Tag: California

America the Mostly Beautiful

In the fall of 2010, as part of a book project, ex-newspaperman Bill Steigerwald retraced the route John Steinbeck took in 1960 and turned into his classic “Travels With Charley.” Steigerwald drove 11,276 miles in 43 days from Long Island to the top of Maine to Seattle to San Francisco to New Orleans before heading back to his home in Pittsburgh. In “Dogging Steinbeck,” his new e-book about how he discovered “Charley” was not nonfiction but a highly fictionalized and dishonest account of Steinbeck’s real trip, Steigerwald describes the America he saw.

"Big."

"Empty."

"Rich."

"No change since 1960."

Long after the old farms and new forests of New England disappeared in my rearview mirror, I was still scrawling those words in the reporter’s notebook on my knee. Big, empty, rich and unchanged – that’s a pretty boring scouting report for the America I “discovered” along the Steinbeck Highway. You can add a bunch of other boring but fitting words – “beautiful,” “safe,” “friendly,” “clean,” and “quiet.”

Like Steinbeck, I didn’t see the Real America or even a representative cross-section of America, neither of which exist anyway. Because I went almost exactly where Steinbeck went and stopped where he stopped, I saw a mostly White Anglo Saxon Protestant Republican America, not a “diverse and politically correct” Obama one. Mostly rural or open country, it included few impoverished or crime-tortured inner cities and no over-developed/underwater suburbs.

America the Beautiful was hurting in the fall of 2010, thanks to the bums and crooks in Washington and on Wall Street who co-produced the Great Recession. It still had the usual ills that make libertarians crazy and may never be cured: too many government wars overseas and at home, too many laws, politicians, cops, lawyers, do-gooders and preachers.

But America was not dead, dying or decaying. There were no signs of becoming a liberal or conservative dystopia. The U.S. of A., as always, was blessed with a diverse population of productive, affluent, generous, decent people and a continent of gorgeous natural resources.

Everyday of my trip I was surrounded by undeniable evidence of America’s underlying health and incredible prosperity. Everywhere I went people were living in good homes, driving new cars and monster pickup trucks and playing with powerboats, motorcycles and snowmobiles. Roads and bridges and parks and main streets were well maintained. Litter and trash were scarce. Specific towns and regions were hurting, and too many people were out of work, but it was still the same country I knew.

I didn’t seek out poverty or misery or pollution on my journey, and I encountered little of it. The destitute and jobless, not to mention the increasing millions on food stamps, on welfare or buried in debt, were especially hard to spot in a generous country where taking care of the less fortunate is a huge public-private industry – where even the poor have homes, cars, wide-screen TVs and smart phones.

I saw the familiar permanent American socioeconomic eyesores – homeless men sleeping on the sidewalks of downtown San Francisco at noon, the sun-bleached ruins of abandoned gas-stations on Route 66, ratty trailer homes parked in beautiful locations surrounded by decades of family junk. I saw Butte’s post-industrial carcass, New Orleans’ struggling Upper Ninth Ward and towns that could desperately use a Japanese car plant.

But the country as a whole was not crippled or even limping. In the fall of 2010, nine in 10 Americans who said they wanted jobs still had them. The one in 10 who were jobless had 99 weeks of extended unemployment benefits and more than 90 percent of homeowners were still making their mortgage payments.

Most of the states I shot through – including Maine, northern New Hampshire and Vermont, upstate New York, Wisconsin, Minnesota, North Dakota, Montana – had unemployment and foreclosure rates well below the national averages.

I didn’t visit the abandoned neighborhoods of poor Detroit. I didn’t see battered Las Vegas, where 14.5 percent of the people were unemployed and one in nine houses – five times the national average – had received some kind of default notice in 2010. But I spent almost two weeks in the Great Train Wreck State of California, where jobless and foreclosure rates were higher than the national average and municipal bankruptcies loomed.

America had 140 million more people than it did in 1960, but from coast to coast it was noticeably quiet – as if half the population had disappeared. Despite perfect fall weather, public and private golf courses were deserted. Ball fields were vacant. Parks and highway rest stops and ocean beaches were barely populated. Except for metropolises like Manhattan and San Francisco and jumping college towns like Missoula and Northampton, people in throngs simply did not exist. I went through lots of 30-mph towns that looked like they’d been evacuated a year earlier.

As I drove what’s left of the Old Steinbeck Highway – U.S. routes 5, 2, 1, 11, 20, 12, 10, 101 and 66 – it was obvious many important changes had occurred along it since 1960. Industrial Age powerhouses like Rochester, Buffalo and Gary had seen their founding industries and the humans they employed swept away by the destructive winds of technology and global capitalism. Small towns like Calais in northeastern Maine had lost people and jobs, and vice versa.

New Orleans had shrunk by half, and not just because of Katrina. The metro areas of Seattle, San Francisco and Albuquerque had exploded and prospered in the digital age. The populations of the West Coast and the Sunbelt had expanded since 1960. The South had shed its shameful system of apartheid and its overt racism, as well as much of its deep-rooted poverty and ignorance. The Northeast had bled people, manufacturing industries and its once overweening role in determining the nation’s political and cultural life.

Change is inevitable, un-stoppable, pervasive. Nevertheless, it was clear that a great deal of what I saw out my car windows had hardly changed at all since Steinbeck and his French poodle Charley raced by.

He saw more farmland and fewer forests than I did, especially in the East. But in many places I passed through almost nothing was newly built. Many farms and crossroads and small towns and churches were frozen in the same place and time they were eons ago, particularly in the East and Midwest.

In Maine the busy fishing village of Stonington was as picturesque as the day Steinbeck left it. He’d recognize the tidy farms of the Corn Belt and the raw beauty of Redwood Country and the buildings if not the people of the Upper Ninth Ward. And at 70 mph whole states – North Dakota and Montana – would look the same to him except for the cell towers and Pilot signs staked out at the interstate exits.

Steinbeck didn’t like a lot of things about Eisenhower America – sprawl, pollution, the rings of junked cars and rubbish he saw around cities. And he lamented – not in “Charley” but in letters to pals like Adlai Stevenson – that he thought America was a rotting corpse and its people had become too soft and contented to keep their country great and strong.

But Steinbeck had America’s future wrong by 178 degrees. Fifty years later, despite being stuck in an economic ditch, the country was far wealthier, healthier, smarter and more globally powerful and influential than he could have imagined. Its air, water and landscapes were far less polluted. And, most important, despite the exponential growth of the federal government’s size and scope and its nanny reach, America in 2010 was also a much freer place for most of its 310 million citizens, especially for women, blacks, Latinos and gays.

You don’t have to be a libertarian to know America is not as free as it should be. But there’s no denying that today our society is freer and more open than ever to entrepreneurs, new forms of media, alternative lifestyles and ordinary people who want to school their own kids, medicate their own bodies or simply choose Fed Ex instead of the U.S. Post Office.

As for the stereotypical complaints about America being despoiled by overpopulation, overdevelopment and commercial homogenization, forget it. Anyone who drives 50 miles in any direction in an empty state like Maine or North Dakota – or even in north-central Ohio or Upstate New York – can see America’s problem is not overpopulation. More often it’s under-population. Cities like Butte and Buffalo and Gary have been virtually abandoned. Huge hunks of America on both sides of the Mississippi have never been settled.

From Calais, Me., to Pelahatchie, Miss., I passed down the main streets of comatose small towns whose mayors would have been thrilled to have to deal with the problems of population growth and sprawl. If anyone thinks rural Minnesota, northwestern Montana, the Oregon Coast, the Texas Panhandle or New Orleans’s Upper Ninth Ward have been homogenized, taken over by chains or destroyed by too much commercial development, it’s because they haven’t been there.

The America I traveled was unchained from sea to sea. I had no problem eating breakfast, sleeping or shopping for road snacks at mom & pop establishments in every state. The motels along the Oregon and Maine coasts are virtually all independents that have been there for decades. You can go the length of old Route 66 and never sleep or eat in a chain unless you choose to.

