California 2010 Ballot Propositions

Having received at least two dozen “voter guides” from “associations” representing public sector employees, and perhaps 2 or 3 from taxpayer groups – on much cheaper paper, much smaller formats, much lower weight – it seems like it would be useful to make a quick run-through of some of the critical voter initiatives on California’s ballot.

CIV FI’s California 2010 Ballot Proposition Voter Guide

Prop. 19 to legalize marijuana – who cares? The big money behind this proposition is based on the premise that people who smoke marijuana will support it, and that people who smoke marijuana will vote if this measure is on the ballot, and that people who smoke marijuana are young voters who (currently) tend to vote Democratic. Proponents of Prop. 19 who are backing it for this reason – and all the recent big money coming in to support this initiative are only concerned about this, not anyone’s rights to get stoned or any supposed tax revenue to be collected – need to be careful what they wish for. If this measure passes the Obama administration will be forced to crack down on California’s medical marijuana industry, which will alienate not only the marijuana smoking crowd, but pretty much every young person or libertarian leaning older person in America. 2012, anyone? CIV FI takes no position on this initiative.

Prop. 20 to form an independent commission to redraw California’s federal congressional districts – YES. A few years ago, a similar measure passed to redraw state legislative districts (ref. Prop. 27 that will reverse that – a terrible idea). A legislative district not only should all have the same number of people living in it, but should also be shaped logically, recognizing when possible city boundaries and geologic features, incorporating whoever happens to live within the resulting borders. Our current legislative districts, currently drawn by whatever political party controls the state legislature, carves each electoral district into whatever shape they can devise, however irregular and contrived it may be, in order to maximize the number of “safe seats” where most of the voters in that district are members of their party. Prop. 20 will accomplish in this election for California’s federal congressional districts what a similar proposition a few years ago accomplished for our state legislative districts (ref. Prop. 27 on this year’s ballot, which is trying to reverse that previous reform and must be voted down). VOTE YES.

Prop. 21 to raise taxes to fund state parks – NO. The reason this is on the ballot is because our unionized government employees, who take our tax money and use it to buy our elections and control our politicians, would rather raise taxes by any means necessary instead of taking cuts to their pay and benefits. Public employees in California are paid, on average, over $100K per year in total compensation, while taxpaying private sector workers, on average, earn less than $60K in total compensation (ref. “Public Employee Compensation,” “The Price of Public Safety,” “California Firefighter Compensation,” and “The Real Reason for Tuition Increases“).  VOTE NO.

Prop. 22 to “stop the state from borrowing or taking funds used for transportation, redevelopment, or local government projects and services.” You decide. The forces behind this measure are Peter fighting with Paul. Since the public employee unions are supporting this measure, one would be reasonably inclined to vote no. On the other hand, when you read the fine print there are some nuances to the measure that may inappropriately increase the power of local governments to enforce eminent domain, which suggests a no vote could make sense. CIV FI takes no position on this initiative.

Prop. 23 to suspend California’s global warming act, AB32, that will take full effect in 2012 – YES. This measure had a chance to pass, until the billionaires in Silicon Valley, who stand to make additional billions by manufacturing high-tech remote surveillance equipment to make sure all us little people don’t do our laundry during peak energy demand, etc., indicated to a few courageous out-of-state energy companies (who were supporting the measure) that they would spend them into the ground to defeat it. Now Prop. 23 will probably lose on Nov. 2nd, but it will be back, when Californians finally wake up and realize that global warming alarm is based on fraudulent science, that CO2 is not “pollution,” and the idea that “green jobs” will make up for the economic harm caused by crippling increases to the costs for energy, water, transportation and housing is a despicable lie. For much more on the global warming fraud in general, and AB32 in particular, ref. “California’s Proposition 23,” “Who Are The Carbon Criminals?,”  “The Climate Money Trail,” and, especially, “Implementing California’s Global Warming Act.” VOTE YES.

