Californians, being tougher than we look, have found ways to survive our economic busts.
It’s the booms that really break us.
This essential truth is now being missed. Today, politicians and media alike juxtapose the hallmarks of California’s current boom with our deep problems, as if they represented a paradox. How can a place be so wealthy and progressive, they ask, and yet so poor and ungenerous at the same time?
“California is booming,” the New York Times asked recently, “Why are so many Californians unhappy?”’
The answer to that question lies in the question itself: so many of us are unhappy precisely because California is booming.
This is no paradox because our successes and our problems are intertwined. California’s tendency to turn everything — from housing to health — into an investment, full of speculation, has made everything, even our booms, volatile and risky.
The signature effect of the now-concluding decade of boom is, of course, homelessness. When the economy grows here, so does homelessness.
Why? In this decade, our boom in jobs and income among the wealthy and middle class created more housing demand. But we couldn’t produce enough housing to keep up with demands. Housing prices soared. And as people moved into cheaper neighborhoods and paid higher rents, they effectively forced out poorer longtime residents, some of whom ended up on the streets.
Booms exacerbate California’s already significant income gap. Rising wages have been good for our most successful, high-income workers, but they also fuel cost of living increases for middle class and poor families, whose gains have not kept up. These higher costs are why California ranks at or near the top on national poverty measures, and why the state has seen an exodus of middle- and low-income people.
When this state really soars, it feels like it’s flying away.
California booms are dangerous in other ways, too. Our state has made its costliest policy mistakes during good times, often to help people deal with skyrocketing growth. Most famously, as housing prices surged in the late 1970s, voters eager to cut soaring property taxes approved Proposition 13, without considering how the ballot initiative might make it harder to govern California.
That is hardly the only example. Our local governments now fiscal peril because of the unsustainably high boosts of public employee pensions approved during the late 1990s tech boom. And today’s investor-owned utility crisis, which is literally sparking fires across the state, is rooted in poorly conceived deregulation during that same ‘90s boom.
When the booms are this tough, it’s not hard to find Californians who remember our busts fondly. Downturns create moments when things are cheap enough to take a risk, start a business, and snap up a piece of the California dream.
I’m here writing this column because of a bust. The Great Recession of 2008 made it possible for me to take a chance on a lower-paying nonprofit media job. Then, in 2011, when prices were still depressed, I bought a small Southern California home that would have been unaffordable before that economic collapse — and that I couldn’t dream of affording today.
Governments also tend to treat citizens better during busts. The Great Recession saw the federal government take big steps to assist Californians, via the economic stimulus package and Obamacare. But, today, during the boom, our state is under attack from the same federal government precisely because our boom is seen as a threatening counter-example to the president’s reactionary policies.
The other bad news about California good times is that future booms are likely to be even tougher. Over the years, all of our booms have changed our character as a state. Once, we were a place of arrival, a destination for new immigrants and the young and ambitious. Back in those days, our busts allowed for surges of new residents. But now, the cost of entry for newcomers has become prohibitively high. That means we are less a state of immigrants and more a state of longtime Californians struggling to hold on.
Perhaps our state and its governments should stop encouraging booms — our de facto policy for decades — and instead pursue more policies that reduce our natural volatility. But that will require us to think of California as a place where we want to spend our lives, rather than a stock exchange of bungalows and beaches.
So happy new year, and good luck finding shelter from the boom.
Joe Mathews writes the Connecting California column for Zócalo Public Square.