“We wanted flying cars, instead we got 140 characters.” – Peter Thiel, in his 2011 manifesto “What Happened to the Future.”

Anyone living in California who’s paying attention knows what venture capitalist Thiel meant. While a handful of Silicon Valley social media entrepreneurs have amassed almost indescribable wealth, andfundamentally transformed how humanity communicates, investment in boring things like roads, bridges, tunnels, ports, aqueducts, reservoirs and railroads – the list is endless – has stagnated. Especially in California. Flying cars? Forget about it. Go tweet.

Why? Why the neglect?

(1) For starters, why invest in moving atoms around, which is messy and might incur the wrath of powerful climate change activists, when you can move electrons… Read More

California’s civil infrastructure was once the envy of the nation. During the 1950’s and 1960’s the state wisely invested in transportation, water and power infrastructure, delivering capacity well in excess of the needs of the state’s population at the time. Even today, the scale of California’s network of aqueducts and pumping stations to transfer water from north to south, east to west, is one of the largest in the world, and California’s vast network of interstate freeways has few rivals.

Moreover, Californians in that era had planned to continue to expand these infrastructure assets to accommodate a growing population, but that all came to a halt in the 1970’s. During the 1970’s not only were the plans for additional water storage and distribution assets abandoned, but state-owned right-of-ways and land acquisitions both for water and transportation were sold to private interests. California now has a population of 40 million people living in a state with civil infrastructure designed to accommodate 20 million people.

The new political alternative to infrastructure development is conservation. By zoning ultra-high density infill in urban… Read More

“The six-year bull market is admittedly long in the tooth.” CalSTRS Chief Investment Officer Chris Ailman,Sacramento Bee, July 17, 2015

If what Mr. Ailman really means is equity investments may not be turning in double digit returns any more, that makes the recent performance of CalSTRS and CalPERS all the more troubling. Because according to their most recent financial statements,CalSTRS only earned 4.8% last year, andCalPERS only earned 2.4%. That leaves CalSTRS 68.5% funded, and CalPERS 77% funded.

Are we at the top of a bull market? Take a look at this chart:

S&P 500, Last Twenty Years Through June 21, 2015

… Read More