Saturday, November 19, 2011





When the U.S. Chamber of Commerce issued a 116-page report last spring that ranked California dead last among all states in the way state laws affect both hiring by private businesses and creation of new businesses, it was good for a belly-laugh.

Now the Chamber is out with another lengthy study purporting to show that California has lost at least 104,000 steady jobs because of its legal climate, which allows wronged parties to sue both companies and individuals.

The newest study doesn’t specifically compare California to Mississippi, as the spring report did. Back then, the business group claimed California’s rules that limit pollution of air and water made it inferior to poverty-ridden Mississippi when it came to new business. And yet…only 139 new businesses opened in Mississippi in 2009 (the most recent year the Chamber examined), compared with 10,087 in California. California, then, accounted for 19.5 percent of all new businesses in America, but had only 12 percent of the nation’s population. Mississippi accounted for a miniscule .00026 percent, but the Chamber liked it better.

The new report on legal climates can best be understood as part of an effort by the Chamber and its state affiliates to free businesses from as many obligations and liabilities as possible. It’s all done while chanting a “new jobs” mantra, even though there is scant evidence that loosening regulations or lowering business taxes causes businesses to increase hiring.

That’s especially true today, when a many of the Chamber’s member businesses have outsourced millions of jobs once held by Americans to Third World countries where they can pay wages that would dump American workers into poverty.

The newest Chamber effort assails what it calls a “tort tax” on California businesses, claiming lawsuit settlements and judgments in this state in 2009 amounted to just over $32 billion.

Putting that into perspective, it amounts to about one-third of the cost of the proposed California High Speed Rail System going to legal costs each year. The Chamber claims that businesses pay $4.47 in legal insurance premiums for every $1,000 of revenue, which it says amounts to a .45 percent tax on every dollar taken in by California businesses.

Of course, the Chamber’s own study indicates that less than half the cost of lawsuits in California involves anything at all commercial. “Personal tort costs” – one person suing another, divorce settlements and the like – amount to almost as much as commercial torts, while medical malpractice suits account for 12 percent of all legal settlements and judgments.

The Chamber hastens to say that its newest study “does not provide a guide for specific legal reforms,” but it has often pushed to limit punitive judgments against companies that build faulty cars or sell rotten food or pollute drinking water. Both the national and state chambers have also tried repeatedly to limit class action lawsuits and make most consumers ineligible to sue when they believe they’ve been wronged.

Doing these kinds of things, the Chamber report says “could add hundreds of thousands of jobs in California.”

But as with all things in this kind of trickle-down economic theory, there is no proof that giving breaks to the rich or the corporate brass causes them to hire more ordinary folks.

At least the newest Chamber effort does not make the mistake of again comparing California to Mississippi. If the new report had done that, its own statistics would have found that lawsuits in the Magnolia State do even more to impede employment than in California, with the Chamber claiming its wished-for changes in the legal climate there could potentially produce at least 1.07 percent more jobs, compared to a minimum of just .65 percent more employment here.

The bottom line is that nothing in the new Chamber report establishes that California’s legal climate – with state legal rules often more generous to consumers and ordinary citizens than federal rules – is a major cause of the state’s economic malaise.

Here’s a suggestion for the Chamber’s corps of analysts, who seem to enjoy tackling big problems with voluminous studies: Figure out a way to solve the home foreclosure crisis that plagues much of California and the rest of America and you’ll go a long way toward fixing the entire economic crisis, which has created about half today’s rampant unemployment.


Email Thomas Elias at His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, visit





"In California, whiskey is for drinking, water is for fighting over." Often attributed to Mark Twain, circa 1870.

Regardless of whether America’s greatest author and wit of the 19th Century actually made that pithy comment, and some Mark Twain scholars question whether he did, the remark is at least as true today as it was when Twain allegedly said it.

Just look what’s happening now between San Diego County and one of its two leading water suppliers, El Centro’s Imperial Irrigation District. Then check out the confusion and possible deception surrounding the perpetually troubled Delta of the Sacramento and San Joaquin rivers.

These are two of the state’s prime water sources, and their futures are both in considerable doubt, with legal and political wrangling over them rampant.

The more surprising of these quarrels is over Imperial Valley water – actually not water rising in that parched yet fertile area along the Colorado River just north of the Mexican border, but water from Imperial’s allocation that’s now being taken out of the river considerably north of any valley farms, then shipped to the San Diego area. To make this possible, more than 5,000 agricultural acres in the Imperial Valley have already been fallowed, their owners receiving payments for water they no longer use.

That water now flows through the Colorado River aqueduct operated by the Metropolitan Water District of Southern California (MWD) and is relayed to the San Diego County Water Authority, a flow slated to increase over the next few decades under a 75-year agreement signed in 2003.

Even though the water now flows – while San Diego County money flows in the other direction, to the Imperial district -- so do the lawsuits. At issue are things like fish die-offs, possible dust storms and the salinity of the Salton Sea – a man-made lake southeast of Indio that’s a major stopping point for migratory birds.

