California’s Inept Central Planners

Gov. Gavin Newsom, the Legislature and the state’s bureaucracy claim to be addressing the state’s much discussed “housing crisis.” But rather than improve the state’s awful affordability crisis, the policies being enacted are precisely the wrong medicine, more akin to witch-doctoring than a scientific curative.

The list of newish blunders, built upon nearly thirty years of disastrous policies, include such things as new rent control measures, mandates for “zero emissions” homes and mandatory solar installations. Worse yet, and soon to be strengthened, are attempts to block development in outlying areas, where land costs are cheaper, in favor of dense development in already expensive, dense urban areas.

The idea that these policies will encourage home-building could only be appreciated by a fantasist. Since California began its ratcheting of regulation, house prices have more than tripled relative to household incomes, the result of which is that in the major metropolitan areas, most middle-class households cannot afford the median priced house. Housing production has fallen because most households have simply been priced out of the market.

Tragically home ownership is declining, particularly among minorities and millennials, and rents now exceed that of any state other than Hawaii. It is not surprising that the latest Census Bureau population estimates, released on the last day of 2019, show that more than 200,000 more people moved to other states than moved into California. California’s net outmigration exceeded that of New York for the first time in over a decade. …

Click here to read the full article from the Orange County Register.

Middle- and Low-Income People Leaving California

In 2017, Susanna Cardenas-Lopez left her home in Salinas to visit her brother in Idaho. Three days into her trip, she called her husband and told him they needed to move there.

Back in Salinas, Cardenas-Lopez and her husband were left out in the cold after their landlord decided to stop renting the home they lived in. They couldn’t afford anything else, so they had to move in with a family member, which was stressful.

Now in Idaho, she and her husband have free time and money left over at the end of each month. There’s a bonus — the area is significantly safer, she said.

“I feel like it’s a dream with the quality of life we now have,” Cardenas-Lopez said. “Yes, the pay is less, but that just doesn’t even seem to matter to me. At least we have enough to pay our rent and bills.”

Many of her family members face the same situation. Five months ago, her 35-year-old daughter, son-in-law and grandchildren left Salinas after their rent increased from $1,300 to $2,000 in just three years, she said. 

“I love California, but it’s just not the Golden State in my eyes anymore,” she said.

Cardenas-Lopez isn’t alone. U.S. Census Bureau numbers show that the middle- and lower-classes are leaving California at a higher rate than the wealthy. Many who have left in recent years say they simply couldn’t afford to stay. 

Susanna Cardenas-Lopez and her husband left their home in Salinas and moved to Idaho, citing California’s high cost of living. Boise, the capital of Idaho, (pictured above) has about 229,000 residents, about 20,000 more than a decade ago. (Photo via iStock.)

Cost of living: the defining issue

In the second quarter of 2019, the San Francisco Bay Area topped Los Angeles, Washington and Chicago when it came to people leaving major U.S. cities. It was second only to New York City. More than 28,190 people departed the Bay Area during those three months, close to double 2017’s rate, according to a regular migration report from real estate brokerage Redfin.

In 2018, according to the U.S. Census, about 190,000 more people left the Golden State than moved there. It was the second year in a row of the negative trend. However, the population is still rising due to the birth rate. California added 141,300 residents between July 2018 and July 2019, bringing its population to an estimated 39.96 million people, according to the California Department of Finance

A recent Edelman Trust Barometer survey found 53% of residents and 63% of millennials were considering leaving the country’s most populated state because of its high cost of living.

The majority of people leaving reported an annual income of less than $100,000, while the state has seen an influx of those making $100,000 and more.

According to a 2018 United Way Cost of Living report, Latino and African-American households struggle at the highest rates in California; the cost of housing is their largest burden.

Still, state demographers said a mix of factors likely are playing into the flight of the impoverished, elderly and those on fixed incomes.

“Moves relate to relative employment situation and they do relate to costs and amenities,” said Eddie Hunsinger, a demographer with the state Department of Finance. “They also, too, move at different stages of life. It’s generally a mix of factors going into migration.”

Hunsinger added that even when people are leaving the state in droves, there is still a steady flow of people moving into California. 

Randa Moore, who used to live in Santa Rosa in Sonoma County, said the No. 1 reason she left for Florida was the cost of living. 

“We were working 10-16 hours a day, seven days a week, every holiday, and were still struggling to buy groceries,” she said. 

Now, Moore rents a three-bedroom home with a pool for $1,400 a month and has money to spare.

“The difference is in the thousands of dollars and hours working,” she said. “We don’t make California money anymore, but we actually have more money at the end of the month. 

“Do I miss it?” she asked. “I miss what it used to be. Before the industries were destroyed as well as the middle class. It seems it’s become a two-class system, the haves and the have-nots. The poor have no chance to survive.”

Housing crisis

California is attempting to address the housing issue. Gov. Gavin Newsom has committed $1.75 billion to fund new building projects to tackle California’s housing crisis. In October, Newsom signed various housing bills, including one that capped rent increases and stifled evictions.

“We’re living in the wealthiest as well as the poorest state in America,” Newsom said when he signed the bills. “Cost of living. It is the issue that defines more issues than any other issue in this state.”

Between 2010 and 2017, negative domestic migration to the state increased annually, according to the California Association of Realtors. In the same period, the median cost of a home in California doubled; in the Bay Area, it tripled.

“About 32% of households in California can afford to buy a median-priced home, which is around $600,000,” said Oscar Wei, the realtor association’s senior economist and director of research. “Compared to 2012, we were at 52% (across the state). In San Francisco and San Mateo only 12 or 13% of residents can afford to buy a median-priced home there.”

In San Francisco, a median-priced home costs around $1.5 million.

