California has a lot of issues and potential. I just don't feel this article really convinces me that they have selected the important ones.
The cost of the prison system may be a significant burden and the article did not address that.
The failure of electricity privatization is another issue that was not mentioned.
Are the pensions for bureaucrats the main costs or is it actually cops and teachers pensions that are more significant?
Living in another first world country that has just lost its textiles industry to third world competition, I hardly see this loss of indicative of anything, except being in the way of globalization and cheap labour from China.
Showing income tax alone seems one sided. What about property and sales taxes? Are these lower than other states?
If you already believe all this stuff, sure you may be right, but for an open minded critical thinker I found it unconvincing.
California's problem is that they regulated retail but not wholesale electricity and banned the construction of new powerplants. Basic supply and demand, there's less so it costs more. So the local electricity companies have to buy supplies from out of state and can't pass on the cost, creating deep structural problems.
About California's only hope is mass nuke building before it's too late.
It's definitely possible to make nuclear plants earthquake-proof, so long as you choose a site that isn't located directly on top of a major fault like or something. The French EPR, for example, comes this way standard. Or if you want to look at really radical solutions, consider floating reactors like the ones Russia is working on:
Why on earth would we ever try to build a nuclear plant anywhere near any general area that's prone to earthquakes? There's plenty of other real estate available for any we decide to build.
You might live on an earthquake-prone island nation like Japan. Or the easiest access to cooling water may be in someplace with an earthquake risk.
Personally, I think that probably the thing to do is work on power lines that can efficiently carry vast amounts of power long distances, and build nuke plants in places that are less crazy politically than California. Reduced earthquake likelihood would be a very nice side-benefit.
(I know this thread is dead, but I figured you should get an answer anyway.)
Be careful that you don't mistake passion for dogmatism. I have seen a few pro-nukes who treat it as a happy death spiral, but they seem to be the exception.
I was pro-nuke and I'm still more pro-nuke than I am pro-coal.
I just re-evaluated my risk tolerance in the wake of this whole gulf thing. Anyways happy death spiral is a great way to put it -- I kind of view my past feelings about it through that lens.
90% pensions for workers retiring early are lavish even if they are "cop and teacher" pensions. The teacher's unions are one of the worst at resisting political reforms.
Property and sales tax in CA are both very high(varies by county but most are up there). The LA county sales tax is 9.75%!
You are right that CA has a lot of potential. The double whammy of decreased revenues from the recession impacted construction industry coupled with the soaring cost of entitlements over the last half decade are probably the two major factors in the states current situation. They are not the ONLY ones, but they are the most signifigant.
Property taxes are actually at the root of much of the problem, but not because they're too high. Thanks to Prop 13, which prevented property taxes from increasing except when a property is sold, they're very unevenly distributed. In essence, we have a subsidy on old homeowners paid for by new homeowners. Not only has this starved local governments of revenue traditionally used to pay for schools, police and other municipal services, but it has badly distorted the housing market.
For example, my parents bought a house in Santa Cruz, CA for about $100,000 in the 1970s. Before the housing crash, the house was probably worth more than 8x that. This makes it very difficult to move, because if they did their property taxes would go up almost an order of magnitude. The problem is even worse with commercial real estate, which can stay in the same hands for decades.
Without repealing Prop 13 and making our tax system more equitable, we cannot reduce the high property/sales taxes that currently pay for municipal government.
Without repealing Prop 13 and making our tax system more equitable, we cannot reduce the high property/sales taxes
I don't know anything about this issue, but your statement here doesn't make logical sense. You're saying (if I interpret it right) that "property taxes can't be reduced because some people are already paying low property taxes".
That's exactly right. The property tax rate (the percentage of the value of your home that you must pay every year) cannot be reduced, because many property owners are paying that percentage on the values of their homes twenty years ago or more. This makes the tax rate very unfavorable for new owners and very good for those who have owned since Prop 13 was passed in 1978. If everybody paid tax based on their current home price (an order of magnitude difference for some properties), the tax _rate_ could be reduced for everybody (though many would end up paying more tax).
Edit: re-reading my original comment, I should have made clear that I was talking about the property tax rate, not the dollar amount assessed, which will of course be different for everybody.
