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◼ REMARKS Bloomberg Businessweek November 11, 2019Butit bouncedback.A keyfigureintherecoverywas
JerryBrown,a fiscallyconservativeDemocrat,whowasgover-
norfrom 2011 untilhewassucceededbyNewsominJanuary.
(Brownalsoservedasgovernorfrom 1975 to1983.)Hewas
relentlessinusingexcessmoneytopaydownwhathecalled
a “wallofdebt.”Heresistedpent-updemandfromDemocrats
whocontrolled(andstilldo)bothchambersofthelegisla-
turetospendsurplusfundsonneworexpandingprograms.
Thestatenowhas$19billionsockedawayinreservefunds.
Newsom’sfirstbudgetfeatureda record$21billionsurplus.
California’seconomyis booming,butthepriceofgrowth
hasbeensteep.Thestateisaddingfarmorejobsandres-
identsthanhousingunits,squeezingsupplyandsending
costssoaring.Themedianhomepricetops$600,000—more
thantwicethenationalaverage—andthepovertyrateis the
nation’sworstwhenfactoringinthecostofliving.California
is hometo12%oftheU.S.populationand25%ofthecoun-
try’shomeless,themajorityofwhomareunsheltered.
Andthenthere’sclimatechange.Environmentalchal-
lengesarehardlyuniquetothestate,saysPeterGleick,
a waterandclimateexpertwhoco-foundedthePacific
Institute,a thinktankinOakland.Butthequestionis,he
says,“Whatdoesit meanforevena richdevelopedsociety
tohavetodealwith?Partofit isa questionofemergency
response,andpartofit is a questionofwhatkindofenergy
andwatersystemsdowehavecomparedtowhatweneed
tohave.Andpartofit is franklypsychological—howarewe
goingtodealwithonecrisisafteranother?”
WildfiresinCaliforniahaveconsumedmanyfeweracres
sofarthisyearthanatthistimein2018.Butthatyearandthe
onebeforeweretheworstforwildfiresinthestate’shistory
intermsofdeathanddestruction,includingtheCampFire,
whichkilled 85 people,andtheMendocinoComplexFire,
whichburned410,000acres,anareamorethantwicethe
sizeofNewYorkCity.Peoplewho’vejustfinishedrebuilding
fromthelastfirearequestioningwhetherthey’llhavetodo
soagain.Preemptiveblackoutsbyutilities—suchasPacific
Gas& ElectricCo.,whosepowerlineshavebeenfoundlia-
bleforsparkingblazes—leftmillionsofpeopleinthedarkup
anddownthestate.It couldtakea decadebeforesuchdis-
ruptionsare“reallyratcheteddownsignificantly,”William
Johnson,PG&E’schiefexecutiveofficer,recentlytoldregu-
lators.Whoknowswhatformthemore-than-a-century-old
companywilltake 10 yearsfromnow:It’sfacingcallsfora
statetakeoverandgoingthroughbankruptcyproceedings.
It wasalsooneofthepowercompaniesthatdeclaredbank-
ruptcyduringoneofthestate’searlier crises in the 2000s.
Scott Anderson, chief economist at Bank of the West, esti-
mates the combined impact of this year’s fires and blackouts,
at up to $11.5 billion, could shave off so much of California’s
economic output that the state could underperform the U.S.
economy for the first time since 2010. Anderson sees the
state’s growth rate this year ranging from 2% to 2.2%, below
the expected 2.3% rate for U.S. gross domestic product. The
fires and power outages could wreak “long-term damage” onCalifornia’s cost of living and business climate, he says, partic-
ularly given the tech industry’s need for reliable power. “It’s
hard to say you’re a high-tech state when you’ve got rolling
blackouts going on,” he says. Coupled with the high taxes and
costs, “it really does make California a less attractive place to
do business and even to live.”
Part of what the state prides itself on—and makes it such a
popular punching bag for critics—is its insistence, by politi-
cal leaders and voters alike, that government can and should
be proactive in addressing problems. For decades, California
has set out to tackle climate change, leading the nation and
often the world in a quest to reduce dependence on fossil
fuels, curb emissions, and adopt renewable energy. As the
nonprofit National Resources Defense Council Inc. wrote in
a May report, “had the other 49 states reduced fossil fuel use
relative to economic activity over the past four decades at
thesamepaceasCalifornia,nationwidecarbonemissions
wouldnowbelowerby 24 percent.”
Newsom hascontinuedtopushthattheme,traveling
throughout the state in recent weeks to highlight steps taken to
prepare for, preempt, and respond to environmental disaster.
To address housing, he signed a package of bills in September
aimed at giving local governments more tools to confront the
crisis. To battle homelessness, residents in Los Angeles and San
Francisco have voted to boost funding by taxing themselves
and their employers, and voters statewide authorized billions
more in state spending to build more indigent housing. It’s not
just government: Facebook Inc. and Google each say they’re
going to throw $1 billion at the housing crisis. Apple Inc. says
it’sputtingup$2.5billion.Thetechgiantsmayhaveexacer-
batedCalifornia’sinequality,butfewotherstateshavesuch
private-sector resources to deal with pressing public issues.
“California is trying to tackle really hard stuff,” says Leah
Stokes, a professor of political science at the University of
California at Santa Barbara. She adds, “No one wrote, ‘Is
Texas over?’ when Hurricane Harvey hit Houston. California
is not an island apart from the rest of the world—if it’s hap-
pening in California, it’s happening everywhere else, too.”
BackinSimiValley,Mikellexamineda NewHollandskip
loader,nowa uselesspileofmeltedmetal,plastic,and
rubber.Onebuildinghadbustedwindowsandhole-ridden
walls.Astreamflowedoutofa meltedpipeandsnaked
aroundstill-smoldering topsoil. The California native voted
for Trump, didn’t vote for Newsom, and, though he believes
the climate is shifting, doesn’t think it’s caused by human-
kind. But he believes in California—and has witnessed how
its attempts, both official and private, at being proactive
have helped. “I’m not interested in starting over,” he says.
“I’m proud to be a Californian. People are resilient here. We
bounce back and pull together.” Besides, starting anew in
a different state would mean leaving family, friends, busi-
ness reputation, and the rock band Seventh Freedom, in
which he plays bass. As he spoke, the Santa Ana winds were
spreading a new fire just a few miles away. <BW> �With Romy
Varghese and Michael Marois