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Joel Kotkin
The Golden State’s War on Itself « Back to Story

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Why is it that business leaders must elect Republicans? They could try to make the Democratic Party more conservative. It seems to me that it's a losing game to try to elect Republicans and let the Democrats be as Progressive as they want to be. I realize the Dems are not conservative in the least, but who says they can't be? Let's make BOTH parties more conservative.
Deregulation of commodities and banking, leading to Enron's attack on California, did not help.
But certainly, the big water projects of the earlier model you eulogize led to overcrowded SOCAL. Better if they were never done in my opinion. Deserts forced to support too many people (or cows for that matter) get even eventually. Damn those dams that only postpone the inevitable.
Really great article. Well done, Joel!
This is spring 2012 now. California is even worse off than it was in the summer of 2010 when this article was written. The Wall Street Journal now calls this state a "Greek Tragedy" in teh March 13, 2012 edition.

http://online.wsj.com/article/SB10001424052702304537904577277242682364690.html?mod=WSJ_hp_mostpop_read

When will the decline end? When will the liberals, the unions, the environmentalists and others bent on destroying this state get voted out of power? I can only hope it is soon before California is bankrupt. It may not be long now before that happens and it is going to be really bad folks.
Rarely does an individual speak with such clarity about California's problems and the solutions needed to solve them.
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Surfing Chuck of San Diego October 25, 2011 at 11:05 PM
Well-written and great expose on the past and current state of California economically. Personally, having been born and raised in California, I see no future or resurgency of the economy, and with AB 32, the Global Warming Initiative, I only see it is going to get worse starting in January. Most Californians do not know what is going to hit them in January. However, Al Gore, who owns one of the two Carbon-Offset Banks, will make a ton of money as he does serving on the Board of Apple, whilst lying around his house in Montecito (Santa Barbara) that cost $7 million (and that is cheap for that area). Sadly, it is over. Give to the Mexicans! They will have it in 15 years anyway. Time to move!
It amuses the hell out of me to see all the inane liberals denying that Kalifornia has a
problem. I guess they weren't lying when they said Denial ain't just a river in Egypt!
I have discussed this with liberals and it seems that when they are confronted with the facts, they do not try to deny the problems, but they do twist themselves into pretzels denying that "liberalism," as it were, is the problem.
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Gentlemen: There is not a chance in hell of any kind of a government/business truce---Californians continue to elect economic morons, from Davis to the Terminator( apply named) to the exterminator: Brown. Each one is bent upon killing off the middle class tax payer, and looting his business or his employer. California is literaly insane--they keep doing the same thing and expect a different result. The bankruptcy and disintegration of the status quo in California is necessary to wake up the rest of the country. You have to hit a mule with a two by four to get his attention.
Oh please, the some old complaint about delta smelt turning the central valley into a dust bowl requires a realistic look at crop subsidies doled out to central valley farmers, before the belly aching begins.

Cotton subsides (in the form of Direct Payments, Price Support Payments, Market Loss Assistance, and Counter Cyclical Programs) from American taxpayers dole out $150 to 400 million per year to congressional district 18 in the central valley. American taxpayers have supported corporate agricultural welfare to the tune of some $2.9 billion from 1995-2009. And this only looks at cotton farmers, now that is an abomination.

But instead, like a broken record, the author toes the party line with the Glenn Beck anthem of “Progressives” are to blame, blah blah blah, lets keep shelling out agricultural welfare, and blame the progressives.
Typical "right liberal" viewpoint, all economics, carefully avoiding any mention of the Mexican Invasion. His ideas, even if followed to the letter, won't make a dime's difference as long as California keeps taxing its remaining productive citizens to support a permanent underclass of Third World immigrants.
It's stunning that you make absolutely no mention of mandatory minimums and the prison complex in California consuming 6% of the state budget. That's a ridiculously high number in camparison to Canada, who holds a similar population to California.

I really enjoyed the article, but the overemphasis on the effects of progressives without also focusing on the misguided efforts of conservatives weakened the quality of it all.
This is an excellent article, I certainly hope that Meg Whitman's campaign has a copy as do our State Senators and Congressmen. It ought to be mandatory reading for assemblymen and state senators.
What about the massive failure to assimilate of California (and the US)'s millions of Latinos?

There is no, zip, zero evidence that the educational and income attainment of California's Latinos will allow the state to afford anything like the Sweden-level welfare state that the Pacific Palisades crowd has written into the constitution.

There is no sign that the "iron triangle" of gentry liberals, public employees and ethnic Latino lobbyists even has any sense of the scope of the problem.

http://amconmag.com/article/2010/jun/01/00044/
So what's the solution? I don't see a single concrete solution offered by any of the brainy pundits here? Would it help if we sold California to China, India? Or sold it back to the original owners, Mexico? How do we fix the problem my dear friends?
My son and his family of five left southern California for Houston about six years ago. His neighbors came by to congratulate the family on being able to "get out." His children were about a half year behind in school and luckily were intelligent enough to catch up. He went from leasing a small home to being able to afford to purchase their first. California is beautiful, and I loved to visit. It's a shame people can't afford to live there.
A Defense of Proposition 13 Property Tax Revenues
by Richard Rider, Chairman, San Diego Tax Fighters
1 July, 2010

When it comes to gathering sufficient property taxes, Prop 13 is no problem at all – except for profligate spenders. Look at the history of my San Diego County – a history which pretty much reflects the history of property taxes in the urban/suburban counties that hold over 90% of California's population.

According to the SD County Tax Assessor, in 1977 – the year BEFORE Prop 13 took effect – our countywide property tax revenue was about $639 million. For this past 30 June concluding 2009-2010 fiscal year, our county assessor reports revenues of $4.596 BILLION. For every property tax dollar collected in 1977, the county this last year collected $7.20.

During that time frame, our county population has grown about 85%, and inflation has gone up about 260%. Hence property tax revenues today are substantially higher than the bloated PRE-Prop 13 year, even after adjusting for inflation and population growth.

For 2008, California was ranked 14th highest in per capita property taxes (including commercial) – the only major tax where we are not in the worst ten states. But CA property taxes per home were the 10th highest in the nation that year.
http://www.taxfoundation.org/taxdata/show/251.html
and
http://www.taxfoundation.org/taxdata/show/1913.html

To see how CA ranks against the other states on various taxes and other economic factors, go to: www.RiderBlog.NotLong.com and read the latest updated version of my fact sheet “Breaking Bad – CA vs. the other states.”

