Fully Oligarchic Luxury Socialism

What happens in California matters well beyond its borders. The Golden State’s cultural and technological influence on America, and the world, now could provide the nation’s next political template.

What California is creating can be best described as oligarchic socialism, a form of collectivism that combines hierarchy with “equity,” regulation with oligopoly, and progressive intentions with feudal results. Like so much else, the pandemic has accelerated this trend, vastly enriching the tech elite, while turning much of the working and middle classes dependent on what Marx called “the proletarian alms bag.”

In contemporary California, traditional notions of economic development and upward mobility have been replaced by subsidized housing, a state bailout for renters in default emergency aid to small businesses and enhanced unemployment payments. Once all the state’s new commitments are met California’s much ballyhooed $75 billion surplus, Chapman economist Jim Doti estimates, shrinks to a still considerable $25 billion.

With such a rich surplus, other states would consider either spending the extra cash, as Texas and other states do, on economic development, either through tax cuts, regulatory holidays, or incentives. But work and upward mobility for the middle and working classes are no longer a prime concern in the Golden State. “The culture for much of California, driven by state politics, is one of benefits (and now guaranteed income), not a jobs strategy or expectation,” suggests Michael Bernick, a former director of the state’s Employment Development Department.

Bernick notes that this approach—as opposed to boosting employment—is also popular both with the tech oligarchs and bureaucrats who together dominate the state. The synergy between Silicon Valley wealth and the expansive welfare state is clear: with seemingly unlimited capital gains and income receipts, the state can fund ever more dysfunctional schools at a high level, pay enormous pensions, and generally expand the role of a state government.

This faith in government seems odd given its record of incompetence, from the high speed rail fiasco to forcing a bailout of the marijuana industry. The state has also mishandled unemployment claims, according to the Los Angeles Times, with more than a million Californians awaiting unemployment checks that were delayed or frozen. Worse yet, the state last year gave payments of $11 billion to various scammers, including people in jail and criminals from Nigeria and Russia.

Politics, not competence, notes Lucy Dunn, head of the Orange County Business Council, plays the leading role here, particularly with Governor Newsom’s recall. “His budget seems more focused on the welfare state with an eye toward surviving recall and preparing for elections in 2022,” she observes. “Business organizations throughout the state have begged him to stop making it easier for folks to stay on the dole and get back to work.”

Some progressive ideologues hail the state as the ultimate avatar of a green capitalism that we can “believe in.” Some, such as a writer at Bloomberg, claim the state has “the best economy” in the world, pointing to the bloated stock prices of the major tech firms and the enormous growth of wealth of a relative handful.

Read the rest of this piece at American Mind.

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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.

Homepage photo: Chris Jepsen, via Flickr under CC 2.0 License.