California’s Green Economy Failure
In order to satisfy the admonition that “California has to be a leader” — a rationale shallow even by the standards of political sloganeering — the Golden State enacted in 2006 the Global Warming Solutions Act (“AB32”), mandating a reduction in purported greenhouse gas emissions to 1990 levels by 2020. This obviously was a large prospective tax on conventional energy use. But even in the land of Hollywood fantasies and San Francisco nuttiness, people have to work to live, suggesting strongly that the employment effects of this law would not prove salutary. Not to worry, said the proponents, prominent among them Governor Arnold Schwarzenegger: California will be transformed as if by magic into a green economy, with green jobs replacing those lost with the decline in conventional energy use.
Suffice it to say that this green jobs gambit is a con job. “Clean” energy is massively expensive and unreliable even apart from its own considerable environmental problems. In short, it has to be subsidized heavily, a policy that is unsustainable beyond the near term, particularly for a state with budget deficits so huge that the governor and other public officials now engage in an annual panhandling exercise in Washington.
The basic problem is twofold. Green energy — solar, wind, etc. — is too diffuse to replace the conventional energy no longer used because of the implicit taxes imposed by greenhouse gas policies. Moreover, labor and energy are economic complements, an eternal truth that even the alchemists in Sacramento cannot change. For the period 1976-2008, during periods of energy prices and/or economic growth low and high, changes in total California energy consumption have driven changes in employment significantly, even after controlling for other central factors. Indeed, the labor intensity of California energy use — in effect, the employment supported by each increment of total energy consumption — has increased virtually every year during that period.
So, AB32, now being implemented, is a job killer in a state with an unemployment rate of 12.4 percent. Accordingly, there is an initiative on the ballot next month — Proposition 23 — that would suspend the implementation of AB32 until the state unemployment rate declines to 5.5 percent for four quarters. A new econometric study published by the Pacific Research Institute (author: yours truly) examines the employment implications of that initiative, finding that it would increase total state employment by over 500,000 in 2012, and over 1.3 million in 2020, or about 5 percent of the working-age population.
In response, the opponents of Prop. 23 have their story and are sticking with it: “AB32 is the next job bank,” and the only question is whether “all our communities and entrepreneurs [are] ready to take advantage of this opportunity.” That was the overriding question at a recent conference at the Public Utilities Commission, attended by the usual green suspects, an echo chamber at which not a single dissenting voice was to be heard.
Just wait until Google gets involved in green energy bowel movement. All bets are off as they start to invest. http://bit.ly/tweetdrudge
If the Socialists win the Governor and Senate races next month, unemployment will never go down. The taxes and regulations that a completely socialist CA government would pass would become so onerous that more businesses and wealthy people will flee.
Within a year, unemployment will be 15%; the only way it would be lower is that so many people leave the job market (or the state) that they are not counted among the unemployed.
Then the budget deficit will hit $40+ billion, and with the GOP Congress refusing a bailout, the state will collapse, and with it, social order. What we have seen in Greece and France this year will occur in California; with possibly some racial and ethnic dimension as well.
The military will have to be called in to restore order, and possibly a state of martial law declared.
Don’t call in the military. Build a fence around the state and let it be a warning to the other 49. People leaving should have to go through a de-radicalization camp before joining American society.
Seems to me they should double down on this shovel ready green job creating idea!! Green jobs, now!!! Double down California, double dog dare you.
I don’t get it. Want “green” energy? Build a nuclear power plant. How could it have a negative effect on employment?
“california has to do everything first.” boxer is creating green job after
green job. i have 2 green jobs.
This is California’s version of Cap and Trade and no wonder. Henry Waxman, the coauthor of the Cap and Trade Bill before congress, represents the 30th district of the State. Little do the people of this state realize that this man has created national legislation that could double their own energy costs.
Locally Waxman is running against Chuck Wilkerson, a true conservative, and refuses to debate him. Chuck happens to be our kind of people and refreshing to talk to. However, not enough has been done to help this man get elected. All you folks in California, get out the vote for Chuck!
Prop 19 and 23 may be remembered as a straw that finally broke the camel’s back. One of the other propisitions will eliminate the 2/3 majority requirement for a bill to pass.
Two weeks before the drug cartels infiltrate this state and buy legal pot in bulk then sell it elsewhere (at an inflated price) for maximum profit.
“Vaya…….. con dios” (Monsignor Martinez)
California is getting the government and the economy they deserve. Any California citizen voting Democratic, or for revoking the 2/3rds requirement, or to keep AB32, should be obligated to remain in the state for the remainder of their life.