I encourage people to read into Prop 13 if they are not informed about the issue.
He is saying that the burden of property tax is not distributed evenly while the benefits of the property tax in the form of more educated populace, fire and policy protection, and better infrastructure are enjoyed evenly. People living in their houses longer are being subsidized by the new home owners, who are paying high property tax. If it's taxed more evenly, those new home owners would see a lower property tax bill.
How is this different than 'most every other tax? One way or another, it's always one group of people subsidizing another group. Why the call for tax equality here, when in pretty much every case we hear calls for "progressive this" and "helping disadvantaged that"?
I enjoyed the article, and in general, I agree with the general philosophy of government behind it - a conservative, small government mindset that is practical enough to see a positive role for the state.
One thing it missed, in my opinion, is the extremely negative consequences of prop 13. Proponents of Prop 13 often argue that it lowered property taxes. As a recent home(owner/debtor), I assure you that it really did not. My taxes are extremely high. And when I move to a more expensive house (all part of that upward mobility), they will adjust upward once again.
Very wealthy individuals and corporations who bought a long time ago and never move pay extremely low property taxes. Young families and new businesses pay extremely high property taxes. To me, this is the most loathsome outcome of prop 13 - a low tax aristocracy of established wealth that keeps its own taxes low but enjoys a bloated state paid for on the backs of young families and new businesses.
I have no idea why principled small government conservatives can't see this problem with prop 13. You'd think that someone who wrote an article like this would be opposed to putting young families and new businesses at a tax disadvantage.
Aside from this (in my opinion) glaring omission that doesn't reflect well on self-declared fiscal conservatives, I think it was a good analysis. It's a shame, because while the article is measured in tone, it clearly does show a (deserved, I think) distain for the big government liberals who created a bloated state. C'mon, dude, hypocritical, fake "small government" conservatives who create a low tax aristocracy are also to blame here.
On the bright side, hey, my parents bought an expensive house in SF and an expensive vacation house in the wine country long ago, so their property taxes are far lower total then what I pay for a small 2br house in an unfashionable district of SF. If I inherit these houses some day, I'll also inherit their low taxes, too. Aren't aristocracies wonderful?
I'm not a big fan of the potshots he takes at New Urbanism and Smart Growth. He seems to not have much of a grasp on the changing demographics of urban versus suburban populations, or the impetus behind higher density construction in urban centers.
For example, this sentence is complete nonsense:
Instead, they favor policies, such as “smart growth”
and an insistence on “renewable” energy sources, that
would make the area look like a gated community—a green
one, naturally.
Gated communities are typically residential subdivisions. "Smart Growth" planning focuses on mixed-use development and walkable (to buy groceries, shop, work from professional offices, etc) neighborhoods.
Kotkin definitely has an axe to grind with respect to "traditional urbanism". Among urban studies circles he's often criticized for his "anti-urban" (i.e. pre-automobile/highways urbanity) stance and his pro-suburban views.
If you read his works he seems to relish predicting the downfall of San Francisco (a Disneyland city in his mind) and Los Angeles.
He's certainly not as outright crazy as Wendell Cox (another noted anti-urbanist), but I certainly don't agree with much of of what he writes.
That's not to say all that he has to say is bunk. He usually raises a lot of good issues. But it is worth, as you suggest, noting some of his clear biases.
California is a leading edge example of what happens when an increasing % of the population are either directly (state workers, people on welfare long term) employed by the government or don't pay any taxes have disproportionate representation in politics.
I won't pretend I'm predisposed in its favor, but the arguments in this article are really pretty terrible.
Take this paragraph from the first section, just about the only attempt to present big-picture numbers:
"Between 2003 and 2007, California state and local government spending grew 31 percent, even as the state’s population grew just 5 percent."
The article doesn't say if the 31% is inflation adjusted - which makes me suspect it's not. Also, what's happened since 2007? That was three years ago. Why cherry-pick numbers from the height of the housing boom, which presumably saw steadily increasing revenue? Is that the only way to show a dramatic spending increase and validate the article's thesis?
"The overall tax burden as a percentage of state income, once middling among the states, has risen to the sixth-highest in the nation, says the Tax Foundation."
