

The Golden State's War on Itself - cwan
http://www.newgeography.com/content/001712-the-golden-state%E2%80%99s-war-itself

======
anigbrowl
Something nobody else seems to think about... _In short, the economy created
by the new progressives can pay off only those at the peak of the employment
pyramid — top researchers, CEOs, entertainment honchos, highly skilled
engineers and programmers. As a result, California suffers from an
increasingly bifurcated social structure._

This is not just a matter of politics, public v. private sector, and the
competing vested interests in California. Those socioeconomic factors are all
important, but the elephant in the room is that a very high proportion of our
wealth derives from computers and software. We have automated away a great
deal of what the labor force used to do, so successfully that many industries
have pushed unit labor costs down to the level where only developing nations
can compete.

Outsourcing is generally blamed for the decline in US manufacturing jobs, but
I think that's a symptom rather than a cause. If there wasn't a large pool of
cheap labor in Asia, then we'd just be seeing more robots in the US, as is the
case in Japan to a large extent.

Of course the internet has brought all kinds of wonderful new opportunities.
But because the key economic benefits are disintermediation and
delocalization, the rewards are distributed very differently. Take Amazon -
hugely successful company, clear benefit to the consumer, and a good advert
for capitalism generally. Jobs at Amazon: warehouse drone, middle manager,
engineer, senior manager. I simplify, of course, but what do you think are the
chances for a warehouse drone to 'learn the business' and rise up the ranks?
Virtually zero unless they study at home, because the warehouse job consists
of picking up order slips, scanning things taken off shelves, and putting them
in boxes. The inventory management, purchasing, accounting, and analysis
aspects are entirely automated, so you're not going to pick up many skills on
the job.

This isn't just an internet problem. In my supermarket the checkout is not
staffed mainly by people whose job is recite scripts written by the marketing
department and to make sure I'm not stealing anything. They wave barcoded
products over a laser scanner and announce a total. All the price-checking,
calculation and cash dispensing is carried out by a computer, and the job
doesn't even require accurate data entry. The job requires so little that it
doesn't pay much, and there's no real room for improvement, skill development,
or competition. There's no opportunity to become the most efficient and
accurate checkout operator; and it demands so little competence that getting
fired is nearly impossible. So if you're tired of stacking shelves, don't hold
your breath waiting for a chance to try life as a checkout clerk. You could
occupy your thoughts with examining what goods sell best in which shelf
positions, but display management is largely automated these days as well. You
just scan the wholesale box and your scanning wand tells you which shelf
section to put the inventory on today.

Work as a mechanic? Well, a lot of modern engines are just black boxes now,
and your job is about running diagnostics and then either resetting the
firmware or ordering whatever the manufacturer's website says you need.
Clerical work/bookkeeping? Greatly reduced - spreadsheets take care of all the
arithmetic, and even the data entry is increasingly automated. As we all know,
writing is a good deal easier with a computer than a typewriter, and there's
been a corresponding decline in the importance of writing ability, accuracy in
spelling and grammar, and handwriting. For many people now, the most complex
tasks they perform at home are operating the microwave and assembling Ikea
furniture. Earning a living now requires either long hours in low paying jobs
or long hours of study and professional commitment for well-paying ones, so
for a lot of people housework and DIY are necessities to be minimized - there
isn't the same time or economic freedom to develop ancillary skills for their
own sake.

So it's not just how we divide the income or the taxes. It's how we divide the
work too.

~~~
brc
I think you'll find that even most of the warehouse picking is done by robots.

[http://robotland.blogspot.com/2009/09/warehouse-robots-on-
mo...](http://robotland.blogspot.com/2009/09/warehouse-robots-on-move.html)

To work your way up at Amazon, you'd need to enter at the base level in either
engineering or marketing. And that's no bad thing.

All of society benefits when mundane tasks are automated. Sure, those
warehouse workers never get that job, but there are jobs at the robot makers,
robot technicians, systems designers. The freeing up of this labour enables it
to be deployed elsewhere, making everyones lives better. I don't see anyone
complaining about cheaper books.

Your examples of mechanics and checkout operators are just red herrings. There
are always better ways to do your job, even if a computer talks to the engine.
There's being better organised, better communicating, harder working, faster
and better. It's complete nonsense to say that a mechanic can't make it to
supervisor or service manager because a computer does all the diagnostics, or
to use the reverse and say the only way a mechanic was able to be promoted was
by being a whiz at using a timing light, even if they were lazy, sloppy and
uncommunicative. And you're forgetting the improvement for the customer, whose
car is serviced quickly and accurately for an ever-decreasing cost in real
terms.

Much of your thinking seems dangerously close to the broken window fallacy.
Improvements in technology drive productivity, and increasing productivity is
what underpins real improvement in living standards.

