Pinkerton: Making California Great Again — and Republican Again 

Los Angeles, California, in the year 2038…

From the perspective of this year, 2038, we can see that three very different events from 20 years ago set in motion the profound partisan realignment in California. It was, indeed, an epic reversal, as the Golden State switched from being overwhelmingly Democratic to overwhelmingly Republican.

As we might remember, two decades ago, California Republicans were very much at a low ebb. In the 2016 presidential election, for example, Donald Trump received just 31.6 percent of the vote in the Golden State, losing to Hillary Clinton by more than 4.3 million votes. The GOP held none of the statewide offices and barely a quarter of the U.S. House delegation. And the state legislature was equally dismal; the GOP possessed less than a third of the seats in both the State Senate and the State Assembly.

And yet, as they say, when there’s nowhere to go but up — that’s often what happens.  o what happened?  What were these three shifts?

The Three Big Shifts of 2018

The first of these events was the spectacular skein of wildfires across California in 2017, combined with the Democrats’ lame reaction to those calamities.

The wildfires burned an estimated 1.4 milion acres across the state, killing at least 31 people. Indeed, estimates of the total cost to the state reached as high as $180 billion.  All that property damage was followed, of course, in the next winter, by mudslides, as the loose soil, no longer rooted with vegetation, emulsified underneath rain and melting snow.

Moreover, back then, the prospect was for more of the same in the future: Experts predicted decades of “mega drought”; in other words, the cycle of devastation seemed destined to continue.

And yet the response of California Democrats who dominated the state was shockingly limited. Many observers speculated that they were so entranced with resisting Donald Trump that they couldn’t be bothered with the wellbeing of their own state.

Other observers suggested that leading green ideologists — those who set much of the agenda for the state’s Democrats — didn’t want to see anything happen on wildfires, because they wanted to keep the focus on the “true cause,” supposedly, climate change. In the words of one Democratic state legislator in February 2018, “Mother Nature right now is very angry with us. Climate change is very real. We need to figure out how to best adapt to this.” Interestingly enough, this legislator represented Santa Barbara, which was ground zero for the fires and floods back then.

So we can see: The dominant idea was a kind of submission to the perceived inevitable, as opposed to a desire to be proactive about future fires. In effect, the leadership of the state was saying to the people: We’re not going to do doing anything about wildfires until we defeat climate change. To which a rational observer might say, That’s nice, but what happens to us in the meantime? To that crucial question, the Democrats had no real answer.

Some even suggested that the Democratic elites had the view that there were simply too many Californians.  After all, the state’s precious coastline was finite, and so if California’s population seemed to be infinite, well, that couldn’t be good for the exclusive privacy of big coastal landowners.

We might pause to add, here, that an astute understanding of these phenomena was provided by the legendary geographer-pundit, Joel Kotkin, who in the early 2000s had coined the term “gentry liberalism” to describe the reality of rich elitists lording it over the masses.  With the benefit of two decades’ worth of hindsight, one can only add that while the elitists of that era typically defined themselves as “progressive,” they were, in fact, quite reactionary.

Labels aside, it was commonly held back then that the population of California, nearing 40 million, was not “sustainable,” especially in regard to fresh water.

Of course, all through history, growing populations have been made sustainable by building infrastructure, such as dams and aqueducts — that’s how civilization advanced. Yet in the California of two decades ago, the idea of expanding infrastructure, including water infrastructure, was not taken seriously, because it would have gone against green principles. Indeed, by a “green: reckoning, eco-disasters, from fire to drought, were seen as a signal — a signal that the excess population should leave. To be sure, this elite opinion was mostly unstated, and yet actions, nevertheless, spoke louder than words.

With such Malthusian thoughts in mind, leaders in California had little interest in actually improving conditions for the vast bulk of the state’s population. In the opinion of many, the anti-people slant of California’s policies weren’t a bug, but rather, a feature — that is, not an accidental flaw, but part of the deliberate design.

So it should be no surprise to recall that back then, California was judged to have the worst business climate in the country. Indeed, California was judged to have the worst quality of life. And so too, it was little wonder that, adjusted for the cost of living, California had the highest poverty rate in the country.  To be sure, along the coast—from Malibu to Mendocino — California might have been a paradise for the plutocracy, but for everyone else in the state, life was increasingly harsh.  And it sure seemed as if the elites, complacent with the status quo, were perfectly happy to keep it that way.

