How the Golden State Embraced Corporate Socialism
By Edward Ring ~ January 24, 2020Gavin Newsom, the lily
white, urbane, coiffed scion of San Francisco’s posh royalty, is California’s
highest-ranking Democrat. He presides over a party that has taken progressive
ideals beyond absurdity to the brink of tyranny, a socialist party that openly
disparages whiteness and wealth. One would think that the party of Gavin Newsom
is bent on destroying everything Gavin Newsom represents. So what’s going on?
To understand the rise of
Newsom, and every other hyper-privileged Democrat who even today remain in firm
control of the progressive movement, it is necessary to define a 21st-century
version of corporate socialism. This goes well beyond the use of the term
merely to describe government subsidies for, say, the oil and gas industry, or,
for that matter, the wind and solar industry.
Corporate socialism in
California today is a marriage of convenience between monopolistic corporations
and the oligarchy they’ve spawned on the one hand, and a seething coalition of
progressive socialists with an agenda best described as a self-contradictory
mixture of nihilism and idealism on the other. What California’s corporate
socialists have done is to concoct a profitable interpretation of this agenda,
implementing those elements that will aggrandize them while paying lip service
to the rest. There are ample examples of this practice.
To ensure “diversity,” an
amazingly lucrative profession has emerged, embodied in “Diversity, Equity and
Inclusion” departments inside every institution of higher education, as well as
embedded in the human resources departments of every major corporation.
To protect wilderness,
sound principles of land management such as controlled burns, maintenance
of firebreaks and access roads, selective logging and salvage logging have been
either banned altogether or mired in prohibitive levels of bureaucratic delays,
leading to catastrophic fires that were
blamed on the “climate.”
To protect the “climate,”
land development outside of existing cities has been all but frozen,
restricting the supply of new homes and driving prices to unaffordable levels. For
similar reasons relating to “climate,” clean conventional energy from natural
gas and nuclear power are being systematically reduced in favor of heavily subsidized “renewable” energy providers.
To ensure housing
“affordability,” the Homeless Industrial Complex has
arisen, with budgets so padded that the average cost to build “permanent
supportive housing” in California now exceeds $500,000 per unit.
To respect the rights of
the homeless, as well as “alternative lifestyles,” hundreds of thousands of
vagrants, most of them either insane, substance abusers, predators, or all
three, have been permitted to camp on the sidewalks and in the parks of every
major California city. To assist them, tens of billions are being spent on
public employees and nonprofit personnel, and the problems just get worse.
And finally, central to
all of this, public sector unions have
fervently supported every expansion of government regulation and its requirement
for new agencies and staff. They have “negotiated” pay and benefit packages for
their membership that have made California’s government itself unaffordable,
with personnel costs crowding out investment in infrastructure and public
services.
All of these policies
derive from socialist ideals, but benefit corporate interests. This is
corporate socialism in the 21st century, California is its epicenter, and it is
an unmitigated disaster.
California Before and
After the Rise of Public Sector Unions
It is ironic that
California in the 1950s and 1960s offered a good example of a state government
that respected property rights and nurtured competitive businesses, yet engaged
in massive public investment in those areas where it was not possible to make
competition effective. During this golden age, barely twenty years in duration,
in partnership with the Federal government, the State of California built the
most comprehensive network of water conveyances in the world. At the same time,
they built the finest system of public colleges and universities in the world,
and they built freeways and expressways that enabled urbanization and an
affordable market in housing.
In those days, a
middle-class family could expect to own their home, travel on uncongested
roads, and pay college tuition for their children. Today, none of that is
possible. What happened?
In California’s case, the
simplest explanation would be that the state itself became a special interest,
viewing bigger government as central to its agenda. By the end of the 1970s,
nearly all of California’s state and local government agencies had become
unionized, and these unions increasingly became aggressive pushing their
agenda, which was to grow government in order to collect more union dues and
acquire more power and influence. Like any organization, government unions
sought to aggrandize themselves.
The problem, of course,
was that the government does not operate in a competitive environment.
Government unions collect money through dues withheld from government
paychecks. Public-sector unions do not negotiate with a management accountable
to shareholders, but instead with politicians whom they help elect and,
therefore, are accountable to the unions. Moreover, politicians, unlike
corporate executives, typically occupy their offices for shorter periods of
time. And politicians, unlike corporate executives, don’t own shares that might
be devalued after they leave office due to decisions they made while in office.