No periodization here at all, and then we get...
"Since 1990, according to an analysis by California Lutheran University, the state’s share of overall U.S. employment has dropped a remarkable 10 percent."
How much of this occurred over the 2003-2007 period that saw increasing spending? From anything the article tells us, the answer might very well be none. What was the population doing in the meantime? Again, for all I know, it might have changed proportionately.
If one was to look up numbers that all covered the same time periods, I don't know what results one would get. But the numbers in the article really don't set up the case it goes on to make, that the problem is spending and regulation.
And then that case has its own independent issues. Though again I don't have quick access to the real numbers, it's not plausible to me that "bureaucratic pensions" are really a substantial proportion of the state budget, unless teachers, firefighters, and prison guards are all alike "bureaucrats", a characterization which would be pretty tendentious. And are carbon-emissions regulations really likely to have contributed more to those 400,000 lost manufacturing jobs than a nationwide trend towards outsourcing?
There is plenty of blame to go around in what has made California such a dysfunctional state.
You cannot, however, take Proposition 13 and pretend it's not part of the problem.
If a proposition is put on the ballot most of the time it requires a simple majority. Three strikes and the prohibition on same-sex marriage were done by a simple majority.
"What went so wrong? The answer lies in a change in the nature of progressive politics in California. During the second half of the twentieth century, the state shifted from an older progressivism, which emphasized infrastructure investment and business growth, to a newer version, which views the private sector much the way the Huns viewed a city—as something to be sacked and plundered."
Pure gold.
I would add another factor: since the 1970s, the old progressivism which actually believed in progress has been replaced by things like green ideology. The latter is a form of puritanical suffering-and-atonement religious fundamentalism. I think it's properly classified as a species of religious conservatism, and doesn't even belong on the left.
Note that I'm referring to the quasi-religious ideology... cleaning up the environment and building more renewable energy systems is great. The ideology has nothing to do with that. Greenpeace has as much to do with saving the planet as "Focus on the Family" has to do with helping actual families. Both are just fundamentalist cults using their respective issues for publicity.
"I think it's properly classified as a species of religious conservatism, and doesn't even belong on the left."
No, it like or not it belongs on the 'left.'
The difference between 'left wing' and 'right wing' ideologies isn't the presence of a religious nature, secular or otherwise, nor does it have anything to do with any specific policy. The difference is this: 'right wing' ideologies take for their inspiration an idealized past, 'left wing' ideologies take for their inspiration an imagined future.
I've always seen conservatism as being rooted in the immutability of human nature and social structures (and a related protectionism for existing social structures) and liberalism as being rooted in the idea that improvement in the human condition is possible.
Green ideology is rooted in the idea of absolute limits to human progress and a related idea that attempts to exceed these (often relatively arbitrary) limits are somehow sinful. I consider that more right-wing than left-wing. It says "know your place and stay there" not "try to make something better."
Your understanding is not in keeping with the historical uses of these words. We get the term 'left-wing' from the French Revolution, where in the Revolutionary Assembly, those who gathered on the left side of the Assembly were more radical than those who gathered on the right. During the height of the Terror, the left side killed the right side and the center moved to the left. At their peek, the Jacobins were every bit as dogmatic and psuedo-religious as Greenpeace, (they were in fact explicit about their attempts to create a new religion.) Soviet Bolshevism presents a similar story but I won't get into it.
'Conservativism' is different than 'right wing,' and 'liberalism' is different than 'left wing.'
The standard polisci definition is that (small 'c') 'conservatives' seek slow organic change in society while (small 'l') 'liberals' seek deliberate and intentional change. In addiction we have 'radicals,' who seek total change and an overthrow of the current system, and 'reactionaries' who either want no change, or to reverse the flow. ('Radical conservative,' is an oxymoron') Big 'C' Conservatives and big 'L' Liberals are different still, (and both are different than 'Progressives.')
Greenpeace is radical, left-wing movement. They are such in the same way that both the French Revolution and Bolshevism were radical left-wing movements.
No. Green ideology is rooted in the idea of absolute limits to resource depletion and a related idea that attempts to exceed these limits threaten all life on Earth.
