s ability to count ballots runs contrary to the otherwise dazzling march of progress, by now we have enough information to offer a pretty good look at California’s state Legislature for 2019-20. The Democratic supermajority has been re-established. With 28 confirmed seats in the Senate, and 56 in the Assembly, the Democrats hold 70 percent of the seats in both houses. Even if Republicans achieved the unlikely capture of all four Assembly seats that remain too close to call, nothing would change. Overall, so far there are 84 Democratic legislators, and only 32 Republicans.

How Many State Legislators Have Private Sector Experience?

Three election cycles ago, a California Policy Center analysis compared the biographies of California’s state legislators, asking how Republicans and Democrats differ in terms of what they did before they became politicians. To repeat this exercise, 2018 election results were obtained from the California Secretary of States “District Races” page for the Senate and the Assembly. For incumbents who were re-elected, biographies were obtained from the Senate and Assembly websites. For newcomers, a trip to Wikipedia, Ballotpedia, or their campaign websites was sufficient.

When one considers the professional background of California’s politicians, a clear pattern emerges. And while compiling this data requires some degree of subjective interpretation, no reasonable interpretation would fail to reveal dramatic differences in experience between Democrats and Republicans.

California State Legislature, 2019-2020 Membership
Business vs. Government Background

As seen on the above table, in California’s 2019-20 state senate, 79 percent of the Democrats have no private sector experience. On the other hand, 58 percent of the Republicans had no public sector experience prior to running for elected office, although most of them ran for local offices prior to running for state senate. The same story applies with California’s state assembly, where 73 percent of the Democrats have no private sector experience, and 55% of the Republicans have at least some private sector experience.

Before continuing, it’s interesting from this perspective to compare this 2019-20 state legislature to the 2013-2014 state legislature. Back then the proportions were generally the same, but there were almost no Democrats – only five in both houses – compared to 14 of them today. Conversely, back in 2013 there were 25 Republicans who had an exclusively business background prior to holding elected office, compared to only 15 today. Over the same period, the number of Republicans with only public sector experience prior to holding office has more than doubled, from four back in 2013 to 11 today. Overall there are now even fewer Republicans – down from a paltry 36/120 six years ago to a vanishing 32/120 today.

California State Legislature, 2013-2014 Membership
Business vs. Government Background

What might explain this tepid drift to the center, at least in terms of more Republican state legislators with public sector experience, and more Democratic state legislators with private sector experience?

One explanation could be the open primary, which makes it less likely an extreme candidate will survive the general election. Another could be the decision made around 2010 by California’s beleaguered business community to start supporting pro-business Democrats. Finally, as Republicans in California fade further into irrelevance, the alliances and allegiances formed in public sector work offer Republican candidates with that background a better chance of electoral success.

Public Sector Unions Pick Public Sector Careerists to Run for Public Office

Back in the 1950’s and 1960’s there were plenty of pro-business Democrats, so called “Pat Brown” Democrats, who worked with Gov. Brown Sr. to build freeways, bridges, power plants, and the finest system of water storage and conveyance the world had ever seen. Those same Democrats cooperated with Republican Governor Reagan a few years later to build the finest public university system in the world. The opportunities available to California’s middle class were unrivaled. What happened to these Democrats?

The problems began in the 1970’s when public sector unions were allowed to form. Steadily acquiring political power through automatic dues deductions, they used taxpayer’s money to lobby for the interests of government workers instead of the interests of the people they serve. Increasingly, business-backed candidates started losing races to candidates backed by government unions. Almost invariably, unions backed Democratic candidates. The more powerful these union-backed candidates became, the more laws they enacted to further consolidate their power. Today government union rule in California is absolute.

The tragedy of unionized government is not merely that they have taken over California’s state legislature and nearly every city, county and school board in the state in order to pursue their membership’s interest above the public interest. It is that most elected officials no longer understand business. These union anointed elected officials come from government agencies, union bureaucracies, nonprofits, activism, and public education. Most of California’s legislators have never had to balance a budget, make a payroll, or convince a customer to voluntarily purchase a product so they could earn a precarious profit in a competitive market.

California’s lawmakers, to the extent they are elected with the support of public sector unions and to the extent they lack business experience, not only face a conflict of interests every time they have to deal with a reform that threatens the power of the unions. They are also less qualified to understand the financial and operational realities that apply in any  efficiently ran, productive organization, large or small. They are in over their heads.

