Progressive Policy Study: Californians Dreamin’ While Jobs and People Leavin’

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Hubwonk host Joe Selvaggi talks with California Policy Center president Will Swaim about how the state’s ambitious policies have combined to stick its residents with the highest cost of living and a tax regime that discourages investment, innovation, and its vital entrepreneurial class.

Related: New Study Highlights Economic Fallout from California’s 2012 Tax Hike

Guest

Will Swaim is president of the California Policy Center. A journalist for nearly three decades, he began by covering international business in 1990. In 1995, the Village Voice and LA Weekly hired him to launch OC Weekly – the first and still only alternative weekly in Orange County. He was more recently editor of Watchdog.org, a national network of state-based investigative reporters, and vice president of journalism at Watchdog’s nonprofit parent, the Washington, D.C.-based Franklin Center for Government & Public Integrity. Will graduated summa cum laude in journalism and with honors in theology from the University of Southern California. He earned an MA in history from UC Irvine where he was a California Regents Fellow. A seventh-generation Californian, Swaim has written extensively about California business, media, politics and religion; is the winner of several print journalism awards and a Southern California Broadcasters Golden Mike award for public affairs commentary. With CPC board member David Bahnsen, he hosts National Review’s weekly Radio Free California Podcast.

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WATCH:

Please excuse typos.

Joe Selvaggi:

This is Hubwonk. I’m Joe Selvaggi.

Joe Selvaggi:

Welcome to Hubwonk, a podcast of Pioneer Institute, a think tank in Boston. With more than 40 million residents and an economy larger than that of India California’s public policy choices offer conspicuous case studies to other states, particularly other progressive largely single party states such as Massachusetts. One particularly relevant example was in 2012 when Californian voted to increase income taxes on high earners in much the same way currently considered by Massachusetts in our upcoming ballot question in November, similar to the promises made by its advocates here, California legislators promised the additional revenue generated by the tax would be dedicated to improving education and infrastructure voters were assured that those subject to the higher tax were unlikely due to camp for other states owing to California’s environmental and cultural appeal. Now, as Massachusetts considers a similar fair share tax voters can look to the results of California’s experience as a window, it to its own possible future and consider whether new revenue equates to improved education in infrastructure, and whether such taxes do indeed cause high earners to leave for more competitive states, taking their investments, jobs, and tax revenue with them.

Joe Selvaggi:

My guest today is Will Swam, president of the California Policy Center, a think tank with a state admission to secure a prosperous future for all Californians, Mr. Swaim’s organization has examined the benefits of prop 30 revenue on the state’s education and infrastructure. He’s also documented the responses of the state’s high earners and business leaders to the new higher rate beyond the observation that California is for the first time in its history, losing population. Mr. Swaim’s think tank has taken measure of which firms are leaving and where they’re heading playfully, naming his list. The Book of Exoduses, Mr. Swaim will share with us his view on the current state of California and what he thinks we might learn from their example. When I return, I’ll be joined by California policy center, president Will Swaim. Okay, we’re back. This is Hubwonk. I’m Joe Selvaggi, and I’m now pleased to be joined by the president of the California Policy Center and host of the Radio Free California podcast Will Swaim. Welcome to Hubwonk, Will.

Will Swaim:

Thank you. Hubwonk Will sounds like my new band name. I like it.

Joe Selvaggi:

<Laugh> Great. Well as I shared with you earlier I am an avid listener of the California Policy Center. I recommend it to our listeners and I think perhaps some of our listeners will wonder why we should have an interest in California. It’s 3,000 miles away. What does that have to do with those here in Massachusetts? But it really fascinates me for its sheer size it’s economy, the population but also not unlike Massachusetts, it’s a deep blue state. It has essentially a one party legislature and governor. So, in some ways it’s a mirror of us and perhaps something that we can use to look into our own future. If we make similar policy choices, if we embrace similar political intuitions, so let’s start there. But before we talk about specific policy issues that you have done in California, give our listeners a sense of how big California and its economy are.

Will Swaim:

Sure. Well thanks. First of all, for having me on, and I do think our states are kind of on parallel paths we’re way down the road in front of you or next adjacent. But yeah, it’s, it, California’s a big state. I was born here. I was raised here. It’s changed a lot, but the fact is right now, it’s about 40, 42 million people, depending on how you count it. That is easily the largest state by population. It’s also very big physically. You know, it takes me probably two hours to drive south and hit the Mexican border and about 12 hours, 10 or 12 hours to hit the Oregon border in the north. It is a big long state. We are the, I think by many calculations, the fifth largest economy in the world that puts us ahead of the great Britain ahead of India.

Will Swaim:

I mean, it is a big, big place where famous for of course tech, the Silicon valley Hollywood of course, you know, generates loads of loads of money. The Disney corporation is based here, there in the news these days. But it’s really a place that is governed primarily and where the politics have changed since the late seventies. And we, you know, if you don’t mind talking about that real quickly, I would just say when I, I, I, I’m going to speak about something I shouldn’t, but I’m 62. I was born in 1960 that used, I used to be the youngest guy in the room and now I’m quite clearly the oldest, but in that time in the seventies, when I was just a teenager our governor then Jerry Brown and his first iteration mandated or signed off on a bill that allowed collective bargaining of all government unions.

