California is consistently a fertile breeding ground for unintended economic consequences. At least I hope they're unintended. These politicians with good tans constantly prove to the rest of us that if you don't understand the most basic economic fundamentals, your efforts will always hurt those whom you proclaim you are helping. As with so many things in this world, those who we think are promoting ideologies to benefit us are actually creating great burdens on us, and those whom we believe are selfishly only benefitting themselves are actually creating prosperity in which rising tides lift all boats, including ours.
Let's look at the connection between the California Energy Commission's recent decision to mandate solar panels on all new homes, the oppressive existing California property taxes and regulations, and the current exploding California homelessness population. This case study is Bad Economics 101, and to show you just how bad unintended consequences can get, we will even check in on Caracas, Venezuela today.
First, mandatory solar panels. Pure Capitalists and Libertarians must be losing their minds over this most-blatant example of government intervention choosing free market winners and losers. I'm sure that at least the 69,000 employees of Exxon have a strong opinion on this one. The average rooftop solar panel system today costs about $18,000 and will add over $100 per month to a 30-year mortgage until rates go higher, which they will. Annual cleaning averages $400, and an average repair costs $650 (no more kids allowed to play baseball in the backyards of California!). The homeowner will reportedly save $80 per month on utilities, but that's only because California's utility bills are already 30-100% higher than their neighboring states due to renewable-energy government mandates already in place. And, California already has such a surplus of solar power that they are currently PAYING Arizona to take the energy off their overloaded power lines! This reminds me of the price control government strategies which pay farmers to plow under crops to keep agriculture prices higher.
Second, property taxes and regulations. It costs approximately $60,000 more to build one house in California than in the rest of the country. Yes, $60,000! California has the highest number and highest priced government mandates, zoning restrictions, and permitting fees. The state legislature thought these barriers of entry for average citizens were so oppressive that they recently even added another socialist $75 fee on every new mortgage refinancing in order to, theoretically, support low income housing. Everyone on the Left Coast must have selected surfing over finance for their electives!
Now, third, Californians are confounded by the fact that they have an explosion in homelessness, and most-unfortunately, unsheltered homelessness. Last year the California homeless population grew 13X the national average! Just Los Angeles has over 55,000 homeless, and because LA lacks shelters or transitional housing due to high costs and regulations, over 75% of the homeless live on the streets or in encampments along riverbeds (Picture Steinbeck's "Grapes of Wrath"). By comparison, in New York City only 5% of homeless are unsheltered. Now when I listen to Diane Feinstein on CNN, she certainly sounds like her entire life mission has been to help the poor people (although her and her husband are fabulously wealthy). So, how can this be? Do you see how government intervention in free markets creates dystopia, especially when presented as helping the less fortunate, redistribution, and "fairness?" This is the con that has been around for thousands of years.
Finally, for a glimpse of how bad it can get you don't have to re-read Orwell's "1984" or Huxley's "Brave New World," because you need only look to today's case study in Caracas, Venezuela. Caracas was once a Latin American jewel with a fashionable urban sprawl of penthouses, fine restaurants, theaters, art, and a bustling international airport. Yet, as socialist-authoritarian governments have rolled across South America promising redistribution, large government care, and power to the people (See Chavez, Peron), they have destroyed lives and countries with their terrible, basic economics. Now, Caracas barely has running water, mass transit doesn't work, and homes sell for one-third the price they did just five years ago. Sadly, President Maduro was just re-elected while gangs run the streets and the middle class rummages for food.
Maybe one day soon someone will come along in our great country who will be able to effectively explain to our hardworking citizens how the "beneficial" economic and political policies sold to the general public actually result in great burdens and terrible unintended consequences.
"The most terrifying words in the English language are: I'm from the government and I'm here to help."
- President Ronald Reagan
