California’s New Feudalism Benefits a Few at the Expense of the Multitude

As late as the 80s, California was democratic in a fundamental sense, a place for outsiders and, increasingly, immigrants—roughly 60 percent of the population was considered middle class. Now, instead of a land of opportunity, California has become increasingly feudal. According to recent census estimates, the state suffers some of the highest levels of inequality in the country. By some estimates, the state’s level of inequality compares with that of such global models as the Dominican Republic, Gambia, and the Republic of the Congo.

At the same time, the Golden State now suffers the highest level of poverty in the country—23.5 percent compared to 16 percent nationally—worse than long-term hard luck cases like Mississippi. It is also now home to roughly one-third of the nation’s welfare recipients, almost three times its proportion of the nation’s population.

Like medieval serfs, increasing numbers of Californians are downwardly mobile, and doing worse than their parents: native born Latinos actually have shorter lifespans than their parents, according to one recent report. Nor are things expected to get better any time soon. According to a recent Hoover Institution survey, most Californians expect their incomes to stagnate in the coming six months, a sense widely shared among the young, whites, Latinos, females, and the less educated.

Some of these trends can be found nationwide, but they have become pronounced and are metastasizing more quickly in the Golden State. As late as the 80s, the state was about as egalitarian as the rest of the country. Now, for the first time in decades, the middle class is a minority, according to the Public Policy Institute of California.

The Role of the tech oligarchs.

California produces more new billionaires than any place this side of oligarchic Russia or crony capitalist China. By some estimates the Golden State is home to one out of every nine of the world’s billionaires. In 2011 the state was home to 90 billionaires, 20 more than second place New York and more than twice as many as booming Texas.

Yet even in Silicon Valley, the expansion of prosperity has been extraordinarily limited. Due to enormous losses suffered in the current tech bubble, tech job creation in Silicon Valley has barely reached its 2000 level. In contrast, previous tech booms, such as the one in the 90s, doubled the ranks of the tech community. Some, like UC Berkeley economist Enrico Moretti, advance the dubious claim that those jobs are more stable than those created in Texas. But even if we concede that point for the moment, the Valley’s growth primarily benefits its denizens but not most Californians. Since the recession, California remains down something like 500,000 jobs, a 3.5 percent loss, while its Lone Star rival has boosted its employment by a remarkable 931,000, a gain of more than 9 percent.

Much of this has to do with the changing nature of California’s increasingly elite—driven economy. Back in the 80s and even the 90s, the state’s tech sector produced industrial jobs that sparked prosperity not only in places like Palo Alto, but also in the more hardscrabble areas in San Jose and even inland cities such as Sacramento. The once huge California aerospace industry, centered in Los Angeles, employed hundreds of thousands, not only engineers but skilled technicians, assemblers, and administrators.

This picture has changed over the past decade. California’s tech manufacturing sector has shrunk, and those employed in Silicon Valley are increasingly well-compensated programmers, engineers and marketers. There has been little growth in good-paying blue collar or even middle management jobs. Since 2001 state production of “middle skill” jobs—those that generally require two years of training after high-school—have grown roughly half as quickly as the national average and one-tenth as fast as similar jobs in arch-rival Texas.

Think of the dot.com billionaires like the Facebook and Google founders as the new Lords and Barons of this land. Their vast estates provide jobs for a relatively few servants while their green politics destroys the ability of those who don't work for them to achieve the middle class.