Tag Archive for: unaffordable California

California’s War Against Prosperity

According to the U.S. Small Business Administration, small businesses are the backbone of the U.S. economy, generating 44 percent of all business activity. Take them out of the equation, and the economy collapses. But that is exactly what’s happening. The cards are stacked against small business in America today, and nowhere is it worse than in the State of California. The rules are rigged to make it harder for small, independent contractors and independent businesspeople to survive, much less thrive. Excessive regulations invariably favor large companies, because the cost of complying is far easier for a company with a billion dollars in annual revenue than it is for a company with a million dollars in annual revenue.

This obvious fact is well understood by corporate monopolists whose rollup and consolidation of industry after industry in America is only accelerated in recent years. This excerpt from a January 2023 report by S&P Global, sums up the trend: “In 91 of 157 primary industries, the five largest U.S. companies by revenue combine for at least 80% of total revenue.”

The report goes on to explain how monopoly power is a double-edged sword. On one hand, “growing monopoly power stifles competition and productivity in the U.S. economy.” The counter-argument is that “very, very productive firms end up dominating the industry.” From the perspective of the ordinary American worker, either as an employee of a monopolistic corporation, or as an independent proprietor trying to compete in markets getting swallowed up by the giants, both of these arguments are true, and both are bad news.

The fact that regulations actually benefit the largest corporations clearly doesn’t translate to a recognition by progressive voters that deregulation – or at the very least, a more judicious application of regulatory oversight – might help small business survive and might help consumers avoid new rounds of price gouging when entire markets are captured by a few giant companies. And California is ground zero for this cognitive dissonance.

A more subtle impact of excessive regulations is how it redirects productivity, rendering the value of enhanced productivity far more ambivalent than one might suppose. In California, for example, with costs for land, energy, and raw materials driven artificially high due to regulations, gains in productivity are offset by higher costs for these inputs and by higher costs to comply with regulations. Apart from wiping out the smaller competition which is good for the monopolies, where is the benefit?

The Punishing Middle Class Tax Burden

If a sole proprietor aspires to upward mobility by working harder, the cards are particularly stacked. The following chart shows just how demotivating current tax laws are on people with taxable income between $90,000 and $160,000, particularly in California where state taxes are particularly onerous.

The first thing to consider when reviewing this chart is that in California, depending on where you’re living, it is difficult if not impossible to support a family on $90,000 per year. That income is the entry level to the middle class. For the same reasons, in California, a taxable household income of $160,000 per year is by no means upper middle class. In many parts of the state, it still spells tight budgets and tough spending decisions for families.

But where is the incentive to work harder, beyond the pure necessity to survive? If a person is making $90,000 per year as an independent contractor (married filing jointly), and they forfeit nights or weekends to take on extra work, they will give 43 percent of their income to the government. That is, for every $100 they earn, they’ll only keep $57. If they are set to make $132,000 per year and they take on an extra job, they’ll pay 47 percent of their earnings to the government. Forty-seven percent tax.

This is an appalling abuse of some of the hardest working citizens in America. People who are barely able to make ends meet, who need to supplement their income by sacrificing whatever time they can spare after fulfilling their obligations to their family and to their primary clients, are forced to give nearly half of every dollar they earn to the government. And in a bizarre twist of logic, white collar law partners and consultants, who collect higher compensation as hired clerisy for monopolists and billionaires, end up paying less marginal taxes. As soon as their taxable income exceeds $160,000 per year, their 12.4 percent Social Security assessment goes away, and their marginal tax burden drops from 47 percent down to 34 percent. In America’s supposedly progressive tax environment, a 47 percent marginal tax burden is not reached again until income exceeds $400,000 per year.

Interesting, isn’t it? A guy who takes on extra work to pay rent for his home and tuition for his kids and scrapes together $130,000 per year is paying more taxes on that last dollar than a corporate litigator whose last billable hour topped out at $390,000 per year. Some might say there is a distinction between Social Security taxes and “taxes.” But when your biggest concern is having enough money left to cover your monthly bills, that’s mumbo jumbo. Money for the government is money for the government. It doesn’t matter where it’s going or what you call it.

