California Update

>> Bill Whalen: It's Thursday, May 9, 2024, and welcome back to Matters of Policy and politics, a Hoover Institution podcast devoted to governance and balance of power here in America and around the globe. I'm Bill Whelan, I'm the Virginia Hobbs Carpenter distinguished Policy Fellow in journalism here at the Hoover Institution.

I'm not the only Hoover fellow who's podcasting these days. In fact, I suggest you go to our website, which is hoover.org, click on the tab at the top of the homepage. It says commentary, then head over to where it says multimedia. And up will pop our podcasts, or over a dozen in all, including this one.

Now this is the California version of matters in policy and politics that we do once a month. Ordinarily, Jonathan Morvrodis will be doing the moderating, but Jonathan's not with us today. So I've got the microphone, which may or may not be good news for our guest today, which is of course my sidekick in all things California, Leo Hanian.

Leo is a senior fellow adjunct here at the Hoover institution and a professor of economics and director of the Ediger Family Program in macroeconomic research at UCLA. As I mentioned, he's also my partner in California endeavors, most importantly, California on your mind, which is a Hoover Institution web devoted to all things California.

Lee and I writing each week on various aspects of the California assistance. Lee, great to see you.

>> Lee Ohanian: Hey, Bill. Good to see you.

>> Bill Whalen: A lot to unpack here in the fifth month of the year. But let's start with the big news in California for the past week or so, which is pro Palestinian protest on California campuses statewide, north, south, east and west.

We're talking USC and UCLA up here in the Bay area, where I am. Lee Cal Berkeley and Stanford. Cal Poly Humboldt had to shut down at one point. Like to focus on UCLA because, first of all, you wrote an excellent column in California on your mind on it.

But also, Lee, for you, this is very personal. I think you mentioned in your lead in your column that you've taught at UCLA. You've taught economics in the past 25 years, so you obviously care very much. So tell us why UCLA handled this wrong, why it was not about free speech and what could have been avoided.

 

>> Lee Ohanian: Yes, Bill, I've been at UCLA for 25 years, and in that time I've taught about 7000 undergrad students and 500 to 600 PhD students. I've never seen anything like what occurred at UCLA last week in which a few hundred pro Palestinian protesters took over an area called Royce Quadrangle.

Royce Quadrangle was named after Royce Hall, which I'm guessing everyone at some point or another, whether in a movie or a television show, some type of video, has seen Royce hall. It's a large, very interesting artisan design building that's UCLA's most iconic. And then there's a grassy area in front of that, and right across from that is the undergraduate library.

So it's a very, very active part of campus. And that part of campus was taken over by pro Palestinian protesters on Thursday, April 25. It was forcibly cleared out by law enforcement about a week later. But in that time, the university, in my opinion, just completely mismanaged what had happened, and in some cases, just egregiously so, and in some cases, just almost without any common sense.

I'll give you a few examples. On Sunday, which would have been, now, it's about a week and a half ago, there was a jewish girl who was beaten unconscious. She was carrying a flag of Israel. She dropped the flag and she was kicked in the head to the point where she was unconscious, and she was taken to the emergency room.

That was on Sunday, April 28. The next day, which was the first day of the week for the academic week, there was, jewish students were trying to walk through the area, and protesters were preventing them from walking. And there's a YouTube video that's linked in my column that shows this.

His friends were videoing this encounter. I was not there at that time. I was around that area at other points of the day. And campus security was simply allowing protesters to prevent students from walking across campus. And of course, this is completely unacceptable. That was the day after a girl was beaten unconscious about, I believe, on the same day that Monday, April 29, there was a jewish professor.

He's been at UCLA almost as long as I am, 22 years. He was tackled. He was tackled by protesters. I think it's fine, but you look at three of these types of incidents, I'm sure there are more that I'm simply not aware of. Every day I was receiving emails from campus leadership telling me that the protest is mostly peaceful.

And we, UCLA's leadership, are doing everything we can to allow our bruins to freely express themselves and not disrupt campus operations. Well, campus operations were incredibly disruptive. The undergraduate library, one of the busiest buildings on campus, access was restricted. Royce hall access was restricted. Individuals who apparently were jewish were not allowed to walk through that area.

So at some level, Bill, what does it mean? What does it mean not to disrupt campus operations? And then finally, roughly a week after the encampment started, the UCLA's leadership decided to clear the encampment, and they brought in highway patrol and ride gear to clear the encampment. About 200 people were taken into custody, released later, 300 left of their own decision to leave.

So UCLA is home to about 77,000. It's a community of 77,000 people, 46,000 students, 31,000 faculty and people working there. So roughly 500 individuals took over and completely disrupted campus life, involving 77,000, it's about 0.4%. And that simply should have never been allowed to happen. And people were physically assaulted.

That should never been allowed to happen and then built it. To make matters worse, after all this took place, after that encampment was cleared, I received an email indicating from campus leadership, we are perplexed. We're perplexed how this could have happened with a mostly peaceful protest. And I'm just shaking my head thinking, you may as well given the car keys to the family car to a twelve year old said, hey, go out and have a good time.

And when they come home from joy riding and the car is cracked up being, hey, how could that happen? How could the family car get cracked up being driven on a Jordan White but 12 year old, I mean, I find that to be equivalent.

