Is California finished?

California is a mess, but I love it all the same--especially the Bay Area, where I lived for 15 years. I went to Berkeley in 1962--a refugee from Amherst College, which at that time was dominated by frat boys with high SAT scores. I didn't go to Berkeley to go to school, but to be a bus ride away from North Beach and the Jazz Workshop. In a broader sense, I went to California for the same reason that other émigrés had been going since the 1840s. I was knocking on the Golden Door.

Immigrants from Europe had come to America seeking happiness and a break with their unhappy pasts. But many Americans--from the '49ers of the Gold Rush to Mark Twain to a young Ronald Reagan--had gone to California to find renewal. California was part of the American frontier, but, as Carey McWilliams points out in California: The Great Exception, it developed outside the framework of the American frontier. It was not an extension of the East or Midwest, but became a state in 1850 before other Western states. It was an island in the sun without Pilgrim winters or windswept prairies. It nourished its own dream of wealth and well-being. It was the American dream all over again, but dreamt within America.

California has fulfilled many of those dreams. It has extended and enhanced the promise of America--from the discovery of gold to the introduction of the movies and television, the aerospace industry, Silicon Valley, and the Central Valley's giant farms that supply a quarter of America's food. It has also been a political and cultural vanguard--from John C. Fremont, the first presidential candidate of the anti-slavery Republican Party, to Progressive Governor Hiram Johnson, Socialist Upton Sinclair, old-age-pension agitator Francis Townsend, and down to Richard Nixon, Earl Warren, and Reagan. The New Left staged its first mass protests in Berkeley. Gay rights came out of Los Angeles and San Francisco. And the New Right was spurred by California's tax revolt and by the backlash against illegal immigration.

I was drawn to California by Jack Kerouac's On the Road, but, by the time I arrived, the era of the beatniks was over. The Caffé Trieste had become a tourist hangout. Still, within a few years, I was trekking to the Fillmore to hear the Grateful Dead, living in sin, smoking pot, and marching against racial discrimination and the Vietnam war. That heady period, marked by the Free Speech Movement and Haight-Ashbury, faded by the early 1970s, but it helped inspire the rise of Apple, the personal computer, the movement for open-source software, and, later, the virtual community of the Internet and the dot-coms. (This is not some oddball observation of mine: It's documented in Steven Levy's book Hackers and in John Markoff's What the Dormouse Said: How the 60s Counterculture Shaped the Personal Computer.)

But could California's days as a politico-cultural vanguard and economic bellwether be coming to an end? The state has endured swings and has come back better than ever. Writing in 1949, with unemployment at 14 percent, McWilliams questioned whether California exceptionalism had finally come to an end, but, with the onset of the cold war, Southern California benefited from an aerospace boom. Again, in the early 1990s, California seemed to be falling into a black hole: Cutbacks in military spending decimated the state's defense industries, and, by the end of 1992, unemployment was 9.9 percent, 2.5 points higher than the national rate; that year, Kemper Securities rated California's economy fifty-first in investment prospects among the 50 states and the District of Columbia. But the growth of dot-coms, a global entertainment industry, and biotech led its rebound.

Last month, California's unemployment rate hit 12.2 percent, a 70-year high. Its bond rating is the lowest of the 50 states. Earlier, the state government had to issue IOUs. Its political system--once the envy of other states--has become dysfunctional. And its educational system, which former University of California president Clark Kerr described as "bait to be dangled in front of industry," is riven by conflict and reeling from budget cuts. Is this déjà vu all over again, or has the California dream finally become a nightmare? There are troubling signs.

I'm not big on traveling, but when I get a chance to visit California, I take it. Last month, I traveled back west as a guest of Stanford's Hoover Institution to attend a conference on educational reform. Education's not a specialty of mine, but I hoped that studying California's tarnished system, which was once the jewel in the state's crown, would provide a window into what is happening in the state. I was not disappointed.

When I first went to California, its elementary and high schools were thought to be among the nation's best. The schools were generously endowed--the fifth-highest in spending per pupil among the states--and about half of California's high school graduates went to college, compared with less than one-third in the rest of the nation. And Kerr and Governor Pat Brown were determined to go further.