***
It turns out that, under Prop 13, property tax revenue is FAR more stable than our other forms of tax revenue. Income tax revenue is plunging, and sales tax revenue is dropping.

But property tax revenue seldom goes down AT ALL. Since the year Prop 13 passed, San Diego County property tax revenue has ALWAYS gone up – every year – until this 2009-10 fiscal year.

The SD County Assessor reports that real estate property tax revenue for the fiscal year ending June 30, 2010 is down – but only 1.0%. This in the 4th year of California’s real estate meltdown. The year before, real estate property tax revenue was actually up 4.1%. Not one person in a thousand knows this – the press has not (yet) covered these amazing facts.

Revenue is up because Prop 13 has the little-known added benefit of smoothing out real estate property tax revenue from year to year. Most properties this year (generally those purchased prior to 2003) had their property tax go up 2%. Add to that the resales, property improvements and new structures (which establish new tax assessment levels), and the revenue stayed rather constant in the teeth of our economic downturn.

Consider what happens without Prop 13 protection: In the real estate boom years from 1998 through 2005, property taxes would have SOARED. (Even WITH the Prop 13 limitations, San Diego County property tax revenue collection during this period STILL rose 111%.) But then in the last four years, dropping property values would have caused a dramatic plummet in property tax revenues – revenues that governments would now be hooked on – just like we see with our volatile sales taxes, and especially with our erratic income tax revenues.
Bingo! From bottom, 4th paragragh sums it up. Four unions with their grandiose sense of entitlement & their lobbyists have ruined the state; and the political clowns that have ignored & continue to ignore the math, point fingers at each other in a perverted death struggle. Having gerrymandered themselves into "permanent" office they could give a damn about their repective constituencies.
Amazing. Kotkin attempts to present an earnest understanding of the woes that have plagued CA without once mentioning Howard Jarvis' destructive politics. Is it any wonder that the percentage of the budget spent on infrastructure dropped dramatically around the time Prop 13 became law.
If the so-called City Journal expects to be taken seriously, then it needs serious writers, not ideological hacks.
Es el inicio del final de la subjugacion
Americana,van probar su própio veneno,
imposto a otras naciones,atrabes de la restricion financera i Politica.
La queda de esta gran nacion es professia
de Nostradamus.
Dios salvara la América de esto?
Thank you for the well-written article.
My roots in California go back to 1905. My biggest fear is that I will not be ready to retire soon enough to avoid being trapped here.
The state is Valhalla from a geographic point of view and pure hell from a business point of view.
We are closing our manufacturing down because employment law makes it impossible to compete.
We notice Intel and other supporters of the progressive movement are moving their people out of the state as well.
What a tragedy for everyone!
ELECT , JERRY DROZ AND GET CALIFORNIA BACK ON TRACK AGAIN .
The Golden State's War on Itself is a great article. As a 15-year small consulting business owner who is currently running for City Council in Rancho Cucamonga, my campaign message is that public sector needs to work more closely with private sector in order to have any realistic hope of achieving a substantive economic recovery in the reasonably foreseeable future.
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What an insightful comment and analysis! Your prescription is right on. But, how to implement it? I think the solution has to come from the traditional immigrant population. They already have the vision, desire and hard-working. What they need is the political know-how and organization. California is still the land rich with natural resources, again waiting to be rediscovered by creative, innovative and hard-working people seeking the American Dream.
There are two types of government spending: That which makes the productive more productive and that which makes the dependent more dependent. The first includes roads, schools, public works and other public goods that the people can use to improve their lives. The second is simply buying votes from various groups that want a larger share of the public treasury. This includes most welfare, nearly all subsidies, and the overcompensation of public employees.

California's downfall began when they increased the second type of spending at the expense of the first. This is also at the root of the anti-government ideology that has arisen since the change. When government spending is being used primarily to keep the politicians in power, who wouldn't oppose it? Who wouldn't be suspicious that ALL government spending is of this nature?

Sadly, as goes California, so goes the nation. The rest of the country is not far behind. And that is why the people are so angry.
California
The environmentalists are in the drivers' seat and they driving blindfolded. Consider the oil reserves we possess in CA and offshore. We could be energy independent. Though solar and wind can contribute to green energy it is a pittance of our demand (5%). It calls for more infrastructure--power lines and distribution equipment. Also nuclear plants must be constructed on a crash basis. We need water distribution---an aqueduct that runs the length of the state (parallel to Hiway 5) and over the same easement. Thereby the major rivers of the state could be tapped during the high season via a diversion canal and pumps to feed new reservoirs built on public lands. Power could be generated by low head hydro at each reservoir dam to offset the power used to fill the reservoirs. The proposed canal would tie in to the Central Valley Project. The roads of our state are a disgrace. Where is all the money going from the gasoline tax? Heaven knows they are plenty high. We must minimize the social programs and create jobs. Our taxes are driving businesses out of the state. We can't go on with the mentality of our legislators. They point to one proposed project that will create jobs---high speed rail. There is no high speed rail system in the world that isn't subsidized. We need that like a hole in the head. Our population centers are dispersed--not like Japan or Europe. That and electric cars are our next boondoogles. Ever stop to think where the energy for your electric car will come from? Mostly fossil fuels at some spewing power plant. Are Americans willing to wait 8 hours for their car batteries to recharge? Stay tuned---
What rubbish. I don't know where to begin.

Kotkin's claim that businesses are leaving California due to "anti-business" policies is a shop-worn myth. California has been losing jobs to China, not Arizona. We have only Wall Street and Washington to blame for that.

Professor Kotkin's sponsor, Chapman University, is heavily endowed by Orange County real estate billionaires.