There’s also the not-so-small matter of the state having committed in 2003 to fund work to save the Salton Sea, something it no longer can afford.

Meanwhile, nothing much has visibly changed in the Delta, from which flows much of the water used by cities in Southern and Central California, as well as farms in the Central Valley. Several cities in the East Bay and Peninsula suburbs of San Francisco also get supplies from the state Water Project, whose fluid originates in the Delta.

But there’s still plenty of action. An environmental impact report paid for by water suppliers like the MWD and the Westlands Water District was labeled suspect even before its writing begins, with five Northern California Democratic members of Congress claiming the funding arrangement gives the big water agencies “unprecedented influence over the process.”

The report will evaluate effects of a current plan to move water south via a tunnel under the Delta or a canal (some call this a “big ditch”) around it. That’s a concept roundly voted down in a 1982 referendum overturning a law passed early that year which would have built a large, concrete-lined waterway around the Delta, called the Peripheral Canal.

The vote against that canal was based on Northern California fears of a big “water grab” where farms and cities south of the Delta would dam or otherwise tap the few remaining wild rivers to the north.

Any new Delta plan would have to shore up earthquake-damage-prone dikes that now protect thousands of homes in the Delta area from flooding. Altogether, there are now ten options for simultaneously making Delta water supplies more reliable, fixing dikes and restoring the area's ecosystem by protecting threatened fish populations and assuring high water quality in the face of continual threats of salt water intrusion from the San Francisco and San Pablo bays.

Accomplishing all that is a tall order that has stymied politicians and water experts for decades, especially with funding low and suspicions high in these bad economic times. No one now is quite sure where money for any work would come from, even if work is approved.

Put it all together and you get a picture of water insecurity in many of the most fertile and populous parts of California. No one knows what might happen if an earthquake cut off supplies from the Delta. Even less certain is what might happen if the Imperial-San Diego agreement were called off before such a quake might strike.

All of which makes the current wrangling over both Colorado River and Delta supplies more crucially important than most Californians know, as vital as any issue now confronting the state.


Email Thomas Elias at His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, visit

Friday, November 11, 2011




A quick look at this year’s scorecard for ballot initiatives and referenda reveals a surprise result: Qualifying a measure for the California ballot appears to have gotten a lot harder than it used to be.

This means the threat made so often by displeased politicians and other factions -- "Cross me and I'll run an initiative or referendum to change what you’ve done” – has lost a lot of its impact.

For years, these ballot measures – initiatives are new laws, while referenda attempt to repeal bills the Legislature has passed and the governor signed, but which have not yet taken effect – were the easy province of almost anyone with a pet cause and a lot of money.

Initiatives are a lot more common, so much so that many voters simply call every the proposition on the ballot by that name, ignoring the distinction between measures placed there by gathering voter signatures and those proposed by the Legislature.

Almost every interest group conceivable has managed to qualify some sort of measure for the ballot: Tobacco industry companies tried to roll back smoking regulations, insurance companies have repeatedly tried to bamboozle voters into giving them more money, fringe politicians like Lyndon LaRouche have made oddball attempts and others have tried to pass myriad new taxes and regulations.

Most of these efforts fail; the overall passage rate is just under 20 percent for initiatives. Referenda sometimes do better, with the foremost example the overwhelming 1982 repeal of bills aiming to create a Peripheral Canal to bring much more Northern California river water to the Central Valley and Southern California. That result made any talk of doing this into political anathema for decades.

But the failures of initiatives and referenda this year are more striking than ever. For one thing, there have been a record nine referendum drives so far this year, all spurred by Republican legislators, big businesses or other conservatives disgruntled over some laws pushed through by Democrats and signed by a Democratic governor. Those efforts have included a try at repealing a new fire protection fee to be assessed on homeowners in fire-prone brush areas and another targeting a new law requiring schools to teach about the contributions of gay, lesbian, bisexual and transgender individuals, as well as people with disabilities. More recent is an attempt to cancel a new law that would put all initiatives into the November general election, which invariably draws more voters than primaries or special elections held at other times.

Referenda now need 504,760 signatures of registered voters in order to qualify for the next statewide ballot (they are not covered by the new only-in-November law for initiatives). The number changes, depending how many people have voted in the last general election.

Referendum sponsors get only 90 days to gather signatures, while initiatives have 150 days to gather voter names once they’re certified.

It’s also more difficult to get corporate financing for referenda than for some initiatives with more commercial implications. An exception was the drive against a law that will soon require Internet retailers to collect sales tax on purchases by Californians. Amazon plunked $5 million into that effort, but thought better of it and pulled the bulk of its cash back a few days later, instead reaching a deal with Gov. Jerry Brown that lets it hold off tax collections for awhile in exchange for setting up several big distribution facilities in California.

The deal will eventually save Amazon money by bringing its warehouses closer to its biggest market. The company previously stayed out of California physically because prior law would have forced it to collect those taxes if it had an actual footprint here.