Prop. 24 to “close corporate loopholes.” NO. This measure is being promoted via one of the most deceptive propaganda campaigns by public sector unions in the history of California, and that’s saying a lot. Prop. 24 will repeal some new corporate tax reforms that were adopted by the state legislature in 2009 as part of the budget deal that year. These were reforms, not loopholes. They eliminated double taxation and other rules in California that differed from other states, and had effectively penalized California’s corporations for locating here, especially if they exported most of the products they manufacture here out of the state or the country. But the fact this was a reform, not a loophole, and the fact that these reforms were negotiated in 2009 as part of the budget deal didn’t faze the California Teacher’s Association (by the way, “Association” means “Union.”) They want more tax revenue, heedless of the fact this measure will drive more corporations out of California, and they stabbed California’s business community in the back, putting this measure on the ballot and trying to sell it by hiring child actors to cry about “libraries being closed.” Why don’t they just fire half the administrators who haven’t seen a classroom in years? Why don’t they take pay cuts like the rest of us who pay the taxes to support them? For more on the origin of this deplorable, illegitimate abuse of power by public sector unions, ref. “California’s Union Ballot Initiatives.” VOTE NO.

Prop. 25 to get us “on-time” budgets – NO. This is also being promoted via another very misleading campaign, suggesting that all it will do is confiscate the pay of politicians for as long as they are overdue on passing a budget. But if you read the fine print, you will see this bill does make it easier to raise taxes. VOTE NO.

Prop. 26 to make a 2/3rd vote necessary for governments to enact fees as well as taxes – YES. It’s about time. Ever wonder why your property tax bill is more than 1.0% (and even just 1.0% is a LOT in California’s real estate market where property values are still grossly inflated)? It’s because of the additional “fee” for schools, the fee for roads, the fee for the disadvantaged, the fee for the endangered species, pretty much the fee for anything a tax might otherwise fund. These fees appear everywhere, not just on your property tax bill, but also on your bills for electricity, gas, water, sewer, garbage, telephone, internet, cable – all utilities – they appear on building permits or business licenses – they are everywhere. It is time to plug this genuine loophole, the ability to assess a fee whenever a new tax would be voted down. VOTE YES.

Prop. 27 to give power to redraw state legislative districts back to the politicians – NO. Are you kidding? Here is another one where the public sector unions are all lining up to say vote no. Why would they want competitive elections? When the Democrats (who in California are a wholly owned subsidiary of public sector unions) have manipulated the boundaries of the state legislative districts so they control nearly 2/3rds of the state assembly seats in a state that has less than 40% registered democrats, don’t you think this bill might scare them? Who is supposed to run California – public sector unions who control politicians who manipulate legislative district boundaries to stay in power, or the people? VOTE NO.

It is nearly impossible to get any political message out to conscientious voters for any election in California, because the public sector unions spend far more money, year after year, than any other special interest group (ref. “Public Sector Unions & Political Spending“). For those voters who are, in increasing numbers, realizing that public sector unions buy our elections through overwhelming campaign spending, there is a solution. For any political contest, local or statewide, no matter how obfuscated the language of the measures, no matter how elusive the candidate’s positions, simply vote against whatever the public sector unions support. Their agenda is unwavering – more government and more taxes, for the sole purpose of hiring more government employees and paying them over-market compensation. This is financially unsustainable. It is a recipe for the destruction of our nation. Public sector unions should be illegal, because they compel public employees to join them and pay dues, funded by taxpayers, in order to pursue an agenda that is anathema to efficient government. They must be opposed at every turn. It is that simple.

Public Employee Compensation

A recently released study sponsored by U.C. Berkeley’s “Institute for Research on Labor and Employment,” authored by Sylvia Allegretto and Jeffrey Keefe, entitled “The Truth about Public Employees in California: They are Neither Overpaid nor Overcompensated,” contains its conclusion in its title, but whether or not this study is presenting the “truth” or not is worthy of further discussion.

