The California Economy vs. Sacramento

Democrats want to add two more tiers to the State income tax—bringing to it over 15%.  They, along with Biden/Harris, want to raise the corporate income tax—killing more jobs—forcing technology to take over for humans.

“Even as the state mints large numbers of new billionaires, conditions for the working class deteriorate. Over the past decade, the California economy has been divided, Janus-like, between a rising innovation economy, based largely in the Bay Area, and the overall state economy, where 85 percent of all new jobs pay below the median income of $66,000, and 40 percent under $40,000. Middle-income jobs actually declined; for every high-end job, the state created five low-wage ones.

Even with the recent Silicon Valley boom, growth in high-wage jobs has been faster in competitor states such as Texas, Utah, Colorado, and Washington. For those without a college education, as even the New York Times notes, California does worse than virtually anywhere else in the country. State politicians, of course, talk about the promise of “green jobs,” but the reality is that they generally are less permanent, pay less, and are far less unionized than established blue-collar work.

Thanks to regulations, policies, taxes and long waiting periods to get permits for growth, California has quickly turned into a Third World County—failed education, crime law, government protecting criminals, taxes go to law breakers from other countries and jobs fleeing the State.  Then you have an organized effort to hate and harm people with an Asian heritage—the Democrat Party last year via Prop. 16 tried to keep Asian students from colleges and universities—like the racist the Democrats have been since supporting slavery, Jim Crow laws and segregation.  Now instead of black being the victims of Democrats, it is Asians.

The California Economy vs. Sacramento

By Joel Kotkin, National Review, 4/1/21 

Over the past few years California’s plight has taken on mythic proportions — a cautionary tale of progressive woe among conservatives, but a beacon for a future enlightened capitalism among its woke supporters. The current battle over the potential recall of the preening governor, Gavin Newsom, likely will enhance these extreme interpretations on both sides, but likely will not be sufficient to make the changes needed to restore the state’s legendary promise.

Outside observers, and many in the deep-blue California media, have trouble comprehending the perplexing dilemma posed by the state. In recent years California’s relative economic strength in many fields, notably manufacturing, has ebbed, and it suffers the nation’s highest cost-of-living-adjusted poverty rate. The pandemic has driven unemployment to the highest level in the nation outside Hawaii, devastating the state’s vast pool of generally low-wage hospitality and service jobs. Future job prospects are not bright, as evidenced by declining new job postings measured by Indeed, which ranks California worse than any state except the tourist-dominated Aloha State. According to the state’s own outlook, California is not supposed to get back to 2019 levels till 2025.

Yet despite all this, California cannot be easily dismissed as a rusty bucket like Illinois, or an aging legacy economy like those of the Northeast. It is not facing imminent bankruptcy, and its rate of net out-migration, though rising, is not nearly as bad as those of New York, Illinois, and New Jersey. Yet according to U.S. Census Bureau data, only twelve states have done worse in this category than California during the 2010s: The number of people exiting for other states exceeded the number moving in by more than the population of San Francisco. Those states lack anything like California’s technology sector, whose bounty has allowed the state to sail through the pandemic with an expanded budget surplus (though the overall long-term prognosis is not so rosy). This is critical to funding its endlessly expanding welfare state.

Before the social-media era, California boasted a remarkably diverse economy, with a job base that included many high-paying blue-collar and white-collar jobs. Climate policies, as even some green groups admit, have made these gaps wider. Due largely to overly restrictive land-use regulations, some tied to the state’s obsession with climate change, total residential building permits per 1,000 population were 40 percent below the national average in 2020, according to the U.S. Census Bureau. Soaring energy prices, also brought on by green policies, have kept industrial job creation well below national averages.

Even as the state mints large numbers of new billionaires, conditions for the working class deteriorate. Over the past decade, the California economy has been divided, Janus-like, between a rising innovation economy, based largely in the Bay Area, and the overall state economy, where 85 percent of all new jobs pay below the median income of $66,000, and 40 percent under $40,000. Middle-income jobs actually declined; for every high-end job, the state created five low-wage ones.

Even with the recent Silicon Valley boom, growth in high-wage jobs has been faster in competitor states such as Texas, Utah, Colorado, and Washington. For those without a college education, as even the New York Times notes, California does worse than virtually anywhere else in the country. State politicians, of course, talk about the promise of “green jobs,” but the reality is that they generally are less permanent, pay less, and are far less unionized than established blue-collar work.

No state is more fervent in its theoretical embrace of people of color than California, so much so that the state now requires the teaching of woke racial theories at the state’s already underperforming schools. There’s less interest in fixing California’s miserable record of educating its poorer residents (largely Latinos and African Americans), with performance near the bottom among the states, including states such as New York, Florida, and Texas.

Now even technology is losing its allure. In the past year numerous major tech firms — Oracle, Hewlett Packard Enterprise, McAfee, Tesla, Dropbox — have moved all or part of their key operations from the Bay Area, mostly to sprawling Sun Belt suburbs. Perhaps more revealing: Three-quarters of venture capitalists and tech-firm founders, notes one recent survey, expect their ventures to be totally, or mostly, operating online, while last year’s largest gains in tech workers, according to a study by Big Technology, were in places such as Madison, Wis., with a net loss in workers coming to the Bay Area.

