NCPA - National Center for Policy Analysis

The Golden State's War On Itself

August 16, 2010

California has long been a destination for those seeking a better place to live.  For most of its history, the state enacted sensible policies that created one of the wealthiest and most innovative economies in human history.  California realized the American dream but better, fostering a huge middle class that, for the most part, owned their homes, sent their kids to public schools and found meaningful work connected to the state's amazingly diverse, innovative economy.  Recently, though, the dream has been fading, says Joel Kotkin, a fellow at Chapman University in Orange, California. 

For example: 

  • Between 2003 and 2007, California state and local government spending grew 31 percent, even as the state's population grew just 5 percent.
  • The overall tax burden as a percentage of state income, once middling among the states, has risen to the sixth highest in the nation.
  • Since 1990, according to an analysis by California Lutheran University, the state's share of overall U.S. employment has dropped a remarkable 10 percent. 

Since the financial crisis began in 2008, the state has fared even worse, says Kotkin:

  • Last year, California personal income fell 2.5 percent, the first such fall since the Great Depression and well below the 1.7 percent drop for the rest of the country.
  • Unemployment may be starting to ebb nationwide, but not in California, where it approaches 13 percent, among the highest rates in the nation.
  • Between 2008 and 2009, not one of California's biggest cities outperformed such traditional laggards as New York, Pittsburgh and Philadelphia in employment growth.  

What went so wrong?  The answer lies in a change in the nature of progressive politics in California.   During the second half of the twentieth century, the state shifted from an older progressivism, which emphasized infrastructure investment and business growth, to a newer version, which views the private sector much the way the Huns viewed a city -- as something to be sacked and plundered, says Kotkin. 

The result is two separate California realities: a lucrative one for the wealthy and for government workers, who are largely insulated from economic decline; and a grim one for the private-sector middle and working classes, who are fleeing the state, says Kotkin. 

Source: Joel Kotkin, "The Golden State's War on Itself," Manhattan Institute, Summer 2010. 

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