It just gets harder and harder to live free in California

Legislation passed by California's Legislature six and a half years ago (!) is finally being implemented. Its title is "California's Short-lived Climate Pollutant Reduction Law," or S.B. 1383 for short. (S.B. stands for senate bill.) Its primary purpose is to reduce human-activity methane emissions. The legislation is supposedly going to slow climate change by diverting 75 percent of organic waste from landfills and redirecting 20 percent of edible food to "food-insecure" Californians.

Advocates for the regulations assert that "methane is a climate super-pollutant 84 times more potent than carbon dioxide." That could be true, but only on a molecular basis. What's deliberately left out of that claim is that carbon dioxide constitutes 0.04 percent of the atmosphere, while methane amounts to only 0.00017 percent. Thus, the number of CO2 molecules is 235 times the number of methane molecules in the atmosphere. While it's possible that methane is more powerful as a greenhouse gas per molecule, there are simply not enough methane molecules to have a measurable impact on the Earth's atmosphere.

If you google the question, "Is there evidence that methane contributes to global warming?," all you'll find are assertions and speculation, not evidence. That shouldn't be surprising. Evidence is rarely in evidence when it comes to global warming catastrophism. The alarmists are happy believing naïvely that correlation equals causation.

Furthermore, it never seems to occur to California politicians that California is not the world. The world's population is currently about eight billion. California's is about forty million, which accounts for only 0.5 percent of the global population. Even if California achieved "net zero" methane generation, how much would that reduce global methane? Whatever success California made in reducing methane would quickly be neutralized by circulation in the Earth's atmosphere.

There are numerous questionable assumptions and unanswered questions inherent in S.B. 1383. Some of the organic waste that now ends up in landfills decomposes just as compost does. Meanwhile, many consumers dispose of their uneaten food in garbage disposals. Is there a net difference between disposing and composting in terms of methane generation? If so, how much of a difference?

The California Legislature's contribution to the rest of the country is to demonstrate what not to do. If methane needed to be reduced, the most effective route would instead be through innovation and the free market, not coercion. Half the methane generated from human activity in California comes from cows. Ironically, an increasing amount of their waste is being captured and converted into renewable natural gas. That's true as well for landfills.

In that same vein, I recently spoke to the manager of a supermarket where my wife and I usually shop. His supermarket and (he believes) others in town already send their unsold edible food to the local food bank. Any spoiled produce goes to a local pig farmer and has for many years. It's a win-win for all involved and therefore happens voluntarily.

A curious term in the title of the legislation is "short-lived." It's there because the "residence time" of methane in the atmosphere is approximately nine years. Residence time is the average time it takes for a molecule to break down and be removed naturally from the atmosphere. In comparison, the residence time for carbon dioxide varies from 20 to 200 years.

The law all but reimposes the draft. The following excerpts are from the informational instructions provided by the authorities:

Businesses and apartment complexes must provide collection containers for compost and recyclables to employees, contractors, tenants, and customers.

Annually provide educational information about the requirements to compost and recycle including how to sort properly among the three waste streams.

Periodically inspect recycling and compost containers and inform employees if contamination is found.

Who is going to collect the edible surplus food and see that it finds its way to "food insecure" Californians? Logistically, it's not that easy. Who's going to assure that the unsold food hasn't spoiled? Will anyone be held accountable?

Because enforcement of S.B. 1383 is only just starting, very few Californians are aware that arrogant politicians and bureaucrats are once again stealing their freedoms for bogus reasons. When that finally hits home, many Californians will not be happy. Will they rebel? It could be fun to watch. To survive and keep your sanity in California, it helps to have a wry sense of humor.

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◼ It just gets harder and harder to live free in California - American Thinker January 12, 2023

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Righteous Recycling

Why should leftists bother to make recycling work when their real objective is reached merely by appearing to practice it?

 

Recycling is a leftist sacrament. It fulfills emotional needs for Democrats. They suffer deep-seated guilt from participating in a materialistic culture that they think results in widespread environmental harm. For them recycling serves as a kind of visible penance. Unfortunately, recycling leads to unintended consequences. 

 

A recent article in the Eureka, California Times-Standard began as follows: 

“The CRV situation in Humboldt County is a losing situation for everyone. 

Three major recycling centers in the county have halted all buyback programs for cans, bottles, and glass. 

Customers who pay 5 cents per can at the grocery or convenience store have a nearly impossible time getting that fee back.” 

“CRV” stands for California Refund Value. Two out of three of those words are bogus. Refunds have almost ceased and recyclables have little or no value. The program, however, epitomizes California. 