To exemplify this, consider how California’s democrats are crowing over a $6 billion budget surplus. Compare that $6 billion surplus to the nearly half-trillion in bond debt that California’s state and local governments have piled up, including another $23 billion on Nov. 6th. Compare that $6 billion surplus to, by most reasonable estimates, the more than half-trillion in unfunded retirement benefits that are going to blow sky high in the next market downturn.

Hint. A trillion is a thousand billion.

How to NOT Solve California’s Housing Crisis

house-constructionThere are obvious reasons the median home price in California is $544,900, whereas in the United States it is only $220,100. In California, demand exceeds supply. And supply is constrained because of unwarranted environmental laws such as SB 375 that have made it nearly impossible to build housing outside the “urban service boundary.” These laws have made the value of land inside existing urban areas artificially expensive. Very expensive. Other overreaching environmentalist laws such as CEQA have made it nearly impossible to build housing anywhere.

Then there are the government fees attendant to construction, along with the ubiquitous and lengthy permitting delays caused by myriad, indifferent bureaucracies with overlapping and often conflicting requirements. There is a separate fee and a separate permit seemingly for everything: planning, building, impact, schools, parks, transportation, capital improvement, housing, etc. Government fees per home in California often are well over $100,000; in the City of Fremont in 2017, they totaled nearly $160,000 on the $850,000 median value of a single family home.

This is a shakedown. It has caused a politically engineered housing shortage in California that enriches billionaire property developers that have the financial strength to withstand decades of delays and millions in fees, because they reap the extreme profits when they sell these homes at inflated prices. Also enriched are the public servants whose pay and pensions depend on all taxes – definitely including property taxes – and all fees being as stratospheric as humanly possible. Public employee pension funds also benefit from housing scarcity, as their real estate investment valuations soar into bubbleland.

When litigious environmentalists, insatiable public sector unions, and an elitist handful of left-wing oligarchs control a state, artificial scarcity is the consequence. Welcome to California.

REJECTED POLICY – REAL SOLUTIONS TO THE HOUSING CRISIS

To decisively solve California’s housing shortage, some of California’s more than 25,000 square miles of rangeland, currently occupied by cattle, would have to be approved for suburban development. California is only 5 percent urbanized, although if you listen to environmentalists, you might get the impression it only had 5 percent remaining open space. You could fit ten million people onto half acre lots in four person households and you would only use up 2,000 square miles – that’s only 1.1 percent of California’s land area. Why aren’t massive new housing developments spreading out along California’s 101, I-5 and 99 corridors?

Real solutions to California’s housing crisis would also require increasing the capacity of California’s water infrastructure and transportation infrastructure. In both cases, investment would be cheaper if this expansion was done on raw land. Real solutions to California’s housing crisis would mean rescinding the mandatory rooftop solar requirement on new home construction, and instead recommissioning and expanding the nuclear power complexes at Diablo Canyon and San Onofre, and embracing development of additional nuclear power and natural gas power plants. In a less confiscatory regulatory environment, the private sector could fund all of this while lowering costs to consumers.

Reforming environmental restrictions and unleashing private sector development of homes and infrastructure is the fastest, easiest way for home prices in California to return to near the national average. In turn, that would solve nearly every problem associated with a shortage of housing. California’s families would be able to afford to buy homes, or pay affordable rent. California’s employers, most definitely including government agencies, would be able to attract workers at prices that would not break their profits or their budgets, which would benefit the economy. And far fewer people would be rendered homeless.

APPROVED POLICY – COMPLETELY USELESS “SOLUTIONS” TO THE HOUSING CRISIS

As long as environmentalist litigators, public sector unions, and left-wing oligarchs run California, none of these real solutions will ever happen. What are they proposing instead?

To summarize, all politically viable housing solutions in California involve densification, i.e., cramming ten million more people into existing urban areas, and, predictably, more taxes, bonds, fees, subsidies and government programs.

Rent Control, Government Subsidized “Affordable Housing” and Government Funded Homeless Shelters

California is the epicenter of America’s “progressive” power structure. In California, in addition to controlling the public bureaucracy through their unions, progressive ideologues control the press, social media, search media, K-12 public education, academia, most corporations, the entertainment industry, and virtually all serious political campaign spending. As a result, California’s progressives can use ballot initiatives to con a brainwashed populace into approving their latest housing policy agenda. The common thread? Government control; government funding. For example, on the ballot this November are propositions to permit cities and counties to enact rent control, issue state bonds totaling $4 billion to build “affordable housing,” and use state tax revenues to build more government-run homeless shelters. It is possible all three of these measures will pass.