Californians, do not expect the rest of us to bail you out from the consequences of your poor decisions.
Never bet against the capacity of California voters not recognize their own best interest. A majority believe that someone else will do the paying.
For those of you who like to kick California around. Before the recession, California alone had the world’s 7th GNP. It by far pays more in federal taxes than it gets in from federal programs. Up till now California has been the cash cow for the nation. My bet is still on this state. If and when it gets its act together, it will lead the nation in earnings and wealth. Remember that pendulums swing in both directions. There will be a point where the people will say ‘What the hell’ and straighten this mess out. In the mean time, the economies of the rest of the states are doing better than us mainly because our industries and companies have left the state. Sorry to tell you this, if our economy improves, and the state spending mess gets cleared up, many of those same companies will opt to return. It still is the best place in the whole country to do business in. There is way more opportunity in this state than in most of the others. On a personal level, upward mobility is easier in this state than in others. Because of this, this state will continue to produce more successful entrepreneurs than other states. Look around you in your state. Is the money stratified in certain families? That stratification is what stifles your states. Sometime come out here and see success. Go to Newport and see what can be achieved here. Most of that is new money. Come sniff it and taste it. Then go back to the crap in your states.
Dear Andy Crapola,
I am delighted to know that you have decided to tough it out in California and not move somewhere else, in the expectation that maybe, some day the productive people will return and you will all be rich, and therefore happy, again. I am sure you will appreciate the news that I have made a similar decision and will remain here in North Carolina, which is about as far from California as one can get and still be in America, and where people are happy right now, have been and expect to be in the future. Good luck, and hang in there.
Andy,
I think you’re dreaming if you think California will straighten out its mess in your life time. I know back in the 70′s and 80′s Michigan thought it would straighten out its mess and, well, look at Michigan now. (I’ve lived in both California and Michigan, but settled in Texas.) But, hey, I wish you luck. Just keep your hands out of the Federal till. (By the way, I question exactly how the “California contributes more in Federal taxes than it gets back” is calculated. These kinds of calculations all too often exclude all kinds of nonmonetary consideration.)
Oh, and please keep your socialists out of Texas.
Hi Andy
I am sorry but I would take that bet and I’m generally not a betting man. If possible, my wife and I would be gone from CA so darn fast we would leave skid marks. You can hope the liberal morons, AGW believers and their ilk, who continue to vote the progressive line in CA, will finally get it, but for all its natural beauty and many other positives, this state with its GD nanny state crap (CARB,etc.) and anti-second amendment types in State and local government and the union bums/thugs with guns (LEOs); the “cost” to live here is just not worth the loss in freedom. If I had known just how bad it really was here I would have taken a 50% pay cut and stayed in PA. I would rather have to deal with lousy weather in a free state than live here in this socialist crap hole one more day, but sadly I am too old and have to hunker down until, God willing, August of 2013.
I would not hold my breath waiting for the state to recover before you and I and my adult kids are long dead. First this is a state that has been controlled by Progressive Democrats for a long time thanks to the “public safety” unions, teacher’s unions, Sierra Club and other environmentalist miscreants. Next, the proposition system for ballot measures facilitates the use of misinformation from the unions and others as well as union dues to get measures either defeated or passed. Add to this the myriad of elected and unelected boards, commissions and the like who desire to regulate every facet of our lives; the problems of a dysfunctional public education system which turns out all these “happy” little Marxists and this is what you get. If they elect “Moonbeam” Brown and they vote to pass prop 21, 22, 24 and 25 and don’t pass prop 20 and 23 the state economy will finally wither and die.
hey Oscar, why have 150 businesses left CA so far this year? Many of them are “green” too.
As far as the Leftist Californians are concerned, they don’t value economic prosperity. A “clean environment” is more important. Fine, and neighboring states will welcome heretofore California businesses.
It’s way more than 150 businesses that have left the state. Each one that leaves leaves a vacum that is just waiting to be filled by somebody else. It just takes the right guy with enough guts to start up. I promise you there will be more millionaires made in this state than anywhere else.
Well, I have to give a hat tip to Californians for their willingness to throw themselves on the grenade for the rest of us. Their failure will provide the rest of the western world the ammunition it needs to scuttle any crazy initiatives our governments come up with.
The company I previously worked for developed carbon capture fossil fuel generation plants, among other leading concepts in the energy industry.
They REFUSE to do business in California, because the government is so unstable, it’s treated like a 3rd world country.
Like what is happening in DC now….
to Bigfoot, Over 50, and Richard
Believe me I have nothing against your states where you live (G-d bless them). I grew up in Nebraska myself and have lived in Colorado. But, what I see is gold in them thar hills. Money begets money and there’s a lot of it here in this state. Even when we are hurting, this is still a world class economy. I’ll say it again, this is a great state.
