New Joel Kotkin Report – Our Town: Restoring Localism

We would like to encourage everyone to take a look at this easy to read new report by Joel Kotkin. If you want to understand the direction that we need to work toward, this is it.

Read this important new report from Joel Kotkin, Our Town: Restoring Localism.


Kotkin: Prescription for an Ailing California

By Steve Parkhurst

Orange County Register - GPH Consulting

Last week I posted about a column by Joel Kotkin that had previously appeared in the Orange County Register. Well, Mr. Kotkin was at it again recently with another column in the Register, also about California’s incredible political problems, but this time with some sound solutions to California’s dismal lack of employment opportunities. Because of the importance of most of what Mr. Kotkin had to say, I could have posted the column in its entirety. Instead, I have excerpted the most important segments below.

The column begins:

Only a fool, or perhaps a politician or media pundit, would say California is not in trouble, despite some modest recent improvements in employment and a decline in migration out of the state. Yet the patient, if still very sick, is curable, if the right medicine is taken, followed by the proper change in lifestyle regimen.

The first thing necessary: Identify the root cause of California’s maladies. The biggest challenge facing our state is not climate change, or immigration, corporate greed, globalization or even corruption. It’s the demise of upward mobility for the vast majority of Californians, and the rise of an increasingly class-ridden, bifurcated society.

California’s class problem spills into virtually every aspect of our malaise. It is reflected in both the nation’s highest poverty rate, above 23 percent, and a leviathan welfare state; California, with roughly 12 percent of the population, now accounts for roughly one-third of the nation’s welfare recipients. This burgeoning underclass exacerbates the demand for public services, deprives the state of potential taxpayers and puts enormous pressure on the private sector middle-class to come up with revenue.
The column continues later:

Conservatives generally have recoiled from a class-based analysis, hoping to play on ethnic or cultural fears to advance their agenda of lower taxes and less regulation. Their incoherence and inability to adjust to changing demographics have left them increasingly irrelevant.

On the other hand, progressives feel comfortable with class as an issue, but see more regulation and ever higher taxes on the private sector as the solution. Yet the experience of the past decade has shown their folly, as California’s middle class has continued to shrink, and poverty has worsened, particularly in the state’s interior. The dangers of a large permanent underclass of unemployed and underemployed should be clear even to the most dreamy progressive.

Essentially, there is only one practical solution to this dilemma: a program that promotes economic growth.

Then there’s this:

Other proposed bromides, like Gov. Jerry Brown’s promised 500,000 “green jobs,” need to be dismissed for what they are – stories we tell our children so they will fall asleep. High-speed rail, another modern-day Moonbeam program, is seen, even by many progressives, such as Mother Jones’ Kevin Drum, as an “ever more ridiculous” boondoggle based on “jaw-droppingly shameless” assumptions.

Instead of delusion, California needs policies that can boost economic growth in precisely those areas – construction, agriculture, manufacturing and energy – with the best prospects for creating good, high-paying jobs for both blue- and white-collar Californians. Yet, right now the Legislature and, even more so, the empowered state apparat, seem determined to do everything they can to strangle an incipient recovery in these industries.

Sadly, much of this is done in the name of the environment, but often based on dubious assumptions. Laws that seek to reduce water allocations to the Central Valley are justified as protecting a bait fish, but create windswept new deserts, along with shocking poverty, in the state hinterland. It is no longer enough to protect the still-wild environment; mankind itself must be pushed away from areas that, in some cases, for generations, has provided food for the world, income for families and revenue to the state.

Concerns over climate change have justified much of the state’s regulatory tsunami. Yet it is absurd to assert that California by itself can change global climate conditions in any meaningful way, given that the big increases of carbon emissions are all coming from the developing world; overall, America’s emissions already are dropping far more quickly than in other high-income parts of the world, largely due to the natural gas boom.

Kotkin closes with this:

On the environmental side, these policies could have an overall negative effect by driving both people and industries to areas that, because of climate and regulatory environment in their new homes, likely will expand their carbon footprint. Arguably the best thing California can do to reduce global carbon emissions would be to boost its industrial profile. The state also should be leading the shift to natural gas, which California, a potentially big player, so far largely has refused to join.

Another great opportunity lies in housing, a key source of both white- and blue-collar jobs. Population growth may have slowed, but the pent-up demand, largely from immigrants and millennials, for single-family homes, remains potentially strong. If the supply was increased, and prices moderated, homebuying would become more attractive for families with children. Emissions could be cut in more family-friendly ways, by encouraging more fuel-efficient cars, the dispersion of industry and, most particularly, telecommuting.

Sparking the revival of these basic industries and higher-wage employment would enhance California’s budget situation over time far more than increasing taxes on the remaining residue of entrepreneurs and professionals. Energy work, in particular, pays high wages, often more than for many tech jobs, and both manufacturing and construction generally provide higher incomes than the low-wage service work that has become the only option for millions of Californians.

Getting kids from the Central Valley or East Los Angeles working on housing sites, factories and energy facilities is both the most humane, and practical, way to right our fiscal ship. Growth in these industries would also spur the knowledge sector of the economy; many of the strongest gains in STEM (science, technology, engineering and mathematics) jobs in recent years have occurred in manufacturing regions, such as Detroit, or in the energy belt, notably Houston. California’s technical know-how should not be expended simply on developing computer games and social networks; resuscitating the tangible economy would also diversify employment opportunities for the highly skilled.

Government can play a critical, even determinative, role here. But it needs to shift priorities from redistribution and wealth suppression to providing the basic infrastructure essential for a growth economy. It means transforming our education system from a jobs and pension program for public sector workers and corporate rent-seekers to a focus on providing our economy with the skills – including those used in basic industries – needed for a revived California. It means spending money on the kind of infrastructure, such as gas pipelines, roads, urban bus lines, water and energy systems, that can spur growth instead of misallocations such as high-speed rail and subsidized green energy boondoggles.

This back-to-basics approach could restore California’s aspirational promise, and not only for a favored few in a handful of favored places, but for the majority of our people, from the mountains to the sea.

It is also worth nothing that left unchecked, the Leftist green movement will bankrupt this entire country. The green movement is full of money-sucking boondoggles, similar to those in California, which serve two purposes: they satisfy the politics of good intentions and they drain money from the coffers which might otherwise fund necessities.

I will again refer you to my post from last week on the importance of electing solid candidates to all offices and really building a farm team of office holders. States like California are out of control. The state legislature is run by the Left, they have a two-thirds super majority, which means they can pass tax hikes as needed, and all the Republicans can do is watch. The state needs local leaders (city and county leaders) to take control and start demanding that power reserved for the local level, be returned to the local level. All other states should take heed as well. If your state does not operate this way or offer this sort of mindset, it is time to change that.

If and when you are ready, we are ready to talk with you. Connect with us any time.

Kotkin: California’s Politics of Farce

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.

Article Tab: image1-Joel Kotkin: California's politics of farce

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.