The California model

Joel Kotkin writes about California in the Orange County Register,

…Economically, our state retains unquestioned areas of remarkable strength, notably in Silicon Valley as well as parts of coastal Southern California. But often overlooked are vast areas of underdevelopment, poverty and searing inequality, particularly in the interior. Overall, after a strong recovery from the recession, California’s GDP growth is now about the national average, well below that of prime competitors like Texas, Washington state, Ohio and even New York.

At the end of his long career, Jerry Brown has spent much time vamping in western Europe, Russia and China as the visionary leader of a de facto green nation-state. Yet it is rarely noticed that California’s greenhouse gas emissions are not dropping more rapidly than most places. In fact, according to the Energy Information Agency, the state since 2007 has reduced emissions by 10 percent, below the national average of 12 percent, meaning the state ranks a measly 35th in reduction.

Immigration and diversity is another defining aspect of the California model. This will be front and center in the effort to nominate the telegenic Kamala Harris for the White House. Harris claims multicultural California represents “the future” being created by very diverse millennials in comparison with Trump’s white and aging base.

Yet on the ground level, the progressive regime has been far less friendly, at least economically, to minorities than most may suspect. Many live in deplorable conditions, with a rate of overcrowding roughly twice the national average. Minority home ownership is plunging well below other states, and economic prospects, particularly for those without college education, are increasingly dismal.

Brown’s successor, notionally former San Francisco Mayor Gavin Newsom, will someday have to confront the reality in places — South Los Angeles, Santa Ana, San Bernardino and Fresno — where the wealth of Facebook, Google, Apple and Disney barely reaches. The state is home to a remarkable 77 of the country’s 297 most “economically challenged” cities based on levels of poverty and employment, suffering the highest poverty rate of any state, well above the rate for such historically poor states as Mississippi.

Today, according to the Social Science Research Council, California now has the greatest income inequality in the nation, suggestive of a disappearing middle class. In the past many people dreamt of moving here. Now it attracts less newcomers per capita than virtually any state; only four states — Michigan, Ohio, Wisconsin and Illinois — fared worse in bringing in new taxpayers.

Today, domestic net out-migration, even after declining in the early years of the recession, has more than doubled between 2013 and 2016. Even worse, according to a recent UC Berkeley study, over a quarter of Californians are considering a move, half of them out of the state, with the strongest proclivity found among people under the age of 50. And contrary to some progressive commentary, those leaving are not necessarily old or losers; according to IRS data, out-migrant households had a higher average income than those households that stayed, or of households that moved in to the state.

Rather than serving primarily as a role model, California today should be seen as much a cautionary tale. We certainly produce great wealth, but also far too much poverty. To be sure, California is now home to four of the 15 richest people on the planet and 70 percent of the 56 billionaires under 40; the Bay Area remains the most prodigious producer of high wage tech-related jobs.

But for much of the middle and working classes, more serious has been the erosion of higher-wage blue collar jobs, which have dropped by 500,000 since 2000 and by over 300,000 since the Great Recession alone. In contrast, minimum or near-minimum wage jobs accounted in 2015-16, notes the state’s Business Roundtable, for almost two-thirds of the state’s new job growth.

Read more here.