I’ve had the privilege of advising some of the candidates running for California governor in the state’s recall election, including Larry Elder, Kevin Faulconer, and Caitlyn Jenner. (While I offer advice, I’m not a paid adviser nor do I make endorsements—my door is open to any candidate of any affiliation who wants to talk about moving the state forward).
I’ve also had the opportunity of sharing economic policy ideas in the past with two other recall candidates, John Cox (who ran against Gov. Gavin Newsom in 2018) and Assemblyman Kevin Kiley.
This has been a privilege for me, because these individuals are all principled, self-made persons. In my opinion, they all have substantial leadership qualities and they operate from the foundational vision that government is a collection of public servants who follow rules and who prioritize their constituents’ priorities.
Yet all these candidates, also in my opinion, have been smeared and mischaracterized by the California media. Yes, all smear campaigns are unfortunate and unfair. But in the case of California’s recall election, this particular smear campaign may ultimately lead to a lost opportunity to make real progress on California’s economic problems as sensational headlines overshadow serious policy discussions.
All these candidates have solid economic ideas. They all clearly understand the chronic problems that have been plaguing California for decades, including the high cost of living, particularly housing costs; the negative impact of regulations and taxes on businesses, job creation, and employee compensation; and the substandard quality of public schooling. They understand that over one-third of Californians live in poverty or are near the poverty line and that nearly 14 million Californians are enrolled in Medi-Cal, the state’s government-administered health program for the poor. If this group were to be their own state, it would be the fifth-largest in the country.
These candidates all care deeply for the state and its people, particularly the Californians who struggle daily. They are saddened by what has happened to the state: record homelessness, public policies that prevent new homes from being built and that create sky-high construction costs for the few that are built, the Golden State’s population and business losses to other states, and rapidly rising crime.
But what really motivates these candidates is a sentiment that the incumbent politicians who preside over the state—who say they are the champions of the poor and the vulnerable, but whose policy and political choices often dovetail with the cultural and social agendas of a small group of wealthy and politically important elites—tend to make policy choices that make life in California even more expensive and more difficult for those whom they profess to represent.
These candidates, in my estimation, understand that solutions to the Golden State’s problems fundamentally are nonpartisan, requiring the application of some commonsense economics and the willingness to trust free and competitive markets. They also understand that many of the greatest beneficiaries of policy reforms will be the most vulnerable in the state, including the Hispanic and Black communities, the youngest, the oldest, and the poorest. They understand that life in California could be so much better for so many, and that the status quo of the Golden State’s political system has been blocking these reforms for years and blocking them under the radar so that voters cannot easily connect the dots from policy choices to economic outcomes.
Despite their different backgrounds, all understand that regulatory policies and tax policies must be changed so that California incomes rise and living costs fall. Nearly all would overhaul California’s 1970 California Environmental Quality Act (CEQA), which has been weaponized over time to allow interest groups to benefit from new housing by capturing some of the economic returns from new construction.
How badly is CEQA being abused? Roughly 85 percent of the “environmental groups” that file lawsuits under CEQA have no history of ever advocating for the environment. These groups are almost always disguised interest groups, ranging from unions that want to be hired onto a construction project to businesses that want to block competitors. You see, CEQA doesn’t require transparency on the part of groups filing lawsuits.
This means that a group with the name of, for example, Friends of the River may not care whatsoever about a river, but disguising their identities behind this name gives them enormous leverage in capturing some of the economic value of a project. Nor does CEQA prevent duplicative lawsuits or require that losing parties pay for court costs, as is standard practice in other civil lawsuits. Nor does CEQA permit a project to continue once it is under way, even if only a minor part of it is impacted by environmental concerns.
These grossly inefficient features of CEQA are among the main reasons why Five Points Valencia, a planned community in Southern California, still has not been built despite plans being submitted in 1994 for approval. That’s almost twenty-eight years—and still counting. You can’t make this up. This is the story of California housing construction.
The needed reforms to CEQA—transparency, trying a lawsuit once and only once, incentivizing against frivolous lawsuits—are not in any way part of the awful partisan divide that is enveloping our society. These are simple, commonsense principles that are required to get things done. But incumbent politicians have not moved the needle whatsoever on a law that is likely costing the state billions in wasted resources every year and that is depressing living standards for millions of Californians. And the reason they haven’t modified CEQA is because incredibly important political interests supporting them—organized labor environmentalists, most notably—don’t want CEQA changed. This is not left vs. right. This is special interests, plain and simple.
Failing to move the needle on the part of incumbent politicians doesn’t end with CEQA. Homelessness? How about addressing drug abuse, which is a major part of homelessness, rather than promoting drug use? High taxes? How about reforms that lower tax rates and raise take-home income for nearly all? School performance? How about implementing merit-based pay, paying the best teachers what they are worth, and reforming teacher tenure so that poorly performing school districts are not stuck with ineffective teachers?
All these ideas developed by replacement candidates are founded on simple and well-accepted economic principles. These changes make enormous sense for California, particularly for Hispanic and Black families, many of whom struggle economically and don’t have the resources to hire tutors for their children or send them to private schools. Partisan? Hardly.
But the media are doing an enormous disservice to these candidates by not providing an objective portrayal of who they really are and how their policies could positively move the state. Instead, the media, like the political campaign against them, call these candidates “Trumpers,” “anti-vaxx,” and “anti-LGBTQ” (including the transgender Caitlyn Jenner).
One example of this is the leading replacement candidate, Larry Elder. For months, California Democrats have portrayed the recall campaign as one of White supremacists and those on the fringe of politics. This portrayal has morphed into the characterization of Larry Elder, a conservative Republican, as “The Black Face of White Supremacy.” Yes, in these sensitive racial times, an opinion columnist writing for the Los Angeles Times, the largest newspaper in the state, in effect called a Black Californian an Uncle Tom. That is horrendous and undeserved.
Elder knows what racism was like before the 1964 Civil Rights Act. He grew up poor in South Central Los Angeles. He’s the son of a man who was beaten viciously by an alcoholic stepfather, a dad who worked two jobs, one as a janitor during the week and the other cooking for a White family on the weekends. But Elder’s dad worked hard, saved his money, and bought property. He instilled in Elder the principle that hard work will succeed in America. Does this sound like “the Black Face of White Supremacy”?
The once proud tradition of American newspapers and the remarkable journalists they hired is now largely gone. To try to maintain ad revenue and paid subscriptions, newspapers are now short on reporting and long on opinion and “clickbait” presented as news articles.
But many Californians rely on the mainstream media for news and information. If these stories are successful in turning voters against the recall candidates, that means a continuation of the status quo. And the most vulnerable Californians—nearly 14 million and counting—will continue to struggle to make ends meet.
Lee Ohanian is a Hoover Institution senior fellow and a distinguished professor of economics and director of the Ettinger Family Program in Macroeconomic Research at UCLA. He writes weekly on the Golden State’s public policy choices for Hoover’s California on Your Mind web channel.