Is it any surprise that his recipe for reform calls for more oil wells, more freeways, and more suburban tract homes?
Amazing. Not even a whisper of the burden illegal immigration places, out of all proportion nationally, on California. It contributes at least $10 billion annually to the state's budget deficit (counting the K-12 education burden of anchor babies, who are citizens but wouldn't be there if their parents weren't).
Excellent comprehensive analysis. Most significant omission is the crumbling of the infrastructure due to combination of deferred maintenance and pressures of overuse. The state used to add infrastructure in anticipation of future needs. Now it doesn't even adequately serve existing demands.
Only economic growth can sustain California. The green movement and the parasitic public sector are destroying the state on which they depend.
Interesting article, but as a native Californian, I would like to add my opinion about the "demise" of California to include the following:

1) Boom-Bust Cycle of Real Estate going on since the inception of the state
2) High costs of the prison system, including the sometimes draconian and always expensive "three strikes" law
3) The Bush-enabled Enron scam that turned a surplus to a huge deficit
4) De funding of higher education mentioned by others
5) The increasing commodification of water and water rights. See "Cadillac Desert"
6) The fact that California gets $0.70 back for every $1.00 it sends to the Federal Government for over 100 years, and when the topic of maybe getting $1 back for $1 sent is broached to the Federal Government, they just sneer and continue to subsidize "sensible" loser states in the middle of the country that get more than a dollar per dollar sent to the Federal Government.
7)Governor Wilson, Governor Dukmejian, conservatives both who contributed to the problem with fiscally unsound policies in the era of Reagan-Bush.
8) Disney. Just kidding.
Soquel by the Creek August 13, 2010 at 3:32 PM
An excellent review and overview of how we arrived here.

I just wonder how many California voters are paying attention.
"reviving growth"

Until When? 100 million Californians? 200 Million? ...

One of the characteristics of overpopulation is that it causes increasing societal dysfunctions, worse if it includes the demographic displacement and dispossession of the original culture that created the foundation of its democratic institutions, the dysfunctions then handily offering up themselves as all sorts of useful sideshows for avoiding the central problem, just right for specious growth peddling that perpetually attempts to reinterpret reality by half-truthing with misleading statistics, which makes California always sound as if it will soon be emptying out and becoming one giant ghost-town by the sea, its rusty Disneyland creaking in the wind, when in fact much of this "leaving the state" simply boils down to 'white flight,' the hundreds of thousands quietly screaming out into the night being more than made up for by legal-illegal immigration numbers and ballooning birthrates, and in real numbers--not in 3-Card-Monty claims of percentage-rate growth changes, happily calculated off of an ever-growing base that could plausibly prove Manhattan will soon become Mayberry--has been growing, mostly thanks to 1965-to-forever federal immigration policies, like the bankrupt Third-World shantytown state it is fast becoming--with many other states soon to follow.
- - - -
Border Enforcement + Immigration Moratorium = Job, Crime and Eco Sanity.
"Historically, California did an enviable job in traditional approaches to conservation—protecting its coastline, preserving water and air resources, and turning large tracts of land into state parks."
It is an urban myth that preservation is good for productive habitat. The State parks are in terrible shape, even compared to adjacent private land. They are host to massive weed infestations, accruing fuels, and un-managed wildlife. The State lacks the personnel to care for it, even if they were philosophically so disposed (which they are not).
Parks are often procured more as a real estate subsidy than for purposes of habitat management, wherein urban renters fund the management of tax-exempt entertainment for those with the time and money to enjoy them. So much for "environmental justice."
As for the 'lavish pensions for bureaucrats', the average pension for a public employee paid by Calpers, the largest pension organization, is $2,188 a month. That's not lavish, kids.

The article makes a number of points, but destroying the middle-class that are public employees is not going to solve the problem, but make it worse.

The number of state employees in California ranks next-to-last in per-capita levels. Yep, 49th out of 50 states.

Public employees aren't the problem. Liberal policies are.
With the exception of a few states (including Texas and Oklahoma as referenced in the article), the old phrase "As goes California, so goes the nation" is, sadly, still accurate.
This should be required reading for anyone that votes in this state.

Unfortunately, most of the folks up in Northern California just believe that the rich are not paying their fair share and those evil companies shipped all of the jobs overseas.

I think Jerry Brown will win as the power of the public unions will rule the election. I cant wait to see how he will fix this - taxes cant be raised enough to pay for the budget shortfall and future pension obligations.
An excellent piece which lays out in detail the insanity of modern day "progressive" policies.

The entire "progressive/liberal/leftist" ideology, fostered by good intentioned yet naive nitwits & anti-West radicals alike, has been the catalyst which has turned our once great country into it's current downward spiral.

The left needs the freedom loving, productive & responsible middle class out of the way in order to realize it's socialistic "utopia". Fill our country up with impoverished, needy poor people from the third world & soon you'll have a never ending base of democrat voters

My only beef with this piece is it didn't bring up the massive & uncontrolled influx of illegal aliens into Ca which has hastened it's downfall

Maybe, just maybe Americans will begin waking up & realizing what the invasion & colonization of our country means. And maybe, just maybe we'll begin to see what the policies of "I got mine" means to our children's futures
I often read Mr. Kotkin and his views as I am a third generation So.Californian born in 1942. Kevin Starr, not one known for hyperbole, may have put it right when he said California could become a failed state-next door to a narco-state, Mexico. The Inland Empire-Riverside/San Bernardino is in crisis in many ways. There are too many of us--no one in Sacramento will mention population control let alone rational growth management.
Outstanding presentation of facts, and what is going on in CA
Well written and to the point. The farmers and ranchers of Siskiyou County are in a fight with the State over private property, water and environmental issues on a daily basis. We literally have to fight our own government to use our own property. visit www.pienpolitics.com to see what is going on in the far north. These agencies choose us for their social experiments because we are underrepresented and have almost no money to fight. We are engaged in an act of civil disobedience with the state fish and game over water.
California is finished and there is no saving it. The middle class has fled while illegal aliens have flooded into California by the millions. In a detailed study funded by the highly respected Federation for American Immigration Reform the total cost of illegal to the taxpayers of this country is $113 billion dollars a year. Californians are on the hook for an incredible 21 billion. The dream is over in California.
"...At that point, maybe we could sell CA to Mexico..."
I'm pretty sure they already own it. Mr. Kotkin's article certainly highlights the economic destruction rooted in a liberal, mis-guided state government economic blunders. But unless I misread the article, it totally blows by the ganggreen wounds festering out of control from the same government's "lay down and die" approach to squatting illegal aliens.

