California, Too Far Gone

We seem to have reached a tipping point here. Too many Californians think that they can have both lunatic environmental and economic policies, and a viable economy. Almost every initiative went the wrong way, as did the gubernatorial and senatorial elections, though the former was partly a result of an awful Republican candidate — Jerry Brown might have been beatable by Chuck DeVore.

It’s a positive feedback situation with increasingly negative results. The economic ignorami in the electorate vote for idiotic propositions, and send economic ignorami to Sacramento in the legislature and governor’s mansion, resulting in flight by the sensible, continuing to distill and concentrate the idiocy in the electorate. It will end in bankruptcy (the state is basically already there), and then they’ll demand a bailout from the rest of the country. Fortunately, with the new Congress, they won’t get it. But I don’t know if the state is salvageable at this point. It’s some of the best real estate on earth, but its current inhabitants don’t deserve it, and have squandered a great legacy.

It’s an opportunity for other states to poach a lot of space companies, I think.

[Update early afternoon]

California, winner of the Dumbest State Award, by a landslide.

49 thoughts on “California, Too Far Gone

  1. Jardinero1

    You are always welcome in Texas.

    California real estate may be characterized as the most scenic but is hardly the best. The best real estate is flat and fertile with plenty of water nearby or falling from the clouds. In development circles, the best real estate is flat, cheap and not bogged down with onerous regulations.

  2. larry j

    When California comes begging (or demanding) for a bailout from their self-inflicted fiscal insanity, I can only hope the Congress will have the spine to say no.

  3. PizzaHog

    I was lamenting/whinging the exact same sentiment to family last night. the other 48 states seem to get it, to one degree or another. How is it that Californians, as a voting block, seem to get it so wrong so consistently? Conservative radio/press here in the Bay Area is happy for the country, spitting mad at our failures at the regional and State levels.

    The only redeeming fact coming from this election, one that seems to make the argument for splitting up the state: coastal California voted as fundamentally liberal as it always seems to; central and inland northern CA seem less insanely inclined [glass is 1/2 empty perspective].

    *sigh* I really want to leave this Asylum [pun intended]. Fortunately, if the economies in other states are allowed to succeed [while our overlords smother ours], perhaps that’s a dream that may be fulfilled.

  4. Jonathan Goff

    Jardinero,
    I prefer having a bit of altitude variation…flat is too boring for some of us. That said, having recently moved from California to Colorado to start a space company, I can understand Rand’s suggestion that there might be reasons for companies to move. Hard to beat Mojave though for wide-open space to do crazy stuff.

    ~Jon

  5. Thomas Matula

    Rand,

    [[[resulting in flight by the sensible, continuing to distill and concentrate the idiocy in the electorate.]]]

    Yep, which is why I am now a card carrying Nevadan. Its hard to imagine any rational person moving to the state since the meltdown.

  6. Steve A

    Jon, we’ll see how our new governor turns out here in Colorado. I was very much hoping that Tancredo could pull off an upset. That being said, our Senate seat is still up in the air too (last I checked).

    Being a farm boy from Illinois I have to agree with Jardinero, though. Growing anything here is a chore compared to the midwest. I often think of moving back that way, and seeing how red the map just flipped for Illinois, it might be getting close to time to do so.

    Steve

  7. Thomas Matula

    Jon,

    Give New Mexico a shot. If Spaceport America is not to your liking there is the former Roswell AFB. Runways designed for B-36’s and the southern great plains stretching forever. Its why Dr. Goddard moved there in the 1930’s for his rocket tests.

  8. larry j

    Jon, we’ll see how our new governor turns out here in Colorado. I was very much hoping that Tancredo could pull off an upset. That being said, our Senate seat is still up in the air too (last I checked).

    It isn’t looking good. Bennet has doubled his lead to 15,000 votes this morning. When I moved to Colorado 25 years ago, I saw bumper stickers warning us to “Don’t Californicate Colorado.” Unfortunately, it happened. Only one Colorado Democrat will be returning to the House but losing the governor’s race and that senate seat hurts.

  9. Ryan Olcott

    New Mexico and/or Texas would be a good place for all those Mojave and El Segundo guys to move to. Lower taxes, lots of empty space, beautiful scenery and night sky (at least in NM) and a new ‘spaceport’. I know that at least XCOR has some contacts in NM, they presented at the TVC VC symposia here a couple years back. Whaddya say Jeff?

