By Katy Grimes

U.S. Sen. Diane Feinstein’s husband Richard Blum, won the first phase construction contract for California’s high-speed rail.

I’m shocked, shocked I tell you.

If I didn’t witness the insanity and corruption in politics every day, I wouldn’t have believed this.

“The Perini-Zachary-Parsons bid was the lowest received from the five consortia participating in the bidding process, but “low” is a relative term,” the Laer Pearce, author of Crazifornia wrote. “The firms bid $985,142,530 to build the wildly anticipated first section of high speed rail track that will tie the megopolis of Madera to the global finance center of Fresno. Do the division, and you find that the low bid came in at a mere $35 million per mile.”

“As this fiasco progress, remember that this $35 million per mile represents the best California can do on the section of track the High on Crack Speed Rail Authority selected to go first because it will be the cheapest,” Pearce said.

Read Pearce’s story here. And stop staring dumfounded at the computer screen. Yes, this is true.

By Wayne Lusvardi

In 2050, after California was hit with a 6.9 Richter scale earthquake on the Hayward Fault, the city of Vallejo didn’t suffer much because it already was a ghost town. California no longer had enough families to populate suburban Vallejo.

The Sacramento Delta, however, nearly instantly became an inland saltwater sea.  Most of urban and agricultural California had lost its access to fresh water supplies overnight. California’s civilization hadn’t collapsed after all; it dissolved.

Democracy didn’t collapse, either.  That is because democracy had already been replaced long before “the Little Big One” had destroyed much of the state’s water and transport infrastructure. Instead, unelected regional government committees that had merged cities and suburbs for tax sharing had supplanted it.

In the ruins, however, they found a book, “Crazifornia! Tales from the Tarnished State — How California is Destroying Itself and Why It Matters to America.”  The author: Laer Pearce, a former war diplomat in the civil wars in California. The book had predicted the disaster that had just happened.

The above science fiction scenario is where author Laer Pearce takes you at the end of his prophetic book of tales of how California destroyed itself.

Like all classic literature, the book tells tales rather than boring with sophisticated public policy analysis, the dryness of a history book, or the escapism of a novel.  Pearce’s stories are real life.  Why write a novel when real life is more unbelievable than a novel?  Pearce was involved as a participant in most of the tales he tells.  He didn’t just read about them on the Internet.

What Crazifornia proves is Machiavelli’s dictum, “Nothing good occurs except by necessity.”  And through some 15 decades of Progressive rule by both Democrats and Republicans in California there never had been any necessity to change.

I have worked in many capacities in several levels of California government. Pearce provides one of the most accurate descriptions of what ails California that I have ever read:

 “A key factor in the demise of California is the state Legislature’s determination to dodge accountability for the negative effects its progressive actions have on the state’s residents and businesses.  To do this, the Senate and Assembly have effectively turned California into a technocracy — a government ruled by educated elites who know what’s best for the people. It is these technocrats in the state’s many large and powerful regulatory agencies, commissions, and boards who actually impose the will of the Legislature through obtrusive and costly regulations and fines that were at best approved only in vague concept by California’s elected representatives.” 

Progressive policies

Pearce describes how much of Progressive public policy is geared to take away choice from people and replace it with government mandates.  But choice is what defines modernity.

As far back as 1893, California fought against the social change that came with modern society with the coming of the Southern Pacific Railroad.  California’s counter-modernization has continued to this day with 16th-century energy technologies (windmills, solar energy mirrors), 19th-century modes of transit (light rail and the bullet train), dam removals and nuclear power plant building moratoriums and shut downs.

California has also embraced a de-modernizing worldview that rejects the Protestant work ethic and market capitalism for environmental ideology and social-movement unionism.  It can only be called “crazy” for California to embrace “Progressivism” while wanting to go backward.

Pearce’s book is chock full of stories you likely never heard of.  In Chapter 4 on California’s cultural revolution of the 1960’s Pearce describes how the C.I.A. program MKULTRA in San Francisco birthed the Hippie Movement.  MKULTRA researched mind-altering drugs and two of its volunteer test subjects were Ken Kesey and Stuart Brand.