According to this study, “the wages received by California public employees are about 7% lower, on average, than wages received by comparable private sector workers; however, public employees do receive more generous benefits. An apples to apples comparison, or one that controls for education, experience, and other factors that may influence pay, reveals no significant difference in the level of employee compensation costs…”

While the study goes on to explain the variables they evaluate in order to arrive at an “apples to apples” comparison, it never actually estimates the actual amount of wage disparity between the average compensation packages for California’s public employees compared to California’s private sector employees, so here goes:

Using California’s Employment Development Department’s recent report “Labor Market Trends,” (ref. figure 1) it is evident there are 2.4 million Federal, State and Local employees in California, 12.2 million full-time private sector employees who work for an employer, and another 1.4 million “self-employed” private sector workers. Worker compensation as reported by the Bureau of Labor Statistics don’t include estimates for California’s 1.4 million self-employed workers, nor does the U.C. Berkeley study. If these estimates were included, they would almost certainly skew average private sector compensation downwards, since according to California’s Employment Development Dept., self-employment does not include anyone working for a Corporation or LLC, even their own, meaning that more highly-compensated professionals fall within the BLS statistics for California’s 12.2 million private sector employees, whereas the remaining self-employed include part-time workers, independent contractors; in aggregate, a marginally compensated multitude who have to cover 100% of their benefits  – a 2x payment for social security, and zero paid time off, or free insurance of any kind, or automatic pay for sick time and retirement.

Returning to the 14.6 million people in California who either work for the government or are employed by private sector firms, according to the Bureau of Labor Statistics report “May 2009 State Occupational Employment and Wage Estimates California,” their average annual compensation (not including employer funded benefits) in 2009 was $49,550. In order to extract from that average the compensation for the 2.4 million government workers in California, one may refer to Census Bureau data for 2009 as follows – for 394,000 state workers ref. State Government Employment Data, and for 1,451,619 local government workers ref. Local Government Employment Data. If you combine and average the compensation data for these two groups, you will arrive at an annual average pay – before any employer funded benefits – of $65,000 per year.

Making just one assumption, that California’s 500,000 federal workers not included in these statistics are earning the same average salary as the state and local workers, it is possible to subtract the figures for government workers from the pool of 14.6 million workers, who, according to the BLS earn an average of $49,500 per year, in order to calculate an average private sector (not including self-employed) compensation of $46,528 per year. This means that the Berkeley study has “normalized” for education, experience, and “other factors” to turn a 40% disparity between public and private sector compensation into a 7% disparity.

Before accepting the conclusion of this study, there are several assumptions it makes, both factual and subjective, that should be questioned; starting with this: “The average age of a typical worker in state and local government is 44 compared to 40 in the private sector.” The benefit of coming up with a “fact” like this, of course, is because by combining this fact with the assumption that compensation increases with seniority, the researchers are able to normalize downwards the average compensation of public employees significantly. For example, if one assumes an average career of 30 years, and that a worker’s inflation-adjusted salary will double between when their career begins and when they retire, than one might reasonably conclude a “normalized” compensation average for the public sector worker must be adjusted downwards by 13.3% in order to represent an “apples-to-apples” comparison with the younger private sector workers. Here again, it is serendipitous for the Berkeley study to exclude self-employed individuals, since according to California’s EDD, for workers over forty years of age, fully 50% of the civilian workforce is self-employed (ref. EDD’s California’s Self-Employed Workforce,” figure 6).