Not only are politicians
far more accountable to the unions with which they negotiate than they are to
the people they serve, but the consequences of giving in to outrageous demands
from public-sector unions are much less immediate and personal for the
politicians. When a corporate executive gives in to union demands that are
unsustainable, the corporation goes out of business. Union negotiators know
this, and in the private sector, the possibility of business failure tempers
their demands.
But the survival of
government agencies doesn’t depend on efficiently competing in a market economy
where consumers voluntarily choose to purchase their product or service. When
government agencies incur expenses that exceed revenues, they simply raise
revenues by increasing taxes. Consumers have no choice but to pay the higher
taxes or go to jail.
If electing their own
bosses and compelling taxpayers to guarantee revenue sufficient to fulfill
their demands weren’t enough, public-sector unions have another advantage
denied private-sector unions. They operate the machinery of government. Their
members run California’s public schools, its transportation agencies, its
public utilities, its administrative bureaucracies including code enforcement
and construction permitting, its public safety agencies; everything.
This confers countless
unique advantages. Depending on the intensity of the issue, the percentage of
unionized government employees willing to use their positions as influencers,
educators, gatekeepers, and enforcers may vary. But within the permanent
bureaucracy of government, it doesn’t take a very large minority of committed
operatives to wield decisive power.
Public-sector unions
epitomize the establishment. Politicians come and go. But like the so-called
deep state, public-sector unions are permanent, embedded in the bureaucracy,
running the show. And if the show’s script calls for running in place, or even
running backward, this is what will happen so long as corporations and
bureaucracies can amass more profit and more power—no problem.
How Government Unions
Acquired Allies and Formed the One-Party State
During the 1980s and
steadily thereafter, these unions acquired powerful allies. The rising
environmentalist movement was particularly useful. It is indisputable that
California needed to aggressively address the problem of air pollution in its
coastal cities, boxed in as they are by mountains and beset with unhealthy
levels of smog. But by the 1990s, air pollution had been reduced to a fraction
of what it had been in the 1960s despite the state’s population doubling. Even
so, environmentalism had become full-spectrum, affecting every aspect of
economic life in California.
For a while, California’s
left-wing, the government unions, and environmentalists, fought against
corporate interests in a political battle where neither side completely
dominated. But after the turn of the century that began to change.
The last big chance to
stop California from becoming a one-party state dominated by Democratic
Socialists may have been the special election of 2005. It’s easy now to forget
the excitement incoming Governor Schwarzenegger once generated among the GOP
faithful in California. Here was a candidate, as far removed from the
establishment as Trump was a decade later, sitting in the guest’s chair,
telling Jay Leno and half of America that “it’s the unions that are breaking
California, and I’m going to terminate them.”
Schwarzenegger tried to
work with legislators to enact reforms during his first year as governor, and
he got nowhere. So in 2005 he took his case to the people, filing four
initiatives—a balanced budget, redistricting reform, lengthened evaluation
period for teacher tenure, and paycheck protection. His consultants, what a
surprise, talked him out of a fifth—pension reform. And what happened?
There Schwarzenegger was,
on television again, saying it was up to the people to save California. But he
said it by himself. Alone. Where was California’s GOP during that entire
election season? Instead of tapping into the populist momentum that had put Schwarzenegger
into office, and giving it voice, most of them were running away from
Schwarzenegger as fast as they could.
Nobody who condemns
Schwarzenegger for later pivoting left should forget that back in 2005, while
the unions spent well over $100 million to defeat his initiatives, the GOP and
its donors did not step up to match them in money or, more importantly, in
their tone. They went to their safe spaces, protected their safe seats, and
continued as the minority party, the dwindling opposition. Bleating haplessly.
Losing.
By 2010, with pro-business
Republicans becoming a permanent minority in the state legislature, with every
one of California’s state officeholders from the governor to the superintendent
of public instruction in the hands of Democrats, and with Democrats in firm
control of nearly every major city, it is no surprise that the business
community moved further and further towards also supporting Democratic
candidates. Searching for the candidates least likely to lean far left, up and
down the state, they gave up on conservatives.
