ESG Investing and Public Sector Unions

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For the last few decades what used to be referred to as socially responsible investing has more recently morphed into “ESG” investing. The acronym stands for “environment, social, and governance,” and refers to how investors should evaluate the impact that every company they’re considering investing in has, positive or negative, in those three areas.

ESG investing has rapidly become a mainstream priority in the financial world. This year, the Securities and Exchange Commission is likely to mandate ESG disclosures for publicly traded U.S. companies. Reporting ESG scores is spreading as well to Europe, Canada, Australia, and elsewhere.

The implications of formalizing ESG reporting are intended to transform the global economy. Companies with low ESG scores will not only be subject to institutional divestment, which would itself constitute a serious threat to their ability to do business. They can also be denied access to lines of credit and other banking services, and they can end up unable to purchase insurance coverage.

The scope of what ESG deems objectionable is vast and inevitably subjective. It can implicate companies that may only involve a small fraction of their operations in the frowned upon activities. The allocation of low ESG scores is impacted by the corruptibility of the examiners and the criteria for ESG scoring may in many cases rest on premises that are either false or transient. With all that in mind, here some examples of activities that will draw a failing ESG score:

Alcoholic beverages, tobacco, commercial animal husbandry for food production or animal testing, military equipment, civilian firearms, gambling, private prisons, adult entertainment, oil extraction, production, and refining, coal distribution and coal fired generation of electricity.

Observing this list, it should be immediately obvious that none of these objectionable categories are going to suddenly vanish. They represent sectors that are too huge, contributing services which are either vital (food, energy, security), or for which there is an irrepressible demand (alcohol, tobacco, gambling, porn). This means adoption of ESG, whether or not it is ultimately a good idea, will put a slow squeeze on several gigantic economic sectors, where only the most powerful companies will be left standing as their smaller competitors are eliminated.

A bill recently introduced by California Senate Democrats Lorena Gonzalez and Scott Wiener, SB 1173, will require the two largest public employee retirement systems in the state, CalPERS and CalSTRS, to liquidate their investments in fossil fuel companies. SB 1173 is just the beginning. If passed, there’s no reason to expect California’s legislators to deliver additional rules to the pension funds to bring them further into compliance with ESG criteria.

California’s public employees, and the unions that represent them, will experience positive and negative impacts from ESG reporting. In the short run, there will be some positives. A ban on private prisons will be a gift to the California Correctional Peace Officers Association. As California’s state and local governing bodies incorporate ESG disclosures into their bond offerings, the climate change provisions of ESG will – in order to elevate their score – justify even greater spending on mass transit projects which generate more union jobs. Also to get a good score, municipalities will have to intensify their high-density zoning codes, which will further increase housing prices and, in turn, drive up property tax revenue — a boon for public bureaucrats.

Public employees and their unions will also benefit as state and local laws incorporate additional social ESG criteria, defined as “everything from LGBTQ+ equality, racial diversity in both the executive suite and staff overall, and inclusion programs and hiring practices.” The implementation of favored environmental and social practices in government, along with the monitoring and in many cases enforcement of those practices in the private sector, will create tens of thousands of new jobs for public employees in California.

In the long run, however, ESG could have a long-term disastrous impact on everyone’s economic fortunes, certainly including the public sector. Environmental policies aimed at destroying the fossil fuel industry will leave California with expensive and unreliable renewable energy that depends on foreign imports for systems and raw materials. Social policies that enforce proportional representation by race and gender in all organizations, irrespective of skills and aptitude, will render California’s government agencies and private industries less equipped to compete globally, because they will have deliberately recruited less competitive workforces. And public employee pension funds, crippled by restrictions on where funds can and can’t be invested, will see less of a return as huge swaths of the economy are deemed not politically correct enough to invest in.

Ultimately, the consequences of allowing ESG to undermine California’s economy will mean less prosperity, which will result in lower sales and income tax collected to support the public sector. Less prosperity will also result in lower investment earnings by California pension funds that are already dangerously underfunded and rely on high rates of return to remain solvent. When it comes to ESG, California’s public sector employees, and their unions, may want to think very carefully about what they’re getting themselves into.

This article originally appeared in the California Globe.

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Wind and Solar Energy Cannot Lift Humanity into Prosperity

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A recent article in the New York Post nicely encapsulates the latest developments in the ongoing debate over climate and energy. In his article entitled “If the Ukraine war hasn’t scared the West straight on energy, nothing will,” author Rich Lowry reminds us “The world hasn’t embraced fossil fuels out of hatred of the planet but because they are so incredibly useful.” He goes on to accurately observe that fossil fuels are used to produce 84 percent of global energy.

If there is only an alleged consensus on the potentially catastrophic threat represented by fossil fuel, there is widespread agreement on the direct connection between energy and prosperity. With that in mind, and to make clear how critical it is to produce more energy worldwide, much more, here’s an immutable fact, courtesy of data in the 2021 edition of the BP Statistical Review of World Energy: For everyone on earth to have access to half the energy, per capita, that Americans consume, global energy production will have to double.

Meanwhile, according to BP, wind and solar power accounted for 5.0 percent of global energy production in 2020. Five percent. And yet, unless you are a climate contrarian, also derisively referred to as a “denier,” wind and solar are not merely the favored solutions to global energy challenges, they’re the only solutions. But what’s wrong with this picture? Go wind. Go solar. Why not?

To appreciate what it’s going to take to create a global economy powered by nothing more than wind and sunshine, look no further than California, where the state’s policymakers are embracing these energy technologies to the exclusion of all others. The are undeterred by geopolitics, economic cost, social cost, or environmental impact. It almost appears that in their zeal to save the planet, they must destroy civilization.

California Leads the World in Ongoing Renewables Delusions

If you live in California, by now you’ve probably seen the ads, either on prime time television or online, exhorting you to “Power Down 4 to 9PM.” These ads are produced by “Energy Upgrade California,” paid for by “investor-owned energy utility customers under the auspices of the California Public Utilities Commission and the California Energy Commission.”

According to the mission of Energy Upgrade California, they are “a statewide initiative committed to uniting Californians to strive toward reaching our state’s energy goals,” and those goals include “getting 33% of our electricity from renewable resources by 2030.”

And it doesn’t end there. Over the past twenty years, through increasingly ambitious legislation and executive orders, California’s official state policy now aims to “achieve carbon neutrality as soon as possible, and no later than 2045.”

The misanthropic cruelty of these laws ought to be obvious. Normal people need more electricity between 4 and 9 PM, and no amount of public education can overcome that circadian fact. This is the time of day when normal people complete their daily work, prepare and eat dinner with their families, complete routine and necessary chores from doing the laundry to packing lunches for the next day. This is the time of day when people want to heat or cool their homes to a comfortable temperature, and power up all the countless electronic gadgets which are now required for everything from homework to paying the bills. They don’t want to wait till 9 PM to do any of this. By 9 PM they want to relax.

Normal people may also be forgiven if they don’t want to jump through the preposterous hoops required of “programmable” appliances, such as washing machines that will defer ignition until the spot price of electricity drops below a specified threshold. The fact that every major appliance now requires internet connectivity and comes with an instruction manual that rivals Lord of the Rings in scope and word-count is not a sign of progress. It is fetishistic excess. Future generations will marvel at the absurdity of this maddening, mandated attention to technology-driven minutia, and attribute it to the hubris of our times.

But beyond the fact that Californians remain quiescent while algorithms, megalomaniacal bureaucrats, and fanatical green nihilists take over and run their lives, there is the sheer impracticality of achieving “net zero” by 2050, if ever. In a narrowing of options that borders on perversity, the current vision for accomplishing this goal rejects any additional hydropower, requires the decommissioning of existing nuclear power plants, and the abandonment of all fossil fuel. Is that possible?

Accomplishing “Zero Air Pollution and Zero Carbon” in California

A professor of civil and environmental engineering at Stanford University, Mark Jacobson, completed a series of simulations, culminating in a report released in December 2021 “that demonstrate the ability of California to match all-purpose energy demand with wind-water-solar (WWS) supply, storage, and demand response continuously every 30 seconds for the years 2050-2051. All-purpose energy is energy for electricity, transportation, buildings, and industry.”

In this relatively unheralded study, Professor Jacobson has done Californians a huge favor, whether or not they support renewables. Because he has quantified a version of exactly what it would take, in terms of the installed base of renewable generating and storage assets to move California to a 100 percent net zero energy economy. Take a look at what Jacobson’s study envisions:

The first thing to note about Jacobson’s selection of renewable systems is that in theory, they would provide sufficient power to replace all legacy systems. The yields (column 4) assigned to each technology are reasonable, which means the total projected annual output as expressed in gigawatt-years, is also a reasonable estimate. Most economists measure total energy produced and consumed in quadrillion BTUs (British Thermal Units), and 101.4 gigawatt-years equates to 3.0 “quads.” In 2018, Californians generated 7.4 quad BTUs, but only consumed 2.5 quad BTUs. The rest was expended as “rejected energy,” primarily through the heat loss when using combustion based power systems including electric generating stations as well as individual vehicles. All-electric systems are far more efficient, and the implied 82 percent efficiency of an all-electric economy from source to user is not outlandish. So Jacobson’s numbers are tight, and assume – presumably via more conservation – no growth in energy consumption between now and whenever total renewable power is achieved, but they are nonetheless in the ballpark.

The other salient take-away from Jacobson’s renewables plan is that it’s all about wind and solar. Other renewables account for very little of the total; hydropower at 5.4 percent and geothermal at 3.0 percent.

Beyond considering the fact that the numbers probably work, however, is a more fundamental question: Do Californians want to live with 8,860 onshore 5 megawatt wind turbines, and another 12,884 of them floating or anchored offshore? Wind turbines of this size are truly monstrous, with a standard rotor diameter of 126 meters, i.e, 410 feet. Imagine a football field, including both end zones and then some, twirling around atop a tower more than twice the height of the Statue of Liberty, and you’re visualizing just one of these. They need a lot of land.

