Victor Davis Hansen- Keynote Address: California at the Crossroads

thank you very much I thought I would speak for thirty or thirty minutes on the good bad and good prognosis of California but let me start with the good first and then we'll go to the bad and we'll end with the good we were very lucky to be born in our to live in California because you know if you look at all of the traditional ingredients that make a society developed through history or boom we've had we have everything were the third largest state now we're the most populous but more importantly people came to California because if you look at the building blocks of society throughout history food fuel shelter we had everything we we could be again the second largest timber producer were already even in our state of decline as far as not utilizing all of our natural resources were third in energy production oil production first in agriculture and that's because very rarely do you see in the world the Sierra Nevada mountains with that watershed juxtaposed to the climate and soils right next to at a desert Mediterranean climate I mean there you can see it in Chile you can see it in North Africa Greece the coast of Turkey but very few places in the world have that combination very rarely do you see a coastline of 900 miles and given the transition in the world economy from a neo socialist paradigm in Europe that's not as dynamic as a sort of free-market capitalist paradigm in Asia this coastline is much more valuable than the one in the East Coast or a window on China Japan South Korea Taiwan Australia and these are economies that are dynamic in a way that the European economies are no longer dynamic so we've got mountains we've got weather we've got the soil we've got size we're just opposed to a foreign country Mexico most importantly though that climate and those natural advantages brought a particular type of California in the 19th century and 20th century that wanted to take advantage of that natch bounty and it brought entrepreneurs Buccaneers privateers good and bad but they all had one thing in common they were very audacious and they were imaginative and I'll just give you a few examples of what I mean any of you've been up to Huntington and Shaver Lake honey Henry Huntington Huntington wanted to develop what we now know as Huntington Beach there was no electricity in those times or they blew the ability to make electricity through steam was very limited so he when he had John Eastman go up on the San Joaquin River and the space of two years 1912 to 1913 they built huntington and then later shaver and then Florence they built a thousand kilowatt megawatt energy production this is in the nineteen twelve thirteen fourteen they didn't know if the penstocks could handle two thousand of foot drop from Huntington all the way to Big Creek so they had the Krupp arms manufacturers who built battleship barrels shipped into California they transmitted the electricity nobody thought you could do it two hundred miles and they electrified Los Angeles and allowed people to take a trolley and live on the beach which was a suburb of Los Angeles if you look at the California water project under governor Pratt brown we confuse the two Browns we got to remember that Jerry Brown's father Pat brown sued the Sierra Club in 1958 to start the California Water Project and he if you go back and read some of his speeches they're very visionary and he would say things like unfortunately this state has two thirds of the people live were actually it's three quarters he said two thirds where there's no water and only one-third is where they're water and rather than just accepting that as an environmental fact he sought to change it first by encouraging further development of the California the Central Valley Project which was federal and then merging it with a California Water Project it's the largest water project in the world even the penstocks right over here that go up over the grapevine or the longest still in existence tallest and the tragedy of course if you look at what he said is when he did this it was 15 or 16 million people and it was calibrated each five years to fit 40 million or present population on to 60 million but in our infinite wisdom or ignorance we canceled the tertiary phase of three or four more dams that would have given us another 10 million acre-feet and ensured growth could go easily up to 50 or 60 million but the point is that we had people like that if you look at David Packard and Bill you at that came to Stanford University really went to the engineering project and they were the godfathers of what we now know as Silicon Valley way before Apple and Facebook and Google and their attitude was that the university was not going to be just an ivory tower but would have pragmatic ramifications and between the two horns of UC Berkeley and Stanford University this was a unique opportunity to grow Silicon Valley it was not an accident that it grew where it did and the type of people who were the entrepreneurs that developed it if you look at Pat Brown and glim dunkey the Chancellor of the State University System we were a hodgepodge university system like most states but the Tri part master plan nine UC campuses now with UC Merced 10:23 now state college campuses and then over 60 Community College and they were all layered and integrated nobody had ever done that before most people thought if you were back east you see small private liberal arts it's a good paradigm but they're not systematic we don't really have that pattern we have a Pepperdine or we have lawyer or but basically we had confidence in public education tuition free until 1967 it was a brilliant idea of educating was based on mass participation of democracy it's another good example like Henry mayor our Sam Goldwyn or herbing Thal Berg who went into Hollywood these were mostly Jewish Americans who were refugees from Eastern Europe they liked the climate of Hollywood they were very interested in developing themes of Americanism especially as juxtaposed to their antithesis they've grown up with in Eastern Europe and in Germany and they really created Hollywood out of nothing and so when you look at universities we could also talk about the freeway system Pat Brown's original vision he said he could dream of a day when I 5 99 and 101 would