Kesey was the author of “One Flew Over the Cuckoo’s Nest” and Brand authored “The Whole Earth Catalog” — the manual of the Hippie Movement. It wasn’t hallucinogenic drugs that made “Crazifornia” crazy, however.  It was Progressivism.

Jerry Brown’s blood money

In Chapter 3 on “Progressivism’s Legacy,” Pearce tells how Gov. Jerry Brown’s inherited wealth came from the blood-soaked Indonesian dictator Sukarno. Jerry’s father, former Gov. Pat Brown, brokered a loan for Indonesian junta generals to set up two oil trading firms.  In return, Brown’s dad was given one of the trading firms.

Pearce writes that it was a lucrative deal because only Indonesian crude oil could meet California’s low-sulfur clean-air standards. It is implied that environmentalism serves as a pretense for elites to make mega-bucks from quasi-monopolistic enterprises.  Only in “Crazifornia” could the greenest governor of any state have the political split personality of a closet oilman.

Pearce describes how the California’s “Brown-Shirt” unions tag team with environmental regulators to force businesses to unionize.  One holdout company got inundated with 144 legal requests for data and another company got 143 data requests pursuant to a threatened lawsuit alleging non-compliance with environmental laws.

Another company that had relented to unionize received no such harassment or investigation from the California Energy Commission. In an event that could probably only occur in “Crazifornia,” the unions ended up brokering a settlement between the companies and environmental groups that the unions had funded.

Then there is the question that has to be asked: How did Pearce come up with the title “Crazifornia” for his book?  Pearce says he was using the term on his old blog, “Cheat Seeking Missiles,” way before the book was written. But it was Pat Mulroy, the head of the Southern Nevada Water Authority, who perhaps validated Pearce’s characterization of California: “It’s hard being next to California.  You’re so big, so powerful…and so crazy.”

Pearce was apparently a stand up comic in another life.  He can’t help but dot his book with laughable stories such as how Brown was going to cut 3,000 jobs out of a state work force of over a quarter million bureaucrats.  Pearce writes that this would be “like a small business with 10 employees, facing a prolonged recession and continuing massive losses, laying off one employee’s arm.”  That’s becasuse, 3,000 employees comprise about 1 percent of the work force.  But the state Legislative Analyst’s Office concluded that Caltrans was 15 percent overstaffed.

Read his book for the treasure trove of unforgettable stories you won’t find anywhere else.

The book deserves an Amazon.com five-star rating.  It’s a quick, fun read.  Buy it and hold on for a zany ride.  But until the apocalypse, perhaps all you can do is laugh and then cry.

It’s a tragedy! It’s a comedy! It’s Crazifornia!

By Laer Pearce

In The Great California Exodus: A Closer Look, the Manhattan Institute has chronicled California’s fall from “the state with more jobs, more space, more sunlight, and more opportunity” to, well, the state with more sunlight.

In documenting the 3.4 million people who left the state in recent years — that’s just about enough to double the population of Oregon — the study identifies three reasons why California has been transformed from a “pull in” state to a “push out” state. Of course, one reason is the state’s pathologically unfriendly treatment of business. The second is the related collapse of its state and municipal finances. The third reason is less familiar to most, and shows just how good California has become at inflicting economic wounds upon itself.

It’s the state’s high density. While less than 6 percent of the state’s landmass is developed — about 50 percent is government-owned and about 45 percent is agricultural — to most Californians, it feels like a very crowded state.

In my home of Orange County and neighboring Los Angeles County, the density is hovering just below 7,000 people per square mile.  That makes the LA/OC megalopolis the most densely populated metro area in the country. San Francisco/Oakland is second, and San Jose is third. New York City is fourth, with a meager 5,319 people per square mile. Chicago is 25th.  Of the 50 densest metro areas in the country, 20 are in California.

