← Victor Davis Hanson: In His Own Words
Victor Davis Hanson: In His Own Words
California’s ‘Futureland’ High-Speed Rail Is Still Stuck at the Station | Lee Ohanian
00:41:56
In 2008, California voters approved Proposition 1A, giving the green light to start planning a high-speed railway connecting San Francisco to Los Angeles, which would be built by 2020 and cost around $35 billion. Well, it’s 2026 and the Golden State’s “Futureland-esque” project is woefully over schedule and budget, now projected to cost around $135 billion.
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- [00:00]
A
Oftentimes in the past when California has implemented a policy or has advanced some type of technology, it has started in California and it has spread to other parts of the country. Pay attention to what happens in California, particularly its politics and its governance and its regulatory affairs. California was sold to Dream in 2008. It was Disney's future Futureland. It was trains that would travel as fast as 220 miles an hour. They would move people from LA to San Francisco in 2 hours and 40 minutes. Louisiana to San Francisco was supposed to have been finished about five years ago, $35 billion. The price tag could be as high as $135 billion. Now. This is the bad infrastructure project. That's California's bad penny. It just won't go away. Water should be an afterthought in California. It's on our minds every single year. So the need for water storage, water conveyance, moving water from dams and reservoirs to water is fundamentally important for our economy. And yet 70% of our dams are at least 50 years old. The state was spending about $100 billion on dam repair, and then they cut that budget in half. It just made no sense whatsoever. So it's just an enormous sense of misplaced prior.
- [01:36]
B
Well, hello, ladies, and hello, gentlemen, and welcome to Victor Davis Hansen in His Own Words, the Recuperation, one of the recuperation episodes. Victor's not here. He is recuperating. We are talking on January 15th, Thursday, and this episode should be out the weekend, not this coming weekend, but the following weekend. And I am blessed to have a good friend of Victor here with Leo Hanian. I'll give his bio in a second. And Lee's going to talk about California things. I want to remind folks that Victor is the Martin and Eli Anderson Senior Fellow at the Hoover Institution, and he's a senior contributor at the Daily Signal, which is the happy home of this podcast. And Victor wants the podcast to go on. While he is recuperating, he senses affection and especially for the many prayers he's received for his recovery. And I think Lee, it's two steps ahead, one back. Some days it's moving ahead, it's progressing, but it's a bit of a slog. So. Lee Ohanian is a professor of economics and director of the Ettinger Family Program in macroeconomic research at UCLA, where he's taught since 1999. He's a senior fellow at the Hoover Institution, a la Victor. And that's where he and Bill Whelan oversee a very important project, I think a highlighted project of Hoover, and it's called California on youn Mind. And Lee is regularly, regularly writing about the state of California and I think the madness of California. By the way, he's got a book coming out, Macroeconomics an aoclassical Perspective. Not sure when that's going to happen, Lee, but may the publishing gods be on your side on all that. As I said before, Lee's a good friend of Victor, and what brings him here today as a guest is the terrific piece he wrote for California on youn Mind back in December. It's titled California in 2025, another bad year of Governance. And that article dissects many of the fiscal nightmares that have been perpetrated in California by the legislature, by the governor, by bureaucrats, regulators, and the regulatory and legislative calamities of California have great influence on the rest of America. And I'm going to ask Lee first why that is so. I mean, why does it matter when California passes a law rather than when Rhode island passes a law? No knock on Rhode Island. And then but more importantly, as we format these shows in Victor's absence, we're going to ask five questions and there are five things to pick out of the many in Lee's really excellent article, and I'm going to bring them up and he'll talk about them. And we're going to start all that. And Lee's actually going to get to talk when we return from these important messages.
- [04:30]
A
Since the founding of America 250 years ago, many things have changed, but some things never do. The commitment of husband and wife, the importance of passing along our values to our children, the faithfulness of God. Some wonder how we can ensure America will continue as long as we keep first things first. We've only just begun. America the Beautiful.
- [05:01]
B
We are back with Victor Davis Hansen in his own words at the Daily Signal. Thanks again, Lee, for joining us. Really deeply appreciate it. Before I take out one of the first of five, which are of several ways in which you've seen California having had another bad year, could you tell us why, briefly? Why does what California does, why are its regulations worth our listeners who live in New York or Florida? Why is it worth that they should care about that? Sure.