all be six lanes Arnold Schwarzenegger said that when he would left that would happen - it never did happen then he but I have to drive home to Selma from this afternoon and when I get to the Delano four-lane bottleneck I don't know if I'm gonna run over a mattress a shovel or a bin it's one of it I always plan an extra two hours and I drove last night - should give you what's happened we used to have the most impressive airports in the United States LAX was Willy I mean it's a mess now but it was considered state-of-the-art and yet i sat last night excuse me Monday night 7 hours at the Palm Springs Airport until the flight was canceled at midnight and you think would be pretty easy to get here from Palm Springs yesterday but believe me that 220 miles on the California freeway system is a very uncertain experience what I'm getting at is we had all of these natural advantages it brought all of these men of genius and daring and they created a utopia that turned out as it still is the fifth or sixth largest economy in the world and then something started to happen in the 90s 90s and the 21st century and it's a very complex it's easy to demagogue it or say it's these people are bad or these people are good but it's more of it I don't see it as melodrama more of tragedy and what happened was I'll just give you the symptoms as a doctor and then we can see if we can come up with a diagnosis and then offer a treatment and prognosis but if you look at some of the symptoms we have 1 out of every 3 people on public assistance lives in California 23 percent of Californians live below the poverty line the CSU system when I started teaching there was struggling with graduating 50 percent of the people in four years and we had this new program called twenty-eight percent of the incoming class did not satisfy high school math in English and yet we were admitted under special circumstances today forty-eight percent do not graduate in six years and the remediation rate has gone up to 55 percent to such a degree that the CSU system often does not use the word remediation at least in some campuses it's fifty five so something is has changed radically if you look at the income tax sales tax and gas tax we that basket whether we count Hawaii or not is really pretty consistently we're the highest tax state and you know in the Union if you look at commiserate benefits as I mentioned our schools at the higher education are under challenge but K through 12 depending on what rubric we use because usually the right uses more pessimistic and the left uses more optimistic and they're subject to interpretation but between the sidelines there's a common consensus we're about 45 43 46 and high school test scores we used to be consistently 10 and 11 so we're not producing our public high schools are not producing the type of college graduates that are going to be competitive not just with other states but with the United the world at large that's a challenge if you look at what we get for what is going to be this graduated new gas tax we may end up higher than Connecticut in our aggregate gas tax and yet Forbes two years ago rated California infrastructure 49 out of 50 so we're kind of confronted with an Orwellian situation we are asked to provide the most generous taxes to government and in return we don't get the type of services that other states do with much less of a tax burden that's the symptoms now what caused this what happened from the vision of Henry Huntington and Bill you it and Dave Packard Pat Brown what was causing this and I think one of the answers was there was an influx of great poverty without traditional to remedy it and great wealth as I said we have 22% of the population lives below the poverty line I didn't say that we have the most billionaire 77 billionaires in the world live right in California and the closest proximity most of any other state so what we see is that Facebook Apple Google in aggregate control half of the world's internet revenues they're capitalized that somewhere between 1.5 trillion which is about the size of the California economy each year the GDP to 2 trillion dollars so we have an enormous amount of wealth just to take one example I'm not mentioning Hollywood is very still even in the days of its decline is still very lucrative 2 Times Educational Supplement rated the 20 top universities in the world it was a British not an American effort 13 of the 20 or American five of them were California the top one Cal was Caltech number three with Stanford six was UC Berkeley those are enormous resources but they're also enormous money earners they spin off industries they bring in foreign students that pay through the nose in high tuition so we have all of these assets and the reason the result was it's part of the state got very very wealthy at the same time people who were fed up with the high taxes and the lack of commiserate services four million in the last 25 years have fled the state if you go to state line Nevada or Reno or Boise or places like Austin it's almost like you can see it for a Fresno or Bakersfield person on the street it's it for naught when I speak in Boise I said people wave all the time so there was a flight of entrepreneur mostly in the seventy to a hundred thousand income bracket at the same time and it's a controversy oh I don't want to get into the illegal immigration Donald Trump was in California but we had about 20 million people enter the United States illegally that wouldn't have been necessarily that much of a challenge had we back to the old melting pot formula Pat Brown of integration assimilation intermarriage and it's still working but with such numbers half of all people who enter the United States illegally came into California and unlike previous immigrations from Central America and Mexico if you look at the per capita income of people who came as undocumented they did not have the levels of English and per capita income that prior migrations from Mexico they were mostly from southern Mexico not from northern Mexico in other words it was a more challenging project and yet we in the state failed our duty to assimilate insist on English and use a melting pot in the way that we had so we have enormous numbers of people of indigenous people who were very poor who came into California and that caused a radical restructuring