Several years ago, the great Walter Russell Mead published a series of essays at The American Interest magazine describing the long, violent death of what he calls the “Blue Model.” The Blue Model is that stagnant mix of Keynesian economics, heavy-handed regulatory policy, and a generous welfare state that largely defined American domestic policy from the New Deal through the Great Society, and that still informs the left and center-left wings of the Democratic Party today. It prizes stability, order, and expertise; it eschews innovation, dynamism, and competition.
Few states, save those in the Northeast and Great Lakes, are anywhere near as Blue as California. This column, “Golden Blues,” will report and comment on the Blue Model’s decline and attempted resurgence in the Golden State, and the ongoing quest of Republicans and moderate Democrats to develop alternative models to bring the state to greatness and prosperity. Pensions, taxation, regulation, healthcare, budgeting- if public policy intersects with the flow of money, then the issue is fair game for Golden Blues.
With that, two stories to start off with. The San Francisco Chronicle reports that on Tuesday, San Francisco voters handed a resounding defeat to the heavily-regulated (and therefore insulated against competition) hotel industry, by voting down Proposition F. Prop F would have dramatically restricted short-term private rentals within the limits of the city, a move that would have hurt Airbnb and similar companies. But the innovative business model prevailed, and the spawn of Silicon Valley won a decisive victory on its home turf.
Meanwhile, two factions within the Service Employees International Union are squabbling over competing measures to raise the minimum wage to $15 per hour. The SEIU State Council’s more comprehensive plan would increase wages statewide by 2020, while also mandating a package of benefits. The SEIU-United Healthcare Workers West plan would merely raise the wage by 2021, and is probably more electorally feasible. Evidently, the two factions are working on a compromise proposal. Nonetheless, splits within the blue coalition are always opportunities for conservatives and moderates to pounce.
These developments are nothing but good news for entrepreneurs and small businesses in the state. The tech revolution of the last several decades has spurred such creative potential for new enterprises in old industries, and the regulatory regime California and the nation currently employs is hopelessly outdated for the new economic and technological realities. Time and time again, it’s been Republicans counseling market-based policies to allow companies like Uber and Airbnb to flourish. Republicans should continue to work towards regulatory reforms that undermine the privileged positions of legacy industries in the newly tech-afflicted sectors, in the interest of greater dynamism and the transition to a truly 21st-Century economy.
Meanwhile, cracks in the coalition of higher minimum wage supporters should be exploited to the fullest. Mandated high minimums and generous benefits, like price controls, are increasingly the domain of the lifetime-employment economy- an economy that, due to globalization, technological innovation, and other trends- exists no more in the 21st Century. While the intentions of those fighting the “Fight for 15” are probably pure, they are also misguided. Republicans should instead look into alternative proposals to secure healthy livings for the middle class and working poor, such as 401(k) retirement accounts, wage subsidies, and, of course, growth-friendly tax and regulatory reform.
The future of California doesn’t have to be blue- it can be golden. But that will take policy creativity.