In Arizona, residents are paying an extra $1,000 per year in additional taxes due to illegal immigration. God knows what that figure is in California, particularly in metro Los Angeles. If you want to talk stupid, line up the California cities "boycotting" Arizona.
If you want a snapshot of liberal fiscal suicide, look no further.
Swartzenager realized the illegal Chicano carcinoma was killing the state and, at least in running for his first term, had plans to reverse the infestation via several measures including using state militias to "seal" the California - Mexico border. But it wasn't long before he was beaten down by the idiotic state legislature, the Hispanic lobby, and even the "we love illegals" insane (and removed from it all) celebrity community. This forced Swartzenager to choose his tenure in the state house over actions to rid the state of the illegal plague. Now this "girly man" has joined the slobs condemming Arizona for throwing down the gauntlet.
I believe most of the people of California DO get it, but their attempts to remedy the situation as "voters" have been crushed by filth wearing black robes.
Most Americans in the anti-illegal immigration community consider California to be "lost" or as I like to put it, "juristictional toast". As other states adopt Arizona's tough stance, more illegals will be making the trek to the "sancutary state". Rest in peace Calfornia. You will find your obituary in future history books under "nutless".
Kevin Dayton, ABC of CA August 10, 2010 at 2:10 PM
This article neglects to mention the costly public policies and lawsuit abuses pushed by construction trade unions since the 1990s. To save their dwindling market share, construction unions have resorted to lobbying for complicated new "prevailing wage" laws and regulations at the state and local level and union Project Labor Agreements (PLAs) at the local level. Many of the toughest obstacles to building new infrastructure in California originate with the anti-competitive political agenda of construction unions. An entire book could be dedicated to describing "greenmail," the extensive union exploitation of the California Environmental Quality Act (CEQA) to block permits for private developments and energy infrastructure until the owner signs a Project Labor Agreement with the unions.
I hope it gets MUCH worse too! My goal is for it to become so bad that even the poor begin to leave, hopfully about 10 million of them.
I will vote for Brown because he can force the needed failure faster. Once all the welfare dries up, the poor will relocate to other more generous (or stupid) states. Then I can have my beautiful state back, sans all those useless and surplus people.
The changes Mr. Kotkin recommends, including abolishing the idiotic climate change laws, pension reform and deficit reduction are all necessary conditions for recovery.

But necessary conditions are not sufficient. As another commenter noted, it is cowardice to ignore the tremendous social and economic cost of mass immigration from Latin America.

From the NR article "Catching Up to Mexico" by Alex Alexiev,

"In short, we are witnessing a highly advanced and prosperous state, long endowed with superior human capital, turning into the exact opposite in just one generation. What can be done to stop this race to the bottom? The answer is simple: California and Washington need to enforce existing immigration law. Unfortunately, it is difficult to convince the public that this is necessary, so deeply entrenched are myths about illegal immigration.

One myth is that because America is a country of immigrants and has successfully absorbed waves of immigration in the past, it can absorb this wave. But the argument neglects two key differences between past waves and the current influx. First, the immigrant population is more than double today what it was following the most massive previous immigration wave (that of the late 19th century). Second, and much more important, as scholars from the Manhattan Institute have shown, earlier immigrants were much more likely to bring with them useful skills. Some Hispanic immigrants certainly do integrate, but most do not. Research has shown that even after 20 years in the country, most illegal aliens (the overwhelming majority of whom are Hispanic) and their children remain poor, unskilled, and culturally isolated — they constitute a new permanent underclass."
The beauty of a Federalist system is 50 laboratories. Can we learn from some of this most obvious lesson?
ryab sez
"...People in Unions are Americans too..."
= = = = = = = = = = = = = = = = = = = = =
coulda' fooled me...
Ernie Banks sez
"...I'd like to see major tax reform. Apply sales taxes to everything (including services)..."
= = = = = = = = = = = = = = = = = = = = =
Texas has done this for decades AND HAS NO INCOME TAX.

hint,hint.
Nothing new to see in this cornucopia of phraseology - If you Tax Them They Will Leave - move along...
yep, they have ruined CA. We are still living here and hanging on, but have seen our income drop by 50% and my 4.2 student could not get into UCLA because she came from a "better" high school than some of the 2.3's that they let in. CA has gone wonky...we need to do a lot of housecleaning in Sacramento and stop this nonsense.
Wow, finally the voice of reason. How can it be clearer that the loss of middle class jobs has driven the bus over the cliff. Do what it takes to bring back our jobs!!!
I have never read a better analysis and true description of California's problem than this article by Joel Kotkin. His solutions listed at the end should be adopted by the state's legislature to the last detail. Every non-progressive needs to read and understand these truths.
California is hopelessly enslaved to liberal fascist government. Californians are bound and determined to make the state an extension of Mexican oligarchy and poverty. Any rational person who is concerned about their family and who values freedom, political and economic, must get out of the state.
I think the only solution is a massive earthquake that kills the majority of government and union workers, thus cancelling the huge pension liabilities. Then the economy can be stimulated with jobs in the re-building effort.
The problem is that the wives of the business leaders have been Oprahfied into believing all the "green" and social-liberal propaganda.
Federal black-robed tyrants rule the people. 1/3 of welfare cases live in Kalifornia. Kalifornia voted overwhelmingly to stop paying illegals to invade, but a single federal tyrant, Marianna Pfaelzer, forced Kalifornians to surrender an to pay tribute to their new foreign masters.
I was was born in California in the 1950's, at a time when I felt I was in the minority. So many people in the 1950's to the 1970's were moving into California because this was the place to do better. You couldn't beat the weather, the schools were good, the roads were excellent and there was so many ways to make a decent living in California. Joel Kotlin's article is RIGHT on the mark. All the changes he has mentioned over the last 50 years I have seen or been involved with. California has evolved from a agressive mover in business and agriculture to a extremely protective and not in my backyard state. The attitudes of our state legislature and some of our public employee unions to bring California back seem out of normality. Whenever I hear their visions and solutions, I shake my head and wondered where they got their education from. The answer is obvious, from California great public education system which ranks near the bottom.
California deserves whatever it gets for electing liberal fascist Democrats. The solution is to split the state, giving a 20-mile wide strip along the coast to the liberal fascists for their marxist playground. The remaining interior can secede from teh union or join tax-free Nevada.
I would love to move back to California to help my aging parents and sister who could use some help but it scares me to death. With all of the budget problems, who is going to end up with the bill. You get the sense that the public sector is feasting off the success of the private sector but the food and wine are almost gone it is soon time to pay the bill. Who gets the bill and how is it going to be paid. I have a 50 year old friend who is retiring this year as a public school teacher who is suppose to get something like $70,000 in retirement. Most people don't make that much and he gets it in retirement at 50. There comes a time that the private sector people just has to tell the teachers, who are not nearly as interested in teaching our children and the other public servents who don't provide a public serive, to Kiss my A##, no more money or promisses for you. The government of California may have promissed the public sector treasures, but the people of California did not promise to pay.
It's all well and good to talk about "fixing" California with this and that, but the judges and the court system run this place.