Also happening during the
2010s was the rise of the super billionaires of Silicon Valley. Always a center
of global wealth and a liberal stronghold, the latest tech wave—social media
monopolies—brought onto the scene politically active billionaires who were even
wealthier and even more liberal than their predecessors. With these turns,
California went from being a state dominated by socialists with at least a
viable conservative opposition to being a one-party state dominated not merely
by socialists, but by corporate socialists.
Today Democrats don’t
merely hold a supermajority in the state legislature, they now have what’s been
dubbed a mega-majority. That is, they control not two-thirds of all seats in
both houses, but three-quarters of all seats in both houses. With the
legislature, the governor, the judiciary, and the most powerful special
interests operating in consensus—government unions, the environmentalist lobby,
corporations, and individual billionaires—there are no checks on their power.
The Face of Corporate
Socialism
Every era has its unique
brand of collectivism, and California in the 21st century will not offer exact
analogs to socialist regimes a century ago in Europe, nor should it. California
is not a brutal totalitarian regime, nor has California’s economy come anywhere
close to that most extreme version of socialism, communism where the state owns
all property.
Instead, California is run
by an oligarchy, working in partnership with a legislature that is controlled
by a handful of powerful government employee unions. These oligarchs and their
counterparts, the union leaders, form a de facto politburo.
The most accurate way to
describe the political economy of California would be corporate socialism. A
more vivid, and equally accurate description would be feudalism.
If one were to examine the
concept of California as a feudal state, all the pieces would be identifiable.
The aristocracy is the wealthy billionaires and the titans of the high tech
industry. The knights and the nobles are the public employees. The clerisy
consists of the academics and the nonprofit activists, which include
environmentalists, homeless and low-income housing advocates, and social
justice warriors. Everyone else would be serfs.
California’s serfs would
either be members of the state’s dwindling middle-class and small-business
owners, paying crippling tithes to the feudal regime, or they would be low
income workers and the unemployed, who would rely on alms from the nobles for their
sustenance.
Other metaphors work as
well. To make an analogy to the old Soviet Union, the aristocracy becomes the
politburo, the nobles become the nomenklatura, the clerisy becomes the
commissars, and the serfs become everyone else. The feudal metaphor is perhaps
more applicable for California today, because unlike in the Soviet Union,
private property is alive and well, so long as you are one of the fabulously
wealthy few, and willing to partner with the state legislature.
The darkest but
nonetheless somewhat apt metaphor for California is Nazism, for two fairly
encompassing reasons. First, because the economic models are almost identical;
private oligarchs and subsidized monopolistic corporations operating in
partnership with a micromanaging government. Second, because where the German
Nazis condemned Jewish wealth in particular, and capitalist profiteering wealth
in general, California’s Democrats focus their scapegoating on “fossil fuel”
wealth, or wealth amassed via unwarranted “privilege,” while enacting laws
designed to penalize all wealth.
When individualism gives
way to collectivism, tyranny eventually and inevitably follows. Californians
who are sanguine about the future of their quasi-socialist, one-party state,
may cite the extraordinary cultural revolution taking place, where individual
freedom to express whatever gender they wish is celebrated, as is the freedom
to experiment with any drug. Surely the German Nazis had views antithetical to
this sort of individual freedom! This is true, but it misses the point.
Where the German Nazis had
a collectivist tyranny that suppressed what they considered to be social or
sexual deviancy, California’s Democrats have a collectivist tyranny designed to
suppress any individual who advocates for traditional conservative social or
sexual behaviors. Equally pervasive and equally if not more sinister, they also
have a collectivist tyranny that seeks to suppress and ostracize anyone who
questions “climate change,” and they are using the supposed climate emergency
to enact increasingly restrictive intrusions on property rights and business
operations. Collectivism is creeping into every aspect of life in California.
It might not wear the same exterior mask as Nazism, but it has the same
essence.
California’s Democrats
differ from the German Nazis, of course, insofar as they haven’t opened up
death camps, and probably never will. But they also differ in their level of
hypocrisy. One might argue that California’s state legislature, and the
Democrats that run it, are even more hypocritical than the German Nazis were.
Despite their ritual demonization of profits and wealth, the private wealth
that has accumulated in California in recent years, with the social media
monopolies piling countless billions onto the piles of wealth already amassed
in previous tech booms, has few if any rivals in the history of civilization.