 

Californians are the truest believers in recycling. Over the decades the state has passed laws that use both force and bribery to increase recycling obedience. One such law pertains to glass, plastic, aluminum cans, and bottles. It requires merchants who sell beverages to charge customers an extra 5 cents for containers up to 24 ounces and 10 cents for containers above 24 ounces. 

 

The legislation enabling the program is the “California Beverage Container Recycling and Litter Reduction Act.”  It has been in effect since 1987 and is administered by the CalRecycle agency. 

 

The law requires supermarkets and other beverage dealers to reimburse the 5 or 10 cent deposits to anyone bringing in their containers, no matter where they acquired them. Milk, wine, and distilled spirits containers are exempt from the law. Beverage merchants must pay a fine of  $100 a day if they choose not to participate. 

 

As you might suspect the program has been something of a minor catastrophe. Part of the problem is that in California and elsewhere recycling has all but collapsed, partly because China stopped buying recyclables. The state passed the law based on the assumption that recycling would always be economically viable. 

 

Wildberries Marketplace, a local supermarket, has chosen to pay the $100 a day fine. According to manager Aaron Gottschalk , “We are here to sell groceries. We are not a recycling center. We felt it was a risk to the safety and sanitation of our store. We just knew we couldn't do it. Did we want to avoid the fee? You bet. But in order to avoid the fee paid to CalRecycle, we would have to fabricate a story and say we were doing something that we were not doing. We weren't going to make that choice and we're paying the fee.” 

 

Wildberries, in other words, is being forced to pay a $100 a day fine for being out of compliance with a law that is all but impossible to obey. 

 

Wildberries is where my wife and I buy most of our groceries. In a conversation with Gottschalk she was told, “Complying would cost us way more than $100 a day. We would have to take every bit of recycling offered to us and then truck it to Crescent City at our expense.” (Crescent city is 85 miles north of the store.) 

 

According to CalRecycle 50 retailers in Humboldt County are now obligated to redeem CRV containers in stores. Notably absent from CalRecycle’s list are Walmart, Target, and Winco. 

 

Most of the Humboldt County designated recycling sites are simply ignoring the rules—they aren’t taking in cans and bottles and they aren’t paying the fines. CalRecycle has been locked down for the past year so there has been no on-site enforcement. 

 

For all practical purposes, recycling has ceased. It simply is no longer economically viable. Supply and demand have turned against it. The price paid for recyclables is below zero, i.e. you have to pay to get someone to take it off your hands. As is the case with ethanol fuel, recycling can only thrive by way of coercion or taxpayer-funded subsidies. 

 

Lawmakers in California are aware of the mess they’ve created, but don’t assume they’ll do anything about it that makes sense. North Coast Assemblyman Jim Wood recently submitted legislation that would permit recycling centers to schedule appointments, something that’s currently prohibited. According to Wood, “These modest changes will by no means solve all the problems facing the bottle bill program, but they address a crisis in my district, and hopefully they will help other communities struggling with access to redemption centers.” Exactly how making appointments would solve any of the deeper problems of the program, he did not explain. 

 

Meanwhile ninety-five percent or more of what goes into recycling bins goes to landfills. That reality is something no one wants to talk about. It would be too upsetting. What we have is faux recycling. 

 

The left’s use of recycling as visible penance is similar to what Christian theology called “outward signs of grace.” That was an issue Saint Augustine addressed in the 4^th century. It dealt with the fact that others could not see if you had grace. Recycling is a modern attempt to cope with the same problem. 

 

Ron Ross Ph.D. is a former economics professor who is currently a wealth manager. He can be reached at rossecon@aol.com. 

 

 

Other articles of interest on this topic: _____________________

◼ CalRecycle's Regulatory Abuse - Leonard Lang

◼ Expert accuses CA of the worst legal environment in the US - Leonard Lang

California in an Oyster Shell

Most people in the rest of the country know that the state of California is a strange place. Unless you live here, however, you can’t fully appreciate just how dysfunctional it has become.

A case in point is what is happening to Coast Seafoods Company, the state’s largest shellfish producer. The company has been operating an oyster farm in Humboldt Bay for the past 65 years. However, the company may cease operation because the California Coastal Commission in June voted 6-5 to deny permits for both the company’s existing 230 acres of shellfish farming as well as a proposed 265-acre expansion. Coast Seafoods has 80 employees and an annual payroll of $2 million. Doubling its capacity is a microcosm of what economic growth means and how it happens.

