By Steve Parkhurst
This column by Joel Kotkin recently appeared in the Orange County Register. It is one of the best modern day summaries of California’s history, as well as its politics. I have excerpted two rather informative sections which I believe help to summarize the current state of the problems in California, and by extension, in the United States.
The tragedy begins with the collapse of a governance system once widely hailed as a leader in efficiency and foresight but which now perpetually teeters at the brink of insolvency and suffers among the worst credit ratings of all the states. Only 20 years ago, the state’s fiscal debt per capita was just below the national average; now it ranks consistently toward the bottom No surprise, then, that California routinely ranked as the “worst governed” state in America.
This poor performance has consequences, particularly in terms of business. Today, CEOs rank California as just about the worst place to do business in the country, and have for a remarkable eight years in a row. And it’s not just the plutocrats who are angry; a survey by the economic forecasting firm EMSI shows that, in 2011, California also ranked 50th, just ahead of Michigan, in new business startups.
CARTOON BY LISA BENSON
The column closes with this:
Of course, there remain pockets of private sector strength, such as Silicon Valley and Hollywood, as well as the various biomedical and biotech companies that still thrive in places such as Orange County and San Diego. These, however, increasingly represent legacy industries, beneficiaries of past accomplishments and better entrepreneurial conditions. Yet, even here, despite the current tech boom, California’s position over the past decade has declined relative to more business-friendly states.
In the immediate future, we should expect more of the same from our one-party government. Flush from the passage of Prop. 30, tax increases backed by public sector unions, there is little to restrain them beyond occasional resistance from Gov. Brown. Having made California’s income taxes the highest in the U.S., legislators and local officials are already busily concocting new taxes, fees and another spate of bond issues to prop up the nation’s most-cosseted public sector, and, of course, fund its rich pensions at the expense of mostly middle-class taxpayers.
Indeed the emphasis on income taxes, representing now close to half of state revenue, creates perverse economic outcomes. With their funds hidden in overseas accounts and other dodges, Hollywood moguls and their Silicon Valley counterparts may hang around, mouthing progressive shibboleths while dining exquisitely. But there is clearly erosion among the less-glamorous entrepreneurial class. The number of households earning above $300,000 dropped by 45,000 from 2006-09, according to the Department of Finance, while those earning under $100,000 has grown by more than 180,000. It’s likely that Prop. 30 will accelerate this trend.
But it’s not only taxes that will depress growth. Our Mad Hatter one-party, public-sector-dominated state seems keen to press its regulatory assault on employers and job creators. With climate change-related legislation certain to boost already high energy costs, we also can expect industries, from food processing to semiconductors and aerospace, to continue heading to friendlier locales.
Unless these policies are challenged, California will continue to underperform well below its potential. Even worse, a state that created the modern American Dream of upward mobility will continue to devolve toward a kind of neofeudalism dominated by a few rich, with many poor and a well-fed, tenured government caste. The only way to halt this continuing farce in Sacramento is for Californians of all backgrounds to recognize that government that so earnestly claims to serve “the people” is doing anything but that.
California does not just need new leaders, it needs real leadership. There are good candidates to look toward. I have mentioned Omar Navarro in Torrance in the past. Omar is a great example of new generation thinking and activism. Omar will look to tackle the issues of Torrance as a member of the city council, and it is imperative for the citizens of Torrance to listen to an individual whose generation will ultimately be affected by and responsible for the bad decisions being made by the leaders in power today.
You might also wonder, why focus on a single city, like Torrance, for example? The reason is simple: all races matter, all elections matter, all elected officials matter. We have to build a support team, a farm system if you will, of candidates and office holders. We have to compete in all elections and in all races, and most importantly, for every vote.
Not all consulting firms are willing to work the lesser known races, many view anything less than a congressional race as a waste of time, or typically, as not profitable enough. We do not take that view. We are building for the future. While we are looking at 2014, we are also looking at 2013 and 2015 and 2016 and 2018. We are not like the others, just looking for the next election, we are working toward a movement, something that lasts longer than just the next election cycle.
As always, you can learn more about what we do and how we do it by following this blog. Feel free to leave a comment, or engage us on twitter @GPHconsulting.