Kwikset, Green Chemistry and Taxes: The Business Wasteland That Is California

Hugh Hewitt

2/3/2011 9:38:19 AM - Hugh Hewitt

Many readers don’t want to hear another horror story about doing business in California. Because I live and practice law in California, I am perhaps more sensitive than other pundits to the ongoing collapse of the state’s economy, and I also have a front row seat to the parade of regulatory insanities that march by on a near-weekly basis, even as the businesses that once made the state an economic titan line up to head east.

Earlier this week I wrote on the so-called "Green Chemistry Initiative” for the Washington Examiner, and one of my law partners quickly emailed to let me know that wasn’t even the worst business news out of the state that week! Gary Wolensky subsequently posted at HughHewitt.com about the California Supreme Court’s decision in Kwikset Corporation v. The Superior Court of Orange County, and the phone has been ringing and email in-box filling up since then with exclamations of disbelief. The decision opens the doors to thousands of new nuisance lawsuits against every product on every shelf in California, even as the new “green chemistry” regulations when they appear in final form will apply to all products sold in the state. 2011 is opening with a double feature horror flick for job generators even as the state careens towards unofficial but very real bankruptcy.

None of this made it into Governor Jerry Brown’s state-of-the-state address Tuesday night. The always charismatic Category 5 political force delivered a characteristically interesting and provocative talk, but not a paragraph of it dealt with the underlying woes besetting the state: No one in their right mind would start a new manufacturing concern here.

And why would they? There are a dozen states with not just better tax and regulatory legal regimes, but far, far better systems. Florida doesn’t have an income tax, for goodness sake, much less one that is in double digits. Texas doesn’t threaten every manufacturer and every purveyor of every product with “green chemistry” labeling regulations in excess of 90 pages. The Supreme Court of Arizona isn’t going to decree that lawsuits can proceed regardless of any allegation of actual injury.

California has become a giant experiment in how to kill job creation, and with the jobs all the tax revenue those jobs produce and all the good things those tax revenues support like public education and roads.

The state has fundamentally gone off the rails, and almost certainly will have to hit bottom before it can begin to rebuild.

Here’s the text of Jerry Brown’s speech. Read it and weep for California. It is mostly an argument on why the legislature should authorize an appeal to the people to extend “temporary” tax hikes. Brown is demanding that the Republican legislators in the state clear the way for a vote on the extension. They should do no such thing, as the voters overwhelmingly rejected just such a set of tax hikes less than two years ago. Going back for another “no” vote wastes time and diverts attention from the fact that California is a bloated state government with enormous unfounded pension liabilities and chaotic laws and budget rules.

Why would anyone take the new governor seriously when the absurd “green chemistry” regulations lurk, while legions of small time bureaucrats sit on permit applications, while the Coastal Commission routinely blocks ready-to-build projects and the schools refuse to adopt even the most basic reforms to empower charter schools to educate children.

If there was anything approaching a real investigative media in the state, story after story would flow revealing shocking stories of waste, fraud and abuse of taxpayers and businesses along the lines of the City of Bell scandal. Not all of them would involve trucks of misspent money, but also misspent time and effort. Just this week the Alliance Defense Fund had to sue the Los Angeles School District to force the district to allow a fifth grader to sing a Christian-themed song in an annual talent show. Just this week the absurd show-down over the Delta smelt continued, with the Los Angeles Times calling the fish “the most powerful player in California water.” Just last month, tens of millions in so-called “stimulus funds” were designated to purchase an existing train station as a sort of salve to disappointed special interests.

And now the California Supreme Court has declared open season for gold-digging plaintiffs.

California makes Greece look well run. The level of competence of many of the legislators is downright scary, and even America’s most interesting recycling project, Jerry Brown, seems out of new and novel ideas. There is no plan for the unfolding fiscal crisis, no serious budget cutting underway, no federal bailout on the horizon -- just an accelerating march towards a fiscal cliff, punctuated by new bursts of judicial and regulatory excess along the way.