---
[ STATE WATCH ](https://ded2209.inmotionhosting.com/~citywa9/state-watch)
# Trouble in Paradise: The Crumbling California Model
January 05 2022
Written by Joel Kotkin.
[](https://www.addtoany.com/share)
STATE OF THE STATE - Yet California is not doomed, at least in the near term, nor is it anything like a model of social democracy.
As long as its tech oligarchs produce enormous profits and generate wealth, California remains fiscally flush for the near term, and the evolving economy, long on digitization and constant entertainment, works to the state’s historic strengths. Key industries such as [space](https://www.nationalreview.com/magazine/2021/03/22/the-age-of-space-reconnaissance/) and biomedical research also offer promise.
The big problem with the California model is that it does not work for most Californians, who [suffer](https://www.chapman.edu/wilkinson/_files/Feudalism.pdf)from the highest poverty rate (cost of living adjusted) in the country. Despite being home to three of the nation’s four most expensive housing markets, California has among the lowest cost-adjusted median income of any state, as demographer Wendell Cox notes. Although not particularly hard hit by pandemic fatalities, California continues to [recover more slowly than](https://wallethub.com/edu/states-unemployment-rates/74907) the rest of the states and now suffers the [highest unemployment rate in the country](https://calmatters.org/commentary/2021/12/california-economy-unemployment-lags-nebraska-comeback/?utm_source=CalMatters+Newsletters&utm_campaign=a82358f7e4-WEEKLY_WALTERS&utm_medium=email&utm_term=0_faa7be558d-a82358f7e4-150636408&mc_cid=a82358f7e4&mc_eid=040d95ce90) — including [nine of the 16 metros](https://cnsnews.com/article/national/terence-p-jeffrey/9-16-metro-areas-highest-unemployment-rates-are-california) with the greatest joblessness. Even as the tech oligarchy has reaped [record profits](https://www.nytimes.com/2021/04/30/technology/big-tech-pandemic.html) and [expanded its wealth](https://www.bbc.com/news/world-55793575) to unprecedented levels, California ranks as the [second-worst place](https://www.ocregister.com/2021/10/23/california-is-2nd-toughest-place-in-u-s-to-find-a-job/) to find a job of all the states. Thank God for Hawaii!
A New Economic Model?
Flush from his recall triumph, Governor [Gavin Newsom](https://www.sfchronicle.com/politics/article/Gavin-Newsom-to-California-s-critics-State-is-14029587.php.), along with the legislature, seems determined to [double down](https://calmatters.org/commentary/2021/10/newsom-legislature-push-the-state-leftward/?utm_source=CalMatters+Newsletters&utm_campaign=918250dfb9-WEEKLY_WALTERS&utm_medium=email&utm_term=0_faa7be558d-918250dfb9-150636408&mc_cid=918250dfb9&mc_eid=040d95ce90) on his attempt to shape California as the [model for the progressive future](https://www.city-journal.org/gavin-newsoms-woke-posturing-masks-dismal-california-economic-record). He claims that our state is “the envy of the world” and the model of social justice. “Unlike the Washington plutocracy,” he boasts, “California isn’t satisfied serving a powerful few on one side of the velvet rope.”
We can see, in aggregate numbers, some justification for crowing. A writer at [Bloomberg](https://www.bloomberg.com/opinion/articles/2021-06-14/california-defies-doom-with-no-1-u-s-economy) claims that the state has “the best economy” in the world, pointing to the bloated stock prices of the major tech firms, soaring home values, and the enormous wealth creation accruing to a relative handful. Other writers insist that California will continue to dominate most of its key industries, owing to its innovation and capital resources.
Yet it’s time now to see what California’s “success” is all about. It reflects a new kind of economy — dominated by a few large companies, with an elite workforce, a large service class, and a population increasingly dependent on wealth redistribution. This emerging oligarchic regime, however progressive it likes to label itself, is more feudal than egalitarian, more hierarchical than competitive, financed largely by the [same tech giants](https://www.vox.com/recode/2021/5/21/22446799/gavin-newsom-reed-hastings-netflix-donation-california-governor-recall) who help fund Newsom’s successful defeat of the recall.