One activist with a logo and a fax machine can stop a dam, a freeway, a desalination plant, aything they want, in the courts. The elected legislature and governor is meaningless here.
Kotkin - the faux urbanist - who rewrites history to service right-wing causes. I'd suggest reading an actual expert on urban and statewide issues like Harvey Molotch, John Logan, Doug Massey, Gerald Benjamin, or Mark Baldassare.
excellent article Joel -- really well researched and written -- a truly sad commentary on what was once a great state.

And a warning to all the other states about the high costs of environmentalists run amok and politicians and government unions draining the life out of taxpayers and small businesses.

Great article, thanks for publishing it. I lived in California for 28 years, and watched the taxes and regulation increase, the unions get stronger, and the illegal aliens take over, sheltered by the progressive liberals in the state. You hit the issues square on, and the amazing part is Brown and Boxer and leading in their respective polls. The cause of the declines are SO easy to see, so how could this be? Are the unionites and people looking for handouts that prevelant? If they win, California deserves what they get. They did it to themselves, and if they can't see that way out by now, there is no hope.

I live in Texas now, a red state. Unemployment is low, housing prices remain strong (and cheap), and the business environment is booming. Even during the recession. I feel sad for CA, and my family that still live there, but for me, I haven't looked back!
The first opportunity that I have to leave this sick state, I will do so without looking back.
I can't believe anyone could be such a poltroon as to write a long article about California's woes and never once mention the uncounted millions of illiterate peasants who have been permitted to flood the state and turn vast regions of it into third-world pestholes.
As a senior who has been here in the Soviet Republic of Ca. since '62, the real problem is the lemming like voters continue to elect in large numbers , liberal Dems in the Assembly and State Senate. To cap it off, they then will elect ole Jerry Brown who is not an eco. wizard. Then they keep electing two liberals like Babs and DiFi. The voters have the angst but they are not very bright when electing people who will not stop taxing and spending them and their heritage into bankruptcy. Then every 4 years , they get more brilliant by electing a Dem for Prez who is a socialist. That is the problem Joel.
I bid $1 per acre. But not a penny more.
I keep getting calls from companies wanting me to relocate to California, but the 8 to 1 cost spread in a reasonably sized home on top of the over 10% income tax rate make their offers woefully inadequate to have a comparable life in "paradise". To live there I would need triple my current net income and companies are loath to make that kind of pay offer.
the two big infrastructure projects that the author mentions as among what the "good" progressives did in the first-half- 20th century -- LA Aquaduct and Hetch Hetchy dam -- were both spectacular scams. Both pulled the wool over everyone's eyes to accomplish clearly larsonist things. For more on the acquaduct, see John Huston's "Chinatown" or any number of less fictionalized accounts.For Hetch Hetchy, do research on how its promoters bamboozled the Federal government into doing what they'd profit from, notwithstanding that it was an unneeded and unused dam that despoiled a priceless part of the Yosemite natural splendor.
We have to stop the progressive liberal agenda. But im not to sure if Meg Whitman is our New Ronald Regan. I feel she has been very wishy washy. Which in turn makes me feel that were gonna get another Arnold!
I made my first pilgrimage from the South East to California in 1976. I was a 20 year old pot-smoking hippie, looking for myself and utopia. It was a wonderful year-long adventure. Unfortunately, I found that I couldn't make a living wage just by partying, not even in California.

I went back a couple of years later, thinking that I was better equipped, with 2 more years of life experience, to try to make my place in utopia. Things had changed. There were street gangs now, and they were serious. The cost of living had grown more than my two years of life experience had prepared me for. I lasted for almost a year, once again.

I gave it one more shot in 1994. I decided a smaller community than Orange County might offer a more familiar setting, in which I would be able to flourish, so I went to the "five cities" community of Arroyo Grande. I now had a resume with 5 years of technical experience working for a defense contractor.

I couldn't get a job at a pizza shop. The "Crankster Gangster" illegals practically ruled the town. I camped in an abandoned walnut grove on the edge of town for over 2 months, because although I had money in the bank, I couldn't afford the first and last month's rent plus deposit and all the other deposits required to get an apartment.

I came back to the South East on a Greyhound, my vision of utopia on the West coast shattered forever. It had changed, radically changed. people were trying to move out, but they had underwater mortgages they couldn't escape. The gangs had taken over, including the state government. The utopian dream was dead.

California has done this to itself. They should have seen that they could not go on like this over 15 years ago, but they kept right on. They deserve no bailout from the rest of us. They should either go bankrupt and nullify all public employee union contracts, or fall into the ocean.
Will the last person to leave California please turn out the lights?
Illinois, Calif, New York, New Jersey, all Blue States that have been controlled by Democrat Majorities for years and long enough to try there taxing, spending and vote buying of public union members and pandering to illegal Aliens and seeing the results, all are bordering on bankruptcy.

Now Obama is following the same blueprint on a vastly bigger scale for the rest of American using 100,s of billion of the simulate money to reward Democrat supporters and to keep the under worked and overpaid union in jobs and buy welfare votes!.

The same mult-trillion dollar con job Obama is attempting, by giving Amnesty to the invading horde of Criminal & Uneducated Prolific breeding third world parasites to buy millions of welfare votes for the Democrat party with American citizens tax money.