    I almost hate to suggest it, but NM is also pretty sparsely populated, people and private business wise. Private space industry could become a considerable part of our business (and political) climate. The government labs that play such a large part in NM’s industry are all potential customers. AFRL, ORS, SNL, and LANL all want space launch, and already do other types of suborbital experiments (ex. high-altitude balloons, sounding rockets).

    Plus, you’ll be a mile closer to LEO ;)

  10. Titus

    It’s some of the best real estate on earth, but its current inhabitants don’t deserve it, and have squandered a great legacy.

    Hey, some of us were just born into this mess and into the larger mess of a collapsing post-war society. Now, I don’t mind cleaning up after this mess and fixing the flat tire with a mop, but don’t be doing a lot of talking with your Slurpee by the side of the road…

  11. David Gadbois

    Rand, I’m glad you did a post on California. The Republican victories on the national level have buried the news of the death blows that California dealt itself last night in most of the media outlets. I agree, we sealed our fate last night.

    The only happy thing I can see about it, is the hope that the combination of Jerry Brown, the failure of Prop 23 to stop the economy-crushing global warming act, and the passage of Prop 25 (which will allow the Democratic legislature to pass their crazy budgets without having to compromise with or even care about Republicans) will send our state on a toboggan ride into bankruptcy. If the state is put into a receivership, we can break the union contracts and enact the radical reforms needed to fundamentally restructure the way the state collects and spends money. My hope is that this path to insolvency will be accelerated, so that the state will reach bankruptcy before the tax burdens are increased to crushing, European-style levels.

    But in the meantime, the increased taxes and regulations are going to hurt. Bad.

    Jon, I would have said you are crazy if you had tried to put a startup company in California. With all of the taxes and regulations California imposes on businesses, it might as well put out a “NOT WELCOME” sign to small businesses at every border crossing.

  12. Aleta

    Mojave is great, Kern County is helpful, but it’s attached to California, which is a liability, alas.

  13. Brock

    This is what I call “The Death Spiral.”

    See also, Greece.

    =======================

    David Gadbois Said:

    If the state is put into a receivership, we can break the union contracts and enact the radical reforms needed to fundamentally restructure the way the state collects and spends money.

    Fat chance. You’ll go into bankruptcy with the same electorate that voted yesterday, and the same government they just elected. Do you really trust them to handle it well?

    The ONLY chance California has is a Bankruptcy Court forcing changes down its throat that move the State to a sustainable fiscal position. But the Judiciary will be very conservative about forcing political decisions on the Legislature, so don’t expect too much there.

  14. Porkypine

    California not only chose to stay on the skids yesterday, but decided to start greasing them liberally – one of the ballot propositions passed removes the requirement for 2/3rds legislative approval of state budgets that’s slowed the state’s slide into bankruptcy till now.

    Letting CA Dems raise taxes to pay off their vote blocs without any Rep help will hit fast-forward on the current slow-motion train wreck. I give them one year to doubled emigration, two years to court receivership.

  15. Orville

    The only positive I see in this is for Arnold. Once Governor Moonbeam finishes with the state, no one will remember Arnie’s many missteps.

  16. Bill S.

    “I give them one year to doubled emigration…”

    Emigration of those who generate wealth, that is, with the only increase in immigration being those seeking the sanctuary cities. It is sickening to watch California plummet (further) into the third-world.

  17. mrmandias

    NM is not business friendly. It has the highest personal tax rate in the region, the highest ration of government worker bees to population in the region, and has just put into place its own one-state cap-and-trade scheme.

  18. Dan DeLong

    Rand:
    There’s another factor in the California political feedback loop. Sacramento dictates requirements on school text books that ensure the population gets its political kool-aid. You should see what passes for a high school physics book.

  19. Ryan Olcott

    yeah, I know =(
    I’m hoping things will change in the next couple years with the new leadership in our state. There was a big focus during the election on paring back the incredible growth of state government over the last 8 Richardson years (lots of kickback jobs). More exciting businesses moving to NM may be able to throw some PR weight around and influence business environment reform for the better as well. Thats my hope.

  20. Dick Eagleson

    I moved here from Michigan in 1974 just a couple of weeks after Jerry Brown was elected Governor here the first time. In the intervening 36 years, California has made a pretty good job of becoming Michigan 1974 in its own right. I’ll be giving it another couple of years because I’m pretty well stuck until then. If the Dems really finish blowing the place up by next year – which looks quite probable – there may be a possibility of undoing at least some of the damage via initiatives. There’s also the possibility that the new non-politician redistricting commission may come up with districts that ameliorate the current Dem hegemony. I’ll admit both hopes are based more on possibility than probability. If, after the 2012 elections, CA is still Greater Berkeley, I’ll be lighting a shuck for Texas.