The Cost-of-Living Burden

It’s not easy to draw the line between what regulations facilitate authentic capitalism, where companies have to use their productivity innovations in order to sell competitive products at competitive prices to customers with options, versus regulations that empower monopolies and throw up impassable barriers to smaller emerging would-be competitors. In California’s case, nobody has even tried to thread that needle. Instead, the state legislature has never considered a regulation they didn’t like. With accelerating frequency and intensity, and specifically with respect to “saving the planet,” California’s regulatory state has made it impossible to live a middle class lifestyle.

Thanks to environmentalists pressuring the state into imposing ridiculous “net zero” building codes, along with cordoning off cities to prevent the far less expensive option of building on open land, the average home in California costs over $728,000. That’s actually slightly down compared to a year ago, but payments are still way up. With a 30 year fixed mortgage now up to 7 percent, the average home in California will set you back $4,844 per month. But that’s not all: California’s much vaunted low property taxes, at 1 percent, still pack a wallop on such a huge base. Add at least another $1,200 per month for the 1 percent property tax, the various local “fees” that get around the 1 percent cap, plus mortgage insurance and homeowners insurance.

How far is that $90,000 per year going, now that you’ve spent $72,000 just to get your family under the average roof? Add to that the most expensive total costs for natural gas, electricity, gasoline, and water in the United States, and you’ll be lucky to have a dime left over for clothing, groceries, or health care. Want to keep your kids out of the public schools? Good luck. On average that will cost another $16,000 per year in California, per child. And it is not tax deductible.

All of these costs are elevated either indirectly or explicitly thanks to environmentalist regulatory excess. The state has plenty of land for homes, trees for lumber, abundant reserves of gas and oil, and amazingly productive farmland. But in every one of these areas, the foundations of prosperity, environmentalist inspired rules have restricted supply and raised costs. The only economic interests that have benefit are monopolists.

What Kind of Government is This?

One must ask how it came to this. Californians pay ridiculously high taxes. If they are within that middle class band of income between $90,000 and $160,000 per year, their marginal tax rate is more than people earning up to $400,000 per year. And for what? A government that passes regulations that have made the state unaffordable. California’s government has declared war on its hardest working citizens. It is literally engaging in economic expulsion of its middle class citizens.

For California’s low income communities, the situation is no better. How does it serve social justice to make the most basic necessities of life unaffordable? How does it serve environmental justice to cram millions of people into already crowded cities because a “greenbelt” has been stretched around every urbanized region of this vast, underpopulated state? How does it foster upward mobility for low income families when the only thing achieving middle class economic status brings is no more government subsidies and instead, brand new, crippling rates of taxation?

And then there’s the entire spectrum of failed state phenomena – rampant drug addiction, decriminalized crime, a completely unregulated homeless population, and public schools where children are taught identity politics and climate crisis indoctrination, filling their head with resentment and terror, instead of grammar and multiplication tables. Why should anyone work anymore? Why try? The government schools teach values that nurture irresponsibility – blame systemic racism and corporate greed for anything missing in your life, at the same time as government regulations have created an economy where in any case, even a hard working and responsible person cannot afford to live.

California’s only hope is for its voters to recognize what has happened and in a multiethnic, nonpartisan seismic wave of populist rage replace every one of their dysfunctional, wholly owned legislators. California’s voters must demand politicians and policies that strike a reasonable balance between the needs of the environment and the needs of civilization, to once again enable an economy where small companies can compete with large companies, where consumers have choices, and a low cost-of-living appropriately reflects California’s abundant resources and innovative people.

This article originally appeared in American Greatness.

How to NOT Solve California’s Housing Crisis

There are obvious reasons the median home price in California is $544,900, whereas in the United States it is only $220,100. In California, demand exceeds supply. And supply is constrained because of unwarranted environmental laws such as SB 375 that have made it nearly impossible to build housing outside the “urban service boundary.” These laws have made the value of land inside existing urban areas artificially expensive. Very expensive. Other overreaching environmentalist laws such as CEQA have made it nearly impossible to build housing anywhere.

Then there are the government fees attendant to construction, along with the ubiquitous and lengthy permitting delays caused by myriad, indifferent bureaucracies with overlapping and often conflicting requirements. There is a separate fee and a separate permit seemingly for everything: planning, building, impact, schools, parks, transportation, capital improvement, housing, etc. Government fees per home in California often are well over $100,000; in the City of Fremont in 2017, they totaled nearly $160,000 on the $850,000 median value of a single family home.

