Recall - How Did California Get To This Point?

[Music] good morning or good afternoon or good evening depending on where you are i'm bill whelan i'm the hoover institutions virginia hubs carpenter distinguished policy fellow in journalism i write about california related matters for hoover's california on your mind web channel as well as the washington post i also do a podcast on california affairs twice a month for hoover's matters of policy and politics podcast i'd like to welcome you today to this special broadcast on california and our upcoming recall election we're going to talk about the recall today we'll talk about the politics about it if you want to but i'd like to get into the bigger picture which is the question of how did california get to this point and i'm honored to be joined today by two colleagues here at hoover with a deep understanding of all things california michael baskin is the hoover institution's wolford family senior fellow dr boskin served as a member of then governor pete wilson's council of economic advisors and at the request of governor arnold schwarzenegger the tax rewriting commission on the 21st century economy aka the parsky commission our other panelists is leo hanion leads the hoover institutions senior fellow and distinguished professor of economics and director of the edinger family program and research at ucla he writes about the golden state's public policy choices for california on your mind and he also does that twice a month podcast with me on california michael and lee great to see you good to be here bill so we are going to chat about california for maybe about 45 minutes and we're going to take about 15 minutes of audience questions after that for those of you watching if you do have a question for the three of us uh very simple go to the q a tab at the bottom of your screen type away send it into us and we'll try to get to your question uh if we have the time uh before michael and lee we get into your thoughts on california let me just give you a couple minutes on the recall itself and uh how this works in california there's been a recall provision in california's constitution going back to 1910 this is when california diverted into direct democracy putting in both the recall as well as the initiative process there have been 55 attempts to recall a california governor since that was implemented only one of them succeeded that was of course 2003 in the election of arnold schwarzenegger this is actually the sixth recall attempt against gavin newsom uh for those of you who are curious about these things seven were attempted against jerry brown in his two terms at his second time as governor and seven recalls were attempted against arnold schwarzenegger but none of those qualified for the ballot the way recall works in california you have to collect enough signatures of registered voters uh the equivalent of 12 of the previous gubernatorial vote uh in 2021 that factored out to about 1.5 million signatures actually the recall people uh ended up in about 1.7 million certified signatures so they had room to spare the recall deadline was supposed to be last november november 17th actually and then the petitioners went to court and they filed for an extension they said that with california locked down they simply couldn't get signature it wasn't fair a judge agreed and he granted an extension to march 17th here is where karma kicks in or fate or circumstance whatever you want to call it about a week after that extension uh services chronicle broke a story reporting that governor newsom had dinner at the french laundry and the recall just sort of took off in a whole nother level after that the odd thing about this recall by the way if you look at the petition itself and the list of grievances covet is nowhere to be found even though covent is largely driving this as michael and lee will explain it's not actually any of the list of grievances as for the ballot if you're a californian you should already have it if you've looked at it there are two questions the first one is shall governor gavin newsom shall gavin newsom be recalled removed from the office of governor if so then you go to question b which is the list of 46 replacement candidates 45 of whom are still active by contrast there were 135 candidates back in 2003 uh arnold schwarzenegger receiving 486 48.6 of the vote in that field 55 of california is voting to recall great davis if governor newsome were to be recalled his replacement would take office 32 38 days after the results are declared my calculation has this as soon as friday october the 22nd uh he or she would serve the remainder of newsome's term which expires next year meaning that the governor's replacement governor's first order of business is going to be to figure how to survive the june primary which would be just a few months away after taking office so for all the questions about what a replacement governor could do if he or she were elected to office i think it's probably better to be talking about what a governor should be doing at this point and michael that's my opportunity to hand things off to you the question of how california got to this point you and i had a conversation about this day and the phrase that you mentioned that caught my attention as you said quote a sense of unreality in sacramento what did you mean by that good morning everyone or good afternoon or evening depending on where you are i'm going to a few slides my wonderful research systems can handle them for me and this is to basically frame things about how we got here and where we're likely to go upon obviously partly depend on the results of the recall election i'll mention something about that at the very end it'll also depend a lot on other decisions californians make that are not directly political where they choose to live how they choose to work what they choose to do etc well let's let's start off with just a brief description for those of you who are not californians some of you are going to be very familiar with some of this some of some of the issues i'll be discussing have deeply impacted your life unfortunately probably some not for the better uh but just to get everybody on the same page with where we are i thought i'd start off and give a few few minutes of this we'll have a chance to uh both embellish this and get into things that he knows more about than i do and then we can go back and forth a little bit before we get into the q a so let's move on to just a brief overview of california it's real gdp just prior to the pandemic was 2.8 trillion dollars it's actually called gross state product not gross domestic product but we use gdp because that's people are familiar with that it's about a little it's about 70 percent the size of germany and slightly larger than the uk so california is a very large economy it of course exists within our union as a our federalist system it's not a standalone country despite the fact that some people uh would like it to be such uh california it has become very much a a state leading in inequality we had the most resident billionaires uh 165 as of march 2020 and undoubtedly more than that given the tremendous increase in in tech share values since the uh pandemic the unemployment rate lasts uh some lags a month behind the national average against the data 7.6 about 40 percent higher than the national average of 5.2 percent so our unemployment is not good the lockdowns were