Already in progress is the implementation of California state laws that took effect Jan. 1 – AB 2299 and SB 1069 – which amend existing state laws governing “accessory dwelling units.” These new laws force California’s counties to streamline the process whereby homeowners can construct additional homes in their backyards. Does that sound good? Not so fast.

Doubling Suburban Population Densities ala Government Subsidized “Accessory Dwelling Units”

There’s a reason people work hard for decades to pay off their mortgages so they can own homes in spacious suburbs. It’s because they value the leafy, semi-rural atmosphere of an uncrowded suburban neighborhood. AB 2299 and SB 1069 will effectively double the housing density in these neighborhoods, violating the expectations of everyone living there who relied on the zoning rules that were in effect when they bought their homes.

If zoning laws in existing suburbs were relaxed at the same time as zoning restrictions were lifted on the urban periphery, the impact of these new rules might be mitigated. But every policy California’s elite and enlightened geniuses come up with is designed to maintain “urban containment.” And to add to the disruption these laws will inflict on quiet neighborhoods, California’s cities – starting with Los Angeles – are providing subsidies to homeowners to build these homes, then encouraging them to rent the properties to low income families wherein the government will pay the rent via Section 8 vouchers.

This is an expensive, utopian scheme that oozes with compassion but is fraught with problems. Doubling the density of suburbs is already problematic. But doubling the density of suburbs by subsidizing the settlement of people on government assistance into every backyard, invites social friction. It is forcible integration of people who, for whatever reason, require government assistance to support themselves, into communities of taxpayers, who, by and large, are working extra hard to pay the mortgages on overpriced homes in order to provide their children with safe neighborhoods.

As usual, when it comes to enlightening the public, neither the media, nor the urban planning experts in academia, ever offer much beyond pro-densification propaganda. A glowing New York Times article, entitled “A Novel Solution for the Homeless: House Them in Backyards,” raves about this entire scheme, already being tried in Los Angeles, Portland and Seattle. The article includes a quote from Vinit Mukhija, a professor of urban planning at UCLA, who says: “The value [of subsidized accessory dwelling units] goes beyond that, though, because it is finally somewhat of a departure of the purity of single-family housing in the region. It’s a good step to change what people here really consider a dogma of private housing.”

The “dogma of private housing.” That epitomizes California’s elitist hostility towards ordinary families owning detached homes with spacious yards.

The incentives created by such a project are perverse. California’s elite has made homes unaffordable. Then, to the people who sacrificed so much to buy these homes despite their punitively high prices, the government offers them subsidies and Section 8 payments, if they are willing subdivide their lots and turn over half their property to people supported by the government. Inevitably, many financially struggling homeowners will be forced to accept this cruel bargain if they want to keep their homes.

Finally, just like in 2008, there will eventually be another economic downturn, when many distressed homeowners will be forced to sell their properties. And when that happens, just like in 2008, investment banking speculators will move in and buy homes by the thousands. This next time, however, these institutional investors will be salivating at the prospect of collecting government subsidies so they can operate two rental units on a single piece of property.

Demolishing Homes to Build High Rises Near Transit Stations

Another way California’s elites – many of whom live in gated communities with homeowner covenants prohibiting nasty things like accessory dwelling units in backyards – propose to solve California’s housing crisis is to force demolition of single family dwellings in the vicinity of mass transit stations. They support this mass destruction of vintage neighborhoods in order to make room for high density apartments and condominiums up to five stories in height. While an attempt in 2018 to enact this draconian solution was beaten back, California’s coercive utopian lawmakers will bring it back in 2019. Some form of this law is likely to pass.

There’s nothing wrong with gradually increasing the population density in the core of large cities. That is a natural and organic process. But it is the job of legislators and local officials to moderate that process, protecting established neighborhoods. Instead, again, the policy consensus in California is to cram ten million new residents into existing urban areas.

Government Subsidized Homeless Shelters on some of the Most Expensive Real Estate on Earth

Perhaps the most misguided housing policies coming out of California concern the homeless. Despite years of bloviating by the compassionate elite, almost no good data is available on homeless populations, much less any good policies. Press coverage of the homeless centers on the family unit; small children, parents forced out of their home by high rents. These are gut wrenching stories. But accompanying the legitimate cases of families or individuals coping with undeserved hardship, there are the willfully indigent, along with criminals, drug dealers, sexual predators and perverts. Again, the City of Los Angeles offers a striking example of bad policy.