This is a shakedown. It has caused a politically engineered housing shortage in California that enriches billionaire property developers that have the financial strength to withstand decades of delays and millions in fees, because they reap the extreme profits when they sell these homes at inflated prices. Also enriched are the public servants whose pay and pensions depend on all taxes – definitely including property taxes – and all fees being as stratospheric as humanly possible. Public employee pension funds also benefit from housing scarcity, as their real estate investment valuations soar into bubbleland.

When litigious environmentalists, insatiable public sector unions, and an elitist handful of left-wing oligarchs control a state, artificial scarcity is the consequence. Welcome to California.

REJECTED POLICY – REAL SOLUTIONS TO THE HOUSING CRISIS

To decisively solve California’s housing shortage, some of California’s more than 25,000 square miles of rangeland, currently occupied by cattle, would have to be approved for suburban development. California is only 5 percent urbanized, although if you listen to environmentalists, you might get the impression it only had 5 percent remaining open space. You could fit ten million people onto half acre lots in four person households and you would only use up 2,000 square miles – that’s only 1.1 percent of California’s land area. Why aren’t massive new housing developments spreading out along California’s 101, I-5 and 99 corridors?

Real solutions to California’s housing crisis would also require increasing the capacity of California’s water infrastructure and transportation infrastructure. In both cases, investment would be cheaper if this expansion was done on raw land. Real solutions to California’s housing crisis would mean rescinding the mandatory rooftop solar requirement on new home construction, and instead recommissioning and expanding the nuclear power complexes at Diablo Canyon and San Onofre, and embracing development of additional nuclear power and natural gas power plants. In a less confiscatory regulatory environment, the private sector could fund all of this while lowering costs to consumers.

Reforming environmental restrictions and unleashing private sector development of homes and infrastructure is the fastest, easiest way for home prices in California to return to near the national average. In turn, that would solve nearly every problem associated with a shortage of housing. California’s families would be able to afford to buy homes, or pay affordable rent. California’s employers, most definitely including government agencies, would be able to attract workers at prices that would not break their profits or their budgets, which would benefit the economy. And far fewer people would be rendered homeless.

APPROVED POLICY – COMPLETELY USELESS “SOLUTIONS” TO THE HOUSING CRISIS

As long as environmentalist litigators, public sector unions, and left-wing oligarchs run California, none of these real solutions will ever happen. What are they proposing instead?

To summarize, all politically viable housing solutions in California involve densification, i.e., cramming ten million more people into existing urban areas, and, predictably, more taxes, bonds, fees, subsidies and government programs.

Rent Control, Government Subsidized “Affordable Housing” and Government Funded Homeless Shelters

California is the epicenter of America’s “progressive” power structure. In California, in addition to controlling the public bureaucracy through their unions, progressive ideologues control the press, social media, search media, K-12 public education, academia, most corporations, the entertainment industry, and virtually all serious political campaign spending. As a result, California’s progressives can use ballot initiatives to con a brainwashed populace into approving their latest housing policy agenda. The common thread? Government control; government funding. For example, on the ballot this November are propositions to permit cities and counties to enact rent control, issue state bonds totaling $4 billion to build “affordable housing,” and use state tax revenues to build more government-run homeless shelters. It is possible all three of these measures will pass.

Already in progress is the implementation of California state laws that took effect Jan. 1 – AB 2299 and SB 1069 – which amend existing state laws governing “accessory dwelling units.” These new laws force California’s counties to streamline the process whereby homeowners can construct additional homes in their backyards. Does that sound good? Not so fast.

Doubling Suburban Population Densities ala Government Subsidized “Accessory Dwelling Units”

There’s a reason people work hard for decades to pay off their mortgages so they can own homes in spacious suburbs. It’s because they value the leafy, semi-rural atmosphere of an uncrowded suburban neighborhood. AB 2299 and SB 1069 will effectively double the housing density in these neighborhoods, violating the expectations of everyone living there who relied on the zoning rules that were in effect when they bought their homes.

If zoning laws in existing suburbs were relaxed at the same time as zoning restrictions were lifted on the urban periphery, the impact of these new rules might be mitigated. But every policy California’s elite and enlightened geniuses come up with is designed to maintain “urban containment.” And to add to the disruption these laws will inflict on quiet neighborhoods, California’s cities – starting with Los Angeles – are providing subsidies to homeowners to build these homes, then encouraging them to rent the properties to low income families wherein the government will pay the rent via Section 8 vouchers.

