Can California's Economic Self-Immolation Be Exported?
What is it about California that make its elected leaders work so hard to earn their place in the dunce's corner alongside Greece? With all the state has going for it - abundant natural resources, an educated populace, and an entrepreneurial tradition second to none - California politicians and the people who put them in power seem determined to destroy the state's economy in order to achieve some higher purpose.
Nowhere is this clearer than in the bizarre economics of California's tax and energy policies.
Were California to shut down its entire manufacturing sector, turn off its power plants, idle its trucks and automobiles, and order its citizens to stop exhaling, the impact on the global atmospheric concentration of carbon dioxide would be immaterial. So California's energy policies cannot be directed at singlehandedly saving the planet from cataclysmic global warming. Rather, its enlightened leaders must be hoping to persuade the rest of the world to follow their example.
How's that working out?
Put aside, for a moment, the scientific debate over climate models and instead look at the facts on the ground. Or under it, as the case may be.
Thanks to new technology, fossil fuels are enjoying a boom not seen since the vast oil fields of the Middle East came online half a century ago. Peak oil alarmists must be stocking up on hemlock as estimates of global oil and gas reserves soar to all-time highs. North Dakota, of all places, looks like it could become the next Saudi Arabia if technology continues to increase the amount of oil that can be extracted from the Bakken Shale. Estimates top out at 500 billion barrels.
Meanwhile, much larger California could contain more oil than North Dakota trapped in its Monterey Shale deposits, not to mention an unknown quantity lying offshore. Yet the Golden State has virtually shut down fossil fuel exploration. Once a major producer, California has seen oil production decline by more than 30% over the past 20 years. Not satisfied with choking off its aging oil wells, politicians continue trying to shut down the state's last remaining refineries.
Under the rules of democracy, the citizens of California have the power to enforce such self-abnegation within their own borders. But tell me, how are politicians in Sacramento going to turn off the pumps in North Dakota?
Thanks to its oil boom, North Dakota state coffers are overflowing with money. Its legislators set aside almost $1 billion in excess reserves this year not needed to support its $3.5 billion balanced budget. They have also cut state income taxes. Unemployment is 3.3%, and workers are flooding into the region in search of high paying jobs.
In a perfect example of life imitating art, in this case the fictional economic renaissance depicted in Ayn Rand's novel Atlas Shrugged following Ellis Wyatt's petroleum shale breakthrough, thousands of miles of roads, bridges, and pipelines are being built across North Dakota. This self-sustaining, economically net-positive construction boom has been stimulated by nary an Obamabuck, without a single make-work job in sight.
And California? Hardly a week goes by without news of another city tottering on the brink of bankruptcy. Unemployment tops 11%. This year's state budget will be $6 billion in the red, even after painful cuts in education, health care, and transportation. And despite the fact that 1 percent of the state's income earners already shoulder half the state's income tax bill - leading one third of California's high income residents to flee the state over the past several years - Governor Jerry Brown is plumping for a ballot initiative to jack up taxes on "the rich" even higher.
And the vaunted entrepreneurs of Silicon Valley? Like Pavlov's dogs, they are salivating over the free money being served up by Obama's energy department, using it to leverage up their bets on windmills, solar plants, and algae farms dedicated to taming demon carbon no matter how much real wealth has to be destroyed in the process.
Cultural leaders making headlines cursing the 1% have made it a virtue to force California taxpayers to help pay for electric cars purchased by millionaires. An unholy alliance of environmentalists, crony capitalists and their political enablers are still trying to build a high speed rail line to nowhere, even though cost estimates have ballooned to $100 billion. It's as if the whole state has been driven insane after watching Al Gore's movie.
It is a mathematical impossibility that California's "renewable" technologies will ever make economic sense in a world awash in oil and gas. This makes the results of all this malinvestment entirely predictable. As North Dakotans become rich pumping oil, Californians are going broke erecting a vast subsidy-dependent green infrastructure primed to collapse the moment the funny money runs dry.
The only hope of delaying the day of reckoning for California's unsustainable green fantasies is an election that delivers the entire national economy into the hands of central planners pledged to emulate California's game plan. Only the federal government has the power to choke off the entire country's flow of gas and oil. If anti-carbon zealots succeed, this will postpone California's date with disaster at the cost of making the eventual collapse nationwide.
We'll see which course America chooses in November.