- [05:43]
A
Sure. Well, Jack, I'm happy to join you today. I wish he was in different circumstances. Victor, sending best wishes and prayers to you for a quick recovery. Jack, California is the biggest state. We've got almost 40 million people here. It's economically very large, perhaps the fourth or fifth largest economy in the world. And oftentimes in the past when California has implemented a policy or has advanced some type of technology, it has started in California and it has spread to other parts of the country. So what sometimes happens in California can auger what comes to the rest of the country. So I do urge people, whatever state they're living in, to pay attention to what happens in California, particularly its politics and its governance and its regulatory affairs.
- [06:35]
B
Well, Lee, one of the things, the first of the five things I'll press you on something we've talked about on Victor's podcast and Victor has railed about it many times. Rail is the right word, by the way, and that is high speed rail. And let me just read a little section of the article you wrote. This is again, folks, should go to the Hoover Institution site, California on youn Mind. And this article is Entitled California in 2025 Another Bad Year of Governance. And Lee writes in the piece, voters approved Proposition 1A, which provided initial funding for high speed rail. Seventeen years ago, that was almost a $10 billion bond. The bond was advertised as connecting San Francisco to Los Angeles by about 2020, promising it would be built for about $35 billion and would attract enough private investors and federal money to complete funding. Well, 17 years later, the cost of the system has ballooned to perhaps as much as 135 billion. Frankly, I think that might be low. And the cost of the Bakersfield Merced route currently being built could be as high as 38.5 billion. So the Los Angeles to San Francisco route now seems like a pipe dream and there is no private investment in the project. And yet, Lee, it somehow carries on. There's still concrete being poured. Your thoughts on, on this project?
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A
Yes, this is the bad infrastructure project. That's California's bad penny. It just won't go away. And Jack, as you noted, California was sold to Dream in 2008, which was Disney. It was Disney's future land. It was trains that would travel as fast as 220 miles an hour. They would move people from LA to San Francisco in 2 hours and 40 minutes. LA to San Francisco was supposed to have been finished about five years ago and as you know, did $35 billion. The price tag could be as high as $135 billion. Now, the project is woefully over budget, woefully behind schedule. And you know, Jack, in 2019, when Governor Newsom gave his inaugural speech right after he was he noted the problems that were happening with high speed rail at that time. And he said in a very interesting way, we don't have the money to go from San Francisco to Los Angeles. And the project has been subject to not enough oversight and not enough accountability. And he was absolutely correct about that. And then what he said right after that just floored me because he said, well, we do have the capacity to build high speed rail from Bakersfield, California to Merced, California. Now, if you live in California, you probably almost certainly have heard of Bakersfield. You probably have heard of Merced. But if you're living outside California, you probably never would have heard of Merced. This is about, I believe, about 170 miles between the two stations. And that might be built by 2035. It might cost as much as $38 billion. And without any other parts of the system being built, that segment is going to need operating cost subsidies, which, interestingly, is against the ballot proposition of 2008, and I suspect will ultimately lead to lawsuits. So the governor could have said, we've got a lot of priority infrastructure investments here in California. We're going to put this one on ice. It's underperforming, it's under delivering. We need to figure out what we're going to do with that. But in the meantime, we're going to address all these other infrastructure issues which are very pressing for Californians. He should have said that. He didn't. And now he's in a situation where the Trump administration has pulled $4 billion in federal money from California high speed rail. The state decided to file a lawsuit on that. Then the state pulled that lawsuit back because I suspect it became obvious they were going to lose that lawsuit. And now we have this albatross on our hands when there are just so many other pressing infrastructure needs in the state. It is, in my opinion, it's become indefensible.
- [11:16]
B
Lee, when he did that, when Newsom did that in 20, was 2019. Other than land being purchased and rights of way maybe being purchased, was there any concrete anything built at all at that point, anywhere from LA to San Francisco's imaginary route or Bakersfield? Well, obviously nothing had been important. Bakersfield, Merced. But had anything been done yet along those lines?