Wei said states with a low cost of living or no income tax can tempt people by offering wages that aren’t quite middle class in California, but would put them above-average elsewhere.

“In California, to buy a median price home it requires an income of $100,000,” he said. “In Arizona, you can buy a median-priced home with an income of $50-$60,000.”

While Wei does not expect housing prices to drop the way they did at the end of the last decade, when the housing bubble burst, he does anticipate price drops in the next five to ten years if the housing crisis isn’t addressed. 

“We have been seeing some companies leaving So Cal and the Bay Area,” said Wei. “Toyota and Nissan left Southern California, and home prices might have slowed down but they haven’t dropped really significantly.

“If the housing affordability issue isn’t addressed in the next five to ten years we will see companies starting to move out,” he said. However, he didn’t think enough companies would move out over a short enough period to truly tumble housing prices.

“After all,” he said, “California is a good place to live. It’s the cost that is an issue.”

‘The state pushed us out’

Pat Tollefson, who said her great-great-grandfather, Joseph Fredrick Snyder, was an early settler of Salinas in the 1860s, moved to Washington state with her husband three years ago, after spending her first 60 years in California. 

“We love California, but the state pushed us out,” she wrote to The Salinas Californian on Facebook. 

“The first year (we were in Washington), our Prius California renewal registration was due at a cost of $290, but we transferred the registration to Washington state at a cost of $63,” she said.”That was just one surprise benefit!”

Tollefson said they found the cost of purchasing a home, as well as utilities were lower than they had paid in California. The lower cost of living, combined with their access to nature has helped lower their stress.

Salinas realtor Chris Barrera has worked for Windermere Valley Properties for five years. In the last few years, he has seen more and more clients cite cost of living as a main reason they are leaving California. 

He estimated about a quarter of the 20 clients he works with a month felt they could no longer afford California. Most are in the service industry or live on a fixed income, and many are leaving for Texas and Idaho, states with a low or no income tax, and a low cost of living.

“People are being priced out,” Barrera said. “I have a lot of clients who are selling and they’re just tired of California politics. 

“Monterey County is one of the most expensive places to live in the U.S., and the only other option is to have numerous families living at one property,” he said. 

That creates its own problems, and can push people out.

“When does this stop?” Barrera asked. “When does this start evening out? All of us are going to be in that situation one day when we retire. To have to leave where our family is and where we were brought up just because we can’t afford it is pretty sad.”

‘A lot of anger’

Those who leave California don’t always leave it behind, though. Communities that sometimes double as support groups have sprung up online for former Californians. Here, they can complain about their former state, or even their new one, while still maintaining that they’re glad they left.

Some also say politics, not just taxes, play a role in their decision to leave.

In “CA Exodus and Ex-CAers,” a Facebook group for ex-Californians and those planning to leave, the banner photo is an altered “Now leaving California” sign. It reads: “Was it something we taxed?”  

Here, a couple hundred members share California laws and regulations they find ridiculous or costly, affirming their and other members’ decision to leave. Mostly, though, they share stories of other Californians leaving California.

“I joined this group so I would at least have others to commiserate with,” said group member Melinda Temblador, who said she left “Commiefornia” because of “the high cost of everything, extreme moral decay and (being) pretty sick of bearing the cost of freeloaders for their free medical, free college, free free free stuff while I slave away staying awake at night wondering how I’m going to pay for my daughter’s college but the illegal next door gets it for free.

“If you sense a lot of anger on my part,” she wrote, “You would be correct. We absolutely made the best decision to flee. Have no regrets and are actively helping several family members to leave ASAP as well.”

Other group members echoed Temblador’s sentiments, adding that the state’s liberal bent left them feeling frustrated and isolated.

“I guess maybe it helps to solidify the fact we are not alone,” said Jonathan English Olmstead, who plans to leave California. “In this state, being a devoted Christian and Republican you feel as though you are the only one with these views.”

Not everyone is taking off for cheaper or greener pastures. Some have instead resorted to subletting or moving in with family to meet increased rental prices. 

Marina native Raycheal Jarvis said she and her family, including four children, are living with her in-laws. Jarvis wanted to stay in Marina where “where neighbors still look out for one another,” but, she said, commuters to San Jose are snapping up properties at sky-high prices. Jarvis is looking at other options, but so far, it seems the only place she and her family can afford housing is outside of the area. 

“We don’t make enough to afford a home big enough to raise our family,” she said.

Kate Cimini is a multimedia journalist for The Californian. This article is part of theCalifornia Divide project, a collaboration among newsrooms examining income inequality and economic survival in California.

Note: This story has been corrected from a previous version to reflect that about 109,000 more people left California than moved there in 2018.

This article was originally published by CalMatters.org

California is Taxing Our Patience

It’s a new year and for Californians, that invariably means new taxes. But there are many questions the tax-grabbing state bureaucrats should be forced to answer first.

Why is California the only state in the country that stubbornly refuses to reveal public spending records to a government watchdog, which has now prompted threats of legal action? If California education spending is at an all-time high, why are schools still short on cash? Why is there is no way to track educational spending to ensure it is going to the right place?

To be sure, many tax dollars disappear into the bottomless hole also known as bureaucratic waste. But clearly a large chunk of that money goes for public employee pension and healthcare perks. In a paper published by the Brookings Institution in May, University of Missouri economics professor Cory Koedel writes, “California’s pension debt is harming teachers and students now — and it’s going to get worse.” He explains that the California State Teachers Retirement System’s total unfunded liability is over $100 billion, “which is greater than the total amount of money spent to educate all of California’s public K-12 students for a year ($97.2 billion).”

Robert Fellner, executive director of Transparent California, reports that “Nearly 80,000 California retirees are receiving $100,000 or more in pension pay.” He adds, “Spending 52 percent more than the market average for public employees’ medical insurance is costing California taxpayers at least $3.3 billion annually.”