This is an expensive, utopian scheme that oozes with compassion but is fraught with problems. Doubling the density of suburbs is already problematic. But doubling the density of suburbs by subsidizing the settlement of people on government assistance into every backyard, invites social friction. It is forcible integration of people who, for whatever reason, require government assistance to support themselves, into communities of taxpayers, who, by and large, are working extra hard to pay the mortgages on overpriced homes in order to provide their children with safe neighborhoods.

As usual, when it comes to enlightening the public, neither the media, nor the urban planning experts in academia, ever offer much beyond pro-densification propaganda. A glowing New York Times article, entitled “A Novel Solution for the Homeless: House Them in Backyards,” raves about this entire scheme, already being tried in Los Angeles, Portland and Seattle. The article includes a quote from Vinit Mukhija, a professor of urban planning at UCLA, who says: “The value [of subsidized accessory dwelling units] goes beyond that, though, because it is finally somewhat of a departure of the purity of single-family housing in the region. It’s a good step to change what people here really consider a dogma of private housing.”

The “dogma of private housing.” That epitomizes California’s elitist hostility towards ordinary families owning detached homes with spacious yards.

The incentives created by such a project are perverse. California’s elite has made homes unaffordable. Then, to the people who sacrificed so much to buy these homes despite their punitively high prices, the government offers them subsidies and Section 8 payments, if they are willing subdivide their lots and turn over half their property to people supported by the government. Inevitably, many financially struggling homeowners will be forced to accept this cruel bargain if they want to keep their homes.

Finally, just like in 2008, there will eventually be another economic downturn, when many distressed homeowners will be forced to sell their properties. And when that happens, just like in 2008, investment banking speculators will move in and buy homes by the thousands. This next time, however, these institutional investors will be salivating at the prospect of collecting government subsidies so they can operate two rental units on a single piece of property.

Demolishing Homes to Build High Rises Near Transit Stations

Another way California’s elites – many of whom live in gated communities with homeowner covenants prohibiting nasty things like accessory dwelling units in backyards – propose to solve California’s housing crisis is to force demolition of single family dwellings in the vicinity of mass transit stations. They support this mass destruction of vintage neighborhoods in order to make room for high density apartments and condominiums up to five stories in height. While an attempt in 2018 to enact this draconian solution was beaten back, California’s coercive utopian lawmakers will bring it back in 2019. Some form of this law is likely to pass.

There’s nothing wrong with gradually increasing the population density in the core of large cities. That is a natural and organic process. But it is the job of legislators and local officials to moderate that process, protecting established neighborhoods. Instead, again, the policy consensus in California is to cram ten million new residents into existing urban areas.

Government Subsidized Homeless Shelters on some of the Most Expensive Real Estate on Earth

Perhaps the most misguided housing policies coming out of California concern the homeless. Despite years of bloviating by the compassionate elite, almost no good data is available on homeless populations, much less any good policies. Press coverage of the homeless centers on the family unit; small children, parents forced out of their home by high rents. These are gut wrenching stories. But accompanying the legitimate cases of families or individuals coping with undeserved hardship, there are the willfully indigent, along with criminals, drug dealers, sexual predators and perverts. Again, the City of Los Angeles offers a striking example of bad policy.

In Venice Beach, which is within Los Angeles city limits, along one of the most expensive, touristy stretches of coastline in the world, there are now permanent homeless encampments. To address the challenge, Los Angeles city officials are fast-tracking the permit process to build a homeless shelter on 3.2 acres of vacant city-owned property less than 500 feet from the beach. This property, nestled in the heart of Venice’s upscale residential and retail neighborhoods, if commercially developed, would be worth well over $200 million. Imagine what could be done with that much money if the goal was to truly help the homeless. And by the way, the proposed shelter will be a so-called “wet” shelter, meaning that drugs and alcohol will not be permitted inside the shelter, but intoxicated homeless individuals will be allowed inside. Go in, get a bed, go out, shoot up, come back in.

That a solution so scandalously inefficient could even be considered by the do-gooders running City Hall in Los Angeles offers additional insights into the minds of California’s progressive elite. Solving the homeless crisis isn’t their goal here. Rather the intent is to create additional government-owned properties, hire additional government bureaucrats, while preening in front of television cameras and pretending to solve a problem. Should the Venice Beach property be developed as currently proposed, well connected construction contractors will rake in government funds, so eventually “up to 100” homeless people will find shelter. Meanwhile, thousands will remain outdoors.

