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Katy Grimes

California’s False ‘Green’ Economy: The Rest of the Story

By Katy Grimes and Tom Tanton

False claims about the success of California’s green economy have been front-page headlines for several years. Green tech groups, green energy investors, stakeholders and even green tech media claim California has a “thriving clean energy economy.”

What’s missing from the news is The Rest of the Story. The political and economic impact of California’s Global Warming Solutions Act of 2006 (AB 32), the greenhouse gas reduction mandate foisted on Californians by the Democrat-dominated Legislature, and signed into law by then-Gov. Arnold Schwarzenegger, hasn’t been good for the economy.

While recent news reports show unemployment has slightly dropped, the facts show otherwise. The U.S. unemployment rate cannot possibly be 5.3 percent, nor can California’s be 6.3 percent. The only way it can be reported this way is by excluding those Americans who have given up finding a job, and are no longer participating in the workforce.

But this Legislature and governor would much rather talk about a warming climate, than the business climate or economy.

Billionaire climate change activist Tom Steyer made his fortune investing in the energy sector, through his hedge fund company, the Farallon Capital Management fund, which Steyer managed until 2012. Farrallon invested in coal mines in Australia and Indonesia, as well as in tar-sands oil, which is strip mined, processed to extract the oil-rich bitumen, which is then refined into oil. It’s an interesting career change and about-face.

Channeling Paul Harvey

Paul Harvey

Paul Harvey would understand. Harvey, a 70-year career radio broadcaster, told melodic, historical, political and moral stories for more than three decades in special segments called, “The Rest of the Story.” Harvey often dispelled media myths, government lies, and dispensed common sense by the truckload. “Dependency arguments often come from elites – either aid agencies or governments – and say something about attitudes to poor people,” Harvey once said.

It’s clear what Harvey might have said about the illogical push to outlaw coal, nuclear and hydroelectric power, to move to an entirely “green” energy sector and economy – especially since this “push” is coming from billionaire oligarchs like Tom Steyer, who are heavily invested in green energy and stand to make billions more in their portfolios, control the energy market, and control the masses, and are doing this through influence peddling California’s elected politicians.

The Rest of the Story on California’s Green Economy

Advocates of California’s green energy scheme claim myriad benefits.  But much like EPA’s take down by the Courts, the advocates forget to count the costs. With its last decision of the 2014 term, in Michigan v. EPA, the Supreme Court held, by a vote of 5-4, that the U.S. Environmental Protection Agency unreasonably failed to consider costs when deciding to regulate mercury emissions from power plants. The same discounting of costs is happening when advocates like Jerry Brown and Tom Steyer, or the California Air Resources Board tout our economic improvements.

Wage disparity is growing as pink collar and service jobs replace blue collar jobs in manufacturing. While we’ve added jobs, that number hasn’t kept up with our large and growing population. And our overall economy is subject to wider volatility, and with it, the state tax revenue.

Before California embarked on its climate change quest, growth was 3.4 percent per year; after, it dropped to just over two percent. Much of that drop was the worldwide recession, but we are lagging in our recovery compared to elsewhere. Folks lucky enough to have a job are working more hours according to the latest California Labor Market Review. Many do so just to pay the higher prices for gasoline, electricity, utilities, food and other necessities, brought about by AB 32.

Headlines across the nation celebrate gasoline prices at or below $2/gallon. Yet gasoline in California remains stuck near $4.00, and higher in California’s big cities. That’s largely due to California-centric myopia and heavy handed regulations aimed at reducing greenhouse gas emissions at any and all cost. At the same time, due to the 2011 Renewable Portfolio Standard, another part of our global climate change law, electricity prices in California are 40 percent higher than the rest of the country, and our electrical grid reliability suffers.

Activists for the “green economy” often point to the growth rate of ‘green jobs’ as justification for more. Yes, green jobs have increased in percentage terms, but that is simply the result of starting from a small grouping.  Add in redefinition of what is a green job (bus drivers? really?) and discount jobs lost in other sectors, and the result is overall jobs lost.