The commissioners who voted to deny the permit renewal and expansion asserted that the company “had not adequately addressed potential impacts to ecologically significant eelgrass beds in the bay.” Humboldt Bay covers a total of 17,000 acres. The disputed area, therefore, comprises less than three percent of the bay.

California has made the accomplishment of virtually any economic activity incredibly costly in both time and money. Coast Seafood’s project, for example, has to be approved by the Humboldt Bay Harbor District, the California Coastal Commission, the North Coast Regional Water Quality Control Board, the California Fish and Game Commission, and the U.S. Army Corps of Engineers.

Even if all those agencies approved the project there would still be obstacles. Three environmental groups, Audubon California, Earth Justice, and California Waterfowl Association, have filed a lawsuit alleging that the oyster farm expansion would “irreparably harm eelgrass in the bay.”

In its attempt to expand its oyster beds Coast Seafoods has so far spent over $2 million for environmental studies. Although the company initially wanted approval to farm 500 acres, it has reduced its request several times in attempts to meet the long list of concerns and demands by the various agencies.

Jack Crider is the harbor district’s executive director. His agency voted unanimously to approve the oyster farm’s renewal and expansion. He said, “By the time we butcher the hell out of this, we’ll be lucky to have 100 acres, maybe 70 or 80 acres, divided up six different ways.… If you were in the oyster industry, would you consider investing in Humboldt Bay after this? It’s just a big trigger to say it’s going to be too expensive and difficult to get a permit. They’ll go to Oregon, they’ll go to Washington, they’ll go somewhere else. They won’t go to California.”

If Coast Seafoods ceases operation, it will not be the first oyster farm to succumb to out of control regulations in California. Two hundred miles south of Humboldt Bay is Drakes Bay. The oyster farm there, in operation since the 1930s, was forced by the U.S. Park Service to suspend operations in 2014. The dispute had raged for over ten years and was considered to be one of the ugliest environmental disputes ever. Fighting the forced closure were Democrat Senator Dianne Feinstein, renowned California cuisine creator Alice Waters, and Food Democracy Now. Even California leftists are powerless against the march of the inexorable agencies.

In her letter to the Park Service Feinstein wrote, “The Park Service has falsified and misinterpreted data, hidden science and even promoted employees who knew about the falsehoods all in an effort to advance a predetermined outcome against the oyster farm. It is my belief that the case against Drakes Bay Oyster Company is deceptive and potentially fraudulent.” Same old same old.

California stacks regulatory agency on regulatory agency. Permission for most projects requires approval from all layers. The result is that every agency has what amounts to veto power over any project. The agencies are populated by self-important board members who see themselves as vital guardians of the planet. Wildlife is assumed to have infinite value for which any minute risk or uncertainty is deemed to be unthinkable. Anything else, human well-being, for example, is assumed to have zero value.

Furthermore, each agency has tunnel vision. They aren’t allowed or motivated to consider anything outside their narrow focus. Nothing else can be considered, no compromises are allowed. Private property rights are given absolutely no consideration. They can do nothing beyond enforcing the rules they’re hired to enforce. This is not the way we should be making resource-allocation choices.

The agencies in no way bear the costs of the decisions they impose on the people and companies they regulate. When their rulings put a company out of business, it’s not their problem. Their job security is untouched.

There is absurd duplication and redundancy throughout the bureaucracies. The Coast Seafoods project must receive “water quality certifications” from the Army Corps of Engineers as well as the North Coast Regional Water Quality Control Board. (Ironically, oysters filter water.)

The regulatory agencies and their environmentalist co-conspirators are expert goal post movers. Their favorite ploy is to add to the already long list of “threatened” species. For example, in the oyster farm issue a new concern is for the black brant goose. Supposedly a three percent reduction in Humboldt Bay eelgrass will constitute an existential threat for the geese in their annual migrations.

Eelgrass, black brant geese, marbled murrelets (a shore bird that nests in old-growth forests) have all been granted victim status and they will not be the last. The supposed at-risk species used to execute the Drakes Bay oyster farm was the harbor seal. Agencies don’t mind taking sides in imagined conflicts between species, e.g. eelgrass vs. oysters, seals vs. oysters, spotted owls vs. barred owls, whatever works.

An article of faith among environmentalists is that every ecology is a fragile, delicate system. Each ecology’s current state is perfect and the tiniest change will set in motion forces too terrible to contemplate. To describe the agencies as “risk averse” is far too tame a description. Negativity overwhelms positivity.