  21. oldguyinwhittier

    How about testing the constutionality of some good stuff?

    1. Amend the Cali Con so that no initiatives or referenda could issue bonds as a result, and can only reduce, not increase spending or claim that it stays the same. Pay me now, pay me later, as our grandchildren will learn to hate us.

    2. Amend the Cali Con so that willing receipt of material support from the state or local government (rent subsidies, rent control, welfare, etc.) would suspend that person’s right to vote for one year from the date of last payment. Note that tax refunds would not be covered, since, as even Chrissy Matthews has had to admit, it’s … our … money.

    Those two items just might cut down a bit on what De Tocqueville (paraphrased) referred to essentially as politicians buying votes for reelection, with my money.

  22. Raoul Ortega

    When the time comes, and California starts begging Congress to bail ‘em out, the Congress should agree with one condition: by assuming those obligations, the state that was never a Territory will become the first State to make that transition in the other direction. Disband your state gov’t, lose your representation in Congress, and let the Congress carve up the new California Territory into 3 or 4 new territories (Mojave, Jefferson, etc.), some of which will be readmitted at a later date once they demonstrate adults are in charge.

    And unlike the former Confederacy, this time we won’t let you backslide with some Leftist economic equivalent of Jim Crow once you are readmitted. Your state constitutions will prohibit gov’t unions and initiatives/propositions and simple majorities for raising taxes, those things that caused the mess in the first place.

  23. Thomas Matula

    mrmandias

    [[[NM is not business friendly.]]]

    Sorry, the data doesn’t support your beliefs…

    http://www.nmpartnership.com/Aerospace_Aviation_1.aspx

    [[[Number one lowest "overall cost of doing business." - North American Business Cost Review & Economy.com ]]]

    And that doesn’t take into account the incentives for aerospace firms to move there.

    The actual report is here at Moody’s, but its costs money to read

    http://www.economy.com/store/product.asp?pid=11-00001-01&cat=2

  24. roga

    I always hesitate to take anyone seriously who calls the electorate dumb. I think this is a classic case of Euro-style socialism. I think it’s a massive prisoners dilemma at this point. The vast majority of the electorate is making reasonable decisions, given the choices that they see in front of them. Everyone in California has his or her hand in some cookie jar. If any interest group flinches, they will be the first to be gutted and lampooned so bad they will become a historical cautionary tale, and in the process they will prolong the ending for the other pieces of the zero-sum pie. It’s either we all go to jail for 10 years (state bankruptcy, whether we get bailed out or not) or I go to jail for life (lose my cheap water/defined-benefit plans/Medical/section 9 housing/renewable energy construction grant) indefinitely. The classic death by special interests. Thank god we can’t print our own money.

  25. McGehee

    I second Raoul’s motion. Since I have family in California, I prefer this over trading it to the Chinese in exchange for them tearing up our debt papers.

  26. Thomas Matula

    MFK,

    No, the lack of any local fire marshals preventing him from launch rockets. The B-36’s came later, followed by a squadron of Atlas missiles in the 1960’s :-)

    So Roswell has always had a close association with rockets.

  27. ken anthony

    The adults in CA will be forced to take the lead if we just don’t bail them out. That’s how economics works. It’s screwing with how it works that gets us in these messes. Getting your fingers burned is how you learn not to touch hot stuff. Rolling blackouts were not the fault of Enron. They were the fault of a state government that doesn’t believe in economic reality. It’s time they grew up.

    Just get the national guard ready. There will be a period of readjustment.

  28. ASEI

    I am a bit curious about California – perhaps a native would know the answer to these questions:

    I know California is ruled by liberal idiots, but for the past 75 years it seems it was the national center for invention and new business. All of it’s major cities top the charts in terms of patents per year. It also is a major hub of the aerospace industry.

    What about California makes it the center for such things? Is just a holdover from a more favorable past political climate? Is it some sort of cultural inertia that still allows enterpreneurship in a state that is politically hostile?

    I thought I read something once about California’s IP laws that might be part of it – it seems California holds non-compete agreements as unenforceable in their state. I could see that being a major anchor for startup businesses – the “all your future inventions are belong to us” contracts being void might be worth a lot of salary lost in taxes.

    What do you think might be needed, if at all possible, to ensure the technology sector and non-government sector aerospace industry can set up elsewhere? After all, if California destroys these things, it’s not a guarantee that they will be re-created elsewhere (esp in the United States).

