Kamala’s Failed State of California

The Harris campaign has based its entire strategy on one primary message: Kamala Harris and Tim Walsh are nice, normal people who care about Americans, and Donald Trump and JD Vance are mean, weird people who don’t care about Americans. It might work. They have more money, and the backing of nearly every powerful institution in the country. Why talk about your policy agenda? Keep it simple. Harris good. Trump bad.

But there’s a contradiction at work here. Without actual policies, you don’t get endorsements from genocidal ghouls like Dick Cheney, rapine vulture capitalists like Mitt Romney, shamelessly biased coverage by corporate owned ABC, CBS, and NBC, and blatantly pro-Harris propaganda from regime funded PBS. Without actual policies, you don’t attract over a billion dollars in donations, sufficient to hire the best opinion managers in the world, and saturate the mediasphere with the most sophisticated messaging and targeting ever deployed in a presidential campaign.

Harris does have a policy agenda. It is comprehensive, and if her administration takes power, it is certain to be implemented. It has very little to do with helping the American people. It is designed to further enrich and empower a coalition of corporations and banks that for decades controlled both the Republicans and Democrats. The rise of the internet has threatened their monopoly on communications, and Donald Trump’s MAGA movement threatens their monopoly on power. Their shills among the Republicans now back Harris.

What Kamala Harris represents is a political machine. She has no agency of her own. Her political ascendancy took place in California, where the policy agenda of this machine has marched furthest towards its ultimate fulfillment. California still has a powerful economic base, even though its government budgets are once again in deficit territory. But California’s success, such as it is, comes from its fantastic weather and abundant natural resources, as well as the decisive vision and accomplishments of its leaders in the 1950s and 1960s. That earlier generation of politicians, including many Democrats, built the freeways, water projects, and technical universities that even now, neglected and badly needing upgrades, still constitute the backbone of the state’s economy. But California’s days of politicians motivated by the public interest are long past. Today, for low income households that aspire to upward mobility, and for middle income households that want to maintain their financial independence and preserve their standard of living, California is a failed state.

Similarly, for independent contractors trying to make a living, or small businesses trying to hang on to their employees and customers, California is a failed, hostile state. It is instructive to focus on California’s business climate, because if all businesses, large and small, are able to thrive, most everything else falls into place. To have successful businesses, you have to have reasonable regulations, you have to have law and order, and you have to have a well educated workforce. And when businesses are allowed to compete, the cost of living comes down. California has none of these things. And the more that Democrats expand state and local government and agencies, the worse conditions get.

The ways that Kamala Harris’s Democrats harass and kill businesses in the California are endless and sickening. Here are some of them.

According to a list of “Cali-Formers,” companies compiled by the Sacramento-based Center for Jobs and the Economy, since 2020 over 500 companies have either left the state completely, or opted to expand their operations in a different state while shrinking their California operations. The list includes scores of household name companies: Aerojet, Aligent, AirBNB, Alphabet (Google), Amazon, Amgen, and Apple, and that’s just the As. It spans the gamut from high-tech and aerospace, to energy (Chevron) and civil engineering (Bechtel), to arts and entertainment (Academy of Country Music, Disney). When including companies that have simply downsized their presence in California, opting to expand in other states instead, it’s a challenge merely to find a large company that wouldn’t be on this list.

Even companies that have to remain in California because they are tied to the land – agriculture, logging, housing – are getting out. Soper-Wheeler, once a major logging company in Northern California, in 2001 began to move their operations to New Zealand, a process they completed by 2020. Publicly traded housing developers, accountable to shareholders, lack a strong incentive to invest in California, because the returns are so much greater in states with less regulation and less litigation. And as California’s beleaguered farmers struggle to stay competitive, markets in the state are increasingly stocked with avocados from Mexico and beef from Brazil. In 2020 California imported $14.3 billion worth of food products.

According to the California Department of Finance, the state’s GDP in 2022 was $3.6 trillion, the highest in the nation. California’s per capita GDP was an impressive $92,308, only eclipsed by the states of New York, Massachusetts, and Washington. But these statistics are misleading. California’s per capita GDP is high, but so is California’s cost-of-living.

As of March 2024, California has the nation’s highest unemployment, lowest job growth, lowest income growth and the highest poverty rate. Its state budget faces ballooning deficits, and it was just ranked by Chief Executive magazine as the worst state in America to do business for the 10th year in a row.