Rather than calculate merely the footprint of the wind tower, a more useful assessment of the land required for these wind turbines is the recommended spacing. An analysis published last year in the trade publication Energy Follower challenged the conventional spacing guidelines, which call for wind turbines to be spaced apart by a distance equal to seven times the rotor diameter. That alone calls for a stupendous amount of land, since that spacing would permit a maximum of four wind turbines per square mile. Citing work by Charles Meneveau, a mechanical engineering professor at Johns Hopkins University, the analysis went on to report that based on Meneveau’s analysis of the performance of utility scale wind farms, for maximum efficiency, “the suggested recommended separation of each turbine being 15 times the rotor diameter away from its nearest neighbors.” That equates to one wind turbine consuming 1.2 square miles.

Wind Power is a Grotesque Waste of Space

A legitimate conclusion that might be drawn from this data is that wind energy is not a desirable choice for Californians. To install 8,860 land based wind turbines would consume between 2,614 and 10,455 square miles, in order to produce only 15 percent of the required total energy in an all-electric economy. To put this in perspective, you could put 10 million new residents into homes, four per household, on half-acre lots, and you would only use up 1,953 square miles. Put them on still very spacious quarter acre lots, with an equal amount of land allocated for roads and commercial/industrial areas, and you’ve still only used up 1,953 square miles. California’s entire urbanized land only consumes around 8,300 square miles. To install these 5 megawatt wind turbines in a manner calculated to optimize their performance, a space greater than the footprint of every town and city in the state would be consumed. And this land would be uninhabitable – anyone who disagrees is invited to live on a wind farm. There will not be many takers.

When reviewing the above chart which estimates the land required for renewables, what is striking is the tremendous difference between the land required for wind farms versus the land required for solar installations. In order to generate 33 percent of the total energy, wind installations propose to consume over 10,000 square miles of land, and over 15,000 square miles of offshore ocean. By contrast, to produce 58 percent of the required energy, solar installations would consume just over 1,000 square miles, and much of that would be on top of existing roofs. Why not just use nothing but solar?

Answering that question goes to one of the hearts of the controversy over renewables, which is its intermittency. The need to balance between wind and solar, to slightly oversimplify, is that the wind blows more in the winter when there aren’t as many hours of sun, and during the summer doldrums when the wind is relatively still, there is plenty of sunshine. This seasonal variation is a bigger problem than the daily variation which underlies the “Power Down Between 4 and 9 PM” campaign, because there aren’t enough batteries in the world to store power collected during, for example, July to be discharged in January, and there never will be.

Viewing maps of wind resources indicate onshore wind energy in California is a poor choice. Far better wind resources are found in the nation’s midsection, assuming that state-of-the-art wind turbines can reliably wrangle tornadoes and ice storms. Possibly more viable is the offshore wind potential in California, especially in the far north of the state, but whether or not offshore wind installations are truly cost-effective is a question that requires far more thorough analysis than we’ve seen to-date.

Ultimately, Californians may want to think very carefully about Jacobson’s analysis, since it is one of the few fully realized and thoroughly vetted visualizations of what it’s going to take to convert to an all-electric, renewables based economy. Set aside the staggering economic cost, and the necessity to import most of the raw materials and even most of the manufactured systems. Set aside the undeniable environmental and social cost of sourcing rare earth metals from nations with an appalling lack of human rights and from mining and manufacturing operations controlled by America’s strategic rivals. For the moment, don’t think about the impact of wind turbines on birds, insects and bats. Never mind the fact that the embodied energy represented by these massive manufactured systems requires years to earn its “carbon payback,” if it ever does. And then contemplate the army of “carbon accountants” and bureaucrats, siphoning a stupefying quantity of wealth out of the economy merely to administer the new scheme.

Never mind all that. Just consider the aesthetic footprint.

Think about what it would be like to have 8,860 wind turbines, each of them twice as tall as the Statue of Liberty, scattered throughout the state. Imagine 1,160 “wave” generators and 60 “tidal” generators, actually sneaking past a coastal commission that ties anything going up near the coast in decades bureaucratic delays. And as for over 15,000 offshore wind turbines, with the requisite undersea foundations and power cables and onshore maintenance facilities. Does anyone think any of these will ever be built, much less 15,000 of them?

California’s energy economy, like that of the world, needs to reject narrow solutions. To produce the economic resilience and fulfill the obligations of a responsible government, California’s legislature needs to restore an all-of-the-above approach to energy. It needs to reembrace natural gas power and explore promising new ways to use it even more efficiently. It needs to approve nuclear power plants using the latest technologies. It needs to consider new sources of hydroelectric power – especially for pump storage on off-stream reservoirs which is one of the most cost effective ways to store surplus renewable power. It needs to weigh the total impact of wind energy taking into account its insufficiently acknowledged environmental, economic, social, and aesthetic cost. And it needs to nurture solar energy development, but not to the exclusion of conventional sources of energy.

It is ridiculous that Californians, living in the wealthiest, most innovative place on earth need to “power down” during precisely the moments in their daily lives when they need to power up. It’s time for California’s policymakers and opinion leaders to acknowledge this, and start acting on behalf of the citizens they serve, instead of special interests and their activist cheerleaders.

The Agenda of California’s Ruling Class is No Joke

Before merely laughing at California’s folly, recognize that this state is home to Facebook, Apple, Netflix, Twitter, Google, Intel, and a host of related social media and technology companies which collectively represent the largest concentration of wealth in one place in the history of the world. It is also home to Hollywood, which remains the primary arbiter of mainstream culture in the United States. California may be diminished by its government’s unrelenting hostility to business and working families, but an emaciated eagle still dwarfs the sparrows.

The model for governance that California is implementing, with the wholehearted approval and complicity of other blue states accompanied by the elites of most of the Western World, is oligarchy. They have determined that a middle class lifestyle cannot be sustained in America, much less exported to the aspiring nations of the world, and oligarchy, or neofeudalism, is their answer.

The conflict between Russia and the Ukraine, and the energy shortages that are its inevitable result, may awaken Americans to the futility of moving headlong into an energy future that excludes every form of energy apart from wind and solar. But that awakening needs to embrace not merely opposition to the green tyranny with its epicenter in California. It needs to embrace a moral crusade to double the energy produced in the world as soon as possible. In this quest, all fuels should be used, incorporating the cleanest technologies possible. At the same time, but over generations instead of within a few urgent years, new technologies can be developed that will eventually replace fossil fuel.

That is the path to peace and prosperity.

An edited version of this article originally appeared on the website American Greatness.

Examining California’s Renewable Energy Plan

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If you live in California, by now you’ve probably seen the ads, either on prime time television or online, exhorting you to “Power Down 4 to 9PM.” These ads are produced by “Energy Upgrade California,” paid for by “investor-owned energy utility customers under the auspices of the California Public Utilities Commission and the California Energy Commission.”

According to the mission of Energy Upgrade California, they are “a statewide initiative committed to uniting Californians to strive toward reaching our state’s energy goals,” and those goals include “getting 33% of our electricity from renewable resources by 2030.”

And it doesn’t end there. Over the past twenty years, through increasingly ambitious legislation and executive orders, California’s official state policy now aims to “achieve carbon neutrality as soon as possible, and no later than 2045.”

The misanthropic cruelty of these laws ought to be obvious. Normal people need more electricity between 4 and 9 PM, and no amount of public education can overcome that circadian fact. This is the time of day when normal people complete their daily work, prepare and eat dinner with their families, complete routine and necessary chores from doing the laundry to packing lunches for the next day. This is the time of day when people want to heat or cool their homes to a comfortable temperature, and power up all the countless electronic gadgets which are now required for everything from homework to paying the bills. They don’t want to wait till 9 PM to do any of this. By 9 PM they want to relax.

Normal people may also be forgiven if they don’t want to jump through the preposterous hoops required of “programmable” appliances, such as washing machines that will defer ignition until the spot price of electricity drops below a specified threshold. The fact that every major appliance now requires internet connectivity and comes with an instruction manual that rivals Lord of the Rings in scope and word-count is not a sign of progress. It is fetishistic excess. Future generations will marvel at the absurdity of this maddening, mandated attention to technology-driven minutia, and attribute it to the hubris of our times.

But beyond the fact that Californians remain quiescent while algorithms, megalomaniacal bureaucrats, and fanatical green nihilists take over and run their lives, there is the sheer impracticality of achieving “net zero” by 2050, if ever. In a narrowing of options that borders on perversity, the current vision for accomplishing this goal rejects any additional hydropower, requires the decommissioning of existing nuclear power plants, and the abandonment of all fossil fuel. Is that possible?

Accomplishing “Zero Air Pollution and Zero Carbon” in California

A professor of civil and environmental engineering at Stanford University, Mark Jacobson, completed a series of simulations, culminating in a report released in December 2021 “that demonstrate the ability of California to match all-purpose energy demand with wind-water-solar (WWS) supply, storage, and demand response continuously every 30 seconds for the years 2050-2051. All-purpose energy is energy for electricity, transportation, buildings, and industry.”

In this relatively unheralded study, Professor Jacobson has done Californians a huge favor, whether or not they support renewables. Because he has quantified a version of exactly what it would take, in terms of the installed base of renewable generating and storage assets to move California to a 100 percent net zero energy economy. Take a look at what Jacobson’s study envisions:

The first thing to note about Jacobson’s selection of renewable systems is that in theory, they would provide sufficient power to replace all legacy systems. The yields (column 4) assigned to each technology are reasonable, which means the total projected annual output as expressed in gigawatt-years, is also a reasonable estimate. Most economists measure total energy produced and consumed in quadrillion BTUs (British Thermal Units), and 101.4 gigawatt-years equates to 3.0 “quads.” In 2018, Californians generated 7.4 quad BTUs, but only consumed 2.5 quad BTUs. The rest was expended as “rejected energy,” primarily through the heat loss when using combustion based power systems including electric generating stations as well as individual vehicles. All-electric systems are far more efficient, and the implied 82 percent efficiency of an all-electric economy from source to user is not outlandish. So Jacobson’s numbers are tight, and assume – presumably via more conservation – no growth in energy consumption between now and whenever total renewable power is achieved, but they are nonetheless in the ballpark.

The other salient take-away from Jacobson’s renewables plan is that it’s all about wind and solar. Other renewables account for very little of the total; hydropower at 5.4 percent and geothermal at 3.0 percent.