Another normalizing factor used by the researchers is gender, wherein they claim 55% of the state and local government workers are women, compared with 40% of the private sector. This is partially skewed, again, by the fact that 60% of self-employed people are men, but even adjusting for that, this fact, if accurate, represents another huge opportunity for the researchers to “normalize” compensation statistics in favor of reducing the disparity between private and public sector pay. Without having access to the work-papers used by the researchers, one can only speculate, but here’s the logic that could have been used: If women make 30% less than what men make for comparable work requiring comparable credentials, and if women represent 55% of the government workforce compared to 40% of the private sector workforce, this means an “apples-to-apples” comparison would require adjusting the public sector compensation upwards by  17% (55% x 30%) vs. an upwards adjustment of only 12% (40% x 30%) for the private sector workforce. Voila, another 5% of pay disparity is vaporized. The problem here is whether or not the “30%” pay differential rests on valid assumptions. When one normalizes for technical degrees vs. non-technical degrees, and the actual supply and demand parameters for jobs that might be deemed “comparable,” as well as for the significant percentage of women who opt out of full-time work in favor of being moms, much of this gender disparity may disappear. Whether or not there remains a gender bias in employee compensation is certainly open to debate, but the researchers should be transparent regarding how significant this factor was in their calculations.

The other major normalizing factor employed by the researchers is education, because the researchers have determined that 35% of the private sector workforce have earned at least a bachelors degree, compared with 55% of the public sector workforce. The researchers also claim the “return to education,” wherein people who have higher educational attainment should earn more, is skewed; that is, they claim private industry rewards education more than the public sector. What the study ignores here, however, is the fact that educational attainment yields qualitative dividends – what degrees are being compared? Is a sociology degree from Sonoma State the equivalent of a computer science degree from Stanford? Is it appropriate to pay more to employees with advanced degrees even if the job they do doesn’t require that level of education? The study doesn’t address this.

In any event, by excluding 1.4 million self-employed and part-time workers, and “normalizing” for seniority, gender and education, the Berkeley study has concluded that an average public sector salary in California is not 40% more than an average private sector salary – and without any normalizing adjustments, 40% higher wages for public sector vs. private sector workers appears to be a conservative estimate – but instead, that public sector wages are 7% less than private sector wages.

When turning to comparing benefits for public employees vs. private sector workers, it is important to understand that salary is the base on which the most significant benefits are calculated. In particular, the largest benefit category in the public sector is retirement pensions, which are calculated based on final salary earned. This means that even if public employee pension benefits were calculated in the same parsimonious manner as social security, they would apply to an average compensation base that is 40% larger for public employees. Moreover, public sector pensions are linear, meaning the benefit increases exactly proportionally to the amount of base salary without limit, whereas social security benefits increase at progressively lower rates, meaning that the more one makes, the lower percentage of their final salary will actually be realized in a social security benefit. These sound like nuances, but have enormous financial consequences. For more on this ref. “Pensions: Giant 401K Plans,” “Sustainable Retirement Finance,” and additional links therein.

Before independently estimating the disparity between public employee and private sector employee benefits, here is the Berkeley study’s specific conclusion: “public employers contribute on average 35.7% of employee compensation expenses to benefits, whereas private employers devote 30% of compensation to benefits.

By far the biggest single cost for employee benefits in both the public and private sector is the cost of retirement security. The calculation in the private sector is relatively straightforward – the employer withholds 6.2% for social security and 1.45% for medicare from employee paychecks, and contributes an equivalent amount themselves as a benefit – 7.65%. Some private sector employers will match a 401K contribution up to 6.0%, but the percentage of private sector employers who do this, combined with the number of private sector employees who take full advantage of this, is probably under 25%, which means the average overall retirement benefit paid by private sector employers is probably 10% (or less) of total wages.

For the public sector in California, the cost of retirement security borne by the employer is something else entirely. The typical formula for non-safety employees (about 85% of the public sector workforce) is to multiply the number of years they work by 2.0%, and apply the resulting percentage to their earnings in their final year of active employment. For example, if a non-safety employee works for 30 years, then 60% of their final salary will be the amount of their retirement pension. For safety employees, the typical formula is the same, but based on a 3.0% per year accrual. In the public sector, unlike with social security, the money contributed each year to fund the future retirement benefit is invested by a pension fund, which means the value of this benefit – and the funding required each year to ensure the pension fund remains solvent – must be calculated based on the expected investment returns of the pension fund. This is a matter of great controversy.