Besides having to cope with all the agencies, California grants incredible power and authority to every imaginable self-appointed protector of the “environment.” A traditional legal doctrine is that to sue someone you must demonstrate “damages” and “standing.” Environmental groups are given wide latitude in making such claims. Everyone is granted “stake-holder” status. In addition, “not in my backyard” resisters successfully stop or at least delay project after project.

In any economy, there are wealth creators and wealth preventers. In California, the wealth preventers hold the upper hand. Because the obstructionists have been so successful in the past at consolidating their power, there are few checks and balances left in the state. The state is politically and philosophically uniform and predictable. Diverse it is not.

The wealth preventers, i.e. environmental groups, trail lawyers, and Democrat politicians, hold the reins of power in California. They are all system wonks and are experts at gaming the system. They feign concern for spotted owls, delta smelt, and eelgrass.

In actuality, logging opponents couldn’t care less about spotted owls. Their real objective is to stop all logging or at least make logging so costly and such a hassle that it’s greatly reduced. If there were a population explosion of spotted owls it would have absolutely no impact on their opposition to logging.

The oyster company’s maddening regulatory mine field is the rule in California and there are only rare exceptions. California’s insanity has gotten so over the top even some liberals can’t ignore it. After the legislature and Governor Brown recently extended its asinine “cap and trade” policy for an additional ten years, San Francisco Chronicle columnist Joe Mathews wrote, “Can our system for controlling greenhouse gases be adopted around the world? Or is California pursuing a lonely one-state war on climate change that will land us in a bubble of economy-destroying regulations?… At its worst California is a bubble of distinctive and convoluted regulations and laws, which are hard to unwind, especially in a state with so many lawyers.”

California is like a petri dish for unbridled Democrat control. It’s the canary in the economic coal mine. The state is demonstrating to the rest of the country what’s in store if Democrats start winning elections. It’s what would have been in store for the whole country if Hillary Clinton had won in November. President Trump has made rolling back regulations one of his foremost priorities.

That California’s economy manages to function as well as it does in spite of the barriers placed in front of it is a tribute to the persistence, energy, and creativity of its wealth creators. California has such immense beauty, natural resources, and human resources the fact that they are being so squandered and wasted is a crime. The difference between what could be accomplished in the state and what is accomplished is incalculable.

“Of all sad words of tongue or pen, the saddest are these, ‘What might have been.’” — John Greenleaf Whittier

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◼ California in an Oyster Shell July 27, 2017

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

California Gasoline Prices: The Damage Done

Currently the average price of regular gasoline in California is $3.81 per gallon. That is $1.11 above the national average ($2.70). What are the reasons for this 40 percent higher price? There’s a witch’s brew of factors, but in a nutshell it boils down to the fact that California’s Democrat politicians have taken on the responsibility of saving the planet. That, of course, is a quixotic endeavor. Californians are wasting billions of dollars and getting nothing in return.

Individually California consumers spend about sixteen dollars more than necessary each time they fill their gas tanks or about $600 a year on average. Collectively California consumers purchase 14 billion gallons of gasoline each year. In other words, we’re spending $15 billion a year more than what we would if gasoline prices equaled the national average. The benefit-cost ratio of those expenditures is as close to zero as you can get.

Fuel costs are a major budget item for many California businesses. High gasoline and diesel prices have impacts beyond what can be seen at the pump.

One big contributor to the price difference is the “special formulation” for gasoline in California. Think of it as special gasoline for a special state. The formulation is the brainchild of the California Air Resources Board, possibly the most powerful and destructive bureaucracy ever created by a single state.

The special formulation supposedly creates less air pollution than gasoline sold in the other 49 states. Unfortunately, there are only a small number of refineries capable of producing the special formulation. That fact leads to other costly problems. The small number of refineries restricts supply and reduces competitive pressure resulting in higher prices. Whenever a refinery is out of commission prices spike. That happens on a fairly regular basis.

Another culprit in California’s elevated gasoline price is the “California Carbon Tax Law of 2014.” The tax took effect at the beginning of 2015. It mandates that petroleum suppliers buy “pollution permits” for the greenhouse gases generated by the fuel they deliver. At this point, how this complicated law is actually going to play out and how the revenue is to be used is anyone’s guess. At the present time a permit for producing a ton of CO2 is roughly $12.

The law “finds and declares” that “Global warming poses a serious threat to the economic well-being, public health, natural resources, and environment of California. The adverse impacts of global warming include the exacerbation of air quality problems, drought, fires, and an increase in the incidences of infectious diseases, asthma, and other human health problems.” We’re doomed!

The authors of the law could not resist the opportunity for patting themselves on the back: “California has long been a national and international leader on energy conservation efforts through energy efficiency requirements, renewable energy standards, natural resource conservation, and greenhouse gas emission standards for passenger vehicles.” Californians are so lucky to have such wonderful politicians watching out for their well-being.

