Why California is Still America's Future

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The State of Progress
So why all the end-is-nighism? Schwarzenegger thinks California gets slagged nationwide for the same reason the U.S. gets slagged worldwide: it's natural to resent the big kahuna. (He should know; his approval rating has dipped below 30%.) In a poolside interview after hosting a global climate summit in Century City, he suggested that outsiders envy California's immense resources — beaches, mountains and redwoods; Hollywood, Napa and Disneyland; the best in stem-cell research, fruits and vegetables, entertainment and fashion. (He was sporting a suit with a zebra-print lining.) "We're all about the cutting edge," he said. "I mean, come on. California is wild!" He's right about the schadenfreude, and it was fun to hear him say the word. It is easy to gloat when the cool jock with the hot girlfriend wrecks his sweet car, especially if he seems kind of smug. I was reminded of this during Rob Lowe's talk at the summit, when he declared that everyone has an obligation to join the fight against global warming, then continued, "For my part, I'll be doing The Ellen DeGeneres Show."

Then again, California has legitimate problems that inspire legitimate criticism: gangs, sprawl, disturbing dropout rates, water shortages that don't seem to stop farmers from irrigating rice and cotton in the desert, the crazymaking traffic that Hollywood immortalized in Falling Down. It's still sitting on a fault line. Its expensive housing, even after the real estate crash, poses a real obstacle to the dream of upward mobility. So do its public schools and other public services, which have been deteriorating for years — in part because older white voters have been reluctant to subsidize younger minorities.

This gets to the one area where California really is dysfunctional: its budget. Californians generally enjoy government spending more than they enjoy paying for it, which is a national problem, but they've also straitjacketed their politicians with scads of lobbyist-produced ballot initiatives locking in huge outlays for various goodies, as well as the notorious Proposition 13, which has severely restricted local property taxes since 1978. California is also one of only three states that need a two-thirds supermajority to pass a budget or raise taxes, a virtual impossibility in its ultra-partisan legislature. So it relies on a boom-and-bust tax base that even many liberals admit is overreliant on the rich. The state's economy actually grew last year, but its revenues crashed because its top earners had lower incomes and capital gains. That meant sharp cutbacks, especially in education, which in California is unusually dependent on state cash. "We have an incredibly dynamic economy, but we'll still end up in federal receivership if our government can't pay its bills," says historian Kevin Starr, a prolific chronicler of the state.

Fortunately, help may be on the way. Nonpartisan groups like Repair California and California Forward have built momentum for sweeping reforms that could stop the unsustainable chaos — including an end to the two-thirds rule, limits on ballot initiatives and a new system of taxation. Schwarzenegger is pushing for a gargantuan water-sharing agreement that could help prevent the state from running dry. And his potential successors are also formidable go-getters with forward-thinking credentials — including former governor and current attorney general Jerry Brown, golden-boy San Francisco mayor Gavin Newsom and former eBay CEO Meg Whitman. Brown, the early front runner, was widely mocked as Governor Moonbeam back in the 1970s, but some of his ideas — including energy efficiency, as well as the emergency-communications satellite that inspired his nickname — no longer seem so flaky.

But the krazy-Kalifornia criticism is likely to continue regardless of the facts on the ground — not just because of envy, but because of ideology as well. The collapse of the Golden State provides an irresistible parable for hippie-lefty vegan politics, the failure of a quasi-Scandinavian progressive experiment symbolized by MoveOn.org, Daily Kos and the Sierra Club; yoga, crystals and medical marijuana; "Hollywood values" and "San Francisco values." California has a tradition of activist government, and public support for the University of California, federal energy labs and the military-aerospace-industrial complex played a huge role in creating Silicon Valley, San Diego's biotech cluster and the state's other private-sector centers of innovation. So it's been a juicy target for right-wingers who consider Schwarzenegger a squishy sellout. If a low-carbon, Big Government, change-obsessed state with high taxes on the wealthy, draconian environmental regulations, a porous border and the nation's most vibrant labor movement were imploding, what would that say about the age of Obama?

Then again, the home state of Richard Nixon and Ronald Reagan has been a conservative trendsetter as well, leading the backlash against taxes, affirmative action and illegal aliens and enacting the first three-strikes law against career criminals. Its economy is much closer than the nation's to a true model of free-enterprise capitalism, in which government sets rules and enforces a level playing field but declines to pick winners. And what could be more Californian than the conservative megapastor Rick Warren urging his multimedia flock to make a fresh start with a forgiving God? "A clean slate is possible!" he wrote in his best seller God's Power to Change Your Life. "It's a lot like my son's Etch A Sketch."

In any case, California is not imploding, which ought to be heartening to Americans regardless of ideology or geography. Because America is essentially the land of the Etch A Sketch, and California is America but more so, beckoning dreamers who want to cook Korean tacos or convert fuel tanks into hot tubs. It's progressive more in the literal than in the political sense of the word. And it's where America is going: a greener, more advanced and more global economy; a browner and more metropolitan population; and, yes, some staggering debts and other governance problems that need to be resolved. It's expensive and crowded — because people still want to be there! — and it's recovering from an economic earthquake. But it continues to have a powerful claim on the future. "In the depths of the breakdown, you can see the next narrative," says Mark Muro of the Brookings Institution's metropolitan-policy program. "It's California. The next economy is already in place there, and it's amazing."