Beyond considering the fact that the numbers probably work, however, is a more fundamental question: Do Californians want to live with 8,860 onshore 5 megawatt wind turbines, and another 12,884 of them floating or anchored offshore? Wind turbines of this size are truly monstrous, with a standard rotor diameter of 126 meters, i.e, 410 feet. Imagine a football field, including both end zones and then some, twirling around atop a tower more than twice the height of the Statue of Liberty, and you’re visualizing just one of these. They need a lot of land.

Rather than calculate merely the footprint of the wind tower, a more useful assessment of the land required for these wind turbines is the recommended spacing. An analysis published last year in the trade publication Energy Follower challenged the conventional spacing guidelines, which call for wind turbines to be spaced apart by a distance equal to seven times the rotor diameter. That alone calls for a stupendous amount of land, since that spacing would permit a maximum of four wind turbines per square mile. Citing work by Charles Meneveau, a mechanical engineering professor at Johns Hopkins University, the analysis went on to report that based on Meneveau’s analysis of the performance of utility scale wind farms, for maximum efficiency, “the suggested recommended separation of each turbine being 15 times the rotor diameter away from its nearest neighbors.” That equates to one wind turbine consuming 1.2 square miles.

Wind Power is a Grotesque Waste of Space

A legitimate conclusion that might be drawn from this data is that wind energy is not a desirable choice for Californians. To install 8,860 land based wind turbines would consume between 2,614 and 10,455 square miles, in order to produce only 15 percent of the required total energy in an all-electric economy. To put this in perspective, you could put 10 million new residents into homes, four per household, on half-acre lots, and you would only use up 1,953 square miles. Put them on still very spacious quarter acre lots, with an equal amount of land allocated for roads and commercial/industrial areas, and you’ve still only used up 1,953 square miles. California’s entire urbanized land only consumes around 8,300 square miles. To install these 5 megawatt wind turbines in a manner calculated to optimize their performance, a space greater than the footprint of every town and city in the state would be consumed. And this land would be uninhabitable – anyone who disagrees is invited to live on a wind farm. There will not be many takers.

When reviewing the above chart which estimates the land required for renewables, what is striking is the tremendous difference between the land required for wind farms versus the land required for solar installations. In order to generate 33 percent of the total energy, wind installations propose to consume over 10,000 square miles of land, and over 15,000 square miles of offshore ocean. By contrast, to produce 58 percent of the required energy, solar installations would consume just over 1,000 square miles, and much of that would be on top of existing roofs. Why not just use nothing but solar?

Answering that question goes to one of the hearts of the controversy over renewables, which is its intermittency. The need to balance between wind and solar, to slightly oversimplify, is that the wind blows more in the winter when there aren’t as many hours of sun, and during the summer doldrums when the wind is relatively still, there is plenty of sunshine. This seasonal variation is a bigger problem than the daily variation which underlies the “Power Down Between 4 and 9 PM” campaign, because there aren’t enough batteries in the world to store power collected during, for example, July to be discharged in January, and there never will be.

Viewing maps of wind resources indicate onshore wind energy in California is a poor choice. Far better wind resources are found in the nation’s midsection, assuming that state-of-the-art wind turbines can reliably wrangle tornadoes and ice storms. Possibly more viable is the offshore wind potential in California, especially in the far north of the state, but whether or not offshore wind installations are truly cost-effective is a question that requires far more thorough analysis than we’ve seen to-date.

Ultimately, Californians may want to think very carefully about Jacobson’s analysis, since it is one of the few fully realized and thoroughly vetted visualizations of what it’s going to take to convert to an all-electric, renewables based economy. Set aside the staggering economic cost, and the necessity to import most of the raw materials and even most of the manufactured systems. Set aside the undeniable environmental and social cost of sourcing rare earth metals from nations with an appalling lack of human rights and from mining and manufacturing operations controlled by America’s strategic rivals. For the moment, don’t think about the impact of wind turbines on birds, insects and bats. Never mind the fact that the embodied energy represented by these massive manufactured systems requires years to earn its “carbon payback,” if it ever does. And then contemplate the army of “carbon accountants” and bureaucrats, siphoning a stupefying quantity of wealth out of the economy merely to administer the new scheme.

Never mind all that. Just consider the aesthetic footprint.

Think about what it would be like to have 8,860 wind turbines, each of them twice as tall as the Statue of Liberty, scattered throughout the state. Imagine 1,160 “wave” generators and 60 “tidal” generators, actually sneaking past a coastal commission that ties anything going up near the coast in decades bureaucratic delays. And as for over 15,000 offshore wind turbines, with the requisite undersea foundations and power cables and onshore maintenance facilities. Does anyone think any of these will ever be built, much less 15,000 of them?

California’s energy economy, like that of the world, needs to reject narrow solutions. To produce the economic resilience and fulfill the obligations of a responsible government, California’s legislature needs to restore an all-of-the-above approach to energy. It needs to reembrace natural gas power and explore promising new ways to use it even more efficiently. It needs to approve nuclear power plants using the latest technologies. It needs to consider new sources of hydroelectric power – especially for pump storage on off-stream reservoirs which is one of the most cost effective ways to store surplus renewable power. It needs to weigh the total impact of wind energy taking into account its insufficiently acknowledged environmental, economic, social, and aesthetic cost. And it needs to nurture solar energy development, but not to the exclusion of conventional sources of energy.

It is ridiculous that Californians, living in the wealthiest, most innovative place on earth need to “power down” during precisely the moments in their daily lives when they need to power up. It’s time for California’s policymakers and opinion leaders to acknowledge this, and start acting on behalf of the citizens they serve, instead of special interests and their activist cheerleaders.

This article originally appeared in the California Globe.

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The Union Card

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Until a few years ago, corporate political influence in the United States was balanced between those promoting a progressive, green agenda, and those still staying away from social equity issues while continuing to lobby for conventional energy policies. But the incredible wealth amassed by high tech companies over the past few years, all of them progressive and green, has completely overwhelmed that balance. America’s corporate establishment has now joined with the financial, academic, media, and government bureaucracies, to unequivocally support progressive politics.

Writing for the trade publication Natural Gas Now, Heartland Institute scholar and author Ronald Stein had this to say about the emerging “Environmental, Social and Governance” ethos that is sweeping through the business and government elites in the Western world:

“Allowing banks and investment giants such as BlackRock, led by CEO Larry Fink to collude to reshape economies and energy infrastructure is a very dangerous precedent. Their movement promotes the idea of a forcibly monolithic, regimented nation under the control of the investment community. It is scarily beginning to resemble the fascism that dominated the media in the past. The American people never voted to give banks this sort of control over our country.”

According to statistics kept by the St. Louis Federal Reserve, in 2021, 32 percent of the wealth in the U.S. was held by one percent of the population, while the bottom 50 percent of U.S. residents only held two percent of all U.S. wealth. This sort of distribution of wealth is not unique in American history, but what is unique today is the simultaneous drive on the part of the super-rich to make basic necessities unaffordable to ordinary Americans.

This isn’t news. The destruction of the middle class, the transfer of middle class wealth upwards to the one percent, the creation of a permanent underclass dependent on government; all of this is well understood by the remaining opposition, variously described as populists, national conservatives, or MAGA conservatives. But with the rise of the tech sector to become the most powerful force in what was already a progressive juggernaut, the opposition needs reinforcements.

With this in mind, the relationship between conservatives and organized labor requires serious reassessment, because labor unions are potential allies powerful enough to tilt the balance of political power in the United States back towards policies that support the interests of the American people. Without the power of organized labor, it may be impossible to counteract the influence of multinational corporations that have almost universally adopted an agenda designed to create scarcity of every resource fundamental to the existence of a thriving middle class: energy, water, transportation, and housing.

Organized Labor is Not Necessarily Anti-Conservative

The labor movement in America is fragmented, inexplicably united on only one thing: support for a corporate globalist agenda. This is primarily expressed in their indifference to immigration policies that undermine the labor market, and environmentalist inspired policies that make everything unaffordable. But if labor unions were to reembrace their foundational principals, they would see these policies for what they are: The priorities of an oligarchy on the verge of acquiring absolute political and financial power.

Meanwhile, Americans who have already awakened to the ongoing destruction of economic opportunities and political freedom by elected leaders who are supposedly looking out for their interests may find new alliances within the American labor movement. While it isn’t uncommon for anyone critical of organized labor to accuse them of being socialist, such criticism ignores an essential truth: All government, indeed society itself, consists of versions of collective behavior.

The many ways that individuals share the burden of coping with risk, chaos, and oppression, might all be considered forms of collectivist redistribution. When someone purchases an insurance policy, they are distributing the burden of an accident that may befall them onto a pool of similarly concerned individuals. When someone submits to government authority, they do so because the social contract they’re accepting, and the taxes they pay, enable them to live with increased safety and shared rules.

In this context, unions are just another form of organized behavior, accepted by individuals because it gives them a chance to live better lives. One may debate important details – should anyone be forced to join a union as a condition of getting a job, to offer one rather significant example – but the fundamental concept of collective bargaining is not some novel aberration, sprung from the bowels of Marxism. Unions can be a normal feature in a healthy democracy, and can embrace an agenda that supports even some of the most critical elements of conservative values.

The Problematic Aspects of Union Power

Whether or not a union is a necessity, or an unchecked and parasitical menace, can often come down to whether or not the union represents private sector workers or public sector workers. The hypothetical examples of Sarah (private sector) and George (public sector) illustrate this point.

Sarah has worked for a major grocery store chain for the past 25 years. Adjusting for inflation, she makes less now than she did over a decade ago, especially since her hours were cut in order for her employer to avoid being required to offer her health insurance. Even more difficult, she is “on call” most of the week, without a reliable schedule, which makes it impossible for her to take on a 2nd part time job to help make ends meet. Including benefits, Sarah is lucky to make $30,000 per year. Now in her early fifties, she will need to work for as long as there is strength left in her body to do the job.