With the future & further goal of turning the USA into a Spanish speaking Third World Slum modeled on Mexico but controlled Lock, Stock & Barrel by the Socialist/Democrat party Dictatorship of the United Sates of Mexico!
1.California the Golden state, American future, is fast becoming the poster child for an bankrupt third world State!
2.
An unholy alliance of Socialist Democrat politicians, Unions, and Illegal Aliens supporters are feasting at the trough of tax payers paid benefits while taxing & regulating business and the tax paying public into poverty.
3.
The pandering of Left Wing Democrat Politicians to their constituency of Illegal Aliens, open border supporters, and unions are driving business and citizens to other states & countries, while leaving the parasites & welfare leeches in an increasing bankrupt, crime ridden, dysfunctional state!
4.
For years California has ignored economics 101 by rewarding Public employee with wages and benefits that far exceed any in the private sector or any thing connected to common sense to buy their votes while importing poverty, Criminals and uneducated Peons from Mexico, which increased Medical, Welfare, Crime, Prison, etc. & adding a estimated 16 billion per year to Calif. State expense to provide for the invading horde of Illegal Aliens while exporting business and educated working tax payers.
5.
Like all Socialist & Marxist States the results have been a astronomical increase in social welfare, schooling, prison cost etc. and a lowing of Living standards, Education standards, Tax receipts & finally Bankruptcy.
6.
Failure to abide by our Constitution against invasion & enforce our Immigration laws and constraints on wages and benefits for public employees will result in turning the Golden State into MexiCalif and the end of the California dream!
7.
The policies of Obama and Wash. DC Democrats are intent on following Calif. policies and are rewarding the Lazy, Corrupt, Criminal, Greedy and Stupid while punishing the tax paying, Law abiding citizens that pulling the cart and carrying the load.
8.
Amnesty & Citizenship as a reward for their invasion of the USA, will result in the rest of the USA turned into a Spanish speaking third world cesspool, modeled on Mexico and follow California into a polluted, over populated, Spanish speaking third world Nation of Crime, Corruption, Poverty, Cruelly & Misery!
9.
This will result in a population depending on Welfare and the Democrat party, thus assuring the lock on power for the Socialist Democrat party of the United States of Mexico!
I meant "unanswered"...doah!
One answered question:

Has CA reached the point where >50% of the population "votes" itself a check through direct assistance, a job, a grant, a business that services the govt, etc. If so, party is over.

At that point, maybe we could sell CA to Mexico :-)...just have them assume the liabilities.
Bell,Ca should be a microism of public employee unions gone haywire. In one of the poorest cities in LA county, public employee unions went door to door to get votes to give themselves HUGE raises , some of them up to 50% , and the RIGHT to retire at age 50 with 95% of there highest level of pay. Such greed is unsustainable. The unions across the entire country, whether the NEA or the Seiu or the private unions like the UAW, are the reasons for this mess. They whine about the "greedy rich". the real greed is the union leadership, which has been robbing the pension funds for decades and now is time to pay the piper.
Fresno is not "California's Detroit". Detroit, the wasteland, was created by its inhabitants. The ruin of Fresno, with 40% unemployment, was created by the Democrats ruling California. And the enviros don't give a flying fandango about "the people", who constitute the human cancer destroying the planet.
Well said - Best article I've read in weeks.
the state shifted to a newer progressivism "which viewed the private sector the way the Huns viewed a city,as something to be sacked and plundered". Enter Obama.
In "The Republic", Plato posed a question : "Quis custodiet ipsos custodes? ". The direct translation is "Who guards the Guardians?"

This is loosely translated in popular culture as : "Who watches the Watchers?"

It's an interesting paradox about the question of power itself. And the answer for California is that "Noone watches the Watchers".

The question is not "why public employees are looting the tax base of California?". That answer is obvious : "because they can, they did it because we let them."

When talking of exorbitant salaries and mind boggling pension plans, this pattern of abuse of the tax base is repeated throughout the land.

If noone shine a light on this, then there is no hope and the path to ruin will become as sure as a plunge off a steep cliff.
I have lived in CA for 60 years and Joel Kotkin has it right. But, the most thriving economy within the state during those years was Orange County and until the last 20 years was Libertarian and not Progressive.
People in Unions are Americans too. You seem to not respect them as people because they differ in their opinions from you.
Prof. P. C. Patton August 09, 2010 at 5:26 PM
Bravo, Joel!
I am running a small business in California. Every day I wake up and wonder why I am still here. If Jerry Brown is re-elected I am done and off to Texas.
This article should be mandatory reading for every Democrat-inclined voter in California. Every word is true. I have lived it and seen it, from arriving here as a three-year-old with my parents in 1948, to the present catastrophe. California's "crisis" is self-inflicted, and the "public employee union and regulatory" disaster that has caused it was started by none other than the fossilized Democratic gubernatorial candidate. His views have not changed. If Californians, the majority of whom are not employed by government and do not receive direct government aid, re-elect this man, it will be an act of suicide.
Let us hope that those fleeing, leave this foolish ideology in California. We do not want this disease to spread!
Excellent piece, nothing but truth. Sorry to say, it will be unnoticed except talk radio.
You could not be more accurate in your description of the hostility towards business in California. Just last month, I moved my small business and the majority of my employees from So Cal to Las Vegas. My employees are happy as they now keep a much larger portion of their paycheck, their living expenses are much lower, and they have some breathing room in their pocketbook each month.

California is a failed state...it just doesn't know it yet.
So now comes the sanity test...is this state dumb enough to reelect Jerry Brown for a third term? Will we be returning the usual crowd of union hacks and Mexican nationalists to that Love-in known as the state legislature? I'm betting that we flunk, that we ignore the $60 billion budget and the $40 billion (and falling) revenues and return the same destructive crowd of free-spending half-wits to office and that this state will go belly up like a salmon that just laid its last clutch of eggs. See you on the soup line!
This article is a mixed bag. As the author points out, the state population is shrinking, not growing. So the need for infrastructure investments is not as great as he seems to think.

We need to get public employee costs under control. The average cop compensation in Oakland is almost $200K a year, for goodness sake. Government has been cutting services for 20 years to pay for employee cost increases - this must stop.

We need to get the state budget under control. We need to stop silly wasteful spending like the billions going to study a bullet train from LA to SF, or stem cell research. We need to cut the outstanding debt and free up money for other purposes.

I'd like to see major tax reform. Apply sales taxes to everything (including services) and cut the sales tax rate in half. Let property taxes go up by 3% a year instead of 2%, and cut the income tax rate.