Additionally, San Diego taxpayer activist Richard Rider reminds us that California already has by far the nation’s highest state income tax rate. And the highest state sales tax rate. And the highest gas tax. What qualifies as “good news” is that our capital gains tax is second highest…in the industrialized world.

No matter. The Sacramento tax machine is oiled up and ready for more plunder. In fact, two of the grabs to be put directly to voter curiously and confusingly invoke “Prop. 13.” In November, pending signatures, we will be treated to the “split roll” initiative which would gut Prop. 13 protections for businesses. What split roll proponents fail to acknowledge is that when business costs increase, they are passed on to customers.

The “Schools and Communities First” initiative would provide more money for “education and local services. Since 1978, Prop. 13 has limited property taxes on all forms of property to 1 percent of assessed value, and limits increases in that value to no more than 2 percent a year, except when properties change hands.

The second Prop. 13, which will be on the ballot March 3rd, has absolutely nothing to do with the 1978 version. The 2020 Prop. 13, a “School and College Facilities Bond,” would authorize $15 billion in general obligation bonds for school and college facilities.

Clearly, the new Prop. 13, unlike its predecessor, is no friend to taxpayers. As Howard Jarvis Taxpayer Association president Jon Coupal notes, the $15 billion figure “reflects typical credit card math” because the money would be borrowed from Wall Street, and taxpayers would pay it back plus 80 percent in total interest costs. Hence, the stated $15 billion eventually becomes $27 billion.

Many Californians have had it. Business are leaving. In 2018, 1,800 companies left the state, with most bound for Texas. California is regularly No. 50 on “Best States to do Business” lists. Such longtime big taxpaying firms like Toyota, Charles Schwab and Carl’s Jr. have left for tax-friendlier states recently.

Golden State taxpayers may have finally reached a tipping point. Measure EE, a parcel tax that needed a two-thirds majority, failed to pass last June. Not only didn’t it get the required two-thirds, it couldn’t even garner a simple majority. Also, in tony Marin County, residents have formed an advocacy group. The mission of the Coalition of Sensible Taxpayers (CO$T) is to “pressure school districts to rethink their spending and funding.”

Over the next year, you are going to hear all kinds of sob stories about needing more money for “the children.” It’s way past time to ignore them and instead, vote your already depleted wallet. You can start by just saying No to Prop. 13 on March 3rd.

Larry Sand, a retired teacher, is president of the California Teachers Empowerment Network.

Originally published in the Orange County Register.

A Bold Fix For The West’s Water Woes

The nation’s Western states are facing severe, and worsening, water shortages. There are both consumption and supply problems, and neither will be easy to fix. However, we have a remedy for the latter.

More water is used in America per capita than almost anywhere else in the world — more than three times as much as in China and 15 times more than in Denmark. Not surprisingly, the highest domestic water use is in the driest Western U.S. states: Arizona residents use 147 gallons per day compared to just 51 gallons in Wisconsin. That’ll come as no surprise to anyone who has seen the heavily irrigated golf courses in places such as Phoenix and Scottsdale.

The situation in California, with its outsized population and recurrent droughts over much of the past decade, is particularly tenuous. The state has received significant amounts of rain during the past few years, but that has not remedied the most serious impact of many years of drought, which has been exacerbated by a growing population and expansive agriculture: namely, a severe deficit of groundwater. For years, farmers in the Central Valley have liberally extracted water from the region’s aquifers to compensate for reduced supplies from canals and aqueducts.

As water levels have dropped, farmers, homeowners, and municipalities have dug deeper and deeper wells, but such measures only prolong the inevitable: The incidence of well failures is increasing.

Most proposed solutions, which have focused on conservation, have been unpalatable, while few have focused on ways to increase supplies. There’s the rub: America does not have a water supply problem; it has a water distribution problem.

Therefore, to address the water shortages in Western states, we propose a major new infrastructure project that could revolutionize water distribution in the U.S. and further development of the western half of the nation: long-distance pipelines.

In much of the West, rain is sparse, and except for parts of the Pacific Northwest, water comes largely from a variety of non-precipitation sources. California, for example, has a hodge-podge of sources, one of the most important of which is the Colorado River, which supplies most of the water for farm irrigation and urban areas in the southern part of the state. Arizona, California, Nevada, New Mexico, Utah, Colorado, Wyoming, and Mexico all share the river’s resources.

The largest eastern river, the Mississippi, has about 30 times the average annual flow of the Colorado, and the Columbia has close to 10 times.  Water from these and other large rivers pours unused into the sea.

Thus, the West’s chronic water shortages result from a failure to appropriately redistribute our nation’s abundant total water resources.

We currently transport oil, but not water, across America, although water can move through pipelines, tunnels, and aqueducts with perfect safety over long distances on a virtually limitless scale.

We envision a major combined federal and private hallmark program for the nation – an Interstate Water System (IWS), which would rival in importance and transformative potential the Interstate Highway System, whose formation was championed by President Dwight Eisenhower. America already moves some water and stores it in man-made lakes, and the IWS would be designed to expand the country’s water-related infrastructure by crossing state boundaries to transport water from where America has an abundance of it to where it is needed. With modifications and expansions over time, no part of the U.S. need find itself short of water.

The IWS is practicable. Assume that an initial goal might be doubling the water flow, averaging about 20,000 cubic feet per second, to Colorado River system reservoirs. Pumping Mississippi River water to about 4,000-5,000 feet altitude would likely be needed to supply reservoirs Lake Mead (altitude 1,100 feet) and/or Lake Powell (altitude 3,600 feet). We estimate that fewer than 10 power plants of typical one-gigawatt size could provide the energy to move water halfway across the nation to double the flow of the Colorado River, while gravity-driven flow turning turbines below its reservoir lakes would eventually regenerate much of the input energy required.