George works for a fire department serving an affluent suburb on the California coast. Taking into account the vacation time he earns as a 25 year veteran, he works less than two 24 hour shifts per week before qualifying for overtime. Since five day weekends are overkill, he often works one or two extra shifts a week, doubling his pay. When he goes on calls, 98% of the time they are medical emergencies, not fires. Including moderate amounts of overtime and the employer’s payments for his benefits, George makes about $250,000 per year. Now in his early fifties, he will retire in a year or two and collect a pension and health benefits package worth well over $100,000 per year.

Both of these individuals are hard working, honest and conscientious. Both of them perform jobs that have a vital role to play in our society. Both of them deserve to be treated with dignity and respect. Neither of them wrote the rules. And both of them are represented by unions.

While these individuals and the work they do is beyond reproach, the unions that represent them leave much to be desired. In Sarah’s case, typical of tens of millions of private sector workers, the unions who represent her have ignored economic reality in pursuit of ideological fantasies. Almost universally, to cite a particularly wounding example, these private sector unions have supported immigration policies that increase the supply of semi-skilled workers who compete with Sarah for work hours. Also common are the pragmatic alliances these unions form with extreme environmentalist organizations who have bottled up development of land and energy, driving the cost of living beyond the reach of an ordinary worker. One may cogitate endlessly over what constitutes optimal and humane policies with respect to immigration and the environment. But to agitate for higher wages and benefits in a society awash in cheap labor and artificially inflated costs for basic necessities is a fool’s errand.

In George’s case, which is equally typical, at least in California, the unions that represent him should not even be permitted to exist. Associations of government workers that engage in collective bargaining are not unions in any traditional sense of the word. They elect their own bosses, they take money from taxpayers instead of competing for consumer spending, and they operate the machinery of government which lets them intimidate or co-opt any special interest that might oppose them. They have priced normal government services beyond the capacity of ordinary taxpayers, and bred cynicism about government into the heart of any financially literate American. And government unions have even less interest than private unions in acknowledging the complexity of issues such as immigration or environmentalist overreach. In both cases, policies that harm the aspirations of private workers have the opposite effect on them, enhancing their job security.

The reality today is that much of America’s labor movement has gone astray. Private sector unions often put ideological goals ahead of the economic interests of their members. And public sector unions, which are not unions in any traditional sense of the word, and which represent the economic interests of their members all too well, are an abomination. They have corrupted our democracy, they are a corrupting influence on government workers because they have exempted them from the economic challenges facing private American workers, they are driving our governments at all levels towards authoritarianism, they are bankrupting our cities and counties and states, and the pension funds they control are some of the most corrupt elements of America’s grotesquely overbuilt financial sector.

Which Unions Are Candidates for Realignment?

There are daunting challenges confronting conservatives that want to form alliances with unions. America’s public sector unions pursue an agenda inherently in conflict with the interests of taxpaying private sector households. But millions of government employees still embrace the ideals of public service and patriotism. This has been seen in the recent activism by police unions to push back against rogue district attorneys that have sown chaos into America’s cities, as well as by border patrol agents calling for more support to end human trafficking and drug smuggling. The excessive politicization of government programs, from law enforcement to homeless policy to public education, may eventually trigger a conservative insurrection even among public sector union membership. Conservatives should not dismiss this opportunity as unrealistic. Only grabbing a percentage of public sector union support for conservative policies could tilt the balance of power.

As for private sector unions, in most cases their policies are already doing more harm than good to the average worker. Ask the pipefitter, the iron monger, the heavy equipment operator, or any other worker who engages in building and maintaining America’s infrastructure who they voted for, and why, then ask them who their union endorsed. Private sector union leadership is out of touch with its membership in these sectors, and there’s no reason an insurgency from within could not realign their political priorities in favor of conservatives.

Reimagining how the labor movement might best operate in the interests of the American worker is difficult but necessary. It requires balancing libertarian and mixed-capitalist economic world views. Ultimately, labor union leaders, along with conservatives of all variants, might ask themselves just one question: Has America become a progressive oligarchy, and if so, what are we going to do about it? Against this extraordinary threat to freedom, prosperity, and national sovereignty, unions and conservatives can work together, and compartmentalize their ongoing conflicts over right-to-work and card check.

Unions, if they returned to their roots, could help bring manufacturing back to America, they could bring back a viable energy economy, they could stand up to environmentalists that want to pack as many Americans as possible into subsidized urban high-density housing, and they could support applying antitrust statutes to the business and financial monopolies that have corrupted and discredited capitalist principals. They could do these things in partnership with conservatives, creating a coalition powerful enough defeat the progressive juggernaut, and win state and national elections. In doing so, they would rescue America’s middle class from oblivion.

This article originally appeared on the website American Greatness.

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California State and Local Liabilities Total $1.6 Trillion

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California’s total state and local government debt now stands at almost $1.6 trillion, or about half the state’s GDP.

That isn’t an alarming ratio when compared to the national debt, which has now soared to 128 percent of U.S. GDP with no end in sight. But Californians carry this $1.6 trillion state and local debt ($40,000 per capita) in addition to their share of the national debt (about $90,000 per capita).

Consolidated data on state and local debt is maddeningly difficult to compile. Getting the most recent data for California’s state and local bond debt requires downloading and analyzing the publicly released annual financial reports for 58 counties, 481 cities, 1,037 school districts, and 3,400 special districts. And even if data miners were to apply sweat and algorithms to this chore, at this moment in early 2022 the complete dataset can be obtained only for the fiscal year through June 30, 2020.

Rather than engage in a from-the-ground-up exercise in data gathering, we have turned to the U.S. Census Bureau’s 2019 “State & Local Government Finance Historical Datasets and Tables,” which is the Bureau’s most recent compilation. According to the Census Bureau, California’s total state long-term debt was $145 billion at the end of 2019, and California’s total local debt was $361 billion. This total, $506 billion, passes the sanity check when compared to the 2017 state/local debt estimate we compiled a few years ago, $482 billion. The slight upward trend comports well with the probability that newly issued bonds each year will marginally exceed the amount by which existing bonds are paid down or retired.

Another significant source of state and local debt is Other Post Employment Benefits, or “OPEB,” which refers to financial obligations that agencies have for current and future retirees, primarily for health insurance. Based on a 2021 study by the Reason Foundation‘s Marc Joffe, we report that California’s state and local agencies have a cumulative OPEB liability of $184 billion.

But OPEB, by virtue of being “other” post employment benefits, does not include the elephant in the room, pensions. California’s State Controller provides comprehensive data on state and local government pension obligations on their “By the Numbers” website. From this downloadable data, updated through June 30, 2020, we are able to calculate the officially recognized unfunded pension liability, which is the amount by which the current value of invested pension fund assets do not equal the present value of pensions to be paid to current and future retirees. The Controller calculates that deficit at $298 billion, but we believe that’s overly optimistic. We believe the official estimate falls $584 billion short of what will actually be required to pay these pensions. The result: we estimate California’s state and local governments owe the pension system $882 billion.

Clearly, such an estimate merits a more lengthy discussion, which will follow. Also to be discussed is California’s deferred infrastructure maintenance, a liability which according to the California Office of Legislative Analyst is now $67 billion. Depicted below is a chart that summarizes our estimate of California’s total state and local government debt:

In 2012, Moody’s Investors Service revised its method of valuing pension liabilities, with the principal adjustment being what discount rate to use when calculating the present value of projected future pension payments to retirees. The lower the discount rate used, the higher the present value. Moody’s now recommends using the high-grade long-term corporate bond index discount rate, which today is pegged at 3.15 percent. By contrast, California’s state and local government pension systems currently calculate the present value of their future pension payments (“Total Liability”) by applying the annual rate-of-return at which they expect their assets to appreciate. For CalPERS, California’s largest pension system, that rate is currently set at 6.8 percent.

The difference between using a rate of 6.8 percent vs 3.15 percent to calculate the present value of future payment obligations is shown on the next chart. It’s not subtle.

As you can see on row two, “Total Liability (various rates)” increases as the projected annual return-on-investment is reduced. And the bigger the liability, the bigger the shortfall between the Pension System Assets and the amount they need to cover. Hence the unfunded liability grows as the amount a pension system thinks it can earn each year shrinks. The column to the far left reflects the official estimate, $298 billion, for California’s total state and local agency unfunded pension liability. The column on the far right reflects that same liability based on the much lower 3.15 percent rate used by Moody’s Investor Services, $882 billion. The intermediate columns reflect the amount of the unfunded pension liability at rates in between these two extremes, 6.0 percent, 5.0 percent, and 4.0 percent.

Given the size of these numbers, and the dire financial consequences of getting the projections wrong, the controversy over which percentage to use is probably the most consequential public debate that nobody has ever heard of. Stanford economist Joshua Rauh argues that pension liabilities should be discounted by the risk-free rate because they are virtually certain to be paid. In a 2019 study, he used 2.5 percent, based on the historical volatility of equity investments.

We can only really know the right discount rate in hindsight, of course, and in hindsight one might argue that over the past 20 years the results are reassuring. As noted on the “Returns Tracker” maintained by the trade publication Pensions and Investments, the 20-year average return for CalPERS was 6.9 percent, and for the California State Teachers’ Retirement System (CalSTRS) it was 7.6 percent. California’s other smaller government agency pension funds have generally produced similar results.

Do these encouraging returns over the past 20 years justify complacency? That’s tough to say, but before dismissing concerns about their future it’s fair to wonder how the pension systems dug themselves into a hole that is, by the most generous analysis, nevertheless at least $298 billion dollars deep.

You can find a summary of some of the events leading to such a state of affairs in a 2018 California Policy Center report “Did CalPERS use accounting ‘gimmicks’ to enable financially unsustainable pensions.” The Cliffs Notes version: They did. At the turn of the century, on the basis of optimistic projections and creative accounting – and egged on by government union leaders – CalPERS management sold local and state elected officials on a scheme to bump most pension benefits by 50 percent, with retroactive effect. The rest of California’s government pension systems quickly followed suit. With technology stocks driving a fantastic bull market in the 1990s, nobody thought anything could possibly go wrong. But after the October 2008 crash, pension funds found themselves demanding higher and higher payments from government payroll departments, a trend that continues to this day.

While Governor Jerry Brown’s Public Employee Pension Reform Act (“PEPRA”) of 2013 has begun to take some financial pressure off the pension systems, they are in no position to handle another crash. Even today, following a remarkable 10-year technology-driven bull market, the pension systems acknowledge they’re only 71 percent funded. If history repeats itself, the funds – and the California taxpayers responsible for them – are in for a shock.