    PS – if the state doesn’t lay waste to it’s industry, and California remains the center of the non-government aerospace industry, I may end up living there some-time in the future.

  29. Karl Hallowell

    What about California makes it the center for such things? Is just a holdover from a more favorable past political climate? Is it some sort of cultural inertia that still allows enterpreneurship in a state that is politically hostile?

    I think it’s mostly inertia from a huge burst of economic activity from a good economic and political climate during and following the Second World War. California already had some degree of industry in the area. The military contracts were enough to seed the first generation of high companies (such as HP). Then when Shockley assembled the first semiconductor team, which soon disbanded due to Shockley’s poor management, he sowed the seeds for several future companies including Intel.

    At that point, Silicon Valley had assembled enough workers to be the place to hire people for most high tech industries. I think that’s still why it’s there despite the hostility of California government. If your company is in Silicon Valley, then you know by default that there’s going to be a huge, skilled workforce, a lot of venture capital and other sources that are eager to work with a high tech company, and a lot of support infrastructure.

  30. The Pathetic Earthling

    As much as I think my homestate is doomed, I’m not quite as down on Jerry Brown as most of the rest of the world. There are two Jerry Browns out there: the rational, pragmatic guy who was mayor of Oakland who understood that without an economic base, nothing could happen. The loony-left opposed him on all of his development efforts and opposed him on his stout efforts to get a military charter school opened up in west Oakland, a school that has been a raging success. And philosophically, you will often hear Jerry Brown talk about the fact that California needs fewer – not more – laws. You don’t hear a lot of moral relevancy stuff from Brown either — he gets that there are objective standards of success, self-worth, achievement and the like.

    Then there’s the other Jerry Brown – the version as AG, the version as governor in the 1970s – who is an anti-development union hack. I’m guessing that’s who we get, but with any other big name democrat in California, that’s definitely who we’d get. And honestly, Meg Whitman would have gotten rolled up in Sacramento. I’m probably suffering from self-delusion here, but Jerry Brown may be the only guy who can save the Democrats from themselves.

  31. philw1776

    My former state of MA has to give CA a run for its money. Every state constitutional office went D and all congressional districts D. MA Rs fielded several excellent candidates for once with the Gov candidate qualified but like Whitman in CA, a lousy campaigner.

    Fortunately up here in NH we abruptly reversed the recent plague of blue trend, defeating both D congresscritters turning two D seats into R seats, and defeated the D US Senate candidate. Despite re-electing one lone middle of the road but high spending D as gov, both the state house and senate ‘unexpectedly’ and overwhelmingly (veto proof) went R. Time to reign in the budget increases and roll back 6 years of statewide moonbat legislation.

    15 miles up Rt 95, Maine despite re-electing its 2 D moombat congressional reps went heavilr R, Gov and both state houses…that ‘unexpectedly’ word again.

  32. Karl Hallowell

    Off topic, but the Fed has announced (after election day, of course) that it’s increasing the amount of debt it owns to $3 trillion.

    Using this technique, called “quantitative easing,” the Fed bought more than $1.7 trillion in securities during the financial crisis and in its immediate aftermath. The central bank’s holdings jumped to their current level of $2.3 trillion, and the figure will approach $3 trillion when the new purchases are complete. This new wave of bond buying is a dramatic turnabout for an institution that just six months ago, amid a false spring in the economy, was weighing how it would begin unloading all the securities it had purchased.

    This buying apparently is going to go through next June at a rate of $75 billion per month. The Fed also is reinvesting interest payments.

    In addition to indicating that the economy isn’t recovering like one would expect (no surprise given the policies of the past two years) and a huge redirection of federal funds (it will be almost a year’s worth at current spending rates), this is an awful big potential liability. At some point the Fed is going to have to unwind these positions and deal with any bad debt contained therein. One also wonders what other purposes the debt may have been used for. For example, was it used to buy new debt so that TARP and ARRA would show “profits”?

    The final, rather ugly aspect of this activity is that most of the so-called Keynesian spending made by the federal government over the past three years was due to the Fed. I don’t know how much information is made public about this sort of spending, but I gather it very opaque. I think that’s a very serious problem given that the Fed apparently now owns roughly 1 part in 40 of all publicly traded global bond debt (which was apparently in excess of $90 trillion in 2009) of all kinds, government, corporate, etc.

    Who knows what we’re facing in the future due to this activity? How will it affect future US obligations, inflation of US currency, and bond prices?