If feasibility studies confirm the basic assumptions, the implications would be enormous. The project would create innumerable jobs, provide many construction and other business opportunities, and facilitate national growth and development. Interstate highway and railroad routes suggest cross-country paths for an IWS. Energy supply is not limiting.

The IWS would evolve over years, as did the Interstate Highway System. To make it happen, we need recognition of the great long-term importance of the fundamental idea, and the determination to pursue it at the highest levels of government and industry. The sooner we start, the better.

Schulman, a physician, scientist, former professor, and chairman of Genetics & IVF Institute, lives in the American East and West. Schaefer is a chemist, former president of the University of Arizona, and chairman of REhnu, Inc. Miller is a physician, molecular biologist, and a senior fellow at the Pacific Research Institute.

This article was originally published by the Pacific Research Institute.

California On Path To High-Tech Feudalism

“We are the modern equivalent of the ancient city-states of Athens and Sparta. California has the ideas of Athens and the power of Sparta,” declared then-governor Arnold Schwarzenegger in 2007. “Not only can we lead California into the future . . . we can show the nation and the world how to get there.” When a movie star who once played Hercules says so who’s to disagree? The idea of California as a model, of course, precedes the former governor’s tenure. Now the state’s anti-Trump resistance—in its zeal on matters concerning climate, technology, gender, or race—believes that it knows how to create a just, affluent, and enlightened society. “The future depends on us,” Governor Gavin Newsom said at his inauguration. “And we will seize this moment.”

In truth, the Golden State is becoming a semi-feudal kingdom, with the nation’s widest gap between middle and upper incomes—72 percent, compared with the U.S. average of 57 percent—and its highest poverty rate. Roughly half of America’s homeless live in Los Angeles or San Francisco, which now has the highest property crime rate among major cities. California hasn’t yet become a full-scale dystopia, of course, but it’s heading in a troubling direction.

This didn’t have to happen. No place on earth has more going for it than the Golden State. Unlike the East Coast and Midwest, California benefited from comparatively late industrialization, with an economy based less on auto manufacturing and steel than on science-based fields like aerospace, software, and semiconductors. In the mid-twentieth century, the state also gained from the best aspects of progressive rule, culminating in an elite public university system, a massive water system reminiscent of the Roman Empire, and a vast infrastructure network of highways, ports, and bridges. The state was fortunate, too, in drawing people from around the U.S. and the world. The eighteenth-century French traveler J. Hector St. John de Crèvecœur described the American as “this new man,” and California—innovative, independent, and less bound by tradition or old prejudice—reflected that insight. Though remnants of this California still exist, its population is aging, less mobile, and more pessimistic, and its roads, schools, and universities are in decline.

In the second half of the twentieth century, California’s remarkably diverse economy spread prosperity from the coast into the state’s inland regions. Though pockets of severe poverty existed—urban barrios, south Los Angeles, the rural Central Valley—they were limited in scope. In fact, growth often favored suburban and exurban communities, where middle-class families, including minorities, settled after World War II.

In the last two decades, the state has adopted policies that undermine the basis for middle-class growth. State energy policies, for example, have made California’s gas and electricity prices among the steepest in the country. Since 2011, electricity prices have risen five times faster than the national average. Meantime, strict land-use controls have raised housing costs to the nation’s highest, while taxes—once average, considering California’s urban scale—now exceed those of virtually every state. At the same time, California’s economy has shed industrial diversity in favor of dependence on one industry: Big Tech. Just a decade before, the state’s largest firms included those in the aerospace, finance, energy, and service industries. Today’s 11 largest companies hail from the tech sector, while energy firms—excluding Chevron, which has moved much of its operations to Houston—have disappeared. Not a single top aerospace firm—the iconic industry of twentieth-century California—retains its headquarters here.

Though lionized in the press, this tech-oriented economy hasn’t resulted in that many middle- and high-paying job opportunities for Californians, particularly outside the Bay Area. Since 2008, notes Chapman University’s Marshall Toplansky, the state has created five times the number of low-paying, as opposed to high-wage, jobs. A remarkable 86 percent of new jobs paid below the median income, while almost half paid under $40,000. Moreover, California, including Silicon Valley, created fewer high-paying positions than the national average, and far less than prime competitors like Salt Lake City, Seattle, or Austin. Los Angeles County features the lowest pay of any of the nation’s 50 largest counties.

No state advertises its multicultural bona fides more than California, now a majority-minority state. This is evident at the University of California, where professors are required to prove their service to “people of color,” to the state’s high school curricula, with its new ethnic studies component. Much of California’s anti-Trump resistance has a racial context. State Attorney General Xavier Becerra has sued the administration numerous times over immigration policy while he helps ensure California’s distinction as a sanctuary for illegal immigrants. So far, more than 1 million illegal residents have received driver’s licenses, and they qualify for free health care, too. San Francisco now permits illegal immigrants to vote in local elections.

Such radical policies may make progressives feel better about themselves, though they seem less concerned about how these actions affect everyday people. California’s Latinos and African-Americans have seen good blue-collar jobs in manufacturing and energy vanish. According to one United Way study, over half of Latino households can barely pay their bills. “For Latinos,” notes long-time political consultant Mike Madrid, “the California Dream is becoming an unattainable fantasy.”

In the past, poorer Californians could count on education to help them move up. But today’s educators appear more interested in political indoctrination than results. Among the 50 states, California ranked 49th in the performance of low-income students. In wealthy San Francisco, test scores for black students are the worst of any California county. Many minority residents, especially African-Americans, are fleeing the state. In a recent UC Berkeley poll, 58 percent of black expressed interest in leaving California, a higher percentage than for any racial group, though approximately 45 percent of Asians and Latinos also considered moving out.

