Get It Through Your Thick Head

Fighting words, I know. Pejorative on so many levels. Insulting even, but that’s what we’ve come to. After reading great posts by Joel Kotkin, Wendell Cox, and some miscellaneous pieces in the WSJ, that support what I’ve been saying for the last few years about regulations and “Feeling Better About Ourselves” (FBAO) ordinances I have come to the sad conclusion we in California are doomed. Doomed like Illinois, Michigan and many other states.

But California is the worst offender because it is so correctable and obvious. It is the simple fact that state is controlled by those who wish to give away what others have earned. And when that runs out you end up with a Michigan and Detroit or an Illinois and Chicago. Sad but true, but FBAO.

California, when I emigrated back in 1971 from Illinois and Michigan, was the place to be. It was the greatest and coolest spot on earth with an endless coastline, bustling cities that were affordable, a sane politic, and an adventurous soul and an expectant population for its future.

What happened? FBAO.

There is no easy answer and yet I will try to give a small opinion, my own. One word comes to mind, self-satisfied. We no longer reach for the stars whether Hollywood or Vandenberg, we have become a creator of toys (IPads, Google, Facebook). We no longer dig in the soil for wealth (gold, silver, cotton, oil, and even lumber), we let George, or Juan, or Chin do it. We became a state of renters and preservers, even though our history is less than two centuries old. We became self-centered as well, FBAO. Sad.

The state is now striven in two. A coastal state that is no more than fifty miles wide, a coastal zone unaffordable to all but the richest and oldest (equity my dear, equity). A zone that does its best to restrict, shun, prevent, and obscure every attempt to grow and deal with changes to its population and economy. “Let Silicon Valley do it,” seems to be the most common hope. Even the Southland dreams of redemption in its own version called Silicon Beach. We are now just cute, not cutting edge.

And most of this is due to over-regulation and protectionism. In 1970 there wasn’t a Coastal Commission, Water Quality Control Board, Bay Conservation and Development Commission, Air Resources Board, affordable housing laws and agencies, waste management agencies, Environmental Impact Reports, and so many other agencies they bump into each other like teenagers at a Rave. And somehow we managed to built a great state. While the ordinances have done some good and in many cases a lot of good, they have also slowed the engine of the state to a dead stop crawl. When there are no expectations, no hope, entrepreneurs move on taking jobs and capital with them. I see Texas waving its flag on the horizon.

What is left is chaos. Drug labs hidden in derelict valley towns and dying orchards, an empty landscape where hundreds of thousands of acres of crops once grew, battles over how much water someone gets versus building greater and greater water supplies, a sad pleasure in returning to the native, and the belief that denser and denser urbanization is the future. FBAO.

We are squandering our resources and capital. Witness the battles over city and county land use boundaries that drive up housing costs, a high speed rail that will fly through counties desperate for jobs and growth, fracking that will produce thousands of jobs and billions for the state, new land laws (by coastal legislators) making Central Valley growth more costly and difficult, and the ongoing subsidies for coastal housing that tries to create affordable housing instead of expanding the overall housing count and thus making housing more expensive and unaffordable, and of course the omnipotent power of the public unions as we have seen in the BART strike. Much of this driven by entrenched political and cultural groups with specific agendas and a relentless and tightening grip on the state’s purse.

It is very hard to accept that at some point this state will run out of credit, it can’t print money (though it does try, by proxy, to sell bonds for its future), and it can only expand taxes on its people and businesses for so long. It will begin to lose those people it needs to retain. California will still grow but is it the type of growth that this state needs? I believe in demographics, but what kind of demographics is important. Education is paramount, so is affordable housing, and so are jobs. California desperately needs adult supervision, even though, I guess, the adults along Coastal California seem to like it the way it is and they of course FBAO.

Stay tuned . . . . . . . . .

