In an op-ed in the Wall Street Journal, John Steele Gordon decides that California has gone down the tubes.  The article title, probably by the WSJ editors, is really the most provocative part:

The Rise and Needless Decline of the Golden State

John Steele Gordon writes in The Wall Street Journal that more Americans left California than arrived in the last decade. What caused this great migration? Politics

The bulk of the story goes through the history of California and how/why people came here.  No real arguments there, but the last 20% goes on to attack, based primarily on anecdote and strained conclusions, that California has gone off the rails because the environmental movement is strangling the economy.

Let’s start with that subtitle, it is pretty misleading, even from the title.  California hasn’t lost population, people are streaming here.  It is just that we are diversifying through immigration.  As noted in the story, our population has actually gone up by 10% over the past decade.

And as for the thrust of the story, that business just hate the climate that they are streaming out of the state.  As we’ve said here many, many times, that just isn’t happening.  Anecdotes are cute, but they aren’t data.  And anecdotes don’t tell you anything resembling the whole story.

And neither does this story tell you anything resembling the whole story.  He finds somebody, somewhere who told him it was hard to get permission to do something once.  It’s oh-so-helpful and informative.

But he has a small tell at what he really wants to see here: gut environmental protection and drill, baby, drill:

The environmental movement was largely born in California, with John Muir and the Sierra Club, but it now threatens to strangle the state’s economy in a laocoön of regulations. The state’s vast oil and natural gas potential on the continental shelf has been off limits for years. Environmental groups and others have become masters at tying up economic development in court.

Let’s be honest, California still leads the nation in innovation.  California made the 90s go boom in technology, and made the last decade go boom with real estate.  Neither booms were substantially slowed by over-regulation.  And while both booms saw their inevitable crashes, neither of these busts had anything to do with regulation.  Well, except maybe under regulation.

The Wall Street Journal likes to pretend at a fact-based reportage and hard hitting editorials.  This one eschews facts entirely in a quest to make a political point in an anti-environmentalist extravaganza.  Par for the course these days.

The move by republicans and polluters to suspend/kill AB 32, California’s Global Warming Solutions Act that seeks to reduce greenhouse gas emissions and spur green job growth, was dealt a devastating blow on Friday — one of the authors of the much-cited (and much-criticized) Varshney/Tootelian report (VTR), which predicts an economic catastrophe if California implements AB 32, is now backing away from the report’s claims.

Facing yet another round of criticism — this time in a report by Stanford University economist Jim Sweeney that found VTR to be “highly biased…based on poor logic and unsound economic analysis” and overstates the costs of AB 32 “by a factor of at least 10” — Sanjay Varshney has refused to defend his report’s claims. When asked by a reporter for the Sacramento Business Journal to respond to Sweeney’s criticism, Varshney, who is Dean of the Business School at California State University Sacramento, would only say, “I haven’t really kept up with the debate. It will be very difficult for me to comment.” (You need to be a subscriber to see the full article.)

Hardly what you’d call a full-throated defense, or even a boilerplate response about his confidence in both his methods and his conclusions. And Varshney should be well-prepared to address the kind of criticism found in the Stanford report since it echoes criticisms found by other economists, as well as the Union of Concerned Scientists.

The main and most obvious criticism of VTR is that it only looks at the projected costs of implementing AB 32 ($24.9 billion) while purposefully omitting any of the savings that AB 32 would generate ($40.4 billion) — a net savings of $15.5 billion.  

It is a methodology that literally makes no sense. How can you account for the cost of buying a more fuel-efficient car, then not account for the money drivers would save at the pump by driving a more fuel-efficient car? How can you include the cost of building a home so it uses no net energy, then not include the savings for a family living in that home who no longer has to pay energy bills? Yet that is exactly what VTR does, a methodology the Stanford report calls “highly biased and has no credibility.”