Will Swaim:

And that was like the starting gun and the transformation of California politics. California’s always been very kind of libertarian, I would say, you know, and it’s Democrats tended to be quite moderate. Republicans tended to be moderates very pragmatic place. It was free wheeling in the sixties, as you might guess. So by the time the seventies come in this vibrancy on the left and the right begins to disappear and they become very stultified and the Democrats race ahead in cash, the government unions today those are the unions that that represent workers in like teachers and firefighters and cops and the DM, the department of motor vehicles. I do you guys call it the DMV in Massachusetts? Yes. Yes we do. Yep. Okay. We do. But all these government workers from the state down to the local levels, school districts and cities and counties there’s about a about a million employees who are represented by these unions. And tho these unions raised collectively about 2 billion, every election cycle, 2 billion with a B, and there is nobody on any politic on any side of the political spectrum, raising that kind of cash. They outspend everybody. So what they do these government unions do, and you can pause me at any time if I’m motoring to no,

Joe Selvaggi:

No, this is good. I wasn’t anticipating this answer, but it’s great.

Will Swaim:

Yeah. So the thing, the thing to know about us is that, you know, with a, with these unions generating about 2 billion E every election cycle, they’re able to elect candidates who, regardless of their I’ll call it insanity in some cases on social issues or governance or whatever can get into office so long as they promise union leaders a single thing. And that is that the unions will remain in power. They will, will, they will retain their grip on political power and over, over their members and the discipline in the workplace. And so the money continues to just flow even, you know, despite the Supreme Court’s decision in Janus, which we can come back to later which basically allowed government workers to opt out of their unions. We still have just south of a million government workers in these unions. So California by population is 12% of the nation’s population.

Will Swaim:

We have 24% of the nation’s government union members. So anyway, that’s, that’s how the mechanism works. The creepy little smelly, little corruption, legal corruption at the heart of our system is this government union ownership of public officials who once in office returned the favor, the unions gave them of getting them into office. They returned the favor by rubber stamping, virtually anything the unions want. And in return, the, these public officials do things like we’re pushing for a vaccine authorization down to the age of 12. So that 12 year olds can opt to any kind of vaccination they want without parental authority, same goes for gender transitioning stuff. And then on the other side, it’s take on as much debt as you want at the local level get involved in creative finance. So you can continue to keep the cash moving to the public employees who then pay out to the unions who then elect the candidates who approve further taxes and bond debt. So that’s the, that’s the thumbnail sketch of this lovely and benighted place?

Joe Selvaggi:

Well, well, that answers a, a question I’ve had because our impression here from sunny Boston is that, you know, California, as you say, has a libertarian streak, it’s let your freak flag fly. Mm-Hmm <affirmative> UBU. That to me is what California’s all about. Maybe it’s a a romanticization of the, of the sixties. But I also will, will point out it’s it’s a relatively new state. Well, you know, I’m recording from a, about a block from the Boston common. It says you know, established 1630 and I think California wasn’t even a state until 1850. So you’ve got a lot of newness there and a lot of freshness, a lot, you know, a lot of people from other places you’ve helped me at least at some level understand why such a freedom loving population has somehow been captured by a, a deep blue I dunno what you would call ruling class if, if, if you will.

Joe Selvaggi:

So compare for me, I don’t know how often you make it over to our side of the country, but Boston where I am in San Francisco are often compared, and I’ve been to San Francisco. It’s beautiful like Boston and it’s easily walkable like Boston, but I think that’s about where the similarities lie. I, I, I’ve not been there very recently, certainly not since the pandemic describe for our listeners if you’ve been there recently how it’s been transformed either by politics or, or whatever you attribute to it’s

Will Swaim:

Transformation. San Francisco is a great example. And I have been to Massachusetts a number of times my son went to school out there on a hockey scholarship. And I did my, my master’s thesis on a church in Salem, Massachusetts. We could talk about that another time. So I spent some time in Massachusetts of Massachusetts historical society. And, and just, you know, quick historical note, I would say that our pro part of the problem here is the rootlessness of the place. We do not have a lot of, I would say that it’s conceivable that a Democrat or a liberal and Massachusetts is not the same as a liberal or a Democrat in California and San Francisco is a great example of that. You know, my, my own sense of Boston is, you know, from 3000 miles away, that liberals in Boston tend to be more moderate in their, in their temperament and in San Francisco, that’s simply not the case.

Will Swaim:

I’ll give you a couple of quick examples in San Francisco. You’ve got mayor London breed who came in preaching, fire and brimstone on social justice issues and COVID hits. And she’s caught not once, not twice but at least twice out partying at local clubs without a mask and dancing and drinking while she has supported the complete lockdown of the city. And the response of the residence is, well, you know, shame on you, but at least you’re on our side and you’re, you’re an African American woman, so we’ll catch you some slack. But it gets worse as you get into policy. London breed has been really interesting to watch as a progressive what’s the old saying about a conservative as a liberal mugged by reality. She begins to try to expand home home opportunity, home ownership, and apartment living for this, the city’s massive filthy streets, so they can get to homeless people off the streets and into housing, but she runs immediately into environmentalists than others who say that they don’t want more housing in San Francisco.