The bald, bespectacled Kerr, a labor economist, had a stormy tenure as university president--he was denounced by students as a technocrat who wanted to turn the university into a service center for the military-industrial complex, and by conservatives for refusing to crack down on the student rebels--but he turns out to have been one of the country's great educators. The Master Plan he devised in 1960 for California's higher education, which Brown got the legislature to adopt, represented a high-water mark of American progressivism and of the California dream. Kerr's idea was that every Californian who graduated from high school should be able to attend college. High school graduates in the top 12.5 percent of their class were to be admitted to the university system, headed by Berkeley and ucla. Students in the top third could go to one of the state colleges, and any graduate could gain admission to a community college from which, after graduation, he or she could transfer easily to a four-year college. Community college was virtually free, and the state universities charged very modest fees--$80 per semester when I attended Berkeley. (We of the New Left objected to the tracking implicit in Kerr's system--we insisted, in effect, that everyone should be able to go to Berkeley--but we had a vision of America that bore no resemblance to existing reality.)

That system, which was emulated by other states, has fallen into disrepair. California now ranks seventeenth of the 20 largest states in the percentage of ninth-graders who go to college--36.3 percent compared with a 41.8 percent national average and 58.2 percent in Minnesota. And it ranks eighteenth among the 20 largest states in the percentage of high school graduates who go directly to college. The problem comes partly from the state government's abandonment of the community college system: Community colleges receive about $5,500 in fees and state funding for each student each year, while the universities get $22,000 and the state colleges $12,000. But the heart of the problem lies in California's K-12 education: According to the Department of Education's National Assessment of Educational Progress (NAEP) tests, California eighth-graders came in forty-eighth in 2007 among the 50 states and District of Columbia in reading and forty-fifth in math.

At the conference at Stanford, members of Hoover's Task Force on K-12 Education tried to explain why schools in California and elsewhere were performing poorly. The experts generally blamed bad teaching and the refusal of the teachers' unions to do anything about it. They want to improve the teaching through evaluations that weed out bad teachers, through merit pay to reward good ones, and by paying extra to teachers willing to teach in problematic schools. They also want to use school choice and, in some cases, vouchers, and the establishment of charter schools to pressure poorly performing schools. (With support from Secretary of Education Arne Duncan, California Governor Arnold Schwarzenegger has advanced a set of proposals along these lines.) For many reformers, everything begins and ends with bad teachers and union obstinacy.

At the gathering, held in a plush conference room, one of the experts projected tables and graphs comparing various states. It was there that I had my own "AHA!" moment. The states with thriving educational systems were generally northern, predominately white, and with relatively few immigrants: the New England states, North Dakota, and Minnesota. That bore out the late Senator Patrick Moynihan's quip that the strongest factor in predicting SAT scores was proximity to the Canadian border. The states grouped with California on the lower end of the bar graph were Deep South states like Mississippi and Alabama with a legacy of racism and with a relative absence of new-economy jobs; states like West Virginia that have relatively few jobs for college grads; and states like Nevada, New Mexico, and Hawaii that have huge numbers of non-English-speaking, downscale immigrants whose children are entering the schools. California clearly falls into the last group, suggesting that California's poor performance since the 1960s may not have been due to an influx of bad teachers, or the rise of teachers' unions, but to the growth of the state's immigrant population after the 1965 federal legislation on immigration opened the gates.

In California, one in four students has to learn English in school, while the average in the United States is less than one in ten. Half of California students are eligible for free or reduced meals. Together, almost 60 percent of California's school population is made up of Hispanics, many of them low-income, and African Americans--groups that generally have a much lower rate of student achievement than whites, Asians, and upper-income students. (One in three Latinos fails to graduate from high school.) And that affects how well schools do in the Department of Education's measure of "Adequate Yearly Progress" (AYP). As the nonpartisan Public Policy Institute of California (PPIC) reports: "Fifty percent of elementary schools with the highest share of low-income students made AYP in 2007, whereas 98 percent of elementary schools with the lowest share of low-income students made AYP. This suggests that AYP reveals more about the type of students who attend a school than it does about the effectiveness of teachers and administrators at that school.”