Western notions of "human progress" during the last few centuries or so happen to correlate well with resource depletion. Green ideology presents a challenge to these notions of progress, and tantalizes us with the possibility of alternative notions of progress (e.g., sustainable development, permaculture, green technology, etc.)
>I've often wondered if the failure of green ideology to take off is Asia is due to the absence of the Judeo-Christian hole for it to plug into.
My take on this is that most Asian countries are newly industrialised - chances are that a young persons parents or grandparents were once dirt poor. They aren't interested in sacrificing their newly-obtained living standards for an ideology that looks mostly self-serving to any disinterested outside observer. Greenpeace et al trades on guilt, just as the Catholic church does. Asians just want to build exciting cities of the future and become rich. Something the rest of us used to want to do but have now lost the stomach for. It's the classic case of third-generational squandering of wealth, on a very large scale.
Nice characterization! That said, leadership for major change does have to come from somewhere and impetus for change is difficult to achieve.
The thing about cults is that everything social is a social construct requiring shared belief to exist, I think John Searle calls it assent or something like that.
While a healthy society must critique institutions for their failures and problems, I'm not sure if it's defensible to say that Greenpeace has nothing to do with saving the planet and as much as it pains me to admit, Focus on Family may even help families too. Does Greenpeace hurt more than help, or Focus on Family? And if so, what realistic ways to achieve the intended affects. After all, the environment is in danger, and social conservatism isn't going away. The organizations of social conservatives will be conservative whether we like it or not, we just need to keep teaching them not to fcku with everyone who is not.
In effect your hyperbole here is similar to theirs, yours has the characteristics of a mass generalization which simply won't have any affect except on the already despairing, the true believers any of a number of causes which you aren't necessarily thinking of, and of course the trolls or whatever we want to describe non-constructive criticizers as. I'm trying to break out of that particular cult, it's a long road, but similar to what you're getting at I think this type of cynicism is a destructive force, thus my rant ;)
Actually, maybe I'm being a little bit too hard on the greens. The thing is: human beings respond to hygiene problems by creating religions with moralistic prohibitions.
By the 50s, pollution had started to get bad. It's basically a hygiene problem. So we made up a religion. We did the same thing when we figured out that having sex with too many people made it hurt when you pee.
For some reason, we need this. Rational arguments are not good enough. Arguments from basic self-interest are not good enough. Having the air smell like burning tires and having rising cancer rates is not good enough. We can't change group behaviors without cults.
Actually, I'd say this comment, with its name calling like "quasi-religious ideology" and "fundemantalist cults", should be classified as DH0 under Graham's hierarchy. Even if you believe that environmentalists are the cause of California's problems you must agree there are just no facts argued here.
Where does this earth saving "religion" come from. It's not like Mother Earth is in trouble. The biological system on earth has lasted for about billion of years and survived several mass extinction events.
I recommend Collapse by Jared Diamond and The Collapse of Complex Societies by Joseph Tainter, as a treatise over how different societies reacted to resource shortages & environmental damage.
They try to be non-political and are very informative, IMO.
I think that resource constraints and environmental damage are real, but I don't think they're the cause of collapse.
It seems to me that complexity itself is the cause of collapse. The problem with human societies is that there's no mechanism for reducing complexity. Each feature of a complex society has a stakeholder, someone who would lose out if that feature were reduced or abandoned. So societies grow in complexity without bound until the complexity collapses under its own weight.
A similar effect is very familiar to every engineer, especially in software. Systems grow in complexity until they are unmaintainable. Then you have to trash them and start over. Removing complexity is difficult, because there is a "reason" for every piece of complexity you have.
I don't think inventing Mr. Fusion would stop this cycle.
The problem with human societies is that there's no mechanism for reducing complexity. Each feature of a complex society has a stakeholder, someone who would lose out if that feature were reduced or abandoned. So societies grow in complexity without bound until the complexity collapses under its own weight.
A key here is that we don't have an ethic of just buying these people out.
New York City taxicabs operate on a medallion system where there are always a limited number of licenses to operate a cab and the right, once granted, is permanent. If the city could buy out every medallion holder and charge a fee set every year, it could control the number of cabs and gain more revenue in the long run. But it is politically impossible to persuade the public to pay a million dollars each to buy a medallion back that was given away for free. So the insane permanent-medallion system continues.
