Friday, July 29, 2011

Gavin Newsom's Five-Year Plan for California's Economy

Right near the top of our list of items that could be painlessly stricken from the state's budget would be Gavin Newsom's $130,000 annual salary. Apart from a fact-finding trip to Texas, where he learned that higher taxes and crushing labor and environmental regulations repel private industry, Newsom has been all but invisible since taking the office of lieutenant governor. Today, according to the San Jose Mercury News, he's decided to crawl out of his bunker and make another public appearance, this time in San Jose, where he's touting his new plan to fix California's economy.

We've never thought Newsom was much more than another empty suit in a long line of vapid, lightweight politicians, and the particulars of his plan don't do anything to change that impression. For one thing, it's pretty much the same plan he unveiled at the PPIC in late May. More importantly, the plan itself is yet another mind-numbing exercise in Sacramento-style central planning. A report articulating his vision says that the California of the future needs to be "more export-oriented, more new manufacturing-oriented, more clean economy-oriented, and more high skill-oriented." To Newsom, California's troubles come down to inadequate bureaucracy. He wants to create a Cabinet-level "jobs czar" in Sacramento to promote "regionally distinct" economic development plans and coordinate the activities of agencies that oversee employment. He still wants to set up an office in China to help broker export deals for California manufacturers. And he wants to create "regulatory strike teams" that help businesses resolve problems in obtaining permits or navigation rules across local, state, and federal levels.

Left out of this, of course, is any appreciation of the role of Sacramento's past "economic development" plans in creating today's problems. For one thing, the idea of making California "more clean economy-oriented" is not a new one. Over at Cal Watchdog, Wayne Lusvardi helpfully reminds us of some other ways in which California has tried and failed to "green" its economy. During his first go-around as Governor, Jerry Brown pushed the construction of two geothermal energy plants in northern California, at the cost of $283 million worth of public bond debt. One of these facilities, South Geysers, was never built, and the other, Bottle Rock, lasted only five years before being shut down due to extreme inefficiency; the ratepayers of the Metropolitan Water District of Southern California began picking up the tab on the bond debt at that point, and won't be done paying until 2024. For another tour down failed-renewable-energy memory lane, you could also visit the Kern County town of Mojave, which has been covered in abandoned windmills since 1998. Moreover, the idea of making the state's economy "more new manufacturing-oriented" flies in the face of its environmental policy. Is any sane entrepreneur going to start opening factories when they're facing a future that includes cap and trade and more expensive energy (since 33% of that energy must come from hydrogen, solar or wind)? And finally, what are the "regulatory strike teams" actually going to do? One aspect of California's poor business climate has to do with the complexity of its regulations, but a much larger and more basic problem is that many of its taxes and regulations are prohibitive to doing business. Internet businesses aren't closing up shop or fleeing the state because they don't understand the Amazon tax; they're doing so because Amazon and others refuse to do business in a state that imposes it. And Carl's Jr isn't looking to shift out of California because the rules for construction permits and labor relations are too complicated. CKE Restaurants understands them perfectly; it just finds them too onerous. Until Newsom and those like him understand that Sacramento is an obstacle, not an aid, to economic growth, they should expect more of the same.

1 comment:

  1. Right near the top of our list of items that could be painlessly stricken from the state's budget would be Gavin Newsom's $130,000 annual salary.

    I LOL'd!


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