Steinbeck, like many others have since, lamented the loss of regional customs. (I don’t think he meant the local “customs” of the Jim Crow South or the marital mores of the Jerry Lee Lewis clan.) I didn’t go looking for Native Americans, Amish, Iraqis in Detroit, Peruvians in northern New Jersey or the French-Canadians who have colonized the top edge of Maine. But I had no trouble spotting local flavor in Wisconsin’s dairy lands, in fishing towns along Oregon’s coast, in the redwood-marijuana belt of Northern California, in San Francisco’s Chinatown or the cattle country of Texas.

Not to generalize, but the New York-Hollywood elites believe the average Flyover Person lives in a double-wide or a Plasticville suburb, eats only at McDonald’s, votes only Republican, shops only at Wal-Mart and the Dollar Store, hates anyone not whiter than they are, speaks in tongues on Sunday and worships pickup trucks, guns and NASCAR the rest of the week.

Those stereotypes and caricatures are alive and well in Flyover Country. But though I held radical beliefs about government, immigration and drugs that could have gotten me lynched in many places, I never felt I was in a country I didn’t like or didn’t belong in. Maybe I just didn’t go to enough sports bars, churches and political rallies, but for 11,276 miles I always felt at home.

Bill Steigerwald, born and raised in Pittsburgh, is a former L.A. Times copy editor and free-lancer who also worked as a docudrama researcher for CBS-TV in Hollywood before becoming a reporter for The Pittsburgh Post-Gazette and a columnist for The Pittsburgh Tribune-Review. He recently retired from daily newspaper journalism.

December 25, 2012
For A Preview Of Obama’s America In 2016, Look At The Crack-Up Of California

Conservatives of the paranoid stripe flocked to the documentary “America: 2016” during the run up to the election, but you don’t have to time travel to catch a vision of President Obama’s plans for the future. It’s playing already in California.

Some East Coast commentators like Jeff Greenfield saw the election as “a good night” for the Golden State, which the President carried by 20 points, 10 times his margin elsewhere — a massive bear hug from Californians. It certainly was a great night for Democrats, who now have a two-thirds majority in the state legislature and can spend a massive tax increase that targets families making over $250,000 a year.

These results assure that California will serve as the prime testing ground for President Obama’s form of post-economic liberalism. Every dream program that the Administration embraces — cap and trade, massive taxes on the rich, high-speed rail — is either in place or on the drawing boards. In Sacramento, blue staters don’t even have to worry about over-reach because the Republicans here have dried into a withered husk. They have about as much influence on what happens here as our family’s dog Roxy, and she’s much cuter.

California now stands as blue America’s end point, but contrary to the media celebration, it presents not such a pretty picture. Even amidst our decennial tech bubble, the state’s unemployment is among the highest in the country, and is trending down very slowly. Over the past decade, California has slowed as a source of fast-growth companies, as a recent Kauffman Foundation study shows, while other states such as Washington, Virginia, Texas and Utah have gained ground.

Old-style liberals might point out that California’s progressive policies have not done much for the working- or middle-class folks often trumpeted as its beneficiaries. Instead income inequality has grown far more than the national average. True, the fortunate sliver of dot-com geniuses make billions, but the ranks of the poor have swollen to the point that the state, with 12% of the nation’s population, account for one third of its welfare cases. Large parts of the state, notably in the interior regions, suffer unemployment in the 15% range and higher.

Demographics may be working to the Democratic Party’s favor, but not so much for the state. As California loses its allure as a place of opportunity for all but a few — the best connected, educated and affluent — the state is losing its magnetic appeal to migrants from both inside and outside the state. Domestic migration has been negative for 18 of the past 20 years; immigration from abroad is at the lowest point in the past two decades. In terms of growth in college-educated residents, only San Diego managed to add more than the national average from 2000 to 2010; both the Bay Area and Los Angeles were considerably below. (See “The U.S. Cities Getting Smarter The Fastest“)

The growing diversity, a good thing in itself, masks a demographic stagnation. California, remarkable for its population growth over the past century, now is heading toward “zero population growth,” notes economist Bill Watkins; the state now barely grows 1% a year. Los Angeles, the state’s largest urban area, grew less, in total numbers, in the last decade than at any time in the last 100 years.

Although this might elicit hosanas among greens, who generally would like to see fewer people, the emerging reality is sobering. Increasingly the state bifurcates between a generally older, predominately white and Asian coast, and an interior increasingly populated by generally less affluent Hispanics and African-Americans. California now ranks near the bottom in science skills, and while its population over 65 is the fifth largest in the nation, the number of those under 35 is only 23rd. And the future looks even bleaker: California’s eighth graders rank a pathetic 47th in terms of science test scores.

So how did the ladder of opportunity crack in a state that has massive natural and human resources, not to mention a kind climate and spectacular scenery?

To some extent, California is suffering the aftereffects of a century of success. Over that period, a large coastal affluent class, now increasingly elderly, enjoyed a spectacular run of rising real estate prices and in some places, like Silicon Valley, a progression of stock windfalls. Once split among liberals and conservatives, this group is now almost uniformly deep blue, as epitomized by Marin County, which voted almost three to one for Obama.

Blacks, Hispanics and young people may be the new core of the Democratic Party, but aging affluents may be the most important constituency. Unlike minorities or young people, they have increasingly little reason to support growth. After all, they have theirs and more people simply means more traffic, congestion and crowded schools. Increasingly many affluents also don’t have children — the liberal heartland of San Francisco has among the lowest fertility rates on the continent — the need to create jobs and opportunities for the next generation is not a pressing priority. Feeling “good” about themselves, by voting for the progressive agenda, is good enough for themselves.

Perhaps the most shocking impact of California’s shift to one-party rule has been the complicity of the once powerful business community. In recent years, California’s business community has accommodated itself to the state’s ever higher taxes and regulations. They acquiesced meekly to the state’s climate change regulations, making the development of anything than largely undesired dense housing developments all but impossible. Industries that use energy — including oil refineries but also chip-makers and server farms — simply go elsewhere, either to another country or across the border to less relentlessly regulated states.

In the battle over the Proposition 30 tax hike, notes small business advocate Joel Fox, Governor Brown and his legislative allies prevented business leaders from opposing the tax hike. “It was a lot of support the Governor — or else,” he says. Some business organizations, like the establishmentarian Bay Area Council, even actively promoted the income tax increase, which makes the state’s rate the highest in the continental United States. For this, they get praise from progressive mouthpieces like The San Francisco Chronicle as “brave business leaders.”

To me, this “bravery” looks like a lot more like “Stockholm syndrome,” where a hostage, as famously happened with Patty Hearst, begins to identify with their captors. Once world-beaters and fierce political competitors, California’s business leaders know that if they oppose the Governor or the legislative leadership’s tax or regulatory agenda, he can threaten them with measures specifically targeted at their industry. So the magnates meekly accept an impossible business climate, knowing, like much of the state’s middle class, that they will be welcomed elsewhere.

In this sense California business has devolved into something analogous to Mexican enterprise under the old PRI regime. If you want to survive, you bow, curtsey and pay up — or else. Business demanded little in return, for example, insisting that education funds be conditional on comprehensive reform. After the election some business types belatedly have started to express concerns about the new Democratic supermajority and what they will do with those new tax revenues. But their inevitable fallback strategy will likely be falling on one knee to beg Governor Brown to save them from an ever more invigorated progressive majority.

This cringing and economically counterproductive approach to governance will soon make its appearance in a Washington. In the next few months, business lobbyists will wear out their knee pads trying to appease the increasingly all powerful regulatory clerisy. Some of the new players may also be the very people who have been killing California. There’s already widespread talk of bringing L.A.’s term-limited Mayor Antonio Villaraigosa to Washington for a big cabinet posting, perhaps as Transportation Secretary. All this rewards an empty suit who has presided over Los Angeles’ economic and demographic decline, leading that great city to the brink of bankruptcy, and a political system rife with cronyism.