- [11:44]
A
Yeah, yeah, Jack. Relatively little. So that would have been the time, the perfect time for him to put this on ice. Had received over 60% of the popular vote. He was riding high politically. He stated, hey, let's be real. We can't get this thing done. We know we made this promise to you, but I'm going to be honest with you, it's just not going to happen. We're going to put it on ice. But Nessetti said, nope, we're going to build Bakersfield and Merced. There was very little that had been done at that point. I mean, we'd spent quite a bit of money at that point. But a lot of the delays were due to failures to get approval for land purchases. There were so many lawsuits against the project. It just never, ever got off the ground. And Jack, in 2008, it was obvious because the state's Legislative Analyst Office had evaluated the business plan and found it to be deficient. It hadn't covered contingencies. It didn't have a sensible operating plan. Revenue forecast for different segments had never been made. There were no contingencies made for all the various things that come up during projects like this. It should never have been started. The government could have paused it or perhaps ended in 2019. And now we're stuck with pouring billions and billions more into what I think is an albatross.
- [13:15]
B
Well, we're going to take up another popular topic from the past on this podcast. That's California and water. But first, Lee, even though you're out there in sunny la, we're only a few weeks here. I'm in Connecticut, so it's cold here. We're only a few weeks into winter and already brutal cold, huge snowstorms, and of course, power outages. Think about this folks. If the power goes out when it's really cold, do you have a way to keep yourself and your family warm besides flannel pajamas? Well, this is a real problem. Winter power outages can even be life threatening. I don't think everyone remembers what happened in Texas a couple of years ago. And that's why so many Americans are getting a Vesta off grid heater from my Patriot Supply. It's a space heater that doesn't use electricity or propane. It runs on something called canned heat, which is an indoor safe fuel. With a Vesta stashed in your closet, you know you can keep warm no matter what. It even doubles as a stove to cook your food, which is pretty cool. So the best part is right now you can get the Vesta and a bunch more of preparedness gear as free gifts. When you order the winter survival kit from my Patriot Supply, just go to mypatriotsupply.com VDH to see everything included. This offer won't last long, so please go to mypatriotsupply.com VDH today. One more time, mypatriotsupply.com vdh and we thank the good people at my Patriot Supply for sponsoring Victor Davis Hansen in his own words. LEE Water, water everywhere. And it seems to go out into the ocean, not down to the people in the Central Valley. Here's another one of the other of the many bones you have to pick with California. This section is titled Aging Water Storage and Conveyance Waits to Get Repaired. I'll read this briefly. You write that the Society of Civil Engineers gives a grade of C minus to California dams, 70% of which are at least 50 years old. And the state has identified 42 dams in need of repair and safety purposes, which reduces their collective storage capacity by over 100 billion gallons. Yet the $100 million dam repair budget was cut in half last fiscal year. Surely there was a way to fully fund this high priority investment with a roughly $300 billion overall state budget on top of that. LEE Even though I'm half the country away from you, we know that the voters have passed billions of dollars of in bonding for water purposes. I don't think a single drop has been saved by that. And Victor says, and I have to believe him, that some of the water related money is being used to actually blow up existing dams for the purposes of salmon, I think, and other nefarious purposes. Anyway, water in California, your thoughts?
- [16:23]
A
Water should be an afterthought in California is on our minds every single year. Because we live in a semi arid climate. We have frequent droughts which create enormous economic costs, particularly to our farmers and in particular our farmers. And of course, Victor lives in a farming area our farmers can't adequately plan. Some crops are very water intensive but very high valued, such as almonds. If you're a farmer, you've got to be able to say, well, am I going to get enough water to grow my crops next year? So the need for water storage, water conveyance, moving water from dams and reservoirs to those who use water is fundamentally important for our economy. And yet 70% of our dams are at least 50 years old. The state was spending about $100 billion on dam repair and then they cut that budget in half in a $320 billion budget. It just made no sense whatsoever. You know, a few years ago, California is, I believe, the largest dam up in Northern California. It breached. It was built in the 1960s. It was over 50 years old. We had to evacuate 180,000 people. Now, Jack, interestingly, deficiencies had been highlighted in this dam and reported for several years. We could have fixed those deficiencies in principle and never have had to risk 180,000 lives. Instead, the dam breached and we spent over a billion dollars to fix it. So it's just an enormous sense of misplaced priorities when we think about, hey, common sense, we gotta fix the dam that's over 50 years old. This has gotta be on the top of our priority list. And yet reports were made of damage and issues, structural efficiencies. It was fix and thankfully no one lost their life. But it was a case where many people could have lost their lives. You know, Jack, back in the day we used to build amazing infrastructure in this state, including under Democrats. None of these issues we're talking about here are partisan in any way, is just common sense governance and common sense use of tax dollars. PAT Brown, way back in the day, Democrat, we built state long water developments that I don't think we could ever build today. And in fact, not only do we not maintain our infrastructure, we don't even keep track of how much we need to spend to fix it. I can't imagine that the enormous public projects we were able to successfully do in California's past, we can never get those done today in the state.