In Venice Beach, which is within Los Angeles city limits, along one of the most expensive, touristy stretches of coastline in the world, there are now permanent homeless encampments. To address the challenge, Los Angeles city officials are fast-tracking the permit process to build a homeless shelter on 3.2 acres of vacant city-owned property less than 500 feet from the beach. This property, nestled in the heart of Venice’s upscale residential and retail neighborhoods, if commercially developed, would be worth well over $200 million. Imagine what could be done with that much money if the goal was to truly help the homeless. And by the way, the proposed shelter will be a so-called “wet” shelter, meaning that drugs and alcohol will not be permitted inside the shelter, but intoxicated homeless individuals will be allowed inside. Go in, get a bed, go out, shoot up, come back in.

That a solution so scandalously inefficient could even be considered by the do-gooders running City Hall in Los Angeles offers additional insights into the minds of California’s progressive elite. Solving the homeless crisis isn’t their goal here. Rather the intent is to create additional government-owned properties, hire additional government bureaucrats, while preening in front of television cameras and pretending to solve a problem. Should the Venice Beach property be developed as currently proposed, well connected construction contractors will rake in government funds, so eventually “up to 100” homeless people will find shelter. Meanwhile, thousands will remain outdoors.

California’s housing is unaffordable because of restrictive laws such as CEQAAB 32SB 375, and countless others at both the state and local level. At the same time, California’s political elites are are inviting in the world’s poor en masse to come and live here. An estimated 2.6 million illegal aliens currently live in California. But the rhetorically unassailable compassion expressed by these sanctuary policies does nothing to alleviate hardship in the nations where these refugees originate, because for every thousand who arrive, millions are left behind.

The result? While California’s visionary rulers engineer a shortage of housing supplies, their welcoming sanctuary policies engineer a burgeoning housing demand. This is the deeply flawed agenda they have implemented in California and are actively exporting to the rest of America.

The biggest lie of all is the compassionate overlay that informs every housing solution California’s elite promote. Because their solutions, however viable they may be politically, will not work. They defy basic economic sense. They create additional drain on public funds while doing nothing to alleviate the high prices that are caused by scarcity. They are sustained by an impossible assumption, that urban densification, and all the destruction that densification will bring, will in itself be sufficient to restore a supply and demand equilibrium for housing. And they reject the obvious solution, suburban expansion to complement higher densities in the urban cores, based on environmentalist objections that are overwrought. In practice, the solutions being implemented to resolve California’s housing crisis are not compassionate. They are cruel.

Eventually, enough Californians are going to realize they’ve been conned. They will recognize that government subsidized densification is financially unsustainable and ruinous to their way of life. They will support politicians who are willing to stand up to environmentalist litigators, government unions, and the left-wing oligarchy that profits from scarcity. Hopefully that will happen before it’s too late.

Democratic California’s Cautionary Tale

Democrat DonkeyIt’s become fashionable among certain conservatives, libertarians, and assorted free-market types to claim that Republicans are no better than Democrats. Both parties, according to the disenchanted, have lost their way. Both parties are controlled by establishment cronies, who support big government of one sort or another.

But conservatives who are disillusioned with Republicans need to remember just how much is at stake if Democrats take over. To indulge in understatement, California offers a cautionary tale.

In the name of saving the planet, and helping the poor, Democrats win votes in California. Assisting these Democrats is the most powerful coalition of leftist oligarchs in the history of the world. But the planet is not better off and California’s poor get poorer. How can this be?

Absolute Power Corrupts Absolutely

Since at least 2006 — the year Governor Arnold Schwarzenegger, a moderate Republican, totally capitulated to the Democratic establishment — Democrats have exercised absolute power in California. Their ongoing agenda, much of which has already been implemented, offers insight into just how different Democrats are from Republicans — even those watered down Republicans who struggle to earn votes from true conservatives.

California’s Democrats, in pursuit of environmentalist perfection, have legislated artificial scarcity of everything necessary to civilized life: land, housing, electricity, gasoline, water, transportation, and quality education — you name it. California has the most expensive homes, the highest utility prices, the worst roads, and failing schools. Behind the high-minded environmentalist rhetoric stand oligarchs who profit from scarcity; established corporations, public utilities, large landowners, and “green” entrepreneurs.

