California Dreaming

California’s wokeness is extracting a heavy price for virtue signalling policies that are delivering less but costing more. By Nick Cater.

California’s dream of becoming a world leader in virtue has collided with the laws of physics.

On some days, the state generates so much solar power it has to pay other states to take it. When the sun sinks over the Pacific on a hot summer evening, however, the “greenouts” begin.

On these days, the Californian Energy Commission pays top dollar for fossil fuel-generated power from other states to meet a shortfall of up to 15,000 megawatts a day — roughly twice Australia’s average daily consumption.

As the developed world slumps into recession, the phrase “go woke, go broke” is proving to be more than just a hashtag.

Few jurisdictions have embraced woke-ism more ardently than California, where the utopian, collectivist, postmodern ideology that has leeched from the universities is extracting a heavy price.

In prosecuting the case for a return to traditional values of individualism and freedom, America’s far-left coast is exhibit A. It serves as a predictor of what might occur here if our democratic governments succumb to the same pernicious ideology. There is evidence that is already happening, notably in Victoria.

California’s radical reformers have been empowered by progressive Democrats who dominate all levels of government.

The collapse of the energy system this summer is the most visible of the many policy blunders on their watch. Almost everything governments are expected to do is costing more and delivering less. An expensive but failing public school system, rising urban crime rates, streets and subways littered with syringes and human faeces and Los Angeles’s notoriously dangerous rapid transit system ­attest to a chronic failure in basic service delivery.

Governments, meanwhile, have been assiduously performing tasks they should avoid.

The latest outrage is a radical reworking of the school curriculum, mandating a semester-long course in ethnic studies to teach “the four ‘i’s of oppression” — ideological, institutional, interpersonal and internalised.

Not all ethnic groups are discriminated against, apparently. The course notes invite students to write a paper on the historical circumstances “that have led to Jewish and Irish Americans gaining racial privilege”.

Just as the division of Germany during the Cold War served as a controlled experiment on the efficacy of old Marxism, so California has become a test-bed for the new. The results are broadly similar: a stagnating economy, a growing social and economic divide and an exodus of citizens.

California, in US mythology, was a place to go to make one’s ­fortune. Last year, emigrants outnumbered immigrants by 39,500.

California has by far the highest income tax rate in the country at 13.3 per cent, and there are plans to raise it to 16.8 per cent.

A progressive minimum wage, powerful unions and development regulations that make housing more expensive are fuelling the exodus of hundreds of businesses a year to more friendly neighbouring states such as Idaho, Nevada, Utah, and Arizona.

As in Victoria, a preference for coercive top-down measures shaped California’s response to the coronavirus. In July, Governor Gavin Newsom banned all indoor activities at restaurants, bars, entertainment venues, zoos and museums. Face masks became compulsory.

Meanwhile, conservative Sunbelt states with similar levels of transmission were reopening, judging that maintaining personal and economic freedom was more important to long-term health.

The consequences of woke-ism were easily overlooked in the good times. Yet they are accelerating in the era of COVID-19 as woke governments fall hostage to public health officials and avoid confronting the trade-offs required to balance conflicting policy aims.

Jurisdictions that have imposed the hardest lockdowns will pay the heaviest price, except in the case of Victoria — which is hoping that commonwealth taxpayers will pick up the tab.

The case for reviewing the distribution of GST revenue to make bad state governments accountable for their follies was well made by Henry Ergas. Even that, however, would be unlikely to curb the worst excesses, since the new ideology treats the rules of economics with contempt.

The economic future of New Zealand looks bleak under Jacinda Ardern. In May, New Zealand’s Reserve Bank warned that the cost of lockdown levels 1, 2, 3 and 4 would be a reduction in GDP of 3.8 per cent, 8.8 per cent, 19 per cent and 37 per cent respectively. Ardern chose the most expensive.

The RBNZ has now resorted to printing money by buying $NZ100bn ($91bn) — almost half the country’s GDP — in government bonds. It cannot end well.

The abject failure of the new ideology to deliver any of its stated policy aims fails to deter its adherents. The failure of government programs is blamed on a lack of spending or sabotage by mysterious forces on the right.

In California, for example, disparity in wealth and income has grown faster under a government pledged to social justice than just about any other state.

The income of the top 5 per cent of households grew by 18.6 per cent between 2006 and 2018, while households in the bottom 20 per cent saw their average income fall by 5.3 per cent over the same period. The gap will widen in the COVID-19 recession, providing justification for welfare programs and spending on schools with a casual disregard for results.

With the state electricity grid shuddering, where is Elon Musk, the battery man? In May, he threatened to move his headquarters from California to Texas or Nevada “immediately” if authorities failed to relax the restrictions that threatened to shut down his operations.

The exodus of businesses that some call a jailbreak will not be slowed if California proceeds with a proposed wealth tax, the first in the US, projected to raise $US7.5bn a year. And it comes with a barb attached: exiled Californians will be liable to pay the tax for a decade after they flee.

“Relax,” said the tax man. “We are programmed to receive. You can check out any time you like, but you can never leave.”