But in Barack Obama’s America, failure can often pave the road to success. In this age, incompetence is no barrier to promotion, and failed states like California and Illinois are taken not as examples to avoid but as models to emulate. So if you want to get an advanced look at what America could look like in 2016, don’t go to the movies. Just hop a plane to California; after all, the Golden State is a wonderful place to visit in winter. And , as things are going, we will need the cash.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

This piece originally appeared at Forbes.

Barack Obama photo by Bigstock.

November 14, 2012

How California Lost its Mojo

The preferred story for California’s economy runs like this:

In the beginning there was prosperity. It started with gold. Then, agriculture thrived in California’s climate. Movies and entertainment came along in the early 20th Century. In the 1930s there was migration from the Dust Bowl. California became an industrial powerhouse in World War II. Defense, aerospace, the world’s best higher education system, theme parks, entertainment, and tech combined to drive California’s post-war expansion.

Then, in the evening of November 9th, 1989, the Berlin Wall came down. On December 25, 1991, the Soviet Union was dissolved. The Cold War was over. America responded by cutting defense spending and called the savings the Peace Dividend.

California paid that peace dividend. A huge portion of California’s military industrial complex was destroyed. The aerospace industry was downsized, never to come back. Hundreds of thousands of well-paying manufacturing and engineering jobs were lost.

The ever-resilient California bounced back though. Tech, driven by an entrepreneurial culture and fed by California’s great universities drove California’s economy to new heights.

Then, there was the dot.com bust. A mild national recession was much more painful for a California dependent on its tech sector. Eventually California recovered. California’s tech sector and climate, aided by a housing boom, restored California’s prosperity.

The housing boom was followed by a housing bust. Again, California paid a high price, and unemployment skyrocketed to 30 percent above the national average.

Today, California is recovering. Its tech sector is once again bringing prosperity to the state. Furthermore, California’s green legislation is providing the motivation for a brave new future of economic growth and environmental virtue.

The story is true through the Peace Dividend. California did pay a high price for the collapse of the Soviet Union. California’s defense sector did begin a decline, and it never recovered. But, defense recovered in other places, as the country expanded defense spending by 21 percent in the 2000s. The United States has constantly been engaged in wars and conflicts for over a decade. On a real-per-person basis, the United States is spending as much on defense as it has at any time since 1960.

But when it comes to the present, the narrative falls down. Defense has rebounded, but not in California. California’s defense sector is small and declining, not because of a permanently smaller U.S. defense sector, but because of something about California.

California’s tech sector did boom after the collapse of California’s defense sector, but that doesn’t mean that California recovered. In fact, much of California never recovered. It’s the aggregation problem.

The 1990s’ recovery was largely a Bay Area recovery. Los Angeles hardly saw any uptick in employment. Here is a chart comparing Los Angeles County’s jobs growth rate with the San Jose Metropolitan Statistical Area (MSA):

San Jose probably had California’s fastest growing job market in the 1990s. Los Angeles was not the states slowest. Still, the differences are striking.

A few years ago, a couple of my graduate students looked at California data from 1990 through 1999. They divided California into two regions, the Bay Area and everywhere else. The Bay Area was defined as Sonoma, Marin, Napa, Solano, Contra Costa, Alameda, Santa Clara, Santa Cruz, San Mateo, and San Francisco counties. Using seven indicators of economic growth, they performed relatively simple statistical tests to see if the two geographies experienced similar economies. The indicators were employment, wages, home prices, bank deposits, population growth, construction permits, and household income.

By every measure except population growth, the Bay Area outperformed the rest of the state. The exception was probably due to commuters to the Bay Area, given that region’s exceptionally high housing prices.

Some economists will tell you that California saw faster-than-national job growth from the mid 1990s until the great recession. This is another aggregation problem. The claim is technically true, but only in the sense that California had a higher proportion of the nation’s jobs in 2007 than it did in 1995. If you look at annual data, you will see that California’s share of the nation’s jobs only grew from 1995 through 2002. Since then, California’s share of United States jobs resumed its decline:

In reality, California never recovered from the dot.com bust. California, perhaps the best place on the planet to live, couldn’t keep up in a housing boom. Something was wrong.

California had lost its mojo.

Opportunity is now greater outside California than inside California. For almost 150 years, California was as widely known for its opportunity as it was for its sunshine. The combination was like a drug. George Stoneman, an army officer destined to become California’s 15th governor, spoke for millions when he said "I will embrace the first opportunity to get to California and it is altogether probable that when once there I shall never again leave it."

They did come to California, and they made an amazing place. Opportunity-driven migrants are different than other people. They take big risks to leave everything they know for an uncertain future in a new place. They are confident, bold, and brash. California became just as confident, bold, and brash. The Anglo-American novelist Taylor Caldwell spoke the truth when she said "If they can’t do it in California, it can’t be done anywhere."

That was then. Today, California can’t even rebuild an old Hotel.

The Miramar Hotel is a partially-demolished eyesore beside the 101 Freeway in Montecito, just south of Santa Barbara. The Hotel’s initial structure was built in 1889. Over the years, it was expanded to a 29 structure luxury hotel and resort. In September 2000 it was closed for renovations which were expected to take 18 months. That was when the fighting started. Community groups, neighbors, and governments all had their own idea of what the Miramar should be. Two owners later, and after millions of dollars, the future to the Miramar is still uncertain.

The Miramar Hotel is a case study of what is wrong with post-industrial California, precisely because it should have been easy, and because it is not unique. Everything is hard to do in California. The state that once moved rivers of water hundreds of miles across deserts and over or through mountain ranges can’t rebuild a hotel.

The situation will get worse. California has become the place people are leaving. The following chart shows that for 20 years more people have left California for other states than came to California from other states:

California’s population is still increasing because of births and international immigration.

Two decades of negative domestic migration has taken its toll. Millions of risk-taking, confident, bold, and brash people have left California. They took California’s mojo with them.

That seems pretty clear when you look at some statistics: California’s unemployment is way above the national average. With only about 12 percent of the nation’s population, California has over 30 percent of the nation’s welfare recipients. San Bernardino has the nation’s second highest poverty rate among cities over 200,000.

Sometimes though, aggregated data can hide California’s weakness, and some, representing the always-present constituency for the status quo, use these data to deny that California’s future is any less golden.

Most recently, those representing the constituency for the status quo have used California’s aggregated jobs data to argue that all is well in California. They argue that California’s tech sector is leading California to a new golden future.

Year-over-year data confirm that, through August 2012, California gained jobs at a faster pace than the United States. Once again, though, that growth is largely confined to one industry and one geography. California’s tech sector is recovering, and amidst a generally weak recovery, it appears strong enough to generate pretty impressive aggregated results. If we disaggregate California’s data, we will find that there is not just one California. There is a rich and mostly coastal California, with a few smaller inland counties on the San Francisco-Lake Tahoe corridor. Another California is very poor and mostly inland.

Here’s a list of California’s poorest counties by poverty rate:

County	Poverty Rate	Child Poverty Rate	Rank
Del Norte	23.5	30.6	3
Fresno	26.8	38.2	1
Imperial	22.3	31.8	6
Kern	21.4	30.3	10
Kings	22.5	29.7	5
Madera	21.7	31.7	8
Merced	23.1	31.4	4
Modoc	21.9	32.5	7
Siskiyou	21.5	30.7	9
Tulare	33.6	33.6	2

Here’s a list of California richest counties by poverty rate:

County	Poverty Rate	Child Poverty Rate	Rank
Calaveras	11.1	18.3	10
Contra Costa	9.3	12.7	4
El Dorado	9.4	11.6	5
Marin	9.2	10.9	3
Mono	10.8	15	8
Napa	10.7	14.7	7
Placer	9.1	10.7	2
San Mateo	7	8.5	1
Santa Clara	10.6	13.3	6
Ventura	11	15.3	9

There are some big differences here. The percentage of Fresno’s children living in poverty is four and half times the percentage of San Mateo children living in poverty. In fact, the data for California’s poorest counties looks like third-world data.