As it is, in 2020, using data provided by the State Controller, California’s state and local governments contributed $46 billion to the pensions systems; through withholding, government employees contributed another $15 billion. This total, $61 billion, exceeds the amount realized through returns on pension system assets in 2020, which was only $42 billion. From a related angle, California’s public retirement systems paid out $65 billion in pension benefits in 2020, while collecting $60 billion in contributions. It was never the intention of the pension systems to be requiring agencies to pay in as much each year as the systems were paying out in benefits.

To illustrate how this misleading claim – that investment returns would be the primary source of pension system funding – was used to justify increasing pension benefits, and is currently used to prevent further reform, consider this “Myths and Facts” webpage, paid for by California’s government unions. In a document replete with selective use of facts and data, this stands out: “According to the latest data, CalSTRS employers, including the state, contribute 25 cents of every pension dollar paid.” This is clearly false. According to the State Controller, as we have seen, when $65 billion in pension benefits was paid out in 2020, $42 billion was paid into the pension systems by government employers. That’s 65 percent, not 25 percent.

How Will Inflation Affect California’s Pensions?

At first glance, the fact that pension systems put a cap on their annual cost of living adjustment (“COLA”) – this varies but typically does not exceed three percent – might suggest that another paroxysm of multi-year inflation would be at least restore pension solvency. One could reasonably assume that if growth of the liability is capped at around three percent per year, while annual contributions to the pension systems rise because they’re being withheld from payrolls that driven higher by cost-of-living adjustments pegged to inflation well in excess of three percent, then the unfunded liability will wither away. But that reasoning is flawed. The way pensions are structured in California, if there is a sustained bout of high inflation, the cap is uncapped.

For better or for worse, all pension systems guarantee retirees a purchasing power “protection allowance” of 75 to 80 percent, meaning that inflation cannot erode the value of a pension payment below that threshold. This means the cost-of-living adjustments, once pension payments hit that floor, will have no ceiling. The question then becomes whether real rates of return (nominal rate of return less the rate of inflation) will be sufficient to fund pension systems that have hedged their beneficiaries against inflation during a period of high single digit or even double-digit inflation. Nobody knows how that is going to turn out, but if real returns falter, agency contributions will have to pick up the slack. It could be a lot of slack.

What this really comes down to is the so-called real rate of return that a pension system can earn. This refers to the nominal performance of the fund, which in CalPERS’ case has averaged 6.9 percent over the past 20 years through 2020, minus the rate of inflation. CalPERS actuaries, when projecting the system’s future pension liability, currently use an inflation assumption of 2.5 percent per year. This means they currently assume their real rate of return to be 4.4 percent.

This is the context in which to view pension fund performance in excess of, in the case of CalPERS, for example, 6.9 percent. That target is misleading and insufficient when inflation is greater than 2.5 percent per year. As the purchasing-power protection allowance kicks in for retiree after retiree in system after system, just to stay even, a pension system such as CalPERS needs its annual return on invested assets to achieve returns that are 4.4 percent above the rate of inflation. If inflation is seven percent, as just reported by the U.S. Dept. of Labor for the 12-month period through January 2022, then just to stay even, CalPERS would need to turn in an investment performance of 11.4 percent.

Pension systems in California have not experienced significant inflation over the past 20 years, which is the period during which they have been coping with the impact of the benefit enhancements awarded around the turn of the century. During the inflationary era 1973 to 1981, stock indexes were negative in nominal terms. This exemplifies the volatility of investment returns and lends credence to conservative analysts such as Stanford economist Joshua Rauh urging actuaries to use even lower discount rates than Moody’s has applied.

Volatility Defines California’s Public Finances

In addition to investment performance and background inflation, the financial health of pension funds is highly sensitive to life expectancy and the ability of agencies to pay the required annual contributions. That’s just a very big and very representative subset of the financial challenges facing all public agencies in California.

There are other challenges. California’s state tax revenues are inordinately dependent on high-wage earners, as documented here, here, and here. In turn, those high-wage earners are reaping windfalls during tech booms. But booms are by definition cyclical, and when the tech boom busts, not only do state income tax revenues plummet, but the tech-driven investment returns of the pension funds falter at the same time. The financial status of California’s pension funds may not be truly alarming today – 71 percent funded is not “alarming,” but it’s far from “excellent” – and the vaunted surpluses in the state budget, swollen with slices of tech-baron bounty and billions fresh off federal printing presses, may suggest a rosy future. But when the economic pendulum swings back the other way, state and local government agencies will face unprecedented budget deficits – at precisely the same time the pension systems are demanding increased contributions from state and local governments.

SOLUTIONS

To restore stability to the system, pension reform must be part of a broader package of policy shifts. For government workers to be able to financially tolerate lower pension benefits, the cost of living in California has to become competitive with other states. This will require business deregulation, which is contrary to everything California’s legislature has worked toward over the past few decades.

The state could also lower California’s cost-of-living by investing in so-called “good debt,” that is, projects that yield long-term economic benefits. Water infrastructure is a prime example. If the state upgraded California’s water system to 21st century standards to create a surplus of water at an affordable price to consumers, it would make it possible to build new homes – homes that cannot get permits without a reliable water supply. It would enable California’s agricultural industry to produce vegetables and dairy products at lower prices. It would make it possible for businesses that use water to offer their products and services at affordable rates and still make a profit. And it would make water utility bills affordable to low-income households.

The California Office of Legislative Analyst estimates just to complete the deferred maintenance of public infrastructure in the state would cost $67 billion. This of course merely scratches the surface of what is needed, since the LAO’s narrow definition of deferred maintenance refers to the backlog of maintenance work required on existing infrastructure, not the infrastructure we need today, and should have been building for the past few decades. To create the economic prosperity and lower cost of living that would permit more cost-effective government and right-sized pension benefits, investment in new public infrastructure is required. And to state the obvious, High Speed Rail does not qualify. High Speed Rail epitomizes bad public infrastructure investment and bad debt, because it will constitute a permanent economic drain.

A discussion of what public infrastructure exists in California, vs. what public infrastructure ought to exist by now, is beyond the scope of this analysis of the total state and local debt that confront California’s taxpayers. But just like pensions, when insufficient investment is made on an ongoing basis, the financial obligation builds up and its burden falls on future generations. And unlike pensions, which can be right sized, or restored to solvency every time there is a capricious bump in the value of the invested assets of the pension systems, the only cure for neglected infrastructure is to either commit to massive new spending, or submit citizens to rationing and high prices for every basic necessity – transportation, housing, energy, and water. For the time being, California’s policymakers are firmly committed to the latter.

For this reason, one might argue California’s true debt overhang is not the officially recognized $1.0 trillion, or even the $1.6 trillion (or more) that accrues if pension analysts use more prudent financial assumptions when calculating the unfunded liability. Taking into account the cost for the public infrastructure that Californians deserve, and that should have been built by now, it is reasonable to assume California’s state and local public debt exceeds $2.0 trillion.

Whether it’s one trillion or two trillion, California’s total state and local government debt, given the size of its economy, may still not be unmanageable at the moment. But the choices California’s legislators and pension boards make over the next few years will determine whether a truly devastating financial and economic crisis materializes or, instead, government agency balance sheets acquire the resilience necessary to cope with the economic turbulence that could lie just ahead.

An edited version of this article appeared on the website of the California Policy Center.

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What Defines a Legitimate Labor Movement?

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While it isn’t uncommon for anyone critical of organized labor to accuse them of being socialist, such criticism ignores an essential truth: All government, indeed society itself, consists of versions of collective behavior.

The many ways that individuals share the burden of coping with risk, chaos, and oppression, might all be considered forms of collectivist redistribution. When someone purchases an insurance policy, they are distributing the burden of an accident that may befall them onto a pool of similarly concerned individuals. When someone submits to government authority, they do so because the social contract they’re accepting, and the taxes they pay, enable them to live with increased safety and shared rules.

In this context, unions are just another form of organized behavior, accepted by individuals because it gives them a chance to live better lives. One may debate important details – should anyone be forced to join a union as a condition of getting a job, to offer one rather significant example – but the fundamental concept of collective bargaining is not some novel aberration, sprung from the bowels of Marxism. It is a normal feature in a healthy democracy.

Whether or not a union is a necessity, or an unchecked and parasitical menace, can often come down to whether or not the union represents private sector workers or public sector workers. The hypothetical examples of Sarah (private sector) and George (public sector) illustrate this point.

Sarah has worked for a major grocery store chain for the past 25 years. Adjusting for inflation, she makes less now than she did over a decade ago, especially since her hours were cut in order for her employer to avoid being required to offer her health insurance. Even more difficult, she is “on call” most of the week, without a reliable schedule, which makes it impossible for her to take on a 2nd part time job to help make ends meet. Including benefits, Sarah is lucky to make $30,000 per year. Now in her early fifties, she will need to work for as long as there is strength left in her body to do the job.

George works for a fire department serving an affluent suburb on the California coast. Taking into account the vacation time he earns as a 25 year veteran, he works less than two 24 hour shifts per week before qualifying for overtime. Since five day weekends are overkill, he often works one or two extra shifts a week, doubling his pay. When he goes on calls, 98% of the time they are medical emergencies, not fires. Including moderate amounts of overtime and the employer’s payments for his benefits, George makes about $250,000 per year. Now in his early fifties, he will retire in a year or two and collect a pension and health benefits package worth well over $100,000 per year.

Both of these individuals are hard working, honest and conscientious. Both of them perform jobs that have a vital role to play in our society. Both of them deserve to be treated with dignity and respect. Neither of them wrote the rules. And both of them are represented by unions.

While these individuals and the work they do is beyond reproach, the unions that represent them leave much to be desired. In Sarah’s case, typical of tens of millions of private sector workers, the unions who represent her have ignored economic reality in pursuit of ideological fantasies. Almost universally, to cite a particularly wounding example, these private sector unions have supported immigration policies that increase the supply of semi-skilled workers who compete with Sarah for work hours. Also common are the pragmatic alliances these unions form with extreme environmentalist organizations who have bottled up development of land and energy, driving the cost of living beyond the reach of an ordinary worker. One may cogitate endlessly over what constitutes optimal and humane policies with respect to immigration and the environment. But to agitate for higher wages and benefits in a society awash in cheap labor and artificially inflated costs for basic necessities is a fool’s errand.

