Liberals Finally Admit That California Is Shrinking but Still Don’t Accept Blame

By Will Swaim

Sunday, May 15, 2022

 

Closing the books on 2021, the California Department of Finance recently announced that the state suffered its second consecutive annual population drop. Reporting the grim news, the New York Times blamed four phenomena: “Deaths from Covid. Aging baby boomers. Fewer children. Restrictions on immigration.”

 

There are problems with this explanation. Other big states — Texas and Florida, for instance — suffered more Covid deaths than California, but their populations grew during the same period. Baby boomers age everywhere, and when they stop aging we call them “dead.” International immigration fell everywhere in the U.S. during Covid, including California, but with 200,000 people showing up at the southern border every month, that’s over. Family formation slows wherever young people can’t afford the costs of buying or renting a home and filling it with children.

 

The New York Times story does not examine what really put the lid on California’s nearly uninterrupted record of population growth over 170 years: the systematic, decades-long destruction of the state’s economy by a political class ignorant (or contemptuous) of mere economics. Their war on business has made California one of the most expensive states in the nation.

 

California imposes the highest income taxes in the nation and has shut down new home construction. State lawmakers are expanding the power of regulatory agencies over business and individual and social life; eliminating fossil fuels with no reliable energy backup; killing the timber industry in order to save forests that (consequently, and annually) burn in homicidal wildfires; cratering what used to be the nation’s best — now its second-worst — public-school system. Thanks to zany environmental regulations, our gasoline and electricity prices are always highest in the nation. In the last two weeks, the governor announced that we’re in for the strictest water rationing in state history. Despite losing in court, California continues to insist it has the right to order corporate boards to include marginalized Californians as members. Now it says it will regulate labor relations in the fast-food sector.

 

I could go on. And this isn’t just the bland world of policy. There’s something deeper — something like actual class hatred among our elected officials. When regulators threatened to shut down Tesla’s Fremont factory during Covid, Elon Musk announced he’d move the company to Austin, Texas. When he made good on that threat, state assemblywoman Lorena Gonzalez tweeted this farewell to one of the state’s biggest taxpayers: “F*ck Elon Musk.”

 

Each of these phenomena is the result of bad policy and bad politicians — hundreds or thousands of bad policies, not God or history or the God of history. Californians are like American revolutionaries, trapped by a legislature that “has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance,” as Jefferson wrote. This explains why California’s population is declining.

 

A Tale of Two Cities, Santa Ana and Kyle

 

My organization, the California Policy Center, created “The California Book of Exoduses” to memorialize the companies fleeing California dysfunction. The Hoover Institution says that these firms are leaving California twice as fast as in previous years, “with no end in sight.”

 

The New York Times ought to have talked to execs at just one of these companies, someone like David Ames, president of California-based Sovereign Flavors. In mid March, Ames announced that he’s moving his company from Santa Ana to Kyle, Texas, 45 minutes south of Austin.

 

Sovereign’s move wasn’t the biggest news in California — in fact, it doesn’t appear to have been news at all there. But it’s all over Texas. The San Antonio News-Express declared Sovereign’s relocation evidence that “the great migration continues,” while Austin’s CultureMap.com noted that Sovereign “joins a parade of businesses that have relocated from California to Texas in the past several years. Those companies include Oracle and Tesla, both based in Austin; Hewlett Packard Enterprise, based in Spring; and CBRE and McKesson, which are based in Dallas–Fort Worth.” Papers across the Lone Star State — even in towns I’d never heard of, such as Cleburn, Longview, Weatherford, and more — reported the good news of Sovereign’s move.

 

But why would Sovereign president David Ames — born in the Bay Area, educated at Cal Poly San Luis Obispo (a B.S. in food science) and UCLA (M.B.A. from the Anderson School), with children and extended family throughout California, and a successful tech business operating a few minutes from the beach — why would that guy leave all that for life in a town of 46,000 best known as the Pie Capital of Texas™?