California’s housing is unaffordable because of restrictive laws such as CEQAAB 32SB 375, and countless others at both the state and local level. At the same time, California’s political elites are inviting in the world’s poor en masse to come and live here. An estimated 2.6 million illegal aliens currently live in California. But the rhetorically unassailable compassion expressed by these sanctuary policies does nothing to alleviate hardship in the nations where these refugees originate, because for every thousand who arrive, millions are left behind.

The result? While California’s visionary rulers engineer a shortage of housing supplies, their welcoming sanctuary policies engineer a burgeoning housing demand. This is the deeply flawed agenda they have implemented in California and are actively exporting to the rest of America.

The biggest lie of all is the compassionate overlay that informs every housing solution California’s elite promote. Because their solutions, however viable they may be politically, will not work. They defy basic economic sense. They create additional drain on public funds while doing nothing to alleviate the high prices that are caused by scarcity. They are sustained by an impossible assumption, that urban densification, and all the destruction that densification will bring, will in itself be sufficient to restore a supply and demand equilibrium for housing. And they reject the obvious solution, suburban expansion to complement higher densities in the urban cores, based on environmentalist objections that are overwrought. In practice, the solutions being implemented to resolve California’s housing crisis are not compassionate. They are cruel.

Eventually, enough Californians are going to realize they’ve been conned. They will recognize that government subsidized densification is financially unsustainable and ruinous to their way of life. They will support politicians who are willing to stand up to environmentalist litigators, government unions, and the left-wing oligarchy that profits from scarcity. Hopefully that will happen before it’s too late.

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Beware of Fool’s Gold: Democratic California’s Cautionary Tale

It’s become fashionable among certain conservatives, libertarians, and assorted free-market types to claim that Republicans are no better than Democrats. Both parties, according to the disenchanted, have lost their way. Both parties are controlled by establishment cronies, who support big government of one sort or another.

But conservatives who are disillusioned with Republicans need to remember just how much is at stake if Democrats take over. To indulge in understatement, California offers a cautionary tale.

Absolute Power Corrupts Absolutely
Since at least 2006—the year Governor Arnold Schwarzenegger, a moderate Republican, totally capitulated to the Democratic establishment—Democrats have exercised absolute power in California. Their ongoing agenda, much of which has already been implemented, offers insight into just how different Democrats are from Republicans—even those watered down Republicans who struggle to earn votes from true conservatives.

California’s Democrats, in pursuit of environmentalist perfection, have legislated artificial scarcity of everything necessary to civilized life: land, housing, electricity, gasoline, water, transportation, and quality education—you name it. California has the most expensive homes, the highest utility prices, the worst roads, and failing schools. Behind the high-minded environmentalist rhetoric stand oligarchs who profit from scarcity; established corporations, public utilities, large landowners, and “green” entrepreneurs.

All of this elitist support is self-serving. All of it is hypocritical. All of it is deeply cynical, and utterly indifferent to working Americans.

California’s Proposition 10 offers an excellent example of how Democrats think. This deeply flawed state ballot initiative addresses the high cost of housing in California by authorizing cities and counties to impose rent control on all rental units, right down to the second homes that middle-class Californians may own in order to earn supplemental income. The negative consequences of a measure like Prop. 10 are obvious not only to anyone with a basic understanding of economics but also to anyone with plain common sense.

Not one Republican supports California’s Prop. 10, but plenty of Democrats do, including the notorious U.S. Rep. Maxine Waters, U.S. Senate candidate Kevin de León, and Los Angeles mayor and future presidential contender Eric Garcetti. And behind these Democrats, also endorsing Prop. 10, are California’s all powerful public sector unions, including the California Teachers Association, the California Nurses AssociationAFSCME California, and SEIU California. And, of course, the California Democratic Party.

Prop. 10 is an example of how Democrats are making California’s housing shortage worse instead of better, but it’s not the only one. Also appearing on California’s statewide ballot next month are Prop. 1, which would borrow $4 billion to build “affordable housing,” and, Prop. 2, which would use state tax revenues to build more government-run homeless shelters. It is possible, if not likely, that every one of these propositions will pass.