Will not higher gasoline prices disproportionately impact low income earners? Not to worry. They thought about that already: “It is the intent of the Legislature that revenues collected under this part be rebated to taxpayers, particularly low- and medium-income taxpayers, of other taxes imposed under this code. In that regard, implementation of the carbon tax is intended to be revenue neutral.” Isn’t that clever? Devilish details yet to be determined.

Politicians and environmentalists do not consider high fuel prices to even be a problem. In fact, they applaud them. The state’s Carbon Tax Law is deliberately designed to increase the price of gasoline and diesel fuel for California consumers. The law states, “The prices of fossil fuels in California’s energy markets do not reflect the true cost to society of the combustion of hydrocarbon fuels and the release of carbon dioxide into the environment.” Once again politicians have declared that the price system isn’t working properly and it’s their job to put that right.

Although not unique to California, fuel prices are also made unnecessarily high because of the federal “Renewable Fuels Standard.” That’s the widely criticized law that mandates blending ethanol with gasoline. California’s enthusiasm for that law is above and beyond that of most other states.

The RFS adds insult to injury because ethanol has only about two-thirds as much energy per gallon as compared to gasoline. Consequently, E10 (ten percent ethanol) results in “3 to 4 percent fewer miles per gallon” than with pure gasoline according to Fueleconomy.gov.

Retailers in most states give consumers a choice between straight gasoline and E10. In California you are prohibited from using straight gasoline on streets and highways. Since ethanol does damage to small engines (lawnmowers and chain saws, for example) Californians have been graciously allowed to purchase straight gasoline. Relatively few dealers exist, however, and the price is significantly higher (currently $5.46 per gallon at one local dealer) than for E10. Dealers are heavily fined if they get caught putting pure gasoline into automobiles.

The Renewable Fuels Standard not only increases the price of fuel, it also does additional damage by raising food prices. Because of the ethanol mandates, 40 percent of the nation’s corn production goes to fuel not food. Everyone in the country, not just Californians, is paying more for food because of the RFS.

Still another contributor to the unusually high gasoline prices in the state is the above average gasoline tax. Nationally the average gasoline tax is $.49. The California tax is $.69 per gallon for gasoline and $.79 per gallon for diesel. Are streets and highways better in California than other states? Not noticeably.

Complaints about California’s high gasoline prices are surprisingly rare. Why more Californians don’t complain about how they’re getting soaked by the state’s politicians is a mystery. Maybe this summer as many of them drive through other states on their vacations, more of them will become aware of the totally unnecessary damage being done to their budgets. Maybe they will start screaming and hollering. They certainly have reason to.

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◼ California Gasoline Prices: The Damage Done May 21, 2015

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

California Descends Deeper Into Self-Destruction

California — it’s the best place to live and it’s the worst place to live. The physical climate is almost ideal and the political climate, if you’re a conservative, is surreal. Through their politicians and bureaucrats Californians seem hell bent on destroying the state’s vast potential. It’s a painful sight to witness.

The latest, all too typical, example is a law signed by Governor Jerry Brown last week mandating new renewable energy requirements for electric utilities in the state. The new law requires that 33 percent of electricity generated be done with “renewable” sources, essentially wind mills and solar panels, by the end of the year 2020. What’s the objective of this “ambitious” new regulation?

To answer that question you first need to understand that California has a wildly inflated sense of self-importance. Californians actually believe they have the ability and duty to save the planet. Humility is clearly not their strong suit.

California has a population of roughly 37 million. That is barely half of one percent of the world’s population. If Californians reduce their “carbon footprint” by a third (a very tall order), that will reduce humanity’s carbon footprint by one sixth of one percent. I hate to tell my fellow Californians, but there is no way on earth that will make an iota’s worth of difference.

Some Californians will point out, however, that that misses the point. Because they think California is the center of the universe, what happens here will change behavior and attitudes throughout the world. California is a place where self-esteem has run amok.

At the signing ceremony Governor Brown said, “It’s about California leading the country. It’s America leading the world. There are people who think we can drill our way to happiness and prosperity. Instead of taking oil from thousands of miles away, we’re taking the sun and converting it.” Brown went on to say quite proudly, “I didn’t get my name ‘Governor Moonbeam’ for nothing.”

