At the California Chamber of Commerce breakfast a couple of weeks ago, Governor Jerry Brown spoke of the California’s legendary Gold Rush as an economic stimulus for the state. One of the reasons for the success of the Gold Rush was that the government of the time let entrepreneurial drive go unfettered.
As quoted in the San Jose Mercury News, Governor Brown said, “By the way, the Gold Rush was the best stimulus program ever invented; 300,000 people came from every country in the world, got a shovel and pick and started picking. They got billions into the economy. Federal Reserve didn’t even exist. The federal government wasn’t even heard from, so far away. They dug and they got gold, they spent it and more and more people came and they haven’t stopped.”
The governor’s comments should be considered with the following paragraphs from Secrets of the Tax Revolt, a 1984 book written by Wall Street Journal editorial board member, James Ring Adams, discussing government’s managing of the Gold Rush.
The military governor (of California), Richard B. Mason, (whom Fort Mason in San Francisco is named) toured the gold fields in mid-1848 and concluded that the situation was beyond his power to regulate. “It was a matter of serious reflection to me,” he wrote Washington, “how I could secure to the government certain rents or fees for the privilege of procuring this gold; but upon considering the large extent of the country, the character of the people engaged and the small scattered force at my command, I am resolved not to interfere but permit all to work freely, unless broils and crimes call for interference.” …
As the Argonauts poured in, crowding the mining camps with a turbulence far surpassing that of 1848, they labored at a tax rate of zero. The ensuing burst of prosperity and phenomenal development vindicates Colonel Mason’s hands-off policy as one of the wisest economic decisions ever made by an American military officer in the field.
To be clear, there were excesses attributed to this non-regulatory policy. Look no farther than the Malakoff Diggins State Historic Park, where mountainsides were washed away in search of gold.
Which brings us to the current debate on CEQA (California Environmental Quality Act) reform. Those proposing reform are not advocating doing away with environmental protections but easing abuse of the law that is employed beyond the law’s intent to hinder business.
Proponents of CEQA reform are pro-environment. No one is advocating wiping away regulations to allow what would be akin to a modern day Malakoff Diggins. However, reform of the CEQA law within bounds of the law’s original intent is essential to promote the state’s economic growth.
Lessons learned during the actions that led to California’s statehood can apply today. We should let the entrepreneurial spirit have as much free rein as possible to stimulate the economy, as the governor suggested in his speech.