The combination of diminished opportunity and high costs drives disturbing migration patterns. Once the beacon for people from around the country and the world, the state has been losing domestic migrants for years. And now the foreign-born population, notes demographer Wendell Cox, has begun to stagnate, particularly in metro Los Angeles, as newcomers seek opportunities elsewhere. Those who leave are not, as some legislators and boosters believe, just the old, the uneducated, and the poor. They are, increasingly, middle-class families. Once it was a beacon for young people and families, but since 2010 the state’s median age has risen 50 percent faster than the rest of the country. Threats to increase further taxes on the wealthy, including after someone leaves the state, could spark a further exodus of the rich, as has occurred in high-tax East Coast locales.

California’s dwindling band of conservatives may dream of a Reaganite revival, but the emigration of middle-class families and jobs undermines the growth of an alternative electoral base, while the ranks of the poor and state employees grow and the key remaining industries, such as technology and Hollywood, tilt decisively to the left. The GOP remains in secular decline: Since the 2003 recall of Democratic governor Gray Davis, the Republican share of the electorate has dropped from 35 percent to 24 percent, roughly half the percentage identifying as Democrats.

The shiny new marble for the disgruntled has been the drive to recall Newsom. This has been sparked by his inconsistent actions during the lockdowns and his being caught partying in ways that violated his own draconian pandemic orders by dining indoors at the ultra-expensive, ultra-chic French Laundry restaurant in Napa. Newsom clearly is not widely popular — his poll rating has fallen since September from 64 percent to 46 percent — but a new Berkeley poll suggests a recall is now supported by barely one-third of voters.

A recall would also require voters to elect a replacement for Newsom, and here the news is not so encouraging for the GOP. John Cox, a nondescript wealthy investor from Illinois who was trounced by 23 points by Newsom in 2018, seems determined to make another quixotic run for governor. Another widely discussed candidate, Richard Grenell, former ambassador to Germany and director of national intelligence, would be a hard sell in a state Trump lost by almost two to one. Democrats are already linking the recall effort to the January 6 “insurrection” in Washington. Former San Diego mayor Kevin Faulconer may prove a better alternative, being a political moderate, but by the time the big money, which tilts Democratic, and the “me too” media weigh in, he will likely be characterized as the new coming of Trump or a West Coast Mussolini.

But this does not mean that pushback against progressive excess is impossible. A recent survey from the Berkeley Institute of Governmental Studies found that voters increasingly identify the root of California’s problems as excessive taxation and regulation. An all-time-record 81 percent of respondents said state and local taxes are too high, with most of those voters (48 percent) saying taxes are “much too high.” Voters resoundingly agreed (78 percent) that onerous taxes are driving people and businesses out of the state.

Even the ethnic transformation of California into a “majority minority” state may carry some surprises, as evidenced in the stunning loss of the affirmative-action ballot measure last year, which had been heavily backed by the oligarchal elite. Politically purple Orange County was solidly anti-Trump, voting for Biden by 53 to 44 percent, but it also voted nearly two to one against Proposition 16, the rejection of which, despite its near-unanimous support by Democratic officeholders and the progressive gentry, reaffirmed the illegality of racial discrimination in public-university acceptances. The measure basically split the Latino vote and lost badly in the blue-collar interior counties.

Independents, open-minded Democrats, and, most critically, concerned racial minorities are still capable of pushing back against economically destructive progressive policies. Scattered attempts are being made to correct the state’s deficiencies in blue-collar Long Beach, which is trying to marry the state’s burgeoning space sector with the education system from grade to graduate school. Grassroots business, some 36 percent minority-owned and just emerging from the pandemic, may seek to cut down on regulations. Similarly, a policy to encourage at-home work could reduce greenhouse-gas emissions while allowing workers to live in more-affordable regions.

California may be suffering from the delusions of its ruling class, but it still contains what may be the greatest collection of creative talent ever assembled in one place, extending from Silicon Valley to Hollywood, in technology, space, culture, design, and ways of eating and living. Many among those of us who settled here do not want to see ourselves or our offspring forced out of the state, ending up as dejected exiles, like Russian nobility dreaming of past glories.

Some on the right might like to see California collapse and prove the dunderheadedness of modern progressivism. But America needs our state’s sometimes wacky creativity just as it needs the stolidity of the heartland, the raw ambition of Texas, and a rapidly changing South working to unravel its racially troubled past. Ultimately, though, this is not the nation’s fight. California can be saved only by Californians.

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.

Comments

  1. Thanks for posting another good article by Kotkin. Yep, we kick out Newsom (hopefully!!), then what? In a different article Kotkin might have given a plan: explain to the working class how Democrats have abandoned them. https://joelkotkin.com/what-happened-to-social-democracy/

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