of the budget night under Pat Brown in 1960 about a third of the budget was spent on infrastructure and about seven was spent on social services now it's about 40% on social services and about 7% on infrastructure it's flipped and you can see the results that the infrastructure is not up to the population or that the needs of the people and this is causing a lot of tension so great wealth made a lot of people in California exempt from the ramifications of their own ideology let me elaborate on that kind of poorly worded phrase so when you had people in Hollywood and you had people in the defense industry and the banking industry and the universities and you had people in Silicon Valley and you had people in Napa Valley and they all shared a corridor roughly 50 miles inland from La Jolla to Berkeley and it represented only about 20 percent of the geography of the state but about 75 percent of the population you look at a map of California politically red and blue and it's almost all red look at it readjusted for population and the balloons on the coast drowned out you can't see any red and that's that's kind of a dichotomy and it would say result of people fleeing the state and from the middle-class people coming in as immigrants that were not assimilated quickly enough for the commiserate idea that we want parity for everybody we want middle-class citizens as quickly as possible but most importantly we created sort of an aristocratic class that was not subject to the ramifications of what they preach and let me give me a few examples very quickly what I mean by that so I'm unfortunately I have I work at Stanford University where the per capita income of San Mateo County is about a hundred and ten thousand I live in Selma rural Selma where it's about twelve thousand and a house and Selma a new home is about a hundred and twenty dollars a square foot where I live in Palo Alto the neighborhood is about I rent is about 900 to 1500 dollars a square foot it's like going from Mississippi to Massachusetts within the same state in one day in three hours and it's very on it's very disturbing because the people who make decisions about all of us in the room and people in Northern California in other words 75 percent of the geography of California don't are not subject to the downsides of them I'll give you a few examples so if I had talked to Stanford professors they're against school choice they're for open borders they make fun of the wall and yet most of the people that I know with rate great wealth and Atherton or Billy they have if you see Mark Zuckerberg home they have walled estates what's happening in the Bay Area is sort of like the depressing reaction in the civil rights movement after the quality of education was ensured by Court decision and federal legislation all throughout the south we had these private academies pop up and white people fled the public schools and put them in it really undermined that public schools their defense was there was no defense but they would have told us I'm consistent with my right-wing philosophy but if you look at the bay area and look what's happening in Harker or Cass delay or Sacred Heart or the Menlo School it's not consistent with our ideology these schools are like southern academies because the Elite has lost faith in the public schools are putting their kids in private schools and yet are dictating how other people should operate the public schools if you look at why we have some of the highest kilowatt rates in the United States I go to Walmart in August and many and very poor people are sitting in Walmart because it's a hundred and ten and they cannot afford to turn on the air-condition the people who make those decisions or on the coast I have an office in the tower of the Hoover off tower on Stanford's campus I've never turned on the air conditioning there isn't any and there's no heat it's about 65 degrees year-round again a ruling class that decides the future of California but it's not subject to the consequences of often theoretical approaches take water I had a conversation with a Stanford professor who was insisting that we had to cut off all the water to AG and I suggested why doesn't he do it to the Hetch Hetchy deliveries California Water Project for the bear and he's pointed to the Crystal Springs reservoir in 280 so we have all the water we need from ourselves he had no idea that every drop of that water was imported from Northern California between Hetch Hetchy and the california water project is about 80% of the Bay Area's water and so they it's not that they're uninformed it's almost as if they're ignorant about the sources of their own wealth so whether it's education or power high-speed rail is another example I think it's great if you believe in high-speed rail that's starting here but if you look at the origins of that decision and you look at the lawsuits that permeated the entire project in the in the Palo Alto area the Oakland area the San Jose area it was pretty much try it down there on those got not here with us it's too dirty it's too disruptive we don't know what work they're so broke down there they'll do anything to get it it's the attitude and now we've got this Stonehenge that's half completed if you've been by the overpasses and and the cost before one foot has been one foot of rail has been laid track the cost is exponentially geometrically rising again that was a project of Bay Area theorists so let's get back to the good news if I can so what I'm saying is we had a natural a natural bountiful state it brought in a lot of diverse people that was wonderful one of the things that California we have these rich ethnic mix Mexican people Japanese people Chinese people German people it was it was all sort of a natural diversity it was not a university enforced boutique diversity and we had men of genius and women of genius and we prospered and Brown was and he represented a generation of far-seeing people and we had this wonderful utopia and then do - I think complacence and too much well people forgot pragmatism in the state and we had a lot of people leave and a lot of people come and the state started to bifurcate so that the people who were subject geographically to the decisions of the lawmakers and the elite were ideologically spatially differentiated we don't know who these people