It shouldn’t come as a surprise that, when places get too crowded, people (including business owners) move if they have the chance. In the late 19th century, America’s largest cities had densities of 50,000 or even 100,000 people per square mile.  When streetcars and trains, then cars, opened the door to suburbia, urban densities plummeted. Philadelphia is a case in point; its density fell from 56,000 people per square mile to 12,000 during those years.

As California’s expensive coastal counties started getting uncomfortably crowded in the 1990s, many moved one or two counties to the east to get more room for less.  Of course, those are the very areas that were the hardest hit by the housing and job market collapse. So now they are the California counties losing the most people to other states.

Higher density

What is progressive California doing about this? It should come as a surprise to no one that it’s doing exactly what it shouldn’t be doing:  Crusading Sacramento bureaucrats are forcing higher density on everyone.

The tool of this latest round of madness is 2008’s California Sustainable Communities and Climate Protection Act, or SB 375, authored by Darrell Steinberg, D-Sacramento, now the Senate president pro-tem. SB 375 stepped up California’s regulatory game from just controlling every aspect of how houses are built to dictating where they can be built.

The law mandates regional sustainable growth plans, and definitely doesn’t include suburbia in the “sustainable” column.  The Brown administration is using it like a hammer in its Quixotic campaign to single-handedly free the world of global warming.  For example, Attorney General Kamala Harris recently sued San Diego under SB 375 because its long-range plan did too much for highways, the transportation system that supports suburbia, and not enough for mass transit.

More to the administration’s liking is the Bay Area’s “Initial Vision Scenario for 2035,” which proclaims that, by 2035, the Bay Area’s population will grow by 2 million people, yet there will be fewer cars there than there are today.  That will only happen if yards, tree-lined streets and a car commute to work are traded in for lofts by the train station.

But, as the Manhattan Institute study illustrates, when faced with a choice between already too-dense cities and less dense (demographically and politically) places like Arizona, Texas, Oregon or Utah, more and more Californians are opting out of the craziness.

A number of years ago, New Republic senior editor Gregg Easterbook wrote, “Sprawl is caused by affluence and population growth, and which of these, exactly, do we propose to prohibit?” California’s Progressive leadership has apparently chosen both, firing one more shot into its suffering economy in the process.

Laer Pearce is the author of the new book, “Crazifornia: Tales from the Tarnished State.” Portions of this column are excerpted from the book.

By Wayne Lusvardi

San Francisco must have taken a chapter out of Laer Pearce’s new book “Crazifornia.” The city’s new CleanPower SF plan garners subsidies from U.S. taxpayers for green-power purchases.

Sounds crazy, doesn’t it? But you would have to be crazy not to shift your green power purchases onto U.S. taxpayers if laws provide for it.  And what city wouldn’t want to do it if it could cover it up as part of their compliance with AB 32, the California Global Warming Solutions Act of 2006?  San Francisco is “gaming the system,” just as Enron supposedly did in the 2001 state energy crisis.  But there is a double standard when municipalities do it.

Community Choice Aggregation Plan — Socialized Choice

Major newspapers are uncritically reporting San Francisco’s pending adoption of its CleanPowerSF plan where it would buy electricity from Shell North America’s renewable power business.  The new plan is part of the city’s “community choice aggregation” system authorized in 2002 after the state’s energy crisis under Assembly Bill 117, sponsored by Assemblywoman Carole Migden, D-San Francisco.

CleanPowerSF provides an option to electricity customers to choose renewable fuel like solar and wind for their homes.  Customers could stay with Pacific Gas & Electric, which previously had a monopoly on providing power to the city.  Or they would choose to get clean, renewable power, reportedly for a higher price.  Most energy experts agree that renewable power costs much more than electricity from conventional natural gas power plants.  So why would San Francisco want to do this?

San Francisco is poised to authorize $2 million to study local power generation options. The CleanPowerSF program would end up automatically enrolling about half of the city’s 375,000 electricity customers.  Customers would be given five months to opt out at no charge. But the city calls this a “choice.”  It would cost $5 to get out of the program after the first five months.