In George’s case, which is equally typical, at least in California, the unions that represent him should not even be permitted to exist. Associations of government workers who engage in collective bargaining are not unions in any traditional sense of the word. They elect their own bosses, they take money from taxpayers instead of competing for consumer spending, and they operate the machinery of government which lets them intimidate or co-opt any special interest that might oppose them. They have priced normal government services beyond the capacity of ordinary taxpayers, and bred cynicism about government into the heart of any financially literate American. And government unions have even less interest than private unions in acknowledging the complexity of issues such as immigration or environmentalist overreach. In both cases, policies that harm the aspirations of private workers have the opposite effect on them, enhancing their job security.

A legitimate labor movement is easy to justify in the abstract. If not unions, what sort of movement will speak for ordinary workers in an era when jobs are being relentlessly automated, global competition is tougher than ever, and the cost of living is punitive? What sort of movement can speak for ordinary workers if, along with these challenges, the nation is gripped by a deep recession brought on because interest rates can’t go any lower and stimulative debt can’t go any higher?

The reality today is that much of America’s labor movement has gone astray. Private sector unions often put ideological goals ahead of the economic interests of their members. And public sector unions, which are not unions in any traditional sense of the word, and which represent the economic interests of their members all too well, are an abomination. They have corrupted our democracy, they are a corrupting influence on government workers because they have exempted them from the economic challenges facing private American workers, they are driving our governments at all levels towards authoritarianism, they are bankrupting our cities and counties and states, and the pension funds they control are some of the most corrupt elements of America’s grotesquely overbuilt financial sector. Maybe what would remain after abolition of public sector unions, still very powerful voluntary associations, could start fighting for CEQA reform, for example, to benefit all workers instead of just themselves. Before unions infested our governments, that’s what public service meant.

Envisioning exactly how the labor movement might best operate in the interests of the American worker is difficult but necessary. It requires balancing libertarian and mixed-capitalist economic world views. But two reforms would be a very good start. First, outlaw collective bargaining in the public sector. Second, the leaders of the private sector labor movement need to starting caring more about American workers, and less about their elitist ideological fantasies.

This article originally appeared on the website of the California Globe.

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The Unforced Errors of California’s Populist Grassroots

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In sports, an unforced error is defined as “a mistake in play that is attributed to one’s own failure rather than to the skill or effort of one’s opponent.” Nothing better describes the fact that California’s school choice advocates managed to come up with two competing ballot initiatives, so similar that it takes an expert to tell them apart.

While school choice efforts in California have arisen for decades, the earliest entrant for the 2022 election cycle came from the California School Choice Foundation, led by Michael Alexander. The committee he formed, Californians for School Choice, is currently gathering signatures for the Educational Freedom Act.

Also qualified for circulation, but no longer engaged in signature gathering, is the awkwardly named “Education Savings Account” initiative, sponsored by Fix California, which is founded and led by Richard Grenell.

These two committees could have worked together to promote one school choice initiative. That might have allowed them to pool their paltry resources and take on the behemoth called the California Teachers Association, which combined with other education employee unions in California rakes in an estimated $500 million per year in membership dues. But they didn’t.

Both of these initiatives, if approved, allow parents to receive into an “education savings account” the state funding for their child that ordinarily goes to the local public school. The parents can then use those funds to pay for their child to attend a private school of their choice. If a parent doesn’t want to participate, nothing changes, and their children continue to attend a publicly funded school.

To people who aren’t immersed in school choice issues, the differences between these two initiatives are underwhelming. Alexander’s initiative pays participating parents $14,000 per year per child, Grenell’s pays $13,000 per year. Alexander’s initiative grants eligibility to any parent of a K-12 student in California, Grenell’s restricts eligibility in the first few years to lower income parents.

The fact that the two groups of proponents could not agree on one initiative to jointly promote, instead of filing two competing versions, is a textbook example of an unforced error. If you care about school choice, how and why this coalition of people and organizations sharing the same strategic goals managed to splinter over tactical details is an appalling disappointment.

Grassroots Supported Initiatives Are the Future

Over the past decade the California state legislature has worked steadily to make initiatives harder to qualify. The window for ballot initiatives is now restricted to only general elections every two years, and when hiring signature gatherers, firms have to carefully adhere to the somewhat ambiguous provisions of AB 5, which increases costs and legal exposure. But these barriers, and others including the COVID pandemic, do not begin to overcome the new opportunities offered by desktop printers and social media.

It is only a matter of time before a grassroots movement coalesces in California with sufficient critical mass that if the right initiative is launched, accomplishing the right political objectives, it can potentially qualify overnight. With barely 40 days left to gather the requisite signatures, it is even possible, though unlikely, that the Educational Freedom Act could offer the breakthrough example.

Consider this link on their campaign website: “Print your own petition.” This link provides clear instructions, including a printable PDF of the petition. A visitor to the Education Freedom Act website has merely to click these links, print the six page petition, then carefully follow the instructions to gather signatures and return it to the campaign.

A Sacramento attorney that specializes in state ballot initiatives, speaking on background, had this to say when asked if downloadable and printable state ballot initiatives are valid:

“In theory, yes. In most cases, the petition will consist of numerous pages and with all the required info, use of 8.5 x 11 standard home printer paper leaves little room for signatures most of the time. In order to be a valid signed petition, all the pages would have to be printed, stapled, signed, and returned. That is a tall order for people to complete accurately.”

It might be a “tall order,” but evidently it is not an impossible order. And Michael Alexander, a man with no quit in him, is putting the theory to the test. If you watch nothing else that comes out of this movement, watch this. Because it is a revolution. Imagine if millions of Californians mastered the skill of printing initiative petitions at home.

Gone are the professional printers, producing immaculate magnum opuses, formatted to accommodate 4,500 words of initiative verbiage on a single sheet 14″ x 17″ folded once, or 7,500 words of initiative verbiage on a single sheet 14″ x 25.5″ folded twice. Gone are the logistics of transporting literally millions of these initiatives from the printer’s shop to every county, every committee, every household, and every collection table at every public venue, in a state of 40 million people. Gone are the legions of paid signature gatherers, with all the cost and legal expenses they bring with them.

It’s important not to understate the remaining logistical hurdles that initiative proponents have to overcome, and it’s extremely unlikely an initiative campaign could ever completely bypass professional printing shops. But online communications and desktop printing have revolutionized the business or initiatives and recalls in California. Find a competent attorney for advice, then build a website, format a PDF, put out the word via email or social media, and stand back while overnight, a million followers load standard copy paper in a home printer, click a link, and make history.

California’s Growing Nonpartisan Populist Movement

Californians surprised the nation last week when an unstoppable multitude of enraged parents successfully recalled three of San Francisco Unified School District’s elected school board members. As impressive as this accomplishment was by virtue of being a sweep, more impressive were the margins. As reported by EdSource, “In a landslide, voters recalled board President Gabriela López and members Alison Collins and Faauuga Moliga. Partial returns from 128,000 mostly mail-in votes, more than seven out 10 backed the recall, with nearly 79% voting to oust Collins, 75% to remove Lopez and 72% to recall Moliga.”

San Francisco is a city with only 7 percent registered Republicans. It is also a multiethnic city; 40 percent white, 35 percent Asian, 15 percent Hispanic and 5 percent black. According to the New York Times, “it also appeared to be a demonstration of Asian American electoral power.”

Ward Connerly, a former member of the University of California Board of Regents and the author of Prop. 209, which outlawed affirmative action in California back in 1996 – and upheld by voters as recently as 2020 when 57 percent of voters statewide rejected Prop. 16 which would have brought back affirmative action – is working closely with Asian activists to eliminate racial discrimination in college admissions and elsewhere. “Asians are realizing that California’s institutions are failing,” said Connerly, “and they’re beginning to organize to repair the damage.”

This is the stuff of realignment, and it’s everywhere. Latino leaders such as Gloria Romero, who had risen to become the majority leader in the California State Senate, then left after recognizing the toxic impact the teachers unions were having on public education in the state. Black Californians such as Ward Connerly, and powerful Asian reform organizations.

Wealthy white liberals as well are belatedly realizing how broken some of California’s institutions have become, as exemplified by David Welch, who was behind the Vergara v. the State of California and the California Teachers Association litigation in 2012. Welch, supported by luminaries such as former Los Angeles mayor Antonio Villaraigosa, has filed an initiative for the 2022 ballot entitled the “California Right to High-Quality Public School Education Initiative.”

And then there are California’s die hard populists, stigmatized and stereotyped, but gathering in strength. That would include The California School Choice Foundation, along with Fix California. It would also include Orrin Heatlie’s all volunteer organization, famed for their stunning success qualifying the Newsom recall petition for the ballot in September 2021. Now renamed Rebuild California, Heatlie’s group is quietly preparing to trigger another political earthquake. Can all these groups find common cause and work together? They certainly can, and they should.

Grassroots movements, often led by volunteers, are bound to attract people with strong passions. Whenever someone is volunteering their time, their incentive to compromise is reduced. But perfect is the mortal enemy of the good. In public education, along with a lot of other policy areas, the people running California are making grievous errors. An underfunded team, using cheap online resources, can reach millions. They can fight and win, by highlighting these policy errors and offering solutions via the initiative process.

But they have to work together. In California’s growing nonpartisan populist movement, unforced errors have no place.

This article originally appeared on the website of the California Globe.

California’s Homeless Housing Scam

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Pogressive politicians have created the homeless crisis. Their policies have made housing unaffordable, driven away decent job opportunities, and encouraged vagrancy and drug addiction. Their solution—taxpayer subsidized housing, provided free and with no conditions imposed on any homeless person—is a special interest scam, guaranteed never to solve the problem. And nowhere in America is that problem worse than in Los Angeles, California.

Over the past week, two local elected officials in Los Angeles have made public statements on the homeless crisis that grips the region. They represent two completely different perspectives on how to resolve that crisis.