are if I go to Stanford and I said I used to grow raisins I had a a colleague said well how many trees per acre do you need and they have no idea that raisins or dried grapes and growing a line rather than they could be picked on a tree and so there's that there's a disconnect and so what is the answer well part of it is I think the Bakersfield paradigm of all of the local paradigms we've seen is the more successful and I'm speaking as someone who grew up with the idea that Fresno was the father and Bakersfield was the poor orphaned son in the 60s and 70s but there was something about Bakersfield I don't know what it was practicality or the Oklahoma diaspora or different ethnic groups that did not really think about their differences they thought more about their unity it was a can-do idea there was these rich oil reserves here you're I think number two county in the United States and oil production I think you're number six and agricultural production you have this wonderful nexus of i-5 and the 99 you're positioned is increasingly a bedroom community people here today have talked about all of the resources and the desert defense housing and but more importantly I think is the paradigm and by that I mean we are coming to the Nash limitations of the blue state California coastal paradigm and what do I mean by that what I mean is it's not function anywhere whether we look at the Oakland mayor who's in South Carolina 1858 fashion is trying to nullify federal law and say that a federal immigration cannot come in and we choose not to cooperate or even obey federal law it'd be almost as if Provo Utah told us I don't believe in the the Endangered Species Act or Missoula Montana said you can buy a handgun anytime you want federal law doesn't apply with it we would be outraged the federalist system cannot maintain itself if individual states can pick and choose which federal laws they follow and we knew we learned that in 1861 if you go down we have the highest number of homeless people about in the United States about half of everybody about 500,000 homeless people are living somewhere in the coastal corridor mostly not all but mostly if you look at housing prices and you combine that with two things great wealth concentrated coming in from all over the Pacific Rim all over the university grid throughout the world high tech everybody's got an iPhone the world over and you concentrate that area along that corridor and then you combined it with an attitude a utopian attitude that I really don't need to build any more dams or freeways because I've got a nice home in Portola Valley or I live in Hillsborough or I like my shady street and it's sort of I've got mine I'm in the Attic I'm pulling up the ladder because most people increasingly cannot afford homes because they're not building homes like they used to because people who already have nice ohms and the money to enjoy it don't want other people to have the same type of opportunities they do so the limitations of that are pretty much been met I think you're going to start to see people in California that a are increasingly dissatisfied with that model of governance and increasingly unable to participate it in it if they weren't dissatisfied and they're going to look for other areas in the San Joaquin Valley is it's gone it's actually got a better water resource you wouldn't believe that but then the coastal communities if you read what early Spanish explorers said that you can't live along the coast there's no water you can live inland when you were in the watershed and the aquifer but not along the coast long term we have more land it's cheaper we have a different attitude and I think you're starting to see already in Bakersfield but also in places like Visalia and Fresno people who left the valley is college students are starting to have families and they want to come back they see more opportunity and they see these local governments better run and more attune to governance elsewhere in the United States than the peculiarities 'im of California I think that's going to be very positive second thing that I think we've seen is that we are one party state that's never been successful through history the two-party system democracy needs to rival oppositional groups to check and balance and audit and adapt and modify each other but when you have one party given the population concentration and the per capita wealth and the coastal area and then this vast expanse that did that dilutes the conservative anecdote then you start to see things like a party voting to make a sanctuary state in the elemental or the ridiculous where they make it a felony to let your dog chase a bobcat for example where we have elemental problems the California motto is sort of the felony that I have no ability to enforce psychologically or monetarily I'll compensate by going after the law bahding who commits a misdemeanor you've all had that experience that you can see bass infractions of the law but there's no mechanism to address it there so existential but you can be going ten miles over the speed limit and get a four hundred dollar fine ISM ate away psychologically and financially of compensating for that inability and so I think that we're starting to see that this one-party state does not work and I think you'll increasingly see is the mexican-american population is assimilated it'll start to resemble the Diaspora and the experience of the Italian Americans of the 1920s and 30s who came here from a Catholic impoverished country and very quickly became democratic and were promoters of big government and yet today if you ask if your name is Cuomo or Giuliani you cannot ascertain one's political beliefs so a lot of new citizens are now taking part in California in a very fair and realistic way and they're starting to ask themselves I don't really care about Bobcats I don't really transgendered restrooms is not on my top of my agenda I don't know why I pay so much for electricity I want to know why I can't go to San Francisco in the freeway I want to know why I fight fly out of LA and these are questions that I don't think the left and the coastal community have an answer for a couple of other last two things that I think will make change not by intent but by default is that your vote and my vote doesn't really matter in a presidential election we saw