California: Harbinger of National Doom?
If you were given the perfect country, could you mess it up as bad as California? Begin with fertile, productive, well-irrigated soils capable of growing just about anything. Add vast agricultural tracts and miles upon miles of wine country with lush, bountiful vineyards. Include majestic mountain ranges containing rich deposits of gold, silver and other useful metals, and covered with thick, immense forests with every type of timber imaginable. Toss in critical navigable rivers to move these resources to market. Insert vast oil and natural gas deposits while you are at it, along with wind, water, geothermal and solar resources. Give it a long coastline with beautiful beaches, plentiful fresh water, ocean fisheries, many natural harbors, a well-connected transportation grid with first-class roads, rails and airports too. Don’t forget universities at the cutting edge of technology and an unparalleled educational system.
Bestow all the natural building blocks necessary for a well-balanced, diversified, leading economy that is virtually guaranteed to bring unparalleled prosperity to your people—a smorgasbord of natural blessings. Then on top of it all, throw in days spent skiing at sunrise on Lake Tahoe and swimming at sunset in San Francisco the same day. This is the Golden State.
Yet California is imploding. And it is dragging the rest of the country with it.
California is home to America’s leading manufacturing belt, the nation’s largest high-tech center (Silicon Valley), and one of its most productive agricultural areas (the Central Valley). As a stand-alone economy, it is bigger than Canada, Brazil, India and even Russia. It is also the most populous state, with one in eight Americans calling California home.
But just look at the next headline you see that says “California.” Whether it’s an article on finance, economics, government, crime, morals or some other subject, the glaring question is: What went wrong?
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A crisis of another sort is strangling Californian industries. California has some of the most progressive environmental laws in the world. It needs environmental laws, because vast swaths of the state are a polluted mess.
However, misdirected and poorly timed environmentalism is also inhibiting job growth and sending jobs out of state—as well as out of country.
The New York Times reports that Californian businesses are being slammed by new requirements to curb carbon dioxide emissions at a time when they are already struggling to survive in a very tough economy. In 2006, the state passed laws to curb carbon dioxide emissions from all economic sectors, including transportation, manufacturing and real-estate development. The result: People are paying more to travel and make purchases, manufacturers are moving out of state or to places like China (taking jobs with them), and just look at the real-estate industry.
CalPortland’s formerly profitable Mount Slover limestone cement facility is a powerful example. The state of California says the company must reduce carbon dioxide emissions by 12 percent per ton of cement. The company estimates that to retrofit its operations will cost in excess of $220 million—for just one plant. But there is not nearly enough limestone in its quarry to justify such an expense. The result is that the plant, which has produced cement for over 100 years, will probably be shut down. People will be laid off, and the state will take a tax revenue hit. Future shipments of cement will probably be imported from Mexico.
Every manufacturer across the state will be subject to what is essentially a massive carbon tax. So multiply CalPortland’s problems by the thousands.
On June 18, the New York Times gave another example of environmental activism gone awry. Apparently, unions are exploiting environmental laws to blackmail companies into signing labor agreements and becoming unionized. The latest developments in this regard are taking place in the solar energy field.
To reduce California’s dependence on polluting-but-inexpensive fossil fuels, which it has in abundance, state legislators decided they would promote solar power plant construction. However, an unpredicted turn of events has resulted. Laws designed to protect the environment are being used to hold up projects designed to help the environment. How so? California’s giant worker unions want a foot in the door.
If a company proposes to build a plant, but does not agree to be unionized, unions inundate the company with demands to study the effect of their proposed project on all kinds of endangered creatures, from the short-nosed kangaroo rat to the Delhi Sands flower-loving fly. The studies add hundreds of thousands of dollars and years of delay to a development plan—if the plans pass at all, since the unions are sure to produce their own scientists at public hearings.
Not only are Californians forced to pay the higher cost of solar energy, but they are forced to pay the higher cost of union labor when the plants are constructed and operated. The unions get their plants and union jobs, or else Californians get no jobs at all.
All this environmental regulation and strangulation couldn’t come at a much worse time for California.
