A fifth-generation Californian laments his state’s ongoing economic collapse.
It’s not easy watching California self-destruct. After all, my four sons are 6th generation Californians. One relative of ours journeyed here prior to the Gold Rush when the state population was just a handful of people. Family lore has it he was a gunslinger who, victorious in a gun duel, headed to California to avoid the law. He ended up ranching on what is now known as Mammoth Mountain. Other family members took part in the gold rush and one ended up discovering gold in 1895 in the Mojave Desert. My grandparents arrived in Kern County in the 1930s and worked as teachers educating the children of oil workers shortly after the discovery of oil in that region.
Proud of my heritage, I had this urge to run for the state legislature, so I did and I won. I was hoping I could do something in Sacramento to slow the decline of the Golden State. But it was not to be. I quickly discovered that the legislature was so dominated by far left ideologues, there was nothing that could be done to reverse course. My Democrat colleagues were not concerned one bit about how their policies were destroying the economic golden goose that made California so famous worldwide. Indeed, they actually believe their big government and nanny state policies have made California the model of how progressives can succeed in governing. Seriously.
The entire time I served in Sacramento, the Democrats were focused almost exclusively on legislation which either had to do with wealth redistribution or creating new “rights” for alleged victims such as illegal aliens, criminals, union members, homosexuals, transgenders and other “oppressed” groups. And it’s no different today. The reality is that the average middle class Californian hasn’t had representation in the halls of Sacramento for decades. Indeed, I predict the destruction of California will, unfortunately, be one of the great legacies of the progressive movement.
Indeed, the Democrats hold super-majorities in both legislative chambers. The Assembly has been in Democratic hands since the 1970 election, except for 1995-1996. The Senate has been controlled by the Democrats continuously since 1970. As for the Governor, well, the last semi-real Republican Governor was Pete Wilson, who ended his term in 1999. However, action superstar and former champion body builder Arnold Schwarzenegger, a Republican, did serve as Governor from 2003-2011 but essentially governed as a Democrat, even to the point of hiring leftists to be his key staff. So much for his tough guy image. Progressive hero Jerry Brown has served as Governor since 2011.
Sure, the liberals like to claim California socialism is working by pointing to the much heralded statistic that “California’s economy is the 6th largest in the world” as calculated by the state’s Department of Finance. Indeed, California’s $2.62 trillion economy is larger than that of France, Canada, Brazil, Russia, and Italy. However, that GDP stat does not factor in California’s cost of living, which is 36.2% higher than the national cost of living. As Carson Bruno writes in Real Clear Markets, “using the cost of living adjusted data from the International Monetary Fund and adjusting California’s GDP data provides a better snapshot of California’s economic standing in the world. Doing so shows that California is actually the 12th largest economy — a drop of 6 spots — and actually puts the state below Mexico.”
Moreover, as Bruno points out, Silicon Valley “accounted for 50% of California’s private industry real GDP growth.” In other words, without a few dozen mega profitable high-tech Silicon Valley firms such as Apple, Google, and Facebook, California’s GDP would be significantly smaller.
However, as economic blogger Richard Rider points out, the aggregate GDP statistic is really not a good indicator of a state’s economic health, especially since one industry appears to be propping up the “6th largest economy” myth. California has over 39 million people, more than any other state, so a far more accurate assessment of its economy, Rider writes, would be per capita GDP as compared to the rest of the country. After adjusting the GDP figures to account for the cost of living (COL), the Golden State ends up with a paltry 37th place ranking within the U.S.A., with a $45,696 per capital GDP. Even rustbelt states, such as Michigan and Ohio, have a higher adjusted per capita GDP. Despite Silicon Valley’s high-tech giants, California barely squeezes past impoverished New Mexico. Rider also reports that when one looks at per capita GDP stats for the rest of the world, California ranks 19th, but those stats don’t factor in the COL data; if they did, California would be even further down the rankings internationally.
One should not also assume that high-tech companies are a permanent feature of California’s economy. Already, the extremely high cost of living in Silicon Valley has, since 2016, caused more Silicon Valley employees to leave the state than it has attracted. With a few high-tech companies having left California for other states such as Virginia, Texas and North Carolina, it’s only a matter of time before this turns into a flood.
But it’s not just Silicon Valley employees fleeing California; it’s productive — and job-creating — citizens from all over the state. As Joel Kotkin and Wendell Cox wrote in the Mercury News last April, “the largest group of outmigrants tends to be middle-aged people making between $100,000 and $200,000 annually.”
Indeed, California has done everything possible to make it difficult for businesses and employers to produce goods and services. California now has the highest state income tax rate and the highest state sales tax rate in the country. Our gas tax rate is fourth-highest, but if you add in the 10-12 cent “cap and trade” cost per gallon, we have the highest gas tax in the country. Based on 2014 numbers, California’s single-family residence property tax is the eighth highest in the country with the median homeowner property tax bill 93% higher than the average property tax bill for the other 49 states. As for the state’s corporate income tax rate, it is also eighth in the country. And let’s not forget our small business tax, a minimum of $800, even if no profit is earned.
Overall, the Tax Foundation ranks California as fifth worse in overall tax burden, but the state is especially hostile to its high earners who start businesses and create most of the jobs. Indeed, the top 1% pays 50% of all state income taxes. Moreover, the Small Business and Entrepreneurship Council ranked California as having the worst anti-business climate in the country; the American Tort Reform Foundation ranks the state as the “worst state judicial hellhole” in the U.S. and the national Chamber of Commerce rates California as having the fourth-worst business climate.