Will Swaim:

That’ll gentrify that will transform the character of the city. Well, I can tell you as a guy who walks the streets of San Francisco, occasionally some of them are quite lovely, these streets but a lot of them really are just massive homeless encampments where open air drug use is pretty much the, the norm. And the result of that is that a lot of San Francisco and San FCAN unable to afford housing have fled east into outlying counties or have just left the state entirely. The city of San Francisco has lost population in the last three years. And it was it preceded COVID because the cost of housing is so expensive. So London breed tries to expand housing options is shut down by social justice, activists who say, it’s not good enough, or by environmentalists who say they don’t wanna change the character of the city.

Will Swaim:

And she begins to understand why you got people living on the streets. There’s no first rung of the ladder anymore. So on, on that issue, there was a radical change. Then the city elects, a guy named Che boudin, who is the son of the, of two weather underground activists who are imprison for the execution of a couple of Brinks armored car delivery guys in the sixties. And this poor guy is, you know, handed off to relatives he’s raised by these other friends rather. And he goes on to become a wildly progressive prosecutor in the county of San Francisco. And in San Francisco, you suddenly get this massive spike in crime. I think this is probably national news. I, I would imagine a lot of your listeners have already seen some of the smash and grab robberies that go on there notorious.

Will Swaim:

They didn’t happen only in San Francisco. They happened in LA as well, which has a similarly inclined prosecutor. They happen in Chicago. They may have happened in your neighborhood. But these are groups of people who will walk in under California’s new misdemeanor classification of crime. And they will simply calculate everything they can steal under $1,000, 950 bucks. Really that’s the magic number. If it’s under nine 50, the prosecutors in San Francisco will not charge you. So there’s no reason to report you. So people walk into Walgreens or CVS pharmacies, and they steal $950 worth of things. They smash in the windows of cars and steal everything, get their hands on. They specifically target rental cars, knowing that those are tourists who might leave cameras or laptops or whatever in the backs of their cars. So crime has spiked in San Francisco. Homelessness has spiked in San Francisco. It is one of the filthiest pro environmental cities you’ll ever visit. I think a I think it was a UN declared a couple of years ago that San Francisco was dirtier than Calcutta, which is, you know, really saying something I think. So it, it is a remarkable real world laboratory for very progressive policies on crime and, and punishment on the environment on housing. And I’m, I think that Bostonians would probably recoil in horror at the idea that they are anything like that.

Joe Selvaggi:

Indeed. So I will report from Boston that we are clean, we’re safe. We’ve got our problems but we’ve not gone that path. Thank goodness. At least not yet. I’m I’m puzzled though. Again, you you’ve been really great at helping me understand how we, we got where we are. You’ve got an economy larger more than $3 trillion, right? That’s a lot of money. But also you’ve got among the highest poverty rates in the entire country. I, I, I’m having a difficult time understanding why all that money with the as assume assumption that progressives are sympathetic, particularly sympathetic to the needs of the poor. Why would a progressive state with $3 trillion economy have any poor let alone leading the nation in the, in the poverty rate?

Will Swaim:

That’s such a great question in part it’s, because a lot of the ostensible wealth of California is tied to firms which have become leaders in supporting really progressive initiatives that backfire and have the effect of actually making it more difficult to live here. So just to give you one example of how the cost of living gets really expensive in California, I talked a little bit about housing. We’ve got environmentalists and social justice, activists who want housing to look a certain way and tie up every new housing project so that when the government goes out to try to build subsidized housing for the poor, it ends up costing more than the market rate of constructing a new home. So just to give you an example, it may cost $500,000 to build a home in most of California. But if you, if the government builds it, it costs about $800,000 a door, as they say in that business.

Will Swaim:

The reason is a bunch of regulations, competing claims, lawsuits, et cetera, that Jack up the cost of housing in many of these major cities. So the, so the cost of housing is so expensive in California. The supply is so limited that people cannot afford to move up. You know, once you get into a home, you just kind of tend to stay there in California because there’s no opportunity to move up because there’s no new housing because the only if, if you wanna move up there are incredible regulations around the possibility you’re gonna move up in a more expensive home. Cause there just aren’t a lot of those being built. So people don’t move up. That means there’s no bottom rung of the ladder for people to move into. So they end up on the street. The O another good example is that because of environmental regulations, we’ve decided that we’re going to eliminate oil or any kind of fossil fuels, so that the price of our electricity, our gasoline is the highest in the nation.

