I've always found Ron Brownstein, political analyst for The Atlantic, well worth reading. But I didn't expect him to come out with "Rock Me on the Water," a portrait of Los Angeles in 1974 — a time and place he argues were pivotal in creating our cultural landscape. I have no idea whether he's right, and it hardly matters: the book is great fun. |
Me being who I am, however, while reading the book I found myself thinking about … the relationship between California's culture and its economy. What made the golden age of L.A. culture possible, and how have things changed since then? |
There clearly was a remarkable collection of artists of various kinds in L.A. from the mid-60s into the 70s. There was, in particular, a cohesive musical scene — famous or soon-to-be-famous musicians who were constantly in and out of each other's houses — documented in the movie "Echo in the Canyon." The music they created remains a source of inspiration and comfort to this day. |
If you know much about contemporary L.A., however, these stories raise an immediate question: How, exactly, were not-yet-established artists able to afford houses there? |
The answer is that back then California real estate was much, much cheaper than it is now. Here's the price of houses in Los Angeles County adjusted for inflation since 1975, together with the same number for Dallas County (of which more shortly): |
 | | You can check out any time you like, but you can't afford to come back.FRED |
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Real L.A. housing prices have tripled since the days Brownstein celebrates. Affordable housing doesn't by itself create a cultural efflorescence, but it's probably a necessary condition. |
The phenomenon of high real estate prices undermining cultural vibrancy is hardly unique to L.A.; it has happened many times in many places. It's reportedly happening in Berlin as we speak. |
But culture isn't the only or, arguably, the main issue. What about making it possible for ordinary people to live decent lives? |
So let's talk about politics, housing and the California economy. |
Once upon a time California was a hotbed of conservatism. But rising ethnic diversity and the growing alienation of highly educated voters from an anti-intellectual G.O.P. eventually led not just to Democratic dominance, but to progressive dominance. If President Biden's agenda succeeds, we'll probably look to Jerry Brown's reign as California governor — with large tax increases for the wealthy and an expansion of social programs — as the proving ground for Democrats' left turn. |
When Brown raised taxes in 2012, conservatives predicted disaster, some going so far as to declare that the state was committing "economic suicide." In fact, job growth boomed, while revenues soared; Governor Gavin Newsom just announced that the state will run a $75 billion (!!!) budget surplus. |
California also enthusiastically implemented Obamacare, cutting the uninsured population by more than half. |
But despite what looks like prosperity, population growth in the formerly dynamic state has stalled. Why? |
Well, it turns out not to be affluent, highly educated residents fleeing those "job-killing taxes." People like that are still moving in. Instead, lower-income and lower-education residents are leaving, probably because housing is so unaffordable. |
It didn't have to be that way. Texas has a rapidly growing population, the way California used to. But as the chart above shows, Texas housing prices haven't risen much at all in real terms. And the reason is obvious: Texas doesn't have California-type restrictions that effectively prevent the construction of much new housing. And that, um, liberal housing policy, not low taxes, is the big explanation of Texas's relative success. |
Which brings me to the bottom line here. What California's example shows is that tax rates on the rich have much less adverse effect on incentives than conservatives would like you to believe. But while blue states can do fine while raising money from the rich, they do a lot of harm by preventing the construction of new housing for ordinary people. |
Why Texas is moving right even as Dem-leaning groups move in. |
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 | | Some music still moving to LAYouTube |
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