It’s no exaggeration to say California is a left-wing, Democrat-ruled oligarchy. If anyone thinks they aren’t poised to take over the rest of the United States, think again. California is merely the epicenter of an uncontained nationwide leftist oligarchy that now controls nearly all traditional media, online media, social media, academia, and the entertainment industry. It has also co-opted most major corporations and government bureaucracies, and draws additional support from powerful government unions as well as most private sector unions.

All of this elitist support is self-serving. All of it is hypocritical. All of it is deeply cynical, and utterly indifferent to working Americans.

California’s Proposition 10 offers an excellent example of how Democrats think. This deeply flawed state ballot initiative addresses the high cost of housing in California by authorizing cities and counties to impose rent control on all rental units, right down to the second homes that middle-class Californians may own in order to earn supplemental income. The negative consequences of a measure like Prop. 10 are obvious not only to anyone with a basic understanding of economics but also to anyone with plain common sense.

If Prop. 10 passes, what few incentives remain for investors and developers to build new housing in California would be further undermined. Who would want to invest in new apartment construction if the rental income from those apartments could be frozen by the whims of populist Democrats as they exert their influence on the local city councils? And what landlord would want to invest to maintain or upgrade their rental properties, if the rental income they can recover on their investment is frozen via rent control? And what renter will move into more appropriate housing as their life circumstances change, if moving means losing the favored low rent they currently enjoy?

Not one Republican supports California’s Prop. 10, but plenty of Democrats do, including the notorious U.S. Rep. Maxine Waters, U.S. Senate candidate Kevin de León, and Los Angeles mayor and future presidential contender Eric Garcetti. And behind these Democrats, also endorsing Prop. 10, are California’s all powerful public sector unions, including the California Teachers Association, the California Nurses AssociationAFSCME California, and SEIU California. And, of course, the California Democratic Party.

Prop. 10 is an example of how Democrats are making California’s housing shortage worse instead of better, but it’s not the only one. Also appearing on California’s statewide ballot next month are Prop. 1, which would borrow $4 billion to build “affordable housing,” and, Prop. 2, which would use state tax revenues to build more government-run homeless shelters. It is possible, if not likely, that every one of these propositions will pass.

Scandalous Inefficiency, Unassailable “Compassion”

Democrat “solutions” to the housing crisis aren’t limited to the state ballot, however. In Venice Beach, California, along one of the most expensive, touristy stretches of coastline in the world, are now permanent homeless encampments. To address the challenge, Los Angeles city officials are proposing to build a homeless shelter on 3.2 acres of vacant city-owned property less than 500 feet from the beach. This property, nestled in the heart of Venice’s upscale residential and retail neighborhoods, if commercially developed, would be worth well over $200 million. Imagine what could be done with that much money.

That a solution so scandalously inefficient could even be considered by the Democrats running City Hall in Los Angeles offers additional insights into the Democrat mind. Solving the homeless crisis really isn’t their goal here. Rather the intent is to create additional government-owned properties, hire additional government bureaucrats, while pretending to solve a problem. Should the Venice Beach property be developed as currently proposed, well connected construction contractors will rake in government funds, so eventually a few hundred homeless people will find shelter. Meanwhile, tens of thousands will remain outdoors.

Democrats, and not Republicans, made California’s housing unaffordable by passing restrictive laws such as CEQAAB 32SB 375, and countless others at both the state and local level. At the same time, it is Democrats, and not Republicans, who are inviting in the world’s poor en masse to come and live there. An estimated 2.6 million illegal aliens currently live in California. But the rhetorically unassailable compassion exhibited by these Democrats does nothing to alleviate hardship in the nations where these refugees originate, because for every thousand who arrive, millions are left behind.

The result? While California’s Democrats, and not Republicans, engineer a shortage of housing supplies, their welcoming sanctuary policies engineer a burgeoning housing demand. This is the deeply flawed, misanthropic vision Democrats have for America. Democratic power is rooted in wishful thinking by the naïve, and by the savvy because of epic greed. Republicans, no matter how tepid their convictions may be, would never have done to California what these Democrats have done. And it’s not even close.

When conservatives and libertarians think about where to cast their vote, they should look west to California, and think very hard about whether or not they want to live in a nation ruled by Democrats.

This article originally appeared on the website American Greatness.