At the same time, however, state government spending in California has dramatically increased. In just the last ten years, and adjusting for inflation, the California State General Fund, the budget that allocates taxpayer dollars to countless state government programs and departments, has nearly doubled. In 2013 the state’s General Fund expenditures were $96.3 billion. Expressed in inflation adjusted 2023 dollars, that was $125.9 billion. Compare that to the state’s General Fund in 2023 of $226.0 billion. Even after adjusting for inflation, that is a 79 percent increase in just ten years.

The per capita increase in California’s General Fund spending is also significant because California’s population hasn’t increased very much since 2013. Ten years earlier it was 38.3 million, and in 2023 it was only up to 38.9 million, an increase of only 1.9 percent. Over the past three years, California’s population has actually dropped by nearly 600,000 residents since reaching a high of 39.5 million in 2020.

Additional cause for concern is growing income inequality. While California’s per capita real income grew over the past 20 years from $65,000 in 2000 (expressed in 2023 dollars) to nearly $86,000 in 2020, most of that rise has gone to the top income groups. For example, since 2000, the top 10 percent of households by income in California have seen their income rise on average by 34 percent, whereas the bottom 10 percent have experienced an increase of only 6 percent. Overall, California has one of the highest rates of income inequality in the US.

According to Chief Executive magazine, which every year issues an authoritative ranking of the best and worst states for business, California occupied the bottom spot, #50, in their most recent report for 2023. To come up with this list, each year the magazine interviews over 600 CEOs running companies that operate in multiple states.

The Small Business Regulation Index, published by the Pacific Research Institute in 2015, ranks California as having the worst business climate for small firms. These findings were corroborated by the Small Business and Entrepreneurship Council in a 2019 study that put California in 49th place, and a 2021 study on the best and worst states for entrepreneurs conducted by the Cato Institute that placed California 48th among the 50 states.

California’s dismal treatment of small businesses disproportionately harms Latinos, whose businesses tend to be smaller and less capitalized. California’s recently mandated $20 minimum hourly wage for fast-food workers, for example, may help some individual Latinos, but it could both reduce total employment and threaten the livelihoods of smaller franchisees, many of whom are minorities. Since California is destined to be predominantly Latino, (Latinos now constitute 56 percent of students enrolled in K-12 schools), the state’s evident hostility towards small businesses is an attack on the next generation and the future.

California has the highest income tax burden in America. Beyond that, every year the Tax Foundation (a Washington DC based think tank that since 1937 has declared itself to be “the nation’s leading independent tax policy research organization”) issues a report called the “State Business Tax Climate Index.” And every year, California is rated at or near the bottom. The most recent report, issued in October 2023, ranked California 49th in individual income tax, 45th in corporate income tax, and 47th in sales tax. While California was rated average in its property tax rate – only 22nd – it was noted that the excessive real estate values in California negated that advantage, since the rate had to apply to a much greater assessed value compared to similar properties in other states.

These direct taxes are only part of what California imposes on its businesses. Then there are the Stealth Taxes – or fees. From a schedule published by the California Department of Tax and Fee Administration, no fewer than 28 categories of fees are listed. Notable examples include a 1.0 percent assessment on all purchases of lumber products, a 2.9 percent “timber yield tax,” an “occupational lead poisoning prevention fee,” a “marine invasive species fee,” an “energy resources surcharge,” a “natural gas surcharge,” an “underground storage tank maintenance fee,” a “water rights fee,” and so on.

One of the most costly sets of taxes affecting California businesses are the $0.57 per gallon gasoline tax, the $0.44 per gallon diesel fuel tax, and the $0.18 per gallon tax on aviation fuel. These fuel taxes, the highest in the nation, add to the cost of virtually all transportation of finished goods and value-added materials used and sold by all businesses. Also adding to the cost of doing business are the state and local taxes on utilities and telecommunications, which are automatically added to monthly bills. And these fees and taxes don’t end with the state and local governments.

Also imposing costly Stealth Taxes and fees – and fines – are the many state agencies, from the Dept. of Fish and Wildlife and the California State Water Board, to the California Air Resources Board, or CARB. The many ways that CARB extracts payments from California’s businesses is a quintessential example of just how complex and pervasive the state’s reach is into businesses of all sizes.

CARB is empowered to adopt a schedule of fees on every “mobile and stationary source” of greenhouse gas operating in the state, from small watercraft to diesel trucks and railroad locomotives. The process of applying for a license from CARB to operate a mobile or stationary source is complicated, the process of gaining approval is complicated, and even the process of making the obligatory payments is complicated. And if the owner of the equipment in question does not successfully navigate this gauntlet, enforcement is swift, the fines are steep, and the appeals process is complicated.

