But two years later, however, Schwarzenegger — in full legacy-hunt mode — didn’t say squat when the California Air Resources Board released a “scoping” plan of the economic impact of AB 32 that was full of happy talk that depicted the law as akin to a job-creation program.

Professional economists pushed back. The “peer review” of the findings was harsh. The panel included Harvard’s Robert Stavins — perhaps the world’s leading environmental economist. Stavins backed AB 32 but considered its happy talk ridiculous. “I have come to the inescapable conclusion that the economic analysis is terribly deficient in critical ways and should not be used by the state government or the public for the purpose of assessing the likely costs of CARB’s plan,” he wrote.

Stavins later told The Wall Street Journal that if shifting to cleaner-but-costlier energy were good for businesses, they would have already done it.

That’s such a crisp, simple Occam’s Razor way to frame this issue.

Unfortunately, in the California of 2014, when it comes to economics, we’re in a post-common sense era.

‘Skimp’ on wages? You’ll make less money!

This is playing out in San Diego, where the City Council’s liberal supermajority wants to make a big splash before November elections in which they are likely to lose their power to impose legislation over a veto by Republican Mayor Kevin Faulconer.

The main way they want to make this splash is by sharply increasing the minimum wage in the city. The initial proposal was to make it $13.09 cents an hour by July 2017. That would be nearly one-third higher than the $10 that will be the minimum state rate effective 2016.

Business interests point out that this will hurt San Diego on competitiveness grounds. Advocates initially responded by saying job losses from a minimum wage hike would be minimal. But somewhere along the way, the spirit of the loony air board infected their thinking, and now San Diegans are being told that a minimum-wage hike is, yes, a rising tide that will lift all boats.

Consider this nugget from this op-ed defending the City Council’s plan. The gist is that business operators who try to keep costs down are idiots who don’t know what they’re doing:

“Employers who skimp on wages and benefits don’t make more money, they make less. They have greater turnover, resulting in more training, and they engender less loyalty and more cheating.”

Oh, give me a break.

CA activists lecture business on how to make money

According to this one-size-fits-all theory, Wal-Mart and carwashes and taco stands and all the non-union companies in the world that try to keep wages down are simply buffoons who are lucky to still be in business.

The arrogance of this is stunning.

The truth, of course, is that — as the world’s leading environmental economist told The Wall Street Journal — businesses won’t reject strategies that make them money. They will embrace such strategies.

But as I said, we’re in a post-common sense era in which activists and liberal pundits who have never made a payroll or run a business look at successful businesses and say something akin to the following:

Hey, you idiots, you don’t know what you’re doing.

Surreal. And so California-ish.

By Steven Greenhut

SACRAMENTO — Advocates for bigger government — which is just about everyone these days, it seems — believe that government is the most efficient and humane provider of goods and services. It’s such a bizarre way of viewing the world, but lessons about the wonders of the free market apparently aren’t taught anywhere anymore.

The presidential election and ongoing debates in the California Legislature illustrate this frightening phenomenon. Voters chose a president who has an undying faith in the power of government, and even the Republican candidate failed to clearly explain his most-obvious advantage — why free enterprise is superior to government coercion.

I don’t like to toss around pejoratives such as “socialist,” but what do you call a state Legislature where the dominant faction seethes with hostility toward private firms and does little more than hatch plans to create new government programs?

This in spite of the fact that, wherever we look, government fails.

A reckless — and incompetent — federal agency

The Sacramento Bee recently published an instructive article about how a federal wildlife agency is gaining contracts for pest-control services of the type that private-sector companies already provide.

One of the basics of government is that it should not assume tasks that private companies already are doing, but now that government is seemingly unlimited, no one seems to care about that idea anymore.

In the Agriculture Department’s Wildlife Services program, many of the costs are off the books — i.e., unfunded pension and overhead costs, which makes it seem as if the agency is more cost competitive than it really is.

Essentially, taxpayers are footing the bill for something that should be paid for by those who need to contract for such services. And the government is putting private firms out of business.

But the most instructive aspect of this story is how poorly the agency provides pest-control services. It is notorious for its ham-fisted approach to pest management, including killing of endangered species and a culture in which such deaths are concealed by workers. The agency has simply ignored calls for reform by members of Congress and activist groups.

“[Concern] is directed at an agency called Wildlife Services, which is already under scrutiny for its lethal control of predators and other animals in the rural West,” the Bee reported. “A … series earlier this year found the agency targets wildlife in ways that have killed thousands of nontarget animals, including family pets, and can trigger unintended, negative ecological consequences.”

If a private company operated in such a way, there would be accountability — legal efforts to control its practices, lawsuits by people whose family pets were killed due to the company’s irresponsibility, and criminal prosecutions for violations of environmental laws.

Government disregards its own laws

But the government doesn’t have to live up to the same laws that apply to the rest of us. Instead of having to cease and desist, Wildlife Services goes along its merry way, expanding more deeply into an activity the private market already is handling in a better and less-costly way.

As the article pointed out, the federal agency operates in virtual secrecy, which is another hallmark of government endeavors. Here is the Bee again: “‘It’s been such an uphill struggle,” said Erick Wolf, CEO of a California firm called Innolytics, which developed a form of birth control for Canada geese and pigeons with help from Wildlife Services’ scientists in Colorado. … ‘All they want to do is shoot, trap and poison,’ said Wolf. ‘They don’t want to consider anything else.'”

Government does not have a bottom line so its incentives are different. Government agencies often are protected from meaningful oversight. This is why a federal wildlife agency can wreak havoc on wildlife and why governments often are the biggest polluters.

These days I even hear people argue that government is the best way to provide services because there is no profit motive. That reflects an almost unbelievable level of economic ignorance, but it is a point officials make as they try to use government’s power of eminent domain against private water companies, for instance.