>> Bill Whalen: Sharply when I saw the phrase mostly peaceful, and here's why.

Let's go back to the summer of 2000. You probably remember that CNN reporter standing in Kenosha, Wisconsin while a building behind him was just a five alarm fire. And one of the screen captions say below him, fiery but mostly peaceful protests. I just think mostly people get retired.

But I'm curious, as a member of the faculty, Lee, what guidance of any do you get as an economics professor in terms of what role you could play in the protest? Is anybody putting out any guidelines saying don't do this? Or if you do do this, what's the limits?

Or is just every professor free to do what he or she so chooses?

>> Lee Ohanian: Well, in my opinion, there is a remarkable lack of leadership, and that's really comes across when you look at the timeline of what occurred. Currently at UCLA, and the failure to take decisions that was really in the best interest of everyone.

We were getting emails coming back and forth saying, hold all your classes on Zoom. And then the next day, the encampment's been cleared, you can go back to holding your classes in person. And then just this past Monday. So today is Thursday. So just on Monday, May 6, I was under the impression my classes were to be held in person on Monday morning.

I was busy. I had meetings and seminars the entire morning. I didn't check email. I went to my 01:00 class, which is 25 kids and 20 to 25 kids. Only three kids were there. And I looked at him and I said, what happened? They said, you didn't get the email?

An email came in this morning saying, all classes are shifted back to zoom. Now, Bill, this is roughly, I don't know, 16 hours after I was told all classes are to be held in person. So I missed the email that came in because I was busy. So there's really just, it strikes me as a rudderless, really as a rudderless ship.

And what perhaps was just the saddest thing is that there are some faculty on campus who were suggesting the idea that classes be moved to the protest site. And that whatever class one was teaching weave in the issues regarding Gaza and Palestinian Arabs and Jews and Israel. And I just thought, my God, is there not an adult around here?

I mean, you're gonna put students in danger and you're gonna open up the university to just an enormous potential liability issue. So there really was just, I think, a gross lack of leadership, in my opinion, as to what took place.

>> Bill Whalen: So what should the leadership have done differently, Lee?

 

>> Lee Ohanian: Yeah, so really it boils down to just having a simple set of principles, which is universities are places where people have different opinions. And universities simply cannot take a stand on political or cultural or social issues unless there's something directly impacting the mission of the university. And in my opinion, I think most people's opinion, the Gaza war does not directly impact the main mission of UCLA or the University of California.

And in those circumstances, you got to protect people on campus. When it comes to free expression, freedom of speech, you vigorously protect that. But this protest was never about freedom of speech. It was about taking over part of the university and staying there indefinitely because the protesters wanted UCLA and the UC system more broadly to divest from investments that were related with Israel and not do business with organizations that have ties to Israel.

That was the purpose of this. This was not about. This was not about peacefully carrying signs or respectfully saying, we stand in solidarity with the Palestinians and we want the Gaza war to end. It was never about that. It was about taking over the university. And that just should not be tolerated.

So what the university could have done is simply to say, if you want to have a protest, okay, you coordinate it with us. We'll give you a start time, we'll give you an end time. We'll give you a specific area where you can take into your protest. We will have campus security there to protect you, to protect everyone.

And you cannot disrupt the mission of the university. You can't block people from walking across the line. You cannot stop people from walking into a classroom. That simply is not tolerated. And if that happens, the protests will be disbanded. You can't camp out overnight. You follow these parameters, which are in place for your safety and the safety of everyone, and then we're good to go.

But that's as far as it can go. And UCLA simply allowed a very small group of people, relative the size of the community, to take over a spot, to build these makeshift barriers where just horrible things were spray painted on there about Jews. And the university let this happen.

And so at the end of the day, you just ask yourself, why? Why did they do this? Why did they make what appears now just to be an obvious blunder? And so now there's a move within the university to possibly have a vote of no confidence in UCLA's chancellor, who has only a few weeks left.

He announced his resignation several months ago. He will return as a normal faculty member on July 1 of this year. But it goes deeper than that. It goes within the leadership of UCLA. There's just a common sense aspect to stuff that was not followed, and now we're paying the price for it.

 

>> Bill Whalen: And then finally, Lee, what's gonna happen? Let's look at the calendar. So, UCLA's commencement is not until June. So I'm curious as to what you think is gonna happen then. And then the new school year will start, what, August, early September. And I'm curious about that, and here's why.

Commencement brings in alumni, brings in donors. The new school year brings in parents. This is ultimately money for the school. And I hate to be crass, but when you look at situations like Columbia, you can't tell me that they were motivated in large part by the fact that their commencement was breathing right down their neck.

So, as you say, gonna be ready to handle a commencement, and will it be ready to open its doors next fall?

>> Lee Ohanian: Yeah, I hope so. A new chancellor has not been announced yet. So what will happen as far as commencement goes? Keep my fingers crossed. But I think right now it's just fundamentally, the university just has to say, we are not gonna permit any type of occupation of university property, that will be cleared out.

And once that's communicated, Bill, one thing you heard protesters saying is that we were shocked when when police and riot gear arrived. We never had any idea about this. The university never gave us a heads up about this. Maybe they did, maybe they didn't. But clear expectations have to be in place that you simply can't do this.