Virtually all of VTR’s conclusions are based on this decision to look only at costs without savings, which the Stanford report estimates causes the results of VTR to be inaccurate by a factor of ten or greater. The authors of VTR try to justify their methodology by claiming that the estimated savings generated by AB 32 are “too speculative to consider at this time,” an explanation the Stanford report says has “little credibility” since VTR has no problem citing the costs of implementing AB 32, many of which are also speculative. And, as said before, it makes no sense to include the cost of increasing energy efficiency without including the savings from using energy more efficiently. The Stanford report goes on to highlight more errors and flawed methodology used in VTR, like claiming that saving $30/month by driving a new fuel-efficient car amounts to a $30/month increase in gas costs for those who stick with their current cars. It’s no wonder economists Christopher Thornberg and Jon Haveman of Beacon Economics called VTR “one of the worst examples of schlock science we’ve ever seen.”

Yet VTR — for which Varshney and Dennis Tootelian were paid $54,000 by the California Small Business Roundtable — is virtually the only evidence that AB 32 opponents give for their doomsday predictions that AB 32 will ruin California’s economy, cost the state a whopping 1.1 million jobs (more than have been lost as a result of the current recession) and raise consumer prices. Republican Meg Whitman has mentioned its findings as a reason why she has promised to suspend AB 32 if she is elected governor, as has a representative for her republican opponent, Steve Poizner. VTR has also been cited by numerous newspapers, including the editorial board of the Wall Street Journal, who heralded its findings as proof that there would be no “free green lunch” in California if AB 32 is implemented.

The fact that candidates like Poizner and Whitman (along with anti-AB 32 groups like the AB 32 Implementation Group) would put so much stake in a fatally flawed report that makes no secret of its most glaring failure is telling. But what are AB 32 opponents to do now when even one of VTR’s principal authors won’t defend its findings? Will they spend hundreds of thousands of dollars to fund a petition drive calling for the suspension of AB 32 when their main justification for suspending it — the conclusions of the VTR report — no longer applies? And considering the numerous studies that have found that AB 32 would create jobs, position California as a leader in the growing green/clean energy economy, reduce costs for businesses and consumers, and improve the health of Californians while reducing greenhouse gas emissions, what justification can AB 32 opponents give for defending a status quo that enriches the state’s worst polluters?  

Yesterday, I found an example of the national media understanding the situation in California in Hendrick Hertzberg’s article in the August 24 issue of the New Yorker. It didn’t take long to remind me that he’s the exception to the rule.

Take today’s Wall Street Journal. I practically fell out of my chair when I read this:

California’s fiscal crisis is giving Tom Campbell, an ex-congressman with few resources, a fighting chance to become the state’s next governor. (WSJ 8/18/09)

Yes, that is a direct quote from what is supposed to be one of the world’s leading newspapers. But, apparently the Wall Street Journal didn’t bother to check the financial reports. A serious candidate doesn’t have $317K in their bank account at this point. (And lest you think there’s big money coming in since the report…let’s dispel that now.) Considering that Meg Whitman has somewhere over $20 million in the bank, you just can’t compete in California without raising more money.

I will give Campbell some props for the DailyKos/R2K poll numbers. The fact that he’s only down 5 points is pretty astounding considering the money disparity. I think that poll might say more about Steve Poizner’s unpopularity in the GOP electorate more than anything else (9 pts? ouch!).

Would Campbell be a strong competitor in the general election? Probably. If he could raise the money, he has some interesting ideas that could capture a sizable chunk of the Decline to State crowd. Is he more moderate than Whitman and Poizner? Sure, but it’s not like that takes a lot. Poizner is running a campaign to defund California. And Whitman has some issues with the gayz as well as slave labor.

The Wall Street Journal may not understand the CA GOP electorate, but I do. Unless Campbell starts skewing hard to the right, the votes just won’t be there.  In today’s Zombie Death Cult, “moderates” – or the slightly sane- just cannot win a statewide primary.

On another note, as I was cruising the virtual pages of the WSJ, I also came upon this article on mortgage lending. It was critical of Vermont for not letting their lenders give out crazy loans that brought down the economy. Seriously, they thought it would have been better if VT had played the game like everybody else and fed the bubble. Yes, ladies and gentleman, meet your media.