So that’s where the situation stood in 2018: The Democratic elite displayed minimal interest in actually increasing the state’s carrying capacity for the wellbeing of people. Indeed, in a kind of perverse tacit alliance, they were often joined by the remaining tiny Republican elite, who didn’t want to spend tax money on infrastructure, even though such spending might have bolstered the Republican-leaning middle class.

So now we come to the second of the events that realigned California politics.  As with the wildfires, this event was not a single “lightbulb” moment but, rather, a trend that had bubbled along for awhile—and then burst into obviousness. This trend was “fintech,” that is, the disruptive fusion of old-line finance and Silicon Valley technology.

A Wall Street Journal  headline in February 2018 crystallized the new phenomenon: “Silicon Valley Explores A New Investment: Your Home: Startups backed by deep-pocketed investors are looking at a new way to profit from rising home prices.”  The article detailed a new financial product, the “shared-equity contract,” which allowed investors to join with individual homeowners to share an ownership position in a home, with an eye toward splitting the profits in the  hoped-for future gain in value.  As the Journal explained, “Home buyers get money for part of their down payment in exchange for pledging some of the home’s future price appreciation.”  In fact, even as early as 2018, a great many companies and investors were involved in shared-equity contracts, including, interestingly enough, two California-based giants: the venture capital firm of Andreessen Horowitz and Mark Zuckerberg’s deep-pocketed philanthropic organization.

To be sure, investors had long known many ways to benefit from rising land values, and so, in a sense, shared-equity contracts were nothing new. And yet at the same time, the prospect of wide-scale peer-to-peer (P2P) investments made real estate investing all the more accessible and nimble; that is, even small investors could jump into the market with the flick of an app. And so the stage was set: A broad base of investors had a strong incentive to see real estate values — indeed, all land values —going up.  So the big remaining question question was, How to make them go up?

One way to make land prices rise, of course, is for the value of assets underground  to go up in value.  And that brings us to the next trend.

The third trend that portended big changes in California politics also emerged in February 2018.  This was the new prominence of carbon capture and storage as a significant factor in fossil-fuel energy policy. After all, if carbon could be captured and stored, then the chief argument against the use of fossil fuels, climate change, would be obviated. Once again, this carbon-capture idea was a trend a long time in the making, and yet the debut of an ambitious Carbon Capture Coalition in February 2018 signaled that the idea was rising to a new plateau of visibility.

And of course, with the coming of carbon capture came the prospect of using ever more fossil fuels. Everyone understood that if fossil fuels could be fully unleashed, the economic impact would be enormous.  For instance, in those days, it was estimated that the value of oil and natural gas, just in California alone, was $2.5 trillion. To put that dollar figure in perspective, in 2018, that was about $63,000 for every man, woman, and child in the state.  Or to state the numbers a different way, $2.5 trillion was more than a dozen times the California state budget.

Meanwhile, nationwide, the total value of fossil fuels was estimated to run into the hundreds of trillions of dollars.  Moreover, deposits of methane hydrates — that is, methane trapped inside ice molecules, in polar regions and deep in the ocean — were estimated to be worth as much as three quadrillion dollars; a quadrillion, we might observe, has 15 zeroes.  (As an interesting historical footnote, the initial research on methane hydrates was funded by the presidential administration of a Californian, Ronald Reagan.)

Needless to say, not everyone wanted to see such energy development. Indeed, many greens didn’t want to see any of this energy used, ever. A big idea back then was “leave it in the ground.”  That is, they wanted humans never to be able to make use of our fossil-fuel endowment.

Of course, such restrictionism was the opinion of just the greens — and most people weren’t greens. Yes, the greens were  disproportionately influential back then, but still, they were still only one tranche of public opinion.   After all, in a democracy, everyone else gets a say, too, and over time, other voices came to be heard — even in California.   And those other voices were pro-energy and pro-growth.

Indeed, today, from the perspective of the mid-21st century, we can see that the “leave it in the ground” effort was always doomed to fail.  To put the matter bluntly, the people of California —  as with the people of America, and the peoples of the world—were never knowingly going to acquiesce to leaving trillions, or quadrillions, of wealth in the ground doing nothing. There were simply too many unmet human needs to allow for such abstention.

Specifically, once carbon capture opened up the prospect of burning fossil fuels cleanly, while not threatening the climate, the door to more energy development was wide open. After all, the people of California, impoverished as they were by NIMBYism and other growth controls, desperately wanted the good jobs and solid economic development that could only come from using energy.