extreme reopening slower school reopening slower or non-existent for many public school districts the vaccine vaccination roll out slower than in many other states that's part of the reason we wound up lagging in our reduction in unemployment sadly and not as widely known california has by far most poor people of any state when you adjust for the cost of living we also have a larger average household size in other states so when you make those adjustments california about almost one in five californians is living in poverty that number's probably up a little bit and probably under reported for measurement issues during the uh pandemic we have over a third of the welfare recipients united states even though we only have 12 percent of the population if you ask me one number that would illustrate the poor governance and mismanagement of california the cost per individual incarcerated inmate in california is 81 000 this may be a year out of date i haven't seen the updated numbers is higher than the median family income so the family right in the middle of california's income distribution the entire family roughly four people has a lower income than we spend for every single incarcerated inmate okay so it sort of suggests that we've gotten things out of whack the performance on education tests for eighth graders about half students meet english standards and a little over a third math standards on the california assessment of student performance and progress and it's worse in many cases far worse particularly in big city public school districts for minority students so that's just a highlight when i think of california's advantages and opportunities which are many there are many wonderful things about california in addition to our climate at least when it's not besmirched by smoky air from wildfires we're the technology entertainment agriculture leader we have great universities uh we have we have several of the most important research universities in the world uh and the like we used to have what was considered by far the by far the best public higher education system that has been waning we've historically been the trend center and talent and an opportunity man people would come here because they saw opportunities that didn't exist or didn't exist to the same degree or more difficult to overcome more of a stiltifying socialist hierarchy in new england in the midwest and the south etc so we were kind of a frontier for a long time and it's still the case in some instances but it's starting to reverse we're the first majority minority state and that certainly creates many challenges but it's an opportunity for a competitive advantage in a global economy what was the last time you heard california's leaders trying to come together and make that a key point in what they're trying to do rather than bickering among different groups in the population and trying to buy them off with handouts or special features etc we have an advanced um i don't know what's beyond vast but we have beyond vast opportunities to improve the delivery and lower the cost of core government services let alone given the large state budget windfall and massive amounts of money flowing here from the federal government we we need to replace decades-old creaky technology with modern solutions i'll say more about that in a moment and there's vast duplication across different levels of government within california between california and the federal government and across agencies and we have tremendous opportunities partly because we've made it so difficult to dramatically improve the business climate tax and regulatory reform education reform housing transportation and water reform all of those there are straightforward things that over time would benefit california in particular benefit hard-working middle-class families with a better jobs environment rising wages greater opportunities one of the biggest challenge at the top of this list is effective governance in a huge complex diverse society that's not easy i'm not saying it is but we keep shooting ourselves in the foot and we've been we've become a heavily blue one-party state with basic nonsense we spend time arguing about and passing bills about whether we should we should have gender neutral displays and department store windows rather than getting at our big problems of not having enough water storage or wrecked infrastructure or horribly underperforming k-12 education etc we have a severe and i mean severe crisis of competence in delivering basic government services one of the major reasons that occurs is because our political leaders have cited government should be the response of first resort for a wide number of things that government probably isn't going to do very well and gets diverted from doing the things we need our government including our state and local governments to do well and be effectively managed examples are employment development department misnamed okay had over a million backlogged unemployment insurance claims just desperate people trying to stay afloat deserving almost all deserving of unemployment eight months after uh after covet hit they still didn't have people enough people manning telephones etc um and they managed to have uh up to 30 billion dollars of fraudulent claims including to nigerians florida jail inmates etc uh it's almost beyond belief how incompetent this is we all like to think of the dmv it's improved slightly with online appointments etc but it's vastly more widespread than that in some cases much worse wildfires are another example transportation water the deferred maintenance and repair for example the oroville dam had had several inspections pointing out the problem nothing was done about it over the course of a couple of administrations and of course then we wound up having to evacuate a quarter of a million people and now we're spending billions to repair it rather than some millions uh to prevent it forest management is a horrible problem uh governor newsom keeps demanding it's all to do with climate change well climate change probably has contributed something but there's absolutely zero california can do to alter the temperature in california over the next 50 years we're too small it depends on global emissions number one the only thing that can help mitigate the horrible problems we have with wildfires and smoke and congestion and all that sort of stuff and evacuations is better forest management which has been prevented by very in this state very strong more radical i think we all think of ourselves at least modest environmentalists we care about the environment radical environmental groups preventing logging and clearing and roads and so on so we start a fire as we always have for thousands of years in california with electric uh usually it's an electric storm sometimes it's arson uh you know lightning strikes porn stars well now we just have to surround it in a gigantic circle and let it burn for months choking us or about we can't get in there it's too dense beetle kill has a left 100 million dead trees etc we have kindling and brush that are just waiting to explode we have massive capacity shortfalls and electricity and water which is due to under investment in these things over the course of not just gavin newsom's but jerry brown's but over a span of time we now have the disaster that is now if you're not aware of it mixed speed not high speed or bullet train it's one of the greatest