You can't take over property like this. That's not permissible. And if that's a clear expectation, then and only, that only the university will permit freedom to speech. Yeah, you can carry a sign. You can say free Gaza, you can say those kinds of things, but we're not going to let you take over property.

And once that's understood, I think you'll see a lot less of this, because if protesters understand that they're not going to be able to do what they really want to do, then they're not, you know, they're not going to do it. I don't think they really want to go to jail.

So if that change of rules takes place, then I think we should be fine for commencement. But if it doesn't, then I don't know.

>> Bill Whalen: So I wrote a California Remind piece last week, Lee, also on the campus protests. But I went back and I looked at history and I looked at the 1960s and the effect that protest had on state politics.

And people tend to forget that actually 1964 was the beginning of the Vietnam movement in California schools. Berkeley that fall, having protest over free speech mushroomed in 1965 and paved the way for one Ronald Reagan to be elected governor in 1966. And this was Reagan's brand. He ran against the Berkeley protest for governor, basically a theme of the inmates running the asylum.

And when he was governor, he took these hands on. He was just very, he had a showdown with students on the campus, didn't shy away from it. And he contrasts that to what Gavin Newsom's approach has been here. And Newsom's approach is, interestingly, because here's a guy who clearly rarely misses a chance to be in front of the cameras, to make news, to see his face on TV.

And he, like the president's, kept a very low profile here. He put out a somewhat wishy-washy statement about protests not leading to violence, everybody getting along. He did send in the CHP and UCLA when requested. But it's interesting two things that Newsom could be doing here, Lee, which he will not do.

Number one, he could ask for a real deep dive into the operations of the UC and CSU systems, and look into campus culture. And what I'd be particular, said, Lee, is the hiring and coddling of professors who are just clearly antisemitic or in any ways are supporting Hamas, Hezbollah, jihadism in general.

So if I were the governor, I'd want to know, how did our schools get to be this way? Why do we have these people teaching on the public's time? The second thing that stands out, Lee, is since he's in California, there's nothing stopping Gavin Newsom from going down to the Wiesenthal center in Los Angeles and giving a very strong speech, as the president did the other day, denouncing antisemitism.

But when you look at past Newsom statements, he, like other Democrats, are trying to put antisemitism up against Islamophobia. He's just trying to walk a careful line. What it reminds me, love, is this, Lee, in 1992, Bill Clinton had a problem. It become evident that he did his best to avoid the draft.

He was not lucky and drew a high number. He pulled strings that he wrote a letter to the RTC director at the University of Arkansas at the time, Lee, with his long, agonizing ramble as to why he decided to just kind of play the system. And the famous phrase that he used, Lee, was he did what he did to, quote, maintain my political viability within the system.

And you look at Gavin Newsom right now, Lee, and that's what Newsom is doing, he's trying to maintain his political viability with an eye in 2028. Because you see with the president right now, who seems just absolutely paralyzed by the fear of alienating young voters over Hamas, Newsom just is not as forceful as you might think a California governor would be in this instance.

 

>> Lee Ohanian: No, Bill, and I don't know if you saw this LA Times article about the protests in Newsom. They did an interview with a woman, Sherry Bebich Jeffy, who is longtime, very deep within the Democratic Party, political analyst. She's been around at least 40 years, and she's part of the USC communications department.

And the very end of the LA Times article quoted her, I'm not gonna get it exactly right, but it was to the effect of something like, Gavin Newsom simply has decided not to be part of the battlefield of protest because it's not in his political interests.

>> Bill Whalen: Right.

 

>> Lee Ohanian: So, that really spoke volumes in terms of leadership and in terms of taking a strong stand and being a person who is going to say, look, here's what's tolerated, here's what's not tolerated. And what's not tolerated is because people get hurt and because we prevent kids from going to college.

And Bill, I can't tell you how many parents and students are just so upset about what happened. I mean, their education is getting disrupted. And we know that Zoom classes, remote videoing, is just simply not nearly as effective as in classroom instruction. And they are really upset, and rightly so.

And I think there really is a vacuum right now within the state about taking a strong stand and trying to get a better outcome. And Bill, another thing I wrote about in that column is I had an opportunity to chat with one protester. Now it's just one protester.

But one thing that this brings to mind is that the people have very, very strong opinions about this issue about Gaza and Israel and Palestinian Arabs and the war and Hamas. But the person I spoke with, their view was very simplistic. It was Israel's the enemy, they're engaging in genocide, they are baby killers.

And I kind of probed him a little bit and I said, do you know that they were living there nearly 2000 years before Islam was even a religion? And he didn't know that because he wanted to call Israel colonizers and land stealers. And my point was, they were there 2000 years, two millennia before Islam was even around, I said they were kicked out.

They were kicked out by the Romans and by the Ottoman Empire, completely silent. He had no idea about this. He also was of the opinion that he didn't know that in 1947 Arabs had turned down the UN offer of a two state solution because Arabs did not want Jews to have any land whatsoever in that area.

He had no idea about any of this. And finally I asked him, you know, do you think, do you think the Gazans, do you think their best interests are represented by Hamas, a political organization that's dedicated to destroying Israel? And how do you, if you're in a war with Hamas, what do you do?

What do you do when they won't surrender? What do you do when they're never going to renounce, say, I wanna destroy you? Yep, had no idea, just Israel's the enemy, and they've got to be stopped, and that was it. So, there's just a remarkable lack of understanding, and it's a complex, incredibly messy issue.