The same sort of thing happens with local municipal monopoly franchises, subsidies, agricultural supports in unsustainable regions, water rights, and some public employee deals.
Eventually accumulated special privileges can strangle a state.
Great summary of (mostly) how California has screwed itself.
This: "California must shift its public priorities away from lavish pensions for bureaucrats and toward the infrastructure critical to reinvigorating the private sector."
needs to happen soon or the failure spiral will continue.
I'm optimistic that this will happen, because frankly I think the state doesn't have a lot of other realistic options.
If the state doesn't implement this on their own soon, it's going to happen anyways once its bond rating falls and we can't use debt to supplement our declining tax reciepts.
Correct me if I'm wrong here: a city CAN declare bankruptcy but a state CANNOT under current law and precedent - true or false?
Correct, that's one of the reasons why New York City got bailed out in the 1970s - everyone was scared of what it would mean if the city went bankrupt. NY state can't declare bankruptcy, so even though it's in a similarly bad situation now, there's not the same urgency to fix the problems.
I believe both entities can declare bankruptcy. There have however been rumblings that if a city were to declare bankruptcy the county and/or state can do something to either block it, or block the judge from invalidating the employment(ie pension) contracts.
Hopefully it won't come to that but a few OC/Inland Empire cities are right on the edge.
I can't imagine what a bankruptcy process would look like for a public entity as large as California.
Putting aside the legal reality for the moment, in theory if the state could and did declare bankruptcy, wouldn't CA need to sell off assets to its creditors in order to pay down some of the outstanding debt before it could proceed with a debt restructuring plan? Couldn't we end up with a scenario where another state who purchased CA debt (if there are any) ends up owning CA state parks, port authorities, schools, and other state-owned policies? How might that go down?
I know it's not realistic, but now I'm curious as to what it would look like...
California cannot declare bankruptcy, but according to the article its because it doesn't need to - states have sovereign immunity. They don't need the protection bankruptcy normally provides.
So technically California cannot, but its more because it never needs to, not because it always has to pay any debt it takes on. They can just tell debtors to f off (of course, no-one would lend to California if it made a habit of doing so).
I think you mean that as a sovereign borrower, California can freely default or unilaterally impose a restructuring on its creditors. California is the debtor in this case. Federal bankruptcy courts wouldn't be able to interfere.
The wild card is what the California Supreme Court would do? While the state has sovereign immunity, in a default any creditors would certainly file suit in state court. There isn't much law covering the situation so it is conceivable that the judicial branch would order the executive and legislative branches to raise taxes or sell assets in order to meet obligations. That would create a constitutional crisis.
I can't help but think part of the problem in CA is the .03% of the budget being spent on labor and workforce development and the stagnant higher education budget for the last 25 years which is now being cut to pre-1980 levels when you factor in inflation. If you can't stop manufacturing jobs from leaving and don't want to invest in your workforce these things tend to happen.
Something nobody else seems to think about...
In short, the economy created by the new progressives can pay off only those at the peak of the employment pyramid — top researchers, CEOs, entertainment honchos, highly skilled engineers and programmers. As a result, California suffers from an increasingly bifurcated social structure.
This is not just a matter of politics, public v. private sector, and the competing vested interests in California. Those socioeconomic factors are all important, but the elephant in the room is that a very high proportion of our wealth derives from computers and software. We have automated away a great deal of what the labor force used to do, so successfully that many industries have pushed unit labor costs down to the level where only developing nations can compete.
Outsourcing is generally blamed for the decline in US manufacturing jobs, but I think that's a symptom rather than a cause. If there wasn't a large pool of cheap labor in Asia, then we'd just be seeing more robots in the US, as is the case in Japan to a large extent.
Of course the internet has brought all kinds of wonderful new opportunities. But because the key economic benefits are disintermediation and delocalization, the rewards are distributed very differently. Take Amazon - hugely successful company, clear benefit to the consumer, and a good advert for capitalism generally. Jobs at Amazon: warehouse drone, middle manager, engineer, senior manager. I simplify, of course, but what do you think are the chances for a warehouse drone to 'learn the business' and rise up the ranks? Virtually zero unless they study at home, because the warehouse job consists of picking up order slips, scanning things taken off shelves, and putting them in boxes. The inventory management, purchasing, accounting, and analysis aspects are entirely automated, so you're not going to pick up many skills on the job.