The Consequences of
Corporate Socialism
As California’s
aristocracy has consolidated its power, an epic transfer of wealth has
occurred. Corporate monopolies, financial intermediaries, wealthy individuals,
public sector treasuries and public employee pension funds have all become
spectacularly endowed. At the same time, at the other extreme, California has
become a magnet for welfare recipients and economic refugees from around the
nation and the world, who survive by collecting state-funded benefits.
Meanwhile, California’s middle class and small businesses, beset by a high cost
of living and crippling regulations, watch their investments and their
enterprises dwindle away.
The consequences of
California’s descent into feudalism are well documented. High Taxes. Over regulation. Record high homelessness with feces and
discarded needles littering the streets. High gas prices. Spikes in crime. Crumbling infrastructure due to green
initiatives. Failing public education. Middle-class flight to other states.
Housing policies that limit new housing construction. Rent control policies
that limit private investment.
But these failures serve a
purpose. They are the products of California’s long-standing one-party regime
controlled by oligarchs and public sector unions, buttressed by the politically
useful fanaticism of social justice warriors and environmentalist extremists.
They have disenfranchised the middle class, at the same time as they have
rendered low income and undocumented communities utterly dependent on
government handouts, and to the extent those groups vote, turned them into
reliable Democratic voters.
Meanwhile, public
employees don’t have to suffer the consequences of what California’s Democratic
politicians are doing. Why should it matter if housing is expensive if you are
collecting a pay and benefits package that amounts to twice what you would make
in a market-based hiring environment? Why should you feel pressure to pay off
your exorbitant mortgage before you retire, if you will be collecting a pension
that is likely to be equal or greater than the pay you received while you were
working?
Giving public employees
job security, compensation, and benefits far in excess of private sector norms
creates a conflict of interests between public employees and the citizens they
serve. It undermines the value of citizenship itself, by making ordinary
private citizens eligible for a package of government benefits that is more
comparable to (if not less than) what undocumented immigrants receive, while
the far better path to job security, a middle-class lifestyle, and retirement
security lies with the privileged public sector.
This inherent conflict of
interests plays out in countless ways that damage trust in government and
undermines faith in American institutions. Why should we control our borders if
membership and dues revenue in the teachers union depends on increasing public
school enrollment by any means necessary? Why, for that matter, should
immigration laws bother to favor newcomers who have job skills and can support
themselves, if that would mean fewer unionized employees in public education
and elsewhere within the public bureaucracies to provide for the special needs
of the illiterate and the destitute?
And how, for the record,
does it help nations with out-of-control birthrates if a few hundred thousand
migrants end up in the public schools of Los Angeles County, when tens of
millions are added to their burgeoning populations every year? But it surely
does benefit the teachers union.
The cold, hard truth
confronting ordinary Californians is that they can expect no help from the
oligarchs. They have secured for themselves obscene profits and investment
returns thanks to a regulatory environment where only the biggest corporations
can afford to comply and, thanks to politically contrived artificial scarcity,
has rewarded preexisting holders of assets and locked out newcomers.
Ordinary Californians may
eventually find growing support, however, from members of public sector unions
who, one at a time, drift away from their leadership’s blind adherence to the
corporate socialist agenda. The plain and obvious fact that this agenda is not
working—not in any phase of public policy, from public education to housing,
homeless, and transportation—will move many of them to support alternative
policies. For the sake of their less fortunate cousins, in-laws, neighbors and
friends they may begin to question current policies, and seek new solutions.
It is possible they will
mount an insurgency within their unions, and turn some of that public-sector
union political power to work for all the people.
Fight for lower barriers
to building new suburbs on open land, instead of letting the oligarchs and
greenies cram everyone into the footprint of existing cities.
Fight for water infrastructure projects—storage, desalination plants, aqueduct
upgrades—that are completed on time and under budget, like they were back in
the 1960s. Fight to build more freeways instead of “light rail” that nobody
wants to ride, and fight to build practical inter-city commuter trains instead
of a grossly overpriced “bullet train.”
Fight to get help for the
mentally ill and substance abusers, instead of only helping a fraction of them
by building a boondoggle archipelago of “affordable”
apartments that cost taxpayers up to $500,000 per unit. Fight to restore sensible wildland management
practices to prevent future infernos. And fight for school vouchers so we can save a
generation of school children, regardless of where they come from and what they
bring to the classroom.
Deep in the tarnished
Golden State, one may still hope.