But Bill was depressing to see how little, at least for this one person, how little they understood about an issue that they felt so strongly about.

>> Bill Whalen: Then finally, Lee, let's delve a little bit into the economics of the protests in this regard. The protesters, one of their announced goals is they want California universities to divest from Israel.

And there's precedent. Colleges have divested from Iran and Sudan in the past. So I guess the next shoe to drop is that some lawmaker will introduce a bill to have California divest from Israel. This would be a symbolic gesture, Lee, because you cannot do this as a state without permission from the federal government.

So, I don't think Washington is going to come forward with that. But the reality is that California and Israel are rather entwined when it comes to economics. I've looked up some data from the California Chamber of Commerce, it says that Israel is California's 18th largest source of foreign direct investment.

Israeli foreign owned enterprises account for 6,743 jobs and about $807 million in wages. If you're a protester, Lee, you might have to change your own lifestyle. For example, do you need to get off Google? Why Google? Google provides cloud computing services to the Israeli Ministry of Defense. So do you see this divestment idea going anywhere?

 

>> Lee Ohanian: I don't, it's completely impractical. I was surprised to see UC Riverside agreed to protester demands. Now, they, of course, as you noted, you can't say, I'm not goa invest in Israel, Israeli related businesses or index funds. But they said, we're not going to invest in organizations or countries that are engaged in genocide and crimes against humanity and this type of thing.

And, of course, that raises the question, well, what's the definition of genocide? What are the definitions of crimes against humanity? I suspect that probably will just kind of dry up and blow away. But again, I think it illustrates that people who are protesting this and who want things like the vestment, they haven't really thought this through.

They don't understand how difficult this would be, and they don't understand that it would not necessarily be in the best interest of people who are in Gaza. And, bill, the idea of Hamas surrender. Simply just unconditionally surrendering, releasing hostages, who knows? Hopefully they're still alive, we just have no idea.

And renouncing their goal of destroying Israel and simply saying, you know what? Okay, we support a permanent peace. There was no, I asked this fellow, don't you think a lot of bloodshed could have been avoided? Yeah, hadn't thought about that either. And what's sad, Bill, is that there's, UCLA is incredibly difficult to get into as a first year student acceptance rate is something like 5 or 6%.

And, Bill, what I thought was, you know there's some really, really bright kids out there, who could have taken up this slot here at UCLA, who could have really gone on and do some great things with their lives. And maybe this fellow will, but I don't have high hopes for that, let's put it that way.

 

>> Bill Whalen: That'll be the interesting thing to look at, Lee, if this does flare up again in June, if it does come back again in September, in the fall, does this have an impact on UCLA applications, people wanting to get in there? Harvard had a 5% drop in its applications, for example, so we'll see if UCLA has it.

Everything leaves, if you were a protester and you get kicked out of the school and you don't have a home, you're now homeless in California. And let's talk about homelessness for a minute. I want to draw your attention, Lee, to this week's assembly budget subcommittee on oversight and accountability hearing, during which lawmakers asked the news administration.

To produce data to prove that California's homelessness housing and assistant program is working. Lee, no such data was available, this after state audit found California's Interagency Council on homelessness isn't tracking spending outcomes. And Lee had this wonderful exchange between Phil Ting, who's an assemblyman from San Francisco, and a poor Newsom official put on the chopping block and went something like this.

Ting said, quote, you're coming into the hearing today, we've spent billions of dollars, you can't tell us at all how many people we've helped. Officials said that she's looking into, quote, unquote, data quality issues and trying to establish a, quote, user-friendly data system. When Ting asked, and she said, in a few short weeks, Ting said, before we vote on a budget, she said, I can't say without a definite date.

To which he said, how do you expect us to vote on something without any data? Now, I would caution Lee that, that's not the first time it's happened in Sacramento, it happens every year, they voted something. That's not data, they don't know what they're voting on, but it does raise a problem here with homelessness in California's approach.

Lee, you look at Operation Roomkey, for example, which has succeeded in part in getting homeless people into hotel rooms and lowering the risk of COVID. However, researchers are unable to cross reference death records, so you can't really determine if room key saved lives to get people healthier. So, Lee, how do we get in the situation where you have billions upon billions of dollars thrown at the problem, but we don't know if the billions upon billions of dollars are working?

 

>> Lee Ohanian: No, no, Bill, there's, we've talked several times over the past years, and since we started writing our California on your mind column, which we're coming up on our 6th anniversary. We've talked a lot about the lack of accountability within state government, the lack of incentives throughout the system for people to do their job.

And for people within state government workers to be at all entrepreneurial and saying, hey, I got a good idea. Let's track homelessness spending, let's figure out, let's figure out what's working, let's figure out what's not working. How could that possibly come to pass? Bill well, the answer is that there's simply no accountability within state government for the most part, there's no incentives among those who are working these agencies to advance those ideas.

And so we wind up with that hearing a, that was called by Joshua Hoover, he's assembled him in, I think, near Sacramento, somewhere near Sacramento. And, Bill, he has championed this, I believe he's been in office only about a year or so. He's part of the republican caucus, and Republicans, Bill, for years have been trying to get this audit conducted.