A Gauntlet in the Shopkeeper’s Face

An Entrepreneur Preparing for the Approval Process

Graphic by LeiaMAC

 

The gauntlet has been thrown by Jerry Brown at the face of the California business community, he has fundamentally said, “Pay up or I will hole the ship of state and we will all go down together.” As a believer in the market forces of competition and growth I am embarrassed by all of this politicking and finger pointing. It’s like Gordon Gecko in the movie Wall Street, but in this case it’s the state government saying, “Greed is good.”

The only way the state of California can get out of this mess, and many other states as well, is to grow out of it, not kill the goose that lays the eggs (at whatever price gold is these days). Bureaucracies, by their inherent DNA, need to control and manage what is set before them, whether it’s fishing licenses or building permits, traffic flows or general plans. And each of these requires staffing, directors, and funds. And if the funds aren’t there, then fees. During my many years as a planner and urban designer I have seen a set of plans for a simple single family house, on an approved lot, go from being approved over the counter to a six month exercise in futility, frustration and fees. I have seen loved communities designed and built in the 1950s in just months; now just the planning and approvals take four and five years before the first grader hits the site. I have seen derelict quarries in desperate need of recycling into better uses, destroyed through votes of the people – people who have nothing vested in the outcome.

Call me Pollyanna. I know there are solutions out there, and they will come when we are desperate enough. The state needs to not just adjust regulations and ordinances, it needs to abolish them, and they will, just wait. Throw them in the political landfills they so adamantly protect.

Growth will only come from the entrepreneurial class, not the big publicly traded retailers and manufacturers. It is these dreamers that will pull the state out of the mess we are in. It is the pizza shop owners, the corner grocers, the nail salons and hairdressers, the trendy new shops for shoes and clothing, the burger joints and the other poster children seen on Diners, Drive-Ins and Dives. It’s the growth of small businesses that will make all the difference. It’s in the desire of almost every immigrant that came to this state, now free from the massive regulations and corruption of their native home, to start a business. Indian videos, Persian treats, Islamic religious art, sushi restaurants and taco trucks, most started by immigrants – everyone employs people, everyone pays taxes, everyone moves the state forward. 

Guy Fieri, the face that helped launch a thousand businesses

I’m reminded of a story I read years ago as applicable today as then. Four very rich men where asked how they would invest $50,000. The first said CDs, the second, more aggressive said the stock market – blue chips, the third said treasuries - you can’t go wrong. The fourth paused and thought for another few seconds and the said, “I would go to the Houston airport, stand outside the international terminal and lend it to the first Korean immigrant I met.” It has been this way for centuries; unfortunately this is being destroyed, especially in this state. We are being burned at the stake by the public unions and civic projects. Enough.

Taxes must be paid and collected, they are critical to the operation of every road and port. And some regional facilities must be subsidized (hold one moment while I slap myself), like transit, safety, and fire. But when taxes are used to slow or even stop growth they are wrong. A businessman would as soon move his new company out of state than pay a tax that is unfair. And Mr. Brown is being very unfair, he using extortion to please the bureaucracy.

Our urban areas are under very dire threats from shifting demographics, age issues, and changes in buying patterns and habits. Yet communities throw barricades up and then these capitalists shrug and go somewhere where they are wanted. Marin County’s loss of a Lucas Film soundstage may be Vallejo’s gain. What retailers and manufacturers decided that Texas was a better business climate than California? We will never know, they don’t write back.

As an example I’m trying to get a number of apartment complexes built in the Bay Area. One is being sued by the carpenters union over environmental impacts (yeah, like that’s the reason), another is faced with approval fees that make each apartment cost almost $40K more – with no benefit. And the utility hookup fees to these units are running over $15K each - for the privilege of paying your monthly water bill forever. And the stories about building code inspectors and delays are legendary. We can’t build our way out of this mess without the removal of obstacles. But each obstacle has its political champion, its director, its staff, its fees and its holy ground. It will be a long and difficult road.

Stay tuned . . . .