California has been an economic powerhouse for decades. Today, its Gross State Product (like Gross National Product, but for a state) is the highest in the USA at US$3.2 trillion (US$80,600 per capita). California is responsible for 15% of GDP in the USA. Indeed, were California a country, it would have the fifth-highest GDP in the entire world. However, given the state government’s radical leftist agenda which is forcing the state’s wealthiest out (the richest man in the world, Elon Musk, is relocating Tesla’s headquarters to Texas), California must be entering the twilight of economic success.
The Cato Institute’s latest survey on personal and economic freedom ranks California 48th out of the 50 states of the USA. For the first time, California’s population declined – by 90,000 people last year, costing it a district in the US House of Representatives. Unemployment is the highest in the country at 7.3%. What are the policies that are preparing the state for a long and slow decline?
California is infamous for leading the country in radical social justice policies that make doing business increasingly more difficult and expensive. As in the United States in Ayn Rand’s book Atlas Shrugged, the productive in California are increasingly either giving up or leaving. There is no Galt’s Gulch to escape to but Texas is good enough for many.
California led the country in harsh sentencing for repeat felony offenders, with the passing of a ballot initiative introducing ‘three strikes’ laws in 1994. In recent years, the criteria for mandatory life sentences have been reduced to include only the most serious violent crimes (murder, rape etc.). Bail and sentencing reform for those arrested for lower-level crimes such as theft has slashed the punishments for this type of offending as well as reducing the deterrent power of being arrested. Rail freight is now experiencing a return to wild-west train robberies in Los Angeles, where Union Pacific estimates over 90 rail freight containers are “compromised” every day: an increase of up to 35% compared to the same month the previous year. Individuals arrested are back on the streets within 24 hours and no-cash bail policies, coupled with delays in their cases being heard in court, keep these thieves on the street.
In 2017, Californian Governor Jerry Brown made California a “sanctuary state” for illegal immigrants charged with misdemeanours. The law prohibits state authorities from working with ICE officials. Unsurprisingly, homelessness numbers are also getting worse with the number of homeless people increasing 24% between 2018 and 2020: now at 162,000. Should the US Supreme Court overturn Roe vs Wade, which forbids states from outlawing abortion, Governor Gavin Newsom promises to make California a sanctuary state for those seeking abortions. This sanctuary policy isn’t just a guarantee that those entering California will be permitted to have an abortion. It will extend to using taxpayer money to cover the costs of travel, lodging, transportation and childcare for those coming to the state to kill their unborn children.
Laws that have just been implemented or are on their way include a requirement that all publicly held companies headquartered in California must have between one and three female board members, depending on size. The penalty for not doing so is as high as $100,000.
In October 2021, a bill to fight climate change by banning petrol-powered lawnmowers and leaf blowers was signed by the governor. The National Association of Landscape Professionals says this action will result in three-man crews of landscapers needing to carry up to 40 fully charged batteries each day to complete their daily workloads and require large-scale retrofitting of workshops to provide sufficient daily energy in battery form.
From 2024, retailers of children’s toys will be required to have a gender-neutral toy section. This doesn’t prohibit boys’ and girls’ sections but it does mandate a gender-neutral section be available, even as an addition to traditional toy layouts. This bill was inspired by a staffer of Assemblyman Evan Low, who was asked by their daughter why certain toys were for girls and boys while shopping.
A 2018 voter ballot measure that became effective on 1 January 2022 has set the toughest standards for animal welfare and living space standards for breeding pigs in the country. It doesn’t just apply to pork produced in California; it applies to pork consumed in California. Despite the law already being technically in effect, the state government is yet to finalise all the regulations to ensure those in the industry are compliant. Just 2% of the pork consumed in the state is also produced there and stakeholders have no idea how they will be able to ensure pork products imported into California meet the new standards. A state certification system was meant to be in place by 1 September 2019 under the terms of the ballot initiative but that system is thought to be at least two years from being ready.
The Employment Development Department, which administers unemployment benefits in the state, has paid an estimated $31 billion out of a total of $122 billion to suspected fraudsters. Law enforcement officials say that organised criminal and hacking rings are behind some of the fraudulent payouts but most could have been avoided had the state implemented better vetting of applications. The state mailed 38 million letters with the recipient’s full social security numbers during the Covid epidemic; an action which will have led to mail thieves making welfare applications under other people’s names.
It isn’t just the ridiculous new rules being put in place that are causing the decline of California’s economy. The speed at which the state legislature operates and implements its decisions are just as destructive. Fi$cal, a $1 billion project to implement an accounting program that aligns the systems of all departments in the government, began in 2005. Now entering its 18th year of implementation, the latest deadline of June 2022 is not expected to be achieved and the number of departments that will implement the new system has been further reduced, making the continuation of the project pointless. A new ID system being rolled out by the Department of Motor Vehicles, which is intended to replace the state drivers license as an acceptable form of ID for boarding domestic flights, is two years beyond the deadline for finishing with no end in sight. Local news reports that applicants, who must apply for the ID in person, face waits of up to 6 hours in long queues at the DMV.
Meanwhile, the California High-Speed Rail Authority’s bullet train project is a complete disaster. Following the approval of ‘The Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century’ by voters in 2008, the state was required to act immediately to commence construction despite land along the entirety of the route not having been acquired. Prior to the ballot being approved, voters were promised bullet trains travelling at over 300 km/h from San Diego to San Francisco and Sacramento at a cost of $45 billion. As of 2021, that cost has leapt to $83 billion for a San Francisco to Anaheim line; a 25% reduction in distance. Currently, the $22 billion Central Valley portion, making up one-third of the original project, is held up due to the California Assembly refusing to authorise $4.2 billion in additional funding.
California has the resources, population and base of super-wealthy residents to continue being a success story. However, incompetence by bureaucrats and politicians in addition to an insanely radical social justice agenda puts all of that at risk. The state is still a global economic leader for the time being but record levels of unemployment and the beginnings of an entrepreneurial exodus indicate California will fall from its place on the ladder should its politicians continue to govern in this manner.