Businesses need to earn a profit, but the prices of their products are determined by competition, which relentlessly drives down costs and increases efficiencies as the less-able providers go out of business.

There is no place to offload private costs onto the public in a free market, even though some businesses despicably lobby the government for special privileges and bailouts.

No incentives to do good job, keep costs down

If the advocates for government efficiency were right, then the Soviet Union — where thousands of unneeded tractors rusted in vacant lots as the public waited in line for toilet paper — would have been the most successful economy on the globe. We would all be happily driving Trabants rather than Toyotas, Fords and Volkswagens.

Private industry creates wealth whereas government efforts consume it.

If my neighbor starts a business, he must win over customers without coercion. He can’t force them to patronize his business or to pay his expenses. Even when government operates as a business, it forces the rest of us to subsidize its operations. Private industry must please consumers or it loses money.

Governments’ only customers are politicians and the unions that represent their workers.

It’s no wonder the results are lousy customer service and shoddy products.

There are no shareholders to please, few incentives to rein in costs, no days of reckoning when it fails.

There are two ways to provide services — through the market, which energizes private initiative as people freely pursue their own dreams, or through the political world, where government officials take money by force (taxes) and protect government providers from competition. There’s a reason the teachers unions, for instance, fight vociferously against charter schools, vouchers and other competitive systems that would embarrass them.

If we want a humane, efficient and accountable society, then we need less government, not more of it. Advocates for freedom need to quickly figure out how to better impart these lessons in a society that is bounding toward limitless government.

Greenhut is vice president of journalism at the Franklin Center for Government and Public Integrity. Write to him at steven.greenhut@franklincenterhq.org.

By Katy Grimes

When a business closes it’s doors forever, the impacts are far-reaching.

The announcement of the upcoming closure of the Campbell’s Soup plant in Sacramento will have regional and statewide impact.

Econ. 101

I may have been a political science student, but my husband is a longtime Sacramento manufacturer. For many years I lived and worked Econ. 101 lessons alongside 250 employees.

My businessman husband was an economics major in college and frequently reminds me that economics education in college has seen a dramatic shift. There weren’t many Keynesian economists in universities back then. Unfortunately, today, Keynesian economics seems to be the only economic theory coming out of universities.

Keynesian economics is an economic theory stating that aggressive government interventions in the marketplace and monetary policy are the best way to ensure economic growth and stability.

Economist Walter Williams has explained for many years the reality of the free market economy in which businesses must make a profit in order to survive: “In the market, when a firm fails to please its customers and fails to earn a profit, it goes bankrupt, making those resources available to another that might do better. That’s unless government steps in to bail it out.”

Williams has long argued against Keynesian economics, “The ruthlessness of the market discipline, which forces firms to please customers and thereby earn profits, goes a long way toward explaining hostility toward free market capitalism.”

Campbell’s Soup

Campbell’s Soup has five large plants in the United States. But the Sacramento processing plant with 700 employees is the only large one closing. Campbell’s Soup also will close a tiny New Jersey spice plant with 27 employees and consolidate spice production at its Milwaukee plant.

What hasn’t been reported are the many suppliers and vendors associated with a large manufacturing plant like the Campbell’s Soup Sacramento location.

Corrugated and boxes

A Sacramento box manufacturing plant owner recently told me the story of Western Corrugated. In 1963, Sacramento company Western Corrugated was a major supplier to Campbell’s Soup in Sacramento. The box maker had to store so much for Campbell’s Soup that stacks of the box materials stood 25-30 feet high within the building. The Sacramento company shipped truckloads out every day to Campbell’s Soup.

During the very busy summer tomato season, when Campbell’s Soup ramped up efforts to can tomatoes, Western Corrugated’s 65 employees grew to 110.

Western Corrugated is gone. But whatever box maker supplies Campbell’s today will lose it’s largest client.

Campbell’s Soup also has an on-site can manufacturer. This business will also lose out, and be forced to lay off many employees.

Campbell’s Soup has its own cogeneration plant on site, which many speculate is one of the biggest reasons the soup company decided to close the Sacramento plant. Cogeneration is the use of a heat engine or a power station to simultaneously generate both electricity and useful heat. All thermal power plants emit a certain amount of heat during electricity generation, subjecting Campbell’s Soup to California’s stringent cap and trade emission laws and carbon emission credit auctions because of AB 32, the Global Warming Solutions Act of 2006.

The carbon emission credits are nothing more than a tax on business, and the caps on emissions are fabricated by the California Air Resources Board.

The Campbell’s Soup Sacramento plant is so large and significant the railroad runs right to it.

Campbell’s Soup closure

With the closure of Campbell’s Soup, the Sacramento region and all of California will lose. The label manufacturers, can manufacturers, the energy produced for SMUD through the cogeneration plant, property taxes, employment taxes, corporate taxes, and the flow of revenue from employees living in the region — all will be lost.

The real impact of a business closure is the city the business supports. The payroll alone for Campbell’s Soup is between $35 and $40 million a year.

Campbell’s Soup announced that they will ship all of the Sacramento plant equipment out of state to their other U.S. plants.

California government

With the new Democrat supermajority in the Assembly and Senate, and with a Democratic governor, California could see even greater taxes in the near future, particularly on the wealthiest Californians and corporation.  Perhaps taxing not just income, but assets. There has been talk about a wealth tax for many years in California, with some politicians insisting that this helps to equal out the “wealth inequality” in the state.

A real stimulus to the economy is a business, and the fiscal effect it has when contracting with other businesses, as well its employees and their spending ability. California politicians ought to be careful not to kill off the only real stimulus left in the state.