Will Swaim:

We play on average, almost a dollar and a half more than everybody else in the country for gasoline. Now the progressives come out and say, well, this is just big oil. And what is this mystery surcharge they’re making on all of us Californians? There’s no mystery. The fact is, is that dollar 50 difference is state taxes and regulations that are designed to price oil out of California. We also sit on one of the largest natural gas deposits on the globe, but we’re not really allowed to, to tap that anymore because it’s dirty and it will cause global warming. So in order to signal our virtue on the climate change issue, we have taxed gasoline electricity, any kind of oil based carbon based sort of fuel. We’ve taxed that at such a high rate that the rich can afford it, but the middle class will struggle with it.

Will Swaim:

I just filled up my truck the other day. It would usually cost me about $80. It cost me 130. And that’s, you know, partly because of recent supply chain things, but those supply chain things in turn footnote are built around government regulation as well. I could talk about ports and highways and, and warehousing and why that’s a problem. But the bottom line is if you’re poor and trying to pay, what’s now about $6 per gallon for gasoline and in many places more than that that hurts you a lot. It makes the costs of getting ahead, starting a business, just getting to your job so that you can work to pay other taxes. It makes it very, very pricey indeed. So VIR, sorry, go ahead.

Joe Selvaggi:

No, no, I was gonna say the I have read that, of course, California has the highest cost of living second, only to Hawaii. So we’re not quite there yet, but you can see how perhaps well intentioned environmental or you know, whatever progressive causes there may be. The end result is a, a crushing burden on the people who can least afford to, to to spend money. You also, you, you mentioned your truck. I have friends who probably drive around in Tesla and say you know, high gas prices don’t affect me, but I say, well, how does everything you buy every tomato in the store? And every, every item on the shelf, how does that get to that store? And it’s either gas or diesel, which is particularly expensive. It, it all flows into perhaps well meaning, but ill, ill targeted taxes.

Will Swaim:

Well, and, and you raised the issue of Tesla’s. And of course, Tesla is built in California by Elon Musks company and Elon Musk no longer lives here. He now lives in Texas, right? Why? Because he was constantly having to go to battle with state regulators over his ability to build a car, build rocket ships or whatever. And the big joke out here is that those of us who know how electricity is generated in California, where we get it from, we don’t get it from, I don’t know, squirrels running in a little hamster wheel. We get it from oil. We get it from natural gas. That’s how we generate electricity. Our governor and our state lawmakers who are on the left, generally love to talk about clean energy. There is no clean energy. The batteries themselves that go into Tesla engines are MI are, are built in part out of lithium.

Will Swaim:

Lithium has to be mined. Now they’re talking about clean energy being mined here in California, cause we have major lithium deposits, but Teslas themselves are really interesting example of a way in which the state subsidized the purchase of Tesla automobiles with the goal of making them affordable nationwide, because California has to be a leader in all things. That’s our arrogance is that we’re telling Bostonians what to drive and we’re signaling to Midwesterners. They too ought to drive electric vehicles because they’re quote unquote clean, but they’re simply not. There is not the electric generating capacity in the United States, certainly not in California that can help harness the energy. We need to power all these Teslas aside from natural gas. So we talk constantly about clean air out here and how we’re a climate leader in, in the world, but it is truly smoke and mirrors. And I, I use smoke advisedly because all these Teslas are being fueled by coal plants in Arizona or Texas. They’re being fueled by hydro from the Northwest in Canada. We are not producing energy in California anymore. We are now a net consumer of electricity from other states.

Joe Selvaggi:

Hey, you, you make a good case. I think a future episode, we’re going to cover the fact that an electric car needs to be driven. It’s Volvo who made these calculations anywhere between 60 and 90,000 miles before it’s equal to its internal combustion counterpart, largely because of the, the greenhouse gases that are produced making the battery for the car. So drive the Tesla, but drive it a long way before you get to break even point which is an interesting thing. And of course, again, the, the, the electricity that goes into the Tesla has to be produced somehow in, in general, as you say, coal and gas are how it’s produced. So you’re just really moving the the externality from the, the, the tailpipe to the, to the coal fired plant. So let’s, let’s move away from how these policies affect the poor.

Joe Selvaggi:

I also wanna talk and I don’t wanna bury the lead here. I really wanna talk about how California has made life very difficult for, as you mentioned, the, the Elon Musks of the world, the innovators, the people that are keeping America growing wealthy employed you not long ago passed something called prop 30. I mentioned it because it was a, a tax on the top earners bringing the marginal tax rate on the top earners to 13.3% that would surprise some of us here, Massachusetts. We’re considering similar ideas in our, we have a ballot question coming up where we tack on an additional 4% above our state’s 5% income tax and 80% premium on high earners. Let’s talk about again, if you are the future and you share our progressive intuition, what has been the effect of this kind of tax on the wealthier residents of the state?

Will Swaim:

Well, the effect is probably internationally known at this point. It’s an Exodus. In fact I kind of, it’s one of those things where some high school friend of yours says he invented a word that’s now in wide use. I swear to you, I did not hear the word Exodus. I was a theologian by training. I was gonna be a priest long story, ended up in a punk band playing you know, and, and in the communist party, but in any case the, the, we, we call a, our, our database of these companies that are leaving the book of Exodus. And and what we find is that a lot of companies, a lot of entrepreneurs simply decide that they are not going to be able to compete nationally, globally, even in California, if they are tied up by the combination of tax tax regulations and just business regulations, environmental regulations.