When disaggregated, the job-growth data shows the same story. Through 2012’s second quarter, jobs in the San Jose MSA were up 3.6 percent on a year-over-year basis. In Los Angeles, jobs were up only 1.1 percent, while in Sacramento they were up only 0.6 percent. For comparison, U.S. jobs were up about 1.3 percent for the same time period.

You can perform this analysis for all types of data. When the data are disaggregated, the story is always the same. It’s telling us that California needs to get its mojo back, and the current tech boom is likely not to be enough for its recovery.

Bill Watkins is a professor at California Lutheran University and runs the Center for Economic Research and Forecasting, which can be found at clucerf.org.

Unemployment photo by BigStockPhoto.com.

October 9, 2012

Is California the New Detroit?

Most Californians live within miles of its majestic coastline – for good reason. The California coastline is blessed with arguably the most desirable climate on Earth, magnificent beaches, a backdrop of snow-capped mountains, and natural harbors in San Diego and San Francisco. The Golden State was aptly named. Its Gold Rush of 1849 was followed a century later by massive post-war growth.

There is no mystery why California’s population and economy boomed after the Second World War. Education in California became the envy of the world. California’s public school system led the nation in innovation with brand new schools and classrooms. The Community College system that fed its universities was free for its students. A college education at the UC and Cal State systems was inexpensive. UC-Berkeley, with its graduate schools, was arguably the greatest in the world while Stanford developed into the Harvard of the West. An efficient highway system moved California’s automobile driven commerce while fertile soil of the Central Valley became the fruit and vegetable basket of the world.

The next wave hit in the 80s as former orchards south of San Francisco morphed into the Silicon Valley. Intel and other chip manufacturers led the computer and software revolution bringing high tech jobs and immense new wealth to the Golden State. The dot-com revolution of the 90s brought more gold to California. Innovators like Google and Apple cashed in by nurturing the Internet era. The next decade heralded the greatest housing and mortgage boom in the nation’s history. Developers from Orange County, south of Los Angeles, invented creative financing vehicles that drove home sales, and profits, to record heights by 2006.

This success has created a problem: Californians, due to their golden history, live unreflective lives. The Tea Party movement generated a political tsunami that swept more than 60 incumbents from political office in 2010, but the wave petered out at California’s state line as Democrats take every elected office in the state.

The state budget, mandated to balance by law, has been billions in the red for ten straight years. Yet Californians re-elect the same politicians, year after year, who produce budgets with multi-billion dollar deficits. California voters rejected Meg Whitman, the billionaire founder of Ebay, in favor of Jerry Brown. California now has a $16 billion deficit which “assumes” that California voters will pass massive tax increases on themselves. If they do not, the 2013 deficit becomes a mind numbing $20 billion. Yet despite the red ink, Governor Brown signed into law a “high speed rail” bill that will spend $6 billion on a train between Fresno and Bakersfield – not LA and San Francisco as promised. Polls turned against the choo-choo, but there remain no outcry from California voters.

California voters rejected Carly Fiorina, who ran Hewlett Packard, for Barbara Boxer in the 2010 Senate race. To protect the endangered Delta Smelt, a fish known better as bait, water has been diverted from Central Valley farms to the Pacific Ocean. Orchards in the Central Valley were allowed to wither and die resulting in unemployment in the Central Valley as high as 40%. Imagine Californians on food stamps, living in what was the fruit basket of American.

California’s business climate now ranks dead last according to 650 CEOs measured by Chief Executive Magazine. Apple will take 3,600 jobs to its new $280,000,000 facility in Austin Texas – jobs that California would have had in the past. Texas ranked first in the same survey. California’s unemployment rate is consistently higher than 10% of its work force, and there are few jobs for college students who graduate with as much as $100,000 in student loans. Despite overwhelming evidence that bad public policy is chasing away jobs, the same state politicians are sent back to Sacramento every two years.

California’s public education system, once the envy of the world, now ranks 46th in the nation in per pupil spending and faces a $1.4 billion cut in the fall. In the last month, three California cities declared bankruptcy. More will follow. Take Poway for example. Its school board borrowed $100,000,000 (for 33,000 students) through a Capital Appreciation Bond. The politicians told the voters there would be no payments for 20 years. What they did not explain was the residents must pay back $1 billion dollars on their $100 million loan. Beginning in 2021, tiny Poway will be forced to pay $50 million per year in bond payments. Huge property tax assessments will be required if homes do not appreciate 400% by then, which is unlikely under foreseeable circumstances.

Rather than stare at themselves in the mirror, Californians should take a look at Michigan. In the 50s greater Detroit was the fourth-largest city in America with 2 million inhabitants and the world’s most dominant industry: the automobile.

Most people had a good paying job. Its burgeoning middle class was the model of the world with excellent public schools and universities. Detroit in 2012 is a shadow of that once great metropolis. Its population has shrunk to 714,000. The average price of a home has fallen to $5,700. Unemployment stands at 28.9%. It has a $300,000,000 deficit. There are 200,000 abandoned buildings in the derelict city. Its public education system, in receivership, is a disgrace producing more inmates than graduates. In 2006, the teacher’s union forced the politicians to reject a $200,000,000 offer from a Detroit philanthropist to build 15 new charter schools. Jobs long ago abandoned Detroit for places like South Carolina and Alabama, with their “right to work” laws and low taxes.

Now Detroit’s Mayor has proposed razing 40 square miles of the 138 square miles of this once great American city returning 70,000 abandoned homes to farmland. Even such a draconian plan may not be enough to save the city. If a hurricane had hit Detroit, more of us would know of this tragedy in our midst, but this fate was man-made and not wrought by nature. Detroit has had one party rule for more than fifty years. Louis C. Miriani served from September 12, 1957 to January 2, 1962 as Detroit’s last Republican mayor. Since that time the Democrats have ruled the Motor City. John Dingell has served region since 1956. His father was the Congressman from 1930 to 1956. Despite the disastrous decline of their city, Detroit voters send him back to Congress twenty-two times.

Like Detroit, California now has one party rule. The Democrats of California did not need a single Republican vote to pass their budget. Governor Brown’s plan is to address the nation’s largest deficit by raising taxes instead of cutting spending. If passed, the deficit would drop from $20 billion to a mere $16 billion. The budget does nothing to cure the systemic problems of a bloated bureaucracy. It does not eliminate one of California’s 519 state agencies.

Caltrans stopped building highways under Brown’s first term, but the people kept coming. Now 37 million Californians are locked in traffic jams each day. Brown was rewarded for such prescience with re-election as Governor. California’s egotistical politicians passed the Global Warming Solutions Act in 2006 (AB32) to “solve” climate change. Dan Sperling, an appointee to the California Air Resources Board (CARB) and a professor of engineering and environmental science at UC Davis, is the lead advocate on the board for a “low carbon fuel standard.” The powerful state agency charged with implementing AB 32 and other climate control measures, claims the low carbon fuel standard will “only” raise gasoline prices $.30 gallon in 2013. The California Political Review reported implementation of these the policies will raise prices by $1.00 per gallon.

Detroit was once the most prosperous manufacturing city in the world, a title later secured by California. Will California follow Detroit down a tragic path to ruin? In 1950, no one could imagine the Detroit of 2010. In 1970, when foreign imports started to make a foothold, the unions and their bought and paid for politicians resisted any change. In the 1990s as manufacturers fled to Alabama and South Carolina, the unions and their political minions held firm, even as good jobs slipped away. No one in Detroit envisioned their future.

