The Ruthless Rise & Fall of California

in 1848 on a typical January morning in Northern California James Marshall who had been leading the construction effort to build a sawmill walked down toward the American River to inspect the progress he never expected that what he was defined would forever alter the future of California and even the world describing the event Marshall stated I reached my hand down and picked it up it made my heart thump for I was certain it was gold in a blink of an eye hundreds of thousands of people from all over the world would descend into the mountains of California to Wade in the muddy rivers in hopes of finding their own personal Fortune businessmen set up shops While others found it more lucrative to start farming in the Central Valley and before you know it California became an industrial Agricultural and technological Powerhouse it went on to give rise to some of the most influential Innovations in history became a global exporter of culture and entertainment and for a century and a half proved to be the land of opportunity in the nation already known for its opportunity it was the Envy of the world for its state-of-the-art infrastructure educational prowess cheap land and thusly its booming economy while not absolute for everyone all of the time California became the easiest place in the world to work hard and be rewarded in what was described as the California Dream yet for all its glory for the first time in history California lost population in 2020 in what is being called The Great California Exodus for the last two decades hundreds of thousands have left the Golden State and it's starting to accelerate a vast majority of them cite California's cost of living to buy a basic single-family home Californians need at least seven times the median income half of all residents in Los Angeles County spend 50 percent or more of their paycheck just for rent and it's not just workers leaving hundreds of large companies including Titans like Oracle HP and Tesla have or are moving out taking with them tens of thousands of high-paying jobs as a result of California's hostile business environment indeed despite its gargantuan economy which would rank it Fifth in the world if it was an independent country if you adjust California's median income with cost of living and taxes you'll find in actuality it's not nearly as rich as you might have suspected having this second highest cost of living only being beaten out by Hawaii it's no wonder why California has the highest percentage of its population living in poverty and even half of the entire homeless population of the United States so how did California become so incredibly rich in the first place only for it to become unlivable for most of its inhabitants this is a story of the rise and fall of the California Dream remember [Music] foreign [Music] this video is sponsored by War Thunder jump into the most comprehensive vehicle combat game that's ever been created featuring 2000 tanks airplanes helicopters and ships that spans 100 Years of development from the 1920s all the way to the present day each and every vehicle is incredibly detailed down to the smallest components which combine with war Thunder's authentic sounds beautiful music and incredible Graphics makes for an unbeatable immersive combat experience as a history buff myself I can't stop myself from flying and driving some of the most notorious combat vehicles from the 20th century so start playing War Thunder today on PC Playstation or Xbox using my link in the description to unlock a free massive Bonus Pack including multiple premium Vehicles a premium account boosters and much more it would be an understatement to say California in 1848 was nothing like it is today it was an official territory of Mexico but was being occupied by the United States during the Mexican-American War despite its massive size and mostly ideal weather it was sparsely populated by only 150 000 people of which just 4.5 percent were non-native American James Marshall's discovery of gold would change all of this quickly unleashing the largest migration in the history of the United States in total over 300 000 people came not just from the United States but from China South America Australia and Europe to all of these new arrivals San Francisco became the port and gateway to the gold Bridges and thus its population exploded from just 200 in 1848 to 37 000 a mere five years later gold mining became so lucrative that San Francisco's Port started to be dominated by abandoned ships as Crews and captains alike decided to try their luck in finding gold to keep up with the massive demand a vibrant and booming economy sprang up for which the miners would spend their Newfound wealth this included the rise of many new towns and cities to further help Supply the growing needs of the gold rush in fact at one point demand for beef was so great that 60 000 Longhorns were herded all the way from Texas and soon Southern California became the largest producer of dairy and meat in the nation indeed California also had a lot of geographical advantages it's Central Valley with its rich soil in ideal climate proved to have significant potential in agriculture while Limited at first due to difficulties finding enough water by utilizing winter wheat California became the largest producer by 1890. along with this its massive Coastline was perfect for trading especially with Asia and also allowed for a robust fishing industry to take root this unprecedented economic and population growth enabled California to bypass the status of territory becoming a full-fledged state by 1850 even being allowed to choose its own boundaries the new government flush with cash started to take on much needed infrastructure projects and heavily invested in education instituting a near Universal school education along with the construction of its first universities while the gold eventually dried up California was presented with another massive boost to its economy work started in 1863 on the Central Pacific Rail line and just six years later it joined with the Union Pacific Line in Utah California was now directly connected with the rest of the U.S resulting in lower overall prices increased profits for Industries and accelerated population growth at the same time clever marketing by the railroad and tourism Industries successfully sold California as a healthy comfortable and cheap place to live resulting in a real estate boom those that did not plan to live in California became tourists to see its immense natural beauty by the turn of the 20th century California was starting to dominate dominate U.S economic expansion by the year 1900 California's population had increased by 13-fold and it showed no signs of slowing down yet a few key factors would take California from a regional to a global power the first was the discovery of large