In the post “Sustainable Pension Fund Returns,” a best-case and realistic-case set of scenarios are offered:

(1) At a real rate of return of 4.75% per year, a worker would need to set aside an additional 21% of their salary each year for 30 years, in order to enjoy a pension benefit during a 30 year retirement equivalent to 60% of their paycheck.

(2) At a real rate of return of 4.75% per year, a worker would need to set aside an additional 32% of their salary each year for 30 years, in order to enjoy a pension benefit during a 30 year retirement equivalent to 90% of their paycheck.

(3) At a real rate of return of 3.00% per year, a worker would need to set aside an additional 35% of their salary each year for 30 years, in order to enjoy a pension benefit during a 30 year retirement equivalent to 60% of their paycheck.

(4) At a real rate of return of 3.00% per year, a worker would need to set aside an additional 52% of their salary each year for 30 years, in order to enjoy a pension benefit during a 30 year retirement equivalent to 90% of their paycheck.

For this independent estimate of the value of public sector employee pension benefits, using an assumption that 15% of public employees receive the enhanced “safety” pension, and assuming that the real rate of pension fund returns going forward will be 3.0% per year (still quite optimistic), it is necessary to contribute an amount equivalent to 38% of the average public employee’s pay in order to keep their pension solvent. Since, on average, public employees contribute about 5% of this amount in the form of withholding, an additional 33% has to be contributed by the employer. Many public employees receive supplemental retirement health insurance, for which few of them contribute anything at all in the form of withholding. It is certainly accurate to value this additional benefit as at least twice the amount of medicare, which adds another 3.0% per year.

Adding this all up, using conservative assumptions, the employer contribution to retirement security in the private sector is at most 10% of average salary, whereas in the public sector the employer contribution is at least 36% of average salary.

When assessing the value of current benefits granted public employees, most reviews of public sector benefit schedules suggest the standard package is a comprehensive set of benefits – for example, if one refers to the State of California’s Dept. of Personnel Administration, some of the current benefits include health insurance, dental benefits, a vision program, long-term care insurance, and long-term disability insurance. While these benefits are partially funded through employee withholding, the amounts withheld almost never exceed 50% of the premium, even for dependent coverage. To suggest that current benefits for public employees are, on average, less generous than the average current benefit for private sector employees strains credulity. What about the millions of part-time workers and self-employed people, who have to pay 100% of whatever health insurance they can afford – at premium rates that aren’t discounted and guaranteed by the insurance companies the way they are for the huge state employee bargaining units? What about all the small companies out there, employing at least 50% of full-time private sector workers, who can barely afford to offer basic health insurance, much less dental, vision, long-term care and long-term disability? It would be conservative indeed to simply assume the cost of current health insurance and other current benefits paid for by the employer is the same for both public and private sector workers, at approximately 5.0% of payroll.

The other significant factor to assess when estimating the value of public sector benefits is the amount of paid time off enjoyed by public sector employees vs. private sector employees. On this matter the Berkeley study makes a claim that they simply must substantiate; they state: “public employees receive considerably less supplemental pay and vacation time.