Today, California is following Michigan’s path with exploding pension obligations, a declining tax base, and disastrous leadership. Housing prices have fallen 30 to 60% across the state, evaporating trillions of dollars of equity and wealth. Unemployment remains stubbornly high and under-employment is rife. Do our politicians need any more signs?

Governor Brown’s budget will first slash money to schools and raise tuition on its students while leaving all 519 state agencies intact. He apparently will protect political patronage at all costs. Jobs, and job creators, are fleeing the state. Intel, Apple, and Google are expanding out of the state. The best and brightest minds are leaving for Texas and North Carolina. The signs are everywhere. Meanwhile, the voters send the same cast of misfits back to Sacramento each year – just as Detroit did before them.

The beaches are still beautiful. The mountains are still snow capped and the climate is still the envy of the world. Detroit never had that. But will California’s physical attributes be enough? If the people of California want to glimpse their future, they need look no farther than once proud City of Detroit and the once wealthy state of Michigan.

It can happen here.

Robert J Cristiano PhD is the Real Estate Professional in Residence at Chapman University in Orange, CA, a Senior Fellow at the Pacific Research Institute in San Francisco, CA and President of the international investment firm, L88 Companies LLC in Denver – Newport Beach – Washington DC – Prague. He has been a successful real estate developer for more than thirty years.

August 17, 2012
Could a Las Vegas Train Produce Losses 10 Times More Than Solyndra? (Report Announcement)

The Reason Foundation has released our "Xpress West" (formerly "DesertXpress") analysis. This high speed rail train would run from Victorville (90 miles from downtown Los Angeles) to Las Vegas. Promoters predict high ridership and profits. They are seeking a subsidized federal loan of more than $5.5 billion, which is within the discretionary authority of the US Department of Transportation to fund.

Our analysis concludes the following:

1. There is serious question whether there is a market for Las Vegas travel that would require driving one-third of the way and transferring to the train. If there is no such market, as seems likely from the international experience, ridership could be as low as 97 percent below projections. The reality can be known only after the line is running.

The balance of the report is based upon the assumption that there is a market for driving to Victorville and boarding a train to Las Vegas.

2. The ridership and revenue projections (by URS Corporation) are based upon data that is more than 7 years old and predates the Great Financial Crisis. There have been significant downward demand trends in the travel market and Las Vegas tourist market since that time, especially in the share of the market from the Los Angeles Basin. It is inappropriate to use such old data in projecting system performance (Certainly no private company would rely on such old data in a due diligence analysis).

3. Even after adjusting the obsolete data (which our report does), the ridership projections are implausibly high — at four times the Amtrak Acela ridership between Washington, Baltimore, Philadelphia and New York.

4. Over 24 years (the forecast period in the project document), we project that expenditures will exceed revenues by between $4 billion and $10 billion. This would mean that there would be insufficient revenues to pay the federal loan. This could result in a taxpayer loss approximately 10 times that of the Solyndra federal loan guarantee.

5. The free use by the private Xpress West project of the Interstate 15 median could preclude cost effective expansion of this roadway. Even assuming the implausible Xpress West assumptions about the diversion of drivers to the train, the overwhelming majority of growth in the corridor would be on the highway, not on the train. This includes not only the heavy truck traffic, but also car traffic.

Related: The Las Vegas Monorail

Wendell Cox was also author of "Analysis of the Proposed Las Vegas LLC Monorail," which indicated that ridership and revenue projections were extremely optimistic and that the project was likely to fail financially. Subsequently the project filed bankruptcy and defaulted on bonds. The actual ridership on the Monorail was within the range predicted in "Analysis of the proposed Las Vegas LLC Monorail," and far below the level forecast by project consultant URS Greiner Woodward Clyde.

Also see this letter from other consultants reviewing the project (Thomas A. Rubin, Jon Twichell Associates, Professor Bernard Malamud and Wendell Cox).

The Las Vegas Monorail case is described in the Reason Foundation report.

August 16, 2012
How Fossil-Fuel Democrats Became An Endangered Species

In an election pivoting on jobs, energy could be the issue that comes back to haunt Barack Obama and the Democratic Party as the cultural and ideological schism between energy-producing Republican states and energy-dependent Democratic ones widens.

As the economy has sputtered since 2008, conventional energy has emerged as one of the few robust sources of high-paying work, adding roughly half a million jobs since 2007 as new technologies and changing market conditions have opened up a vast new supply of exploitable domestic reserves. This is good news for Mitt Romney: nine of the ten states that rely most heavily on the sector for jobs are solidly behind him. (Colorado, where polls show Obama with a narrow lead, is the one exception).

President Obama’s heavy-handed regulation of the booming old-energy economy—the moratorium on offshore drilling following the BP spoil, the decision to block the Keystone XL Pipeline, and the prospect of a fracking ban—and his embrace of green-energy policies has played well in the solidly-Democratic post-industrial coastal economies that he also depends on for fund-raising. But it’s left him with few friends in the energy belt that spans the Great Plains, the Gulf Coast, Appalachia and now some parts of the old rustbelt, despite his election-year claims of an “all-of-the-above” energy policy.

It’s a far cry from Bill Clinton, whose close ties with Great Plains and Gulf Coast Democrats and energy producers there helped him twice carry Louisiana, Kentucky and West Virginia—all states that appear to be solidly behind Romney this year.

Today, Democratic senators in regions that depend on fossil fuels are becoming an endangered species. Over the past two years, Virginia’s Jim Webb and Byron Dorgan and Kent Conrad, both from booming North Dakota, have announced their retirement or retired, while Montana’s Jon Tester has distanced himself from the president as he faces a difficult re-election fight. And that diminishing presence in turn means less intra-party resistance to any potential second-term plans to cut the burgeoning fossil-fuel business to size.

The administration’s hostility to the dirty business of energy, and the sector’s fear of new bans or regulations in a second Obama term that would gut the industry were perhaps best captured by the then-EPA administrator who claimed Administration policy was to “crucify” fossil fuel.

Yet as Obama pursues a 50-percent-plus-one re-election strategy reminiscent of President Bush in 2004, his energy approach has been embraced by his core constituents, particularly the public-sector union workers and urbanized “creative-class” members. This is particularly true in the coastal enclaves like New York and California that import much of their energy (and in California’s case in particular has declined to exploit its own considerable reserves). Sixty-percent of the electricity in Los Angeles, a key bastion of Obama support, comes from coal-fired plants in Utah and Arizona; much of the natural gas that provides nearly half of the power for California’s grid is imported. While Pennsylvania and Ohio have exploited their large shale reserves that have become vastly valuable in recent year thanks to new extraction techniques and shifting energy prices, New York State has yet to follow suit, even as New York City lacks the supply to match peak summer demand, forcing it to depend on an aging nuclear power plant at Indian Point that’s years overdue to close.

President Barack Obama defends his energy agenda during his visit to oil and gas production fields located on federal lands outside of Maljamar, N.M., Wednesday, March, 21, 2012. (Pablo Martinez Monsivais / AP Photo)

If anything, the pressure from environmental activists , many of them well-heeled and living far removed from power sources and the jobs they create, is for Obama to go even further. A few rich donors from the green lobby complain the President has not been environmentally correct enough; Mother Jones actually asked if Obama has been “morphing into Dick Cheney” on energy issues.

But for the most part, the coasts are on board with Obama’s energy policy. Silicon Valley and Wall Street have invested heavily in the renewable industries favored and frequently propped up by the administration, putting their money where Obama’s mouth is. Silicon Valley hegemons like venture capitalist John Doerr and Wall Street giants like Goldman Sachs regard the green energy business as a profitable, state-supported way to grow their profits. One disgusted venture investor described the investors in the heavily subsidized green game as “venture porkulists.”