And we need wholesale reform of state government. They don't do anything - they simply point fingers at each other.

But more infrastructure spending? Not so much.

Another excellent piece from Mr. Kotkin. I moved to CA from Louisiana 30 years ago and have been a sad witness to the decline of the once-Golden State. In fact, I am a recently retired state worker. But being in management left me with a jaundiced view the public-sector unions. It also allowed me some insight into how self-interested "advocates" for the downtrodden can eviscerate any attempt at rational reform. California currently suffers from a host of self-inflicted ills but I have little hope of a sea-change this election. The grip of the crackpot Left is still very strong. Even now they shriek that the solution is more taxation and even more illegal immigration. The latter, they argue, will make up for the flight of productive citizens from the state!
Bravo, Joel. A perfect summary:

"[A Liberal world view which sees] the private sector much the way the Huns viewed a city—as something to be sacked and plundered. The result is two separate California realities: a lucrative one for the wealthy and for government workers, who are largely insulated from economic decline; and a grim one for the private-sector middle and working classes, who are fleeing the state."
Wow. As a resident of L.A. County, the public assistance numbers quoted in this article were devastating!

I believe that either drastic change will occur or California will implode on itself as the middle and working class continue their exodus to greener pastures
California is a textbook example of how one of the world's strongest, most vibrant economies can be ruined by decades of bone-headed "feel good" liberal policies. And yet the idiot voters of California keep sending the same Democrats back to Sacremento and Washington again, and again, and again. As a wise man once said, "People ultimately get the government they deserve." I'm just glad I'm back in Texas now, a state where common sense still resonates.
Great article - where California goes the rest of the blue states, and maybe some red states as well, will follow. The Democrats thought they could have it all - be anti-business, pay loyal 'hard working' state employees lavish benefits, have grossly anti-business regulations, an anti-business tax policy and unreasonable environmental restrictions etc. Democrats simply import voters, who would see anything as better than what they came from. Add a grossly subservient media, a divided and just plain stupid opposition, the ability of unions to funnel money to the representatives that made the decisions on employment, and you get the once great state of California - and maybe the future of the United States. Without more years of a falling standard of living, nothing will change - unfortunately that's what's coming especially since California, which used to be the reddest of red states, can simply import more Democrats. So, California leads again - as the first State to declare bankrupcy.

How else are they going to deal with this - where will the money come from? If Republicans take the House, California won't get a dime from the feds, not that they deserve it. A classic tale of the grasshopper and the ant - except in California they are all grasshoppers!
Oe can only hope that the Federal Government will take a close look at California and make the discovery that when the outgo for public workers, going Green and public welfare exceeds to income to pay for these programs, then the economy cannot sustain itself. It is obvious that the Public workers are the lowest educated group and lead by the most extreme environmental groups, who know nothing about the environment or its sustainability or ecological settings. This means that tose who are smart enough to even vaguely understand what is happening,are leaving like rats on a sinking ship. The only problem, is when this occurs on the National level, where can the intelligent population flee to?
Thank you for this great information.
Wow!, you said it all Mr. Kotkin. I'm in the Central Valley. I am seeing first hand the results of years of neglect by the progressive movement. The worst culprits are Nancy Pelosi, Barbara Boxer and my own Congressman, Jim Costa. To think, Nancy Pelosi is Speaker of the House! This place looks like a dust bowl, but what's worse is the psychological impact on the unemployed. So many sad faces.
Excellent article, please distribute to the hapless (Toronto) Liberals as they are setting course to duplicate the California Model.
It's easy to criticize and omit substantive rebuttal arguments - nonetheless right-wing these commissioned polemics continue to apologize for the economic ruin supply-side policies have wrought since 1981, when the GOP took control.

The concentration of wealth and the deliberate strategy by right-wing aficionados to hinder effective governance of the public weal is the root of the problem
Yes, Richard, Californians come to my state to register and license their cars to avoid the taxes, ex-pats leave describing Ca as 'broken', spoiled Berekely students think its a sin to raise their tuition/fees and conduct a protest with the support of their tenured professors. They don't teach or learn much about business there but they have green studies. If Brown is elected, as hard as it is to conceive, he'll screw it up worse.
I only hope Ca is not the bell weather state it has been in the past or the rest of us are looking into our futures.
The best I've read on the subject
Insightful article. I have been fighting the excessive public sector pension battle for about 18 months now (locally in the San Diego area). The Unions and environmentalists seem not to think much beyond their narrow interests but are a tough opponent to battle. I'm not optimistic that wee can get the State back on the right track until much more pain to public services is felt. Hope that I am wrong.
The best laid plans aft gang fakked up.
Ballot measures making compensation in the government to be equal to or less than the "real world." Wrongdoing while serving in legislature shall be punished
severally and tried by peoples court, ballot measure would set the penalty and the courts. Peoples ballot to deal with tort reform, e.g. if the plaintiff does not win, they pay court costs.

Prisons to be a place for punishment not a rehab resting place. Illegals doing time there can do it in Mexico. Create tent city prisons in the Mojave, follow the model of "Sheriff Joe" in Arizona.

you want more of this? I've GOT more of this!!!

Breaking Bad: California vs. the Other States
by Richard Rider
Chairman, San Diego Tax Fighters
Version 1.68
Revised 20 July, 2010
Updated version online at: www.RiderBlog.NotLong.com
Phone: 858-530-3027

Here’s a depressing but documented comparison of California taxes and economic climate with the rest of the states. The news is breaking bad, and getting worse (I keep updating this fact sheet):

California has the 3rd worst state income tax in the nation. 9.55% tax bracket starts at $46,349 for people filing as individuals. 10.55% at $1,000,000 http://www.taxfoundation.org/files/bp59_es.pdf

By far the highest state sales tax rate in the nation. 8.25%. 7% is next highest (does not include local sales taxes)
http://www.taxfoundation.org/files/bp59.pdf Table #15

California corporate income tax rate (8.84%) is the highest west of the Mississippi (our economic competitors) except for Alaska. http://www.taxfoundation.org/files/bp59.pdf Table #8 -- we are 9th highest nationwide.