 

“Okay,” he tells me, “here’s what we’re up against in California.” He begins a one-minute description of life inside a growing company.

 

In 2019, with business booming, space was so tight that Sovereign was running two shifts to move product. Ames leased a new building nearby. “We did all the required paperwork,” but three years on “we still don’t have approval to build out the new space.” He says that Southern California Edison was supposed to map electricity for the expansion but took seven months to make its first visit — and then told Ames it would be another six months before they could draft the plan. That would have put final submission of plans sometime after January 2022. Meantime, dealing with Santa Ana city officials “was just one thing after another.” The state, too, he said, was obfuscatory, mercurial, unreliable. “Some of it was Covid,” he says, sounding generous. “But all of it was just so . . .” He pauses to search for the right word before settling on “California.”

 

“I’ve got to take care of my customers,” he says, seeming to tap a deep reservoir of frustration. “I can’t wait for California and all of its regulations. Everything here is contentious. You just never know where they’re coming from.”

 

In late 2021, “I said, ‘Enough is enough.’” He visited Kyle, Texas, met local officials, bought land, and moved through the permit process on his new building. “Out in Texas, business isn’t a left–right issue. There’s no politics, no crap with this. It’s just a different experience. They want you there. They’re nicer people.”

 

California has become the place where, increasingly, businesspeople know they’re unwanted, and it doesn’t take a tweet from a public official to tell you so.

 

This Happened Before

 

Perhaps the New York Times didn’t bother to talk to someone like David Ames — didn’t, that is, do basic reporting — because it was easier to simply perform the function of state stenographer, communicating what California officials would like us to believe about population decline, that population decline is driven by factors beyond political control (pandemics, fertility, aging) or something that President Donald J. Trump did to them (limiting immigration from Mexico and Central America).

 

Demographers, geeks, and old people will see that the New York Times came dangerously close to acknowledging that California’s real problem is that its political class hates businesspeople. It’s buried in the story, in a bit that seems to suggest there’s nothing to see here because “residents leaving the state for economic reasons” is “not a new phenomenon.” The reporter helpfully cites a population drop in the early 1990s, a result, he notes, “of the decline of the aerospace and defense industries in Southern California.”

 

Two things contributed to that earlier decline. First, seized by a belief that the Cold War was over — that we weren’t gonna study war no more — Congress did indeed cut Pentagon spending. That was inarguably beyond the control of California lawmakers.

 

But second, by the early 1990s California had already earned a reputation for hostility to markets. Writing in 1993, a Los Angeles Times reporter noted that “even when this [defense spending] drought ends, it is questionable whether a major new military airplane will be built in California. As defense budgets have dropped, contractors have consolidated and looked for the cheapest, most efficient places to manufacture. California struggles because of its reputation as a high-cost, bureaucratic place in which to do business, analysts say.”

 

An Old Joke vis-à-vis California

 

You know this classic: A guy trapped on his roof in a flood prays for God to save him. A man in a rowboat paddles up and yells, “Jump in! I can save you!” No, says the guy on the roof, I’m waiting for God. A woman in a motorboat races up and shouts, “Jump in! I can save you!” The guy on the roof says, “Thanks, no, prayer, waiting for God.” A helicopter appears overhead — similar message from the pilot and same response from the guy on the roof. The torrent rises, violently sweeping the man to his death. Appearing immediately before God, the man says, “Where were you when I prayed for help?” God says, “Who the hell do you think sent the rowboat, motorboat, and helicopter?”

 

In the years since the Los Angeles Times story, aerospace employment in Los Angeles County fell from 130,000 in 1990 to 40,000 in 2010. That story now reads like an ancient warning that California was already on the wrong economic path. It went unheeded. Decades from now, Californians may well wonder why we didn’t react to the California Department of Finance’s latest analysis — or see through the New York Times’ reporting on it.