reserves of easily accessible oil near Los Angeles and the San Joaquin Valley kerosene was rapidly replacing whale oil for lighting oil was becoming a necessity for lubrication in the blossoming Machine age and the rise of the automobile made the nation parched for gasoline as such a major oil industry took shape and by 1903 California became the leading producer in the nation pumping out 4 million barrels annually at the same time new Innovations in film were rapidly growing the industry however the technology to film these new movies had patents on them mostly owned by Thomas Edison who was headquartered in New York as such many film companies then wanted to get as far away as possible in hopes of secret getting away with not having to pay royalties Southern California's varied terrain year-round Sunshine growing talent pool and being about as far from New York as you could possibly get became the new ideal destination as a result the Hollywood film industry was born bringing in huge amounts of cash while also projecting California's allure in culture domestically and eventually around the world but the continued population boom of California soon required the state to start shaping nature the cities in the Central Valley were starting to run out of water to remedy this many extensive water projects costing billions of dollars started redirecting large amounts of water this included the Central Valley Project the Los Angeles Aqueduct and many other endeavors which brought much needed water from the mountains and rivers to the farmlands and the cities this not only enabled the capacity for many more residents but also transformed California's Heartland into the most productive agricultural region in the United States along with these projects came Mass investment into more railroads and a sprawling highway system boosting industrial growth even further yet California would get lucky once again in the early to mid 20th century California's strategic location gave rise to huge military investment ideal weather brought training facilities and airfields and the rise of Japan as a military threat led to new Naval ports and large-scale shipyards World War II sawai skyrocketing of these needs and California became a military industrial Powerhouse emerging from the war California continued its role attracting 25 percent of the entire department of defense's contracts and 40 percent of the military's research contracts this was especially true for the Aerospace industry which continued to be a major supplier of employment and economic stimulus later being accelerated due to the cold war with the Soviet Union yet maybe most important to California's role in the world was its prowess in lower in higher education from its Inception California funded near Universal basic education by the 1930s it was a trendsetter in education Beyond elementary schools being a leader in the high school movement this combined with the Port of San Francisco Stanford University and nearby Moffett Field led to the Bay Area becoming the epicenter of research and development for radio and Aerospace but Stanford would go on to heavily encourage its students to commercialize their ideas and seek venture capital in what would become the birth of Silicon Valley at the same time California adopted the master plan for higher education it started spending huge amounts of money to build the largest community college system in the nation dramatically increased the capacity for undergraduate institutions in higher education became free enabling 50 percent of high school graduates to enroll in college as a result the educational system churned out ideas and talent in which Silicon Valley was able to put to use quickly investment the amount of talent and thusly in Innovation started spewing out from the region giving rise to the transistor integrated circuits the precursor to the modern internet the microprocessor and eventually some of the largest companies ever created including HP Intel Google Oracle Apple Tesla and many others California and specifically Silicon Valley became the global home of technological innovation generating obscene amounts of cash it has attracted the most talented mines from all over the world and is the reason you are able to watch this very video California in the 20th century had firmly cemented itself as one of if not the most influential pieces of land in the entire world incomes were high jobs were plentiful and homes were affordable if you had any semblance of a work ethic or a novel idea chances were you could live a comfortable life in California while it was never absolute and often not equal California during this golden age was unrivaled in its opportunities for everyday people people Venice Beach is one of the most iconic places in all of California and its famed Boardwalk is one of the most popular tourist destinations in the entire world yet the population calling this area home has decreased by 20 from 1960 to 2010. during that same period the population of the Los Angeles metro area has increased by 91 percent how did one of the most desirable areas on Earth lose population when the surrounding area itself had almost doubled what once started as a working-class neighborhood in the 1960s has been transformed by a years-long battle by homeowners to make Venice even less dense than before successfully implementing egregious building quotas and restrictions starting in the 1970s Los Angeles decentralized decision making to Citizen advisory committees this allowed a narrow faction of wealthy homeowners to warp regulations to favor single-family homes discourage further construction and contest the building of denser in more affordable apartment buildings they did this in an effort to retain what they already had quiet single-family neighborhoods which also had the benefit of greatly increasing their home prices not only this but California's notorious environmentalism which makes the state the most regulated in the country if not the world increased costs and decrease Supply to make it even worse a law which fixes the growth of property taxes forced the state to shift the burden onto home builders resulting in the state having the highest construction impact fees in the nation as a result since 1960 the average home value in Venice has increased from 20 000 to almost 2.5 million dollars and this not only happened in Venice but to the entirety of California the consequences of which have been widespread the state is now short close to 4 million houses it has the second lowest home ownership rate the second highest median home prices and thus the highest poverty rate when adjusted for cost of living but this is affected more than home prices as the population boomed and Prices rose the more affordable and dense apartment complexes were pushed to the poor neighborhoods as a result segregation along race and