Secession is no Californian dream The appetite for Calexit may be growing, but the state should be careful what it wishes for

Secession has not been seriously contemplated in the US since April 1861, when Confederate guns around Charleston Harbor opened fire on Fort Sumter in South Carolina just over a month after Abraham Lincoln’s inauguration. The Union’s victory in the four-year long Civil War, along with a later constitutional ruling in the case of Texas v White in 1869 was thought to have settled once and for all the issue of unilateral secession. 

But this does not preclude a constitutional renegotiation. Much like Brexit, once seen as a wild-eyed fringe movement, a California independence movement is no longer fanciful. Since the election of Trump, the idea has been gaining traction: a 2017 Reuters poll suggested that one in three Californians was supportive of an independence movement. In the context of a highly contested election in which Trump is re-elected, that’s almost certain to rise.

A California Independence Referendum initiative was drafted last July, a proposed initiative that, if qualified by the California Secretary of State, would allow a popular vote on whether to leave the Union to be on the state ballot by 2022. It is unlikely that this process would lead to civil war. Indeed, when confronted with the happy political implications of the largest Democratic state leaving the union, Republicans might welcome “Calexit”.

But would sovereignty truly represent a panacea to most Californians? On the surface, it would certainly appear to be viable as a stand-alone country: California would have the 5th largest GDP in the world, barely behind Germany, but ahead of both India and the United Kingdom. And its ostensibly progressive politics would no longer be hampered by American constitutional arrangements that seem designed to frustrate such aspirations.

But look a bit closer, and the benefits appear less obvious. It is true that Californians by large margins disapprove of almost everything Trump has done as president, notably on housing policy, climate change, healthcare reform, deregulation, tax, and issues pertaining to economic inequality. However, the state also exemplifies the most extreme version of America’s worst pathologies, many of which are the reasons why Trump got elected in the first place.

Consider that California’s economy remains profoundly unequal, despite its robust economic growth historically. Its level of income inequality exceeds that of all but five states. Wealth inequality is even more pronounced: 20% of all net worth is concentrated in the 30 wealthiest zip codes, home to just 2% of Californians. 

The response to the Covid-19 pandemic has further exacerbated these disparities, as have the wildfires currently incinerating the state. The latter highlights the state’s vulnerabilities to the ravages of climate change and droughts, which have decimated its many agricultural-based industries. Similarly, the decaying public infrastructure has necessitated rolling electricity blackouts in order to prevent the state’s electric utilities from starting yet more wildfires (we’re not even through 2020, but already this year’s fires dwarf the 10 biggest from the previous decade).

Anybody moving to the Golden State today would be shocked at the cost of housing; California’s housing affordability ranks last among the 50 states. This has led to an epidemic of homelessness that evokes scenes from the dark ages, as author and long-time California resident Michael Shellenberger has described: “The 44,000 people living, eating, and defecating on the streets of L.A. have brought rats and medieval diseases including typhus.” And all this is occuring in a state that is home to the largest number of billionaires living in the country.

Virtue-signalling Silicon Valley oligarchs (who comprise a large chunk of these billionaires) hope to sustain the status quo through the expedient of a Universal Basic Income guarantee. The UBI sounds like progressive policy, but in fact is a placebo reform that fails to address the serf-like employment conditions that increasingly prevail in the state. 

Silicon Valley employers love the idea of the UBI. For them, it represents a de facto subsidy from the government, which means they could retain more of their fat profits instead of paying them out to their increasingly stressed workers. But at least they find the time to pay lip service to social justice movements like Black Lives Matter.

For all of the state’s celebration of innovation, entrepreneurialism, and job creation, a research brief from Chapman University’s Center for Demographics and Policy highlights that California is producing far fewer mid- and high-paid jobs than the rest of the country. The brief also indicates that most of these jobs pay under the US median wage, and 40% pay under $40,000 a year. 

By contrast, higher-paid industrial jobs, critical to the progress and upward aspirations of the working class, have dropped well below the national average over the past decade. As a result, “California has now taken on an increasingly feudal cast, with a small but growing group of the ultra-rich, a diminishing middle class, and a large, rising segment of the population that is in or near poverty”, writes Joel Kotkin.  

While Silicon Valley itself has become synonymous with high tech-led prosperity, cities in North Carolina, notably Charlotte and Raleigh, along with Austin, Texas, now outrank many leading California metropolitan areas as the top spots for tech professionals to work. And let us not forget how Washington state has risen as an alternative high-tech hub with the creation of Amazon and Microsoft over the past 30 years. 

Secession, therefore, would complicate matters, as that specific employment escape-valve might no longer be automatically available to Californians if or when its workers decided to emigrate in search of superior job opportunities. 

Which brings another uncomfortable truth closer to home. As much as California likes to see itself as the new frontier for technology and cutting edge visions for the future, this rose-tinted view conveniently forgets the significant role that the US government itself played in creating the innovation platform that established the foundations of much of the state’s prosperity. 

It is the US government, for example, that created the Internet, as well as many other transformative general-purpose technologies. If we see a return to ambitious hi-tech industrial policy on the part of the US government, then a separate nation of California obviously wouldn’t benefit.

Of course, this conjecture about California’s future as an independent nation-state is still all in the realm of fantasy. Depending on the national US election outcome, however, the fantasy could well morph quickly into reality.

But that future reality provides no happy ending. Breaking up the alliance between Washington DC and Silicon Valley would leave the latter exposed — especially in a world where the continued dominance of the existing tech giants is by no means guaranteed. If the standard-bearers of the Golden State’s economy end up sharing the same fate as Lucent or Eastman Kodak, then Californians would regret forgetting that they are, at heart, Americans.

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Marshall Auerback is a market commentator and a research associate for the Levy Institute at Bard College.

Mauerback