A recent Public Utilities Commission study found that previously imposed renewable energy regulations have added $6 billion to what utilities have had to spend generating electricity since 2002. Has there been any measurable or identifiable benefit for spending that unnecessary $6 billion? The benefit-cost ratio of those expenditures is a close to zero as it’s possible to get. This has been absolute folly and we are about to multiply it by who knows how much.

Such costs are even worse than increasing taxes. Taxes at least have the potential to create value when spent on, for example, teachers’ salaries. Taxes redistribute wealth, mandates destroy wealth.

When the utilities are forced to buy several times more power generated by windmills and solar panels, the price is bound to go through the roof. Not to worry, however. The new law further requires the utilities commission to place limits on how much can be spent on renewable power. When one kind of coercion isn’t enough, follow up with another kind of coercion. Of course, the only real result of a price ceiling is to create shortages. Shortages do even more economic damage than rising prices. Keep passing laws until the entire economy is in a straightjacket. One interference with the market always necessitates another, as Fredrich Hayek demonstrated long ago in The Road to Serfdom.

As is usually the case (Obamacare, for example), the spineless lawmakers left the ugly details to the bureaucrats. According to public utilities commissioner Mike Florio, “Our staff is already figuring out what we’ll need to do. It’s clearly a priority for the state, so we’ll get it done as fast as possible.” The politicians and the bureaucrats have not the vaguest idea what they’re doing. They know nothing about what’s involved in providing electricity to the state’s residents and businesses, and they don’t really see why they need to.

The legislation demonstrates the liberal faith in and willingness to use force. The assumption is that solar panels and windmills can suddenly increase their output just because a law has been passed. It’s not that simple. The politicians have no more understanding about how technology works than they do about how the economy works.

If it’s California’s responsibility to save the world, and if force works, why such a modest target? Why not, for example, a 100 percent renewable requirement by 2015? The 33 percent mandate by the end of 2020 is totally arbitrary. How was it arrived at? When you’re operating in a realm where costs don’t matter and objectives are utopian, numbers are a mere afterthought. The targets are unlikely to be achieved even after billions of dollars have been squandered. According to Gino DiCaro, spokesman for the California Manufacturers and Technology Association, industry in California already pays electricity rates about 50 percent higher than the rest of the country. That, of course, is one of the reasons for the exodus of businesses from the state.

Although California politicians fail utterly in their basic responsibilities—balancing a budget, for example—they arrogantly believe they can save the planet. Their attitude is, “We can’t possibly focus on the state’s economy. We’re too busy stopping global warming!” Just as they recklessly overpromise on government-employee pensions, they overpromise on their ability to cure the world’s maladies.

In a spot-on Wall Street Journal column last year entitled “California: The Lindsay Lohan of States,” Allysia Finley (a former resident of California) pointed out that our government here is being “run by a brothel of environmentalists, lawyers, public-sector unions and legislative bums.” Her article followed the November elections that made California a one-party state. She said the state is like “a prima donna who once showed some talent but is now too wasted to do anything with it.” I fervently wish her words weren’t so true. As a resident of California, it breaks my heart to see the state’s vast potential being squandered. As an economist it pains me to see resources so grossly misallocated and wasted on such a massive scale.

I wish this self-destructive behavior were confined to California. Ominously, the renewable mandate signing ceremony was attended by U.S. Energy Secretary Steven Chu. It isn’t often a state-level bill signing is attended by a U.S. cabinet officer. The Obama administration obviously believes California’s lunacy is just what the rest of the country needs. God help us.

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◼ California Descends Deeper Into Self-Destruction April 21, 2011

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Don't Blame Reagan

Today's California seems to hate the private sector. And vice versa.

◼ Don't Blame Reagan - Ron Ross/North Coast Journal

We can all agree that California is a fiscal mess. As I have traveled around the country over the past few months, people I talk with seem to essentially view our state with a sense of pity. They ask, "What are you guys going to do out there?"

The fact that this state, with all its natural beauty, delightful climate and creative population, has gotten itself into such dire straits raises the obvious question -- why? How, exactly, did this come to pass?

Two Bay Guardian journalists, Steven Jones and Tim Redmond, present the rather implausible hypothesis that the true sources of our problems are rooted in the long-ago administration of Ronald Reagan and the free market philosophy that he espoused. More specifically, they blame the 1978 passage of Proposition 13, which limited property tax increases in the state. Attributing our problems to Prop 13 is an argument I've seen presented many times over the past few years.

Jones and Redmond assert that "opposition to taxes is now deeply embedded in the California electorate." Their lament, essentially, is that we are in this predicament because taxes aren't high enough. Granted, primarily because of Prop 13, California's property tax rate is below the national average. That, however, is only part of the picture.