Perhaps to rebut this preposterous claim one must revert to anecdotes, but here at least are some quantitative considerations: there are 723,000 teachers in California who work for the government either in primary and secondary school or in higher education. Every one of these instructors and administrators works about 180 days per year, which when one considers there are 260 weekdays in a year (52 weeks x five days per week), indicates that teachers in California get 16 weeks of paid days off each year. What about college professors who only teach one class per week, yet enjoy total compensation packages worth $138K per year (ref. The Real Reason for College Tuition Increases). If you review compensation studies for safety employees in the city of Costa Mesa (ref. The Price of Public Safety), or firefighters in Sacramento (ref. California Firefighter Compensation), you can see, for example, that before overtime, full-time service for a veteran firefighter in Sacramento requires them to work, on average, two 24 hour shifts per week. Does the Berkeley study normalize for any of this? Compare vacation time in any public entity in California against private sector norms – the average vacation days awarded in the public sector allocate employees after about 10-15 years of service 20 days of vacation per year, and by the end of their careers, up to 30 days of vacation per year (ref. CA Dept. of Personnel Administration, Leave Benefits). This amount of paid vacation is rarely offered to employees in the private sector – with many small companies offering virtually no vacation to their employees, a generous assumption might be 10 days, half as much as public sector vacation benefits. With respect to paid holidays, the typical public sector benefit is at least 12 days, while small private companies often only award six (Christmas, New Year, Memorial Day, July 4th, Labor Day and Thanksgiving), if that. In addition to vacation and holidays, many local governments and various state units also offer paid “personal days,” something nearly unheard of in the private sector. It is also common for sick time to be accrued without limit in the public sector, also something nearly unheard of in the private sector. And self-employed workers, of course, get nothing.

In order to continue to make conservative assumptions, however, one may estimate the average number of paid days off in the private sector to be 20 per year (probably high) and the average number of paid days off in the public sector to be 30 per year (probably low). How does this all add up?

The average public sector worker makes $65,000 per year, with the employer contributing an additional 21,450 for their retirement pension, $1,950 for their retirement health insurance, $3,250 for their current health insurance and other benefits, and they earn vacation worth an additional $10,575 – making their average total compensation $102,225 per year. It is interesting to note that the benefits as a percent of total compensation in this analysis agree with the Berkeley study – 36.4% vs. 35.7%, because the Berkeley study has almost certainly understated the value of the required pension fund contribution, which is another reason why the assumptions made here to estimate the value of all the other public employee non-pension benefits are probably conservative.

The average private sector worker makes $46,500 per year, with the employer contributing an additional $4,650 for their social security, medicare, and 401K, $2,325 for their current health insurance and other benefits, and they earn vacation worth an additional $4,113 – making their average total compensation $57,558 per year. The average private sector worker’s benefits as a percent of total compensation in this analysis is 19%, not 30% as claimed in the Berkeley study. And again, the Berkeley study failed to consider any of California’s 1.4 million self-employed and part-time workers in the pool they evaluated .

It is left to the reader to decide which numbers are more accurate, the numbers put forward here, or the numbers put forward by the Berkeley research team. Similarly, it is left to the reader – and the voter – to decide whether or not the services provided by California’s state and local governments, and the skills required to render them, entitle California’s public servants to earn, on average, $102K per year, compared to average annual earnings of $57K by those of us whose taxes sustain them.

Local Government Public Employment Data – revised Dec. 2009

California’s Proposition 23

Back in 2006 California’s Governor Schwarzenegger signed AB 32, the “Global Warming Act,” which set the goal of reducing California’s “greenhouse gas emissions” to 1990 levels by 2020. The bill was set to become implemented in 2012, and for the past few years, the bureaucrats at the California Air Resources Board have been working feverishly to come up with specific regulations. What they have produced is a monstrosity.

To start to come to grips with what AB 32 is going to do to California, read CARB’s own material, their “Climate Change Scoping Plan,” their “Updated Economic Analysis of California’s Climate Change Scoping Plan,” and their “ENERGY 2020 Model Inputs and Assumptions.” You can get an attempt at a summary if you read the post “Implementing California’s Global Warming Act.”

Since the most recent publicized polling results indicate that voters are split roughly 50/50 on Prop. 23 (ref. the Sept. 24th LA Times article “Proposition 23 poll shows a dead heat among California voters“), it is worthwhile to examine the arguments against Prop. 23 that are currently bombarding voters. A good place to review these arguments would be on the “fact sheet” put forward by the group “Californians to Stop the Dirty Energy Proposition.” Here are two principal arguments – with rebuttal:

1 – Prop. 23 would create more air pollution in California and threaten public health.

