Today’s LA Times explores the campaign tactics of Meg Whitman and Steve Poizner, who have been running against Arnold Schwarzenegger (even if in a veiled way). It’s not a particularly surprising development given the falling out the Yacht Party has had with their governor over the last few years. But what the article really shows us is that neither Whitman nor Poizner are offering Californians any kind of coherent vision for our state’s future.

By criticizing his painstakingly crafted budget, actively opposing several of his ballot measures and, more subtly, jabbing at his work habits and ego, Meg Whitman and Steve Poizner are striving to distance themselves from the unpopular Schwarzenegger and tap widespread GOP anger over the incumbent’s broken pledge not to raise taxes. It is, in the words of a strategist involved in the race, a competition to become “the anti-Arnold.”

It is also an effort to persuade voters — starting with Republicans — to trust a pair of candidates with backgrounds similar to Schwarzenegger, who are making some of the same promises he did when he first ran for governor 5 1/2 years ago.

This is a pretty apt description of the two candidates – folks that look and sound a lot like Arnold (well, without the Austrian accent) who nevertheless think they can convince voters that the problem was Arnold himself and not the policies he supported.

Poizner and Whitman have yet to offer concrete solutions for closing the state’s budget gap, which has grown by several billion dollars since lawmakers and the governor narrowly reached their agreement. They speak in broad generalities about running California like a business, and they fiercely oppose higher taxes — echoing positions that Schwarzenegger took during the recall campaign. Then, he said California’s fiscal ills could be cured with stringent auditing and a willingness to “blow up the boxes” of state government.

In short, Whitman and Poizner are both planning to run the exact same campaign as Arnold did back in 2003. It’s much like John McCain’s campaign strategy, which was to embrace Bush’s entire agenda but try and convince a skeptical public that the problem was Bush himself and not his policies.

Barack Obama did a pretty good job of convincing Americans that the problem with the last 8 years wasn’t Bush but the policies he embraced. But Obama did that partly because he passed himself off as a candidate offering a fundamentally different vision for America than conservatives like Bush and McCain offered. (Whether Obama will deliver on this remains to be seen.)

Democratic gubernatorial candidates will need to do the same in 2010 if they are to beat either Whitman or Poizner. It doesn’t help when people like Jerry Brown echo Republican talking points about taxes and jobs. Californians have tried it the Republicans’ way for the last 30 years – cutting taxes, spending, and regulation and yet sustained and shared prosperity remains more elusive now than in 1978 when this ugly journey began.

It should not be difficult to beat Whitman and Poizner. They aren’t offering new policies or ideas because they believe the policies of the last 30 years are inherently good and should be preserved. The way you beat that is to point out the obvious and say “no, those policies have failed; time to try something new.”

What would that something new look like? As I argued last week it should emphasize sustainability and security, ensuring that basic needs can be met outside the financial markets and that we have robust and effective government services to meet the multifaceted 21st century crisis and to provide shared prosperity.

All of that requires junking the policies and the frames of the last 30 years – and pursuing a restoration of the taxes on the wealthy and on corporations would be a damn good place to start. Unfortunately California Democrats have been as guilty as anyone of being too close to big business, especially to their money, and as a result have become closely tied to the neoliberal policies of the last 30 years, unwilling to offer an alternative even if they believed in one (and many Dems, like Bill Lockyer, do not).

At some point you might imagine that Democrats would realize, as Barack Obama did, that getting fat checks from big business isn’t actually that valuable if it consigns Democrats to an eternal second place. The Democratic candidate for governor who realizes that Obama’s organizing model freed him from dependence on corporate cash – and therefore allowed him to articulate a newer vision for America and thus win the election – will be the Democratic candidate with the best chance at taking the oath of office in January 2011.

For far too long now discussions of California political economy have been dominated by neoliberals. Republican neoliberals are overt in their desire for an economy based on oligarchy – a wealthy few get to prosper at the expense of the basic economic security of everyone else. Democratic neoliberals have usually wanted to smooth out the edges of this rough beast, supporting tax and spending cuts and deregulation in the hopes that enough debt can be spread around to make up for the loss of shared prosperity – but otherwise have consistently gone along with the Republican efforts to channel wealth upward.

The economic policies of the last 30 years in the US emphasized debt, tax and spending cuts, and deregulation as the magic ingredients for growth. It worked, on occasion, but never for more than a few years at a time, never for most Californians, and did not produce ANY long-term value, stability, or security. California’s version of these policies emphasized the housing market, especially over the last 15 years but really ever since 1978 (or am I one of the few people to remember California in the 1980s?).

Where that wasn’t sufficient to create jobs, big business and their political lobbying arms (the Chamber of Commerce, the Republican Party) went further and argued that supposedly high taxes and supposedly onerous regulations were driving jobs away. Nevermind the fact that the economic booms we did have in the 1980s, 1990s, and 2000s showed that the state had no problem creating businesses and jobs – the problem was instead sustaining them and spreading the wealth around, which neoliberalism makes impossible.