There’s been some whining from groups that failed to qualify the repeal measures they sought. Example: “The abbreviated timeline and lack of funding made this attempt extremely difficult,” griped the California Family Council, one of two groups behind the bid to eliminate the gay-education law.

Translation: There wasn’t much support for its cause, something most interest groups are loath to admit.

It was the same for the labor and environmental groups trying to qualify an oil severance tax initiative for next November’s election. When it become clear their first attempt to get that levy onto the ballot would fail, they abandoned it in favor of a new drive for a “revised” measure. But the revisions were small.

Maybe all these failures (and there have been some recent successful signature drives, too, with one measure changing term limits and another creating a new cigarette tax to benefit cancer research already set for votes next year) are due to a growing public cynicism about signing petitions.

A recent Field Poll showed about 60 percent of voters believe most proposition elections turn out “the way organized special interest groups want.”

All of which means the oft-heard threats to make end runs around the Legislature or overturn its votes are less credible today than they’ve been in decades.


Email Thomas Elias at His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, visit





It’s easy to dismiss the “Occupy” movement that quickly spread from Wall Street in New York to California points like Los Angeles, Oakland, Sacramento and San Francisco as mainly an activity for the homeless and a bunch of anarchists. The movement prides itself on having no formal leadership, no structure and has rarely been able to articulate any aims.

But a new report from the non-partisan, non-profit California Budget Project ( gives some decent indications of why this phenomenon found fertile ground in California and why its protests did not quickly fade away.

The budget project’s analysts found that disparities in wealth – already wide in this state 20 years ago – have expanded into a chasm. Essentially, the rich have gotten much richer, while the poor and the middle class received fewer and fewer crumbs.

When this column noted the wide income disparities in the late 1980s, it concluded that if the gulf became wider or began to seem permanent and implacable, it would form an open invitation to class warfare on a scale unprecedented in America.

But the gap did grow steadily wider, as tax benefits and loopholes for the wealthy and outsourcing of jobs to cheap-labor foreign countries forced lower- and middle-class incomes and benefits ever downward during the last two decades, while corporate owners, managers and some investors piled up wealth -- much of which still lies unspent.

It’s far from certain that the Occupy movement marks the beginning of outright violence based on economic class, any more than the riots spurred by the Rodney King verdict in 1992 marked the start of perpetual race warfare, as some predicted they would. In fact, racial harmony appears to have improved over the 10 years since the terrorism of 9-11, perhaps because a sense of national unity ensued, at least for several months.

But the causes of Occupy’s wide appeal and endurance show no sign of abating. Rather, the trend is toward ever-wider income disparity.

The new report shows that more than one-third of all income gains in California between 1987 and 2009 went to the wealthiest 1 percent of the populace. Almost three-fourths of all income gains during that time went to the top 10 percent, while the other 90 percent of Californians received just one-fourth of all new income. With unemployment up several percent since 2009, it doesn’t take a genius to realize that differences in income growth have become even wider.

Putting this in real numbers, the average income of the top 1 percent of Californians rose from $778,000 to $1.2 million per year, while the average income of people in the bottom 80 percent actually fell. These figures include corporate kingpins paid in the tens of millions of dollars, but CEOs are few even within the wealthy upper crust.

Does anyone believe this has gone unnoticed by the tens of thousands of recent college graduates who can’t find work on the level for which they’ve assiduously prepared? Those young people, of course, are well represented among the Occupy demonstrators.

There’s nothing really unique about the income gap in California, which continues a national trend that sees the top 10 percent of American households receiving half of all the nation’s income and the top 1 percent getting nearly one-quarter of total income.

All this means the average income of California’s top 1 percent was 33 times the average for the middle 20 percent.

Robert Reich, the former U.S. Secretary of Labor who now teaches at UC Berkeley, sees this as one cause of the longstanding recession. “The economy is in trouble because so much income and wealth have been going to the top that the rest of us no longer have the purchasing power to buy…goods and services.”

All this suggests that even when the Occupy demonstrations die down or are forcibly dispersed, the causes of the protestors’ resentment will remain, along with the anger that’s fueled the movement.

This, in turn, indicates there will likely be more to follow. For the more people feel they have nothing to lose, the more they will act up.

One other statistic: California millionaires, just 0.2 percent of taxpayers, took in $104 billion in 2009, roughly 11 times what it would take to make sure no more Californians live in poverty.

Yet, the wealthy and their representatives in Sacramento and Washington, D.C., constantly work to assure their taxes do not rise above levels to which they were reduced in the early 2000s. They even seek further cuts, claiming this will lead to many thousands of new jobs.

But the Occupy demonstrators suspect lower taxes on the rich don’t produce more jobs. They know for sure it hasn’t worked that way for them, which means the feelings that produced their protests will remain strong no matter how their current activity ends.

Elias is author of the current book "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government's Campaign to Squelch It," now available in an updated third printing. His email address is