Perhaps the biggest demographic disaster is generational. For decades, California incubated youth culture, creating trends like beatniks, hippies, surfers, and Latino and Asian art, music, and cuisine. The state is a fountainhead of youthful wokeness and rebellion, but that may prove short-lived as millennials leave. From 2014 to 2018, notes demographer Wendell Cox, net domestic out-migration grew from 46,000 to 156,000. The exiles are increasingly in their family-formation years. In the 2010s, California suffered higher net declines in virtually every age category under 54, with the biggest rate of loss coming among the 35-to-44 cohort.

As families with children leave, and international migration slows to one-third of Texas’s level, the remaining population is rapidly aging. Since 2010, California’s fertility rate has dropped 60 percent, more than the national average; the state is now aging 50 percent more rapidly than the rest of the country. A growing number of tech firms and millennials have headed to the Intermountain West. Low rates of homeownership among younger people play a big role in this trend, with California millennials forced to rent, with little chance of buying their own home, while many of the state’s biggest metros lead the nation in long-term owners. California is increasingly a greying refuge for those who bought property when housing was affordable.

After Governor Schwarzenegger morphed into a progressive environmentalist, climate concerns began driving state policy. His successors have embraced California “leadership” on climate issues. Jerry Brown recently told a crowd in China that the rest of the world should follow California’s example. The state’s top Democrats, like state senate president pro tem Kevin DeLeon, Los Angeles mayor Eric Garcetti, and billionaire Democratic presidential candidate Tom Steyer, now compete for the green mantle.

Their policies have worsened conditions for many middle- and working-class Californians. Oblivious to these concerns, Greens ignore practical ideas—nuclear power, natural gas cars, job creation in affordable areas, home-based work—that could help reduce emissions without disrupting people’s lives. Ultra-green policies also work against the state’s proclaimed goal of building more than 3.5 million new housing units by 2025. In accordance with its efforts to reduce car use, the state mandates that most growth occurs in already-crowded coastal areas, where land prices are highest. But in cities like San Francisco, the cost of building one unit for a homeless person surpasses $700,000. California’s inland regions, though experiencing population gains, keep losing state funding for decrepit highways in favor of urban-centric, mass transit projects—yet transit use has stagnated, especially in greater Los Angeles.

The state, nevertheless, continues its pursuit of policies that would eliminate all fossil fuels and nuclear power—outpacing national or even Paris Accord levels and guaranteeing ever-rising energy prices. Mandating everything from electric cars to electric homes will only drive more working-class Californians into “energy poverty.” High energy prices also directly affect the manufacturing and logistics firms that employ blue-collar workers at decent wages. Business relocation expert Joe Vranich notes that industrial firms account for many of the 2,000 employers that left the state this decade. California’s industrial growth has fallen to the bottom tier of states; last year, it ranked 44th, with a rate of growth one-third to one-quarter that of prime competitors like Texas, Virginia, Arizona, Nevada, and Florida.

Similarly, the high energy prices tend to hit the interior counties that, besides being poorer, have far less temperate climates. Cities like Bakersfield, capital of the state’s once-vibrant oil industry, are particularly hard-hit. High energy prices will cost the region, northeast of the Los Angeles Basin, 14,000 generally high-paid jobs, even as the state continues to import oil from Saudi Arabia.

California’s leaders apply climate change to excuse virtually every failure of state policy. During the California drought, Brown and his minions blamed the “climate” for the dry period, refusing to take responsibility for insufficient water storage that would have helped farmers. When the rains returned and reservoirs filled, this argument was forgotten, and little effort has been made to conserve water for next time. Likewise, Newsom and his supporters in the media have blamed recent fires on changes in the global climate, but the disaster had as much to do with green mandates against controlled burns and brush clearance than anything occurring on a planetary scale. Brown joined greens and others in blocking such sensible policies.

Few climate advocates ever seem to ask if their policies actually help the planet. Indeed, California’s green policy, as one paper demonstrates, may be increasing total greenhouse-gas emissions by pushing people and industries to states with less mild climates. In the past decade, the state ranked 40th in per-capita reductions, and its global carbon footprint is minimal. Renewable energy may be expensive and unreliable, but state policy nevertheless enriches the green-energy investments of tech leaders, even when their efforts—like the Google-backed Ivanpah solar farm—fail to deliver affordable, reliable energy.

It’s not so surprising, given these enthusiasms, that progressive politicians like Garcetti—who leads a city with paralyzing traffic congestion, rampant inequality, a huge rat infestation, and proliferating homeless camps—would rather talk about becoming chair of the C40 Cities Climate Leadership Group.

Reality is asserting itself, though. Tech firms already show signs of restlessness with the current regulatory regime and appear to be shifting employment to other states, notably TexasTennesseeNevadaColorado, and Arizona. Economic-modeling firm Emsi estimates that several states—Idaho, Tennessee, Washington, and Utah—are growing their tech employment faster than California. The state is losing momentum in professional and technical services—the largest high-wage sector—and now stands roughly in the middle of the pack behind other western states such as Texas, Tennessee, and Florida. And Assembly Bill 5, the state law regulating certain forms of contract labor, reclassifies part-time workers. Aimed initially at ride-sharing giants Uber and Lyft, the legislation also extends to independent contractors in industries from media to trucking.