debacles in history of state government mismanagement happy to talk about that more if people have questions we're gonna we're blowing a lot of money and they're waiting for a biden bailout we're several gigs short on our what we need for electricity at peak uh because we've had such aggressive renewables mandates that are unbalancing the grid we don't have sufficient backup uh people have been decommissioning uh nuclear and we're repressing the economics of gas-fired power plants uh uh which are expensive as just as backup um and we're following the path that others have done which we should have learned from the germans for example are now importing lignite the dirtiest form of coal to keep the cost down and rebalance the grid because they're even more aggressive renewables mandates we have huge challenges in k-12 education as i said water storage and delivery uh up and up and down the central valley there are signs saying build dams not trains energy in the environment i've said we're way short on our capacity we have we take pride in caring about the environment and we should it's one thing that makes california special but we've been screwing that up for mismanagement and housing supply which lee is the expert on and we'll say more about i'm sure we have uncompetitive tax rates in the most volatile revenue system of any state so when things are booming the economy is booming and the stock market's booming because we tax capital gains as far as ordinary income we have massive uh stock option income coming in from our tech companies revenues just explode far more rapidly than income grows and then we have a very hard time adjusting when that the music stops there's a recession a downturn and then we can't even provide the services for our most vulnerable people so we need a much less volatile uh revenue system as bill mentioned i was on a commission appointed by governor schwarzenegger and karen bastet of the assembly and darrell steinberg the head of the the state senate and we came up with a revenue system that would have about a six slightly over six percent uh top income tax rate that would lower the corporate tax rate that would have broadened the tax base and uh and led to a much less volatility and a much more stable uh tax system uh unfortunately in 2009 they were deeply uh entrenched in dealing with a large budget deficit and couldn't get into tax reform we have costly complex and inflexible and oftentimes overlapping regulation and continuous lawsuits we have frayed relationships between the state and counties and cities over responsibilities and resources particularly during every downturn the state trying to dumps more responsibilities and withdraws resources on lower levels of government a big challenge would be the future of work from home and technology both displacing middle class jobs but also enabling people to locate further away from the hubs that are generating a fair number of pretty high high paid jobs as well as some low paid service jobs and we have large unfunded pension and health liabilities despite our balanced budget propositions we do not have accrual accounting for these things and every year the unfunded liabilities and in calpers and things of that sort go up roughly 15 billion dollars so these are big challenges so what will californians do and i want to emphasize this because we're talking about the recall as if that's the be all and end-all all that will make a major change and if gavin newsom is recalled polls now bill talked about polls more later suggests it's not likely but if that occurs and a republican is in office they will be able to block various things from the legislature and they'll be able to issue executive orders and so on undo some things but that will be limited and it's bill indicate limited in time until the next election but californians also have a significant impact on what californians like in their individual and family decisions as employers workers families potential in and out migrants they'll hold the key to california's future and they're going to respond to the opportunities benefits and costs that affect their decisions if we go ahead with some of these nonsensical things in our education system like you can't have accelerated math programs until 11th grade because they make other students feel bad what is that going to do the incentives of a couple of highly educated entrepreneurs who want their kids to get a great education they'll either go to private school they'll locate somewhere else the recent while in some cases it's overstated in the media the recent outmigration of people for the first time ever and re-headquarting affirms are causes of concern it's not yet a flood it could become one eventually uh it's not yet a flood and a lot of the migration is out of san francisco and los angeles to partly because of technology and work from home partly because of the deteriorating quality of life in those places with needles on the streets and homeless and efficient and so on people having a heart are their cars getting broken into every month uh the high cost of living and deteriorating quality of life most pronounced in san francisco and los angeles the sonar and whether that will be ameliorated whether anyone will have the um will have the gumption and the leadership skills to announce some tough love for those things and actually do what's sensible uh scenarios for the return to work it keeps getting pushed back um so we'll see whether what the final equilibrium will look like uh importantly the future of california tax spending and regulation policy uh and the budgetary windfall which probably will continue for a couple of years before it reverses and we have opportunities to improve that and i just want to set expectations at least what i think are reasonable expectations you should not expect california's left party leaning one state control to produce best outcomes the best policies things that i would teach my students i would draw up in sacramento if i was there but it's vital that they recognize reality stop screwing up consistently and enable reasonable future prospects for hard-working people to build that build a better life for their family and that's going to take a lot of work it's going to take a long time it's doable and some people believe that it has to get worse before the flood of concern uh gets removed i'm cautiously optimistic that at least a little backfire is starting with recalls on the left nutcase district attorneys in san francisco and los angeles that are letting criminals out and refuse to prosecute crimes um that the recall of some potential recall of some of the more wild wild members of the san francisco school board as well as this recall so it's showing that some californians are fed up it's not just republicans are only 24 of the registered voters it's a much larger fraction of people and they will have some say about this that will last well beyond the recall election and stay tuned okay bill back to you and delete thank you michael lee i uh i first came to sacramento to work in state government in february of 1994 this was just after the northridge earthquake i don't take responsibility for that um but michael mentioned housing and back in the you know prehistoric days that i worked in the wilson administration we talked about affordable housing every governor since has talked about affordable housing but this just becomes an exercise in kicking