George Rebane

[This is the transcript of my bi-weekly KVMR-FM 89.5 commentary that was broadcast on 3 December 2010.]

The news just keeps pouring in about the wrong track that California has taken, and on which it is now doubling down.  The state continues to be led by the gang that can’t think straight, and the voters expanded its membership in the November elections.  We remain convinced that what has not worked before is still the ticket to return us to economic glory.  The newly elected crew will do all it can to continue raising taxes, increasing the regulatory burden on businesses and consumers, and make us a permanent recipient of the federal dole.

Examples of some local attitudes and decisions that reinforce this statewide malady were evident in the recent Board of Supervisors’ 3 to 2 vote to add new sprinklers to all newly constructed homes in the county.  Is this another self-inflicted ‘benefit’, or did we have a Hobson’s choice?

Another example is all the hoopla about green or ‘cleantech’ jobs being promoted for the county.  These jobs satisfy arbitrary government mandates and have yet to prove economically viable in developed country labor markets.  They all need government subsidies to work, and they have yet to demonstrate any net economic benefit.  European countries have tried them and failed.  Before Spain pulled the plug, its cleantech programs destroyed over two jobs for every new one created.

America is already on the cleantech track sporting its own massive failures such as attempting to make ethanol environmentally or economically viable.  The latest shoe in this unemployment derby dropped in Greenville, Michigan.  There Unisolar, a much celebrated cleantech solar energy plant, has only replaced 320 of the 4,000 jobs the town lost when Sweden’s Electrolux shut its doors.  The common problem is that subsidized cleantech companies are just not creating the jobs, but they are costing taxpayers a bundle.  Unisolar does not expect to expand its facilities in Michigan.

If we now back off and take a broader look at how California is stacking up in terms of competiveness with other states, we see another confirmation of the wrong path we are on.  Survey after survey has placed us nationally near the bottom of the pile.  The most recent to come out is tenth annual Suffolk University’s Beacon Hill Institute State Competitiveness Index.  This well designed index has a comprehensive list of components that makes it useful for public policy planning.

The BHI Index considers a state to be competitive “if it has in place the policies and conditions that ensure and sustain a high level of per capita income and its continued growth.”  The index’s formulation identifies and takes into account factors it calls ‘sub-indexes’ that are “needed to cultivate, for example, a solid base of scientists and engineers, or what a state needs to do to improve human capital or how it may need to build smart roads that cut down on travel-time-to-work, the sort of problem that impedes productivity.”

These sub-indexes cover a broad range of measures that go beyond the more stringent ones relating only to the hard aspects of starting and running a business.  They include government & fiscal policy, security, infrastructure, human resources, technology, business incubation, openness, and environmental policy.  When taken all together, the BHI Index ranked California 28th in the nation.  Way below average, but not that bad – right?  Wrong.

When looking at the detailed breakdown for California, we rank 44th in starting new businesses, and 48th in ‘government and fiscal policy’.  The latter includes such components as per capita taxes, budget deficits, insurance costs, and wages and benefits.  The bottom line is that California’s wealth creating environment is abysmally poor.

In the face of this bad news, the state boasts a loud faction of big government backers who point to the dollar volume of California’s business, and the amount of taxes we send to Washington.  But those numbers are just due to our sheer size and don’t balance our books.  Not enough of us are asking ‘what does this smokescreen really mean if we can no longer pay our bills while we drive away the real jobs that can bring us back to solvency?’

My name is Rebane and I also expand on these and other themes in my Union columns, on NCTV, and on georgerebane.com where this transcript appears.  These opinions are not necessarily shared by KVMR.  Thank you for listening.