This is not to say that exceptional teachers can't make a difference. It is also not to say that non-English-speaking immigrant kids are unteachable. But they are more difficult to teach, especially when their parents aren't high school graduates. And, without an extraordinary infusion of resources, as well as active and knowledgeable support from parents, their achievement levels are likely to bring down a state's bar graph. Leaving the parental question aside, California does not put extraordinary resources into teaching these kids. California is thirtieth among states in the amount it spends per student. It is forty-ninth in student-teacher ratios. It is fifty-first for guidance counselors and libraries. The reformers' proposals certainly might help, but to succeed at all, the teachers will need guidance counselors, special-ed experts, and librarians, too.

The education reformers also tend to ignore the question of what kinds of jobs will ultimately be available to California students who get through high school and college. When Clark Kerr designed the Master Plan, he could imagine a steady progression of income and occupation from day laborer to industrial worker to white-collar professional to manager. And school reformers still buy into this dream. But California's workforce has become highly segmented between low-wage service, construction, and farm labor at the bottom and white-collar professionals and managers at the top; and that segmentation of the workforce is reflected in the schools and colleges.

Yes, only 30 percent of the state's 19-year-olds are now in college, but, if you look at the jobs that California's Employment Development Department thinks will be available over the next decade, the greatest numbers by far are among those that require short-term on-the-job training--retail sales, cashiers, waiters, clerks, home care aides, and laborers--many of which pay less than $10 per hour. All that college prep seems pretty useless if it's not going to pay off in the job market.

Surely there are problems within California's schools. But the underlying problem that must ultimately be addressed is the segmented structure of California's economy that creates its own tracking system along the lines of income, race, and nationality within the schools. More than anything, that is what has been holding back the realization of Clark Kerr's dream for California.

Read the pundits about California's economy, and you'll learn it is "collapsing," a "wreck," and indicative of a "failed state." This is the same kind of language one hears about Michigan or Pakistan. It's good theatrics and probably sells newspapers or magazines, but it's bad economics.

There are places in California's Central Valley, and in the exurbs where Countrywide, Wachovia, and IndyMac sold subprime mortgages, that look like downriver Detroit, but, in Menlo Park and in Oakland's Rockridge area, where I stayed during my recent visit, there were few visible signs of trouble. That's because, like its educational system, California's economy is pretty much divided in two.

California's unemployment rate is over 12 percent, higher than Ohio or West Virginia, but that can be a misleading figure. Since the 1970s, California's rate of unemployment has always been higher than the national average during recessions. According to the PPIC, that's because "California's labor force grows faster than the U.S. labor force. The state's economy, therefore, generates jobs at a rate similar to the national rate, but this is not enough to keep up with California's faster growing population.”

What's important are the huge disparities between regions. The unemployment rate in Silicon Valley's San Mateo County is 9.2 percent, less than the national average, and unemployment is even lower around Santa Barbara or in Marin County. But it is 15.7 percent in the Stockton area, 16.7 percent in Merced, and a whopping 28.7 percent in Imperial County near the Mexican border--heavily Hispanic areas dependent on agriculture and home construction. The disparities in these figures largely reflect what is produced in those areas and who lives there.

The disparities also reflect the skewed growth in California's economy, which, in the future, could exacerbate the differences between peoples and regions. Far from "collapsing," California's economy currently boasts some of the country's leading-edge industries, including computer and telecommunication hardware and software, biotechnology, alternative energy, entertainment (one of the country's biggest exports), and aerospace technology. These industries provide high wages and help pay for state government. But except, perhaps, for alternative energy, they're different from the industries that triggered California's earlier booms. They enjoy extremely high rates of productivity, which means they increase their output without creating millions of new jobs. From 2001 to 2007, California's information industries increased their output by 21 percent, but lost 6.9 percent of their jobs. In addition, the jobs these high-tech industries tend to create directly are high-wage jobs that require advanced degrees, while the jobs they create indirectly are low-wage service-sector jobs at homes, restaurants, offices, and hospitals. So, by their nature, they exacerbate the segmentation of California's economy.

In the past, immigrant farm laborers or roofers or grocery clerks could hope that their children would work their way up the occupational ladder--perhaps by getting a well-paid job in California's auto or aircraft industry. But, for the last two decades, these kinds of middle-income jobs in manufacturing and office work have been disappearing in the state. A study by California's Legislative Analyst's Office found that, between 1989 and 1998, California lost more than 100,000 of these jobs, while gaining about 700,000 jobs in low-wage services. That trend has continued during the last decade: Between May 2000 and May 2009, California lost 28.7 percent of its manufacturing jobs.