If California is such a prosperous state as liberals claim, why does it have the highest poverty rate in the nation? According to the Census Bureau, the poverty rate is 23.4%, which is 17% higher than second place Nevada. Indeed, while California has 12% of the nation’s population, it is home to 33% of the nation’s TANF (Temporary Assistance for Needy Families) welfare recipients, more than the next seven states combined.
What’s clear is that the producers are leaving the state and the takers are coming in. Many of the takers are illegal aliens, now estimated to number over 2.6 million. The Federation for American Immigration Reform estimates that California spends $22 billion on government services for illegal aliens, including welfare, education, Medicaid, and criminal justice system costs. Liberals claim they more than make that up with taxes paid, but that’s simply not true. It’s not even close. FAIR estimates illegal aliens in California contribute only $1.21 billion in tax revenue, which means they cost California $20.6 billion, or at least $1,800 per household.
Nonetheless, open border advocates, such as Facebook Chairman Mark Zuckerberg, claim illegal aliens are a net benefit to California with little evidence to support such an assertion. As the Center for Immigration Studies has documented, the vast majority of illegals are poor, uneducated, and with few skills. How does accepting millions of illegal aliens and then granting them access to dozens of welfare programs benefit California’s economy? If illegal aliens were contributing to the economy in any meaningful way, California, with its 2.6 million illegal aliens, would be booming.
Furthermore, the complexion of illegal aliens has changed with far more on welfare and committing crimes than those who entered the country in the 1980s. Heather Mac Donald of the Manhattan Institute has testified before a Congressional committee that in 2004, 95% of all outstanding warrants for murder in Los Angeles were for illegal aliens; in 2000, 23% of all Los Angeles County jail inmates were illegal aliens and that in 1995, 60% of Los Angeles’s largest street gang, the 18th Street gang, were illegal aliens. Granted, those statistics are old, but if you talk to any California law enforcement officer, they will tell you it’s much worse today. The problem is that the Brown administration will not release any statewide data on illegal alien crimes. That would be insensitive. And now that California has declared itself a “sanctuary state,” there is little doubt this sends a message south of the border that will further escalate illegal immigration into the state.
Indeed, California goes out of its way to attract illegal aliens. The state has even created government programs that cater exclusively to illegal aliens. For example, the State Department of Motor Vehicles has offices that only process driver licenses for illegal aliens. With over a million illegal aliens now driving in California, the state felt compelled to help them avoid the long lines the rest of us must endure at the DMV. And just recently, the state-funded University of California system announced it will spend $27 million on financial aid for illegal aliens. They’ve even taken out radio spots on stations all along the border, just to make sure other potential illegal border-crossers hear about this program. I can’t afford college education for all my four sons, but my taxes will pay for illegals to get a college education.
And let’s not forget the impact illegals have upon employment and wages. Illegal aliens are driving down wages across the board in California, especially in the service and construction industries. The people who suffer the most are legal citizens who lose out jobs to illegals willing to work for rock bottom wages. What most people do not understand is that illegals enter the country without their families and as many as ten of them will pile up in a cheap apartment. With very few expenses, they are able to bid on jobs at a rate most legal citizens cannot afford to work for.
I served for six years in that God forsaken capital, Sacramento, and the one thing I found most bizarre was the intense focus by my Democrat colleagues on creating agencies and programs that cater to illegal aliens and thus attract even more illegal aliens to California. Such pro-illegal alien policies undermine the hundreds of thousands of legal minorities who work in the service and construction industries, but strangely the biggest boosters of such policies were the Democrat legislators of Hispanic descent. It’s as if the entire Hispanic delegation in both houses made a concerted decision to abandon legal Hispanics and to represent only Mexican citizens. I find that odd and a violation of their oath of office, but I also believe that this is all about political power. The more illegals, the more registered Democrats.
But one can’t be too surprised; many of these Hispanic elites have little in common with middle class Californians. While in college, many belonged to a Hispanic separatist movement called Movimiento Estodiantil Chicano de Aztlan (MEChA), which believes our borders should be eliminated and that the entire southwest USA was stolen from Mexico. In other words, these extremists do not even believe in the notion of citizenship or borders.
With the state now funding over 250 agencies that intrude into every aspect of its citizens’ lives, it is clear that government spending is completely out of control. California political writer Steve Frank estimates that the real state government debt is $2.8 trillion. Since the state can’t print money like the feds do, it’s only option is to assess its overtaxed citizens more fees and taxes. The truth of the matter is that California would be far better off if they randomly selected 120 people out of the phone book to serve in the Assembly and the Senate, since that way, many will actually be normal people with private sector experience. As it stands now, many state politicians have never held a real job and have little in common with the vast majority of hard-working Californians.
Today, large sections of California look like a Third World country with ramshackle buildings, junky cars and trash strewn everywhere. We even have outbreaks of Hepatitis A, just like the Third World has. A state cannot chase away the producers and attract the takers year after year without economic consequences. That doesn’t end well so there’s little doubt California is headed toward economic disaster. Perhaps it is time for conservatives to support California’s succession movement before the state completely collapses and comes begging the federal government for a bailout.
Written by Steve Baldwin for the American Spectator ~ October 19, 2017.
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