Has the Golden State Lost Its Shine?

I just read through this lengthy profile of modern California in Vanity Fair by one of my favorite writers, Michael Lewis. He does a great job of breaking down what ails the Golden State. Lewis, who wrote Moneyball: The Art of Winning an Unfair Game, The Blind Side and The Big Short, writes a great deal about finances and business in a way that is understandable to the average layman.

Understanding what has happened to California is important for Americans of every state and especially for 20-somethings like myself, who are just now getting their careers started. California was for some a dream, but it is becoming a nightmare.

Lewis describes how the state went from boom to bust to flat on its back in such a seemingly short amount of time. California became a state with a high amount of public services but didn’t have the means to pay for them. This prompted politicians in the state to fund those public services with a huge amount of borrowing and debt.

When things were going well in California it seemed like that system was sustainable, and the model for a 21st century economy. Unfortunately, in 2008 the wheels came off and the whole system was exposed to be nothing but fool’s gold.

Accounting gimmicks and over-inflated economic projections suddenly became public knowledge and California institutions were hit with the backlash. Cities that had been the epitome of prosperity were suddenly bankrupt. The statewide system of public education that had at one time been among the most affordable in the nation, suddenly doubled and tripled in cost.

I went to UC Davis, which is a Northern California public university, and from the years 2008-2010 my tuition doubled. It was still going up when I left.

On top of the explosion in the cost of education, was inability to do anything about the cost of other public services.

Lewis highlights how the idea of public service became corrupted in California and how the structuring of pensions for state workers was taken far beyond what was sustainable. State politicians and union bosses constructed this broken system, which imploded when the housing bubble burst. The result was that cities in California were so deep in debt that some, such as Vallejo, were actually forced to declare bankruptcy.

I thought this part of Lewis’s article in which he interviews Vallejo firefighter, Paige Meyer, stuck out to me the most,

Meyer thought firefighters, who tended to be idealistic and trusting, were easily duped. He further thought the rank and file had been deceived both by the city, which lied to them repeatedly in negotiations, and by their own leadership, which harnessed the firefighters’ outrage to make unreasonable demands in the union-negotiated contract with the city. What was lost at the bargaining table was the reason they did what they did for a living.

“The minute the economy started to collapse, people started looking at each other,” said Meyer.

This stuck out to me because my father was a California firefighter who knew for years about the broken system and tried to speak out against it. He knew that some day the house of cards would collapse, but doom and gloom was unlikely to break through the exuberance of a flourishing economy and lavish benefits.

When the system itself collapsed it brought a lot of pain to the public workers, their families, and people all across the state who had difficulty keeping themselves financially afloat even without the extra cost of a large force of highly paid public workers.

So California has become a mess. Declining public institutions, burdensome taxation that services an ever-increasing debt, a poor climate for business and a particularly bad environment for young people that are trying to start a career have pushed Californians to flee the state rather than deal with its decline.

This article in the OC Register highlights specifically what I am describing. It’s a deep sense that the system is broken from top to bottom that has left Californians and Americas in such a deep state of gloom. Not only is it a feeling, but also a deep understanding of the daunting issues that we face.

Many of my college-educated friends have either stayed in school or have taken jobs that only require a high school education. Many others, like myself, have gone to other states to find employment. It’s a sad indictment on what used to be the world’s 5th largest economy and the American Dream within the American Dream.

This is the greatest problem with California. It’s the growing belief that it is in a permanent state of decline, despite the fact that it is still the richest and most powerful state in the union.

The same thing can be said for the United States right now. We are still the richest and most powerful country on earth, with the best piece of real estate and the most potential for growth. But the belief that the country’s decline is inevitable, along with many deep, and seemingly intractable economic problems has left the country in a potent malaise.

This is why young people have to be serious about the nation’s problems and be critical in surveying its future. This is not the first or last time the country will have suffered a great economic crisis, but we must learn to face it and defeat it like previous generations have. We are a nation of fixers and doers, not of moochers and freeloaders.

American problems require American solutions. That is what my generation must come to grasp.

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