Now this comes from a guy who after Obama was elected and they took the house and they took the senate, who was telling everyone to get off their ass and go to work. I was telling people that we had a future even after our political defeat. Guess what happened, from all over, there were others who felt like me. The Tea Party came along and helped unite us. Now we are kicking a**. Wish I could share a brew with you. Bye!
Anyone crazy enough to think businesses are going to turn around and go back to California is delusional. What business owner in their right mind would go back to that?? Where the cost of just doing business is higher than in most of the rest of the nation?
That state is going to implode, there is no way up with the lemmings living there in such a majority. The fact that Jerry Brown is even in the running in the next election speaks volumes!
Brian, its so good to hear your voice of reason. Too bad that I’m half deaf.
Why California…….
First of all, the money is still here.
We have the infrastructure to handle business ie ports, rail, highway, buildings, utilities. Everything is in place and ready.
We have a huge exploitable labor supply.
The business climate is changing rapidly.
We are located on the Pacific rim and business emphasis has shifted from Europe to China (not to mention Japan and India).
Smart money (that is Chinese and Japanese) are interested in investing here.
By the way if this state implodes, so does the nation. Better hope things work out here.
Andy,
Many of the things you say are advantages in California are real, but they are mostly natural advantages, accidents of climate and geography, which are not nearly enough to return Califonia to its past economic dynamism. Because things once were just so does not, by itself, make it any more liely that they will be so again. This is a logical fallacy and no more than wishful thinking, unsupported by history or the facts on the ground in California. Because the Roman Empire was once great was no reason to think that, after its disintegration, Italy, therefore would likely become the most important country in the world. Things might again be better in California, but so they might be anywhere. Basic things would have to change in California, and those things don’t appear to be happening at all.
As far as California being “where the money is” or the 7th, 8th or 12th or whatever-sized economy in the world, how much does that have to do with being the most populous state in the Union clinging to the last residue of its former economic glory, and how much from some other special distinction? With a rather large net outflow of middle class and wealthy residents trying to obtain work or maintain their capital, with the constant news of hundreds of companies not expanding in or leaving or not considering moving to California, what could possibly create this new source of wealth, more illegal low skilled labor from south of the border which use more public resources than they contribute and ship their earnings back to be spent in Mexico? Empty buildings, ports and highways are a liability; they are only an asset when fully utilized. Large scale ownership of assets in California by the Chinese may not necessrily turn out to be a net positive, as it may just earn revenue to send back to China, to be, in turn, used to buy more U.S. debt to further impoverish our country in never-ending debt service.
Innovation and the pioneering spirit in the private sector cannot be maintained when the needs of government suck all the capital out of the state economy and given the horrendous self-inflicted wounds of the Green-cult-yuppie liberals in absolutely forbidding exploration and development of natural resources in California in the twisted worship of a false and ultimately death-dealing, literally pagan earth god.
I am all for optimism, and I very much wish that the people of California turn things around for their own sake, as well as the sake of the rest of the country, but I currently see absolutely no indications of anything in the near future but further decline and misplaced political and economic resources.
Please, do your best to change things there in November, but I would be very cautious about expecting some great California Renaissance anytime soon. There is no magic in the gound there, nor are people more exceptional, than live almost everywhere else, and many times live in a state or country with a culture and political climate much more attuned to creating jobs and wealth.
Andy
The infrastruture in CA is crumbling. Utilities you say?? When was the last time a power plant was created there? The opposite is true, energy is IMPORTED into CA. Because the cost of creating it in the state is too high. The cost to business for workers Comp ins. in that state is through the roof!, Environmental regulation is insane. Two prime examples, a large shipyard had to shut down a 5 million dollar crane because a Gull nested on it, hardly an indangered species. Another southland steel fabricator has to shut down operations 12 hours a day, 4 months out of the year because a bird nests in the field next to it.
This is Business friendly??? It took 15 years to build a 5 mile road because they were only allowed to work 4 months a year!! INSANITY!
Corporate taxes are high! Income Taxes are high! Schools are near the bottom in the nation. CO2 was defined and a hazardous waste! No business investor in their right minds would go there to start a business. They would go to Texas.. and they have been.
California is the only state that will allow a group of people(CARB/California Air Resources Board) to adopt rules and regs when members of the board recieved their Doctorate from an online university and the math that the group was putting out on polution rates and standards were a mere 340% off. Members knew of the false data they were putting out yet still released it. These members are still on the board.