Why ‘overregulated’ California is leading the way
Ideologues hate it when the facts get in the way of their theories. California’s Gov. Jerry Brown signed trailblazing legislation last week that commits the state to audacious greenhouse gas emission reductions by 2030 of 40 percent below 1990 levels. Not surprisingly, longstanding critics from the business community were howling once againabout how California’s business climate will deteriorate as a result.
The law extended efforts under California’s previous cap-and-trade bill which set emission targets for 2020 to match 1990 levels.
Predictions of doom for the California economy are a perennial staple of California politics. But is there any truth to them?
First, here are the bald facts. Growth of California’s ‘overregulated’ economy has frequently exceeded the U.S. economy as a whole since 1998. Annual growth in gross domestic product shown in the linked graphs is not a perfect measure of economic vitality, but it shows that fears that California is somehow stunted by its so-called excessive regulatory and tax burden isn’t supported by the growth numbers.
Moreover, states that rank highest in typical business-oriented think tank ratings such as North Dakota and Wyoming saw their economies shrink by 6.7 and 2.9 percent respectively in 2015 as California led the nation with an expansion of 4.2 percent. Of course, North Dakota and Wyoming were hit hard by the decline of oil prices as their economies are largely extractive. California’s economy is far more diverse.
It’s probably true that carbon emissions intensive industries will now think twice about expanding their presence in California. But those industries aren’t really the future that California is seeking.
Instead, the state is becoming a leader in solar and wind energy and energy efficiency technology and policy. These are cutting edge industries that other states should envy California for. One has to look no further than the coal industry to see what’s in store for the fossil fuel industry as a whole and the economies that rely on them.
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