California Lutheran University economist Bill Watkins
spoke to the state Senate on Monday, offering unorthodox, economics-driven
advice with suggestions that were political heresy to senators of both parties.
Watkins laid out a somewhat bleak vision for California in the 21st century based on trends that show the state headed for negative population growth, an exodus of young adults of child-rearing age and technological advances that will further reduce the number of jobs available to low-skilled workers.
"As you go from a growing population to a shrinking population, unless you have huge increases in productivity, there's one generation at least that's going to have a lower standard of living than their parents," he said.
He then offered some suggestions for steps to delay California's day of economic reckoning and soften the effects on workers. Among the ideas:
Aggressively recruit more foreign immigrants. Watkins said there was no realistic way to increase the birthrate or eliminate the cost-of-living differential that is driving young California families to other states and that the best way to avoid a declining population is to attract new immigrants.
"I have been a proponent for massive increases in immigrants," he said. "Immigrants are not random draws. People who immigrate are people who have what my grandmother used to call gumption. We need these people, and we need these people in California."
Get rid of the minimum wage and backfill the loss of income to workers with more generous government support. "If technology is putting the lowest-skilled workers out of work, it means that technology is cheaper," he said.
Because there is an intrinsic social value in work, Watkins said, jobs should be provided even at very low wages. Workers' incomes could then be bolstered by earned income tax credits that would in essence backfill their loss of wages with government subsidies.
"The biggest loser in the Industrial Revolution was the horse," he said. "We're not going to treat people the way we treated horses. We are going to support them either way, so keep them working."
Increase economic opportunity in California by reducing regulation. He suggested rescinding AB 32, the state law requiring a rollback of carbon emissions to 1990 levels.
The state could do that without reducing its commitment to addressing climate change, he said.
Watkins added that California already has "the most carbon-efficient economy of any place on Earth." As a result, reducing carbon emissions here is more expensive than anywhere else, he said.
Watkins suggested eliminating all costs associated with AB 32 compliance, imposing a tax for half that amount and then using the money "to hire a California company" to go to China to reduce carbon emissions there.
"That would produce a bigger decrease in carbon. It's the biggest impact we can have per dollar of investment," he said. "Is that politically possible? I don't think so."
Watkins, who said he was somewhat surprised by the invitation given that his assessments are frequently more pessimistic than those of many of his fellow California economic forecasters, was asked to participate as part of the Senate's "Distinguished Speaker Forum."
For the past couple of months, during a slow period for floor sessions as senators waited for bills to be reviewed by the public and then subjected to committee hearings, outside speakers have addressed the Senate at the close of each Monday session. Watkins' was the last such presentation this year.
About half of the 40-member Senate remained on the floor to listen to Watkins' remarks and participate in a question-and-answer session afterward.
Among them was Sen. Hannah-Beth Jackson, D-Santa Barbara, who expressed concern about what Watkins said regarding the exodus of 30- to 45-year-olds from California. Jackson's daughter, a young adult, lives in the Washington, D.C., area.
"When I say, 'Come home,' she says, 'I can't afford to,' " Jackson said.
She asked Watkins, "If you were master of the universe, what would you call for to put us back on track?"
Watkins told lawmakers that when they consider legislation, "look at how it impacts opportunity. You need to create an opportunity economy."
(c)2013 Ventura County Star (Camarillo, Calif.)
Distributed by MCT Information Services
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