And then there’s Cap and Trade. Established by the California State Legislature as a means to lower CO2 emissions eventually to “net zero,” the first auction of “allowances” to emit CO2 was held in 2014, and they have been held quarterly ever since. These so-called Cap and Trade auctions now raise between $3.5 to $4.5 billion per year. A report issued last year by the California Office of Legislative Analyst stated “CARB estimates that the cap-and-trade program adds about 27 cents to each gallon of retail gasoline sold in California.” Costs passed on to consumers and businesses come from all of the purchasers of these emissions allowances, which include natural gas electricity generating plants, natural gas suppliers for heating and cooking, oil refineries, cement manufacturers, and oil and gas producers; literally every essential resource needed by every other business in California.

The sheer complexity of California’s bureaucracy is mind-blowing. If you have a business, your activities will be subject to oversight by dozens of state agencies. Do you want to work as a barber or hair stylist? Better check with the Board of Barbering and Cosmetology. That’s an obvious one. But if you have employees, don’t be surprised if you hear from the Occupational Safety and Health Division, the Labor Standards Division, the Division of Workers’ Compensation, and the Employment Development Department. If you have premises, the Office of the State Fire Marshal. If you use chemical hair products, the Department of Toxic Substances Control. If you have trash, the Department of Resources Recycling and Recovery. If you sell hair products, you’ll have to collect sales tax and file reports with the State Board of Equalization. And, of course, you have to register your corporation with the California Secretary of State and pay taxes to the State’s Franchise Tax Board. And then there are the county and city governments.

But that’s easy compared to anyone running a business that actually disrupts the earth or produces tangible products. Are you laying a foundation? Building homes, or building a factory, cutting timber, running cattle, farming, mining, or quarrying? In addition to most of the above listed agencies, here are some of the additional agencies that may demand your attention: The California Biodiversity Council, the Department of Fish and Game, the Board of Forestry, the Office of Tribal Advisor, the Department of Food and Agriculture, the California Natural Resources Agency, the California Air Resources Board, the Agricultural Labor Relations Board, the Contractors State License Board, Cal Fire, CalRecycle, the Industrial Welfare Commission, the Department of Insurance, the State Lands Commission, the State Mining and Geology Board, the Department of Pesticide Regulation, the Department of Water Resources, the Water Commission, and the Water Resources Control Board, and any number of state run conservancies. Is your operation located near the ocean? Expect to deal with the Coastal Commission.

It’s bad enough simply trying to run a business in the face of this vast regulatory onslaught. Compounding the problem are two further layers of deadweight: the fact that thresholds for violations are set at unreasonable (if not impossibly low) levels, with punitive, excessive fines for violators. And then there is the mentality of agency staff, best described as indifference if not overt hostility.

Such is the state of business in California. No wonder millions of people are leaving.

All of this barely scratches the surface of California’s dysfunction, brought about by a political machine that has exercised absolute power in California for a generation. The only winners in this scenario are the people behind the machine. That would be the people running the biggest corporations and the biggest banks, and, of course, California’s billionaires. Their financial strength gives them the economies of scale necessary to comply with all the regulations and the sophistication to exploit loopholes in the tax code. Meanwhile, they are able to consolidate and expand their wealth as they acquire the distressed assets of their smaller competitors who were driven into bankruptcy or short sales.

What has happened in California is a travesty of capitalism and it is a travesty of democracy. Meaningful political and economic power has passed upwards into the hands of a small elite. Citizens reliably support Democrats by 60 percent to 40 percent margins, and thanks to gerrymandering by the machine, Republicans only hold 20 percent of the seats in the state senate, the state assembly, and California’s seats in the U.S. Congress. There hasn’t been a republican governor since the 1990s, unless you include Schwarzenegger who has removed all doubt as to his RINO status by endorsing Harris.

This is what a Harris presidency has in store for America. And this political agenda will be justified using the same manipulative tools that were perfected in California: the need to do whatever it takes to fight racism and reduce emissions of greenhouse gas. Both of these alleged crises are not, in fact, crises. But expert exploitation of the emotions they conjure, combined with billions of dollars to buy all the experts, can reduce an electorate to sheep enthusiastically headed for slaughter, berating the unwilling as conspiracy theorists.

Perhaps the best way to distill who we are really dealing with is to examine Kamala Harris’s facial expressions during the debate. Turn off the audio, and just watch the video. The smirks and scorn that animate her features didn’t surface in the moment. They are the practiced product of a lifetime hiding behind a machine, demonizing and ridiculing opponents instead of engaging in honest debate. This is not a “nice” person. Like so many Democrats as well as the ecosystem of vendors that promote Democrats, she is attracted to power and money, and nurtured by a machine that values obedience over integrity.

Vote accordingly.

An edited version of this article first appeared in City Journal.

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