The information shared demonstrated just how far this one-party, blue state has fallen in terms of governance and accountability. Incidentally, a survey released Tuesday showed that the recall that was within the margin of error two weeks ago now has swung strongly toward Gov. Gavin Newsom retaining his position.
Senior Fellow Michael Boskin shared an overview of the California situation that included statistics, opportunities and challenges. The state has a larger GDP (gross domestic product) that the United Kingdom at $2.8 trillion. It has the most billionaires (165) contrasted with the about 20% of families living in poverty when the cost-of-living is factored in. The prolonged shutdown and slow re-opening contributed to an unemployment rate of 7.6% versus the national average of 5.2%. One-third of the welfare recipients live here even though California only makes up 12% of the national population.
Perhaps even more stunning, the cost of incarcerating one person is $81,000 per year, way above the median household income. That’s a reflection of the political power of the prison guards’ union—the teachers’ unions and other public employee unions also exert vast influence over Democrats in Sacramento. And then there’s the failing k-12 education, particularly for Black and Brown students where around 20% are proficient in English or math. And then there’s the unfunded pension funds for public employees and teachers.
He also cited the decline in quality of life brought about by the huge homeless populations in the major cities with open drug use on the streets.
Traditionally, Boskin said that California has been a magnet for entrepreneurial people seeking opportunities and that’s been fading. The state still has quality higher education institution, but needs to focus on the big issues such as the power grid, water and transportation and abandon absurd boondoggles such as the now “mixed” speed bullet train. He expressed cautious optimism that there’s starting to be a ground swell for change pointing out the recall campaigns against the progressive prosecutors in Los Angeles and San Francisco.
Lee Ohanian, a fellow and professor at UCLA, pointed out the huge cost of housing and the failure, over several administrations to do anything about it. Only about 20% of households in the well compensated Silicon Valley can afford a house. The legislative solution is to greatly increase densities, something that will not fly in suburban communities built around single family homes. He pointed out it costs $1,000 per square foot to build “affordable housing.”
In his mind, it’s simple: “This is what happens when we depart from the simple trio of principles of accountability, incentives and respect for the market process.” He pointed out that the lack of forest management coupled with the drought has resulted in wildfires that already put 25% more carbon into the atmosphere than all of the fossil fuels used in a year. So, should California continue to invest in the mixed-speed rail to the tune of $100 billion or are there better uses for it such as expanding forest management and adding water supply?
Not a hard call even for hard-core environmentalists.
Ohanian also criticized AB5, the bill that made gig workers for Uber, Lyft and other companies’ classified as employees not independent contractors. It was driven by a former labor organizer and upheld in the Supreme Court. He pointed out that tow truck drivers affiliated with AAA were exempt, but drivers for other companies had to be employees. There were many carveouts for influential industries, but ordinary gig folks got hammered. Proposition 22 on the ballot last November overturned the law for three companies, but that’s now being challenged in court.
Ohanian, who has advised three Republican candidates in the recall, said, “California needs to address the lack of political competition just as in any market. Lack of competition leads to bad outcomes for consumers.”
You can watch the entire webinar on the website www.hoover.org.