Will Swaim:

And so they leave this has of course downstream effects as those people leave, the number of jobs begins to shrink you know, jobs that might be actually quite good, good paying jobs. So, you know, I’ve, I’ve said before that there’s almost nothing more heartbreaking in my life than the fact that I’ve had to help. Three, three of my oldest kids. I’ve got four, my three oldest have packed up and moved out of the state to go find cheaper places to live, where there’s more opportunity. So these are kids who are college educated might have expected to go right into work right here in our own neighborhood, but could not because the job market is shrinking and they found they could make more pay less and live elsewhere. And that hacks right at the roots of middle class community, as much as it does, you know, poor communities, because you’re, my social security is really my kids.

Will Swaim:

Like I am like a an 18th century peasant farmer somewhere, right. I, I had as many kids as I could, so they could support me in my old age. And instead they’re off trying to find their futures elsewhere, and I will make an historical moment note here to say that you know, when I was doing my research on new England and the revolution, one of the things I noticed about Massachusetts was that a great source of political destabilization in new England, even in the colonial era was villages growing almost like Maslow’s model here. Now it wasn’t Maslow. I’m blanking, sorry. The economist will come to me. But the idea that you move out to your most marginal lands, eventually population grows in a little village, and then you move out a little farther and a little farther and soon you’re in forests and rocks.

Will Swaim:

And then your kids have to move out to some other place where the land is more fertile, but, and you break down family security, if you will, in that sense, that kind of family, social security network, well, the same thing’s happening here in California, just in modern terms, our kids cannot afford to buy a home here. And most of us are trying just desperately to keep up with our taxes, which as you point out are among the highest in the nation and getting higher you point out that we’re now in the 13%, 13.3% range, there’s a new bill floating through that would Jack that up another 3% on top income earners. The ex the, and the language that that is being used is it’s about fairness. It’s about making sure the rich pay, their fair share 150,000 taxpayers in California, 150,000 taxpayers pay more than 50% of all income tax revenue in California, 150,000 people, that’s it out of 42 million or so people. So we are beginning to chisel away at that group who will either decide to suck it up and stay here. Cause the weather is great and they generally like, I don’t know, Yosemite or the beach or whatever. But for a lot of the rest of us, there’s, there’s a tipping point.

Joe Selvaggi:

Yeah, indeed. We band bandy around the idea of a fair share, no one has ever given me a sense of where that natural limit of fair share ends. It’s always a directional thing. It’s a, a vector going into infinity. Our listeners have heard of, of course the high profile, you mentioned Elon musky packed it in and said, you know, look, I’m, I’m not staying around. Your book of Exodus I think is wonderful. It’s a wonderful title. And it’s it’s reference to the, the Bible and and escape from enslavement. Is it entirely appropriate? Can you name some of the other, let’s say household names that have left California and, and where are they going? Are they just sort of randomly moving somewhere else in the, in the state in the country or do you see a pattern of where they’re moving from and going to,

Will Swaim:

Yeah, there’s a pattern and I would love to have on the, on your show at some point, the guy who compiles the book of Exodus for us, a guy named Brandon Roff. And what Brandon would tell you is that by and large companies seem to prefer to move to really three states. It’s Texas, Florida, and Tennessee. Interestingly, a lot of, a lot of Californians find living in Nashville, just sort of ideal or in thereabouts. Texas is the big winner. Texas has signs up here that are, they used to have signs up here. I was talking to a friend of mine at Texas public policy foundation. He says they don’t even need to put up signs anymore. Everybody in California knows how to get to Texas now. But you know, some of the higher, it it’s a lot of the tech firms get the, the big names like talent here.

Will Swaim:

The is a big investment tech tech investment firm. They moved to Denver. A lot of the apparel companies followed suit. I wanna say it was north face that also moved to Denver. So, you know, the, the, and, and then MEA just moved MEA, which is apparent company of Facebook just announced. They’re moving to Austin, they’re building, you know, some massive skyscraper there. You might say that our loss is Austin’s gain, but a lot of these companies are bringing their politics with them. Musk will bring his peculiar idiosyncratic blend of kind of libertarian and progressive policies, I think to Texas more libertarian than, than progressive in the conventional sense. But it’s really a lot of the smaller firms that nobody has ever heard of that have perhaps, you know, 50, a hundred, 200 employees, and they’re really kind of poised for takeoff.

Will Swaim:

You can see the engines firing up. The companies are getting big and they’re starting to look around at the price of expansion here in California, and they either leave their headquarters here, but open up new operations elsewhere, or they just move everything out. I had a couple of examples that I, I haven’t even been able to share with our radio free California listeners here for you. The, this is just a, a recent sampling. Here’s a company that I had not heard of Kraken. It’s a crypto company, cryptocurrency company based in San Francisco. They say they’re moving out. Because San Francisco is no longer safe. They are moving to Texas. They, they took a crack at, I mentioned this guy cha boudin the district attorney in San Francisco. They mentioned him by name on their way out the door saying, look, it’s not safe for our employees here anymore.

