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Sunday, March 24 , 2019, 9:55 pm | Fair 55º


Joe Armendariz: California Needs Proposition 23

It's not the environment that needs help in the Golden State, it's the economy

A common theme heard from proponents of Proposition 23 is that Prop. 23 doesn’t repeal AB 32 ... as if that were a reason to support it. I support Prop. 23, and urge voters to support it, in spite of that fact. In other words, while it is true that Prop. 23 wouldn’t repeal AB 32, I believe it should, and I wish it did.

Joe Armendariz
Joe Armendariz

So what would Prop. 23 do? It would suspend AB 32 until California’s unemployment rate falls from where it is now (12.2 percent), to where some economists think it ought to be (5.5 percent).

The reason I believe AB 32 should not only be suspended, but ultimately repealed, is because it puts a regulatory chokehold on California’s economy, and because it is essentially a solution in search of a problem.

The notion that with all California faces in terms of economic and fiscal challenges, rolling back so-called greenhouse gases to 1990 levels by the year 2020 should be a top priority is, frankly, indicative of a major disconnect that plagues policy makers in Sacramento, and in the environmental lobby which is driving a huge part of their agenda.

To determine the wisdom of AB 32, and Prop. 23, it is useful to examine where we are today with respect to two major issues: the economy and the environment.

First, consider the state of our economy. In 2009, 51 companies left California for greener pastures. By October of this year, 178 companies had left California, and there are still two and a half months to go!

Further, and while the following stats relate to the national economy (I submit that California is an economic microcosm of the nation), California is doing significantly worse than the nation as a whole. Therefore, consider a few facts from a recent article published in “The Economic Collapse”:

» The United States has lost approximately 42,400 factories since 2001. About 75 percent of those factories employed more than 500 people when they were still in operation.

» The United States has lost a total of about 5.5 million manufacturing jobs since October 2000.

» According to Tax Notes, between 1999 and 2008 employment at the foreign affiliates of U.S. parent companies increased an astounding 30 percent to 10.1 million. During that exact same time period, U.S. employment at American multinational corporations declined 8 percent to 21.1 million.

» In 1959, manufacturing represented 28 percent of U.S. economic output. In 2008, it represented 11.5 percent.

» As of the end of 2009, fewer than 12 million Americans worked in manufacturing. The last time fewer than 12 million Americans were employed in manufacturing was in 1941.

» The United States has lost a whopping 32 percent of its manufacturing jobs since 2000.

» Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.

Again, while these numbers relate to our industrial manufacturing sector nationally, the numbers are significantly worse in California.

For example, California has lost more than 3 million private-sector jobs in the last 10 years — more than 1 million jobs in the last three years. Annual value of those 3 million jobs in terms of revenue for the government? Roughly $20 billion. Enough to balance California’s budget. Economists predict that AB 32 will eventually result in the loss of an additional 1 million jobs.

And as already pointed out, California’s unemployment rate is 12.2 percent. But that only tells part of the story. The state’s under-employment rate, i.e., the percentage of workers who are employed part time but want full-time work is more than 24 percent. We simply can’t afford AB 32, and that is why we need Prop. 23.

The quickest way to turn these numbers right side up is to remove the regulatory green tape that is stifling California’s economy. Unfortunately, AB 32 is the mother of all green-tape regulation. AB 32 imposes higher taxes on the productive sectors of our economy in order to subsidize unproductive sectors of our economy, what the enviros call “green businesses.”

However, California needs business creation of every color ... green, red, white and blue ...

But what about the environment ... Are we on the verge of an environmental catastrophe with respect to air quality as some suggest? And therefore in need of AB 32 to avoid it? I don’t believe so. Consider the following metrics provided by the Environmental Protection Agency. Since 1980, nitrous dioxide in the air is down 46 percent, sulfur dioxide is down 76 percent, carbon monoxide is down 79 percent and lead is down 91 percent.

And under what circumstances has this occurred? Under the following: Since 1980, the U.S. population has increased by more than 50 percent, traffic volume (miles driven) has increased 160 percent, and real GDP has increased 204 percent. So even as every human-caused metric, which should have caused major degradation to our air quality, is higher, the amount of particulate matter in the air is dramatically lower.

Don’t misunderstand. I am 100 percent in support of common-sense enviromental regulations ... but the main challenge facing California today is the health of our economy, not the health of our environment.

Therefore, the choice for voters on Nov. 2 could not be more clear. A yes vote on Proposition 23 would temporarily suspend a job-killing law that we don’t need, in order to help our economy recover, which is something we need desperately.

— Joe Armendariz is a principal of Armendariz Partners.


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