the can down the road so you've written about housing for california on your mind you've written about sequa the california environmental equality act why does something like housing remain so elusive for california yeah but bill bill thank you and um yeah hi everyone um i'm delighted to join you and share ideas about such an important issue and michael thank you for your wonderful presentation yeah california had there's no doubt it has a housing crisis that just seems to get worse every year the state's median home price uh single family is now about eight hundred thousand dollars and along coastal california which is roughly the living areas on the pacific on the pacific ocean and inland about 25 to 30 miles median home prices are well over a million dollars including 1.6 million in silicon valley and 1.6 million in san francisco which of course are tech hubs and despite the fact that many of our most high-paying jobs are in the areas of silicon valley and san francisco ironically home affordability in those areas is is the lowest only about 20 of households in silicon valley and in san francisco despite all those high-paced software engineers and patent attorneys only about 20 percent can afford the median priced home and california housing and its lack of affordability and the fact that it is so remarkably expensive to build here including including 1.1 million dollars per apartment in and i'll just say quote affordable housing north of san diego 1.1 million dollars for a one for per apartment is really about a failure of governance and when we talk about how we got here and what we can do to get out those two issues are really two sides of the same coin and it really boils down to you know what i what i perceive to be the simple trio of the principles of sensible governance which is accountability and incentives within government the incentives to do the right thing and be productive and the incentives not to do the wrong thing and be unproductive incentives accountability and respect for the market process the laws of supply and demand and competition and we really have just had a gross departure from those three principles those three foundations and those three foundations work synergistically with each other when we have accountability incentives work much better and when we respect the market process of supply and demand and respecting and honoring the market incentives and accountability are that much more that much more powerful so where we went off the rails a bit and michael had michael provides some great illustrations of that include including our including our bullet train where we went off the rails is we really departed from the principles of incentives accountability and uh and respect for the market process i'm going to give you um just sort of a 30 000 foot overview that i hope helps you think about despite the wide variety of issues i'm going to i'm going to talk about in the next five five or six minutes or so despite the wide variety they are all part and parcel symptomatic of what happens when we depart from incentives and accountability and the market process and then making things better is really getting the train back on the tracks of accountability and competition and incentives and in my view what really worries me and what i think is going to make this so hard in getting back to bill's original question you know why is it every year we keep struggling with these headlines of media and home price in california's seven hundred thousand dollars eight hundred thousand dollars why do we keep struggling with this there are groups within the state that don't want to return to the principles of the market or accountability or incentives and there are some incredibly well-meaning people who live in our state people whom i know and i suspect michael knows and bill knows and you know who think that the woeful deficiency in our public schools and where the vulnerable as michael indicated with the vulnerable or the worst hit so math and science proficiency rates among black kids and kids from hispanic families 15 to 20 at the sophomore level how will those kids ever compete for one of those high-paying silicon valley or san francisco jobs okay most of them never will be able to compete but a lot of women people think gosh you know it's just that the schools are starved for money because that's what they're told and the fact that the california business exit rate this year is double it is double what it was in 2018 2019 before covid it is now twice as high and the businesses that are leaving are remarkably transformative businesses some of which are in their go-go very rapid growth years and we're not only losing those organizations that will create jobs but we are losing the creative minds that gave birth to those organizations elon musk for example we have housing i mentioned housing and how we have so many regulations that impact that sector there are well-meaning people in the state legislature who would like to reform zoning and think that every solution to the state housing crisis is in zoning and that fails every year because all of those proposals are really forcing multi-family housing into areas that are single families owned and we don't have to have it that way we have building costs for again quote affordable housing that are over a thousand dollars a square foot and if there's any i'm sure there's some developers and people real estate professionals in the audience um i'd love to hear from you uh outside of california what does a thousand dollars per square foot per square foot by you um we have a situation really where the restoration of accountability and incentives and competition even just a little bit and i share michael's concerns that it's going to be hard to do a 180 do-over which is what we had back in the day when there was much more bipartisan discussion and there was much more respect for those principles i share michael's concerns about that but at the same time when michael noted that california is incredibly diverse now it's much larger the world's a much more complicated place it is more important than ever to get government back on track with a very limited purpose of protecting us protecting our property providing quality public services and public goods that use tax dollars efficiently and from that standpoint that is completely nonpartisan there's no left or right aspect of asking government be careful with our tax dollars or to provide quality service and not let our dams fail and have to evacuate 200 000 people when the orville dam for example failed uh or provide school services that are failing those from the poorest families or that are requiring a thousand dollars per square foot to build affordable housing or to take 30 years to approve a housing development for those of you in southern california valencia five points was uh well it remains to be a planned community whose plans were submitted in 1994 in the year 2021 not one home has been built why because of lawsuit after lawsuit including duplicative lawsuits filed on the auspices of the well-intentioned but poorly designed california environmental quality act those passed in 1970 we can get into that more in a few minutes um but uh and i'll just end with this and then i think we'll have a we'll have a more organic discussion with bill uh with bill and michael um california including governor houston um has been really a gung-ho about the