Falling Off The Skyscraper

Even as you pass the 3rd floor on the way down, you can console yourself by saying, "Nothing's happened yet!"

In the coming years, California’s claim of being the economic exemplar of the country may be further undermined by legislative overreach. The statewide rise in the minimum wage will hit the lower-wage sector, particularly outside the coastal enclaves. Various plans to boost the welfare state, such as a single-payer health care system that includes the undocumented, and a host of union-driven initiatives, seem certain to drive up costs and impose an ever-heavier tax burden on the state’s struggling middle class.

Perhaps most threatening, over time, may be a host of new environmental laws which will impose enormous burdens on affordable housing, energy prices and industrial growth. The slowdown in tech growth, coupled with a looming decline in the markets as the Trump agenda unravels, could weaken the capital gains juggernaut that has sustained the state through the past decade. Gov. Jerry Brown, under whose watch spending has risen 45 percent, is already predicting a large deficit for next year.

So far this decade, California has defied economic logic, largely due to the explosive growth of Silicon Valley, as well as the effects of rapid real estate appreciation. Yet, these gains have failed to reverse, and in some ways have even exacerbated, the state’s highest-in-the-nation poverty rate, growing inequality and a mounting outmigration of middle-class families. These facts suggest that it’s time to end the celebration and start focusing on how create a more expansive, less feudal California.

Something that can't go on forever, won't. That's as much a law of economics as it is physics.