The end of the ‘Golden Age’ in America’s ‘Golden State’

The end of the ‘Golden Age’ in America’s ‘Golden State’

As a reporter more than 20 years ago, I used to boastfully write that were California an independent country it would be a member of the “G-8,” with the sixth largest economy in the world.

Roaming my home state today, the only global comparison to make is that it feels like embattled Greece. Even the conversations I have with friends and family resemble the talk in Athens: How to get out (in this case to another state)? How to fight the financial powers demanding more and more concessions from state and local governments? How to cope with rising unemployment that at 12 percent is the highest in America?

When I first joined the newspaper business in 1979, California had the youngest governor in her history: Jerry Brown, who was launching new initiatives like the state’s “Office of Appropriate Technology” to plan for the future, opening trade liaison offices in London and Tokyo and expanding the reach and scope of the state’s mighty university system.

Today, California has the oldest governor in its history. After a three-decade absence, Brown, now 72, was elected last year again. But reading about him in the newspapers, his role feels more like that of fallen Greek Prime Minister George Papandreou, who failed to get finances under control.

A few figures from “Demographia” a public policy consultancy here in the late Great State of California:
In the decade of the 1990s, California’s two big metropolitan areas of Los Angeles and San Francisco together created 1.1 million new jobs. In the last decade, the same regions have created just 70,000 new jobs. Large companies have scaled back to eliminate 450,000 jobs, business closures have erased another quarter million jobs and about 80,000 jobs have followed the migration of business to other states.

Outside the big cities, the situation can be even grimmer. I read the tiny town of Maricopa (against whose football team we used to play in high school), is about to close its police department. In the north of the state, eight rural county sheriffs (the top local law officers) drew headlines when they jointly announced they wouldn’t arrest anyone for violating state or federal environmental law that many blame for joblessness.

Earlier this year, poor Brown managed to win a string of concessions from public unions, schools and his political opposition to cobble together a plan to close a projected $25 billion shortfall by next June. This in the face of revenues of about $80 billion. He made it, only to discover another $4 billion shortfall just last month which no one seems to know how to close.

Like in Greece and basket case Portugal, the state’s once sterling credit rating has been repeatedly downgraded and is now close to “junk” status. The International Monetary Fund may have no jurisdiction here, but as in Greece all eyes here are on public pensions. A state employee can retire at 55 with 60 percent of final average pay. The cost of this pension adds up to $2 million per retiree. That adds up to pension obligations of $612 billion, according to one new study, an impossible sum for California to pay.

California is beautiful, just like Greece. California is also broke, just like Greece.