- [19:23]
B
Yeah. We're going to take a break here in a sec, Lee, but I just as again, as a Connecticut resident, somebody from New York, originally water was a thing that came out of the tap. You mentioned the word afterthought. And for much of the country, though out west particular, this is an issue. Back east here again, it's mineral rights. What are those? Water rights, These things, Are they even an issue? But it's a deadly issue. By the way, we do eat the food that comes out of these farms. We all have an interest in this. Well, anyway, we're gonna get on to another topic and that's gasoline and refinery closers in California. I'm gonna do that when we come back from these important messages. We are back with Victor Davis Hansen in his own words, recording on January 15th. This episode will be up on, I think the 24th. And we're very thrilled to have Lee Ohanian with us. And Lee is like Victor, he's a fellow, a senior fellow at the Hoover Institution. And his sweet spot there is California and California economics and policy. I think all things California. And Lee's a professor at UCLA and economics. Lee, the third topic we're going to get to your take on today is will refinery closures lead to $8 per gallon gasoline? California has different gasoline right than most. And California has a leftist government. The two do not mix very well. Refineries are closing. What does someone do to even get gas someday? And will they pay $10 a gallon or $8 a gallon. Tell us about this nightmare that's ongoing and getting worse.
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A
Well, Jack, it's interesting. California being a state that developed later than your state of Connecticut or New York. We are very much a gasoline driven economy. We have cities that are not so urban dense as New York or Chicago. The car is part and parcel California. And that's just the way it is. We've lost a lot of refinery capacity in California since the early 1980s. We've lost over a third of our refining capacity. And we use a special blend of gasoline that is low carbon, so when it burns, it releases fewer carbon emissions. Now, as I say that, it's important to note that irrespective of what anyone's opinion is about climate change, what is a fact is that carbon emissions in the atmosphere are a global issue. And California is responsible for less than 1% of global carbon emissions. So if we could wave a magic wand and completely eliminate California's carbon emissions, we wouldn't move the needle whatsoever for global carbon content. So there's really no economic sense for us to be pursuing these types of policies. When we can't get our special gasoline, we have to import it. Where do we import it from? South Korea is one place we import it from. And you can imagine the additional cost that comes from importing gasoline from South Korea. Our gas prices are about 50% higher than the national average. A USC study is predicting that California gas prices could, and I'll just emphasize could, could rise as much as $8 per gallon because it appears that we may be losing more refinery capacity. Perhaps another. So the basics of supply and demand are that we've put ourselves. California has put itself in a very vulnerable position because of the type of gasoline it uses. By essentially chasing refinery capacity out of the state, we make it very difficult to build new refineries. We've got regulations and issues coming out of our ears as far as that goes. So not so long ago, I teach at UCLA and I'm up at the Hoover Institution a few times a year down in LA, I saw gasoline for $6 a gallon. That's not currently, but right before Christmas. And there are states in the country where I believe gasoline is now under $2 a gallon.
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B
But Lee, this is a Let them cake some aspect of that. To this note, there are regulators, there are policymakers who think this is a good thing. $8 a gallon? No.
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A
Well, if for those who live and breathe the idea that fossil fuels are.
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B
Horrible.
