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How Does California Use Less Energy Per Capita?


"In the late 1970s, the state of California enacted tougher energy-efficiency policies," Obama said, noting that the state and its residents use less energy today per capita than the national average. "Think about that," he said, "California producing jobs, their economy keeping pace with the rest of the country and yet they've been able to maintain their energy usage in a much lower level than the rest of the country."

Sounds like that idiot Kevin Drum. Now, the national average is also pushed up by more poor people in southern states getting things like air conditioning, and other salutary developments. But it would appear that isn't how California did it...

"Obama might want to rethink his choice of a model state because it is easy to understand how California has curbed its energy use. Between 2000 and 2007, before the current recession, the state shed nearly 21 percent of its manufacturing jobs, driving down its industrial electrical consumption by 21 percent. California's industrial users pay electric rates twice as high as their Midwestern counterparts - which helps explain why so much heavy industry has fled the state. In addition to alienating its industry, California has also curbed energy use through exorbitant residential electric rates (50 percent higher than the national average) and massive net out-migration. Between 2005 and 2007, 2.14 million Californians moved to other states, while only 1.44 million people from elsewhere moved to the Golden State, according to the U.S. Census Bureau. Don't be surprised when the 2010 Census finds even more people leaving to escape California's 11.5 percent unemployment. And, as jobs and residents fled California, its tax revenues have declined, while its politicians went on a spending binge, creating a severe budget crisis."

I should add that from January 2001 to June 2009, California lost 425,800 private sector jobs, while adding 163,700 government jobs, Oh, wait. That is the Obama economic model...


Over the same period, the United States as a whole appears to have lost almost 2.5 million private sector jobs, less than CA, but that does help put the numbers in perspective. I guess that is because we are in a recession. Moreover, I would go so far as to say presenting the part without the whole is polemics in place of statistics.

Far be it from me to defend the California Legislature's indulging the electorate's fantasy of a low-tax, high-service state, but I'd also point out that the departure of heavy industry is not an unalloyed evil. If there are other states that can accommodate such industry with less pollution (e.g., because they do not have the air inversion patterns of the LA Basin), that's probably a net plus.

For some additional perspective, CA has 12% of the nation's population, but sustained 20% of its job losses over the past decade. I guess the recession is worse there. Wonder why that is.

And of course Andrew's response would be "let them eat cake." A low tax, high service approach can in fact work Andrew. IF, and only if, you have a high tax base of productive industry.

And of course, those manufacturing jobs were the highest-earning tier, on average. Not to mention a key source of upward mobility for its black population.

There are liberal states out like Wisconsin that grasp the tax base point. It's a pity Andrew does not. His lack of comprehension is a good example of of the ideology that has driven California's budget and economy to the sorry shape it's in - and now leads the way nationally, which is why he's defending it.

Here's a manufacturer who moved from California to Wisconsin, not exactly a hotbed of conservatism. Listen carefully as he explains why, and what the local impact is. Not that Andrew gives a damn - they aren't his government New Class.

Throw in things like green tech manufacturers consistently preferring other states, shipping companies (!) moving their HQ to Arizona, etc., and it's a pretty clear verdict.

California has been engaged in a systematic, deliberate effort to strangle its tax base, by making that base a clear last place on its priorities list. While accelerating spending. Lunacy is the only fit word to describe that combination. Raising taxes to go alongside impenetrable regulations enforced by whimsical commissars just accelerates the decline.

The commissars part isn't an exaggeration, either. Why does the Creators Syndicate firm want to leave L.A.?

"This city is fast becoming a job-killing machine. It's no accident the unemployment rate is a frightening 11.4% and climbing.

I never could have imagined that, after living here for more than three decades, I would be filing a lawsuit against my beloved Los Angeles and making plans for my company, Creators Syndicate, to move elsewhere. But we have no choice. The city's bureaucrats rival Stalin's apparatchiks in issuing decrees, rescinding them, and then punishing citizens for having followed them in the first place...."

Andrew's ideal, right there. A lot less than ideal if you actually want to keep jobs, especially high wage jobs, in your jurisdiction.

If the last employer leaving turns out the lights, I guess our energy use will be perfect.

Silicon Valley's got LA beat: Our unemployment rate is up to 11.8%. And there are high tech veterans bailing out on the industry - not the HTML kiddies who had to pack their bags after the dot-com implosion, but long term hard core people. We've been eating the seed corn too long.

AFA energy use: Every time I get one of those PG&E flyers exhorting me to conserve (we've long ago done everything they suggest) - I can read the subtext: "You'd better, because we have no intent of ever building more capacity in California."