class accelerated while shoving more children into the most overcrowded and underfunded schools zip code education as it's called has dramatically deteriorated what was once an envied educational system if you are rich you can choose to live and be enrolled in any school if you are poor you'll be forced to receive education from the most neglected schools California now has the worst student-to-teacher ratio in the nation the 10th worst K-12 educational performance in the 15th highest dropout rate this of course is better than it appears as the schools in rich areas bring up the state's averages the result is a massive reduction in Social Mobility poor Californians today receive a much lower standard of education and when combined with the hyper-inflated cost of living this means their chances of climbing the socioeconomic ladder are lower than ever before it makes sense now why 53 percent of Californians are considering leaving according to an Edelman intelligence survey yet this is just the beginning of California's economic woes starting with the end of the Cold War in 1991 California's military in adjacent supply chain Industries took a massive hit this along with the overarching trend of American companies moving manufacturing jobs overseas meant California was starting to no longer be the employment Factory it once was since then it has persistently had a higher unemployment rate than the rest of the United States specifically herding blue collar and middle class populations the highest paying jobs are those in Silicon Valley which has never been a substantial provider of jobs therefore income inequality has steadily increased at a rate higher than the rest of the nation and today California stands as the fourth most unequal State this economic reality facilitated a change in policy where the government started to to increase the taxes levied on businesses and the highest income earners the money could then be funneled to the education system infrastructure and economic safety nets for the less fortunate in fact California spends more on health care and Welfare than any other state by a wide margin this of course is not necessarily A Bad Thing and is very logical in nature the problem is the extent to which taxes and regulations have been increased in a survey of 383 CEOs by Chief Executive magazine ranking States on how business friendly they are California ranks dead last Forbes ranked it almost at the bottom for regulations and business costs in a survey of corporate attorneys assessing the fairness of liability systems California ranked 48th it's 8.84 State corporate income flat tax is one of the highest in the nation and it's not just companies being burdened California has the highest state income tax for its ultra high income earners at 13.5 three percent when combined with the federal rate of 37 percent those in the top one percent are likely seeing close to 50 percent of their incomes taken by taxes of course many of you think this is Justified and indeed it might be however even if it is this is creating a major problem the top point five percent of income earners in California now represents forty percent of the state's tax revenue revenue which props up most of the state's needs yet with many other states providing very low or no state income tax and little regulations there now stands a huge incentive for those that support the whole system to move out historically though California's large tech companies and workers have stayed because you just needed to be in the area to stay connected with the rapidly changing industry it was hard to find Qualified workers elsewhere and the cost to get up and move out of state was great the pandemic has started to change this no longer do you need workers to be in the office no longer do you need to be close to others to network work and with the rise of other Regional Tech hubs like Austin Texas it's not as hard to find skilled workers elsewhere California's comparative advantages are steadily decreasing with technology while at the same time it's actively threatening to raise taxes further businesses are now finding they're able to create much more value for shareholders generate higher profits and find high quality workers for cheaper outside of California subsequently in 2016 alone 1800 companies left and today the state is losing about 12 major company headquarters every month as they leave they crucially take away billions of dollars of state tax revenue which is needed to support the growing impoverished population the worsening educational system and crumbling infrastructure projects that have been neglected since their construction worse yet a large majority of state revenue is built off the back of capital gains as California stares down the barrel of a recession in the ensuing stock sell-off these revenues are likely to be taken away precisely when the economy needs it most California now finds itself in a catch-22 as the economy increasingly becomes unequal the voter demand to increase taxes on the wealthy does too as these taxes increase more companies and Wealthy individuals leave taking with them much needed tax revenue and thus the cycle repeats yet running for office on the promise to cut taxes or spending proves to be political suicide as candidates running to spend in tax more when out it appears then that California is leaders and its population are likely to realize this problem after it's already too late California and the rise of its Mighty economy came down to successive economic booms from the gold rush to Silicon Valley today's boom of Technology however has led to fewer jobs and higher income inequality as the state has pivoted to account for this it has found itself in a situation where it's destroying the very thing that sustains it its ability to create Innovation and attract from all over the world coupled with homeowners waging a war that has skyrocketed prices and pushed children into overcrowded schools the once glorious California Dream of working hard and being rewarded is starting to erode despite this California will likely continue to dominate the global economy just with diminishing magnitude in the meantime however the ensuing economic and social burden will fall on the middle and lower classes All That Glitters Is Not Gold especially when you're poor in the Golden State don't forget to play War Thunder today click the link in my description to unlock your free massive Bonus Pack which includes Vehicles boosters and everything you need to start playing the most comprehensive and immersive vehicle combat experience thank you War Thunder for sponsoring this video [Music]

Channel: Casual Scholar

Views: 1,148,689

Keywords: California’s Economy, California History, California Midterms, California, Economics, Casual Scholar

Id: lwvGFQ9rY2I

Length: 21min 22sec (1282 seconds)

Published: Mon Oct 31 2022