Scandalous Inefficiency, Unassailable “Compassion”
Democrat “solutions” to the housing crisis aren’t limited to the state ballot, however. In Venice Beach, California, along one of the most expensive, touristy stretches of coastline in the world, are now permanent homeless encampments. To address the challenge, Los Angeles city officials are proposing to build a homeless shelter on 3.2 acres of vacant city-owned property less than 500 feet from the beach. This property, nestled in the heart of Venice’s upscale residential and retail neighborhoods, if commercially developed, would be worth well over $200 million. Imagine what could be done with that much money.

That a solution so scandalously inefficient could even be considered by the Democrats running City Hall in Los Angeles offers additional insights into the Democrat mind. Solving the homeless crisis really isn’t their goal here. Rather the intent is to create additional government-owned properties, hire additional government bureaucrats, while pretending to solve a problem. Should the Venice Beach property be developed as currently proposed, well connected construction contractors will rake in government funds, so eventually a few hundred homeless people will find shelter. Meanwhile, tens of thousands will remain outdoors.

Democrats, and not Republicans, made California’s housing unaffordable by passing restrictive laws such as CEQAAB 32SB 375, and countless others at both the state and local level. At the same time, it is Democrats, and not Republicans, who are inviting in the world’s poor en masse to come and live there. An estimated 2.6 million illegal aliens currently live in California. But the rhetorically unassailable compassion exhibited by these Democrats does nothing to alleviate hardship in the nations where these refugees originate, because for every thousand who arrive, millions are left behind.

The result? While California’s Democrats, and not Republicans, engineer a shortage of housing supplies, their welcoming sanctuary policies engineer a burgeoning housing demand. This is the deeply flawed, misanthropic vision Democrats have for America. Democratic power is rooted in wishful thinking by the naïve, and by the savvy because of epic greed. Republicans, no matter how tepid their convictions may be, would never have done to California what these Democrats have done. And it’s not even close.

When conservatives and libertarians think about where to cast their vote, they should look west to California, and think very hard about whether or not they want to live in a nation ruled by Democrats.

This article originally appeared on the website American Greatness.

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California’s Socialist Oligarchy, Part One: Making the State Unaffordable

Touted as the “fifth-largest economy on Earth,” and recently heralded as delivering the “greatest increase in average income,” these statistics obscure an alarming reality. California has become a feudal state, where the benefits of prosperity are unequally distributed, rewarding corrupt plutocrats and punishing ordinary working families. Joel Kotkin, a fellow in urban studies at Chapman University in Orange, California, characterized California’s current political economy as “Oligarchical Socialism.” This is a perfect description of a system that destroys the middle class at the same time it protects the ultra rich.

California’s leftist oligarchy benefits financially from precisely the depredations they accuse conservatives of committing. They have enacted policies that are designed to make California unaffordable to all but the wealthiest residents, and hostile to emerging small businesses, at the same time as their preexisting wealth and politically connected corporations reap enhanced returns and profits.

Plenty of Land, Impossible to Build

Nowhere are the consequences of California’s oligarchical socialism more evident than in the cost of housing. State legislation has made it nearly impossible for developers to construct new housing outside the so-called “urban growth boundary.” Instead, development is redirected into the footprint of existing urban areas.

While there is a natural tendency as population increases to see higher density redevelopment in urban cores, by restricting outward expansion of urban areas, the value of the limited remaining eligible land becomes artificially inflated. But established landowners and large development firms benefit from these restrictions. They are able to withstand years, if not decades, of expensive permitting delays and endless litigation. They are able to afford millions in permit fees because these costs are offset by their ability to sell residence units—from high-rise condos to detached single family dwellings—at prices far beyond what they would cost in a normal market.

These billionaire business interests get richer, while ordinary Californians who want to own or develop land cannot afford to go through the permit process. Meanwhile, the median cost of a home in California is $539,400—nearly 2.5 times the national average of $216,700. And that’s not even in the tougher markets.

With all land development, environmentalist laws such as California’s Environmental Quality Act (CEQA) create additional barriers. California’s legislature has now made it necessary for new home construction to be 100 percent “energy neutral” by 2020. Not only does this require installation of photovoltaic roof panels, but also more expensive insulation, as well as more expensive appliances that use less energy (and also happen to be less durable and don’t work as well). These mandates make homes less livable, for example, requiring smaller windows in order to make the homes easier to heat and cool.