environment and michael just very pointedly noted that this is a global problem california's carbon emissions are a drop in the bucket and yet this year this year alone carbon emissions are 25 above all of the carbon emissions created by fossil fuels in the state generated by forest fires and when we think about government doing a good job they use the standard principle of economics cost benefit analysis which is what all of us use in our daily lives when we have to allocate our budget where does it make most sense for me to spend my dollars well the stages just fail miserably on that it is just fair it has failed miserably and when we think about forest fires creating 25 more carbon emissions than all fossil fuel burnings that should i hope that comes back and hits you in the face and you say this this is just this is just not right this just can't continue um and yet it does it does and what we need is voters to start understanding based on this type of discussion we're having today and other types of discussions that i hope start becoming more commonplace in the state that things can be better and with some simple with some simple modifications to putting government back on a narrow track protect us protect our property provide quality services and goods and respect the taxpayer that we can may that we can move the needle even understanding that california will remain a relative left state so let me stop there and um and i look forward to questions later and bill i'll turn it back over to you thank you lee and we will get to questions at about 10 15 minutes again just go to q a tab at the bottom of your screen and type away and send it in to us michael and lee i'd like to pose a question to you we can all agree that to live the good life in california is to live a great life if you have the resources if you have the money you own one maybe two homes you have one maybe two teslas in the driveway your kids go to excellent colleges you just live large it's just it's a dizzying exhilarating existence to be poor in california is to be on the opposite end of that but my question is what about people in the middle people neither terribly rich nor poor to income families let's say and they're kind of scraping by you know with their mortgage and trying to save for college and dealing with the high cost of living in california lee and michael what should the government what should california be do should be doing for the middle class because we've had this barbell economy as we've called it for for decades now but what about those folks are in between well first of all the barbell's gotten heavier on the two ends mostly on the lower end number one number two all the things that make the middle class struggle have gotten cumulatively worse we focus for example on housing costs also a very large and not quite appreciated enough issue is how this differs not just by uh racial and ethnic groups but by age a young couple starting out has a very very difficult time much more difficult time in california because it's so so difficult to get into a home and they're not quite ready able to afford private education for their kid or if they are they're really really straining so i think we hit the nail on the head about returning to these principles but i think the key to this is both getting the services scaled to the price scaled and as importantly targeted properly and thinking longer term in a sensible way like let's start actually budgeting for the deferred maintenance that were probably the 100 billion dollars they want to spend on the bullet train would be much better suited to deal with and provide much better better return on the dollar and also trying to make it really much more attractive to those middle class jobs that's been the big problem it's not just these exactly right when elon musk leaves that's probably an irreparable brain drain there are a lot of him floating around uh others other others i would i could name that are similarly uh have left california but also uh it's the talent they attract and the jobs they provide up and down the chain and importantly it's the opportunities created in a dynamic growing uh prospering economy that people younger people minority center can get onto the ladder and move up that ladder and have some sense that they have a bright future they'll be able to afford they can start a family they'll be able to afford sending their kids to a good school because it's a public school that uh will teach them basic skills not um not uh politically correct nonsense um etc so it's it's widespread but i think it's basically restoring uh a sense that the state is going to head in the right direction through a cumulative series of actions that gets back to those principles that he was about a spouse yeah i i agree i agree completely with michael um the i i i wish i wish when i think about government newsom's performance i really wish he had taken a strong negative stand on assembly bill 5 which he signed into law uh in my opinion that was a mistake and assembly bill 5 essentially makes it illegal for a large number of individuals to be able to work as an independent contractor and you know michael i'd love to hear your thoughts on this as well but i can think of no efficiency economic reason why that bill should exist it essentially is preventing mutually advantageous trades between someone who wants to work as an independent contractor and someone who wants to hire that person for their services from independent contracting and ab5 prevents that and in some ways in some instances very obtusely so for example if a tow truck driver is affiliated with triple a they are exempted from ab5 they can work as an independent contractor if a tow truck driver is not affiliated with triple a and by the way triple a has a powerful political presence in sacramento for those tow truck drivers who are not fully with triple a they are not exempt from ab5 so when bill asks uh you know what can we do to to to really support people in the middle of income distribution roll back that law i think would would mean an awful lot um representative uh kevin kiley who is one of the candidates running on the in the recall election has a facebook page devoted to ab5 and there are tens of thousands of people who've written into him he's been a very vocal critic of ab5 tens of thousands of people written in them saying hey why why did you do this to me you have ruined my livelihood and bill an awful lot of when we look at the people who are leaving california um we've talked a little bit about those businesses who are leaving when we look at the the households are leaving california um it's those people in uh in the middle income distribution um the creators of facebook and google and yahoo can happily afford to live here and as bill noted live wonderful lives and those who are immigrants who come here young and who have the dream that they can make it they are still coming here but those sort of in that sweet spot household incomes of seventy thousand dollars a year eighty thousand dollars a year it is a horrendous struggle to live in california at that income level if you're anywhere near the coast let me just add something real quickly it's important as a simple uh arithmetic point when we're looking at the outflow and the high high profile outflows of companies re-headquarting and etc uh it's important as lies mentioned there's also an inflow and it's the net and it's