Meanwhile, the income gap between professionals and managers and low-income service and farmworkers in California has grown. From 1993 to 2007, the share in total income of the top 1 percent earners went from 13.8 percent to 25.2 percent. The wealthiest 20 percent of Californians have average incomes 7.9 times higher than those of the poorest
20 percent. That's the eighth-largest spread among states.

Worse still, the divide in income and occupation, like the divide in educational attainment, breaks along racial and national lines. Hispanics make up 67.9 percent of California's farmworkers. Immigrant non-citizens--most of them Hispanic--accounted for 51 percent of California's farmworkers, 32.4 percent of its construction laborers, 25.7 percent of its leisure and hospitality workers, and 27.2 percent of its manufacturing workforce. African Americans are also disproportionately represented in lower-level service and production occupations. A PPIC study in 2003 found that the income of black males relative to white males fell from 81 cents on the dollar in 1993 to 74 cents in 2003.

As Peter Schrag recounts in California: America's High Stakes Experiment, the California dream has always had its dark side--from the discrimination against the Chinese in the late nineteenth century to the "battering" the Okies took during the Depression to the "push-pull-love-hate relationship with Mexicans." What is distinctive about the present situation, however, is that the dark side of the California dream encompasses population groups that will soon make up the majority of its citizens.

Sharp ethnic and racial divides of this kind don't necessarily undermine an economy. On the contrary, California's success in agriculture was based on cheap immigrant labor. But it's a recipe for social and political unrest--and even riot and rebellion. And it's a betrayal of the American, as well as the California, dream. That's something California's government will need to address, but there's the question of whether it is capable of doing so.

I came to California during the 1962 gubernatorial campaign, when Democrat Pat Brown repelled Richard Nixon's first political comeback bid. Brown's achievement eluded me at the time; he seemed mostly like a weak, bumbling politician who acquiesced in the execution of Caryl Chessman. But Brown was largely responsible for California's replacing New York as the country's most populous and most influential state. He built roads, bridges, schools, and universities. He believed, his daughter later recalled, "in the absolute destiny of California to grow."

But if California has grown in recent decades, it has been in spite of, and without the guidance of, the state government. California has certainly had the wealth to fund its schools, rebuild its infrastructure, and give its immigrants the economic security they need to strive for better things, but it has been stymied--in booms as well as busts--by a political system that can't respond to California's new economy in a way that would encourage growth and reduce inequality. California needs the kind of innovative approach that Brown and Kerr devised, but, instead, it has gotten protracted budget battles dominated by short-sighted political factionalism.

The biggest reason for this paralysis is the radicalization of California's Republican Party. By now, this is a familiar part of the American political landscape. But it all began in California. When Brown took office, California politics was still dominated by liberal Democrats and progressive Republicans. By the mid-1960s, conservative Republicans, fueled by the backlash against the civil rights movement, the campus rebellion, and the counterculture, began to oust Republican progressives. In the 1966 gubernatorial primary, Reagan took out San Francisco Mayor George Christopher; and, in 1968, right-wing firebrand Max Rafferty--notorious for wanting to ban books from school libraries--defeated liberal Republican Thomas Kuchel in the Republican Senate primary. That set the stage for the conservative takeover of the California party. Some moderates remain, but they find themselves embattled within their own party.

By itself, this Republican shift to the right didn't lead to political paralysis. It had to be combined with the political rules that Californians have adopted over the last century. These rules, beginning with the introduction of the initiative and referendum in 1911, were generally adopted in order to make the state more responsive to voters. But, over time, they have led to a system in which a determined minority can defy the majority. In 1933, Californians adopted a two-thirds requirement for passing budget increases over 5 percent. Then, in 1978, as part of the infamous Proposition 13, Californians adopted a rigid two-thirds requirement on tax increases, but not reductions. That meant that a one-third minority of the legislature could block any spending or tax increases.

Under Pat Brown, or even under Reagan, a former labor negotiator who enjoyed the give-and-take of political compromise, the budget restriction meant little, but, in the last few decades, the polarization of the parties, combined with the two-thirds requirements, has paralyzed California politics. Except for 1995–1996, Democrats have controlled the state legislature, but they have not enjoyed a two-thirds majority. That has meant that a conservative Republican caucus, opposed to any tax increase and demanding spending cuts (except in programs that directly benefit its business supporters or constituents), has had inordinate power over budget decisions.