For most, the reality on the ground is increasingly challenging. The state is now the [second-most unaffordable state for home-buyers](https://www.newgeography.com/content/005187-america-s-most-urban-states%20and%20has%20increased%20urban%20densities), a particular challenge for [Millennials,](https://www.wsj.com/articles/millennials-prefer-single-family-homes-in-the-suburbs-1421896797) and it suffers [the highest rate of “doubling up”](https://www.newgeography.com/content/006908-california-and-urban-cores-dominate-overcrowded-housing) — only our friend Hawaii does worse. California has [the largest gap](https://www.ocregister.com/2019/04/23/california-has-no-1-wage-gap-between-middle-income-pay-and-what-wealthy-earn/) between middle and upper wage quartiles in the nation, and it has a [level of inequality](https://nationaleconomicseditorial.com/2018/01/17/californian-income-inequality-tops-mexico/) greater than that of Mexico and closer to that of Central American countries such as Guatemala and Honduras than to such “progressive” developed counties as Canada and Norway. According to the state [Legislative Analyst’s Office](https://lao.ca.gov/reports/2019/4093/ca-geography-wealth-090519.pdf), 20 percent of state wealth is held within 30 zip codes that account for just 2 percent of the population. Less than 33 percent of state wealth is held within 1,350 zip codes that house 75 percent of Californians.
A Changed Economy
California’s inegalitarian reality reflects the decline of what was once a remarkably diverse, job-rich economy. Key sectors included aerospace, oil, trade, manufacturing, business services, agriculture, as well as software and media. But according to new research from Chapman University’s Marshall Toplansky and Ken Murphy of UC-Irvine, California ‘s rate of job creation over the past three decades has been far below that of key competitors such as Texas, Arizona, Florida, Washington, Nevada, and Colorado.
[Read More.](https://www.nationalreview.com/2022/01/trouble-in-paradise-the-crumbling-california-model/?bypass_key=K6pmPSVIuy2fed4f6exXow%3D%3D)
*(JOEL KOTKIN is the presidential fellow in Urban Futures at Chapman University in Orange, Calif., Washington Fellow at the Claremont Institute’s Center for the American Way of Life, and the executive director of the Urban Reform Institute. His new book is The Coming of Neo-Feudalism. [**@joelkotkin**](https://www.twitter.com/@joelkotkin))*
[  ](https://ded2209.inmotionhosting.com/~citywa9/component/banners/click/115 "Brian Goldsmith Vertical R. Col")
[  ](https://ded2209.inmotionhosting.com/~citywa9/component/banners/click/107 "LA DWP | Save $4K, Green | Priority Ad")
[  ](https://ded2209.inmotionhosting.com/~citywa9/component/banners/click/114 "McKinney Campaign")
[  ](https://ded2209.inmotionhosting.com/~citywa9/component/banners/click/82 "LA DWP #2 (Power Savers)")
[  ](https://ded2209.inmotionhosting.com/~citywa9/component/banners/click/98 "Donna Tryfman - HS1-1")
[  ](https://ded2209.inmotionhosting.com/~citywa9/component/banners/click/97 "Home - LA DWP #2 (Pay Water Bill Help)")
[  ](https://ded2209.inmotionhosting.com/~citywa9/component/banners/click/111 "David DeJute Campaign")
[  ](https://ded2209.inmotionhosting.com/~citywa9/component/banners/click/112 "Anna Reitano Vertical R. Col")
## Get The News In Your Email Inbox Mondays & Thursdays
Last Name
[  ](https://ded2209.inmotionhosting.com/~citywa9/component/banners/click/113 "Rhonda Haymon campaign")
[  ](https://ded2209.inmotionhosting.com/~citywa9/component/banners/click/110 "Something You Should Know")
---
## Featured CityWatch Stories
[  ](https://ded2209.inmotionhosting.com/~citywa9/election-2024/33624-prosecutor-democrat-city-attorney-mckinney-makes-his-case-to-los-angeles-voters)