In addition, the number of jobs is one thing; the productivity of those jobs is another. Creating jobs is easy…just make them less productive.  As Nobel winning economist Milton Friedman once observed, if the number of jobs were the only criteria, just give workers spoons instead of bulldozers when they’re building large structures.

The Rest of the Story on a ‘Recovering’ Economy

“California unemployment rate falls to 6.2 percent,” the headline screamed Saturday in the Sacramento Bee. Michael Bernick, a labor lawyer in San Francisco and former state EDD director, called the monthly job spike ‘astonishing,’ adding that it was ‘the fourth largest monthly gain since January 2000 and the largest since October 2012,’” the Bee reported.

Wow! Shazam! Pow! Readers may have sighed a collective sign of relief. Whew! The economy is back.

However, had the Bee done even a tiny bit of research, they would find a very different set of circumstances and numbers, because what is left out of this story and most others like it, is the Labor Force Participation Rate. California’s labor participation rate is at its lowest since 1978… when Jimmy Carter was President. Carter, now 90 years old, ushered in the deepest and longest-lasting recession the United States has experienced since the big depression in the 1940’s.

This Bee story also neglected to compare California unemployment with the 49 other states. California is hardly leading a recovery in the country, with the state’s unemployment rate going down less rapidly than elsewhere.

The Rest of the Story on Taxes, Business,

California’s top, marginal tax rate of 33 percent is the third-highest tax rate in the industrialized world, behind only Denmark and France. This situation creates a bias against savings, slows economic growth and harms competitiveness,” Chief executive Magazine reported.

California has the highest individual income tax rate in the entire country. The state ranks 15th highest on high corporate taxes. Our sales taxes are in the top 10 highest in the country. California has the highest gasoline taxes. Additionally, the Legislature is planning on passing a tax on services.

California even considered taxing bullets and ammo, but the legislation died in the Committee process.

California also has a myriad of “Sin Taxes,” which lawmakers, acting as political activists, claim are designed to change behavior. California taxes sodas, cigarettes, and has tried to tax fatty fast foods. When he was Oakland’s Mayor, Jerry Brown proposed taxing junk food and chocolate.

Yet sin taxes don’t change behavior.

For the 10th year in a row, Chief Executive Magazine ranks California dead last for business-friendly states: “California is the highest-taxed state in the nation, highest gas tax, 60-plus cents per gallon, which—combined with CARB regulations—makes delivery within the state extremely costly. Added to this is the disdain for any and all manufacturing as Sacramento wants this to be a Green State. Add to that a pension debt that is largely ignored but very real.”

The Rest of the Story on Unemployment

California is tied for the 7th worst state unemployment rate at 6.3 percent. The national unemployment rate is 5.3 percent.  But even that number is a lie. Those who are unemployed and have stopped looking for employment are no longer counted as “unemployed…” ironic in this era where everyone gets a trophy just for showing up.

Those who are underemployed are not counted in the unemployment calculations. And those who work part time, but previously worked full time, or want to work full time, are not counted in the unemployment numbers. Areas of the state have unemployment above 20 percent.

We’re creating jobs at a slower pace now than at the same time last year. And with the supposed drop in unemployment, the underemployed and those “no longer in the labor force” are issues rarely reported. There is no coincidence between dropping unemployment numbers, and the increase of underemployed and those “no longer in the labor force.”

Daniel Amerman, a Certified Financial Planner with thirty years of experience sums it up best: “In an extraordinarily cynical act, the government is effectively saying that because the job situation has been so bad for many millions of unemployed people in their 40s, 30s, 20s and teens, they can no longer be considered to be potential participants in the work force at all.  Because there is no hope for them – they no longer need to be counted.  And it is this steady statistical cleansing from the workforce of the worst of the economic casualties – of these very real millions of individual tragedies – that is being presented as a rapidly improving jobs picture.”

And now you know the rest of the story. Good Day!


Tom Tanton is Director of Science and Technology Assessment, Energy and Environment Legal Institute and Senior Fellow Reason Foundation. He previously served as Principle Policy Advisor at the California Energy Commission.

Katy Grimes is Senior Media Fellow for Energy and Environment Legal Institute, and Senior Correspondent for the Flash Report.

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