Book describes CA problems, how to fix them: Part 1

November 12, 2013 - By John Seiler

Beholden State coverThis is Part 1 of a two-part series. Part 2 is here.

If you listen to Gov. Jerry Brown and his allies, “California is back” from the deficits and dysfunction of a few years ago. Not so fast. A new book examines the problems that still plague the state — and will continue to do so until sensible reforms are enacted.

The Beholden State: California’s Lost Promise and How to Recapture It” is a collection of essays edited by Brian C. Anderson, the editor of City Journal, which is published by the Manhattan Institute; and which has a special California edition edited by Ben Boychuk. So the book is solidly grounded in experts on the Golden State.

It is the “Beholden State” today because it is beholden to so many mistakes of the past, which are dissected in the book’s essays: overweening union power, a dysfunctional tax code, broken roads and failing schools. Fortunately, the book also provides essays showing how to make things better — without the Pollyannaish gloss put on things by the governor.

The forward is by Bill Simon, who lost a bid for governor in 2002 to then-Gov. Gray Davis, who ended up recalled the next year. Writing of the massive exodus of businesses during the years of Davis and his successor, Arnold Schwarzenegger, Simon laments, “I’ve lost count of the business people I know personally who have either decided to expand their operations out of state or simply pulled up stake and left entirely.”

He points to the “endless accretion of regulations,” in particular AB 32, the Global Warming Solutions Act of 2006, which Schwarzenegger signed. It greatly increases the cost of electricity, boosting business costs. And Simon points out that California’s public schools, “once among the nation’s best, now compete with Mississippi’s for the dubious distinction of the lowest student achievement in reading and math.”

Teachers’ unions

Which brings us to “The Worst Union in America,” a chapter by Troy Senik, a columnist and member of the editorial board of the Orange County Register (where I also write editorials). He’s writing about the California Teachers Association. He points out that the decline began in 1975 when Brown, during his first stint as governor, signed the Rodda Act, allowing collective bargaining for teachers’ unions. As I have described it, this meant teachers elected their own bosses; so they sit on both sides of the bargaining table, as workers and as the employer (by electing pliable legislators and local school boards).

Mandatory dues of up to $1,000 a year per member fatten the CTA’s coffers. During the decade of the 2000s, the union spend $210 million on political campaigns to maintain its power and to keep the tax money flowing to high pay, lucrative pensions and the union’s own coffers.

The kids? Union power ensured “stifling reform efforts at the local level,” Senik writes. It has made it nigh impossible to fire even the worst teachers. The Los Angeles Unified School District, “home to 33,000 teachers — has dismissed only four” in the past decade.

The California State Teachers’ Retirement System has “about $56 billion in liabilities.” CalSTRS itself recently announced it needs $4.5 billion a year for 30 year to remain solvents. That amount was not included in the fiscal 2013-14 state budget Brown signed in June, meaning his boast of it being “balanced” was not accurate.

As Senik notes, the real tragedy here is the loss of generations of students who have been badly educated; and who will not be contributing to the state’s economy at their full potential.

Anti-Business

That’s assuming there even will be jobs for these public-school graduates, even those who went to a decent school. In one of four essays in the volume, Steven Malanga, senior editor at City Journal, takes on, “Cali to Business: Get Out!” He also has written “The New New Left,” a book which I reviewed for the Register.

His chapter in the new book is subtitled, “Firms Are Fleeing the State’s Senseless Regulations and Confiscatory Taxes.”

He notes that California, despite somewhat higher taxes than other states, long was a magnet for business and jobs because of its ideal climate, “a world-class public university system” that churned out able workers, “sturdy infrastructure” and “a history of innovative companies.”

Many companies still innovate, but most are high-tech firms with few employees located in Silicon Valley or San Francisco. The latest example was Twitter’s IPO, which just created 1,600 new millionaires and $2.2 billion in new revenue for the state. Great for them. But Twitter, Facebook, Google and the other firms have not created the millions of middle-class jobs that departed when much of the aerospace industry left in the early 1990s.

Those jobs aren’t coming back, Malanga says, because “California has transformed into a relentlessly antibusiness state,” whose remaining redeeming features — the weather still is great — “haven’t been enough to keep firms from leaving. Relocation experts say that the number of companies exiting the state for greener pastures has exploded.”

He recites how Gov. Gray Davis, upon taking office in 1999, signed 33 bills the California Chamber of Commerce labeled “jobs killers.” And despite a pro-business orientation during Gov. Arnold Schwarzenegger’s first two years in office, 2003-05 — such as the 2005 workers’ compensation reform — the anti-business onslaught has contiued. After losing his Reform Slate in November 2005, Schwarzenegger switched and became anti-business. Brown, with the $7 billion tax increase of Proposition 30 last year and numerous anti-business bills, also has been anti-business.

After an anti-business tax and regulatory environment, Malanga also brings up the state’s position as “America’s most expensive litigation environment for firms.”

CA vs. CA

The always insightful Joel Kotkin, now a professor at Chapman University and columnist with the Orange County Register, writes on, “The Golden State’s War on Itself: How Politicians Turned the California Dream Into a Nightmare.”

He writes that, from 2003 to 2007, the state’s population grew by just 5 percent. But “state and local government grew by 31 percent.” I would add that these were the years of Schwarzenegger, a Republican governor who was elected during the 2003 Gray Davis recall precisely because voters wanted to rein in state spending and endemic deficits. Arnold promised to “blow up the boxes” of state waste and bureaucracy — but ended up expanding the boxes.