These investments are now critical to many powerful tech firms, who increasingly have little domestic involvement in the manufacturing businesses that was central to a prior generation of Silicon Valley titans. Google alone has invested more than a billion dollars in the green-energy sector, as the valley’s new dominant clique of venture capitalists and tech executives donate at record levels to the president’s re-election.

Nowhere is the element of choice inherent in energy policy more evident than in California, home to five of the nation’s twelve largest oil fields and energy reserves equal to those of Nigeria, the world’s tenth-largest producer. As high-paying energy jobs swell payrolls in the Great Plains, the Intermountain West and parts of the Gulf, the Golden State has double-digit unemployment, a collapsed inland economy and a series of bankrupt municipalities. Amidst a great national energy boom, California’s energy production has remained stunted even as the state’s draconian “renewable” energy mandates are slated to drive up its already high electricity rates. The state’s high cost of energy has impacted industry: despite its vast human and natural resources, the Golden State, with 12 percent of the nation’s population received barely 2 percent of the country’s manufacturing expansions last year.

Such inattention to California’s resources may be popular in wealthy precincts of Silicon Valley, San Francisco and west Los Angeles, but the state’s green approach has helped place traditionally manufacturing-oriented communities such as Oakland, east Los Angeles, San Bernardino and Stockton in deep distress. Despite central California’s vast deposits of oil and gas, unemployment rates in some oil-rich areas there are over 15 and sometimes even 20 percent.

As economic forecaster Bill Watkins recently told an audience in hard-hit Santa Maria: “If you were in Texas, you’d be rich.”

Meanwhile the fossil-fuel energy producers, related chemical manufacturers and financiers who are getting rich, from the Koch Brothers to Chesapeake Energy and Arch Coal, have been investing in Romney and the super-PACs supporting him.

Much of the money they’re pouring in will likely be spent persuading voters in the four crucial energy states –long-time producers New Mexico and Colorado and emergent natural gas producers Ohio and Pennsylvania—that will be up for grabs in November. Colorado has generated more than 20,000 while new energy jobs since 2000, third highest in the nation, while Ohio and Pennsylvania combined have created 25,000 new energy jobs in that span—and that’s not counting the services those largely well-paid workers demand or the new manufacturing jobs making pipes and compressors the industry creates. What all four contested states have in common is that their energy sectors are pitted against powerful competing interests, including true-blue urban constituents, and tourism and technology sectors that employ workers and industries more concerned with the local environment than with energy-driven growth.Still, a boom is a boom, and President Obama is doing his best to claim credit for the huge surge in oil and gas production under his watch, although the increase has been almost completely on private and state lands outside his reach. Production on federal lands has actually dropped. Yet his “all of the above” rhetoric comes off as more evenhanded and substantial than the drill- baby-drill GOP set.

Romney, though, can point to a series of Obama decisions and priorities—including the painfully slow resumption of Gulf Shore oil operations after the BP spill, the effective veto of the Keystone XL pipeline, and proposed EPA greenhouse gas restrictions—as mortal threats to the American energy boom. He can also contrast the economic rise of energy-friendly Texas with the troubles of hyper-green California.

Whether Romney, far from a master communicator, is savvy and bold enough to stick the point may prove decisive in November.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

This piece originally appeared in The Daily Beast.

Oil well photo by BigStockPhoto.com.

July 13, 2012
High Speed Rail Advocates Discredit Their Cause – Again

Is there any high speed rail boondoggle big enough to make rail transport advocates reject it? Sadly, for all too many of them, the answer is No, as two recent developments make clear.

The first is in California, where the state continues to press forward on a high speed rail plan for the state that could cost anywhere from $68 billion to $100 billion. Voters had previously approved $10 billion in bonds for the project, but as the state’s economy and finances have continued to sour – including multiple major cities going bankrupt – the polls have turned against it, and with good reason. The state faces the prospect of already enacted education cutbacks if Gov. Jerry Brown’s tax increase proposal in not approved in a vote this fall. Other painful service cuts loom. Voters are rightly asking themselves if now is the time to be borrowing public money for very expensive, speculative infrastructure.

Equally, many of the much cited overseas examples of high-speed rail seem, well, to be off the tracks. China’s rail system has serious safety problems, for example. And developing the most extensive high speed rail system in Europe hasn’t stopped Spain from seeing 50% youth unemployment, a 3 percentage point increase in the VAT tax, and a humiliating bailout from the rest of the EU.

Nevertheless, the California assembly recently voted to go full speed head on its high speed rail plans. As part of an overall $8 billion rail spending package, the state is borrowing $2.6 billion to complement $3.2 billion in federal funds left over from the stimulus (shovel ready???) to build a starter segment of the line linking Bakersfield and Madera through the Central Valley. This is the easiest segment on which to build – though legal action is likely to delay construction – but doesn’t do anything to link the state’s huge population centers around LA and the Bay Area. With no more significant federal funds likely to be forthcoming, and the state’s finances a wreck, this segment risks becoming an embarrassing white elephant, or, as critics call it, “a train to nowhere”.

After this vote it came to light that respected French high speed rail operator SNCF had approached California officials, private funding in hand, with a preliminary offer to build the LA-SF link themselves on a better and cheaper alignment along I-5 that would cost only $38 billion. But this was rejected by the state. The Times account suggests this rejection came about due to a combination of a political preference for the inefficient Central Valley segment and the clout of Parsons Brinckerhoff, the lead contractor. Some commentators have referred to this revelation as a “bombshell.”

Despite management misstep after management deception, rail advocates around the country cheered California’s decision to build the Central Valley segment. Jerry Brown, with not much to show for his reprise as Governor, is excited of course. Secretary of Transportation Ray LaHood called it a “big win.” America 2050 (an offshoot of the Regional Plan Association of New York), “commended” the state for “taking a big step forward.” Streetsblog called it a “major victory.” While I respect what these organizations do in other contexts, this high speed rail vote is not a major victory, but a major defeat for common sense.

But apparently not willing to let California take the prize in the rail boondoggle category without a fight, Amtrak shortly thereafter issued a “vision” for rail in the Northeast Corridor that would provide faster service between Boston and Washington, DC – at a cost of $151 billion. Strange as it sounds, some commentators actually lauded Amtrak for reducing costs since the previous plan was $169 billion. The Brookings Institution was measured in its reaction to the plan, but managed to describe it as “more rational.” With Republicans seemingly safely in charge of the House for now, and large federal deficits projected for the mid-term future, $151 billion for Amtrak seems purest fantasy.

These developments are unfortunate because high speed rail could play an important role in US transportation, particularly in the Northeast. But that’s unlikely to happen because of the indiscriminate way establishment advocates have supported anything with the “high speed rail” label attached, ranging from $2 billion, 110 MPH peak speed Toonerville Trolleys in Illinois that barely beat Megabus in terms of journey time to the California rail boondoggle, regardless of merit. All they know that if it claims to be high speed rail, they are in favor of it.

There are other people who take a more serious view. Unfortunately, they tend to be outsiders with little influence. For example, Alon Levy suggested a set of near term, incremental Northeast Corridor improvements that might cost 90% less than Amtrak’s plan.

$8 billion in stimulus dollars have gone to purchase us nothing of any real significance in terms of rail infrastructure. That money, invested wisely in high priority projects in the Northeast Corridor, could have made a big difference and started building a real demonstrated case for high speed rail investment in America. Unfortunately, the way high speed rail has been botched by its advocates, all the money we’ve spent on it has accomplished just the opposite. If California’s Central Valley segment is built and the complete line is never finished, it will likely discredit high speed rail in America for the long term.

Aaron M. Renn is an independent writer on urban affairs and the founder of Telestrian, a data analysis and mapping tool.

CA route map by Wikipedia user CountZ.

July 13, 2012
No, It’s the Deniers who Are Wrong

Dennis Meyers is the Principal Economist at California’s Department of Finance. He has recently published two parts of what is promised to be a four-part series titled The Declinists are Wrong. He intends to convince us of “the fundamental strength of the Golden State’s dynamic and vibrant economy.”