And for years they were stymied until, until they could get some bipartisan port from Democrats. And the bipartisan report came from Democrats because Democrats were hearing from their constituents what's going on? Why are we having to deal with so much homelessness, so much drug abuse, so much drop in the quality of life within our communities?

So that's the only reason this audit got traction, and, of course, now we kind of see what has happened, nobody knows where the money's going, nobody knows what's working. So, Bill, we've spent about $25 billion, and I think I'm in a California undermine column a couple of months ago I made a calculation where I simply divided how much we'd spent on homelessness.

Under Newsom as governor, I divided that's $20 to $25 billion depending upon how you count some, how you count some stuff. And I divided it by the number of homeless when Newsom took office, and it comes out to something like $200,000 per homeless person. And what has happened is that homelessness, of course, has increased substantially since Newsom has been in office.

And in my opinion, a big reason about that is because we're just burning money, we're simply just burning money on this.

>> Bill Whalen: It does leave, it makes California an easy target for ridicule. And I turn your attention now to a column in the Senate, Kansas City Star, where somebody kind of thinks along the lines of, you do, and here's what the columnist wrote, and I'll read it to you.

Quote, every time a nutty story pops up about the Golden State, you think it must be the nuttiest, but you're wrong. Whether it's spritzes, potties or houses, Governor Gavin Newsom's woke wonderland is spending money on the homeless like well water, and the column goes on. Quote, in some places, one unit of supportive housing for people who are homeless cost a cool million dollars.

And every month after it is built, taxpayers fork over $17,000 for security, maintenance, social workers to help them get government assistance, utilities, cleaning, and such. To put that in perspective for people in normal America, you could buy each Californian suffering from homelessness two first class tickets to Kansas City or national airport, get them a limo ride to their new home.

Which would be a new three bedroom ranch fully furnished with a new Tesla in the garage, and still save hundreds of thousands of dollars. Every month, you could give them a salary for picking up cans and other debris along the highways that would still be. That would be greater than half of what working Missourians make and still save $10,000 off that monthly bill, boom.

 

>> Lee Ohanian: Yeah, 100% right. And, man, but this is the reason why homelessness is, as I've argued for the last six years, and I don't like being right about this, but as I've argued for the last six years, it'll never get resolved. And I didn't think it was going to get all that much worse, but it has, and it's going to be just an enormous fiscal drain on the state.

And I suspect it's going to just get worse, Bill, one reason being that California has become just even more expensive to live in. And we simply haven't been willing to accept the fact that homelessness has an awful lot to do with substance abuse, mental health issues. And that's really politically incorrect to talk about, it's much more politically correct to say, you know, these people, they just can't afford, they can't afford to live here.

There's so much, there's a lot of homeless housing and capacity, certainly in San Francisco, that sits vacant every day. Because this is not simply about putting a roof over your, putting a roof over people's house. Heads and everything will be fine. That's not the issue. And the state's still not willing to accept that.

There was a little bit of movement about that regarding prop one, which passed, what was it, 50.3 to 49, eight, something like that.

>> Bill Whalen: Right.

>> Bill Whalen: In the fact that it barely passed when there was no opposition to it and there was just nothing on the ballot. It was vaguely Republican to draw the conservatives.

It barely passed Lee because the public is having this issue with spending money, not getting results.

>> Lee Ohanian: Yeah, and they should.

>> Bill Whalen: Okay, well, Lee the situation calls for somebody who's politically non correct, a strong man, if you will. And we know he's a strong man because he likes to work out with his shirt off.

That takes us to Robert F Kennedy Junior, who is now on the ballot in California this November. Kennedy running as a third party candidate. He is actually repping the American Independent Party in California. Our eagle eyed political students will understand the irony here. It was in 1968 that George Wallace, the famous segregationist, who was a nemesis of the Kennedy administration in the early 60s.

He also is an American Independent candidate, though it's now rebranded Independent Party, if you will. So this is my topic for this week's California on your mind column, Lee, and it's the question of a couple of things. Number one, is Kennedy really at play in California? I think the answer, Lee, is that decided no.

He gets about 10% in polls right now. Even if he reached what I call peak Perot, which was Perot running as this wild card in 1992, Perot only got 20% in California, so didn't change things. What I found more interesting, though, Lee, was how the younger Kennedy connects to California compared to the older.

And if you go back to 68, it was on an airplane ride from the Central Valley back to Los Angeles that Bobby Kennedy first told his aides he's gonna run for. And then he announces that a week later he's back in San Jose. And he gives a very heartfelt speech in which he's tapping into disillusionment with Vietnam and he's tapping into the plight of migrant workers in the Central Valley in the AG industry.

As Frenchman puts his charter is, it's obvious that California is very much front and center on his mind when it comes to campaigning. You fast forward to 2024, Lee, though, and you look at RFK Junior, and here's the essence of Kennedy's campaign. I'll read it to you, Lee, and I want you to tell me how California sidetracked this.

This is what Kennedy said when he announced in Philadelphia last year, quote, we declare independence from the corporations that have hijacked our government. And we declare independence from the Wall Street, from big tech, from big pharma, from Big Ag, from the military contractors and the lobbyists. Is that really a California message, Lee?

 

>> Lee Ohanian: Yeah, well, certainly a lot of quarters, it's not big tech. A lot of support for the Democratic Party coming from big tech. Big pharma, they support both sides. There's a populist tinge to that bill that I think is resonating with a lot of young people, and I haven't tracked his numbers recently, but is most of the support coming from younger people?