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A
Then those people are happy with $8 a gallon of gasoline. Because we won't burn as much in that case. It's interesting, the governor at one point he appointed a division of Petroleum Market Oversight, I believe is the name of the commission to investigate California's high gas prices. And the governor was of the opinion that it was price gouging. And he said something like, well, these gasoline producers are manipulating the market and they've been raking in unprecedented profits. Well, imagine you're a business and you're operating in a state which is just not very friendly to you. And year in and year out, you don't know what new types of taxes or regulations they will put on you. You're not going to be expanding your business. And there are refineries in the state that are only marginally profitable. And Jack, interestingly enough, this Division of Petroleum Market Oversight, they issued a report and what they ended up saying is, no, there's not price gouging. They have very high operating costs, including the costs of regulations. So this is just basic economics. It's incredibly expensive to Californians, and in particular California's with low or moderate household incomes. We have such a high cost of living. And then you tack on to that very high gasoline costs. You know, many minorities with lower household incomes, they're getting hit very hard by this, including people in landscaping businesses, farming businesses that are all very intensive. Trucking, I believe. It's a shame it doesn't make economic sense, but there's an awful lot in California that doesn't make economic sense.
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B
Yeah, well, we're going to talk about, you mentioned burning, and we're going to get to one of the big issues after we take one more break. But before we do that, we're going to get your thoughts on what might be the pedestrian equivalent of the high speed rail. And in your article for California on youn Mind, it actually begins with an expose, I'll say, on Los Angeles's $1 billion 8 mile bike lane. I guess I should say I'm surprised, but maybe I'm not anymore that that billion dollars for anything seems to be the going rate in California. But this is a. I don't know, this is a fiscal calamity. Tell us about this.
- [27:00]
A
Yeah, Jack, it sounds like you're having a hard time wrapping your head around $1 billion for 8 miles of a bike lane. And you know, everybody should have a hard time wrapping their head around a billion dollars for eight miles of a bike lane. Is a bike lane in a walking path about 16 to 20ft wide. You know, the backstory for this is the Californians 10 years ago approved paying a higher sales tax for another 30 years to improve transportation in LA County. So we taxed ourselves to get better transportation. This is not what we, this is not what we had in mind. It just seems unfathomable that anybody would ever think it was a good idea to spend a billion dollars on an 8 mile bike and walking path. It is to connect a 51 pile path along the LA river. And then there's this eight mile gap that's the most expensive piece of this. This path was supposed to have been done already. It was supposed to have been completed at a fraction of that cost. But we not only have a lack of sensibility about how we should spend our tax dollars, but we can't even get things done. We're still doing environmental reviews for this 8 mile path. So if I was the one pulling the treasure strings, I would just cut this right now. Nobody's gonna lose sleep over and miss any 8 mile bike path. And I'd improve LA roads with that billion dollars because this is what people thought was gonna happen with that tax money. LA has some of the worst roads. I believe about 57% are rated in PO, which means drivers pay more in terms of maintenance and depreciation and insurance every year. I know that, you know, I've been at UCLA over 25 years. There's the same pothole as I pull out of campus onto Sunset Boulevard, one of the most heavily traveled roads in California. In Los Angeles there's this enormous pothole that has been there forever. Every once in a while they, they put a little asphalt in, tamp it down, and as soon as it rains, the pothole is there again. $920 has been estimated to be those additional costs that Angelenos pay in terms of driving on awful roads. So imagine you could reduce that just by 1/3 from $920 down to about $600. LA drivers would be saving $2 billion per year. So that's a worthwhile investment. And yet instead we have terrible roads, but we're going to have ostensibly a really nice billion dollar bike path that goes for eight miles.
- [30:01]
B
Lee, when we come back from these final important messages, let's take on that big issue that so many people are shocked over. The fires and it's a year later and your assessment of what happened, what is happening, what isn't happening. We'll do all that when we come back from these final important messages. We are back with Victor Davis Hanson, in his own words, of Lee Ohanian, the economist and professor of Economics from ucla lives in the belly of the beast. And he's also a senior fellow at the Hoover Institution. In this article, Lee, the Palisades fire is not only, as you write, a tragedy that could have been prevented, but it seems a tragedy also of what's happened since. To an observer from 3,000 miles away, seems like nothing's happened. And also, frankly, Donald, I don't know, was Donald Trump even president when he went out there and met? It could have been pre presidential, but that there was going to be the might of the federal government come in here and see that this get rectified quickly. Has the ball been dropped federally? It seems to have been dropped, stopped state by the state and local government. But what's your assessment of what happened and what is or isn't happening now?