~~~
anigbrowl
I agree with you about the basic productivity gains from technology, which is
why I hang out on HN rather than BackToNature.com or something - and I've been
a technology evangelist for most of my life, and still think of myself as one.

Where we differ is about where the benefits go. Of course, we can all benefit
as customers from cheaper books or more reliable vehicles and so forth;
indeed, Walmart exemplifies the benefits of scale and modern supply chains in
a way that substantially lowers the cost of living for a very large number of
people. But it is not true that all of society benefits evenly when dull jobs
are eliminated by automation.

 _Sure, those warehouse workers never get that job, but there are jobs at the
robot makers, robot technicians, systems designers. The freeing up of this
labour enables it to be deployed elsewhere, making everyones lives better._

See, if we had low unemployment and steady growth I'd agree, because
industrial policy props up inefficient businesses and labor shortages drive up
wages and act as a brake on growth. But what we have now is unusually high
unemployment following a long period of wage stagnation, even though we had a
period of record GDP growth at the same time. Between technology, outsourcing,
and a shift towards services, it's not clear where less skilled labor _can_ be
efficiently deployed in the US at the moment. Youth unemployment is something
like 40% because there's just not much demand for the inexperienced. One
approach might be to abolish the minimum wage so that people could be busy
doing _something_ , even if only for $1/hour - but that's not a realistic
policy, and would probably lead to riots.

It's no good being able to deploy your labor elsewhere if you lack skills that
are in demand or the place demanding them is far away. Of course, you can up
and move. I've done it myself, on several occasions - but I was young, free
and single, and more importantly I had portable skills that were in high
demand. The sad fact is that a lot of people aren't very entrepreneurial or
smart - half the population is on the left side of the IQ distribution. A
cheerful distribution and a good work ethic are important for anyone, but
absent the skills most in demand, or the knowledge of what those even are, the
opportunities are limited. We can easily come up with suggestions for a given
individual but it's much harder to do across a population. And part of the
reason for this is that neither government nor the economy as a whole operates
like a business. We don't have the option of just firing 10 or 20% of the
least productive citizens.

There's plenty of capital sitting unused in the private sector right now, but
not enough new demand to invest it in new equipment or hiring. The ~30 million
unemployed and the bottom 50% of earners don't have enough money to do much
shopping, so it's not going to come from them. Europe and Japan are in a
similar situation. Where is the demand going to come from?

~~~
brc
We're closer in views than you might expect. I especially agree about
industrial policy and legislation that chokes off business.

Youth unemployment - well I have a lot of opinions about this - and your
answer is correct - you up and leave and chase the work, you don't sit around
and complain. Part of the problem is that we tell everyone that they're going
to have a wonderful career when that is plainly not an option for every school
leaver. What should be taught is self reliance and basic financial literacy
and let people make their own decisions from there.

As for that unemployed capital - there's plenty of scope to put it to work,
but the regulatory environment closes off a lot of options, minimum wages
being just one of the factors. It just takes some creative destruction and
some new ideas to get it moving again. I don't have any of those ideas (nor
any of the capital, for that matter) but I'm sure there are plenty of new
things just around the corner.

------
geebee
I enjoyed the article, and in general, I agree with the general philosophy of
government behind it - a conservative, small government mindset that is
practical enough to see a positive role for the state.

One thing it missed, in my opinion, is the extremely negative consequences of
prop 13. Proponents of Prop 13 often argue that it lowered property taxes. As
a recent home(owner/debtor), I assure you that it really did not. My taxes are
extremely high. And when I move to a more expensive house (all part of that
upward mobility), they will adjust upward once again.

Very wealthy individuals and corporations who bought a long time ago and never
move pay extremely low property taxes. Young families and new businesses pay
extremely high property taxes. To me, this is the most loathsome outcome of
prop 13 - a low tax aristocracy of established wealth that keeps its own taxes
low but enjoys a bloated state paid for on the backs of young families and new
businesses.

I have no idea why principled small government conservatives can't see this
problem with prop 13. You'd think that someone who wrote an article like this
would be opposed to putting young families and new businesses at a tax
disadvantage.

Aside from this (in my opinion) glaring omission that doesn't reflect well on
self-declared fiscal conservatives, I think it was a good analysis. It's a
shame, because while the article is measured in tone, it clearly does show a
(deserved, I think) distain for the big government liberals who created a
bloated state. C'mon, dude, hypocritical, fake "small government"
conservatives who create a low tax aristocracy are also to blame here.

On the bright side, hey, my parents bought an expensive house in SF and an
expensive vacation house in the wine country long ago, so their property taxes
are far lower _total_ then what I pay for a small 2br house in an
unfashionable district of SF. If I inherit these houses some day, I'll also
inherit their low taxes, too. Aren't aristocracies wonderful?

------
artsrc
California has a lot of issues and potential. I just don't feel this article
really convinces me that they have selected the important ones.

The cost of the prison system may be a significant burden and the article did
not address that.

The failure of electricity privatization is another issue that was not
mentioned.

Are the pensions for bureaucrats the main costs or is it actually cops and
teachers pensions that are more significant?

Living in another first world country that has just lost its textiles industry
to third world competition, I hardly see this loss of indicative of anything,
except being in the way of globalization and cheap labour from China.

Showing income tax alone seems one sided. What about property and sales taxes?
Are these lower than other states?

If you already believe all this stuff, sure you may be right, but for an open
minded critical thinker I found it unconvincing.

