California remains deep blue, but the good news from this week’s elections is that it has not yet achieved complete ballot-box unanimity. California voters appear to have turned two or three house seats red, and statewide voters rejected some of the most extreme progressive proposals governing contract workers, affirmative action, expansion of rent control, and raising property taxes on commercial properties.
Overall, to be sure, California voters reaffirmed one-party rule, giving Joe Biden a two-to-one victory and maintaining the Democratic veto-proof majority in both legislative houses. The dominant urban centers, San Francisco and Los Angeles, went ever further into left field, approving radical measures such as increasing wealth taxes and using public funds to fight racism. They also overwhelmingly backed measures to raise commercial property taxes, expand rent control, and reimpose affirmative action, though these efforts failed miserably elsewhere in the state. San Francisco, where Biden won 85 percent of the vote, also voted for a new tax on companies where CEOs make too much compared with employees, and a measure to allow non-citizens to serve on public boards.
The good news for Californians is that the rest of the state is not quite ready for socialist rule by the public unions and their allies. “It’s not so much light pouring through the window, as a small crack opening,” suggests Joel Fox, editor of the widely read California political website Fox and Hounds Daily. The opportunity for centrists and conservatives lies in what a Marxist might describe as “heightening the contradictions” within the blue alliance. Consider the battle over Proposition 22, funded by Uber and Lyft, to overturn the state’s onerous AB5 law, which sought to force employers to treat contract drivers as full-time employees. This mandate, as the tech firms understood, would destroy their business model and their fortunes. Tech elites, who also worked tirelessly to defeat Donald Trump, spent an estimated $200 million to push the measure against labor opposition, and they seem to have won the day.
The conflict between the tech elites and labor, though, is not restricted to ride-sharing firms. Taxes remain a major battlefield. With the apparent defeat of Proposition 15, legislators seem likely to consider new statewide measures to raise income-tax rates to as high as 16 percent. This cannot be good news to the tech industry; not only its fabulously rich owners but also many of their well-paid top employees would be affected.
The state’s business regulations threaten even the most heralded, emblematic California companies. Disney executive chairman Robert Iger has fought with the state’s progressives, who generally favor extreme lockdowns, to keep his businesses open. Disneyland remains closed, resulting in 28,000 layoffs, even as the company’s parks in Florida and abroad are operating. The state’s inflexibility led Iger to resign from Governor Newsom’s coronavirus recovery taskforce.
Tesla’s Elon Musk has also dissented, having battled with Alameda County officials about the opening of his plant. More importantly, he seems to be shifting his investment focus, and perhaps even his headquarters, from California. He has already announced big expansion plans for both Tesla and Space X in Texas.
The contradictions between tech and entertainment oligarchs and the hard Left are likely to intensify in the years ahead. The state has neglected the basics of business competitiveness, particularly in creating the mid-skilled jobs crucial to a healthy economy. University of California at Irvine’s Ken Murphy estimates that, outside the Bay Area, 85 percent of all new jobs have paid below the area median income of $66,000; 40 percent pay under $40,000 a year. Once a beacon of opportunity, the Golden State suffers the nation’s highest cost-adjusted poverty rate.
Read the rest of this piece in City Journal.
Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.