This year, the Republicans, who have only 35 percent of the seats in the Assembly and 37.5 percent in the Senate, held up the budget bill for months until the state was forced in July to issue IOUs for state services. They objected to tax increases on cigarettes and a tax on oil extraction (which were later removed) and measures to improve tax enforcement on businesses (which were also removed). They demanded cuts in social services (which they got) and in transportation (which they didn't). The Democrats were able to block a measure to allow oil drilling off the Santa Barbara coast--the scene of a disastrous oil spill in 1969--but, all in all, the budget shredded the state's safety net, including spending on health care for poor children, and took an ax to California's community colleges and state colleges, reducing enrollment at the latter by 300,000. Political scientist Bruce Cain told The Wall Street Journal after the budget battle was over that the Republicans "have realized Reagan's vision of a smaller state and local government. They forced [Democrats] to make very deep cuts in services, to schools and to state salaries and state benefits." And that at a time when, if anything, California's budget needs to grow to make up for losses in private investment and revenues.

Republican as well as Democratic governors have fared poorly under this political system (see "Failed State," September 5, 2005). Republican Pete Wilson tried to govern from the political center with the Democrats, infuriating his own party, and probably would have been denied re-election in 1994 if he had not decided to reverse his stand and champion Proposition 187, which was ostensibly directed at illegal immigrants but played on broader hostility to Hispanic immigration. Wilson's successor Gray Davis was recalled and replaced in 2003 by Schwarzenegger, who has endured a succession of bitter budget battles in which he has tried to buck his own party. Schwarzenegger, who first won office on a vain promise to reform California politics, has ended up with an approval rating of 27 percent. Wilson, Gray, and Schwarzenegger each suffered from the absence of a vital center in California politics.

Five major candidates are currently running to succeed Schwarzenegger. The three Republicans--former eBay CEO Meg Whitman, former Representative Tom Campbell, and Insurance Commissioner Steve Poizner--are pro-choice Silicon Valley Republicans who have survived the party's trend to the right, but who in campaigning have been forced to repudiate or downplay their pasts. If the charismatic Schwarzenegger failed to carve out a new centrism, they are even less likely to succeed.

The two Democrats are Jerry Brown, the former governor and current state attorney general, and San Francisco Mayor Gavin Newsom. Brown, who is well-known around the state, is currently favored to win the primary and the election. As someone who lived in California when Brown was governor, I worry about his reincarnation. Brown's first two years in office in 1975–1976 were notable for his support of environmental regulation and of collective bargaining for farm workers, but later, he failed to anticipate Proposition 13 and, when it passed, embraced it as if he had favored it all along. Fourteen years later, he was running for president as a champion of a flat tax.

In The New York Review of Books in June 1976, Garry Wills wrote the best article yet on Brown. Titled "Anti-Papa Politics," it described how Brown had fashioned his own "era of limits," creating a "small is beautiful" politics in contradiction to his father's politics of growth. But what California needs now is not the negation of Pat Brown, but an attempt to adapt his energetic approach to government to a new California. Perhaps his son is the man to do it. Children often come around in their twilight years to the ways of their fathers. In any case, whoever succeeds Schwarzenegger is going to be faced with the same problems that he and past governors have faced: polarized parties, a deadlocked legislature, and a populace that, schooled in the initiative and referendum, is committed to a plebiscitary political culture that discourages democratic deliberation.

California remains America's state, but it also registers the state of America. It is the repository of America's dreams and fantasies, and it is integral to the country's wealth and prosperity, as well as the growing inequality they have fostered. To realize the California dream for a new generation--and to do it in a way that touches not just Menlo Park and Santa Barbara, but also Fresno and Modesto--California needs a new Master Plan, one that repairs its tattered educational system and reshapes its segmented economy. But it can't do that without a far-sighted government that can transcend faction and interest.

To be sure, California has defied its prophets of doom before, recreating and renewing itself. As someone who knocked on the Golden Door in an earlier era, I hope it does so again--for the country's sake as well as California's. But I have my doubts.

John B. Judis is a senior editor for The New Republic.

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