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Works and Days

The Great California Land Rush

May 7th, 2013 - 12:06 am

Old-fashioned Energy

One, there is a lot of oil and gas in the Monterey Shale formation. It is located right in the center of the state, ideal in terms of exploitation and transportation. Drilling off Big Sur would be one thing, drilling in the scorched, godforsaken West Side foothills, where nary a Bay Area professor or Santa Monica lawyer has ventured, is quite another. In Montecito or Lafayette, you can get fined for painting your house off-pink; out here you can move nine mobile homes behind it, dig some holes for outhouses, string Romex, create a low-rent compound — and the most regulated state in the nation becomes the most wild. At some point soon, fracking and horizontal drilling will start in earnest. The money will flow to ensure funding for one-third of the nation’s welfare recipients, for the schools that rank 48th and 49th in the nation, for the unfunded $300 billion in pension liabilities, for ad hoc, stopgap tinkering on the murderous sections of the 99 and 101, and for the environmentalists to save the next bait fish in line.

Techies

Two, you can clone elsewhere Silicon Valley, but as yet, not quite replace it. Yes, I know Sacramento is taxing entrepreneurship to death, and forcing relocations to Texas and the like. But that said, Silicon Valley grew where it did for three reasons and they have not much changed since my graduate days at Stanford when I saw it take off.

First, the corridor between the great universities Stanford and UC Berkeley ensured highly educated engineers, MBAs, lawyers, and professionals in general. Both universities, Stanford particularly, are doing quite well, and their expertise is now more embedded in private enterprise than ever, despite the cheap Occupy Wall Street/May Day rhetoric of the student plazas. Other nearby subsidiaries — UC Davis, UC Santa Cruz, several CSU campuses, Santa Clara, etc. — serve as satellite multipliers and purveyors of expertise. Second, the coast that’s nearby Silicon Valley faces an ascendant Asia, not a dying Europe. That means not just proximity to markets, but a blending of culture, particularly of highly intelligent and aspiring Asian professionals and immigrants, and a steady hand on the pulse of Chinese, Japanese, South Korean, and Taiwanese popular tastes. Third, there is a hip, cool culture in the Bay Area. I am not too fond of it, given its manifest hypocrisies that emulate medieval penance and exemption. The more one thirsts after riches and gives lip service to multiculturalism, the more the metrosexual hipster decries capitalism and seeks his apartheid world apart from the logical wreckage of his own ideology.

But I am also not stupid. When I sit in a café on University Avenue, the energy of the green, the gay, the feminist, the Obamaized techie, the Facebooker, et al is manifest. That sense of living in the “right” zip code means that they are willing to buy overpriced hovels and fork up astronomical prices for pedestrian food. Weird — but weirdly dynamic all the same. An engineer would rather have his family live in a 1,000 square-foot box in Mountain View than bring them up in a palace in Tulare. Most simply love Silicon Valley cool as much as much as I am glad to leave it each week.

Farming Cannot Move

The third and final reason why California sort of works when it should have gone broke long ago is, of course, the point of this essay — agriculture. You cannot pull up your pistachio orchard and transplant it to Texas or start almonds over in the Nevada desert. Agriculturalists hate what the state is doing to them: a cynical effort to overregulate, grow inefficient confiscatory government, overtax, and generally insult the entrepreneur on the cynical theory that farmers are going nowhere and so should pay bureaucrats a premium for allowing them to profit. And at $7,000-8,000 an acre profit, Jerry Brown’s high-speed rail, or Solyndra, or the Voice of Aztlan theatrics are small costs of doing business.

Tech income, oil and gas income, and farm income are pretty balanced and diverse incomes for the foreseeable future — and well apart from tourism, Hollywood, Napa Valley, banking, finance, and construction.

The Weirdest Place in the World

So California is both more poorly managed than any time in its past, more divided between rich and poor, more fragmented by opportunistic ethnic identity politics, more impoverished by massive illegal immigration — and never more naturally wealthy. The other day I drove through the verdant Central Valley on Manning Avenue. Each acre I zoomed by is producing thousands of dollars in global profits. At I-5, I looked out at fracking country, before descending into the land of Facebook, Google, and Apple — all on mostly poor roads, with terrible drivers and third-world public rest stops, and now and then passing inferior schools.