### [Prosecutor, Democrat, City Attorney? McKinney Makes His Case to Los Angeles Voters](https://ded2209.inmotionhosting.com/~citywa9/election-2024/33624-prosecutor-democrat-city-attorney-mckinney-makes-his-case-to-los-angeles-voters)
ELECTION 2026 - The race for LA City Attorney has been laced with political accusations and allegations that when close…
[  ](https://ded2209.inmotionhosting.com/~citywa9/la-watchdog/33544-the-la-watchdogs-2026-voters-guide-2)
### [The LA Watchdog’s 2026 Voter Guide](https://ded2209.inmotionhosting.com/~citywa9/la-watchdog/33544-the-la-watchdogs-2026-voters-guide-2)
LA WATCHDOG - My recommendations are influenced by the need for truly balanced budgets, fiscal responsibility, long ter…
[  ](https://ded2209.inmotionhosting.com/~citywa9/los-angeles/33626-the-fools-blame-game)
### [The Fools’ Blame Game](https://ded2209.inmotionhosting.com/~citywa9/los-angeles/33626-the-fools-blame-game)
THE VIEW FROM HERE - Angelenos do not use elections to plot a wiser course of conduct for Los Angeles, but rather they…
[  ](https://ded2209.inmotionhosting.com/~citywa9/los-angeles/33619-california-film-tax-credits-arent-enough-the-guilds-need-to-change-too)
### [California Film Tax Credits Aren’t Enough. The Guilds Need to Change Too.](https://ded2209.inmotionhosting.com/~citywa9/los-angeles/33619-california-film-tax-credits-arent-enough-the-guilds-need-to-change-too)
LONNIE’S VIEW - California used to be the center of the movie and television universe. If you wanted to make movies, yo…
[  ](https://ded2209.inmotionhosting.com/~citywa9/voices/33648-heres-what-zionisms-got-to-do-with-it)
### [Here’s What Zionism’s Got To Do With It](https://ded2209.inmotionhosting.com/~citywa9/voices/33648-heres-what-zionisms-got-to-do-with-it)
ICAN - The anonymous website “BHUSD Watch” recently published a long, detailed article about the current BHUSD board an…
---
## [ STATE WATCH ](https://ded2209.inmotionhosting.com/~citywa9/state-watch)
[  ](https://ded2209.inmotionhosting.com/~citywa9/state-watch/33554-the-real-cost-of-moving-to-san-diego-in-2026-a-neighborhood-by-neighborhood-breakdown)### [The Real Cost of Moving to San Diego in 2026: A Neighborhood-by-Neighborhood Breakdown](https://ded2209.inmotionhosting.com/~citywa9/state-watch/33554-the-real-cost-of-moving-to-san-diego-in-2026-a-neighborhood-by-neighborhood-breakdown)
[  ](https://ded2209.inmotionhosting.com/~citywa9/state-watch/33288-60-minutes-governance-breakdown-threatens-californias-ghost-trains-future)### [“60 Minutes": Governance Breakdown Threatens California’s Ghost Train’s Future](https://ded2209.inmotionhosting.com/~citywa9/state-watch/33288-60-minutes-governance-breakdown-threatens-californias-ghost-trains-future)
[  ](https://ded2209.inmotionhosting.com/~citywa9/state-watch/33230-california-hates-your-car)### [California Hates Your Car](https://ded2209.inmotionhosting.com/~citywa9/state-watch/33230-california-hates-your-car)
[  ](https://ded2209.inmotionhosting.com/~citywa9/state-watch/33134-they-once-taught-about-a-hero-now-faculty-rethink-cesar-chavez-lessons-after-allegations)### [They Once Taught About A Hero. Now Faculty Rethink César Chávez Lessons After Allegations](https://ded2209.inmotionhosting.com/~citywa9/state-watch/33134-they-once-taught-about-a-hero-now-faculty-rethink-cesar-chavez-lessons-after-allegations)
[  ](https://ded2209.inmotionhosting.com/~citywa9/state-watch/33125-in-california-880-pedestrians-a-year-are-killed-walking-after-dark-making-it-the-seventh-deadliest-state-in-america-for-nighttime-pedestrian-fatalities)### [In California, 880 Pedestrians a Year Are Killed Walking After Dark, Making It the Seventh Deadliest State in America for Nighttime Pedestrian Fatalities](https://ded2209.inmotionhosting.com/~citywa9/state-watch/33125-in-california-880-pedestrians-a-year-are-killed-walking-after-dark-making-it-the-seventh-deadliest-state-in-america-for-nighttime-pedestrian-fatalities)