Moreover, the state’s percentage of overall U.S. employment has dropped a remarkable 10 percent since 1990. Kotkin contrasts the old progressives, such as Gov. Hiram Johnson and other reformers of the 1910s through the 1950s, who promoted business and growth to advance prosperity, with the modern “progressives,” such as Gov. Jerry Brown (both in the 1970s and now), who push restrictions on growth.

The slack was supposed to be taken up by the “green economy.” But instead of the reasonable regulations of “conservation” efforts in the last century, now, Kotkin writes, the greens are “an impediment to social and economic progress.” In particular, regulations such as AB 32 have severely curtailed industrial jobs, which are higher paying that service jobs.

In this new “progressive” economy, only high-tech CEOs and government workers are prospering. The way back to “the state’s promise,” Kotkin urges, is through “only sustained, broadly based economic growth.”

Part 2 will be published tomorrow.

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Comments(6)
  1. LetitCollapse says:

    So far Mr. Anderson made some very valid points. The public union influence and the anti-business culture have proven to be 2 nails in California’s coffin for sure. A state cannot chase away its producers who pay the bills while adding more parasites who either pay taxes with recycled tax dollars or pay no taxes at all without eventually colliding head-on with a brick wall.

    I sure hope Anderson addresses the poverty rate in California and Brown’s (and the democrats) relentless crusade to invite even more indigents to California by giving illegal aliens CA drivers licenses and enacting the ‘Trust Act’ which forbids local authorities from cooperating with the Feds by turning over jailed illegal aliens for deportation unless they’ve committed serious VIOLENT felonies. Non-violent illegal felons and those just convicted of misdemeanor assault (and other misdemeanors) are allowed to remain in CA after released from jail. Do you think that might be a magnet for more illegal indigents to move to California, not just from south of the border – but from other states? And what do you think that would do to our already prize winning 23.8% poverty rate? Poverty = more transfer payments, higher crime and more blight. Now is it clear to you why the producers are fleeing?

    For every action there is a reaction. For every cause, an effect.

  2. LetitCollapse says:

    Oh, btw, did you notice that when the California legislators approved the “Trust Act” which basically ordered local authorities to DEFY federal law by refusing to turn over jailed illegal aliens to federal authorities for deportation unless the aliens have been convicted of VIOLENT felonies (non-violent felonies are ok) neither did the POTUS or any federal (democrat or republican) elected step in and initiate action to sue California for approving a state law that defies federal law – like they did to Arizona with SB1070? So the feds took no action against California for voting to defy federal law but the feds took deliberate and decisive legal action against Arizona when that state allegedly violated federal law.

    Is it becoming clear to you yet that we are living in a nation with 2 sets of rules and laws? And if they can do it and get away with it on immigration they can do it and get away with it for most any law (ie. healthcare).

    Do you know what it’s called when a government can arbitrarily apply (enforce) a law to punish or force a certain behavior from one party while giving another party effective immunity from that same law?

  3. Ulysses Uhaul. says:

    Lets keep these posts crisp and pithy!

    Us working pokes ain’t got the leisure time like retired doomers tapping away in their Verdun-style bunkers.

  4. LetitCollapse says:

    If you don’t like detailed posts the solution is simple. Don’t read them. This site promotes freedom of choice!

  5. californianative says:

    U haul,
    the wife and I packed up the kids and left our native state 15 years ago for better prospects. We were mid 30′s, highly educated professionals. Solidly in the 2 %, heading towards the 1%. Lots of tax dollars funneled into our new state that California will never see. Still care a lot about my native state, I have many relatives still there. The old are fairly comfortable, many of the young ( nieces and nephews) struggling to make it in the $10-15/hr labor force. They could live so much better elsewhere but think life ends once you cross the Sierra.

  6. californianative says:

    Actually it was 20 years ago when we left. time flies when you are having fun!!

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Joseph Perkins
Joseph Perkins, now assistant editor of the Orange County Register Opinion Pages, started his career as an editorial writer for the Wall Street Journal. After serving on the White House Staff of former Vice President Dan Quayle he wrote for the San Diego Union-Tribune where he authored a nationally-syndicated column. Before writing for CalWatchdog.com, Mr. Perkins was also Business Editor for San Diego Magazine.
Chris Reed
Chris Reed is a regular contributor to Cal Watchdog. Reed is an editorial writer for U-T San Diego. Before joining the U-T in July 2005, he was the opinion-page columns editor and wrote the featured weekly Unspin column for The Orange County Register. Reed was on the national board of the Association of Opinion Page Editors from 2003-2005. From 2000 to 2005, Reed made more than 100 appearances as a featured news analyst on Los Angeles-area National Public Radio affiliate KPCC-FM. From 1990 to 1998, Reed was an editor, metro columnist and film critic at the Inland Valley Daily Bulletin in Ontario. Reed has a political science degree from the University of Hawaii (Hilo campus), where he edited the student newspaper, the Vulcan News, his senior year. He is on Twitter: @chrisreed99.
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Brian Calle is Editor-in-Chief of CalWatchdog.com and the Opinion Editor for the Orange County Register. His work has appeared in Bloomberg, Fox News, Forbes, Real Clear Politics, Human Events, Real Clear Markets and City Journal, among other websites and publications. Find him on Twitter: @briancalle
John Seiler
John Seiler has been writing about California for 25 years. That includes 22 years as an editorial writer for the Orange County Register and two years for CalWatchDog.com, where he is managing editor. He attended the University of Michigan and graduated from Hillsdale College. He was a Russian linguist in U.S. Army military intelligence from 1978 to 1982. He was an editor and writer for Phillips Publishing Company from 1983 to 1986. He has written for Policy Review, Chronicles, LewRockwell.com, Flash Report and numerous other publications. His email: writejohnseiler@gmail.com

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