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A
Yeah, so it was a preventable tragedy in my opinion. What happened? Long story short, on New Year's eve, going into 2025, an arsonist set of fire in Pacific Palisades that ostensibly was put out by January 1st. Now, about six days later, the Palisades fire started and we lost about 7,400 structures, either lost or damaged. I believe 12 people lost their lives, economic damages, you know, tens, billions, hundreds of billions of dollars. I used to live in the Palisades, so it's an area I know well. We still have many friends in the area. One good friend of mine texted me on that day. He texted me a photo of a fireplace and nothing else. And that was the site of his former home. And he's a very funny guy. He sent it to me with the caption of for sale, one fireplace, very good condition, fire tested. I went to my former house. It's completely gone. The development my home is in is just devastated. There's really no rebuilding going on in that area, I believe as of today. And now we are about what we're about. A little over a year after the fire, I believe there have been seven completed rebuilds. After one year, 7,400 structures destroyed or impacted. I believe in Malibu, which is just adjacent to Pacific Palisades, I believe there's been no rebuilds and only a handful of permits have been handed out. Jack, you asked me about the federal government. Trump came to Los Angeles and I don't recall if it was right before or right after his inauguration, but he held meetings with LA Mayor Karen Bass and he said, look, you've got to get this done as fast as possible and I will do everything in my power for the federal government to help you out. Well, the Army Corps of Engineers came in and they did an amazing job in terms of cleaning out debris from these thousands of lots. And ironically, Palisades is a relatively wealthy area. Lots of electric vehicles. When those electric vehicles catch fire, all those batteries melt and there are toxic, heavy, heavy metals. So it's extremely dangerous. Army Corps Avengers got this clean very, very quickly. So now it's time for the state to step in and help people out rebuild. And Jack, you know, the Palisades fire was a reignition, according to federal investigators, was a reignition of a fire of that fire that was started just one week before that. And, and some private citizens have been very active in trying to place responsibility on state government and local government, which does not want to accept that responsibility. And some of these people have received text messages that apparently firefighters sent to their supervisors saying, the fire's not out yet. We still have hotspots. There's a video showing smoke coming up from that New Year's Day fire. If only that fire had been completely put out, we wouldn't be having this conversation. My former home will still be there. Those 12 people wouldn't have died. It is tragic and it was preventable.
- [35:28]
B
This may be unfair of me to ask you, but if you had to put a percentage of blame to local government versus state government, which one do you think bears more responsibility or do they equal equally at fault here?
- [35:46]
A
Well, Jack and us, that's a really interesting question because as we speak, there are lawsuits proceeding against both the state and the city of Los Angeles. The city of Los Angeles, about the firefighter response. You know, the after action report, Jack. So after a fire, the fire department writes a report. The LA fire chief, I believe, has now admitted that the report was watered down in terms of their response. There is a debate now about whether California park officials. This fire took place on undeveloped land. There's a debate about whether California park officials impeded firefighter efforts to put that fire out or whether it's purely on the fire department. And I don't think we'll have an answer to that question until these lawsuits are concluded.
- [36:43]
B
Okay. Well, it's maddening to see nothing, essentially nothing happening and, and lives and dreams destroyed. And also the fear, Lee, that leftist bureaucrats will see this as an opportunity to remake housing in their way and not in private homes as was there before. But we'll see. We'll keep a watch on that. Well, Lee, I really do appreciate your coming here and talking about the big events in California in 2025, which are not restricted to 2025. These persist and carry on and grow and magnify. But thanks for that. Thanks for all the great work you do at California on youn Mind at Hoover Institution and for joining us today. Thanks for our listeners and viewers for watching. As for me, Jack Fowler, I write civil thoughts. You can, you can sign up and get that. It comes in your email every Friday. It's free, totally free. It's 14 recommended readings. Go to civilthoughts.com and sign up. Just put in your email address. I know you're gonna like it. Thanks so much, Lee. Thanks for everything you do and for being here, folks. We'll be back soon with another episode of Victor Davis Hansen in His Own Words. Bye bye.
- [38:09]
A
Thank you for tuning in to the Daily Signal. Please like share and subscribe to be notified for more content like this. You can also check out my own website@victorhansen.com and subscribe for exclusive features in addition.