This isn't just an internet problem. In my supermarket the checkout is not staffed mainly by people whose job is recite scripts written by the marketing department and to make sure I'm not stealing anything. They wave barcoded products over a laser scanner and announce a total. All the price-checking, calculation and cash dispensing is carried out by a computer, and the job doesn't even require accurate data entry. The job requires so little that it doesn't pay much, and there's no real room for improvement, skill development, or competition. There's no opportunity to become the most efficient and accurate checkout operator; and it demands so little competence that getting fired is nearly impossible. So if you're tired of stacking shelves, don't hold your breath waiting for a chance to try life as a checkout clerk. You could occupy your thoughts with examining what goods sell best in which shelf positions, but display management is largely automated these days as well. You just scan the wholesale box and your scanning wand tells you which shelf section to put the inventory on today.
Work as a mechanic? Well, a lot of modern engines are just black boxes now, and your job is about running diagnostics and then either resetting the firmware or ordering whatever the manufacturer's website says you need. Clerical work/bookkeeping? Greatly reduced - spreadsheets take care of all the arithmetic, and even the data entry is increasingly automated. As we all know, writing is a good deal easier with a computer than a typewriter, and there's been a corresponding decline in the importance of writing ability, accuracy in spelling and grammar, and handwriting. For many people now, the most complex tasks they perform at home are operating the microwave and assembling Ikea furniture. Earning a living now requires either long hours in low paying jobs or long hours of study and professional commitment for well-paying ones, so for a lot of people housework and DIY are necessities to be minimized - there isn't the same time or economic freedom to develop ancillary skills for their own sake.
So it's not just how we divide the income or the taxes. It's how we divide the work too.
To work your way up at Amazon, you'd need to enter at the base level in either engineering or marketing. And that's no bad thing.
All of society benefits when mundane tasks are automated. Sure, those warehouse workers never get that job, but there are jobs at the robot makers, robot technicians, systems designers. The freeing up of this labour enables it to be deployed elsewhere, making everyones lives better. I don't see anyone complaining about cheaper books.
Your examples of mechanics and checkout operators are just red herrings. There are always better ways to do your job, even if a computer talks to the engine. There's being better organised, better communicating, harder working, faster and better. It's complete nonsense to say that a mechanic can't make it to supervisor or service manager because a computer does all the diagnostics, or to use the reverse and say the only way a mechanic was able to be promoted was by being a whiz at using a timing light, even if they were lazy, sloppy and uncommunicative. And you're forgetting the improvement for the customer, whose car is serviced quickly and accurately for an ever-decreasing cost in real terms.
Much of your thinking seems dangerously close to the broken window fallacy. Improvements in technology drive productivity, and increasing productivity is what underpins real improvement in living standards.
All of society benefits when mundane tasks are automated. Sure, those warehouse workers never get that job, but there are jobs at the robot makers, robot technicians, systems designers. The freeing up of this labour enables it to be deployed elsewhere, making everyones lives better. I don't see anyone complaining about cheaper books.
Ever read the Penny Arcade cartoon "Automata"? There's a scene where automata are banned, and the chief of police goes, "It's about time someone got rid of those damned autos! Those jobs should go to hard-working American men!" To which the robot character, Carl, responds, "Actually, sir, hundreds of American workers were involved in my construction..."
It made me smile. Especially as an employee of a robotics company.
I agree with you about the basic productivity gains from technology, which is why I hang out on HN rather than BackToNature.com or something - and I've been a technology evangelist for most of my life, and still think of myself as one.
Where we differ is about where the benefits go. Of course, we can all benefit as customers from cheaper books or more reliable vehicles and so forth; indeed, Walmart exemplifies the benefits of scale and modern supply chains in a way that substantially lowers the cost of living for a very large number of people. But it is not true that all of society benefits evenly when dull jobs are eliminated by automation.
Sure, those warehouse workers never get that job, but there are jobs at the robot makers, robot technicians, systems designers. The freeing up of this labour enables it to be deployed elsewhere, making everyones lives better.