At some point, as even Brown noted, the ultra-high capital gains returns will fall and, combined with the costs of an expanding welfare state, could leave the state in fiscal chaos. Big Tech could stumble, a possibility made more real by the recent $100 billion drop in the value of privately held “unicorn” companies, including WeWork. If the tech economy slows, a rift could develop between two of the state’s biggest forces—unions and the green establishment—over future levels of taxation. More than two-thirds of California cities don’t have any funds set aside for retiree health care and other retirement expenses. The state also confronts $1 trillion in pension debt, according to former Democratic state senator Joe NationU.S. News & Report ranks California, despite the tech boom, 42nd in fiscal health among the states.

The good news: some Californians are waking up. A recent PPIC poll found that increasing proportions of Californians believe that the state is headed in the wrong direction—a figure that exceeds 55 percent in the inland areas. And voters dislike the state legislature even more than they dislike Donald Trump. Newsom’s approval rating stands at 43 percent, placing him toward the bottom among the nation’s governors. A conservative-led campaign to recall him is unlikely to succeed, but surveys reveal growing opposition to the new tax hikes proposed by the legislature. There’s a growing concern about the state’s expanding homeless population.

And a rebellion against the state’s energy policies is already under way. Recently, 110 cities, with total population exceeding 8 million, have demanded changes in California’s drive to prevent new natural gas hookups. The state’s Chamber of Commerce and the three most prominent ethnic chambers—African-American, Latino, and Asian-Pacific—have joined this effort.

Californians need less bombast and progressive pretense from their leaders and more attention to policies that could counteract the economic and demographic tides threatening the state. On its current course, California increasingly resembles a model of what the late Taichi Sakaiya called “high-tech feudalism,” with a small population of wealthy residents and a growing mass of modern-day serfs. Delusion and preening ultimately have limits, as more Californians are beginning to recognize. As the 2020s beckon, the time for the state to change course is now.

Originally published in the City Journal https://www.city-journal.org/california-high-tech-feudalism

Joel Kotkin is editor of NewGeography.com and Presidential fellow in urban futures at Chapman University.

Fire insurance renewal mandate may bankrupt insurers

California Insurance Commissioner Ricardo Lara’s recent decision to put a one-year moratorium on insurance companies refusing to renew policies on homes in areas adjacent to recent devastating wildfires has garnered widely mixed reaction.

Lara’s decision ensures roughly 800,000 homeowners can have policies renewed. It’s allowed under Senate Bill 824, which Lara shepherded to passage in 2018 while a state senator representing Bell Gardens. An estimated 350,000 policies had not been renewed in California since the beginning of 2015.

“This wildfire insurance crisis has been years in the making, but it is an emergency we must deal with now if we are going to keep the California dream of homeownership from becoming the California nightmare,” Lara said in a statement.

Lara has won praise from consumer advocates who say insurers are too quick to cancel policies held by homeowners who have dutifully paid premiums for years without ever filing claims. He’s also gotten kudos for his November decision to expand the state-overseen FAIR program, which is run by a pool of insurers and provides bare-bones insurance to homeowners otherwise unable to get policies. Beginning in April, FAIR is supposed to offer plans that cover $3 million in damages, up from the present $1.5 million.

But an analysis by The New York Times suggests that Lara has misjudged the risk that insurers face in an era of hotter, drier weather and that the industry could be on the road to ruin. It noted that the $20 billion that insurers offering policies in the state lost because of devastating wildfires in 2017 and 2018 “wiped out a full quarter-century of the industry’s profits” from California operations, according to the Milliman consulting firm.

Lara told the Times that all he was doing was “hitting the pause button on non-renewals” to stabilize the home insurance market and let insurers and regulators catch their breath and carefully evaluate future steps.

Parallels seen to Hurricane Andrew, Northridge earthquake

But Milliman actuary Eric Xu compared the massive losses suffered by insurers since 2017 to the aftermath of Hurricane Andrew in Florida in 1992, when insurers lost a similar amount and about a dozen went bankrupt.

Karl Susman, owner of a Los Angeles-based insurance agency, told the Associated Press that the present crisis reminded him of the fallout from the Northridge earthquake in 1994, which led many insurers to either stop renewing earthquake insurance policies or to get out of the field entirely. He questioned whether the historic model of home insurance was “sustainable” in California, given fire risks. 

Home insurers in the state requested about 80 rate hikes in 2018, far more than the norm. But the hikes are generally rejected unless it can be established that they are needed because of demonstrated risk – not the higher risks that insurance actuaries expect because of a hotter climate.

“That works, until it doesn’t,” Rex Frazier, president of the Personal Insurance Federation of California, an insurers’ trade association, told the New York Times. He questioned how the industry could survive unless it was allowed to factor in future risks.

Insurers have grumbled but otherwise taken no formal steps to challenge Lara’s moratorium on non-renewals, which is in effect until Dec. 5, 2020. 

But the insurance companies which pool to provide the FAIR “insurance of last resort” program are openly defying Lara. FAIR officials were supposed to provide an operational plan by Dec. 14 of how they would expand the program and increase coverage limits, as the insurance commissioner had ordered. Instead, they sued Lara just before the deadline, saying he had grossly overstepped his authority.

This article was originally published by CalWatchdog.com

More Californians Consider Leaving

In the ‘80s, a punk rock band, The Clash, had a catchy little hit entitled, “Should I Stay or Should I Go.” As Californians start a new decade, many are asking themselves the same thing.

For a few, the decision to leave is easy because of better job opportunities or the desire to escape California’s high cost of living. But for many, it is a difficult choice. Older Californians often stay because this is where their children and grandchildren are. But recent college graduates who would prefer to stay in California for the lifestyle and recreation are nonetheless compelled to move because of ridiculously high housing costs.

While California has the highest level of net domestic out-migration in the nation, totaling well over one million people in less than eight years, the decision to leave the Golden State remains personal and no one factor will be determinative for most people.

Hard decisions compel people to weigh the pros and cons of bailing out. But here are some of the considerations:

To read the entire column, please click here.