California may be in awful financial, social, civic, and political shape — but it is far, far from broke.

(Thumbnail image on PJM homepage by Shutterstock.com.)

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Top Rated Comments   
You're all missing it - including you, Doc.
When the Venetian trading merchants saw their shipping and banking businesses stalling out from competition with Spain, France, England and Holland, what did they do? They bought land in the Veneto and became wealthy aristocratic farmers. As Roman power declined, wealthy merchants in Roman cities moved out and bought land to settle on as....aristocratic farmers. Who do you think is buying California land now? "Latifundia" is a very accurate description of what's going on.
And 'Silicon Valley'? It's DEAD, folks. 3 years ago, the remaining companies started farming out their DESIGN ENGINEERING departments to china and india. Within the next 5 years, you'll see Marvell transfer it's corporate HQ to Shanghai, and the Bay Area chip outfits will be reduced to sales offices with some marketing people, while all the product definition, development and manufacturing happens overseas. Watch acres of office parks (many of them empty for over a DECADE) get plowed under in Silicon Valley so that the land can return to it's farming character pre-1970.
Energy? Fair enough. If there's oil in them thar hills, the hypocritical progressives in Sacramento will ignore their own environmental dogma in order to tax the new growth. But notice where that leaves California - a state with lots of agriculture and energy/raw material output. That's EXACTLY what you can say about the most economically active THIRD WORLD NATIONS.
Everyone should take a very careful look at LA and SF as well. It's clear as daylight that both cities are becoming very Third World, with tiny strips of very prosperous, pretty and well guarded neighborhoods stocked with private security, and a vast expanse of run down, dirty, disheveled hovels and ghettos where people scramble to scratch out a miserable living while dodging rampant criminality. I can see SF and LA turning into a Rio De Janeiro or Sao Paolo within the next decade.
1 year ago
1 year ago Link To Comment
I'm not buying what youre selling Mr Hanson. I live in the other valley over the hill from yours and I can assure you the wave of illegal South Americans do not want to come here to be "American". They want to bring Mexico with them here and demand I conform. The ONLY growth industries in Gilroy are Mexican restaurants and Mexican stores. And when I say "Mexican" I mean Mexican ONLY. The modern Liberal demands I give up my life and culture to a group of the 3RD World selfish miscreants... And for what again? SO they will buy our stuff? Hardly... Reconquista is well underway.
1 year ago
1 year ago Link To Comment
"California is hard to destroy in a generation."

Unfortunately, the Democrats consider that a challenge.
1 year ago
1 year ago Link To Comment
All Comments   (81)
All Comments   (81)
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Why does no one excoriate the connection between corporation and state? Everyone knows that corporations are creatures of the state. The corporation is bound by the laws governing its very existence and is therefore beholden to the state. You don’t have to be a politician to see how this begets crony farmers. The statists in power favor the cronies of corporate farms and the twain becomes one. Corporations that favor the criminals in power get their lobby loopholes and the criminals in power keep getting reelected by their crony popular majority by bestowing generous favors on their benefactors, and the vicious cycle keeps repeating. The only way to break the cycle is for crony voters to wake up and smell the stench of their own ill-begotten favors from the state.
1 year ago
1 year ago Link To Comment
There is a more important factor.
Governments can only be buddie buddie with chrony capitalists if the government has the size and power to influence things in the chrony's favor. That's why government needs to be very, very small, perhaps 1/10 of it's current size, with the rest of the power devolving back to the states and municipalities.
1 year ago
1 year ago Link To Comment
1/10 of the government's current size takes you back about 30 years, 1983. And Ronald Reagan was elected to cut back on the size of THAT government. (He failed.)

Even 1/100 of its present size is too big.

