Tuesday, October 08, 2013

Sticker Shock: Californians suddenly discover why all the Republican shouting over #Obamacare

Meet Tom Waschura, Californian, father of two – oh, and right: Obama supporter. Just got a letter from his healthcare provider telling him that his private health insurance just went up by ten grand a year:

“I was laughing at Boehner — until the mail came today,” Waschura said, referring to House Speaker John Boehner, who is leading the Republican charge to defund Obamacare.

“I really don’t like the Republican tactics, but at least now I can understand why they are so pissed about this. When you take $10,000 out of my family’s pocket each year, that’s otherwise disposable income or retirement savings that will not be going into our local economy.”

Let me tell you a secret: we don’t need people like Mr. Waschura to love us. We just need people like him to vote their class interests, to quote the Marxists who unaccountably confidently expect this rotating disaster of a health care rationing system to fuel public outcry for socialized medicine.

They don’t have to vote Republican forever, you know. We’ll be happy if they vote Republican just enough to allow the party to kill this thing. With that in mind, let me just be the first to assure Mr. Waschura that his hope that the rates will be adjusted down in a few years is only half-justified: left unchecked, they will be adjusted. Only upwards.

The Democrats always expected and planned that Obamacare would be funded by raiding the incomes of as many people as possible; making the insurance companies the mechanism for jacking up premiums was the only way to get the insurance companies on-board.

In other words, Mr. Waschura: what happened to you was not a bug in the system. It is the system. And now you have to ask yourself: are you really prepared to pay ten grand a year and rising for the privilege of having a legislator theatrically agree with you on, say, first-trimester abortion? – Because I’m sure that the California Republican party will be able to find a candidate that won’t go out of his or her way to aggravate you on that topic.

We’ll finish this up with an observation from Cindy Vinson. Also Californian, also Obama supporter; she got hit with a $1,800/year increase on her individual policy.

“Of course, I want people to have health care,” Vinson said. “I just didn’t realize I would be the one who was going to pay for it personally.”

The most expensive thing in the world is something that’s free, Ms. Vinson. And if you sit down at the poker table and you don’t know after a half hour which person is going to be taken to the cleaners, it’s going to be you.



California’s New Feudalism Benefits a Few at the Expense of the Multitude

Once famous as a land of opportunity, the Golden State is now awash in inequality, growing poverty, and downward mobility that’s practically medieval, writes Joel Kotkin

California has been the source of much innovation, from agribusiness and oil to fashion and the digital world. Historically much richer than the rest of the country, it was also the birthplace, along with Levittown, of the mass-produced suburb, freeways, much of our modern entrepreneurial culture, and of course mass entertainment. For most of a century, for both better and worse, California has defined progress, not only for America but for the world.

As late as the 80s, California was democratic in a fundamental sense, a place for outsiders and, increasingly, immigrants—roughly 60 percent of the population was considered middle class. Now, instead of a land of opportunity, California has become increasingly feudal. According to recent census estimates,  the state suffers some of the highest levels of inequality in the country. By some estimates, the state’s level of inequality compares with that of such global models as  the Dominican Republic, Gambia, and the Republic of the Congo.

At the same time, the Golden State now suffers the highest level of poverty in the country—23.5 percent compared to 16 percent nationally—worse than long-term hard luck cases like Mississippi. It is also now home to roughly one-third of the nation’s welfare recipients, almost three times its proportion of the nation’s population.

Like medieval serfs, increasing numbers of Californians are downwardly mobile, and doing worse than their parents: native born Latinos actually have shorter lifespans than their parents, according to one recent report. Nor are things expected to get better any time soon. According to a recent Hoover Institution survey, most Californians expect their incomes to stagnate in the coming six months, a sense widely shared among the young, whites, Latinos, females, and the less educated.

Some of these trends can be found nationwide, but they have become pronounced and are metastasizing more quickly in the Golden State. As late as the 80s, the state was about as egalitarian as the rest of the country. Now, for the first time in decades, the middle class is a minority, according to the Public Policy Institute of California.