 

>> Bill Whalen: It's coming from younger, and the concern is actually right now. So it pivots back and forth. So, until about a month ago, the concern was that he was taking away votes from Joe Biden based on the last name, democratic familiarity. But now the concern among Republicans is he's taking votes away from Trump, why?

It's because he's very much anti-vaccine. He's a conspiracy guy. He just don't trust institutions. And that, of course, is heart and soul Omega. So. the thinking right now is he takes more from Trump than he does from Kennedy, excuse me, for Biden.

>> Lee Ohanian: Interesting, interesting. Yeah, he does have that pro conspiracy aspect to it, and that goes a little bit across both ways.

But, I can see the connection with Trump and how that might be worrisome on the Republican side, that he could be taking votes away. Do you have a sense of how he's doing in swing states?

>> Bill Whalen: It's just peeling off this consistent ten to 12% in swing states.

And again, the question is, who are these people? Are they gonna vote? The November election is just a complete riddle and a complete jump ball right now because why? It's a turnout model, plain and simple. We don't know how Trump voters are gonna turn out compared to the past two elections.

We don't know if Biden can put together the same coalition he did in 2020. And there's a very small sliver of disaffected voters who are gonna have to hold their nose and vote for one of those two, and they can't decide which. And so, good luck guessing. One thing I do know, though, Lee, is that RFK junior does not really understand California that well in this regard.

Right after he made news by getting on the California ballot, his campaign put out a dare and they called it the spoiler challenge to the Biden campaign. And the spoiler challenge is this. RFK junior wants Biden to agree to the two of them doing head to head polls with Donald Trump in mid October.

And whoever does worse than those head to head polls, Lee, agrees to drop out of the race. Well, that's a very interesting idea and the media has. But there's one problem, Lee. As you know, being a Californian, by mid October, you already have your ballot in possession. So, if RK Junior wanted to do this, he'd have to do it around Labor Day just to keep Biden name off the ballot.

 

>> Lee Ohanian: Yeah, that's right. Well, Bill, I guess what, he's sort of considered a gadfly now, maybe on both sides. Biden seems to be completely ignoring him. Bill, at one point I had seen, I don't know if he was coming from RFK's camp or whether he said it personally, but I saw a couple of stories about him being mentioned as possible VP for Trump.

I'm assuming that either had no coherence and by now it certainly doesn't.

>> Bill Whalen: Assuming he hasn't killed any puppies, he has a leg up on at least one of the contenders for that.

>> Lee Ohanian: My God, what a gaffe that was.

>> Bill Whalen: That was beyond a gaffe. Yeah, he was floated as Donald Trump's running mate, but Trump keeps sending out just kind of signals that that's not gonna happen.

He's hinted that he wants somebody kind of in his own mold. He's hinted that he wants a woman. He's hinted that he wants somebody decidedly MAGA, and that's not Kennedy Junior at all. So, don't think that's gonna happen.

>> Lee Ohanian: Bill, not so much in California. But do you see the possibility of any debate between Biden and Trump?

 

>> Bill Whalen: So that's a good question. So Biden went on Howard Stern show a few days ago and said he's up for a debate, which was news to his camp.

>> Bill Whalen: Trump is constantly trying to badger Biden into doing debates. He'll continue to do so as the summer goes along.

I think what will happen is this, Lee. I think there will be one debate. I think Biden's people will say, we're not gonna share the stage with this nut for three in a row. Trump would probably wanna do some version of Lincoln Douglas and just go all over the country with him.

So I think they'll agree to one. And then the question is gonna be, where does Bobby Kennedy fit into this? Because under current debate rules, right now, 15% is the threshold for a third party candidate getting on that stage. But if he's a 10, 12, 13, 14% lead, it's gonna be awfully hard for these two to say, no, you can't come on because of the arbitrary 15.

And so, there's all kinds of schools of thought as how Kennedy would do on a debate stage. Given he does have the problem with his voice, would he really come across as that comforting to voters or not? So, again, stay tuned. So, well, only got six more months of this to go, Lee, so hang in there.

 

>> Lee Ohanian: Yeah, yeah.

>> Bill Whalen: Lee, I now wanna turn your attention to something that keeps coming back on us like a bad meal, pun intended. And that is California's fast food minimum Blade Shaw. You wrote an excellent column on this about how this is the new law that requires $20 an hour if you're working at a large chain fast food operation in California.

Your column, you say it's cost almost about 10,000 jobs already in California. My question, Lee, is why won't this story go away? I was watching my local news last night. You know what the lead was on local news last night, Lee?

>> Lee Ohanian: I didn't see that.

>> Bill Whalen: It was a combination of two things.

It was, number one, how the minimum wage is hitting fast food operations in California. And then they segue it into another law coming down the pike in Sacramento. Probably another column for you in which legislature is going after so called junk fees and restaurants. These are just little add ons that restaurants do to add onto your bill and just, frankly, make more money to survive.

And they're now crying foul about that. The interesting angle in this, Lee, was they talked to the reporter, talked to a couple of people who have gotten the dollar 20 raise, and that's the good news. But here's the bad news, Lee. They're working fewer hours. Restaurants are now cutting back.