2010 Business Tax Climate ranks 48th in the nation.
http://www.taxfoundation.org/files/bp59_es.pdf

Fourth highest capital gains tax 9.55% http://www.thereibrain.com/realestate-blog/capital-gains-tax-rates-state-by-state/109/

Highest gasoline tax (averaging 67.0 cents/gallon) in the nation, 3.5 cents above second place Hawaii (April, 2010). When gas hits $3.00/gallon, we are numero uno – because unlike many states, we charge sales tax on gasoline purchases (built into the price). http://www.api.org/statistics/fueltaxes/ (also highest diesel tax)

California is ranked 27th worst in per capita property taxes (including commercial) – the only area where we are not in the worst ten states. But CA property taxes per home were the 10th highest in the nation in 2008.
http://www.taxfoundation.org/taxdata/show/251.html and http://www.taxfoundation.org/taxdata/show/1913.html

One of the highest state vehicle license car taxes. 1.15% per year on value of vehicle, up from 0.65% in 2008.
http://tinyurl.com/lrvmtd

California’s 2010 “Tax Freedom Day” (the day the average taxpayer stops working for government and starts working for oneself) is the 7th worst date in the nation – up from 28th worst in 1994, but down from 4th worst last year CA “improved” only because of our state’s soaring unemployment rate – the new tax dodge! http://www.taxfoundation.org/research/show/387.html

In 2009, 24 states raised their taxes at least 1% to collect $28.6 billion. California’s taxes went up over $12 billion – thus we were responsible for about 42% of all the state tax increases in the nation. http://tinyurl.com/2009CA-Tax

California has the 3rd highest unemployment rate in the nation. (June, 2010) 12.3%. National unemployment rate 9.5%.
http://www.bls.gov/news.release/laus.nr0.htm

California needlessly licenses more occupations than any state – 177. Second worst state is Connecticut at 155. The average for the states is 92. http://cssrc.us/publications.aspx?id=7707

1 in 5 in Los Angeles County receiving public aid. http://www.latimes.com/news/local/la-me-welfare22-2009feb22,0,4377048.story

Los Angeles Unified School District spends over $25,000 a year per student. http://tinyurl.com/LAUnified-25K

California has 12% of the nation’s population, but 36% of the country’s TANF (“Temporary” Assistance for Needy Families) welfare recipients – more than the next 7 states combined. Unlike other states, this “temporary” assistance becomes much more permanent in CA. http://weblog.signonsandiego.com/weblogs/afb/archives/034662.html

CA public school teachers the 2nd highest paid in the nation after NY. The average 2008-09 CA educator salary was $69,093 – 7.25% higher than the previous year’s $64,424 average. http://www.nea.org/assets/docs/010rankings.pdf Page 21, table C-18

California prison guards highest paid in the nation. http://www.caltax.org/caltaxletter/2008/101708_fraud1.htm

California is the worst ranked state for tax administration – another anti-business factor.
http://www.sacbee.com/static/weblogs/capitolalertlatest/2010/03/cal-rated-worst.html

California now has the lowest bond ratings of any state, edging out Louisiana. http://tinyurl.com/CA-worst-bond-rating

As of 2008, California ranks 46th worst in “lawsuit climate.” http://tinyurl.com/CA-44th-lawsuits

America’s top 600 CEO’s rank California “the worst place in which to do business” for the fifth straight year (3/2010). But here’s the interesting part – they think California is a great state to live (primarily for the great climate) – they just won’t bring their businesses here because of the oppressive tax and regulatory climate.
Consider this quote from the survey (a conclusion reflected in the rankings of the characteristics of the state): “California has huge advantages with its size, quality of work force, particularly in high tech, as well as the quality of life and climate advantages of the state. However, it is an absolute regulatory and tax disaster.” http://tinyurl.com/CEO-states-rank-2010

California, a destitute state, still gives away college education at fire sale prices. Our community college tuition is by far the lowest in the nation. How low? Nationwide, the average community college tuition is almost four times higher than California CC’s. This ridiculously low tuition devalues education to students – resulting in a 30+% drop rate for class completion. In addition, 2/3 of California CC students pay no tuition at all – filling out a simple unverified “hardship” form that exempts them from any tuition payment, or receiving grants and tax credits for their full tuition. http://tinyurl.com/ygqz9ls

On top of that, California offers thousands of absolutely free adult continuing education classes – a sop to the upper middle class. In San Diego, over 1,400 classes for everything from baking pastries to ballroom dancing are offered totally at taxpayer expense. http://www.sdce.edu

Protests about increased UC student fees ignore one crucial point -- all poor and most middle class students don't pay the “fees” (our state’s euphemism for tuition)! There are no fees for California families with under $70K income. Moreover, Pell Grants and federal tuition tax credits cover the total 2009-10 fee increases for nearly 3/4 of all undergraduates with household incomes below $180K. http://www.universityofcalifornia.edu/blueandgold/ and www.universityofcalifornia.edu/news/article/22415

California residential electricity costs an average of 37.2% more than the national average (far higher in San Diego County). For industrial use, CA electricity is 44.6% higher than the national average (December, 2009).
http://www.eia.doe.gov/cneaf/electricity/epm/table5_6_a.html

It costs 38% more to build solar panels in California than in Tennessee – which is why European corporations have invested $2.3 billion in two Tennessee manufacturing plants to build solar panels for our state. http://tinyurl.com/llussb

Consider California’s net domestic migration (migration between states). From April, 2000 through June, 2008 (8 years, 2 months) California has lost a NET 1.4 million people. The departures slowed in 2008 only because people couldn’t sell their homes. http://www.mdp.state.md.us/msdc/Pop_estimate/Estimate_08/table5.pdf
These are not welfare kings and queens departing. They are the young, the educated, the productive, the ambitious, the wealthy (such as Tiger Woods), and retirees seeking to make their pensions provide more bang for the buck. The irony is that a disproportionate number of these seniors are retired state and local government employees fleeing the state that provides them with their opulent pensions – in order to avoid the high taxes that these same employees pushed so hard through their unions.

As taxes rise and jobs disappear, we lose our tax base, continuing California’s state and local fiscal death spiral. This downward spiral must stop NOW.

NOTE: To see the latest version of this “Breaking Bad” column, plus other taxpayer items of interest, go to my blog at www.RiderBlog.NotLong.com. There is an “RSS Feed” button to have notices of blog updates sent to you automatically.