It pretty much doesn't matter what gets cut. Cut, cut, and cut yet again I say. Then dig out the roots. There has been no point in my life at which government has been too small.
1 year ago
1 year ago Link To Comment
Right on Stallion!!thanhks for giving us all the whole facts.Liz
1 year ago
1 year ago Link To Comment
RE: Farming Cannot Move

I live in Northern Minnesota, where as of today the lakes are still frozen and the frost is still deep in the ground. Not a great area for farming.

Yet all winter I've been able to buy reasonably good, reasonably priced, fresh tomatoes grown 80 miles away in Superior, WI, and blueberries better than we can pick here in July, delivered from Chile!
1 year ago
1 year ago Link To Comment
VDH wrote: "An engineer would rather have his family live in a 1,000 square-foot box in Mountain View than bring them up in a palace in Tulare."

Why doesn't the engineer tear down the small house on expensive land and replace it with a big house on expensive land? Seems to me that smart people would find a way to at least build an addition, a basement, or something on that land. Here in Texas we'd replace the 1000 square-foot box with a 3000 square-foot starter castle. Farmers Branch, TX even gives homeowners a tax break to demolish small homes and build larger more expensive less illegal immigrant friendly ones in their place. https://www.farmersbranch.info/live/participate/demolition/rebuild-program
1 year ago
1 year ago Link To Comment
Taxes and regulation, my friend. Just try getting the permits. Required environmental impact surveys, city and county taxes, etc., plus the increase in taxes on land values. Then the materials in California are ridiculously expensive. Then there's the nightmare of meeting the building code. California building inspectors are notorious for actively seeking to sabotage projects with red tape. It's so bad a neighbor back home actually threatened one with a rifle, just so he could build a garage. Improving land in California is a nightmare that just gets worse every year. It's so bad I saw a documentary that said it's actually cheaper and easier to strip a building to four standing walls and rebuild from that point because it avoids a huge portion of taxes and regulations.
1 year ago
1 year ago Link To Comment
from the Golden State to the Gold, 'n State

doo dah, doo dah

sand sun sea site a scene seen sad sight

do diddly dude ah day, YO!
1 year ago
1 year ago Link To Comment
Just moved from LA to the Midwest, to a beautiful and peaceful farming state. Anyone who stays in Calif. is in deep deep denial, even the brilliant Dr. Hanson. The funny thing is, my friends feel sorry for me because I had to leave fab LA due to high cost of living. I haven't told them yet that I will never even visit that toilet again, and I am a native Angeleno.
1 year ago
1 year ago Link To Comment
Congrats! I'm an escaped Californian myself. You're probably going to live an extra ten years from decreased stress alone. Take my advice, get a rifle and go shooting with your new red-state neighbors, then make it a point to gripe about Obama and the unions while you're there with them. If you're sincere about it, they'll know you're not a locust. Plus a range day is ALWAYS good for lowering your blood pressure.
1 year ago
1 year ago Link To Comment
The booms and busts are a result of Federal Reserve policy that sucks in greedy investors and then bankrupts them. This is what happened with Fannie and Freddie with securitizing Sub-prime mortgages. The Fed pumped lots of money into the system until they decided it was time to stick a pin in it. Chucky "cheese" Schumer inserted the needle with the IndyMac scare right there in Southern CA. The banks were forced to write down the value of the securities and the market collapsed.
It was not an accident. Allot of Wall Street guys from the CFR and politicians cashed in on the deal. They sell high, engineer the collapse, wait for the suckers to go into foreclosure and buy their property on the cheap. That is what will happen when the Fed cuts off the spigot or something big happens such as 9/11/2001.
The lesson to be learned is to not over leverage or they will take you to the cleaners.
1 year ago
1 year ago Link To Comment
CA is standing tall on a foundation of quick sand. Their arrogance and ignorance of human nature doesn't allow them to see they are slowing sinking. It will be too late for them once the natural resources are either used up or a natural disaster incapacitates it and the brain drain is complete.
1 year ago
1 year ago Link To Comment
For what it's worth, we still have plenty of water in Michigan. Top that.
1 year ago
1 year ago Link To Comment
There is only one universal truth. Everything cycles.
1 year ago
1 year ago Link To Comment
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