California’s New Online Privacy Law Creating Confusion

Enacted in 2018 over the vigorous objections of Silicon Valley tech giants, California’s first-in-the-nation online privacy law took effect Jan. 1, 2020. But with the staff of state Attorney General Xavier Becerra still far short of finalizing an enforcement framework, it’s unclear what effect the California Consumer Privacy Act will have in the short term.

The law’s most important provisions appear straightforward. Californians can ask companies which collect information online what information they have on them. Companies must delete this information upon request. Websites with third-party trackers must make it easy for consumers to opt out of having their information sold by having a visible button allowing them to quickly do so on their home pages.

But echoing the warnings of the California Chamber of Commerce, there’s confusion on how much information companies can retain on their customers – as opposed to information on those who have visited websites or use phone applications. There are also questions about what constitutes the sort of data that consumers should be able to control.

Facebook, Google have different view of law’s scope

“Companies have different interpretations, and depending on which lawyer they are using, they’re going to get different advice,” privacy software executive Kabir Barday told the New York Times.

This is plain in the contrasting plans of California’s two most high-profile tech firms.

Facebook told advertisers in early December that it had no plans to change data-collection policies because it doesn’t believe that “routine data transfers” about consumers fit the definition of selling data contained in the California law, according to a Wall Street Journal report.

Google, however, has put up a website that says the company welcomes the California law and will fully adhere to its intent of letting consumers control their personal data. The company is telling advertisers that consumer data can only be used for fraud detection or to measure online views of ads – and never to try to ascertain the buying habits or product searches of individuals.

Meanwhile, the Experian credit-reporting service told Becerra’s office that it strongly objected to having to provide consumers with “internally generated data” about them, arguing that such information is proprietary and isn’t akin to snooping on individuals’ online search habits and histories.

The Evite company that lets people send out personalized online invitations to parties or events has taken a different tack: using its privacy policy page to make the case to users that the information it collects is used in benign ways that benefit users and improves the services Evite offers.

The law does not apply to businesses with annual revenue of less than $25 million that do not buy or sell personal information on at least 50,000 people a year.

Becerra expects to have guidelines finished by summer

Becerra issued draft guidelines for how the law would be implemented in October. His office is now evaluating the complaints and comments it got from privacy activists, affected companies and others. The goal is to have the regulations in place by the middle of the year.

A key question going forward is how hard Becerra will come down on the 100-plus “data broker” firms in the U.S. which accumulate and sell the most personal of information yet have managed to escape much attention. An investigation posted by the Fast Company media website last March detailed how “if you use a smartphone or a credit card, it’s not difficult for a company to determine if you’ve just gone through a break-up, if you’re pregnant or trying to lose weight, whether you’re an extrovert [and] what medicine you take.” Jewelry sellers, for example, can get customized lists of which consumers have a history of buying expensive gifts on Valentine’s Day.

The firms’ ability to provide such detailed, specific information could be widely curtailed if enough consumers opt out of sharing their personal information – at least if they’re based in California or a state or nation with similar rules. But since such data mining can be done about Americans by companies based in nations with no such rules, it’s certain to continue. A likely future policy fight is over whether California companies should be banned from obtaining such personal information from firms that don’t honor online privacy laws like the Golden State’s.

This article was originally published by CalWatchdog.com

California’s In a Hole – Time To Stop Digging

For those of us who have been here long enough, we have seen how our once Golden State has disintegrated beyond recognition. For those familiar with military jargon, “FUBAR” is certainly apt for the state of our state. California, the United States’ testing ground for all ridiculous uber-progressive policies, is unrecognizable from as recently as a decade ago.

The liberal-instigated crisis du-jour is the issue of homelessness. Psychiatrists, educators and political scholars struggle day and night to figure out the answer to the homelessness crisis.  The solutions elude them for one basic reason – they don’t want to confront the bare facts.

The answer is pretty simple. Over the last 20 years, California has been controlled by the Democrat party. And for 20 years, the quality of life in California has plummeted. On top of that, it seems as if the taxes will never stop rising. Democrats supply of wrecking balls to apply to our state seems endless.

Los Angeles and San Francisco are just two examples of failed Democrat governance. Streets are full of homeless people. Feces, urine, garbage and heroin stained syringes litter the streets of these cities. The city of San Francisco employs individuals who are known as the “Poop Patrol,” and pays them almost $184,000 a year including salary and benefits, to steam clean the city’s sidewalks, according to Business Insider.

Democrats would like to twist the narrative to the benefit of their interests. But when you look at the facts, their policies are racking up failures faster than Saddam Hussein’s army in “Operation Desert Strom.”  Following the advice of Chicago Mayor Rahm Emanuel when he was President Obama’s Chief of Staff to “never let a crisis go to waste,” Democrats want to make the homeless issue another excuse to raise taxes and implement more government control in the housing sector. They firmly believe that the homeless issue is caused by increasing costs of housing. But that is only partially true, and ignores the Democrats roll in raising regulations which add tens of thousands of dollars to the cost of new homes.

The main driver of homelessness, as even many of the more honest folks who work with the homeless, is that half or more of the individuals living in California’s streets suffer with severe mental illness. Even if you built these individuals a home and gave them the keys, they still would not be willing or able to support themselves.

To be able to solve the issue, we must first look at what is causing it. Jerry Brown signed A.B. 109, a bill that revised California’s prison system because it was “overcrowded.” Brown allowed for the release of “non-violent” criminals back into the streets. A large number of these individuals who were let out have nowhere to go. To make it worse, many of them are suffering from mental illnesses and drug addictions. So what do they do? They live in the liberal’s brave new world – they live  on the streets,  poop on the streets, inject their drugs on the streets and then dispose of the used syringes on the streets.