The amazing fact that California’s legislators willfully ignore is the incredibly abundance of expanses of land that remain virtually empty in this vast state. California is only 5 percent urbanized. According to the American Farmland Trust, of California’s 163,000 square miles, there are 25,000 square miles of grazing land and 42,000 square miles of agricultural land; of that, 14,000 square miles are prime agricultural land. In other words, you could put 10 million new residents into homes, four per household, on half-acre lots, and you would only consume 1,953 square miles. If you built those homes on the best prime agricultural land California’s got, you would only use up 14 percent of it. If you scattered those homes among all of California’s farmland and grazing land—which is far more likely—you would only use up 3 percent of it. Three percent loss of agricultural land, to allow 10 million people to live on half-acre lots!

Instead of allowing land owners to build millions of inexpensive homes on, say, just a small fraction of California’s 25,000 square miles of grazing land, California’s lawmakers want to have “smart growth.” And as prices rise, the solution? On the ballot this November, propositions to enforce statewide rent control, borrow $4 billion to build “affordable housing,” and use state tax revenues to build more government-run homeless shelters. After all, expanding the private sector threatens the oligarchy. Best to expand the public sector.

Plenty of Energy Resources, Unaffordable Energy

While the cost of housing is an obvious example of how California has been turned into an enclave for the super rich and an expensive ordeal for ordinary Americans trying to live there, it is not the only example. California’s legislature has curtailed, if not completely shut down, development of oil, natural gashydroelectric and nuclear power.

In the summer of 2000, during California’s energy crisis, as brown-outs were rolling up and down the state, total disaster was averted because two nuclear reactor complexes, San Onofre and Diablo Canyon, were continuously pumping 4.2 gigawatts of electricity—more than 10 percent of California’s peak demand at the time—into the power grid. But instead of retrofitting, San Onofre was shuttered in 2013 and Diablo Canyon is set to shut down by 2025.

And what’s replacing these power plants? Wind and solar farms, with their intermittent output backed up by natural gas power stations.

If the massive amounts of surplus electricity produced when the sun is shining and the wind is blowing could be stored, it might make sense to decommission clean nuclear power plants and ban development of fossil fuel. But despite decades of research, and dozens of promising but failed attempts, grid-scale electricity storage remains prohibitively expensive. But that’s OK. According to the state legislature, Californians can just pay more. And of course, when consumers pay more, utilities—whose percentage profit is limited by regulation—make far more in absolute profits, since they get to charge so much more per kilowatt-hour. The average cost for electricity is 19.7 cents per kilowatt-hour in California, compared to 13.1 cents per kilowatt-hour nationally.

And there’s no end in sight. True to form, California’s state legislature just passed a law that calls for 60 percent renewable energy by 2030 and 100 percent carbon-free energy by 2045. With hydroelectric and nuclear power off the table, that’s going to be a neat trick.

With oil, it gets worse. We’re not talking about California’s aggressive formulation requirements that make tailpipe emissions cleaner. Perhaps California’s geography justifies this, as offshore winds blow the entirety of coastal city smog into the inland valleys where it is trapped and accumulates. But the reason gas is so expensive in California has little to do with that. It is nearly impossible to maintain refinery output in California, and California’s state gas taxes are among the highest in the nation. Gasoline in California costs around $3.87 per gallon, compared to $2.87 nationally.

While ordinary Californians suffer, left-wing oligarchs prosper.

Green technology entrepreneurs flourish, selling products that consumers are required by law to purchase. Not just solar panels and the related “balance of plant” systems. There are also “negawatts,” a good concept that is being taken to extremes. Sensors and chips designed to make appliances more “energy efficient” are designed by Silicon Valley companies whose prosperity depends on legislative mandates that compel Californians to purchase their products. Promoting the “internet of things” is purportedly justified on environmentalist grounds, while in reality it is a lucrative source of income for high-tech manufacturers, as well as a lucrative means of surveillance and data mining. These new appliances save some electricity. But are they durable? Easy to operate? Do they work as well as conventional appliances? Are they easy to use? Are they inexpensive? No to all.

Plenty of Water, Yet Water Is Rationed

Water is another area where ordinary Californians needlessly suffer inconveniences and pay more.

California receives between 150 and 300 million acre feet of rainfall per year, depending on whether it’s a drought year or a wet year. Regardless of the year, most of that water either evaporates, percolates, or runs off into the Pacific Ocean. And of the roughly 65 million acre feet that are diverted, fully half of it is saved for re-release into the environment, to maintain river flow and to prevent saltwater intrusion into the Sacramento Delta. Of what remains, almost all of it is used for agriculture. Less than 4 million acre feet of water each year are used by California’s households, and less than half that much is for indoor use.