~~~
gaius
California's problem is that they regulated retail but not wholesale
electricity _and_ banned the construction of new powerplants. Basic supply and
demand, there's less so it costs more. So the local electricity companies have
to buy supplies from out of state and can't pass on the cost, creating deep
structural problems.

About California's only hope is mass nuke building before it's too late.

~~~
anigbrowl
_mass nuke building before it's too late_

I'm pro nuclear power in general, but evidence suggests it's not a very good
fit for California. <http://earthquake.usgs.gov/earthquakes/recenteqscanv/>
<http://www.energy.ca.gov/nuclear/california.html>

~~~
pjscott
It's definitely possible to make nuclear plants earthquake-proof, so long as
you choose a site that isn't located directly on top of a major fault like or
something. The French EPR, for example, comes this way standard. Or if you
want to look at really radical solutions, consider floating reactors like the
ones Russia is working on:

[http://finger-tree.blogspot.com/2009/11/floating-nuclear-
pla...](http://finger-tree.blogspot.com/2009/11/floating-nuclear-plants-for-
cheap-power.html)

Earthquakes are just another engineering challenge, and one that nuclear
engineers have been dealing with successfully for decades now.

~~~
jbooth
Why on earth would we ever try to build a nuclear plant anywhere near any
general area that's prone to earthquakes? There's plenty of other real estate
available for any we decide to build.

~~~
pjscott
You might live on an earthquake-prone island nation like Japan. Or the easiest
access to cooling water may be in someplace with an earthquake risk.

Personally, I think that probably the thing to do is work on power lines that
can efficiently carry vast amounts of power long distances, and build nuke
plants in places that are less crazy politically than California. Reduced
earthquake likelihood would be a very nice side-benefit.

(I know this thread is dead, but I figured you should get an answer anyway.)

------
wooster
I'm not a big fan of the potshots he takes at New Urbanism and Smart Growth.
He seems to not have much of a grasp on the changing demographics of urban
versus suburban populations, or the impetus behind higher density construction
in urban centers.

For example, this sentence is complete nonsense:

    
    
      Instead, they favor policies, such as “smart growth” 
      and an insistence on “renewable” energy sources, that 
      would make the area look like a gated community—a green 
      one, naturally.
    