Instead of working 40 hours a week, they talked to one interviewer who said that she went from $18.20 for 40 hours down to $20 for 35 hours. My crude math mill, Lee, if your math is better than mine, I calculate $18.20 at 40 hours to be $728 a week, 35 hours a week at dollar 20 a week is dollar 700.

So she is now earning dollar 28 less a a week because of this higher wage. But why? So, again, Lee, this just continues to be written up, even though it's been a long time since the gave a lot. Why are we still stuck on this story?

>> Lee Ohanian: Yeah, Bill, I'm glad, I'm glad the media is covering this, because it is such a gross policy failure.

Fast food industry, their employment, the composition of the labor force is remarkably different than every other industry. So 60% of people working in fast food are 24 years old or less. In every other industry, 14% of their workers are 24 years or younger. So what this does is that we're suddenly jacking up the minimum wage to a level that's 25% higher than for every other industry in the state.

And, so why is that? Why, why single out fast food, particularly when they make so much use of really young people, when those young people tend to be, by definition, they have much less experience. They have far fewer skills. They need to be trained. They show up for work in June, and then they're gone in August when they go back to school.

These are restaurants that are earning five to 8% profit rates to begin with. So this is not like asking Sergey Brin at Google to say, you know what? You can afford it. You can afford to write bigger paychecks for your workers. Help them, no, they really can't. And, Billy, after this column came out, and so what I've estimated is nearly 10,000, close to 10,000 people lost their jobs in the industry after the legislation was signed by Newsom.

And after that, after I wrote that piece, I spoke with a gentleman who owns a number of franchises in fast food within the state, and he told me that the rate of automation within fast food is going to accelerate. The rate at which they also use workers from outside of California is gonna accelerate.

In fact, I heard one story about a kiosk being manned by an individual who was living in Pakistan. A Pakistan, was a Pakistan person very personable, very nice but puffy English they took the order. So this is really gonna kill opportunities for young people. And I don't know, I grew up working these kinds of jobs.

I worked in what would be called fast food. It was the summertime, I think probably, I started out a really bad employee, didn't know what I was doing. Then I learned how to work the cash register and learn what the tasks were. But it's not a high profit area.

And this is really ends up just being a political payoff to the service Employees International Union, which has spent over $100 billion over decades nationwide trying to unionize the fast food business. They couldn't get it done, so then they turned to legislators to try to do that. And so now we're seeing what happens.

And there's a north, there's a lot, awful lot of job loss that goes with this.

>> Bill Whalen: Yeah, Lee, I think the story resonates for two reasons. One, given people's obsessions with the price of everything, you may or may not have noticed California fast food prices are up 7% in the last six months.

So that happy meal is making a lot less happy now in terms of its cost. So there's a tie into inflation economics. But secondly, this is also about the future of work. I was in South Carolina a couple of weeks ago, and I took my grand nephews into McDonald's.

They are forever trying to sucker me into bets to get free lunches at McDonald's. So I play along with them. It's a fun little male bonding experience. We walked to McDonald's, and guess what, Lee? You walk up to a kiosk, and you punch in your order, and then a couple minutes later, somebody walks it out to you.

That means there are at least two fewer jobs in that fast food place, two people who should be working behind the counter. So this is the slimming down at work. And so you see people being replaced by artificial intelligence, by robotics. And so, yeah, the McJob, as much as it's been maligned by some people, heralded by others, the McJoB is becoming something of an endangered species.

Lee, speaking of things that may or may not be endangered. Gavin Newsom. He is Lee next week, traveling to the Vatican to take part in a climate summit. Very hard for me to resist the urge of comparing Newsom to Nero and fiddling while his state is burning by going to do this.

But this is really what the governor should be doing in May, given that he has a messy budget he has to deal with, given that you still have campus unrest going on and other merited issues. And by the way, when you look at climate change in California, Lee, let me throw some numbers at you.

According to the California Green Innovation Index released in March, California is not even close to its goal of reducing greenhouse gases by 48% from 1990 levels by the end of this decade. Lee, the state's hard pressed to reduce its emissions by 4% a year. It's only happened twice, Lee, in 2009 and 2020.

What do those years have in common? The economy was a shambles.

>> Lee Ohanian: Yeah, Bill, we've talked a number of times and, and media, including very liberal media such as the San Francisco Chronicle, has talked about. Gavin's forgotten that he has a day job. And so, yeah, off he goes to Rome, off he goes to the Vatican.

There's potentially a $73 billion deficit within the state that needs to be dealt with. And, Bill, the size of that deficit is bigger than the general fund. Of all but two states in the country, only New York and Texas have larger general fund budgets than our deficit. Just to give people a sense of the size of what we're dealing with here and really, what's the level of irresponsibility under Newsom, spending per Californian has increased 57% since the, since he took office in early 2019.

I don't think there's any other state. I don't, I didn't look at the New York numbers, but I doubt there's any other state that comes close to that. That's just fiscally irresponsible to grow spending by 10% per year, particularly in a state that's losing people and particularly in a state where the money is being burned through, as we were just talking about, and people are just really aren't getting the value of the tax dollars that they're spending.

So to me, it seems incredibly tone deaf that this is what he is doing. You would think just for PR purposes, he would be here. He would be here dealing with what appear to be much more pressing issues than climate change. And no matter how you feel about climate change, carbon emissions are a global issue, California is less than one half of 1% of global carbon emissions.

