Dowell Myers takes on Joel Kotkin and makes me start asking questions

My brilliant colleague, Dowell Myers, has a nice piece in Zocalo that responds to demographic debate that Joel Kotkin sparked with some of Kotkin’s scathing comments about California in the WSJ. The first big argument is that California retains its natives:

California, in fact, holds its own. When it comes to retaining native sons and daughters, California has the fifth-strongest attraction of all 50 states. Among California-born adults who were at least 25 years of age and old enough to have moved away, fully 66.9 percent were still choosing to reside in the Golden State in 2007, the last year of high migration before the recession held people down. Texas, with 75.1 percent of native Texans still living in the state, has the strongest loyalty, and the other three rounding out the top five are Wisconsin, North Carolina, and Georgia. California’s top-five ranking is all the more impressive when you take into account the state’s high living costs and other negatives. We must have something going for us.

He also notes that slowed population growth is, essentially, inevitable: you aren’t going to see 1980s-style growth in California again, and it couldn’t be maintained, for lots of reasons:

When it comes to the question of how much growth is desirable, the last decade of booming population growth in California was the 1980s, when over 6 million people were added. That is Kotkin’s apparent standard of excellence. But the 1980s were a big anomaly. It might have had something to do with Texas being in an oil bust and the Midwest hitting the worst of its rustbelt slide. Or perhaps it had to do with Ronald Reagan occupying the White House and launching a campaign of defense spending to outmuscle the Soviets, with much of the spending focused on southern California’s aerospace companies. California, in that decade, was a magnet without competition.

All that makes a lot of sense. I am with Myers until the end, where I start to get antsy, not because he’s wrong, but because the challenge is not minor:

In reality, the demographic picture in California is brighter than it has been in decades, provided we meet one key challenge. New studies show that the state’s immigrants have settled in and the growth in the workforce now rides on the skills of homegrown Californians, many the children of immigrants. The main threat in California isn’t about business climate or the types of homes being built. It is about the defunding of higher education and the failure to invest in the next generation of workers, taxpayers, and homebuyers. If there is any doubt about California’s future—and this is no crying wolf—that is the demographic challenge to keep your eyes on.

This piece appeared on the same day that Governor Brown announced that the state had a $15-$16 billion budget deficit. We’ve spent the last four years gutting our budget. I get that Myers that wants to take on overwrought narratives, buy I still think we’re in trouble. The first place everybody wants to cut always seems to be education. What’s left to cut at this point? Maybe we can sell the copper wiring from school electrical systems and let them use candles?

When I put on my economist hat (it’s an ugly hat, if you are wondering) I see California in a policy whipsaw; it is an expensive place to live and work. It is not a cheap place to do business–and I don’t mean business taxes. Instead, I think that the regulatory and approvals process makes it hard to get deals done here across a wide variety of economic sectors. At the same time it’s expensive to live here, our public school systems are not doing so well–and business needs schools to function well. So we are already relatively highly taxed; we are already expensive; and we are cheating ourselves on education, one thing that, if run well, could be a means to offset the idea that the state is a bad value for money on the tax side.