Will Swaim:

So Cracken, they’re out a small beverage company here in I’m in orange county, which is halfway between LA and San Diego. It’s more famous perhaps as the home of Disneyland. The other Disney world and this beverage company in Santa Ana with just 50 people, they do flavorings for major beverage producers, and they anticipate huge growth. I was talking to somebody over there and they said like, look, man, we just started looking around at the cost of adding additional employees and where that would put us under certain metrics for healthcare in California for housing, the ability to attract high end technicians to work in this company that does flavors. And they decided not, not possible here in California, they just announced they’re moving to Austin. One of my favorite stories is a Vietnamese car maker that wants to build electric cars naturally settled in LA county thinking, well, you know, California, that’s Tesla, that’s electric cars. They built their headquarters here that looked around and decided they were moving their factory to North Carolina. So they may keep their headquarters here, but they’re moving to North Carolina where they believe they will hire 7,500 people to work in a, an electric car factory.

Joe Selvaggi:

So will I just these are great examples. I, I wanna quote one of my favorite Californians your former governor, Ronald Reagan. He once said that had the pilgrims, I dunno if this is an apocryphal story, an actual quotation, he said, if had the pilgrims landed in California, the east coast would still be a wilderness. In other words, it’s so beautiful that why would anyone leave to go elsewhere? Certainly to the cold new England winters? I, I don’t think they would. Why are these firms leaping beautiful California for places like nothing against Texas and Nevada, but I can’t imagine they offer the same sheer natural beauty that California is. What is, what is the common pattern among those states where they, where they seem to be going

Will Swaim:

Well, this is the, the terrible irony for those companies that are progressive. And let’s just take a look. And I mean, in their politics, take a look at the meta slash Facebook and mark Zuckerberg. They’re moving ironically to go exploit the kinds of opportunities in Texas, the low regulation, the low tax environment, relatively low tax environment, the lower cost, the living they’re moving for all of the things that they themselves have helped destroy here in California, right? They, mark Zuckerberg is a notoriously famous for supporting virtually every tax hike in California. So long as it’s associated with the claim that it will help the poor. When, of course you and I both have already discussed, it does not taxes, you know, the rich don’t pay taxes. They, if they own a business, they simply pass it on to their consumers, right? So we all end up paying more for that. So they’re moving to Texas, Florida, Tennessee, Nevada Colorado, even, which is a blue state, but they, you know, primarily to Texas and they’re moving there because they can achieve real competitive advantages in a lower tax better rate. And I would argue a better, generally more business friendly kind of environment.

Joe Selvaggi:

Now I can hear the tension in our say more progressive listeners saying, well, listen, you know, as they like to say, taxes are the price we pay for you know, civilization, right? For better society. So again, we’ve got 42 million people a 3 trillion economy and the highest taxes tax rate in the country. That’s a lot of money slash slash around. And as you say, it’s largely attributable to the power of public unions. Those are the teachers and the, and the policemen and all those people who help keep us educated and safe. So therefore our listeners who are more progressive must be eager to hear if that money is actually having the intended effect. In other words, all the money going to schools and policemen or whatever. Do you have better schools in California? Again, we, that’s important to us here, Massachusetts. We’re all about education here. How do, how is that faring in California?

Will Swaim:

<Laugh> I feel like you’ve just set the softball on thet for me. <Laugh> California’s public education, K12 results are, gosh, the only word that pops into my brain immediately executable terrible Fe equally inclined. We have in our state about 90% of our kids cannot do math at grade level in K12. About 70% cannot do perform English at grade level. Put that another way. 30% of our kids are performing at grade level, 30% K12 kids performing at grade level in English and 10% on math. Parents typically have begun to flee neighborhoods where the schools are no really bad for places where those schools are less bad. But there’s simply not a lot of difference really overall. I mean, you can move into a very rich, rich neighborhood where the schools, because of perhaps family foreign formation and because of family conventions around education, I come from a long line of college educated people.

Will Swaim:

There was never any question. I was gonna go to college, same for my kids. But that doesn’t always exist in poor communities. So when I hear my friends on the left and most of my friends are on the left. If I didn’t have left wing friends in California, have no friends at all that’s not entirely true. But when I hear them say like, gosh, you know, we just have to do more for the kids. I would say, well, look, our schools used to be our public schools used to be among the best in the nation, right there with Massachusetts right there with Iowa. And now they’re among the worst. We are down near Mississippi levels and no offense to my friends in Mississippi. I don’t have any friends in Mississippi. That’s not this. I just haven’t met them yet, but our schools are now among the worst in the nation.