No matter how you feel about what they do to the climate, it's just, it seems to be a non starter, so you just wonder what's- Calvin, I think just, yeah, I think he just can't help himself, he wants to be on the national stage and this is what he loves to talk about, I guess John Kerry is gonna be there as well.

 

>> Bill Whalen: Terrific, so the governor's feeling Zozi's days Lee, he recently climbed to the top of the Golden Gate Bridge to tout record tourist numbers in the Golden State. They fast passed $150 billion annually for the first time, and there he was, perched atop the Golden Gate Bridge, and he was bragging about how the economy is still fifth in the world.

Populations on the rise, we are back, baby, meanwhile, Lee, the California's Tourism Council has come out with a new slogan. The new name for the Golden State is, quote, the ultimate playground.

>> Lee Ohanian: Well, it might be the ultimate playground for people who are coming here, get ready to pay an awful lot for a hotel, an awful lot for fast food.

And be careful where you walk in Los Angeles, San Francisco, San Diego, be careful the areas that you visit and watch where you're walking. That's the fine print that should come with the ultimate playground advertisement.

>> Bill Whalen: I don't know, Lee, playground leaf seems like a pretty good metaphor to talk about, sandboxes and bullies and slides and all the things you find in daycare that you also find your state government.

Final note, Lee, US News and World Report is out with its best state's rankings for 2024, California finished 37th overall. Lee, that's because it's in the mid-30s in most of the categories here, which included healthcare, natural environment, crime corrections, infrastructure, fiscal instability. But one number stands out, Lee, when it came to opportunity, which us News world report defines as economic opportunity, affordability and equality, you wanna guess where California finished, Lee?

 

>> Lee Ohanian: Bill, I'm guessing it's pretty close to the bottom.

>> Bill Whalen: Try bottom, 50th dead last, so 50th an opportunity.

>> Lee Ohanian: I hedged myself a little bit there.

>> Bill Whalen: Now, I would note, Lee, that Gavin Newsom's nemesis, Florida was 45th an opportunity, but where did Florida do? Well, it finished first in economy and first in education.

 

>> Lee Ohanian: Yeah, and Bill, they spend so much less per pupil on education, and among our kids, our education budget this last year was nearly $130 billion. And three out of four of our kids lack proficiency in math, reading, and science, so again, spending a lot of money. A lot of state policymakers like to talk about how much they're spending, but it simply isn't showing up in terms of what we need to achieve, it's wasting a lot of taxpayer money.

And Bill, out of those three out of four kids that can't read or write or do math at grade level, they're living here in California. Welcome to some of the youngest future homeless people, I hate to say that, but I just don't see any conclusion beyond that.

>> Bill Whalen: Okay, so let me point you in the direction of economic opportunity and affordability, if you were asked to address either one of those, what would you do?

 

>> Lee Ohanian: People are leaving California, businesses leaving California, and there's this simple reason, which is for people, cost of living is just simply way too high. California workers do earn a little bit of a premium compared to the rest of the country, but the reason it isn't bigger is because business costs are so high.

So California really needs a policy reset in terms of regulatory burdens on businesses and regulatory burdens on families, which includes the California Environmental Quality act. Median home price in California now is about $850,000, only 17% of California households can afford that home. So, you look at a family of four, even if their income is in the six-figure range, they're not coming close to being able to afford a home.

But they can move to many states, including Texas, including Florida, Tennessee, Utah, Nevada, Arizona, the Midwest, they can buy a beautiful home on a six-figure household income. Making changes to the regulations that create so much expenses for households and create so much expenses for businesses. You get down household costs, you get down business costs, and then you enjoy the synergies of businesses wanna hire more.

And so, compensation goes up and households can afford to live here and there's salaries are going up, so it's like, okay, what's not to like about that? But there just seems to be a level of deafness within the state capital about making these changes because, Bill, it's a super majority state.

They should be able to get done anything they wanna get done and have Newsom sign it. But year after year, we keep seeing people complaining about California Environmental Quality act, the cost of living, bad schools, the lack of water, the cost of doing business here, nothing gets done.

So, we've lost half a million people since 2019, and we've lost, it's a little bit hard to count lost businesses because most of them just go under the radar. But we've talked about business losses many times of the businesses that we know that leave, that are sufficiently large staff to report their plans to exit to the state.

Those business losses have more than doubled in recent years, so until policies change, we're gonna keep seeing the same thing.

>> Bill Whalen: So, one idea, Lee, would be to have a constitutional convention, which we've not done since the latter part of the 19th century here in California. And kind of blow everything up and start over again, but you know what?

Given that our governor is going to the Vatican, Lee, I think we consider that a Hail Maryland.

>> Lee Ohanian: Yeah, that's a Hail Mary, it's good to know, it's good to know that the Vatican is on top of the priority list over all the things that need to get done here.

 

>> Bill Whalen: Okay, Lee, we're gonna leave it there, I hope the rest of the school year goes swimmingly for you, despite what's going on on that campus.

>> Lee Ohanian: Yeah, I hope so, too, thanks, Bill, good to chat.

>> Bill Whalen: You've been listening to matters of policy and politics, the Hoover Institution podcast devoted to governance and balance of power here in America and around the world.

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