Gated communities are typically residential subdivisions. "Smart Growth"
planning focuses on mixed-use development and walkable (to buy groceries,
shop, work from professional offices, etc) neighborhoods.

~~~
papa
Kotkin definitely has an axe to grind with respect to "traditional urbanism".
Among urban studies circles he's often criticized for his "anti-urban" (i.e.
pre-automobile/highways urbanity) stance and his pro-suburban views.

If you read his works he seems to relish predicting the downfall of San
Francisco (a Disneyland city in his mind) and Los Angeles.

He's certainly not as outright crazy as Wendell Cox (another noted anti-
urbanist), but I certainly don't agree with much of of what he writes.

That's not to say all that he has to say is bunk. He usually raises a lot of
good issues. But it is worth, as you suggest, noting some of his clear biases.

------
kalk
I won't pretend I'm predisposed in its favor, but the arguments in this
article are really pretty terrible.

Take this paragraph from the first section, just about the only attempt to
present big-picture numbers:

"Between 2003 and 2007, California state and local government spending grew 31
percent, even as the state’s population grew just 5 percent."

The article doesn't say if the 31% is inflation adjusted - which makes me
suspect it's not. Also, what's happened since 2007? That was three years ago.
Why cherry-pick numbers from the height of the housing boom, which presumably
saw steadily increasing revenue? Is that the only way to show a dramatic
spending increase and validate the article's thesis?

"The overall tax burden as a percentage of state income, once middling among
the states, has risen to the sixth-highest in the nation, says the Tax
Foundation."

No periodization here at all, and then we get...

"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."

How much of this occurred over the 2003-2007 period that saw increasing
spending? From anything the article tells us, the answer might very well be
none. What was the population doing in the meantime? Again, for all I know, it
might have changed proportionately.

If one was to look up numbers that all covered the same time periods, I don't
know what results one would get. But the numbers in the article really don't
set up the case it goes on to make, that the problem is spending and
regulation.

And then that case has its own independent issues. Though again I don't have
quick access to the real numbers, it's not plausible to me that "bureaucratic
pensions" are really a substantial proportion of the state budget, unless
teachers, firefighters, and prison guards are all alike "bureaucrats", a
characterization which would be pretty tendentious. And are carbon-emissions
regulations really likely to have contributed more to those 400,000 lost
manufacturing jobs than a nationwide trend towards outsourcing?

------
protomyth
California is a leading edge example of what happens when an increasing % of
the population are either directly (state workers, people on welfare long
term) employed by the government or don't pay any taxes have disproportionate
representation in politics.

------
Tokala
There is plenty of blame to go around in what has made California such a
dysfunctional state.

You cannot, however, take Proposition 13 and pretend it's not part of the
problem.

If a proposition is put on the ballot most of the time it requires a simple
majority. Three strikes and the prohibition on same-sex marriage were done by
a simple majority.

Taxes?

A 66% approval is required thanks to Prop. 13.

California is like Scandinavia with no taxes.

------
api
"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."

Pure gold.

I would add another factor: since the 1970s, the old progressivism which
actually believed in progress has been replaced by things like green ideology.
The latter is a form of puritanical suffering-and-atonement religious
fundamentalism. I think it's properly classified as a species of religious
conservatism, and doesn't even belong on the left.

Note that I'm referring to the quasi-religious ideology... cleaning up the
environment and building more renewable energy systems is great. The ideology
has nothing to do with that. Greenpeace has as much to do with saving the
planet as "Focus on the Family" has to do with helping actual families. Both
are just fundamentalist cults using their respective issues for publicity.

~~~
alextp
This is the best characterization I've ever read of the Green movement.

I've joked for years about how nature has replaced god for some people, but it
was always too vague without the connection to atonement and suffering.

~~~
api
To be more precise, I think green ideology is a secular rehash of Calvinism.
It follows the same basic sin-and-redemption narrative.

I've often wondered if the failure of green ideology to take off is Asia is
due to the absence of the Judeo-Christian hole for it to plug into.

~~~
brc
>I've often wondered if the failure of green ideology to take off is Asia is
due to the absence of the Judeo-Christian hole for it to plug into.

My take on this is that most Asian countries are newly industrialised -
chances are that a young persons parents or grandparents were once dirt poor.
They aren't interested in sacrificing their newly-obtained living standards
for an ideology that looks mostly self-serving to any disinterested outside
observer. Greenpeace et al trades on guilt, just as the Catholic church does.
Asians just want to build exciting cities of the future and become rich.
Something the rest of us used to want to do but have now lost the stomach for.
It's the classic case of third-generational squandering of wealth, on a very
large scale.

------
surlyadopter
Great summary of (mostly) how California has screwed itself. This: "California
must shift its public priorities away from lavish pensions for bureaucrats and
toward the infrastructure critical to reinvigorating the private sector."
needs to happen soon or the failure spiral will continue.

~~~
Aaronontheweb
I'm optimistic that this will happen, because frankly I think the state
doesn't have a lot of other realistic options.

If the state doesn't implement this on their own soon, it's going to happen
anyways once its bond rating falls and we can't use debt to supplement our
declining tax reciepts.

Correct me if I'm wrong here: a city CAN declare bankruptcy but a state CANNOT
under current law and precedent - true or false?

~~~
surlyadopter
I believe both entities can declare bankruptcy. There have however been
rumblings that if a city were to declare bankruptcy the county and/or state
can do something to either block it, or block the judge from invalidating the
employment(ie pension) contracts.