Will Swaim:

A recent report came out from I believe it was a world health organization. I could be wrong about that. It was a, a global report that showed that California is the least literate state in the nation. That is partly owing the fact that we have a school system that isn’t worthy of the name. It’s neither systematic except in producing basically almost producing illiteracy. So the money that goes into these schools is trapped by the government unions, which do not insist on merit pay for teachers, which do not allow for competition. There’s, there’s no choice in California in education. If you’re trapped in a lousy school, in a poor community, you get to go there because that’s the school that’s indicated by your address, you zip code, you are trapped in that school and trying to transfer to a better, better school in a different community is almost impossible.

Will Swaim:

In fact, it’s illegal under most circumstances. So trying to help the poor by pouring more cash into this system is not only ineffective. We already spend more per student in California to educate our kids than any other state in the country. We spend north of $21,000 per year on kids. And that doesn’t even include all the full costs of the bond debt that is required to build the schools and maintain them for these kids. So it’s not a spending problem. It’s an execution problem. And the execution of good education is been in the hands for 40 years. As I mentioned since the late seventies and the teacher’s union and the teacher’s union has as any monopoly, does it has no incentive to produce better education. It gets paid the same. Our teachers do, whether the results are good or bad, there’s no merit pay.

Will Swaim:

There’s no a sense that if we have a financial downturn that we really ought to start grading the teachers, because we’re told by the union, you can’t grade teachers, that’s just insane. Say the people who grade our kids every single day. So you, you mentioned that, you know our, our progressive and liberal friends might say, well, you know, it’s just the cost of, of living in a great state. We, we joke out here, we only pay for the weather. That’s the only thing we’re really paying for because otherwise our public services are not that fantastic. And in fact, they’re, they’re kind of, legendarily bad back in the day when I was traveling in Massachusetts a lot more. I remember you guys had this big controversial, I think it was called the big dig. It was a big project in Boston.

Joe Selvaggi:

Yes. It actually turned out quite well. But for a while, I was at 10 years of pain, but I think, but we’re proud of it now that it’s done.

Will Swaim:

That’s my point. You guys suffered through just 10 years of mediocrity and cost overruns and inefficiencies, and then you got a great thing. We just walk away. We just have given up, we haven’t built a reservoir in this state in 40 years and our population is almost doubled in that time. So now we have a drought and taxes that ought go to building new water infrastructure are simply sort of redeployed into other areas that are really about environment and conserving water usage. We just found out the other day that though our water costs are soaring. We’re going to get 5% of the water that we got last year, 5%. My wife and I are now talking about showering out front in underpants so that we can water our modest drought resistant garden and clean ourselves which is great in the spring and summer, but not so good in the winter. So, you know, we, we simply pay a lot of taxes and then we watch this money disappear and it disappears into places like our unfunded retirement programs for the underfunded retirement programs for government workers. We owe in this state all told about 1.7 trillion on borrowed money that has not gone into capital projects. It’s gone into operating expenses and trying to pay forward things like post you know post-employment retirement healthcare and pensions for public employees.

Joe Selvaggi:

Indeed. Well I think yours is an example of how well, in our state we’re, we’re considering ballot measure where we might add another 4% to our, our state’s income tax. And we’ve been promised that money will go to teaching and infrastructure into education. But as you say, it’s a promise to take the money. It may even be a promise to spend the money. It’s no promise that we’re gonna get results. And that’s even a, I, I I’ll, I’ll brag that our our tax revenue here Massachusetts 2 billion over what was estimated, and we have a 4.2 billion surplus. So despite our our prosperity and sloshing in money still some will advocate for yet more taxes. Now we’re running out of time. So I wanna share with our listeners less, they think that you’re a diehard desk pounding, conservative from, from square one.

Joe Selvaggi:

I, I know only through your podcast that you started life as a man of the left. Can you share with us at least a good story of where was that moment and, and perhaps some of our listeners might might be in this exact moment in their, their near future where you say, look, I, I care about other people. I think that should make me a progressive what, what sort of opened your eyes as a man who cares about his fellow American, his fellow Californian who wants to do right by the world? What, what sort of puts you on a different track?

Will Swaim:

The short story is this. I, I became the I, I, I was in, I was on the left because I thought that that was the logical place to go if you wanted to help the poor. And I actually did literally join the communist party USA for a couple of years, found their meetings and terminable and highly theoretical and abstract, and went to work for the Catholic worker for a while. And when I say went to work, I volunteered for the Catholic worker a famously Catholic and an anarchist organization, and started to, you know, I became, then I moved right word, you might say, into the democratic party, but the democratic party as I was, you know, in my early twenties was still a much more moderate kind of party out here, but I got into journalism full time and became an investigative reporter than an editor and a publisher of a paper called O C weekly. That’s a was a sister paper of the LA weekly, the village voice in New York. Very much like your Boston, Phoenix. I don’t know. What’s become of that, how to,

Joe Selvaggi:

But yeah, we we, we actually used the globe if we wanted any progressive perspective instead,

Will Swaim:

Ah, there you go. Yeah, that’s, what’s happened out here as well. So I was the editor of this famously left wing paper, where we had a column called Commie Girl and Ask a Mexican, and that sort of thing. It was a, it was a funny and Ry and hard-hitting investigative newspaper. And in the course of looking at the investigative reporting, it became clear to me that the problem was not a problem of conservatism and business people and, you know, corporate bailouts and that sort of thing. The real problem was that government is simply like trying to use a sledge hammer to perform brain surgery. It’s just really an insufficient tool. And I started to look more skeptically at the kinds of things that you and I have already talked about here that simply pouring more money into a broken education system would make it better.

