The Big Q: Is California ‘Cracking Up”
$AAPL, $FB, $GOOGL
Corporate profits at California-based transnational corporations such as Apple, Facebook, and Google are hitting record highs.
California housing prices from La Jolla to Berkeley along the Pacific Coast can top $1,000 a sqf
It seems as if all of China is willing to pay premium prices to get their children degreed at Caltech, Berkeley, Stanford, UCLA, or USC.
Yet California, after raising its top income tax rate to 13.3% and receiving record revenues, is still facing a budget deficit of more than $1-B.
There is a much more foreboding state crisis of unfunded liabilities and pension obligations of nearly $1-T.
Soon, new gas tax hikes, on top of Green mandates, might make California gas the most expensive in the nation, despite the state’s huge reserves of untapped oil.
Where does the money go, given that the state’s schools and infrastructure rank among America’s worst in national surveys?
Illegal immigration over the last 30 years, the exodus of millions of middle-class Californians, and huge wealth concentrated in the LA basin and Silicon Valley have turned the state into a medieval manor of knights and peasants, with ever fewer in between.
The strapped middle class continues to flee bad schools, high taxes, rampant crime, and poor state services. About one-third of the nation’s welfare recipients reside in California. Approximately one-fifth of the state lives below the poverty line. More than a quarter of Californians were not born in the United States.
Many of the state’s wealthiest residents support high taxes, no-growth green policies, and subsidies for the poor. They do so because they reside in apartheid neighborhoods and have the material and political wherewithal to become exempt from the consequences of their own utopian bromides.
Blue California has no 2-party politics anymore. Its campuses, from Berkeley to Claremont, have proven among the most hostile to free speech in the nation.
A few things keep California going.
Its natural bounty, beauty, and weather draw in people eager to play California roulette. The state is naturally rich in minerals, Crude Oil and Nat Gas, timber, and farmland. The world pays dearly for whatever techies based in California’s universities can dream up.
That said, the status quo is failing.
The skeletons of half-built bridges and overpasses for a $100-B high-speed-rail dinosaur remind residents of the ongoing boondoggle.
Meantime, outdated roads and highways; mostly unchanged from the 1960’s make driving for 40-M both slow and dangerous. Each mile of track for high-speed rail represents millions of dollars that were not spent on repairing and expanding stretches of the state’s decrepit freeways and hundreds of lives needlessly lost each year.
The future of state transportation is not updated versions of 19th Century ideas of railways and locomotives, but instead will include electric-powered and automatically piloted cars, all impossible without good roads.
Less than 40% of California residents identify themselves as conservative.
But Red-county California represents some 75% of California’s geographical area. It’s as if large, rural Mississippi and tiny urban Massachusetts were one combined state, all ruled by liberal Boston.
Now, 33% of the state thinks it can pull off a “Calexit” and leave the United States.
Calexit’s unhinged proponents have no idea that they are mimicking the right-wing arguments of the Confederate states that prompted the Civil War.
Like South Carolina residents in Y 1861, Calexit advocates seem to assume that federal law should apply everywhere else except in California. Many of these California residents also believe that the federal Environmental Protection Agency (EPA) should always override local ordinances, but not so with another federal bureau, Immigration and Customs Enforcement (ICE).
South Carolina started the Civil War by shelling and capturing federal property at Fort Sumter in Charleston Bay.
Calexit wannabe secessionists similarly assume that thousands of square miles of federal property from California federal courtrooms and post offices to national parks such as Yosemite to huge military bases such as Camp Pendleton belong to the state and could simply be confiscated from the federal government.
Calexit proponents assume California can leave the union without an authorizing amendment to the Constitution, ratified by 3/4th of all the states. And they fail to see that should California ever secede, it would immediately split in half.
The coastal strip would go the way of secessionist Virginia.
The other 75% of the state’s geography would remain loyal to the Union and become a new version of loyalist West Virginia.
Buying a home on the California coast is nearly impossible.
The state budget can only be balanced through constant tax hikes.
Finding a good, safe public school is difficult.
Building a single new dam during the California drought to capture record runoff water in subsequent wet years proved politically impossible.
Many Californians consider those existential problems to be a pre-modern drag, while they dream of postmodern trains, the legalization of marijuana-growing, and seceding from the United States of America.
By Victor D. Hanson
Paul Ebeling, Editor
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