Reportedly, customers would see their electricity bills increase about $9 per month ($108 per year) to buy higher-priced clean power.  That would end up costing customers about $40.5 million more, total, each year once all city customers are enrolled.

To lure its customers back, PG&E plans to offer its own Green Option Program that would only cost $6 per month more by instead relying on a mix of renewable power and clean-energy credits. PG&E profits won’t suffer because those who opt out will still have to pay a premium in their power rate to do so.  This is called a “power charge indifferent adjustment.”  You can always tell when government and utilities don’t want you to know what a charge is when it is described in bureaucratic gobbledygook.

A low energy user in San Francisco pays about $89.31 per month for electricity from PG&E.  So $9 more would reflect an electricity price hike of about 10 percent.

Gaming the System of Negative Pricing

But perhaps what is behind the Community Choice Aggregation plan is an old-fashioned, buy low-sell high scheme.  Using different terms, this is called “arbitraging,” “playing the price spread,” or “gaming the system.”  The Wall Street Journal article by Lamar Alexander and Mike Pompeo of Sept. 18 — “Puff, the Magic Drag on the Economy” — gives us a clue as to how this might work.

Conventional power plants only generate electricity sales when there is a demand for energy.  But solar and wind power plants can collect a federal tax credit for every kilowatt hour they produce power, whether there is a demand for it or not.

Strangely, the government green power subsidy is so generous that green power producers can pay municipal power departments to buy it.

It’s called “negative pricing.”  It allows green-power companies actually to bribe customers to take their power so they can collect a net profitable tax subsidy from U.S. taxpayers.  Voila!  Another example of Laer Pearce’s “Crazifornia,” where higher electricity prices are better and lower prices are worse.

And to make it even crazier, wind turbines mostly generate electricity at night and thus have an efficiency factor of only about 30 percent.   But wind energy producers get a tax credit as if the wind turbine was producing power 24 hours/7 days a week/365 days a year.

For a city to generate a 10 percent rate hike and justify it, a city would only have to buy about 2.5 hours of wind power at night when electricity prices are often near zero anyway. You might call wind turbines “tax farms,” not wind farms.

City Skimming of Electric Rate Revenues

Cities impose what are called “Utility User’s Taxes” on electricity, water and telephone bills. The Utility User’s Tax rate in San Francisco is 7.5 percent.  So about $3 million per year would get skimmed right off the top into city coffers.

Additionally, the city can transfer revenue surpluses from municipal electricity departments into their general funds whenever deemed necessary. So, conceivably, the whole $40.5 million in estimated additional revenues generated under the city’s CleanPowerSF plan could end up in the coffers of the city’s operating budget.

Eureka! Another Gold Rush in San Francisco. Maybe the city isn’t so crazy after all.

Functional, But is it Necessary?

Many public policy experts and journalists claim California is dysfunctional.  But San Francisco is proving its motto born in the Progressive 1960’s: “The city that knows how.”  And what it knows how to do is shift its electric power costs onto U.S. taxpayers, while double-charging its electric customers and marketing it as a renewable energy program that reduces carbon emissions.  Customers in liberal San Francisco are likely to buy this as a feel-good program that they participating in to clean up the environment and bring competition into the power market to lower prices.

All this is totally legal and functional.  You won’t hear a peep out the California Public Utility Commission about this, because they only regulate private investor-owned utilities, not unregulated municipal utilities.

Oddly, San Francisco already is supplied clean hydroelectric power from Hetch Hetchy Dam, which is run by PG&E.  But that doesn’t count as “green power” under California’s “green power” law.  Now you can see why.  It would ruin the city’s tax-farming plan.

Those who keep using “dysfunction” as a way to describe California’s “craziness” may not understand how functional such seeming irrationality may be in reality. Psychologists have a term for it for individuals: secondary gain.  Sociologists call it a “latent function,” as opposed to a “manifest function.” 

