Beginning in 1990, the Manhattan Institute’s estimable quarterly City Journal helped restore safety and order to Dinkins-era New York. Many had given up on the Big Apple—recall its hopeless depiction in Tom Wolfe’s The Bonfire of the Vanities (1987)—but under editor Myron Magnet, CJ doggedly contended that the city’s chaos and decay were simply the result of bad policies and were therefore reversible. CJ was right, as mayors Rudolph Giuliani and Michael Bloomberg, whose policies led to a renaissance of prosperity and urban civility in the city, subsequently demonstrated.
Brian C. Anderson (CJ’s current editor) notes in his introduction to The Beholden State that the transformation of New York in the 1990s “was one of the great public-policy successes in history.” In recent years, CJ has undertaken a similar rescue project for the state of California, publishing a series of detailed articles exploring the policy failures of the once-Golden State. Whether California, too, can be saved remains to be seen.
Many of CJ’s articles are collected in this volume, including contributions by Heather Mac Donald, Steven Malanga, Victor Davis Hanson, Joel Kotkin, and Art Laffer. California surely has fallen from grace. Despite an abundance of natural resources, a famously balmy climate, the world’s most productive agricultural region, spectacular beaches and mountains, and what was, until recently, a first-rate infrastructure for transportation, water, and electrical power, California has hit the skids in the past decade. High unemployment, business flight, suffocating taxes and regulation, mediocre schools, and—reversing a decades-long trend—a net exodus of population have supplanted the California dream of comfortable living and upward mobility. What happened?
The title of this book captures its theme: California was hijacked by special interests—notably, public employee unions, environmentalists, trial lawyers, and the multicultural crowd. These groups have largely taken control of state and local government, enacting deleterious policies that benefit themselves at the expense of everyone else, especially taxpayers and entrepreneurs, who consistently rate California as having the nation’s worst business climate.
In the opening essay, Steven Malanga explains how public employee unions managed to become the most powerful force in the Beholden State. The seeds were sown long ago, when California foolishly granted collective bargaining rights to local government workers in 1968. Since then, “bargaining rights” (in a form more one-sidedly pro-union than federal law applicable to the private sector) have been extended to virtually all public employees. This, combined with the right to strike and compel payment of union dues—and the growth of government payrolls as California’s population mushroomed in the 1970s and ’80s—allowed public sector unions to amass staggering war chests and become influential players in state and local elections. The unions learned that labor “negotiations” yield much more favorable results if the government officials on the other side of the table have been elected thanks to union support.
As a result, public employee unions win “contracts” with wages and benefits (especially retirement benefits) so crazily generous that they border on plunder. No wonder California’s prison guards can earn over $100,000 a year with overtime, and the cities of Vallejo, Stockton, and San Bernardino have filed for bankruptcy because of massive unfunded pension liabilities. Moreover, the public employee unions reflexively resist any meaningful long-term reform: When cities do succeed in adopting reforms, as when San Diego enacted “managed competition” via Proposition C (2006), the unions can stall their implementation indefinitely, through interminable “negotiations.” So much for democracy.
The California Teachers Association adamantly opposes school choice and teacher accountability; and all the public employee unions implacably fight privatization, competition, restrictions on the collection and use of union dues, and pension reform. Tax monies that were once spent on infrastructure are now siphoned off to inflate employees’ salaries and benefits. Government spending has increased dramatically with no discernible improvement in public services, the grim details of which are explored at length in other chapters here.
Joel Kotkin points out that “California’s environmental movement has become so powerful that it feels free to push its agenda without regard for collateral damage done to the state’s economy and people.” For example, although California (like Texas) sits atop substantial oil reserves, environmentalists have managed to severely restrict drilling in the interior and offshore. In the name of “green energy,” utilities are required to provide a third of their total electricity from costly “renewable” sources (such as solar and wind generation) by 2020, which drives up already-high residential and commercial rates. “Carbon neutrality” edicts for all new development will cost California an estimated 1.1 million jobs over the next decade.
Trial lawyers are another rent-seeking special interest group. The American Tort Reform Association regularly names California as one of the nation’s “judicial hellholes,” based in large part on abusive class action litigation involving minor violations of arcane consumer and/or employment regulations. Class members receive coupons or pennies, but the lawyers who bring the class action receive millions. Heather Mac Donald describes how multiculturalism and political correctness have debased California’s once-peerless system of higher education, and how zealous advocates for the homeless threaten to turn the state’s urban centers into unruly colonies of beggars, vagrants, and druggies.
Governor Rick Perry heralds his state as the “Texas Model,” but mainly it stands as an example of what California used to be. Businesses are relocating to Texas—voting with their feet—in order to escape the destructive consequences of the Beholden State. Can California be saved? The unprecedented demographic changes caused by massive illegal immigration—with little or no assimilation—must be taken into account. California simply is not the same state it was a generation ago: A large and growing percentage of the state’s population is unskilled, uneducated, and not fluent in English.
But the greatest challenge to California’s recovery lies in indifference and apathy on the part of voters. And in the face of powerful special interests, it will take considerable resolve to fix what’s broken. Much of California’s middle class—the constituency that passed Proposition 13, limiting property taxation, in 1978—has fled elsewhere. Increasingly, California is populated by liberal elites, service workers, activists, and public employees—all of whom tend to vote Democratic. The business community is in disarray. California might well become a Detroit-by-the-sea, a tragic symbol of greatness in decline and decay.
Whether or not California can be turned around, its road to ruin provides what Steven Malanga calls “a cautionary tale to the rest of the country, where the same process is happening in slower motion.” Other states failing to heed these warnings do so at their peril.
Mark Pulliam, a former Californian, is a writer in Austin, Texas.