I was going to wait until the entire series was complete before commenting, but part one and part two are so poorly argued that I feel compelled to respond now.

In part one, Meyers argues that California’s economy is strong because it is big. He points out that California represents about 12 percent of the United States population and is the ninth largest economy in the world.

This is, as Mr. Spock would say, highly illogical. It just doesn’t follow that just because you are big you will have a “dynamic and vibrant” economy. Instead, we have lots of counter examples. Great Britain was once large, wealthy, vigorous, and powerful. Not anymore.

Closer to home, we have Detroit. In 1950, Detroit’s population was 1.85 million, and it was America’s fourth largest city. Today, Detroit has a population of only 713,777. Its once-vigorous economy is not even a shadow of its former self. Its government is unable to even keep the lights on. It turns out that the lights do go off before the last person leaves.

In part two, Meyers argues the California is wealthy and this assures a prosperous future. This is, of course, the same logical fallacy as in part one. Detroit was also once one of America’s richest cities.

Meyers makes another mistake: He talks about average incomes. When it comes to incomes, averaging hides California’s real story, which is its increasing inequality and increasing poverty. California has two of America’s poorest cities. Fresno, with a poverty rate of 30.2 percent, is the eighth poorest American city over 200,000 population. San Bernardino, in the same category, and with a poverty rate of 34.6 percent, is second only to Detroit.

One of the denialists’ favorite tactics is to find a data point where California does pretty well, and then argue that the selected data point is a reason for the state to do well. Call this a selective data bias. Of course, expanding from the specific to the general is a logical fallacy. This dog is brown therefore all dogs are brown.

Typically, venture capital is the selected data. A huge percentage of the nation’s venture capital is invested in California, no doubt about it. The problem is that the nation’s venture capital is not all that much. In 2011, California received 51 percent of the nation’s $28.76 billion venture capital net investment — $14.76 billion, which represents less than one percent of California’s almost $2 trillion economy. Almost all of it went to four counties in the Bay Area.

Meyers takes selective data analysis to a new zenith. He digs through California’s jobs data to find small sectors that are generating jobs at a faster rate in California than nationwide. For example, California’s Computer and Electronic Production Sector (a sub-category of Durable Manufacturing) created jobs at a rate of 2.1 percent in 2010, compared to a national rate of 1.1 percent.

That’s all well and good, but over the past 12 months, California has lost durable manufacturing jobs. The growth that Meyers cites has only slowed California’s manufacturing jobs losses. Slowing decline is welcome, but it’s not a sign of imminent prosperity.

And he adds a nice touch discussing mining:

“The one high-wage sector in which national job gains outpaced those in California was Mining, which includes oil and natural gas production. There are several regions, such as Texas, that are blessed with generous deposits of these resources which California lacks. This advantage also shows up in Engineering Services employment…. The presence of healthy oil and natural gas resources typically generates demand for engineering consulting services related to exploration and extraction.”

That’s just wrong. California has abundant oil and natural gas resources. In fact, recent California discoveries are roughly equivalent to the proven reserves of Nigeria, the world’s 10th-largest oil producer. We’ve chosen not to extract them. We’ve also chosen to no longer exploit California’s vast mineral resources.

Chris Thornberg, Beacon Economics founder and economist, recently came up with a novel argument to deny California’s decline. He says that since recent jobs data have been revised upward, “we are in full recovery mode and not looking back.” The problem here is that the jobs data were revised from terrible to merely dismal.

Look at the data. Below are two charts summarizing changes in jobs since the pre-recession peak. The first is the United States. California is the second. Both are pretty discouraging. Four and half years after the recession, the US is still down almost 5 million jobs. This represents about a 3.5 percent net decline. California, down almost a million jobs, is even worse — down a net 6.2 percent.

Job Changes From the Peak

California has also seen slower-than-US job gains over the past year. It is worse than that, though. California has lost jobs in durable manufacturing, non-durable manufacturing, and in the other services category, labeled as Personal, Repair, & Maintenance Services in the table. By contrast, the US only saw job losses in one sector over the past year, the information and technology sector.

The very recent news is worse. In March, the most recent month for which we have data, California lost jobs while the nation gained. And the number of declining sectors has expanded to include construction, durable and non-durable manufacturing, transportation, warehousing, utilities, education/health, and leisure/hospitality.

The signs of California’s weaknesses are all around us. With about 12 percent of the US population, we have about a third of the nation’s welfare recipients. It tops the nation in teen unemployment. Domestic migration has been negative for about two decades, after a century-and-a-half of being the destination for people from all over America.

California’s weakness is the result of California’s choices. It has chosen to be anti-oil and anti-gas, and to unilaterally implement the nation’s most restrictive environmental regulations. California has elected to impose the nation’s most restrictive regulatory regime on all businesses and an onerous tax system. In short, California has chosen to be anti-opportunity and to have a weak economy. The denialists have chosen not to see California’s decline.

Flickr Photo by Steve Rhodes: Jobless not Hopeless, Ask for my resume – Chris Stewart, Union Square, San Francisco 2009

Bill Watkins is a professor at California Lutheran University and runs the Center for Economic Research and Forecasting, which can be found at clucerf.org.

June 15, 2012
More Unwelcome News for the California High Speed Rail Project

Decidedly, early June has not been the best of times for the California high-speed rail project.

On June 2, came a new poll showing that fifty-nine percent of voters would now oppose building high-speed rail if the measure were placed on the ballot again. Sixty-nine percent said that they would "never or hardly ever" ride the bullet train if it were built. (USC Dornsife/LA Times survey). The poll made news throughout the state, and indeed nationally. The public was treated to headlines such as "Voters have turned against California bullet train" (LA Times); "California high speed rail losing support" (Bloomberg); "California high speed rail doesn’t have the support of majority of Californians" (Huffington Post); "Voters don’t trust state to build high speed rail" (CalWatchdog) and "Poll finds California voters are experiencing buyers’ remorse" (Associated Press).

Then, on the heels of the poll, came news that Central Valley farm groups have filed a major environmental lawsuit asking for preliminary injunction to block rail construction slated to begin later this year. Plaintiffs include the Madera and Merced county farm bureaus and Madera County. Still more agricultural interests in the Central Valley are reportedly threatening to sue.

The Sierra Club, traditionally a loyal supporter of Gov. Brown, announced it was "strongly opposed" to Brown’s proposal to eliminate California environmental (CEQA) requirements for the high speed rail program and its Central Valley construction project. The Brown administration has made its proposal despite a solemn promise to the legislature by the Authority’s Chairman, Dan Richard, that they would never try to bypass CEQA ("We have never and we will never come to you and ask you to mess with the CEQA requirements for the project level").

The multi-billion dollar HSR program is exactly the sort of large scale public works project that CEQA was designed to address, wrote Kathryn Phillips, Sierra Club’s Director in a June 5 letter to the Governor. "By removing a large-scale project such as high-speed rail from full CEQA coverage, the proposal grants the state a status that suggests it does not have to fully and seriously consider and mitigate environmental impacts. … In the interests of the environment and in the interest of rebuilding public support for rail in this state, we urge you in the strongest possible terms to abandon the proposal to weaken environmental review for the high-speed rail system," the letter concludes.

Nor was this the end to unwelcome news for the Brown administration. A series of editorials and opinion pieces by some of California’s most influential columnists has reinforced the public’s growing disenchantment with the bullet train project and with the Governor’s stubborn determination to defy public opinion.

In a June 3 commentary, the Sacramento Bee columnist Dan Walters, a longtime observer of the legislative scene, refuted the Governor’s attempt to compare the high speed rail project with the iconic Golden Gate Bridge. Both projects, the Governor had said in a ceremony marking the 75th anniversary of the bridge, took much political courage and foresight, and both will go down in history as remarkable gifts to posterity.