Great polarization of wealth -- as in other Latin American polities

California produces more new billionaires than any place this side of oligarchic Russia or crony capitalist China. By some estimates the Golden State is home to one out of every nine of the world’s billionaires. In 2011 the state was home to 90 billionaires, 20 more than second place New York and more than twice as many as booming Texas.

The state’s digital oligarchy, surely without intention, is increasingly driving the state’s lurch towards feudalism. Silicon Valley’s wealth reflects the fortunes of a handful of companies that dominate an information economy that itself is increasingly oligopolistic.  In contrast to the traditionally conservative or libertarian ethos of the entrepreneurial class, the oligarchy is increasingly allied with the nominally populist Democratic Party and its regulatory agenda. Along with the public sector, Hollywood, and their media claque, they present California as “the spiritual inspiration” for modern “progressives” across the country.

Through their embrace of and financial support for the state’s regulatory regime, the oligarchs have made job creation in non tech-businesses—manufacturing, energy, agriculture—increasingly difficult through “green energy” initiatives that are also sure to boost already high utility costs. One critic, state Democratic Senator Roderick Wright from heavily minority Inglewood, compares the state’s regulatory regime to the “vig” or high interest charged by the Mafia, calling it a major reason for disinvestment in many industries.

Yet even in Silicon Valley, the expansion of prosperity has been extraordinarily limited. Due to enormous losses suffered in the current tech bubble, tech job creation in Silicon Valley has barely reached its 2000 level. In contrast, previous tech booms, such as the one in the 90s, doubled the ranks of the tech community. Some, like UC Berkeley economist Enrico Moretti, advance the dubious claim that those jobs are more stable than those created in Texas. But even if we concede that point for the moment,  the Valley’s growth primarily benefits its denizens but not most Californians. Since the recession, California remains down something like 500,000 jobs, a 3.5 percent loss, while its Lone Star rival has boosted its employment by a remarkable 931,000, a gain of more than 9 percent.

Much of this has to do with the changing nature of California’s increasingly elite—driven economy. Back in the 80s and even the 90s, the state’s tech sector produced industrial jobs that sparked prosperity not only in places like Palo Alto, but also in the more hardscrabble areas in San Jose and even inland cities such as Sacramento. The once huge California aerospace industry, centered in Los Angeles, employed hundreds of thousands, not only engineers but skilled technicians, assemblers, and administrators.

This picture has changed over the past decade. California’s tech manufacturing sector has shrunk, and those employed in Silicon Valley are increasingly well-compensated programmers, engineers and marketers. There has been little growth in good-paying blue collar or even middle management jobs. Since 2001 state production of “middle skill” jobs—those that generally require two years of training after high-school—have grown roughly half as quickly as the national average and one-tenth as fast as similar jobs in arch-rival Texas.

“The job creation has changed,” says Leslie Parks, a long-time San Jose economic development official. “We used to be the whole food chain and create all sorts of middle class jobs. Now, increasingly, we don’t design the future—we just think about it. That makes some people rich, but not many.”

In the midst of the current Silicon Valley boom, incomes for local Hispanics and African-Americans, who together account for one third of the population, have actually declined—18 percent for blacks and 5 percent for Latinos between 2009 and 2011, prompting one local booster to admit that “Silicon Valley is two valleys. There is a valley of haves, and a valley of have-nots.”

The Geography of Inequality

Geography, caste, and land ownership increasingly distinguish California’s classes from one another. As Silicon Valley, San Francisco, and the wealthier suburbs in the Bay Area have enjoyed steady income growth during the current bubble, much of the state, notes economist Bill Watkins, endures Depression-like conditions, with stretches of poverty more reminiscent of a developing country than the epicenter of advanced capitalism.

Once you get outside the Bay Area, unemployment in many of the state’s largest counties—Sacramento, Los Angeles, Riverside, San Bernardino, Fresno, and Oakland—soars into the double digits. Indeed, among the 20 American cities with the highest unemployment rates, a remarkable 11 are in California, led by Merced’s mind-boggling 22 percent rate.