The first came in the form of a thank you letter from retiring Los Angeles City Council member Mike Bonin, sent to those of his constituents who wish him well in whatever he does next. With respect to his legacy, Bonin writes: “By providing housing and services, we are changing lives and providing a pathway out of homelessness. Since the launch of the Venice Beach Encampments to Homes initiative, 76 people have been permanently housed.”

Seventy six people. Remember that number.

Bonin’s philosophy is consistent with what remains of the prevailing progressive doctrine regarding homelessness, known as “Housing First.” It is defined on the U.S. Department of Housing and Urban Development website as “an approach to quickly and successfully connect individuals and families experiencing homelessness to permanent housing without preconditions and barriers to entry, such as sobriety, treatment or service participation requirements.”

This approach has made Bonin infamous even among the mostly progressive residents of Venice Beach, where an estimated 2,000 homeless have taken over this tiny beachfront suburb of Los Angeles. Only a small fraction of them have been given “supportive housing” or temporary shelter, and only a small fraction are held accountable for using and selling hard drugs, public intoxication, theft, vandalism, or worse.

The other public official who has recently weighed in on L.A.’s challenges is the outspoken county sheriff, Alex Villanueva. In an interview with California Insider, Villanueva describes how progressive policies have combined to “defund, defame, and defang” his department.

In a must-watch video, Villanueva claims the Los Angeles County Board of Supervisors is the only major local government in the United States that has not begun to pull back from the defund the police movement. He claims the worst effect of defunding is the hiring freeze, which has prevented the department’s veterans from mentoring new hires before they retire.

But it is the county’s response to the homeless crisis that draws Villanueva’s most withering remarks.

“The problem with city government and county government is that they [woke ideologues] occupy every seat at the table,” according to Villanueva. “That’s why every single plan the city has, or the county has, with regard to homelessness is destined to fail. No other opinion gets in.”

“They think that if we build enough supportive housing we will end homelessness in Los Angeles,” he continued. “But the more you build, the more people will come. Right now we have 25 percent of the nation’s homeless in Los Angeles County. What’s going to prevent more homeless people from coming to Los Angeles if they see someone living in a $500,000 condo with a beach view? They’ll say, ‘hey, I want one too.’ We cannot create the magnet that brings other people here.”

Subsidized Housing: The Boondoggle Archipelago

Villianueva is not exaggerating, and the problem has been known for some time.

In a 2019 report by the California Policy Center titled “The Boondoggle Archipelago,” several representative examples of staggering costs for “supportive housing” were documented. San Francisco’s Proposition A funded housing at an estimated cost of $500,000 per unit. Alameda County’s Measure A1 funds housing at $736,000 per unit. San Jose’s Measure A funds housing at between $406,000 and $706,000 per unit. Los Angeles’ plan to repurpose an existing structure on the Veterans Affairs campus in West Los Angeles cost $926,000 per unit. Also in Los Angeles, $1.2 billion in bonds to construct supportive housing will cost an estimated $550,000 per unit.

And back in Venice Beach, Mike Bonin’s backyard, officials plan to build 140 new apartment units on a city-owned property that is currently the only significant beach parking available to the public. Dubbed “The Monster on the Median” by outraged residents, the estimated total project cost comes up to at least $1.1 million per unit.

These costs are not coming down. For the 2021-2022 fiscal year, Los Angeles County has budgeted $527 million to address homelessness. For same fiscal year, the city of Los Angeles has allocated $1 billion, nearly 10 percent of all spending, “for the homeless crisis.” Add to that the spending by many other cities in Los Angeles County, plus direct state and federal spending, plus the ongoing disbursements from bonds approved for homeless housing. Will it work?

The last time Los Angeles County counted its homeless was in 2020, because the 2021 count was canceled due to COVID. The 2022 count has been postponed for the same reason. But in 2020 there were an estimated 66,000 homeless in Los Angeles County. It is unlikely that housing has kept up with the influx since, as Villanueva accurately proclaims, Los Angeles is a national magnet for homeless migration. At $500,000 per unit, it would cost $33 billion to house every homeless person in Los Angeles, assuming no more arrived. That doesn’t include the swollen bureaucracy and ongoing costs to manage homeless housing, nor any spending to actually treat them and get them on a path to independence.

As noted in a lengthy 2019 study published by the California Policy Center titled “The Homeless Industrial Complex,” and as expressed more recently in a provocative and compelling book, San Fransicko, by the writer and activist Michael Shellenberger, homelessness is not simply a housing problem to be solved with more housing. It is primarily a mental illness, drug addiction, and crime problem. At the very least, some of the billions in public funds for “housing first” need to be redirected, with equal amounts spent immediately on treatment, and for some, incarceration. In many cases, involuntary treatment—i.e., incarceration—is the only way to rescue people from addiction.

A Confluence of Interests

Mike Bonin, along with countless other intransigent progressives, refuses to accept this reality. But ideological idiocy alone does not explain why common sense reforms aren’t sweeping away these failed policies.

The homelessness and crime problems afflicting California’s cities, especially Los Angeles, have not been solved because there is a confluence of interests between public bureaucrats, powerful nonprofits, and politically connected housing developers, who prefer that policies remain unchanged. The billions pour in, and as the problem only gets worse, additional billions pour in, enriching a Homeless Industrial Complex that thrives on failure.

Members of law enforcement in Los Angeles County, from the elected sheriff to the officers on the streets to the unions that represent them (to their immense credit) have recognized that progressive ideology—as epitomized by retiring local politician Mike Bonin—has caused the problem and is only making the problem worse. It is up to the remaining players that influence policy in Los Angeles and elsewhere to come to the same conclusion.

Eventually, we may hope common sense will prevail. Deregulate home construction. Stop harassing private employers and let them create jobs. Stop decriminalizing crime. Build inexpensive and safe shelters on inexpensive real estate. Reject entirely the absurd position that drug addiction is a legitimate “lifestyle.” Get addicts off the streets and get them sober.

As it is, Los Angeles is more than just a progressive failure. It is a false beacon to every troubled person in America who stands at the crossroads between recovering their dignity with hard work and self-discipline, and succumbing to drugs and dissolution. It is a blazing, nihilistic beacon, telling these souls they can give up, come to California, live on the beach, and disintegrate.

This article originally appeared on the website American Greatness.

Will Police Unions try to Change Homeless Policy?

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Over the past week two local elected officials in Los Angeles have made public statements on the homeless crisis that grips the region. They represent two completely different perspectives on how to resolve the crisis.

The first comes in the form of a thank you letter from retiring Los Angeles city council member Mike Bonin, sent to those of his constituents who wish him well in whatever he does next. With respect to his legacy, Bonin writes:

“By providing housing and services, we are changing lives and providing a pathway out of homelessness. Since the launch of the Venice Beach Encampments to Homes initiative, 76 people have been permanently housed.” Seventy six people. Remember that number.

Bonin’s philosophy is consistent with what remains the prevailing progressive doctrine regarding homelessness, known as “Housing First.” It is defined on the US Department of Housing and Urban Development website as “an approach to quickly and successfully connect individuals and families experiencing homelessness to permanent housing without preconditions and barriers to entry, such as sobriety, treatment or service participation requirements.”

This approach has made Bonin infamous even among the mostly progressive residents of Venice Beach, where an estimated 2,000 homeless have taken over this tiny beachfront suburb of Los Angeles. Only a small fraction of them have been given “supportive housing” or temporary shelter, and only a small fraction held accountable for using and selling hard drugs, public intoxication, theft, vandalism, or worse.

The other public official who has recently weighed in on these challenges facing Los Angeles is their county sheriff, the outspoken Alex Villanueva. In an interview with California Insider, Villanueva describes how progressive policies have combined to “defund, defame and defang” his department.

In a must-watch video, Villanueva claims that the Los Angeles County Board of Supervisors is the only major local government in the U.S. that has not begun to pull back from the defund the police movement. He claims the worst impact of defunding is the hiring freeze, which has prevented the department’s veterans from mentoring new hires before they retire. But it is the county’s response to the homeless crisis that draws Villanueva’s most withering remarks.

“The problem with city government and county government is that they [woke ideologues] occupy every seat at the table,” according to Villanueva, “That’s why every single plan the city has, or the county has, with regard to homelessness is destined to fail. No other opinion gets in.”

“They think that if we build enough supportive housing we will end homelessness in Los Angeles. But the more you build, the more people will come. Right now we have 25 percent of the nation’s homeless in Los Angeles County. What’s going to prevent more homeless people from coming to Los Angeles if they see someone living in a $500,000 condo with a beach view? They’ll say, ‘hey, I want one too.’ We cannot create the magnet that brings other people here.”

California’s Subsidized Housing – The Boondoggle Archipelago

Villianueva is not exaggerating, and this problem has been known for some time. In a 2019 report by the California Policy Center entitled “The Boondoggle Archipelago,” several representative examples of staggering costs for “supportive housing” were revealed. San Francisco’s Proposition A funding housing at an estimated cost of $500,000 per unit. Alameda County’s Measure A1 funds for housing costing $736,000 per unit. San Jose’s Measure A funds for housing coming in at between $406,000 and $706,000 per unit. Los Angeles’s plan to repurpose an existing structure on the Veterans Affairs campus in West Los Angeles to create supportive housing at a cost of $926,000 per unit. Also in Los Angeles, $1.2 billion in bonds to construct supportive housing at an estimated cost of $550,000 per unit.

And back in Venice Beach, Mike Bonin’s back yard, the plan to create 140 new apartment units on a city owned property that is currently the only significant beach parking available to the public. Dubbed “The Monster on the Median” by outraged residents, the estimated total project cost comes up to at least $1.1 million per unit.

These costs are not coming down. But for the 2021-22 fiscal year Los Angeles County has budgeted $527 million to address homelessness. Also for the 2021-22 fiscal year, the City of Los Angeles has allocated $1.0 billion, nearly 10 percent of all spending, “for the homeless crisis.” Add to that the spending on homeless by many other cities in Los Angeles County, plus direct state and federal spending, plus the ongoing disbursements from bonds approved for homeless housing. Will it work?

