The Days of Easy Growth are Over

I’m 30 years old. Growing up, stories of California filled me with nostalgia for bygone days of open space, booming opportunity, and a more affordable existence. I’d hear my family describe a time when a single income could purchase a home, when freeways had less congestion, and a when everyone believed California was the place you’d go to improve your life.

I’d read California history and hear of times when it felt like previous eras were defined by a greater sense of optimism. For decades, California was the place to be, where we built world-leading infrastructure and defined global culture.

I’d hear these stories and wish I had been born a few decades earlier. I felt I had missed the party and instead was stuck experiencing a statewide hangover.

Two things broke me out of my slump.

First, things were never perfect. California history shows things were never rosy. Most housing booms were paired with a housing bust, bankrupting desperate builders who assumed prices only go up. The Great Depression was horrific. Desperate families straight out of the “Grapes of Wrath” rode here seeking jobs and hope and finding neither. And for all of California’s sense of being a place of oppenness, the California Dream was often defined by nasty racial exclusion, as seen in the Chinese Exclusion Act, Japanese internment camps, racial housing covenants, and the mistreatment of farm laborers.

This realization broke my illusion that California was always idyllic and led to my second source of hope: the future isn’t fixed. Humans have agency. California has not been on some predestined decline from bygone golden days. We have turned things around in this state before, and we can do it again. We do not have to passively accept the status quo, and if any state can reinvent its trajectory, it’s California.

As outlined in the first post, one goal of this blog is to flesh out what progress looks like. In this post I’m going to start by thinking about mapping out what ingredients historically led to California’s growth and whether those offer hope for the future.

The Ingredients of Golden Growth

If I had to pick one feature defining California’s best times, I’d pick it’s booming growth and broadly shared prosperity. Growth goes beyond just a high GDP (though it includes that too), it also includes a growing population and abundance that allowed the state to serve as an engine of opportunity. Growth breeds a virtuous cycle, creating a society where existing residents and new arrivals alike can build a better life for themselves and better integrate as there’s more than enough to go around. When I talk about ushering in a golden age for California, growth is at the center.

So what were the ingredients of growth in the past? Painting with broad strokes, I’d offer the following answers:

• Abundant Resources and Land: California was blessed with more than pretty coasts and mountains. The land was built for riches. Not only did we have the gold rush that kickstarted everything, we also had an often-forgotten oil boom in Southern California that fueled the region’s industrial growth. Then there was the land. Seemingly endless, fertile land. This allowed the Central Valley to grow into a world-leading agricultural hub. It also allowed the major cities, especially SoCal, to develop an agricultural economy before suburbanizing and turning those fields into today’s mega-region.

• Technological Innovative and Entrepreneurial Spirit: With Silicon Valley, California remains the beneficiary of the ongoing tech boom with no signs of slowing down. The state was also the birthplace of the modern aerospace and defense industry, a biotech hub, and for generations was a manufacturing hub. California continues to reap the benefits of cutting-edge industries who set the frontier of what’s possible and generate unprecedented investment and wealth as a result.

• Openness and Diversity: The subtitle of Carey McWilliams’ books on California describe it as an “island in the land” and “the great exception,” implying our isolation allowed the state to foster a uniquely open culture of experimentation. This is also driven by our cultural diversity driven by ongoing waves of immigration from around the world.

• World-leading Infrastructure: For years, California was a leader in physical and social infrastructure, including unprecedented aqueducts and water systems, roads and ports, and a top public education system. Having “things just work” and fostering a high-achieving education system allowed our economy to grow and for waves of new arrivals to improve their life within a generation.

• Cultural Optimism and Magnetism: The state has embodied hope for many people, the hope of a better life and innovative future. People have been attracted to the California brand as source of youth and vitality, that shared sense that it is possible for the future to be even better than it is today. This is less-tangible than the other ingredients, but it matters. The mythology and identity of the state reinforces its growth and establishes an identity as the place to be.

Farewell to the Low-Hanging Fruit

The list suggests much of what made growth possible in the past is no longer available today. Yes, we still are a center for tech and innovation, and yes, we’re still an open and diverse society, but beyond that most of the other sources of growth have dried up.

Consider land and resources. Obviously there won’t be another gold rush or oil boom. While the Central Valley is still dominant, it has relied on over-pumping aquifers that are largely depleted. What’s even harder is the limited land available for homes. Since WWII Californian cities grew horizontally with the assumption we can simply house new people in suburbs at the edge of job-centers. That logic is played out. LA now sprawls into the desert and the Bay Area has few choices of where to build. The formula of suburbs + freeways = growth no longer works.

Our infrastructure is no longer world-leading either. Our electrical grid is struggling to keep up. Any attempt to build new things, whether that be new homes or high-speed rail, are thwarted by bureaucracy. Our public universities are still world class, but our K-12 system is ranked 37th out of 50.

We’re still a cultural hub, but the shared sense of optimism is gone in an era when more people are leaving the state than moving here. I also think our optimism is declining as the state’s population ages. As the golden state’s hair turns silver, the willingness to build great things for the future is replaced by a complacency and desire to maintain the status quo. Why wouldn’t you want to keep things the same if you’re a boomer whose home has tripled in value while your property taxes have stayed low thanks to Prop 13?

This can all sound a bit doom and gloom, that’s not the point. As I said at the beginning, I believe a brighter future is possible. It just will require new ways of fueling growth. The things that got us where we are today won’t be the ones that usher in a brighter future, and that’s ok. Instead of banging our heads against the wall trying to recreate the past, it’s better to acknowledge growth requires change.

This dilemma is not unique to California. As Tyler Cowen argues in “The Great Stagnation”, the growth of most Western countries stalled in the last 50 years because we ate all the “low-hanging fruit” for growth. In the 19th and early 20th century economies benefitted from world-changing innovations (e.g. electricity and the internal combustion engine), expanded education access, globalization, and effective government institutions. These powerful sources of growth have either been played out and only offer marginal improvements, or in the case of ineffective bureaucracies, actively slow growth down. We live in an age where increasing growth and productivity is harder than it used to be. Future growth is possible, but it won’t come as easily, or necessarily from the same places as before.

Where do We Go From Here?

Progress, growth, and abundance are all possible, but it will take creative, intentional effort to make it happen. In future posts I’ll dig in further depth into ideas people have on how to make that happen, including things like housing affordability, energy abundance, AI and deep tech innovation, and governmental reform. There’s a lot to dig into, and I look forward to going deeper in coming weeks. Let me know if there’s anything specific you’d like me to focus on or other ideas I’ve left off the list!