And so the stage was set: The vast bulk of Californians — having trusted the Democrats for so long in exchagn for so little in return—were ready for a change.e

California Republicans Make Their Big Move

So we can see that in 2018, three very different forces were coming together: the wildfire crisis, highlighting the need for more fresh water, as well as a better overall infrastructure; the expanding ability to apply fintech to the task of harnessing increases in land prices, anywhere in the state; and the potential of fossil fuels — suitably carbon-captured — to provide jobs and pay for all that water desalination, other infrastructure, and everything else.

For pro-growth Republicans, this was a dream come true: Those trillions of dollars’ worth of fossil fuels offered the opportunity to pay for the needed infrastructure, without a tax increase. And then, as energy production and infrastructure construction increased land values, Silicon Valley investors, thanks to fintech, had a direct incentive to see those land values keep going up. Often, that meant finding yet more fossil fuel underground. And so we can see: the shared-equity contracts gave investors a real reason to keep pushing for more drilling.

Thus the Republicans began to seize the opportunity: They would be the avowed party of new infrastructure construction, paid for by new energy production. They would also be the party of renascent industry.

The immediate emphasis, of course, was on water desalination, to put a stop to the threat of wildfires once and for all (as outlined, interestingly enough, in a prescient 2018 article in Breitbart California). This new security against fires, we might add, boosted the healthy dispersal of California’s population. Indeed, the population of the big urban areas began to shrink, as Californians took advantage of the state’s New Homestead Act, enabling hardworking strivers to carve out their own well-irrigated land-stake in the former arid wilderness.

In addition, the Golden State GOP knew that there were votes to be had in offering other kinds of infrastructure and amenities, aimed at improving the quality of life for the 99 percent of Californians who were not the affluent coastal elite — and all without a tax increase, thanks to those gushing energy revenues.

Admittedly, it took Republicans some time to become fully conversant in this new language of infrastructure boom.  Yet this new agenda was proven effective in reaching voters who were not much interested in the traditional GOP message of tax cuts and fiscal restraint, for the simple reason that they were neither taxpayers nor interested in fiscal restraint — at least, not yet.

Indeed, poor and working class people have almost never been interested in economic theory; they’ve always been interested in more lunch in their lunch-buckets.  And so that’s why Republicans began to do well with their new slogan, borrowed from the early 20th century labor leader Samuel Gompers, who summed up what his union members wanted — “More.”  Of course, in 21st century California, this one-word slogan was soon translated into the equally succinct Spanish, Más.

With this new message of More, the Republicans were soon scoring electoral successes. The abundance pitch worked to split the Democratic elites from the Democratic masses, who, weary of green austerity, welcomed the new Republican cornucopia.

Yet even as the Republicans began making electoral gains, most California Democrats chose not to respond with a matching message. Why not?  It seemed they were permanently in the thrall of their coastal donors and green opinion leaders.  In political terminology, the energized — literally — Republicans were challenging the Democrats to go where, intellectually, they simply could not go. It was, in the most literal sense, their loss.

Thus it was left to the GOP to reap the political gains of technological innovation and wealth creation.  As we all know now, the plan for desalinating seawater on a massive scale proved to be an economic bonanza on a par with the original development of Los Angeles in the early 1900s, when the Owens River water project made it all possible.  Only this time, a century later, the development was deep in the once-empty inland desert, now wet and blooming.

In the meantime, fintech investors were there every step of the way, participating in the virtuous cycle of greater investment, greater returns, and then still greater investment.

And of course, as we all know, the science of carbon capture, spurred on by the prospect of energy windfalls, accelerated rapidly.  Whereas in the 10s carbon capture mostly consisted of injecting carbon dioxide into the ground, by the 20s, it meant turning CO₂  into a solid, for use as landfill and as fertilizer, and by the 30s, it meant using CO₂ for building materials, such as carbon nanotubes — and even new fuel. Thus the basic lessons of scientific ingenuity and industrial productivity were proven yet again. Over time, thanks to the power of the human mind — the true ultimate resource — waste products become valuable products.

Of course, most Californians didn’t care much about the science of any of these economic gains.  All they knew was that they were better off thanks to GOP policies, which, we might recall, were completely color-blind in their positive impact on the population. As a result, past ethnic and racial divisions were subsumed in the rising tide of Republican-spurred prosperity.

And as they say, a rising tide lifts all boats—including the once-submerged boat of the California Republican Party.