the net numbers but it's also net composition we want to make sure that there are lots of energetic people here coming here to work hard and build stuff and create jobs for themselves and other people and that that's what's uh increasingly at risk it's uh it's it's more than a trickle now but it's not a flood and it can be arrested as we indicated so i'm already looking at the questions gentlemen and this interesting one from john campbell who asks regarding public education are charter schools getting any traction in california as it means to bring standards up give parents options and force the teachers unions to improve the job they do we haven't talked much about education on this call but michael you're a product of california public schools lee i believe you're a gaucho aren't you so um what is going on with education in california what should be done with education in california i've got a great education in los angeles public schools decades ago and i can just tell you from successive cohorts of the stanford undergraduates i teach that some skills are deteriorating they're brighter than ever uh and some of this is technology they think they can get anything they want in an instance so they can be very very broad but they're not really being taught a lot of the basics i when i teach my freshman seminar and i find out that most of them have never even read one federalist paper in high school it's kind of frightening we used to have civics and real history not woke history being taught and required both the undergrad at the uh high school level and asked you to get a degree from the university of california when i was an undergraduate you had to take courses in both government and history american government american history so these these are things that are a problem and uh it's uh uh i think it would be fair to say that the left has taken over that uh you can argue whether there are many variants to the left the near left the far left the in between left whatever but they've taken over and uh there's a lot of uh extraneous stuff and the basics aren't being done right now i'm not going to say that it's easy to teach particularly in a large diverse society my sister-in-law was a schoolteacher in los angeles and she would teach third and fourth grade and in the course of a year she might have 75 different students speaking nine languages as people moved in and out so this is a tough uh tough situation in many places but just to give some numbers in san francisco we spend between seventeen thousand and eighteen thousand dollars per pupil okay that's less than in uh washington dc for example but it's still a lot of money it's a half million dollars per class what does a teacher make sixty thousand dollars maybe so the vast bulk of that isn't on getting a teacher in the classroom the fast book that's going to a lot of other stuff so we need also to figure out how within these large bureaucratic systems how we can get as lee put it better incentives for the funds to be allocated where they're making a difference for students not pushing paper and pushing agendas and things of that sort and the like and wasting funds before we invest a lot more pour a lot more money into these programs into these different situations in these bureaucracies that are wasting a lot are highly inefficient we need to reform them first and they would regain the trust of californians if and when additional funds become necessary but the first place to find additional funds to actually produce the goods and services that citizens want and need and that serve our children in education our farmers in the central valley for water all of us breathing healthier air etc feeling safer in our homes all of that requires that we reform these large bureaucracies through forgotten sclerotic and are wasting large funds large amounts or large fractions of their funding yeah i agree i agree entirely with michael and um and uh it's wonderful we got michael join us to use one of the world's experts in um in race of return on public investments and there perhaps no is no more important investment than we make entering in in our young people and we really want to make sure that our tax dollars being allocated to that process are are more than ever living in such a globally connected world where our workers compete not just with each other but with machines doing jobs that humans used to do and with workers in other countries we really need to make sure we're doing uh we're doing right but by by our children and um and we're not and the school k through 12 public education perhaps there's no there's probably no better illustration of where we seem to have implicitly hired government to be an agent for social and cultural change uh an agent that we did not explicitly hire uh and then personally i would prefer that they don't do that that they stick to training our kids so that they can be proficient in the areas of stem where again only 15 to 20 of black and hispanic kids uh are proficient and the question i think referred to uh issues about charter schools uh in unions and um and you know based on what i've seen so far i think we've missed a great opportunity uh in 2018 when a fellow named mark marshall tuck ran for state school superintendent as a democrat facing another democrat named tony thurman who ultimately won the won the election so in that election tuck running as a democrat received hardly any support whatsoever from his state's party all the funding went to tony thurman because he was what i'll call a status quo fellow he wasn't going to tip over the apple cart now marshall tuck produced a charter school called the green dot schools there were five schools in los angeles where tuck reached an agreement um with uh with the l.a mayor and tony of the aragosa at that time he took over five just abysmally failing schools and within three or four years graduation rates had increased from 20 percent to 70 percent compared to all public schools in the state five times as many kids were judged to be college ready in schools that were at the very bottom without an enormous increase i think with hardly any increase in funding uh just by simply making some changes associated with incentives and accountability and respecting the market respecting the market process and those green dot schools to talk about unions in a sense those green dot schools are unionized that was part that was part of the agreement between tuck and via rugosa politically it would have been very difficult for viewer ghosts to hand those schools over to tuck without the agreement that they were still going to be unionized but it's a totally different union it's not a union based on 1950s united auto workers united steel workers which unfortunately is still a vestige that we see in most teachers unions today even though the uaw and the usw have moved on from that mindset we're still seeing teachers unions today um and i was comparing the charters of the green dot schools with those of say united teachers of los angeles and one really struck me which is when does the school day end and when does the school day begin well in the traditional utla world the school day starts at a particular time and the school day ends the particular time for the green dot union it's the the charter begins you are professional you conduct yourself as a professional the school day begins when you need to arrive to do your job as a professional as we evaluate