A low tax, high service approach can in fact work Andrew. IF, and only if, you have a high tax base of productive industry.
And where exactly do we have this Utopian combination? Bahrain? What we learn empirically is you can have, briefly, a low-tax high-service economy during a bubble that generates unusually large income tax and capital gains taxes to fund services. Low tax states in the US are low service, too. There's still manufacturing in the low-tax South and it's still generally the most impoverished, uneducated part of the country. Meanwhile, we're still using the freeways and colleges of high-tax pre-Prop-13 California, even as they crumble around the edges. Supply side advocates are still out there claiming that (a) tax cuts pay for themselves (Really? All the way to a rate of 0.0001%?) and (b) growth from tax cuts will repeal the Keynesian cycle, allowing bubbles and their brief revenue burst to continue indefinitely. Both of these propositions have been refuted historically time and again, even (tangentially and ironically) by those defending George Bush against responsibility for the tax revenue drop from the end of the Clinton Administration (and tech bubble) to his own.
And of course, those manufacturing jobs were the highest-earning tier, on average. Not to mention a key source of upward mobility for its black population.
Almost half of the US workforce of 1900 was employed in agriculture. The figure now is 2 percent. I can't say where the figure for semi-skilled labor in manufacturing will end up, but the need has dropped all over the United States, not just high-tax regions. Labor-intensive manufacturing is term-limited, even in places like China where wages are still low. The need for those jobs is going, as gone as the need for millions of farmhands (which also included a great many blacks, albeit with limited chance for advancement). We'll still need labor, of course, but much of it will need skills in fields like robotics that we are only on the verge of understanding.

This thread is mistaking spending for service. One does not equate to another, and in fact as spending increasing results are subject to diminishing returns. California shot past that point billions of dollars ago. You cut the budget by a third and lay off a third of government workers and see if anybody not getting the pink slip notices- or you could if the big government folks weren't savvy enough to make firefighters and cops their first line of firings whenever there is a budget standoff.

People want effective government, and we are so far away from efficiency in our spending it is pointless to have these theoretical debates about service vs tax rates. Its kind of unnerving, but somewhere along the line this country came to the silent agreement that of course government is going to be inept and inefficient, so much so that we shouldn't even bother trying to get it in shape. Far simpler just to splash buckets full of money around and pretend that equates progress (or caring, take your pick).

I'm going to agree with Andrew here, on a couple of points. One:

"We'll still need labor, of course, but much of it will need skills in fields like robotics that we are only on the verge of understanding."

That's a problem, given the national weakness of STEM (Science, Technology, Engineering, Math) education and prep. A nation whose university science and engineering programs are filled by foreign students is in trouble. And even agriculture (which looks poised for a cyclical uptick) is going to need this.

Two is that Andrew's likely definition of "high service," i.e. high government control, does mean high taxes. My definition is closer to a government that does basic functions very well, and has good local infrastructure. so, we might want to sort that out as we talk about "high services".

My point is that a productive industrial and business base = much more tax revenue, even at a lower rate. More revenue allows for more and better services.

This seems like basic grade school math to me.

And if you drive those people out, you WILL eventually have a lower service government, whether you want one or not. Wisconsin, a liberal state, grasps this. Which is why it is welcoming manufacturers from California, who does not.

Note that those manufacturers remain in business, in the USA, trends or no. Just not in California. Note, also, that Creators' Syndicate isn't a manufacturer - but is a lucrative business.

Andrew would like to duck those inconvenient facts, but I've no intention of letting him.

Especially since there are some longer-term trends out there which suggest that manufacturing's medium term future in the USA could be rather brighter than he thinks. Even as California deals itself out, and lets the feds cripple Silicon Valley's wealth-creating VCs and IPO cycles. Which are critical to progress and industry in areas like oh, robotics for instance.

Not a recipe for any kind of worthwhile future.

"Supply side advocates are still out there claiming that (a) tax cuts pay for themselves (Really? All the way to a rate of 0.0001%?) and (b) growth from tax cuts will repeal the Keynesian cycle, allowing bubbles and their brief revenue burst to continue indefinitely"

Really, and this has been proven multiple times in practice. The simplest reason they don't go to .0001% is that the Laffer Curve is, well, a curve. Before the downslope, there is an upslope. It's hard to refute your opponents' argument if you do not understand it in the first place.

There are supply side advocates who seem to peddle the idea that growth from tax cuts can repeal the business cycle. And they are now looking pretty foolish, especially when you pair them up with guys like Schiff, who remained focused on the productive economy, and kept insisting that the kind of "growth" promoted made a big difference. While highlighting the importance of regulatory effects, which are a key variable all their own.

What is true is that more money that remains in the productive economy will help to keep economies running at a higher level than otherwise.

That doesn't repeal the business cycle. Nor does it remove the deleterious effects of bad government policy, credit cycles and human stupidity, poor or over regulation (both are possible), poor investment of public funds so that they don't help create a more productive society, etc.

As an hypothetical example, if enough of these other things are stupid, it's possible that the monies put into the economy via a tax cut could largely feed a bursting bubble, effectively vaporizing much of that wealth in short order. So it isn't always the smart solution.

But it must be counterbalanced with the realization that monies kept in the government can also go to a slew of unproductive uses, and effectively vaporize much of that wealth in short order. While adding a distribution penalty.

Realizing that government is not a neutral force, is subject to all of the human foibles of greed found in business, and is subject to failures just as business are (nice job with Fannie Mae...), if not more so because the governing levers are weaker. Those core drivers explain the stories linked above in the comments. And also help explain that lower energy per capita.

It's a much smaller and less extreme example than, say, North Korea's low energy use per capita. But it is a (much milder) version of the same phenomenon, and drivers.

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