Restoring the California Dream
There’s no place like California. Situated on the western edge of North America, isolated from the rest of the world by alpine mountains to the north and east, vast deserts to the south, and nestled against the Pacific Ocean, it might has well be an island. And what an island. The megacity of Los Angeles, music and entertainment capital of the world. The legendary Silicon Valley, still the global epicenter of high tech. The hills of San Francisco, perhaps the most beautiful city in America. Napa wines. Farms that grow crops year round in soil that rivals the deep loam of Iowa. Redwood trees. Magnificent beaches. Olympic skiing. California has it all.
The American dream as a concept now endures into its third century basically unchanged. Work hard, save, buy a home, have a family, find your place as an equal in a nation without caste or class. Follow that dream with integrity and it will come true, because America is the land of opportunity.
California took that dream and gave it a unique cache. Nearly two centuries ago when gold was discovered on a tributary of the American River, adventurers from everywhere on earth streamed into California, nearly quadrupling the population between 1850 and 1860. But the growth never stopped. The gold fever subsided, but the Golden State was still a magnet for dreamers willing to work hard. The young state’s growth consistently outstripped the rest of the nation: 1.5 million people in 1900 grew to 10.6 million people by 1950. The post-war boom in California saw the population grow to 20 million people by 1970, 30 million by 1990, and nearly 40 million by 2020. And then something happened that nobody expected. People started to leave faster than they arrived.
After peaking at 39.4 million in 2018, California’s population went into slow decline. Today, eight years later, the population is back up to 39.4 million but hasn’t grown. The trend was obvious. Today, renting a 26 foot truck to go one-way from Sacramento to Houston costs $5999. The other way? Only $2,196, less than half as much.
What happened? If California has everything, certainly including the best weather on earth, why aren’t people moving here anymore?
The biggest problem is that getting to California is about the only thing that’s still affordable. The average home price in California is $773,000. In Los Angeles, it’s $948,000, and in San Jose, it’s a ridiculous $1.4 million. By contrast, the average home price in Texas is $299,000. In Dallas it’s $301,000, and in Houston it’s $264,000. That’s quite a contrast.
None of this had to happen. There’s no reason California’s housing should cost so much. The state is only 5 percent urbanized; not quite 8,000 square miles of cities and suburbs in a state that covers 163,000 square miles. There’s plenty of room. But housing, along with gasoline, electricity, natural gas, and water, is effectively rationed by a state legislature that has committed itself to the bleeding edge of renewables technology and an extreme version of “smart growth.” In practice, this means establishing “greenbelts” around every major city and doing everything possible to confine all new construction to “infill.” In practice this means neglecting investment in practical infrastructure – roads, conventional power plants, oil drilling and refining, water supply projects – to instead ration these essentials such that nearly 40 million Californians live with infrastructure designed for 20 million people.
It’s not just fanatical environmentalism that has made California unaffordable. When billions of dollars are withdrawn from productive public investments, that money is freed up to pay for a bloated public sector that can only claim they’re not overpaid because the policies their unions have supported in the legislature. Hence the synergy between the public sector and the environmentalist community – stop the projects to be green, pocket the savings to fund public sector pay and pensions.
The cronyism doesn’t stop there. Crony capitalism finds lucrative expression in California’s homeless industrial complex, along with its less exposed but even bigger affordable housing industrial complex. The equation is diabolical: enact regulations on homebuilding so onerous that no private builder can make a profit selling a home at a price people with median household incomes can afford. Then once they’ve been driven out of the market, pay subsidies to developers to build homes and apartments at a cost of $400 (or more) per square foot, and pay further subsidies to renters who can’t otherwise afford to live in them. This scam has sucked hundreds of billions out of California’s economy to do an inadequate job that back in the 1950s was performed with ease by the private sector.
It may be that California’s golden age was the 1950s and 1960s. During that time of rapid growth there wasn’t a housing shortage, and homes were affordable. Instead of paying outrageous pensions and excessive salaries to state workers who nowadays are mostly bureaucrats, the state paid contractors to get on with it, constructing freeways, reservoirs, aqueducts, and what was at the time the finest public university system on earth. But those days are long gone.
Some changes were necessary. California led the nation in getting rid of unleaded gasoline. Californian wildlife biologists brought back the magnificent California Condor from what was otherwise certain extinction. But it has gone too far, and environmentalism in the state is now dominated by special interests. A “bullet train” that will never make financial or economic sense, set to cost well over $100 billion. Offshore wind proposals, sailing through the state legislature, that will squander additional hundreds of billions on a science project that is only certain to wreak havoc on the supposedly inviolable marine environment.
California’s dream is all but gone. The state is still beautiful, if you avoid the blighted cities where crime and homelessness remain endemic. The universities still attract some of the brightest minds in the world, so long as you steer clear of the woke indoctrination that masquerades as degrees for students admitted for reasons other than academic excellence. Hollywood and Silicon Valley still glisten and for some, still deliver spectacular success. But for most Californians, home ownership is unthinkable. Anyone hoping to start a family does not move to California. They move out of California. They go to Texas, or to Florida, where the American dream is still alive.
Progressive fanatics, misguided environmentalists, and the special interests that feed on their zealotry, have made a mess of California. But in historical terms today’s dysfunction is still an aberration, a few decades of decline after more than a century of glory. Restoring the California dream will require a movement that offers struggling families a vision they can believe. It requires leaders who will explain not only what’s gone wrong, but a believable win-win scenario. An agenda of growth that lowers the cost-of-living by investing in enabling infrastructure instead of public pay and benefits. A recalibrated version of environmentalism that sets more realistic goals in order to enable dramatic deregulation.
It isn’t going to be easy. Californians have been conditioned to mistrust the private sector, even though it is the most corrupt, crony elements of the private sector that thrive when voters support more government bureaucracy and more regulations. The reality of that irony is California’s tragic obstacle to realignment and a return to prosperity. We may only hope a critical mass of reform minded people can turn the tide.
This article was originally published by American Habits, a publication of the State Policy Network.
Edward Ring is the director of water and energy policy for the California Policy Center, which he co-founded in 2013 and served as its first president. He is also a senior fellow with the Center for American Greatness, and a regular contributor to the California Globe. His work has appeared in the Los Angeles Times, the Wall Street Journal, the Economist, National Review, City Journal, and other media outlets.