Unfortunately some leading Democratic politicians in this state see fit to repeat the neoliberal argument that high taxes and regulations will drive businesses away. Recently more voices are challenging the neoliberal consensus, urging California to adopt different, progressive policies to build on California’s remaining strengths and resist calls to go back one more time to the neoliberal trough, to try and float one last bubble-based boom.

What these folks point out is that California needs government policies that provide both flexibility and basic security, instead of giving power and wealth to a small elite in a process that increasingly traps Californians in a rigid system of debt and inequality.

Richard Florida provides one of the most insightful examinations of the economic crisis and how  it will reshape American economic geography. He argues that the current recession may well resemble the Long Depression of 1873-1896, which dramatically reshaped where economic growth took place. The small manufacturing towns of Lowell and Rochester were replaced by large urban centers like Detroit and New York City as engines of growth. And not surprisingly, the Progressive Era quickly followed, motivated largely by a desire to make the cities more livable and more equitable.

The places that will thrive, Florida argues, are those urban centers that can provide support and opportunity for people to create, produce, and just plain work sustainably and with security:

The United States rose to economic preeminence by periodically developing entirely new systems of infrastructure-from canals and railroads to modern water-and-sewer systems to federal highways. Each played a major role in shaping and enabling whole eras of growth.

The Obama administration has declared its intention to open the federal government’s pocketbook wide to help us get through this recession, and infrastructure spending seems poised to play a key role. Done right, such spending could position the United States for the next round of growth. But that will entail more than patching up roads and bridges.

Florida is directly challenging the neoliberal consensus that jobs grow through some sort of “voodoo economics” – that if you cut it (taxes, spending and regulations) they (jobs) will come. This is nonsense. What he instead points out is that a modern economy requires a modern level of services. We need passenger trains, well-funded schools (from kindergarten to grad school), health care, and a dense urban landscape that can affordably house all these workers instead of exhausting our water resources, pushing people into known fire zones, and raising the planet’s temperature in order to sustain sprawl.

Another voice that  

Dan Walters examines the obvious in today’s Sac Bee, pointing out that the economic forecasts for California are becoming dire:

Consider, for example, this dark, but perhaps realistic, projection by University of California, Santa Barbara, economists:

“The … economy will likely continue to decline for another two years, perhaps longer. We expect the number of California jobs … economic output … retail sales (and) tourism revenues will fall throughout the forecast horizon. There is no measure of economic strength that provides even a glimmer of hope for California’s economy in the near term, none.”

The UC Santa Barbara forecast has California’s unemployment rate, now over 10 percent, nearing 14 percent by next year, which means another half-million workers would join the jobless ranks.

The UCSB forecast (for which I’m unable to find a link, unfortunately) jibes with what leading economic observers like Nouriel Roubini are saying – that we will see a recession into 2010 and then a slow recovery from there.

All of that begs the question, of course, of exactly what’s supposed to drive that recovery. If we look back at the last three recoveries, we can see a pattern of dependence on one or two sectors of the economy to produce a boom, but little long-term planning beyond that:

1980s recovery: Driven mostly by defense spending (especially in Southern California, a major beneficiary of the Reagan arms race boom) and, later in the decade, by a housing bubble. High tech began to make its presence felt later in the decade in the Silicon Valley. All of this masked the effect of the beginning of neglect of basic government services, including schools, which began in the immediate aftermath of Prop 13’s passage in 1978.

Core weaknesses: Defense spending and housing boom were both unsustainable. When Cold War ended in 1989, which was perhaps coincidentally the peak of the ’80s housing boom, CA’s economy had no real safety net to avoid a recession. Much of this was fueled by debt, but at far smaller levels that what we have seen recently. Economy began shifting away from manufacturing.

1990s recovery: The 1980s boom turned into a particularly nasty bust by 1991-92, with unemployment in Southern California pushing 10%. This recovery was led primarily by the high tech sector, which spread throughout the Bay Area and into Southern California (former defense industry workers turned out to be very good at high tech). Tax increases at the outset of the decade helped support this growth by arresting the decline of the UC and CSU system into unaffordability and loss of quality, sending a steady stream of qualified workers into the high tech field. Additionally, CA became a center of the deregulated financial industry. Housing did not actually become a major part of this boom until much later in the cycle.

Core weaknesses: High tech work could be easily outsourced. The manufacturing decline that began in the ’80s accelerated in the early ’90s recession. Late ’90s spike in tax revenues led politicians to recklessly cut taxes to unsustainably low levels, endangering the state’s ability to recover from the next crisis. By decade’s end housing was becoming a larger part of the economy, and much of this was based on sprawl dependent on debt and cheap oil.

2000s recovery: Based almost wholly on housing and deregulated financial products – and on a pile of debt. Soaring cost of UC/CSU led to exacerbation of a generation of inequality – high cost of higher ed combined with fewer high-wage job options limited upward mobility of millions. Government recovery was anemic at best. Health care costs began to spiral out of control, as did housing costs. Often known as a “jobless recovery”.

Core weaknesses: Required endless supply of debt and cheap oil to sustain what little growth there was. When cheap oil vanished after 2005 entire economy was imperiled. Erosion of government and safety net meant that next recession would not only be nasty, brutish, and long but that government would not be in a strong position to lead recovery.

