How California Can Prosper Once More

If you’re looking for some down to earth analysis of the current problems in California, it’s hard to find a better analyst than Joel Kotkin. He’s a long time resident of the state, knows its economics and politics and usually bases his conclusions on sound data and logic.

For that reason, I was happy to see a piece in New Geography disecting the current problems and offering a prescription for a comeback. Kotkin recounts the growth and prosperity that was visited upon the state largely through the efforts of an enlightened political leadership. He points out that the opportunity that was created acted as a magnet for immigrants from all over the country and led to the emergence of a vibrant and aspirational middle class. Somewhere along the line the dynamic changed and that same middle class either fell silent or more ominously began to leave the state.

Today, Kotkin sees them squeezed between a political left comprised of very wealthy individuals and the public employees unions. In effect politically neutered. However, he discerns in the recent elections which soundly defeated all of the initiatives intended to pull California out of its downward spiral a revival of middle class engagement.

The good news is that the middle class shows signs of stirring. The nearly two-to-one rejection of the governor’s budget compromise reflected a groundswell of anger toward both the Terminator and his allies in the legislature.

Simply put, California voters sense we need something more than an artful quick fix built to please the various Sacramento interest groups. Required now is a more sweeping revolutionary change that takes power away from the state’s most powerful lobby, the public employees, whose one desired reform would be ending the two-thirds rule for approval of new taxes and budgets.

Middle-class Californians are asking, with justification, why we should be increasing taxes–we’reranked sixth-highest in the nationto pay for gold-plated state employee pensions as well as an ever-expanding social welfare program. Although state spending has grown at an adjusted 26% per capita over the past 10 years, it is hard to discern any improvement in roads, schools or much of anything else.

As an opening gambit, the right’s solution–strict limits on state spending–makes perfect sense. However, long-lasting reform needs to be about more than preserving property and low taxes. To appeal to the state’s increasingly minority population, as well as the younger generation, a reform movement also has to be about economic growth and jobs.

Kotkin proposes three solutions to the current impasse. He believes the poser of Sacramento has to be broken, the state needs to develop a comprehensive economic plan aimed at restoring the vitality of its basic industries and a new middle class political coalition that includes elements of the right and the left has to arise and become an effective voice in politics.

One couldn’t quibble with his recommendations but whether they are reasonably achievable is a matter for debate. The power in Sacramento serves the interests of many economic interests as well as not only the California political establishment but the national one as well. Breaking that stranglehold may prove well nigh impossible. A realistic economic development plan — note the emphasis on realistic — would make great sense but pulling together the disparate interests of that huge economy and aligning them behind a common plan is a monumental task. As for getting liberals and conservatives to unite in a common purpose, well …

But it’s easy to stand back and say how hard all of this would be. Joel Kotkin at least has put something on the table other than a simple bailout. In fact, we all probably ought to think about the sermon he’s preaching. It isn’t just California that has ceded too much power to too few.

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