that in 2016 in other words when we are predictably a blue state why would any Republican candidate come here comes here for one reason to raise money and leave two or three days and he's out of here and that creates a sense of helplessness or if you're on the Left it makes you dig in even more that California went three million votes for Hillary Clinton and yet we didn't elect her or why don't candidates come here or what and and the answer is that we're politically irrelevant and that I think is starting to affect people when they say that there's only one candidate and some of these statewide races there hasn't been a Republican statewide office holder since 2006 and that's getting people not only look at the red red state paradigm in a more fair and judicious way but saying politics as they are in California cannot go on we're no longer really a democracy we're a one state state party and we don't have any national influence we're all the talk about our great economy and high tech and the California model the fact is that how California votes does not determine a presidential race anymore and finally and this is very controversial if you've looked at some of the we talked to our pounds we really don't know all the details in this massive tax reform and reduction bill of 2017 but what sticks out to us and people in Illinois and people in New York and if you can get a congressman in Washington to have a couple of drinks and be honest with you he will tell you that the that this legislation was targeted at Illinois New York Connecticut and California and by that I mean there's a 10,000 rough limitation on state deductions for local and state taxes as well as interest deductions what that means is that affluent people who and there's many of them many of them in this room that are paying a hundred or 150 thousand a year in state taxes are essentially going to see that deduction disappear and their de facto or their effective rates going to double and when you add in the fact although we're only 11th in property rate the rate of property taxes when you factor in assessments we're right up there with some other states that have a two percent rate and that means that somebody who's living in Portola Valley might have 30 or $40,000 property tax and they might have a hundred and fifty they might have two hundred thousand in the old days the effective rate might have been ninety or a hundred thousand with their deductions now it's going to be almost the whole thing why is that important besides the idea that it the Republican Congress taught us a lesson I suppose we have 40 million people in California half of our revenue comes from income tax half of the income tax comes from how many households of 40 million pay half of the anybody know 150 thousand think of that 150,000 out of 40 million people pay the 1/4 of the aggregate revenue and one half of the income tax if you were to lose 10,000 people because they might want to flee in a way that the middle class had traditionally fled it would be disastrous to the state I speak a lot for the Hoover institutions Board of Overseers I just got back at Palm Springs and I had in dinner I talked to four people just four randomly people they're all leaving the state because many of these affluent people are retired and they no longer have businesses or their businesses can be run de-facto or in a vicarious manner and they're going to places like Boise and Nevada or they're going to Texas or they're going to Arizona and it doesn't take many of them for us to have a revenue default but the flipside of it is when somebody in the California Legislature and this has happened if you've been following the news says well we have to raise the income tax rate up if people leave you can imagine if people left at an effective top rate of 13 if you went to 15 it would be a stampede so I think we're getting to the limitations of what that's going to happen so that the Congress was saying to California you can raise taxes all you want but we're going to put a lid on how high you can tax people because if you go much higher people are going to can't afford because they're not going to write it off there other states expense let me just review then what I'm trying to suggest to you that we are the richest state in the Union we're one of the rare climates and geographies whether we Bay ports San Diego San Cisco Bay everybody who came here in the 17th 18th and 19th century called it paradise then people understood that paradise and develop it in a responsible far seen fashion Democrat Republican liberal and conservative Pat Brown said I get up in the morning I want two things I want a person to get an education so they can vote and I want a man to be able to get to work and back safely and quickly on our freeways think of that it works so well human nature being what it is that we created a wealthy class that had utopian and theoretical ideas and they did not remember the lessons and the pragmatism of their ancestors and they started to do things radical limitations on growth radically high taxes radically high ideas of redistribution radically ideas of the salad bowl and I identity politics rather than making the way we look incidental rather than essential to our characters and in the process we did not keep up with the growth we forgot who we were and why we came here and what had made us what we are and now I think in a very perverse way we've come to the limitations of that blue state model it's not because they're nice people are going to stop but it doesn't work anymore I just got back from Market Street in San Francisco and it reminded me something like a city in Latin America not to be unfair to Latin America but it's at Market Street looked like a third world or a community homeless community in Orange County looks like the third world there's problems that we haven't seen I was in San Diego two weeks ago and people said be careful we had a hepatitis epidemic among homeless people and that model is not working and when people turn to an alternative I think what you are doing in Bakersfield is going to be the obvious alternative and superior choice and we'll see I think we'll start to see changes thank you very much [Applause]

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Length: 34min 26sec (2066 seconds)

Published: Fri Mar 30 2018