California has the highest state income tax rates and the highest sales tax rates in the nation. We are first out of 50 in those rather dubious achievements. (Our top income tax rate, 10.55 percent, is almost twice the average of the other 49 states.) I shudder to think how high our tax rates would be if the electorate were not under the spells of Ronald Reagan, Howard Jarvis (described by the authors as "a Republican landlord lobbyist") and Milton Friedman. In spite of Prop 13, state government expenditures have increased more than 7 percent per year since its passage.

Jones and Redmond seem to believe that advocacy of free market economics and opposition to government growth started in California 40 years ago. They also believe that California is such a trendsetter that the philosophy contaminated the rest of the country, and the whole world as well.

Argument for the benefits of free market economics has been around for well over 200 years and was first elaborated by a Scotsman, Adam Smith, with the publication of "The Wealth of Nations" in 1776. The most famous tax revolt, the Boston Tea Party, occurred in 1773.

It apparently doesn't occur to the authors that the kinds of liberal and progressive policies they advocate might have played in California's decline. Because they refuse to look inward or take any accountability, they can only conjure up strained explanations as to why someone else must be to blame. All the state's problems are caused by the ghosts of three dead white guys (Reagan, Jarvis and Friedman).

California's fundamental problem is its anemic economic growth rate. Our state has the fourth highest unemployment rate (12.2 percent) and the second highest home foreclosure rate. Is California in such relatively bad shape because its citizens are not taxed enough? That doesn't make sense.

The opposite is much closer to the truth. Because of high taxes and irrationally burdensome regulations, California is near the top of the list in regard to hostility toward business. According to a ranking by the Small Business and Entrepreneurship Council, only New Jersey has a more business-unfriendly environment. Californians can, if they choose, burden businesses with ever more demands and regulations. They pay a high price, however. Choices have consequences. Intel Corporation, the chip manufacturer that started in California, announced earlier this year that it would be investing $7 billion in new manufacturing facilities over the next two years -- in Oregon, Arizona and New Mexico. There's a pattern there. Are they avoiding California because our taxes are too low?

Jones and Redmond recognize the negative effects of the kinds of policies they espouse. "Certainly, turning over more public resources to free market capitalists, cutting taxes and slashing government regulation will spur private sector economic growth, just as advocates claim. But that growth has a cost. The wealth won't be shared by everyone." Their argument essentially says there's no point in creating wealth if it's not equally distributed.

In other words, if the beneficial impacts of some policy are not equally shared by everyone, they must be rejected. Such a standard creates an absolutely impossible hurdle for any human action. For Redmond and Jones, income equality is more important than economic growth. I have never understood those kinds of priorities. The damage done by unemployment is a real and unrecoverable loss. Ironically, it also hurts government revenues and, in the end, those citizens who depend on government-funded programs. If Redmond and Jones really want more money flowing into state coffers they should be welcoming policies that encourage economic vitality.

Jones and Redmond regret that corporations don't pay as much taxes as they should, partly because of Prop 13. The fantasy that corporations are capable of paying taxes is one of the most naïve beliefs of the left. In the real world, the world all of us actually live in, only humans are capable of paying taxes. Corporations are only intermediaries. They can write the checks to the IRS or the Franchise Tax Board, but they can't bear the "burden" of taxes any more than cows or real estate can.

Corporations connect with humans in three ways -- owners, employees and customers. The burden of corporate taxes falls on some combination of those three groups. Corporate taxes result in some combination of reduced profits for shareholders, higher prices for customers and lower wages for employees. The actual distribution of the effects varies from industry to industry, case to case. The conclusion of most recent research indicates that the principal burden falls on the employees of corporations. If your objective is to soak the rich, the corporate tax is an extremely crude and counterproductive means for doing so. Many on the left despise corporations and have no interest in actually analyzing their policies, so the corporate tax is one of their favorite weapons of choice.

California will survive and we will muddle through somehow. Unfortunately, we are squandering our vast potential by misreading the fundamental sources of our chronic problems.

_________________

This article originally ran in the North Coast Journal. October 29, 2009

Today's California seems to hate the private sector. And vice versa.

◼ Don't Blame Reagan - North Coast Journal

We can all agree that California is a fiscal mess. As I have traveled around the country over the past few months, people I talk with seem to essentially view our state with a sense of pity. They ask, "What are you guys going to do out there?"

The fact that this state, with all its natural beauty, delightful climate and creative population, has gotten itself into such dire straits raises the obvious question -- why? How, exactly, did this come to pass?

