How The Past Can Devour The Future

David Crane
Lecturer at Stanford University, President of Govern for California, and Former Economic Adviser to California Governor Arnold Schwarzenegger

The stock market has hit record highs and public pension funds are reporting record levels of capital, yet public pension costs keep growing, leaving some observers puzzled. A new book by French economist Thomas Piketty helps clear up the confusion.

In his book, Capital in the 21st Century, Piketty explains that capital is wealth derived from past activities (e.g., your savings represent wealth you accumulated over the past) that combines with labor to produce, and split the benefits from, economic growth. Everything works fine so long as returns promised to capital are lower than economic growth rates. But when returns promised to capital are higher than economic growth rates, Piketty says the past “devours the future.”

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Dude, Growing Marijuana Uses 200 Times More Water Than Fracking!

Eric Eisenhammer
Founder of the Coalition of Energy Users, a nonprofit organization supporting access to affordable energy and quality jobs

Intent on ignoring facts and spreading hysteria, ideological opponents of hydraulic fracturing, or fracking, have seized on the state’s drought as an excuse to demand a moratorium.  Never mind that fracking doesn’t even use much water.

Now, scientists with the California Department of Fish and Wildlife are warning that streams harboring endangered salmon and steelhead could go dry for an entirely different reason – because of the heavy water consumption of marijuana growers.  During growing season, marijuana consumes 60 million gallons of water a day.  That’s 200 times more water than is used in hydraulic fracturing operations and 50% more than consumed by the entire city of San Francisco.

This all raises an interesting question: Where is the alarmist press release from the folks at the Center for Biological Diversity demanding an immediate moratorium on marijuana?

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Tim Draper vs. Southern California

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

To reiterate, I like the idea of the 6 Californias campaign because of the conversation it could spark about the state’s size, and our need to decentralize power from Sacramento. (I’m discounting the idea of California as six states because it won’t happen – voters are almost certain to turn it down and even if they approved it, the other states would never go along).

But the details of the ballot initiative, which seems headed to the 2016 ballot, are problematic. Among the biggest problems: it’s deeply hostile to Southern California.

Draper’s idea is supposed about empowering the state’s disparate regions. But his ballot initiative would split the biggest region in half, turning millions of Southern California commuters into people who work and live in different places.

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Taxes, Jobs and Patriotism

Stephen Moore
Chief Economist at the Heritage Foundation

What does it mean to be a “patriotic” American? I ask that question because there has been so much hullabaloo in recent weeks about American businesses leaving the U.S. and setting up factories overseas. This week, Treasury Secretary Jack Lew questioned whether these U.S. corporations are putting America first.

“What we need,” Mr. Lew lectured, “is a new sense of American patriotism.”

He said this as the Obama administration announced new rules this week that would financially punish American companies that relocate outside the U.S. in order to save on taxes.

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Why Kashkari’s Failure to Understand Schwarzenegger Is a Problem

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

The problem wasn’t personality.

But it’s not surprising that Neel Kashkari, pressed to explain why his plans to fix California would succeed after Arnold Schwarzenegger’s plans failed, would latch onto the ex-governor’s personality. That personally is an awfully big target, after all. Kashkari pinned Schwarzenegger’s problems on wanting too much to be loved.

That’s diagnosis is so wrong, and so at odds with the record, that the comment alone raises questions about whether Kashkari is ready to be governor.

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Notes from the Weekend: Perez Out; Investors of High Speed Rail in?

Joel Fox
Editor of Fox & Hounds and President of the Small Business Action Committee

John Perez has ended his recount bid that had brought out critics of both Perez for seeking the recount and California’s bizarre recount system, itself, in which a candidate can choose the county votes he or she wished to explore. Given the small margin of defeat, there has also been carping about the Perez campaign saying, essentially, as my old track coach would put it, you must run through the finish line. Given the money left over in the Perez campaign kitty, one wonders if an additional blitz with those funds might have helped the former assembly speaker find 500 votes that would have put him into the lead.

Now it’s on to November for Board of Equalization member Betty Yee. The Democratic Party has already rallied around Yee with the anticipation, as old friend and star analyst, Garry South, wrote on this site, Yee will win. We shall see. The controller’s fiscal responsibilities should give Republican Ashley Swearengin a platform to make her case for the job.

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One Ballot Initiative, Six Times the Fun

Jessica Levinson
Associate Clinical Professor at Loyola Law School, Los Angeles, and Vice President of the Los Angeles Ethics Commission.

California is huge. I do not necessarily mean that as a compliment.

California is the nation’s most populous state. More than thirty-eight million people live in the Golden State. That is roughly twelve percent of the nation’s population. Add up the populations in about twenty-one of American’s least populous states and that will still not equal the number of people who live in California.

How many people represent these thirty-eight million people in the state legislature? One hundred and twenty. If that doesn’t seem like much, it is because it isn’t. California has the largest state legislative districts in the country. There are eighty State Assembly Districts (which each hold more than 466,000 residents) and forty State Senate Districts (which each hold more than 931,000 residents).

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AVERAGE Orange County Pension 88% of Final Salary

Research Fellow with the California Policy Center and a Transparency Researcher for TransparentCalifornia.com.

Would you take a 12 percent pay cut in exchange for a 100 percent reduction in work? In Orange County, if you’ve worked 30 years – say from age 25 until age 55 – that is exactly what you can expect. And many OCERS retirees receiving pensions in excess of their highest salary.

For instance, Orange County Department of Education’s former deputy superintendent Lynn Hartline retired in 2013 with an OCERS-reported final average salary of $250,018. Hartline won’t have too much trouble adapting to life without a salary, however. Her 2013 full-year pension benefit from OCERS (Orange County Employees Retirement System) was 100 percent of her final average salary – $250,018.

Charles Walters received the second-highest OCERS yearly payout in 2013. Walters was the former Orange County assistant sheriff who retired in 2008 amidst a criminal grand jury probe for the 2006 murder of John Chamberlain in the jails he oversaw. His pension for the 2013 year was also 100 percent of his final average salary — $226,365.

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Growth, Not Redistribution the Cure for Income Inequality

Joel Kotkin
Editor of NewGeography.com and Presidential fellow in urban futures at Chapman University

Ever since the publication this spring of Thomas Piketty’s book “Capital in the 21st Century,” conservatives and much of the business press, such as the Financial Times, have been on a jihad to discredit the author and his findings about increased income inequality in Western societies. Some have even equated growing attacks on inequality with anti-Semitism, with at least one Silicon Valley venture capitalist, Tom Perkins, comparing anti-inequality campaigners to Nazis.

For their part, progressives have taken to embracing the book like acolytes who have found a new gospel for their talking points. Paul Krugman predictably describes the book as “the most important economics book of the year – and, maybe, the decade.”

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Draper’s Fateful Anti-Democratic Error

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

I still like the idea of hijacking Tim Draper’s ballot initiative campaign for 6 Californias (since it has not chance of winning) and using it to have a conversation about the importance of devolving government power from Sacramento the regions. I argued that previously here.

But re-reading the initiative after signatures were turned in made me realize again just how imperfect a vehicle the Draper initiative is for the kind of conversation Californians need to have about the size and organization of our state.

One enormous error – a political, strategic and cultural mistake of Bill Bucknerian proportions – also jumped out at me: why on earth didn’t Draper allow the six new states of California to name themselves?

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