Will Swaim:

It did not, it was actually not educating the, the poor who I had, you know, really being born and, and reared as a good Catholic boy. I I’m, I’m wired to think this way that, you know, whatever my politics are, they had better be aligned with helping the least among us. And I watched as all these programs that I had, I had really back supported full-heartedly, you know, let’s tax the rich and give the money to the poor, had to filter itself through government. And if the government was run by Republicans or Democrats, it didn’t always seem to matter a lot back then. Now it matters quite a di quite a big, a great deal. But I watched, as my Republican run, orange county board of supervisors landed us in the largest at that time, municipal bankruptcy in America, it was 1994, the county of orange went bankrupt.

Will Swaim:

It was, as I say, the largest in history at that point. And certainly on the left, there is just this constant grab for more money. And if, if that amount of money doesn’t work for you, you simply ask for more, but the poor are not only always among us. They’re growing in number. We have more homeless, more poor as a percentage of our population than at any time. And our tax rates are higher than ever in California. So it was looking at all these stories of how unions really operated. And again, this is in a left wing newspaper. I’m watching, I remember famously I’ll just tell you this very quick story watched famously how friends of mine in the government union movement out here in orange county began to press against some conservatives who I ought to have hated because I was still sort of vestigial left wing.

Will Swaim:

And I watched how these union leaders just really severely misrepresented what was going on in the city, what its finances were. They claimed that, you know, we ought for example, to abandon asphalting the alleyways in the poor part of towns because, you know, that was unnecessary. We didn’t need this place to be the Taj ma hall. What we really needed was to pay our public employees more and, and it started to just fall apart for me at that point. I mean, philosophically, I was beginning to come to grips with the idea that human flourishing really requires a great deal of Liberty. There is no such thing as coerced virtue. You know, if you hold a gun to my head and make me do something virtuous, I haven’t really done a virtuous thing. I’ve tried to keep myself alive. So coercion is the enemy.

Will Swaim:

Liberty is what made America and California. Great. I am not suggesting there’s no room for regulation. I’m not an anarchist. I don’t think Somali is the model we want of war Lords and battling rich people. I do think that California is now like Gulliver and the IANS, you know, we are just tied down by myriad bonds of regulation on how you can start a business and what you need to run that business in California. So that’s, that’s roughly the story about how I was writing Damas to Damascus on a, on a donkey and got knocked on my keister and then heard the voice of God.

Joe Selvaggi:

<Laugh> wonderful. We love those roads to Damascus moment. You know, we’ve all been there. And you’re in good company. I think some of the greatest minds on the, on the right, like come to mind like Thomas, so or Thomas Fri Milton Friedman, or even Ron Reagan was a a committed Democrat a man of the left and had that, that moment where he said, wait a minute if I wanna help the poor this may not be the right path. So you’re, you’re in good company. So before we let you go, we’re at the end of our time where can our listeners find your excellent podcast and the California policy center and its good work?

Will Swaim:

Well, thanks for asking. California policy center is really simple California policy center.org and the podcast is on the national review site. So if you just go to national review magazine, you look up podcasts, it’s Radio Free California. And I do that show every week with my friend, one of our board members here an economist named Dave Bonson, who is a bicoastal guy, but born and raised out here in Southern California with an office in Newport beach and one in New York. So every week Radio Free California.

Joe Selvaggi:

Wonderful. I, I enjoy listening even though I have no connection whatsoever an amusing banter. And also I think insofar as you’ll let me make this comparison. I see California’s perhaps the the the channel Dickens here the ghost of, of Christmas yet to come the foreboding of what we might be if we don’t take the right path. I don’t know if you’ll, you’ll allow this reference to you know, Christmas Carol here. But that’s how I see

Will Swaim:

It. One of our great books and it, and, and it’s either that, or it’s a tale of two cities, right? The best of times, and the worst of times, this is a place that is practicing on us to produce a new and more perfect utopia. And it’s an utter catastrophe.

Joe Selvaggi:

Indeed. All right, well, we’ll leave it there. Thank you so much for your time. Well keep up the good work and then thank you for joining Hubwonk.

Will Swaim:

Thanks, Joe.

Joe Selvaggi:

This has been another episode of Hubwonk. If you enjoy today’s show, there are several ways to support Hubwonk and Pioneer Institute. It would be easier for you and better for us. If you subscribe to Hubwonk on your iTunes podcast, catcher, if you’d like to make it easier for others to find hub won, it would be great. If you would offer a five star rating or a favorable review, if you have ideas for me or suggestions comments about future episode topics, you’re welcome to email me at hubwonk@pioneerinstitute.org. Please join me next week for a new episode of Hubwonk.

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