Hopefully it won't come to that but a few OC/Inland Empire cities are right on
the edge.

~~~
wooster
California cannot declare bankruptcy: <http://www.slate.com/id/2246915>

~~~
sbov
California cannot declare bankruptcy, but according to the article its because
it doesn't need to - states have sovereign immunity. They don't need the
protection bankruptcy normally provides.

So technically California cannot, but its more because it never needs to, not
because it always has to pay any debt it takes on. They can just tell debtors
to f off (of course, no-one would lend to California if it made a habit of
doing so).

~~~
nradov
I think you mean that as a sovereign borrower, California can freely default
or unilaterally impose a restructuring on its _creditors_. California is the
_debtor_ in this case. Federal bankruptcy courts wouldn't be able to
interfere.

The wild card is what the California Supreme Court would do? While the state
has sovereign immunity, in a default any creditors would certainly file suit
in state court. There isn't much law covering the situation so it is
conceivable that the judicial branch would order the executive and legislative
branches to raise taxes or sell assets in order to meet obligations. That
would create a constitutional crisis.

------
jsz0
I can't help but think part of the problem in CA is the .03% of the budget
being spent on labor and workforce development and the stagnant higher
education budget for the last 25 years which is now being cut to pre-1980
levels when you factor in inflation. If you can't stop manufacturing jobs from
leaving and don't want to invest in your workforce these things tend to
happen.

------
sspencer
Sort of an aside, but this article has the worst graphics imaginable. Why is
about 1/2 the graphic made of garbage stock photos or "helpful" graphics like
that giant up-arrow with a percent symbol on it?

Ugh.

------
koops
"In the Central Valley, for instance, regulations designed to save certain
fish species have required 450,000 acres to go fallow."

Who could support "impoverishing whole regions" this way? Those who understand
ecology. If the Delta Smelt goes extinct, a whole chain of species, fish and
otherwise, will likely go with it, with unknown consequences. This is to human
Californians' detriment, to say nothing of those species. Extinction is
forever.

------
binspace
There are some good points, however the emphasis needs to be on how green
regulation is applied.

The article seems to be complaining about "green" regulations (which are
outdated and inane), not against the idea of the necessity of sustainable
technology.

One quibble, more offshore drilling will not solve the problem, and causes
problems, as in the Gulf of Mexico. It's also a drop in the ocean of energy
demand. It solves nothing.

You only need to look as far as global rising energy consumption (especially
China) and the supply/demand curve. Basic economics. This means the
sustainable energy problem _needs_ to be solved, and what better place to
solve it than in California?

We need solutions without throwing the baby out with the bathwater. For
example, make it easier for entrepreneurs and relieve the tax burden to
encourage businesses. Provide an environment where technology (even green
technology) can thrive. Create incentives for people to adopt more
environmentally friendly approaches to living, etc. I think there are plenty
of examples where sustainable living & and strong economic fundamentals can
coexist.

~~~
brc
What's wrong with offshore drilling? Yes, GoM events do happen but are very
rare. You can't go around being completely risk averse and not doing anything
- this is the whole problem with the green ideology. Why not drill the oil and
get the tax revenue, bring in the jobs, get a little industry going? This is
what the article is about : refusal to let private enterprise get on with
making, doing, exporting, building.

As for alternative energy - by all means continue R&D but drop the tax
subsidies and using the government to 'pick winners'. The subsidies starve
other technologies of capital, funding and attention while prolonging the life
of unsuccessful technology. The only way the energy problems are going to be
solved is by letting free enterprise innovate and compete to a solution.
Governments can't and shouldn't pick winners. Let any energy solution live and
die on it's merits.

To me your reply sounds as though you acknowledge the problem (green
regulations and intervention) but aren't willing to accept that the solution
is to wind it all back and let solutions develop naturally. Green regulations
should be restricted to reducing pollution and preserving areas of natural
beauty, not stomping on every little use of the earth to provide, and
certainly not picking future energy direction. Set the rules of the game, then
let private entreprise go and come up with the solutions. Oil will cease to be
an issue once better, cheaper alternatives exist.

~~~
shadowfox
Is there a reason we should regulate pollution and "areas of natural beauty"
while deregulating everything else?

~~~
brc
Pollution is something that affects quality of life and health of people.
That's important.

By 'areas of natural beauty' I basically mean national and state parks and
other areas that provide quality of life for many people just through
observation and enjoyment. It was a pretty ambiguous line, I admit, but what I
really mean is : preserve some parts for the enjoyment of all and future
generations. Don't close off existing farmland and already modified
environments. Let farmers grow, miners mine, timber workers log. Use the
resources wisely for the improvement of living standards.