But  even the Democrats soon realized that these individuals would suffer  starvation since they could not support themselves. Democrats, not wanting to be held responsible for that, did the usual liberal maneuver and introduced legislation – in the name of compassion of course – making the problem worse.

In November of 2014, Californians passed the The Safe Neighborhoods and Schools Act, aka Prop 47. Prop 47 reclassified theft of items under “$950 or less as exclusively a misdemeanor”, even if the theft is committed every single day. So the homeless were told – yea some might say encouraged – to steal $950 worth of goods every day from the stores in our communities and get away with it. 

In 2017, California Democrats passed Senate Bill 180, which aims at amending the penal code section that relates to drug offenses. The goal is to depopulate the overcrowded prisons. Predictably, S.B 180 is an utter failure. The only thing this bill accomplishes is putting a further strain on law enforcement officials who want to make our communities safer. Under the bill, law enforcement can’t send repeat drug offenders back to prison. These repeat drug offenders, many of whom are homeless, continue to commit drug offenses, often in public areas where children play.

Instead of paying attention to issues that Californians actually face every day, Democrats chase left wing narratives and play at peoples’ emotions. Democrats essentially banned the use of plastic straws in an effort to “save the environment,” even though plastic straws constitute less than one half of one percent of our flow of waste.

Americans are starting to see straight through this lie. If Democrats actually cared about the environment, they’d do something about all the trash, feces, drugs and syringes that stain the sidewalks of once beautiful cities like San Francisco. While children have no other choice but to play in parks that are riddled with feces and used syringes by homeless people, the Democrats could care less. 

They have been in control of California for more than twenty years now, and clearly, their governance is driving our state downhill. There’s an old saying that the first rule when finding yourself in a hole is to stop digging.  Here’s hoping that California voters realize the deep and expanding hole they are in and stop digging by replacing their legislators next year and governor in 2022.

David Ter-Petrosyan is a student at Glendale Community College studying Economic Philosophy. He is a delegate to the California Republican Party.

GOP Political Grifters Grub For Money – Help Adam Schiff

The Vocabulary.com online dictionary defines “grifters” as “chiselers, defrauders, gougers, scammers, swindlers, and flim-flam men. Selling a bridge and starting a Ponzi scheme are things a grifter might do.” As Rod Serling used to say to start most “Twilight Zone” episodes, “submitted for your approval” is the strange case of apparent political grifters Omar Navarro and Jennifer Barbosa.

Navarro was unknown (blessedly) in 2018 when he became the GOP nominee against Maxine “Mad Max” Waters for Congress. Mad Max was such an easy target for conservative ire that Omar was able to raise over a million dollars. Omar repaid his donors trust by spending large sums on himself in the form of a “salary,” rent on his apartment, etc. The amount used effectively actually campaigning against Waters was the proverbial ant-fart in a hurricane, as witnessed by Navarro’s 22.3% of the vote. But hey – he got free rent and a nice salary along the way.

Fast forward to this year, and Omar the money incinerator is back again and expanding his horizons with allies in two more Congressional districts.  His former girlfriend is running as a Republican against Nancy Pelosi, and a current … uhm … associate,  Jennifer Barbosa, is running as a No-Party-Preference (NPP) candidate against Adam Schiff.

Most notable about Navarro’s candidate/former girlfriend running against Pelosi is that she had a restraining order filed against him, and he was arrested in San Francisco earlier this month for stalking her. This got Omar a free stay in the Frisco hoosegow, one of the few overnighters that Omar’s campaign didn’t pay for. Many suspect that the original plan in the district was to replicate Navarro’s sleight of hand from ’18 and spend much of the contributions received – and lots of national conservatives could be tricked into contributing – on personal items instead of campaigning against Pelosi.

Far more potentially damaging is Navarro’s oleaginous dealings in the Schiff race. The consensus Republican candidate is local attorney Eric Early,  He’s been endorsed by the California and Los Angeles Republican Parties, local GOP volunteer groups like the California Republican Assembly (CRA) and local GOP hero former Supervisor Mike Antonovich. Early received almost a million votes when he ran for Attorney General in 2018. The remnants of Congressman Jim Rogan’s organization are solidly behind him. Early is a serious candidate and threat to Pencil Neck Schiff.

Barbosa on the other hand appears to be either a tool or a fool – and either way no conservative interested in defeating Schiff should support her. She has not been active in politics or in the community at large. She is a total unknown. But she has been on Navarro’s payroll before, and while campaign finance reports for this year aren’t due until January 31, betting that contributors’ money is still flowing to her or Omar for personal use would not be, shall we say, a long-shot wager.

And frankly none of this would matter except that the race against Schiff – while still in the “long shot” category – is also in the “winnable” category because the Pencil Neck has alienated large portions of his constituency by becoming the most visible driver of the Democrats’ Impeachment Clown Car. I was at my local community’s Christmas parade a couple of weekends ago. Schiff was in it and got roundly booed along the route. 

Like most ultra-liberals I’ve observed in my 50+ year political career, Pencil Neck has over-reached and alienated a large portion of the “normal folks”  who occupy our political middle ground. He can be taken down. But it will take a smart campaign, something neither Navarro nor Barbosa are capable of running.

So is Barbosa a tool – running to split the opposition vote against Schiff and/or directly damage Early with attacks – or a fool – running to justify Omar-ish compensation from the campaign in the form of rent checks, salary checks, etc? Are she and Navarro actually political grifters or just inept, greedy political wannabes? Whatever the answer, serious people should stay as far away as possible.

Here’s hoping voters in the 28th Congressional district and conservative donors nationwide do not buy the bridge that Navarro and Barbosa are selling.

Bill Saracino is a member of the Editorial Board of CA Political Review.