Friday, 14 November 2008

As goes California...so goes the United States...

Once upon a time the state of California led America in terms of innovation and especially in the area of information technology in the way that Detroit was a leader in the automotive field.

Now, the government of California is run by the Baby Boomers' generation - a group of narcissistic, economically ignorant, intellectually immature individuals who never worked out that a sound economic environment enables compassionate policies to be enacted, a bit at a time.

In this
terrific article by John Koltin published in New Geography he details his 25 plus years in California and the decline that has brought the state to its economic knees.

It should be no surprise that a few decades of extreme left politics has led to such parlous times, as it has happened all around the world where socialist policies have been implemented in countries that had sound enough economic conditions. Russia, Zimbabwe and Cuba are clear examples.

If the same policies take root in Washington then there's no doubt that the US could begin a decades long decline into a mediocrity similar to France.
Twenty-five years ago, along with another young journalist, I coauthored a book called California, Inc. about our adopted home state. The book described “California’s rise to economic, political, and cultural ascendancy.”

As relative newcomers at the time, we saw California as a place of limitless possibility. And over most of the next two decades, my coauthor, Paul Grabowicz, and I could feel comfortable that we were indeed predicting the future.

But much has changed in recent years. And today our Golden State appears headed, if not for imminent disaster, then toward an unanticipated, maddening, and largely unnecessary mediocrity.

Since 2000, California’s job growth rate— which in the late 1970s surged at many times the national average—has lagged behind the national average by almost 20 percent. Rapid population growth, once synonymous with the state, has slowed dramatically. Most troubling of all, domestic out-migration, about even in 2001, swelled to over 260,000 in 2007 and now surpasses international immigration. Texas has replaced California as the leading growth center for Hispanics.

Out-migration is a key factor, along with a weak economy, for the collapse of the housing market. Simply put, the population growth expected for many areas has not materialized, nor the new jobs that might attract newcomers. In the past year, four of the top six housing markets in terms of price decline have been in California, including Sacramento, San Diego, Riverside, and Los Angeles. The Central Valley towns of Stockton, Merced, and Modesto have all been awarded the dubious honors of the highest foreclosure rates in the nation during the past year.

Even with prices down, many of the most desirable places in California are also among the most unaffordable in the nation. Less than 15 percent of households earning the local median income can afford a home in L.A. or San Francisco. In Santa Barbara, San Diego, Oxnard, Santa Cruz, or San Jose, it’s less than a third. That’s about half the number who can buy in the big Texas or North Carolina markets. Moreover, state officials warned in October that they might have to seek as much as $7 billion in loans from the U.S. Treasury. This is a disappointing turn for a state that once saw itself as the harbinger of the future.

Not surprisingly, few Californians see a turnaround soon. In the most recent Field Poll in July, a record high 63 percent of Californians said they are financially worse off than they were a year ago, while a record low 14 percent described themselves as better off. Poll director Mark DiCamillo called it “the broadest sentiment of pessimism we’ve ever seen.”

Of course, California can still attract many newcomers, particularly young and ambitious people who dream of a career in Hollywood or Silicon Valley. The problem is that when you grow up and have failed to secure your own dotcom or television series, life in Texas, Arizona, North Carolina, or even Kansas starts looking better. According to real estate analysts, the only thing preventing the current outflow from being worse is that homeowners cannot sell their residences in order to move.

All of this suggests a historic slide of California’s role as a bastion of upward mobility. In 1946, Californians enjoyed the nation’s highest living standards and the third highest per-capita income, noted journalist John Gunther. As recently as the 1980s, Californians generally got richer faster than other Americans did. Now, median household income growth trails the national average while the already large divide between the social classes—often bemoaned by the state’s political left—grows faster than in the rest of the country.

Today, notes a recent Public Policy Institute of California study, California has the 15th highest poverty rate in the nation. Only New York and the District of Columbia fare worse if the cost of living is factored in. Indeed, after accounting for cost of living, L.A., Monterey, and San Francisco counties—all places known for concentrations of wealth—have poverty populations of 20 percent. “San Francisco,” says historian Kevin Starr, a native of the city, “is a cross between Carmel and Calcutta.”

The Political Roots of the California Ascendancy


You can blame many factors for California’s fall from grace: too much immigration from poor countries, the impact of global competition on technology and aerospace industries, the end of the Cold War, failing schools, and the 12 years of political control by the Texas-centric Bushes. Yet other states have weathered similar storms and still gained ground on the Golden State.

The real problem lies in the decline of the state’s political culture. “Our society may be evolving spectacularly but our politics are devolving,” suggests Starr, the state’s most eminent historian. “California is in no way a role model for anyone from outside the state.”

For much of the 20th century, California—already blessed by climate, topography, and fertility—was also relatively well governed. California’s schools, universities, and infrastructure were considered among the finest anywhere. From the 1920s on, its prevailing ideology was a kind of business-like progressivism. Californians in both parties embraced the idea that government could be a positive force in the economic and social life of California. However, they also embraced the latest notions of scientific management. One report from the administration of California’s Republican Governor Hiram Johnson, produced in the early part of the 20th century, stated that the goal was “to systematize the business of the State of California.”

California’s state government laid the foundation for its remarkable ascendancy. Progressivism’s pragmatic orientation, the melding of science and technology into government, the large-scale investment in infrastructure, and a strong nonpartisan tradition produced spectacular results. In his famous book Inside USA in 1946, Gunther gushingly described California as “the most spectacular and most diversified American state … so ripe, golden.”

Another Republican California governor, Earl Warren, who served between 1943 and 1953, epitomized progressive virtues—pragmatic in policy, nonpartisan in approach, and activist in his manner. Later on, as the GOP became more conservative, the progressive mantle shifted to the Democrats. Under Governor Edmund G. “Pat” Brown, elected in 1958, the state continued with an aggressive program of public works, a rapid expansion of higher education, and the massive California Water Project.

Like his Republican progressive predecessors, Brown advocated civil rights for minorities but also promoted business interests, notably in real estate development, Hollywood, aerospace, and agribusiness. Equally important, the Democrat embraced the traditional good government principles of the progressives. Shortly after taking office, Brown initiated a thorough reorganization of state government, attempting to make it more businesslike. California, Brown himself noted, needed “to apply the latest concepts of management, organization, and cost control just as modern corporations have done.”

As they say, read the whole thing.

(Nothing Follows)

1 comment:

Kevo said...

Ummm Jack,

Think you can replace names like 'Brown' and 'Davis' with some dinky-di Aussies like 'Carr' and 'Beatty' et al and probably republish this in a couple of years time.

Public sector unions ( and more importantly their leaders), activist political/social groups and rent-seekers in the private sector driving governance and the finances off a cliff because they assume someone else will always be stuck with the bill at the end of the day.

Sounds like the Australian playbook right now ? As usual - where California leads the rest follow !