As you can see, the recoveries of the ’80s and the ’00s were fundamentally weak, whereas the ’90s recovery had somewhat of a stronger base but was susceptible to underlying problems (free trade, anti-tax policies, loss of manufacturing base, increasing tendency toward dependence on sprawl and housing markets to produce consumer spending). And I haven’t even mentioned the enormous environmental costs of these recoveries, which should further suggest the undesirability of repeating any of these models.

Ultimately the problem was that at no time in the last 30 years did California plan for the future. Each recovery just sort of happened, partly by federal design and partly due to state laws, from Prop 13 to land use, favoring sprawl. Each recovery was dependent on debt in one form or another, and each recovery failed to fix the long-term decline in government resources (although the ’90s recovery began to address this before Pete Wilson and Tom McClintock got their hands on the till).

What this means is that California needs, desperately, to start thinking about how it can produce long-term sustainable growth and not just try and inflate a fourth bubble or a recovery whose bases are fundamentally weak. Over the flip I propose some elements of what this strategy might look like.

1. Fix the structural revenue shortfall. California cannot have economic recovery without more government support of the economy and its workers. This ranges from universal health care to restoring the lost quality of K-12 education to restoring the promise of a free higher education to those who qualify. It also includes a reconstruction of the safety net, which has so many holes that most Californians feel like Man On Wire. Many of the solutions proposed below depend on a government that has the ability to spend money without the conservative constraints put on it in 1978 and in the following years.

2. Prioritize energy independence. As more and more people are starting to realize, if we have not taken dramatic steps to reduce our dependence on oil, then our recovery will be strangled as gas prices again rise with demand. California needs to see the high speed rail project through to completion, restore the insane elimination of state funding for local mass transit. A higher gas tax can help fund this – now is the time to do it, as gas prices hover just about $2/gal.

California is also in a commanding position to develop alternative energy. We have more potential solar and wind power that could be developed than almost any other state. That can bring green jobs as well as help provide a more sustainable energy base for our economy. Of course, it does not help when Dianne Feinstein wants a blanket ban on Mojave solar projects – if we want to arrest global warming and improve our environment as a whole, some currently wild regions will have to be developed for solar and wind and transmission lines to serve them.

3. Emphasize sustainable and locally-grown food. California is still one of the best places in the nation for growing food – we have good soil and a climate that allows us to grow virtually anything. We are also growing a strong local and sustainable food movement. Unfortunately California also has a huge corporate agriculture sector that is increasingly using unsustainable practices, especially for water. Government can support local agriculture through proper regulation, by encouraging cities to provide community gardens, and by encouraging the in-state production of the implements used in urban farming.

4. Stop writing checks mother nature can’t cash. This applies particularly to our water resources, which have been overstretched for decades. Now, thanks to contracts written like a subprime mortgage – promising to deliver more water than mother nature can actually deliver – California faces a water crisis even though the current drought isn’t as severe as some have said. Local food production can help ease the demand on the Central Valley for our food and can help better distribute stressed water resources. Ultimately the state will have to further regulate water usage and encourage localities to follow Orange County’s lead in water recycling. Desalination should be considered as a last resort, and only to be implemented under strict conditions.

5. Channel growth toward urban density and end sprawl. I’ve been hammering this point since 2007 – that if we are to restore the California Dream we have to stop sprawl and start building more urban density and the transit to support it if we are to have a hope of providing housing security and a sustainable economy. Sen. Darrell Steinberg’s SB 375 was a great start down this path.

6. Find ways to encourage the growth of a sustainable manufacturing base again. The state ought to consider pursuing various forms of subsidy to products made in-state and if possible taxation of imports. This may bring California into conflict with the various, stupid free trade agreements the US has signed over the last 20 years, but it is a fight someone needs to pick.

I would also note two more fundamental goals that we ought to keep in mind and pursue as we consider long-term recovery:

Sustainability is the key. Everything we do must be sustainable – whether in terms of economic security and broadly shared prosperity, or in terms of environment and use of natural resources. The lack of sustainability is directly responsible for the collapse of the last three recoveries. It is time for us to place sustainability at the CENTER of every economic policy we adopt as a state.

Reduce or eliminate finance from core social needs. A major problem with the present economy is that so much of what we need to survive and thrive – from housing to health care to an education – is dependent on a financial economy. One should not have to depend on loans or debt to have a roof over their head, or get health care, or to eat, or to learn. One might include energy in this as well. While it may be impossible to remove finance entirely from the equation, we should find ways to reduce its place in the provision of those core services, and start seeing a home or health care as fundamental rights we all receive as a condition of being alive, and not privileges we get for playing a market or being willing to take on debt.

Finally, I recognize that the state of California is quite limited in how much long-term economic planning it can do, and that many of the keys are actually held by the federal government. However, an assertive economic recovery plan can create its own momentum in Washington DC, and can force the hand of both Congress and the White House when they might be more inclined toward inertia or, as Obama appears to be, inclined to try and refloat yet another bubble.