The most recent homeless count for Los Angeles County was in 2020, with the 2021 count cancelled because of COVID and, for that same reason, the 2022 count postponed at this time. But in 2020 there were an estimated 66,000 homeless in Los Angeles County. It is unlikely that housing has kept up with the influx, since, as Sheriff Villanueva accurately proclaims, Los Angeles is a national magnet for homeless migration. At $500,000 per unit, it would cost $33 billion to house every homeless person in Los Angeles, assuming no more arrived. That doesn’t include the bureaucracy swollen and perpetual costs to manage homeless housing, nor any spending to actually treat them and get them on a path to independence.

As noted in a lengthy 2019 study published by the California Policy Center entitled “The Homeless Industrial Complex,” and as expressed more recently in a provocative and compelling book, “San Fransicko,” by the writer and activist Michael Shellenberger, homelessness is not just a housing issue, to be solved by more housing. It is primarily a mental illness, drug addiction, and crime issue. At the very least, some of the billions in taxpayer sourced funds that are mandated to be spent on “housing first” need to be redirected, with equal amounts spent immediately on treatment, and for some, incarceration. In many cases, involuntary treatment, i.e., incarceration, is the only way to rescue people from addiction.

Mike Bonin, along with countless other intransigent progressives, refuse to accept this reality. But ideological idiocy alone does not explain why common sense reforms aren’t sweeping away these failed policies.

The homelessness and crime afflicting California’s cities, especially Los Angeles, has not been solved because there is an identity of interests between public bureaucrats, powerful nonprofits, and politically connected housing developers, who prefer that policies remain unchanged. The billions pour in, and as the problem only gets worse, additional billions pour in, enabling a Homeless Industrial Complex that thrives on failure.

Members of law enforcement in Los Angeles County, from the elected sheriff to the officers on the streets to the unions that represent them, and to their immense credit, have recognized that progressive ideology – as epitomized by retiring local politician Mike Bonin – has created the problem and is only making the problem worse. It is up to the remaining players that influence policy in Los Angeles and elsewhere to come to the same conclusion, despite whatever detriment a new approach might inflict on their budgets and their prerogatives.

This article originally appeared on the website California Globe.

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How Unions Can Help ALL Workers

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Last month on January 5, Assemblymember Lorena Gonzalez resigned from the legislature to join the California Labor Federation. Gonzalez is likely to succeed the current Secretary-Treasurer Art Pulaski when he retires this summer. What will this mean for the labor movement in California?

Gonzalez has earned a controversial reputation in the State Assembly, partly by virtue of the legislation she’s sponsored, and partly by her Trumpian penchant for lobbing polarizing Tweets at her political opponents. But when Gonzalez takes the helm of the most powerful labor organization in California, as is expected, will the weight of the job moderate her political priorities?

It’s common for right-of-center politicians to criticize unions, and it’s worth repeating some of these criticisms. Public sector unions have an agenda that is inherently in conflict with the public interest, since the interests of their membership – more jobs, better pay and benefits – may be served regardless of whether or not public services are operated efficiently and effectively. They divert public funds out of public employee paychecks to wage campaigns to elect the politicians with whom they supposedly then “negotiate” labor agreements. The agencies they represent don’t have to compete for customers or make a profit, they can just raise taxes. Civil service laws offer ample protection to public employees, and voluntary associations that don’t engage in collective bargaining would still provide plenty of political leverage for public employees. Public sector unions should probably be illegal.

As for private sector unions, on the other hand, these unions often represent the only recourse that workers have when employers, for whatever reason, abuse their employees. The history of the labor movement in America is an evolution, whereby over the decades the rights of workers have steadily improved. While there is disagreement as to how much, private sector unions still have a vital role to play in the American economy. And union spokespersons who are always quick to attack “greedy CEOs” should reflect on a great irony: union encroachment into the private sector, along with increasing government regulations usually advocated and sponsored by unions, enables corporate consolidation because only the most financially resilient private companies can withstand the expense of excessive regulations along with union pay scales and union work rules.

The reality, in any case, is that in California, public sector unions exercise nearly absolute control over state and local elected officials, by virtue of the nearly $1.0 billion per year they collect in membership dues. And by this time next year, one of California’s most outspoken and arguably extreme advocates for union power is probably going to be running the most powerful union organization in California. With great power comes great responsibility. So in the interests of ALL the workers in California, here are three ideas that Lorena Gonzalez and her union colleagues are invited to consider.

Try Not to Restrict the Supply of Skilled Labor

The consequences of labor in short supply is that employers are required to pay more in order to attract workers. That’s good for workers. But if the pipeline that feeds trained workers into the marketplace is too narrow, there is an economic penalty that harms everyone. The shortage of nurses is a good example. There isn’t merely a short-term crisis in staffing health care workers because of COVID. There’s a long-term crisis as well.

An analysis from 2019, published by the California Policy Center, found that nursing programs in California turned away 62 percent of qualified applicants for lack of openings. The analysis reported, using 2018 data compiled by the Kaiser Family Foundation, that by 2030, California will have to replace more than half of its nursing workforce, over 165,000 positions. Meanwhile, California is only graduating around 11,000 trained nurses per year.

There are solutions to the challenge of too few trained nurses. Some positions filled by nurses can be just as effectively filled by nursing assistants with vocational degrees. And the guidelines designed to limit the annual enrollment in approved schools of nursing, set by the California Board of Registered Nursing, can be revised to allow for more accredited private programs to be accepted.

If the union representing nurses wanted to, they could support policies that would safely eliminate the shortage of nurses in California. This may only be one step towards providing better health care to all Californians, but it’s a big one.

These shortages exist across many disciplines where unions could help. The State Building and Construction Trades Council has around 450,000 members in California. Most of their members are currently employed, which is a good thing. But what if California’s state legislature were to start making massive investments in, for example, badly needed water infrastructure? Is the SBCTC ready to support programs to double the number of their trained workers? Are they increasing available vocational training for high school and community college students, along with training for inmates and others who want to reenter the workforce?

It is possible that increasing the supply of workers puts downward pressure on wages. But releasing entire sectors of California’s economy from paralysis due to labor shortages helps all working families, not just those currently enjoying union pay and benefits.

Demand Public Projects That Offer Long-Term Economic Benefit

The classic example in California of a project of dubious value is the High Speed Rail project. Absolutely everything about this project is wrong. The project will never make an operating profit, even if amortizing the stupefying capital costs are not taken into account. It relies on imported rolling stock. It carves a scar across the land that disrupts thousands of private properties and sensitive ecosystems. It is mired in litigation and may never be completed. And supposedly we’re willing to squander countless billions on High Speed Rail because it creates thousands of good paying jobs.

If there is one example of where union power could have been used – and could still be used – to accomplish something truly great for all Californians, it would be to scrap the High Speed Rail project and instead direct that workforce to build something that will benefit Californians for generations. The checklist of worthy projects is urgent and obvious: Resurface and widen the freeways to prepare for green, sustainable, autonomous, high-speed next generation vehicles. Repair the aqueducts and seismically retrofit the dams, build plants to recycle 100 percent of urban wastewater, and add a few more offstream reservoirs to capture runoff, and bring California’s remarkable water system into the 21st century. These projects create just as many good jobs, but they also make California a better place.

Why won’t California’s unions demand these projects, instead of supporting High Speed Rail? Exploring the reasons for this exposes an ugly truth. California’s unions are unwilling to stand up to the environmentalist lobby, and the only major construction project that California’s powerful environmentalists apparently approve of is High Speed Rail. And even these environmentalists, if they’ve got any common sense at all, know that High Speed Rail isn’t going to do anything to help the environment. But unions want work, and environmentalists don’t want better roads and more water, so this hideous compromise is the best they can collectively come up with. Disclaimer: This is overstating the situation. But only slightly.

It isn’t labor costs that are the reason infrastructure costs so much in California. It’s the excessive cost of permitting and out-of-control litigation. California’s construction unions, if they want to advocate policies that will help all the workers in California, need to demand more spending on water and transportation infrastructure. At the same time, they need to demand regulatory reform so money can be spent on heavy construction instead paying bureaucrats and litigators.

Recognize that Lowering the Cost-of-Living is Equal to Raising Pay

Increasing wages in an inflationary environment is like a cat chasing its tail. You go around and around but never get to a better place. Unions are hardly the only culprit when it comes to the causes of inflation. But with the political power they wield in Sacramento, every time there is a new proposed law or regulation, they might ask themselves “this might be good for our members, but how will this affect the overall cost of living?” State spending on better roads and more water infrastructure, to stick to those fundamental examples, lowers the cost of living. Better roads and more water means it is easier to build new homes. More water means less expensive water, which means row crops such as lettuce and tomatoes, along with dairy products (cows eat alfalfa), can be produced in-state at lower prices than imported products.

California’s unions could use their power to deregulate the timber industry. Loggers have been driven out of California, relocating to states like Georgia, or nations like New Zealand, where the cost of operating is far less – not because labor is cheaper, but because regulations are more reasonable. Imagine if California’s timber industry were revived, producing 6.0 billion board feet a year again, like they did in the 1990s? Imagine if sawmills were back, and framing lumber could be imported from Redding instead of from British Columbia. Imagine all those union jobs for loggers and mill workers, but at the same time imagine the cost of lumber for homes costing a fraction of what it costs today in California.

There are cases, as noted, where literally hundreds of thousands of union jobs can be created at the same time as the overall cost-of-living is lowered, because the jobs that are created are producing a long-term economic return. Water and transportation infrastructure, along with a revitalized logging industry, are examples of this. The High Speed Rail project as it is currently envisioned in California, on the other hand, has the precise opposite effect. It is a long-term economic drain.

California has instead created a regulatory environment that in every way has priced people out of the ability to make a living. Home prices are out of reach, because there are not adequate enabling roads and supplies of water to facilitate home building, and because the price of lumber and other building materials is far higher than in other parts of the country. All of this can be fixed, and unions in California can take the lead in fixing it.

Lorena Gonzalez and the labor movement she is taking over must ask themselves: Do we want to continue on a path that suits our membership, but destroys opportunities for everyone else who is trying to run a small business or manage a household in California, or do we want to confront some tough questions and get out of our comfort zone?

This article first appeared on the website of the California Globe.