  33. Thomas Matula

    The Pathetic Earthling

    I agree with your assessment, plus Jerry Brown has the creditability to actually get the unions to take the concessions needed to fix the budget problems. By contrast Meg Whitman would have been out of her league. Its a lot harder to get things done when you are not able to terrorize folks by the threat of firing them if they don’t obey.

  34. Jerry

    Voting to bailout CA in ’11 or ’12 will be the equivalent of voting for Obamacare or the Stimulus. We will be watching.

  35. ken anthony

    Who knows what we’re facing in the future due to this activity?

    Massive death by starvation and chaos perhaps? It’s all just an intellectual activity until it comes apart. Like a meteor coming from the sun, it’s going to hit us while we’re looking somewhere else.

  36. Paul Breed

    I you look at stocks as owning a portion of real assets the stock market will set new records solely on the effect of inflation on the underlying currency. So the new stock market high is just a reaction to the FED caused inflation, not necessarily 100% due to the election.

    My son heard a news talking head say that the Market set new highs to celebrate the fact that the Donkeys managed to hold on to the senate. They must have their reality distortion field set too high.

  37. Dick Eagleson

    Jerry Brown has the creditability to actually get the unions to take the concessions needed to fix the budget problems.

    Except for the minor quibble that he’s essentially a wholly-owned subsidiary of AFSCME, SEIU, CTA and whatever alphabet soup the prison guards union is called. The public employee unions paid a lot of good money for ‘ole Jere and they’re looking for a big return on their investment. Electing Jerry Brown to reign in the public employee unions makes about as much sense as hiring Tony Soprano to run the Witness Protection Program. I predict a large uptick in the already disastrous rate of out-migration by economic refugees who decline to become additional entrees at the all-you-can-eat state employee pay and pension buffet. We are, I think, going to get an object lesson in what happens to a parasite when there are no further hosts to leech off of.

  38. Thomas Matula

    Dick,

    [[[Electing Jerry Brown to reign in the public employee unions makes about as much sense as hiring Tony Soprano to run the Witness Protection Program.]]]

    If Tony Soprano was given immunity based on the witnesses all staying safe and hidden he might just be the ideal person for the job since he knows the opposition. Ever see the movie “Catch me if you can”? It the true story of a master check forger who now works for the banks to make sure their checks are impossible to forge or alter.

  39. Titus

    Except for the minor quibble that he’s essentially a wholly-owned subsidiary of AFSCME, SEIU, CTA and whatever alphabet soup the prison guards union is called.

    Amnesia seems to have wiped peoples’ memories of the Gray Davis years. Looks like we’ll get our reminder.

  40. Dick Eagleson

    If Tony Soprano was given immunity based on the witnesses all staying safe and hidden he might just be the ideal person for the job since he knows the opposition.

    And if my aunt had any balls she’d be my uncle. There is no outside force to act on Jerry Brown comparable to your hypothetical about Mr. Soprano here. Jerry Brown has been the lapdog of public employee unions for his entire political career. I see zero probability he’s going to change his spots at this late date.

  41. Thomas Matula

    Dick,

    You are forgetting two powerful forces, his Ego and his Legacy. This is likely his last political position and he will want to be remembered for it.

  42. Leland

    You are forgetting two powerful forces, his Ego and his Legacy. This is likely his last political position and he will want to be remembered for it.

    I’m fairly sure Dick was taking that into account, and as such, came to the conclusion:

    I see zero probability he’s going to change his spots at this late date.

    Brown’s ego will keep him from changing his way. After all, he just won on his past record. And sure he wants to be remembered, but the question who does he want to remember him? He wants the people that will shovel money his way to remember to keep it coming.

  43. googaw

    There’s a small chance that Jerry the union guy is just the guy to cut the budget, just as Dick Nixon was just the guy to break the ice with Communist China. (For the yung ‘uns Nixon had achieved renown as an anti-Communist).

  44. Thomas Matula

    Leland,

    Yea. Maybe he will recycle some of his crazy 1970’s ideas, like California should lead in the commercial development of space, you know, that crazy idea that space should be about economics, not exploration that earned him the nickname, “Governor Moonbeam” in the press. Back during his term as governor when California had regular budget surpluses almost as large as the NASA budgets of the era and he wanted to create a California Space Program based on the ideas of Dr. O’Neill.

    Really, now that he’s elected give him a chance instead of acting like a Tea Party candidate that lost.

  45. Titus

    It would really make more sense to just accept the Jerry Brown they just elected — the one who spouts gibberish promises like “no new taxes without voter approval.”

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