you and the school day ends when we evaluate as a professional you stay as long as you need to do a professional job but those green dot schools i urge you to look them up online and take a look um remarkable turnaround just a remarkable turn getting back to michael's point about getting a rate return on investment what a uh what a remarkable what a remarkable victory we see in k-12 um what are we seeing at the state level charter schools are being blocked every chance the every chance k-12 in traditional schools gets so again more and more families need to understand what a big difference charters can make and tell their tell their constituents tell the representatives hey i want this school i might be at a poor hispanic family i want this school in my in my neighborhood let me make a three let me make three very quick points here michael uh number one if um mayor veragosa runs in the recall it's a very different recall i think because he probably puts the focus on newsome struggles with hispanics and then secondly his relationship with unions uh versus virgos secondly you mentioned utla they actually went on strike before the pandemic and among their conditions returned into the classroom it was the middle of a school year kind of shocking for teachers they wanted universal health care and wealth tax in california and then thirdly as for public sector unions tim draper the silicon valley venture capitalist is uh talking about doing an initiative in 2022 which would eliminate public sector unions uh in california michael you remember the special election in 2005 when the california teachers association mortgaged their headquarters in sacramento to kill those measures they will they will fight to the death to kill that one won't they absolutely uh arnold put some measures on the ballot and some people argued he should have done it one at a time rather than all together and the teachers union uh fought him tooth and nail and they narrowly lost and that greatly reduces opportunity to do structural reform so absolutely but these vested interests extend well beyond just the teachers union but i'll give you three quick examples number one a foundation i helped run supports something called the national math and science initiative it's a group that has quadrupled stem a fraction of minority students in inner city public schools that have passed a stem at least one stem advanced placement course get ready for college in offering to bring that to a big city school district and paying for it we were rejected as that wasn't our priority so it's very much for peace with what we were saying second point i want to mention is your generic question about charters their original mission was not just to be good schools but to demonstrate best practices that could be transferred and help reform were always going to be the much larger fraction of schools and students that were going to be in public schools well the latter really has failed i think a fair fraction of charter schools have done very well and are doing a good job and we need to expand them but i think that the underwhelming progress in those best practices getting shifted into the into the public schools has largely been the um uh the entrenched interests of the teachers union uh and we have that and the the prison guards union i can go on and on with others of these special interests so it's gonna take somebody uh and then i'll get back to the other big disappointment lost opportunity was when a brave judge in los angeles in the vegard decision announced that um because of the way poor teachers were shuttled shunted into after failing at other schools trended into poor districts and minority districts and there was a lawsuit brought on behalf of some students saying they were being denied the equal protection of the california constitution he issued a brave decision but it was overturn of the supreme court uh on kamala harris as attorney general and jerry brown as governor of filing america's priests to uh to prevent the overturn of the 10-year rules and all that sort of stuff so uh there have been some opportunities we've come close on a couple of occasions marshall marshall tuck and the vegar decision and we'll keep trying but it's going to be a tough tough combat don't don't be deluded it's doable but don't be deluded if thinking swing anything other than hand-to-hand combat so here's gentlemen a question from david anderson who writes a one-party democratic state will never enact the same policies michael and lee describe we need a viable republican opposition that forces rational debate and problem solving uh i went and did a little homework before this call and i looked up california statewide races uh in the schwarzenegger area moving forward going back to 2004 in races not involving arnold schwarzenegger michael and lee these are statewide races president senate and the eight state constitutional offices democrats have won 41 of 42 races steve poiser the insurance commissioner uh winner of 2006 the exception uh this speaks to a brand problem uh it speaks to a problem that existed before donald trump and will exist after donald trump so what's your suggestion for fixing the brand well uh bill i've um so in in this recall i've had i've had the privilege to help advise um uh three of the candidates kevin faulconer caitlin jenner and larry elder and uh in speaking with all three um you know very different people um all very much uh self-made in some cases coming from remarkably poor backgrounds in the case of elder um you know they all have a very good sense of what the issues are they have a very good sense of what needs to be done at a broad level um and i think the uh the issue that california's must address in terms of having and i agree complete with the question um lack of political competition just as in any market lack of competition leads to very very bad outcomes for consumers and and we're the consumers um and we're as michael mentioned we're a majority minority state and and when we look at the remarkable economic success that a lot of hispanics have had that they place high value on quality schools they're uh as a demographic group more entrepreneurial than any other demographic group um more conservative politically that's a group that i think needs to be courted by the footballing party and be told that hey you know our principles are your principles and that you're not getting you're paying the price for a political system that's largely run by a group of elites that really doesn't have your best interests at heart so for the republican party to reestablish themselves i mean obviously we'll see what happens with uh with the recall election but um there's a real opportunity uh and not just for republicans but for for for i would call you know center-right democrats to say i've got better ideas and here's the track record of my ideas and here's what happens in other states that don't have the same failures as california we can do it here if you give me your support so i think politically i'm not an expert in political science but um in my view that's that's where the california republican party should go i think that there are several things that need to be done the first is to recognize an old principle that ronald reagan used to uh enunciate which is we need to be a big ten party that people agree with us 80 are our allies not our enemies and there's been too much purity it's also true on