This amounts to what conservative commentator Victor Davis Hanson has labeled “liberal apartheid,” a sharp divide between a well-heeled, mostly white and Asian population located along the California coast, and a largely poor, heavily Latino working class in the interior. But the class divide is also evident within  the large metro areas, despite their huge concentrations of affluent individuals. Los Angeles, for example, has the third highest rate of inequality of the nation’s 51 largest metropolitan areas, and the Bay Area ranks seventh.

The current surge of California triumphalism, trumpeted mostly by the ruling Democrats and their eastern media allies, seems to ignore the reality faced by residents in many parts of the state. The current surge of wealth among the coastal elites, boosted by rises in property, stock, and other assets, has staved off a much feared state bankruptcy. Yet the the state’s more intractible problems cannot be addressed if growth remains restricted to a handful of favored areas and industries. This will become increasingly clear when, as is inevitable, the current tech and property boom fades, depriving the state of the taxes paid by high income individuals.

The gap between the oligarchic class and everyone else seems increasingly permanent. A critical component of assuring class mobility, California’s once widely admired public schools were recently ranked near the absolute bottom in the country. Think about this: despite the state’s huge tech sector, California eighth graders scored 47th out of the 51 states in science testing. No wonder Mark Zuckerberg and other oligarchs are so anxious to import “techno coolies” from abroad.

As in medieval times, land ownership, particularly along the coast, has become increasingly difficult for those not in the upper class. In 2012, four California markets—San Jose, San Francisco, San Diego, and Los Angeles—ranked as the most unaffordable relative to income in the nation. The impact of these prices falls particularly on the poor. According to the Center for Housing Policy and National Housing Conference, 39 percent of working households in the Los Angeles metropolitan area spend more than half their income on housing, as do 35 percent in the San Francisco metro area—both higher than 31 percent in the New York area and well above the national rate of 24 percent. This is likely to get much worse given that California median housing prices rose 31 percent in the year ending May 2013. In the Bay Area the increase was an amazing 43 percent.

Even skilled workers are affected by these prices. An analysis done for National Core, a major developer of low income housing, found that prices in such areas as Orange County are so high that even a biomedical engineer earning more than $100,000 a year could not afford to buy a home there. This, as well as the unbalanced economy, has weakened California’s hold on aspirational families, something that threatens the very dream that has attracted  millions to the state.

This is a far cry from the 50s and 60s, when California abounded in new owner-occupied single family homes. Historian Sam Bass Warner suggested that this constituted “the glory of Los Angeles and an expression of its design for living.” Yet today the L.A. home ownership rate, like that of New York, stands at about half the national average of 65 percent. This is particularly true among working class and minority households. Atlanta’s African-American home ownership rate is approximately 40 percent above that of San Jose or Los Angeles, and approximately 50 percent higher than San Francisco.

This feudalizing trend is likely to worsen due to draconian land regulations that will put the remaining stock of single family houses ever further out of reach, something that seems related to a reduction in child-bearing in the state. As the “Ozzie and Harriet” model erodes, many Californians end up as modern day land serfs, renting and paying someone else’s mortgage. If they seek to start a family, their tendency is to look elsewhere, ironically even in places such as Oklahoma and Texas, places that once sent eager migrants to the Golden State.

 In neo-feudalist California, the biggest losers tend to be the old private sector middle class. This includes largely small business owners, professionals, and skilled workers in traditional industries most targeted by regulatory shifts and higher taxes. Once catered to by both parties, the yeomanry have become increasingly irrelevant as California has evolved into a one-party state where the ruling Democrats have achieved a potentially permanent, sizable majority consisting largely of the clerisy and the serf class, and funded by the oligarchs. Unable to influence government and largely disdained by the clerisy, these middle income Californians are becoming a permanent outsider group, much like the old Third Estate in early medieval times, forced to pay ever higher taxes as well as soaring utility bills and required to follow regulations imposed by people who often have little use for their “middle class” suburban values.


There is a  new  lot of postings by Chris Brand just up -- on his usual vastly "incorrect" themes of race, genes, IQ etc


For more blog postings from me, see  TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH,  POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC,  AUSTRALIAN POLITICS, and Paralipomena (Occasionally updated) and Coral reef compendium. (Updated as news items come in).  GUN WATCH is now mainly put together by Dean Weingarten.

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