See, if we had low unemployment and steady growth I'd agree, because industrial policy props up inefficient businesses and labor shortages drive up wages and act as a brake on growth. But what we have now is unusually high unemployment following a long period of wage stagnation, even though we had a period of record GDP growth at the same time. Between technology, outsourcing, and a shift towards services, it's not clear where less skilled labor can be efficiently deployed in the US at the moment. Youth unemployment is something like 40% because there's just not much demand for the inexperienced. One approach might be to abolish the minimum wage so that people could be busy doing something, even if only for $1/hour - but that's not a realistic policy, and would probably lead to riots.
It's no good being able to deploy your labor elsewhere if you lack skills that are in demand or the place demanding them is far away. Of course, you can up and move. I've done it myself, on several occasions - but I was young, free and single, and more importantly I had portable skills that were in high demand. The sad fact is that a lot of people aren't very entrepreneurial or smart - half the population is on the left side of the IQ distribution. A cheerful distribution and a good work ethic are important for anyone, but absent the skills most in demand, or the knowledge of what those even are, the opportunities are limited. We can easily come up with suggestions for a given individual but it's much harder to do across a population. And part of the reason for this is that neither government nor the economy as a whole operates like a business. We don't have the option of just firing 10 or 20% of the least productive citizens.
There's plenty of capital sitting unused in the private sector right now, but not enough new demand to invest it in new equipment or hiring. The ~30 million unemployed and the bottom 50% of earners don't have enough money to do much shopping, so it's not going to come from them. Europe and Japan are in a similar situation. Where is the demand going to come from?
We're closer in views than you might expect. I especially agree about industrial policy and legislation that chokes off business.
Youth unemployment - well I have a lot of opinions about this - and your answer is correct - you up and leave and chase the work, you don't sit around and complain. Part of the problem is that we tell everyone that they're going to have a wonderful career when that is plainly not an option for every school leaver. What should be taught is self reliance and basic financial literacy and let people make their own decisions from there.
As for that unemployed capital - there's plenty of scope to put it to work, but the regulatory environment closes off a lot of options, minimum wages being just one of the factors. It just takes some creative destruction and some new ideas to get it moving again. I don't have any of those ideas (nor any of the capital, for that matter) but I'm sure there are plenty of new things just around the corner.
Excellent post. This is an issue I've pondered a lot. Most of the jobs lost in the first few rounds of computerization and automation were replaced by service jobs. A lot were high end like medicine or education, but most were low end. High paying manufacturing jobs were replaced by burger flipping. In Japan they are experimenting with replacing these service jobs with robots. What happens here when robots are cheaper than minimum wage plus benefits? Do we have permanent 40% unemployment? Legislated 25-30 hour workweeks? A permanent crash in housing prices because no-one can afford them?
I think history shows that we will have a structural realignment of our society. For better or worse, California will be at the front of it.
Sort of an aside, but this article has the worst graphics imaginable. Why is about 1/2 the graphic made of garbage stock photos or "helpful" graphics like that giant up-arrow with a percent symbol on it?
"In the Central Valley, for instance, regulations designed to save certain fish species have required 450,000 acres to go fallow."
Who could support "impoverishing whole regions" this way? Those who understand ecology. If the Delta Smelt goes extinct, a whole chain of species, fish and otherwise, will likely go with it, with unknown consequences. This is to human Californians' detriment, to say nothing of those species. Extinction is forever.
There are some good points, however the emphasis needs to be on how green regulation is applied.
The article seems to be complaining about "green" regulations (which are outdated and inane), not against the idea of the necessity of sustainable technology.
One quibble, more offshore drilling will not solve the problem, and causes problems, as in the Gulf of Mexico. It's also a drop in the ocean of energy demand. It solves nothing.
You only need to look as far as global rising energy consumption (especially China) and the supply/demand curve. Basic economics. This means the sustainable energy problem needs to be solved, and what better place to solve it than in California?
We need solutions without throwing the baby out with the bathwater. For example, make it easier for entrepreneurs and relieve the tax burden to encourage businesses. Provide an environment where technology (even green technology) can thrive. Create incentives for people to adopt more environmentally friendly approaches to living, etc. I think there are plenty of examples where sustainable living & and strong economic fundamentals can coexist.