This argument is based on the proposition that CO2 is pollution, because the intent of AB32 is to regulate CO2 emissions, and little else. California’s regulatory agencies have done a reasonably good job at cleaning up genuine air pollution, and they need to finish the job there, instead of focusing on CO2 emissions. CO2 does not harm the respiratory system in the quantities it currently appears in the atmosphere, or in any conceivable quantities it ever may increase to in the atmosphere. On the other hand, plants cannot live without CO2. To suggest that suspending a measure that regulates CO2 emissions is going to increase pollution is grossly misleading.

2 – Prop. 23 would kill clean technology jobs, innovation and billions of dollars of investment in California.

This “fact” as well is almost completely false. California’s gubernatorial candidate Jerry Brown made a clever argument in favor of retaining AB32 last week in his final debate with candidate Meg Whitman, when he said we need AB32 to stay on the books to reduce “regulatory uncertainty.” This is a good argument applied to a bad law. AB32 – read the scoping report – doesn’t create regulatory certainty in any of the cleantech areas that matter. If you want to encourage development of low carbon fuel, then pass a law requiring a certain percentage of transportation fuel contain lower levels of carbon. This will stimulate innovation in 3rd generation biofuels, which is a good idea. If you want to encourage development of cost-competitive solar energy, the leave in place California’s renewable portfolio standard. If you want to encourage energy efficiency retrofits, then implement tax credits to stimulate activity in that area. You don’t need AB32 to stimulate green jobs.

Opponents of the Prop 23 actually claim that suspending California’s Global Warming Act will increase energy costs and harm California’s economy. This is precisely incorrect. Alternative energy still costs considerably more than conventional energy, and this disparity would be even greater if conventional energy technologies weren’t tied up in environmentalist lawsuits.

Instead of carpeting the landscape with wind generators – talk about pollution, what about the aesthetics of all these wind generators? – Californians should be developing a diverse assortment of conventional energy solutions – more hydroelectric power (which would also create more water supplies), nuclear power, a liquid natural gas terminal, and offshore drilling. Currently Californians pay, on average, about $0.15 per kilowatt-hour, while in states where conventional energy is not overregulated, consumers pay less than half that amount.

AB 32 will further reduce California’s ability to use conventional energy, and this will cause energy prices to go up, not down. And because AB 32 will regulate virtually everything we do, under the assumption that restricting road construction and land development – and adding new regulations to virtually all industries, from farming to manufacturing – will lower the “carbon footprint” of the state, everything will get more expensive. You don’t have to be an economist to grasp this simple economic truth – if you make all the basic resources more expensive, land, water, transportation and energy – then you will make it harder for businesses to compete. And if they can’t compete, they won’t grow. Many of them will leave.

The reason Prop. 23 has attracted so much opposition is because AB 32 appeals not only to the environmentalists – a lobby that has been entirely hijacked and discredited by the global warming alarmists – but the political left, who see another opportunity to expand government, the public sector unions, who never saw a government expansion they didn’t like, and, tragically, the Silicon Valley investors and entrepreneurs who have decided they don’t want to make money any more the old fashioned way, where they create superior innovations that people choose to purchase, but instead want government regulations to force people to buy their “smart meters” and other cleantech innovations.

It is easy to demonize “Big Oil” for standing up to this lobby, but nobody else has come forward, despite the fact that most members of the business community realize the harm AB 32 will wreak on California. A more relevant question is why California’s own big oil company, Chevron, is sitting on the sidelines. Chevron’s craven failure to stand up for its own interests as well as the interests of consumers is a bigger indictment of big oil than Valero and Tesoro’s courage in their decision to fight. There aren’t many companies left in California who will stand up for capitalism and for rational environmental management. This is the core problem, because with California’s voters deadlocked on Prop. 23 despite the avalanche of propaganda against it, Californians are clearly receptive to the truth, if someone will bother to provide it to them.