the far left of the democratic party as well but there's too much security tests and extreme statements and extreme positions and many of them are subject to nuanced coalition building parties are coalitions of factions in the u.s we build them inside the clash and the two parties and in other countries they may have coalition governments among many parties that are narrowly focused on specific issues greens for example etc uh so that's number one and certainly outreach to minority voters they're not just politically more conservative they're culturally and socially more conservative which aligns with a more moderate position of republicans on those things not as extreme as some republicans try to be um that's number one number so the big ten part of it and that outreach is part of it but it's also important to realize that california has a huge decline to state population right it's actually larger i think correct me if i'm wrong bill are slightly larger than the republican base a little smaller right now a little smaller okay those are those are gettable okay and perhaps some democrats who've gotten fed up with uh the form of governance and the uh uh the poor management of the state that we've had for quite some time and currently so that that those are opportunities but again that's uh that's going to require some building some long-term building building a bench building an outreach it's also going to involve a much more sophisticated media outreach given the control of the mainstream media in california like the national most of the national mainstream media uh that has gone uh hard left and uh is into narratives and taking sides and the the in the journalism side of the newspapers and radio shows not just on the opinion pages so we're going to need a more sophisticated communication strategy and building and um and that's again going to be time consuming but perhaps we've we've reached bottom in that regard with respect to the republican party and have an opportunity to rebound given how how many problems we have in california that can be traced fairly directly at least in part to poor governance we have but a few minutes left in this broadcast uh so rather than put you on the spot and ask the two of you for predictions into what happens on tuesday uh i say this is somebody who predicted donald trump wrongly every step of the way so i like to avoid predictions let's close with this question gentlemen it comes from jim werleen and he asked a very simple question should i move to florida and you could change florida to texas or utah or arizona fill in the blank states other than california lee why don't you go first because you just put out a story about why businesses are leaving california then michael i'll give you the final word so go ahead lee uh well bill you know last night my um my wife who is a um a family and child therapist was speaking to uh to one of her mentors um a fellow who is uh in his 70s now is retiring um he is moving uh he's moving from marina del rey to uh fargo north dakota so if you want to talk about moving away from the the the sun and the coast you really can't get much farther than uh than fargo um you know i had the i had the pleasure of speaking with um miami's mayor in a recent hoover event uh along with mayors of louisville kentucky who know has a record number of black women who were gaining expertise in stem as michael was indicating a couple of minutes earlier and also the mayor of fort worth and what really struck me among these three mayors was um just their sense of we are humble and we are public servants and we are here to do our jobs um so so for the uh for the uh the the caller um i would say uh you know florida looks pretty good i might i might have a second home in uh in a state that's a little bit more weather friendly during the summer months but given the lack of taxes in florida that could very well be doable michael is a question first asked by the rock band the clash in 1982 should i stay or should i go well i can't give without knowing a lot more about your personal situation and risking a personal friendship i wouldn't i had other personal advice but generically i'd say there's still a lot of good things in california and a lot of things worth staying for um but it's getting more and more tenuous i would say you know if you're financially secure enough and it's uh uh you know a modest a modest issue of whether you can afford to stay here that's one thing if it's a big deal for your family and you're not going to afford a home and you're thinking of changing your whole lifestyle and uh and whether your kids can get an education and stuff like that that's another calculus but there's still a lot of good things in california it hasn't uh it hasn't failed yet but it is on the precipice of a more rapid deterioration unless it gets very very fortunate in a variety of things including the economy continuing to boom and the stock market continuing to boom uh if that if that uh or i should say perhaps when that finally turns there's going to be a very ugly uh repetition of what happened in 2009 10 11 or 1993 for after the recession then and basically the implosion of the defense industry in southern california so so those are all things i would take into account and there are issues in florida you know there they have issues you probably don't want to be there in july and august and you know they have hurricanes and all sorts of other things but it seems that many other places are at least on balance on average spending more of their time and and more limited of their taxpayers resources on the basic functions of government rather than on all these extra things that uh may be nice to have in a uh in a more left-wing utopia but are actually in the end not even serving the people they're designed to help very well bill i know i know we're running out of time but can i just have 10 seconds of throw one i think just what's this shocking statistic to me to follow up on on michael's great points which is the california budget two-thirds of it two-thirds of it goes to the prison system which michael discussed k-12 education where we're about 40th in the country in terms of quality and health and human services including medi-cal which is performing very very poorly two-thirds of the budget goes to those three areas um this is unsustainable housing is unsustainable there's going to become a day of reckoning and then the question is uh do we get all the way there and then what do we do or do we make changes now now's the time to make changes okay gentlemen we're going to cut it off there uh michael lee thank you very much for your insights and thanks for all the great work you do for the hoover institution it really is an honor to be on a call with the two of you i'd like to thank all of you watching for joining us today and for those of you who generously support the work of the hoover institution can't do it without your help on behalf of my colleagues michael boskin and leo hanion all of us here at the hoover institution by all means stay safe stay healthy we'll do our best here at the hoover institution to help you stay informed take care and if you're a californian don't forget to vote [Music] you

Channel: Hoover Institution

Views: 12,549

Rating: 4.8717947 out of 5

Keywords: Recall, California, Newsom, Governor, voters, restrictions

Id: gD4pz6ScKwI

Length: 66min 21sec (3981 seconds)

Published: Wed Sep 08 2021