All we need is for oil energy cost to goes up, than you'll get "green energy". Currently, it does not make sense to invest in green energy technologies.
It doesn't need to be solved right now, but it will become urgent in the future. Urgency will increase flow of capital. Increased flow of capital mean we'll get technological solutions faster.
Right now, we can put our money to other, more urgent things that's more important. Green energy is not that important, for now.
What's wrong with offshore drilling? Yes, GoM events do happen but are very rare. You can't go around being completely risk averse and not doing anything - this is the whole problem with the green ideology. Why not drill the oil and get the tax revenue, bring in the jobs, get a little industry going? This is what the article is about : refusal to let private enterprise get on with making, doing, exporting, building.
As for alternative energy - by all means continue R&D but drop the tax subsidies and using the government to 'pick winners'. The subsidies starve other technologies of capital, funding and attention while prolonging the life of unsuccessful technology. The only way the energy problems are going to be solved is by letting free enterprise innovate and compete to a solution. Governments can't and shouldn't pick winners. Let any energy solution live and die on it's merits.
To me your reply sounds as though you acknowledge the problem (green regulations and intervention) but aren't willing to accept that the solution is to wind it all back and let solutions develop naturally. Green regulations should be restricted to reducing pollution and preserving areas of natural beauty, not stomping on every little use of the earth to provide, and certainly not picking future energy direction. Set the rules of the game, then let private entreprise go and come up with the solutions. Oil will cease to be an issue once better, cheaper alternatives exist.
Pollution is something that affects quality of life and health of people. That's important.
By 'areas of natural beauty' I basically mean national and state parks and other areas that provide quality of life for many people just through observation and enjoyment. It was a pretty ambiguous line, I admit, but what I really mean is : preserve some parts for the enjoyment of all and future generations. Don't close off existing farmland and already modified environments. Let farmers grow, miners mine, timber workers log. Use the resources wisely for the improvement of living standards.
> refusal to let private enterprise get on with making, doing, exporting, building
Agreed. However, blatant consumerism is causing massive global environmental damage. Industry & private enterprise should produce things that help society & the world, not pillage and destroy it.
Face it, the economy was on hyper-drive for too many years. We have for too long deferred paying our debts and missed making fundamental changes to our economy and society that would make our society (not just the environment) more sustainable.
Joblessness and a down economy would have happened with or without California regulations.
> The only way the energy problems are going to be solved is by letting free enterprise innovate and compete to a solution. Governments can't and shouldn't pick winners. Let any energy solution live and die on it's merits.
Exactly, that would be wonderful. Unfortunately the government has & still gives enormous subsidies to many environmentally (both sociologically and environmentally) damaging industries.
For example, why is food so cheap to mass produce in a centralized location and ship, so we can enjoy fattening and nutrient-starved meals at our local Micky D's? Government subsidies.
Why is oil so prevalent as our only energy source. Government subsidies of the auto industry. Let them go out of business so manufacturers make cars that people actually want.
Why is planned obsolescence such a mainstay in consumer goods, when more practical solutions exist? The all-mighty dollar has served as a Siren's song to the unchecked finance gambling machine.
Why do we have to spend billions of hours commuting, away from our families, when we can focus on making industries more localized and developing telecommuting technologies?
And how about the military as a vehicle of subsidization. Why are we fighting two wars based on false premises while pillaging social security?
Why is there a war on drugs? Subsidies.
I would rather have subsidies spent on encouraging more sustainable behavior, as the world population's resource usage is rapidly increasing. It just makes sense.
The cost of the prison system may be a significant burden and the article did not address that.
The failure of electricity privatization is another issue that was not mentioned.
Are the pensions for bureaucrats the main costs or is it actually cops and teachers pensions that are more significant?
Living in another first world country that has just lost its textiles industry to third world competition, I hardly see this loss of indicative of anything, except being in the way of globalization and cheap labour from China.
Showing income tax alone seems one sided. What about property and sales taxes? Are these lower than other states?
If you already believe all this stuff, sure you may be right, but for an open minded critical thinker I found it unconvincing.