You wouldn’t think that were the case if you reviewed California’s new laws regarding water, and the ways they’re going to be implemented. This year California’s state legislature passed a law requiring average daily indoor water use by California residents to not exceed 55 gallons per day, an amount that lowers to 50 gallons per day by 2030. Maybe you’ve encountered the “solutions” that will effect this reduction: Water faucets that spray eight tiny concentrated, 1.0 mm thick jets of water onto your hands, making it difficult to get them wet and nearly impossible to rinse off soap. Or “low-flow” shower heads with the same problem, magnified for anyone who wants to rinse shampoo out of long hair. What about “smart” laundry machinesthat start and stop randomly, ostensibly to save energy and water, that do a poor job of cleaning your clothes. Or supplemental “tankless” water heaters positioned close to your kitchen sink, that cost thousands of dollars and don’t work all that well, in order for residents to avoid running unnecessary gallons down the drain as they wait for the hot water to flow through their pipes.

All this expense and bother, to save what, at a statewide level, amounts to a trivial amount of water. California’s total residential indoor water use represents less than three percent of California’s total water diversions.

And California’s bureaucrats still aren’t done. In a hearing postponed till just after November 6—no coincidence there—California’s State Water Resources Board is expected to mandate increased “natural flows” in California’s rivers, which will create additional water scarcity, especially for farmers.

It doesn’t have to be this way.

Californians could easily escape water scarcity by investing in additional reservoirs, desalination plants, and wastewater recycling. But environmentalists torpedo all of these projects, successfully lobbying for laws that tie every project up in permitting delays that cost millions, if not tens of millions, and take years, if not decades, to overcome. When permits are finally granted, along come the lawsuits.

A good example of a project that makes compelling economic sense, but is bitterly opposed by environmentalists, is raising the height of the Shasta Dam. In exchange for construction costs under $2 billion, an annual yield of a half-million acre feet would be added to California’s water resources. Not only does this amount of water exceed how much water could be saved by additional household rationing, there’s even an environmental benefit, because summer releases of this water from Shasta’s deep, cool reservoir would improve fish habitat on the Sacramento River.

Roads Are Congested, And the State Builds a Bullet Train

There is nothing more versatile than the common road. On a road, anything on wheels, from bicycles to 80-ton trucks, can get from their point of origin to their destination. The simple flat surface delivers transportation options that nothing requiring rails or runways can hope to match. Moreover, cars and trucks are becoming cleaner and greener every year. One may argue vehemently over how exactly clean energy abundance will be achieved, but only the most pessimistic Luddite might cling to the notion that it will never happen.

Meanwhile, Californians urgently need new roads, wider roads, and upgraded roads. Californians may supplement these new roads with hyperloop technologies, or flying cars and other next generation vehicles, but what California does not need is the much criticized but seemingly unstoppable “bullet train,” a project that fails any rational cost-benefit analysis.

Using the California High Speed Rail Authority’s own projections, the system will not be profitable for 10 years. And what projections! The CHSRA assumes an average ticket price of $60, and average daily ridership of 120,000 people. Will 120,000 individuals actually be willing to spend $600 per month (and that’s only $30 per round trip, half what the High Speed Rail Commission is projecting) to commute from California’s less expensive Central Valley, into their jobs in coastal Silicon Valley and Los Angeles? And so what if they did? California has a workforce of more than 19 million people. How does spending around $100 billion on high speed rail help these other 18.9 million commuters?

To build a road in California takes years of permitting and litigating, then costs far more than it would in other parts of America. Environmentalist restrictionsproject labor agreements, and a bloated, inefficient State Department of Transportation are all contributing factors. Meanwhile, in comparison to other states, California consistently ranks at or near the bottom in terms of pavement conditions and traffic congestion. There is no end in sight.

Housing. Energy. Water. Transportation. These are the basic necessities of civilized life. And for power and profit, California’s socialist oligarchs have made them all prohibitively expensive. The social agenda of California’s Left is well understood. But the punishing economic agenda, engineered by California’s socialist oligarchy, is equally disturbing. It represents a devastating threat to the American way of life.

The second part of this report will identify the special interests that constitute this coalition of scarcity profiteers, and how they might be stopped.