Two Bay Guardian journalists, Steven Jones and Tim Redmond, present the rather implausible hypothesis that the true sources of our problems are rooted in the long-ago administration of Ronald Reagan and the free market philosophy that he espoused. More specifically, they blame the 1978 passage of Proposition 13, which limited property tax increases in the state. Attributing our problems to Prop 13 is an argument I've seen presented many times over the past few years.

Jones and Redmond assert that "opposition to taxes is now deeply embedded in the California electorate." Their lament, essentially, is that we are in this predicament because taxes aren't high enough. Granted, primarily because of Prop 13, California's property tax rate is below the national average. That, however, is only part of the picture.

California has the highest state income tax rates and the highest sales tax rates in the nation. We are first out of 50 in those rather dubious achievements. (Our top income tax rate, 10.55 percent, is almost twice the average of the other 49 states.) I shudder to think how high our tax rates would be if the electorate were not under the spells of Ronald Reagan, Howard Jarvis (described by the authors as "a Republican landlord lobbyist") and Milton Friedman. In spite of Prop 13, state government expenditures have increased more than 7 percent per year since its passage.

Jones and Redmond seem to believe that advocacy of free market economics and opposition to government growth started in California 40 years ago. They also believe that California is such a trendsetter that the philosophy contaminated the rest of the country, and the whole world as well.

Argument for the benefits of free market economics has been around for well over 200 years and was first elaborated by a Scotsman, Adam Smith, with the publication of "The Wealth of Nations" in 1776. The most famous tax revolt, the Boston Tea Party, occurred in 1773.

It apparently doesn't occur to the authors that the kinds of liberal and progressive policies they advocate might have played in California's decline. Because they refuse to look inward or take any accountability, they can only conjure up strained explanations as to why someone else must be to blame. All the state's problems are caused by the ghosts of three dead white guys (Reagan, Jarvis and Friedman).

California's fundamental problem is its anemic economic growth rate. Our state has the fourth highest unemployment rate (12.2 percent) and the second highest home foreclosure rate. Is California in such relatively bad shape because its citizens are not taxed enough? That doesn't make sense.

The opposite is much closer to the truth. Because of high taxes and irrationally burdensome regulations, California is near the top of the list in regard to hostility toward business. According to a ranking by the Small Business and Entrepreneurship Council, only New Jersey has a more business-unfriendly environment. Californians can, if they choose, burden businesses with ever more demands and regulations. They pay a high price, however. Choices have consequences. Intel Corporation, the chip manufacturer that started in California, announced earlier this year that it would be investing $7 billion in new manufacturing facilities over the next two years -- in Oregon, Arizona and New Mexico. There's a pattern there. Are they avoiding California because our taxes are too low?

Jones and Redmond recognize the negative effects of the kinds of policies they espouse. "Certainly, turning over more public resources to free market capitalists, cutting taxes and slashing government regulation will spur private sector economic growth, just as advocates claim. But that growth has a cost. The wealth won't be shared by everyone." Their argument essentially says there's no point in creating wealth if it's not equally distributed.

In other words, if the beneficial impacts of some policy are not equally shared by everyone, they must be rejected. Such a standard creates an absolutely impossible hurdle for any human action. For Redmond and Jones, income equality is more important than economic growth. I have never understood those kinds of priorities. The damage done by unemployment is a real and unrecoverable loss. Ironically, it also hurts government revenues and, in the end, those citizens who depend on government-funded programs. If Redmond and Jones really want more money flowing into state coffers they should be welcoming policies that encourage economic vitality.

Jones and Redmond regret that corporations don't pay as much taxes as they should, partly because of Prop 13. The fantasy that corporations are capable of paying taxes is one of the most naïve beliefs of the left. In the real world, the world all of us actually live in, only humans are capable of paying taxes. Corporations are only intermediaries. They can write the checks to the IRS or the Franchise Tax Board, but they can't bear the "burden" of taxes any more than cows or real estate can.

Corporations connect with humans in three ways -- owners, employees and customers. The burden of corporate taxes falls on some combination of those three groups. Corporate taxes result in some combination of reduced profits for shareholders, higher prices for customers and lower wages for employees. The actual distribution of the effects varies from industry to industry, case to case. The conclusion of most recent research indicates that the principal burden falls on the employees of corporations. If your objective is to soak the rich, the corporate tax is an extremely crude and counterproductive means for doing so. Many on the left despise corporations and have no interest in actually analyzing their policies, so the corporate tax is one of their favorite weapons of choice.

California will survive and we will muddle through somehow. Unfortunately, we are squandering our vast potential by misreading the fundamental sources of our chronic problems.