"Nice try, Governor," wrote Walters, but the comparison is misleading. The need for the Golden Gate crossing was clearly demonstrable and the bridge used revenue bonds to be repaid with bridge tolls. The need for a bullet train, on the other hand, "exists only in the minds of its ardent backers" and the Governor assumes that the federal government will finance nearly two-thirds of the project’s cost—an assumption that is nothing more than wishful thinking. Asked Walters, if the train is as financially viable as Brown and the Authority insist it is, why wouldn’t they do what the bridge builders did — float revenue bonds to be repaid from the train’s supposed operating profits. "Public works projects make sense when they fit well-documented needs. When they don’t, they are just political ego trips," Walters concluded.

Daniel Borenstein, columnist and editorial writer for the Contra Costa Times, came to a similar conclusion. In pushing for the bullet train, he wrote, Gov. Brown is motivated by a quest for a legacy. But, the columnist warned, while the Governor strives to be remembered like his late father for the capital projects he leaves behind, he could derail the November tax measure by his "reckless exuberance for spending billions on high speed rail." "Does he really want to anger [the voters] when he needs them the most?" Borenstein asked.

Perhaps the most devastating criticism of the Governor’s high speed rail initiative came in a June 8 editorial in the San Jose Mercury News, one of the Bay Area’s most influential newspapers. Entitled "High Speed Rail Plan is Delusional" the editorial has been syndicated in a number of Bay Area and Los Angeles Sunday papers. Follow this link to read it at the Mercury News website.

June 15, 2012
Is Perestroika Coming In California?

When Jerry Brown was elected governor for a third time in 2010, there was widespread hope that he would repair the state’s crumbling and dysfunctional political edifice. But instead of becoming a Californian Mikhail Gorbachev, he has turned out to be something more resembling Konstantin Chernenko or Yuri Andropov, an aged hegemon desperately trying to save a dying system.

As with the old party bosses in Russia, Brown’s distinct lack of courage has only worsened California’s lurch toward fiscal and economic disaster. Yet as the budget woes worsen, other Californians, including some Democrats, are beginning to recognize the need for perestroika in the Golden State. This was most evident in the overwhelming vote last week in two key cities, San Diego and San Jose, to reform public employee pensions, a huge reversal after decades of ever more expansive public union power in the state.

California’s “progressive” approach has been enshrined in what is essentially a one-party state that is almost Soviet in its rigidity and inability to adapt to changing conditions. With conservatives, most businesses and taxpayer advocates marginalized, California politics has become the plaything of three powerful interest groups: public-sector unions, the Bay Area/Silicon Valley elite and the greens. Their agendas, largely unrestrained by serious opposition, have brought this great state to its knees.

California’s ruling troika has been melded by a combination of self-interest and a common ideology. Their ruling tenets center on support for an ever more intrusive, and expensive, state apparatus; the need to turn California into an Ecotopian green state; and a shared belief that the “genius” of Silicon Valley can pay for all of this.

Now this world view is foundering on the rocks of economic reality. The Soviet Union armed itself to the teeth and sent cosmonauts into space while the public waited on line for toothpaste and sausages. Similarly, Californians suffer from a combination of high taxes and intrusive regulation coupled with a miserable education system — the state’s students now rank 47th in science achievement — and a rapidly deteriorating infrastructure.

The current recession has been particularly severe, continuing at a more acute level than in most states, including places like Florida and Arizona, which also suffered greatly from the housing bust. California now has the third highest unemployment rate in the U.S., beating out only its co-dependent evil twin Nevada and Rhode Island. At the same time, according to a recent Public Policy Institute of California study, inequality in the devoutly “progressive” state has been growing much faster than in the rest of the country.

The most auspicious sign of grassroots support for perestroika was last week’s smack down of public employee unions in San Jose and San Diego. For the first time in recent memory, the unions suffered a humiliating defeat — the measures passed by a margin greater than two to one — as voters endorsed deep reform of the pension burdens bringing these cities to the brink of bankruptcy. Backed by its Democratic mayor, Chuck Reed, San Jose’s measure B aims to reduce pension benefits for both future and current hires. Unsurprisingly, the public employee have threatened to sue.

This may precipitate what could become the California equivalent of a prairie fire. Like San Jose and San Diego, many other California cities are on the verge of bankruptcy. Union-dominated Los Angeles could be the next big domino to fall, according to the city’s own chief administrative office, and has been forced to boost its bonded indebtedness and cut back on critical infrastructure spending to stave off the inevitable.

As services drop and taxes rise — California’s already are among the nation’s highest — voters increasingly realize that one of the main problems is over-generous pensions for public sector workers. This is reflected in the sad reality that the state consistently competes with Illinois for the worst bond rating in the country. Most recently, the state upped its deficit estimate to $16 billion from a $9.2 billion estimate made just in January.

Brown could have used this mounting crisis to reveal his inner Gorbachev. But instead, he has so far chosen a classic Chernenko-Andropov muddle. He proposed a mild pension reform but could not persuade his own party — aware that vengeful the unions will be around long after the old man is gone — to consider it.

More recently, the governor showed his own inner Stalinist by jettisoning his original more modest tax increase proposal for a more radical teachers’ union measure that would raise California’s income tax to the highest in the nation.

Brown’s “millionaire’s” tax, as it is being marketed, starts with individuals making $250,000 or more. Right now it is still ahead in the polls but seems to be losing ground. Joel Fox, a longtime anti- tax activist, senses that people in the state — as evidenced by the San Jose and San Diego votes — are beginning to realize that the tax increases are designed primarily not to improve the schools, keep the parks open or pave the roads but simply to bolster public-sector pay and pensions.

This collective turning on of the civic light bulb comes at the same time that the primary economic delusion that has dominated progressive politics — the myth of the high-tech savior — has fallen into disrepute. Under Brown and his monumentally incompetent predecessor, Arnold Schwarzenegger, state officials maintained a belief that Silicon Valley’s money machine would be able to bail the state out of its budgetary morass.

In this context, the underwhelming performance of Facebook’s IPO last month takes on major political significance. Not only will there be fewer puerile billionaires to inflate the Valley real estate market and bankroll “progressive” candidates and causes, scores of hip wannabe start-ups suddenly may find themselves no longer the darlings of venture capital investors or the stock market. Like California’s budget itself, the social media boom is now looking like something of a fraud.

Another potential casualty of the weak economy could be the green drive to remake the state into a kind of Ecotopian paradise. This is evident in growing opposition to some of Brown’s most beloved initiatives, notably a fantastically expensive high-speed rail system. Sold in the euphoric progressive atmosphere of 2008, support has collapsed as the price tag has soared and the state’s grievous fiscal problems have worsened. The most recent LA Times poll currently finds nearly three in five California voters would like to see the project scrapped.

Once unassailable politically, the environmental community is fracturing between those thoroughly allied to rent-seeking capitalists and the Democratic Party and those still primarily concerned with preserving nature. The Sierra Club, for example, objects to Brown’s attempt to exempt the high-speed line from environmental review. Some Greens also object to Brown-supported projects like the massive tortoise-roasting solar farm planned for the Mojave Desert.

Both Brown and the Greens also have failed to deliver many of the much ballyhooed “green jobs” that they insisted their policies would produce. Instead they may soon have to confront an electorate increasingly skeptical about green fantasies and more concerned with a persistently under-performing economy.

Clearly, the conditions for a California perestroika are coming into place. Still missing is a coherent vision — from either Independents, centrist Democrats or Republicans — that can unite business, private-sector workers and taxpayers around a fiscally prudent, pro-economic growth agenda. Yet it’s clearly good news that , for the first time in a decade, there’s hope that the whole corrupt, failing California political edifice could come crashing down, providing a renewed hope for recovering the state’s former greatness.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

This piece originally appeared in Forbes.

Jerry Brown photo by BigStockPhoto.com.

June 12, 2012