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California: Across the Great Class Divide


The bifurcation of Californian society into coastal elites and inland proles is catching the attention of more and more people. Economists at the UCLA Anderson Forecast are warning that California’s slow growth and high unemployment may be part of a structural problem that’s not going away any time soon. The industry on which California’s economy depends most is closed to the vast majority of the state’s workers. Residents in California’s interior districts simply don’t have the skills to participate in tech and have no means of gaining them. The LA Times reports:

“Yes, California is growing, but the recovery has not narrowed the gap between the coastal parts of the state and the inland parts of the state,” said Jerry Nickelsburg, senior economist at the UCLA Anderson Forecast. “The gap is larger.”

The latest economic data are not encouraging, showing that some parts of the Central Valley and Inland Empire actually declined in some industries, such as manufacturing. […]

Nickelsburg said he fears that structural unemployment will keep thousands out of the labor force long into the future. […]

“So if history is our guide to forecasting, the bifurcation of California’s recovery has no necessary imperative to end for a number of years to come,” Nickelsburg wrote.

To be sure, California is not alone; this is a crisis that the country faces as a whole. Our challenge in the information economy is to figure out how to put the talent and hard work of the non-Zuckerbergs among us to work in meaningful ways. It won’t come quickly, if it comes at all, but if we figure this out, we’ll have an economy with even more wealth and more and better jobs than we had in the last one.

If we don’t figure it out, we’ll be stuck with something like what California is right now: Stark class divisions with a tiny handful of wealthy innovators on the one hand and insecure, unemployed welfare dependents on the other. It didn’t used to be this way, but California should serve as a warning of what Americans need to work hardest to avoid. The Golden State is what could happen if we don’t make our way in the brave new world.

[Image of unemployment line courtesy of Shutterstock]

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  • rheddles

    Tyler Cohen says get used to it. But I doubt it will be as bad as Caliphornia as the rest of the country is not nearly as racist or self-righteous as coastal Caliphornians. Nonetheless we are going to have to learn how to live in a world of alphas and epsilons.

    • f1b0nacc1

      We have always lived in a world of alphas and epsilons (wonderful metaphor, by the way…hope you don’t mind if I use it in the future), we have just have chosen the wrong way to cope.
      Unlike Brave New World, the Alphas and Epsilons should not be seen as permanent realities of birth, but rather temporary categories where individuals can transition up or down. To this end, we need to focus on making mobility not only possible, but easy, and defeating the efforts of those on the top to pull the ladder up behind them. This means first and foremost defeating the efforts of the Left that destroy enterprise and lock the poor into protected ghettos for ‘their own good’. We will always have winners and losers, trying to eliminate this only guarantees that those at the bottom never have the opportunity to win.
      Alphas and epsilons aren’t the problem…PERMANENT alphas and epsilons are…

      • rheddles

        Read Cowen’s book. There will be mobility, but it will be one strike and you’re out.

  • Anthony

    There is at least some hope. You don’t have to be a rocket scientist to become a nurse, a respiratory therapist or a truck driver. All three of these professions are in high demand across America, and all three are much better than working in low wage retail jobs.

    The skilled trades are also a good bet. The one problem with them is that the best opportunities are close to where rich people live, i.e., there are more customers for electricians and plumbers in the big metro areas than in poor rural areas.

    • rheddles

      Truck drivers are a decade away from being obsolete unless the law interferes. Nurses and respiratory therapists will be in declining demand later as the development of the technology to make them obsolete will take longer. But it will happen. low wage retail jobs will disappear as bricks and mortar lose to Amazon et al.

      You hit Cowen’s nail on the head in the second paragraph. The opportunities for the epsilons will be to serve alphas. But there will be lots of epsilons. So you’ll need some schtick to attract the alphas. But remember. One bad review on Yelp and you’re history.

  • wigwag

    Peter Beinart (who I usually think is a blow hard) has one of the smartest pieces that I’ve read in years in the current issue of “The Daily Beast.” It is really a must read for Walter Russell Mead fans because it hits on all the issues that Professor Mead blogs about regularly; the class divide, the “war on the young” and the intra party civil war that both tge GOP and the Democrats are currently confronting.

    It also highlights the the relevance of the very interesting recent democratic mayoralty primary in New York and what it may foreshadow for the American political system as a whole (a subject Mead hasn’t touched on yet).

    Beinart may be annoying and mostly wrong about things, but he’s authored a very compelling essay.

    It can be found here,

    • rheddles

      Interesting, but verbose and more like wishful thinking. Anyone who isn’t a liberal at 30 doesn’t have a heart. Anyone who isn’t conservative by 50 doesn’t have a brain. What is the ratio of voting members of the electorate by ages?

      One big problem all these neo-liberals have is the depth of the Democrat bench. Cory Booker, OK. But Gavin Newsome and Elizabeth Warren? The next liberal leader will one of the millenials who doesn’t go conservative by 50.

    • Anthony

      Wow, this article is great. Professor Mead would enjoy reading it.

      • wigwag

        I am glad that you found Beinart’s remarks interesting. One of the problems the GOP needs to address is that the Party is hemmoraghing votes among young people. Superimpose this reality on the GOP’s estrangement from African American, Jewish, Asian and especially Latino voters and it becomes difficult to conceive of how a Republican candidate can ever be elected President in the foreseeable future. And all this is before you even take into account a gender gap that is enormous.

        Having neoliberal sentiments myself, I have take no pleasure in Beinart’s thesis but I do think he may be on to something.

        The increasing class divide could produce an electorate that is far more left on average than the American electorate is now. I don’t think that bodes particularly well for the future.

    • Anthony

      WigWag, Jeffrey Sachs in talking about Millennials echoes that economic crises open the door to deep political change. Beinart’s political generation concept ought to raise interest among aspiring politicians. His essay certainly provides ideas, concerns, trends, and dynamics questioning anything like stasis going forward in either party – thanks. And, I see you subtly elicited Quick Take on NYC primary

  • Jacksonian_Libertarian

    You get more of what you pay for, and less of what you tax. If you pay people to be poor, you will get more poor people. If you tax only rich people, you will get fewer rich people. This is why conservatives want to end all welfare, and have a flat income tax.

  • Kavanna

    Ah, California … didn’t the future once happen there? Now it’s the Great Plains and Third Coast.

    When will the Millennials wake up?

    Yes, Peter Beinart is a strutting blowhard. I believe I invented that phrase 🙂

  • stan

    It would help if the rich elites weren’t pushing state laws and regulations that destroy the chances of the have nots to succeed.

  • shermanlee1

    The ‘information economy’ is to some degree an illusion. The way it’s currently set up is fundamentally parasitic, and it _inherently_ produces class structures and job losses, because it isn’t expanding the economic pie, it’s just squeezing cutting the same pie into bigger (and fewer) slices, while transferring the risk to the general population. What we call today’s ‘information economy’ is a form of ‘private profit and public risk’.

    But you can’t do that indefinitely, precisely because both the pie and the risk pool is finite in size. The crash of 2008 is just one example of this effect.

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