What is missing from the dysfunction explanation of government in California is the value dimension.  California can crazily adopt high-priced green energy plans or build unnecessary bullet trains.  And it can make the trains run on time and avoid electric blackouts by buying wind power at night when usage is low.

So seemingly crazy government programs and projects can be made to function properly. But function omits the value dimension: Is there a real necessity for such crazy big government?

But what if there was a cheaper, clean option all along from hydropower?  The unexplainable craziness involved with CleanPowerSF indicates that providing clean, renewable power is not its real purpose or function.

Do seemingly “crazy” Rube Goldberg cartoon-like taxing mechanisms fit with our democratic values?  Where is the check and balance mechanisms?  What happened to the Progressive notion of utility regulation?  Who will guard the public interest of the taxpayer and utility ratepayers when the fox is supplying the power for the lights in the henhouse so he can see the chickens better?

Just as your you may know some relative who acts “crazy” on the outside but who has a motive to do so, California may not be as crazy as we think it is. It may be crazy like a fox.

By Laer Pearce

Gov. Jerry Brown didn’t cut any beat up old Plymouths from the state’s car fleet this Tuesday, but that enduring symbol of his Moonbeam years aside, he did give the fleet a bit of a trim, issuing an executive order requiring the state to dump 7,112 vehicles.

Will that include the 50 Toyota Priuses the California Department of General Services bought in 2009, then left on the roof of a parking garage for eight months? Or the 51 vans the California Highway Patrol purchased, then let collect dust in lots for two years as Californians paid out $90,385 in interest payments on them? Probably not, although in a press release, Brown did acknowledge that a lot of the cars to be cut “aren’t even driven.”

The Department of Corrections & Rehabilitation’s fleet got the biggest whack, as 2,263 vehicles will be pared from its fleet. If you’re wondering how big the Dept. of Corrections’ fleet had to be if the state could so easily eliminate 2,263 vehicles from it, the answer is 8,940.  Post-reduction, the department is left with a mere 6,677 vehicles for the members of California’s powerful prison guards union to tootle around in as they count down the days until the start of their lucrative retirements.

44,000 cars remain

According to information provided to me by the Department of General Services (which must cut 823 vehicles from its fleet), 44,000 state-owned cars will remain after the purge. While that sounds like a very large fleet for a state to maintain at taxpayer expense, you have to be careful with California statistics because this is one very large state.  We have more school kids than Virginia has people, for example, and only five states have more registered vehicles than Los Angeles County alone does.  So, to be fair, you need to compare the number of state employees per car state by state before jumping to conclusions.

Well, go ahead and jump.  It turns out that California does have a very large car fleet, even after the cuts. Once the state dumps the 7,112 cars, it will be left with about one car for every five state employees.  (The state counted 223,370 active employees in July.)  In Illinois, a state that rivals California in government mismanagement, there is only one state car for every 6.6 state employees — about the same as Arkansas. And in Pennsylvania, no slouch when it comes to government excess, there is only one state car for every 8.5 state employees.

Still too many cars

So — and this should come as no surprise to anyone — California had way too many cars in its fleet before the cut, and will have way too many cars in its fleet after the cut is in place.

This close look at the fleet-trimming story shows it to be much like this week’s larger California budget story:  the proposal to trim public employee retirement benefits. A quick crunch of the numbers by Sacramento analysts showed the proposed changes could bring as much as $40 to $60 billion in lower pension costs. But with the pension deficit anywhere from $250 billion to a more likely $500 billion, like the car cuts, the pension cuts are just not enough.

California may be at or near the bottom of a lot of state-to-state comparisons — worst for business, worst legal environment, 46th in elementary school math scores, 48th in reading and 49th in science — but it continues to score near the top in not doing enough to get its budget deficits under control.

Laer Pearce is an occasional contributor to CalWatchdog.com. He works in California public affairs and is the author of Crazifornia, Tales from the Tarnished State, which will be available in September.