California’s legislature is controlled by Democratic supermajorities in both houses. These Democratic politicians, in turn, are controlled by public-sector unions. Legislators are now considering Assembly Bill 828, which will empower courts to reduce rents summarily by up to 25 percent and create additional barriers to the eviction process.
The law would be a disaster. It’s not just a blatant usurpation of property rights. It also adds a hefty shove to an economy already teetering on the brink of an epic deflationary spiral.
But supporters have the votes to pass the measure and Governor Gavin Newsom is likely to sign it into law.
This is happening in a state where the pandemic emergency has already induced the legislature to ban evictions and already had capped rental rate hikes. In California today, renters no longer any have legal incentives to pay rent, whether or not they are impacted by the current state of emergency. But landlords get no similar relief from property taxes or mortgage obligations.
A look at who funds these Democratic politicians yields unambiguous results. The money trail works like this: California’s citizens pay taxes, which fund state and local government payroll departments, from which—paycheck after paycheck—money automatically pours into the coffers of public-sector unions. These unions use that money to buy the allegiance of politicians via campaign contributions.
The three primary sponsors of AB 828 are Assemblymembers Phil Ting (D-San Francisco), Ash Kalra (D-Silicon Valley), and Mike Gipson (D-Los Angeles). Using data from FollowTheMoney.org, if you view the “Top Donors” for Ting, Kalra, and Gipson, you will see that nearly all their money comes from unions, and nearly all of these unions are public-sector unions.
Phil Ting’s top 15 donors, for example, are all unions; his No. 1 donor is the powerful California Teachers Association. Ash Kalra’s top 28 donors are unions with only one exception, the “Consumer Attorneys of California” at No. 10. Mike Gipson’s slightly more diverse assortment of donors includes the California Dental Association at No. 3, the California Association of Realtors at No. 8, a casino, and Chevron at positions 12 and 13, Anheuser-Busch at No. 18 and the California Beer & Beverage Distributors at No. 20. This leaves fourteen of Gipson’s top 20 donors that are, you guessed it, unions.
A 2018 California Policy Center analysis estimated that California’s government unions collect and spend over $800 million per year. Not per election cycle. Per year. About one-third of the money goes to political campaigns and lobbying efforts (that would be roughly half-a-billion per election cycle) with a substantial share of the rest used to fund “nonpolitical” activities including “public information campaigns” and get-out-the-vote efforts.
There is no special interest, even in California’s huge economy, that can match this level of focused political power.
Corporations big enough to oppose the political agendas of the unions rarely bother, since they might then be targeted with retaliatory legislation. When they do stand up to the unions, it is only if pending union-supported legislation poses an existential threat to their industry. Even in the rare event of conflict, the unions are usually able to prevail since these industrial special interests lack the cohesion and the common agenda, much less the multi-decade commitment it would take to challenge these unions seriously.
What about California’s vaunted 160 billionaires? First, having a net worth in excess of $1 billion still doesn’t provide the discretionary funds necessary to go toe-to-toe with a special interest that spends a half-billion per election cycle. You have to be a multi-billionaire to play this game. And in any case, most of California’s billionaires either keep their heads down or, far too often, they just offer additional financial support for the leftist agenda of the public-sector unions.
The Consequences of Public-Sector Union Power
When conscientious Americans, concerned about the future of the nation, warn us about the growing power of the administrative state, they’re right. But in deep blue states and cities across America, there is the other deep state, controlled by public-sector unions. The threat these unions pose to democracy and freedom is equally troubling.
The usual problems with public-sector unions are well known, but worth repeating: They use campaign donations to elect the politicians they negotiate with for pay, benefits, and work rules. Their members staff the bureaucracies and operate the machinery of government, with a sizable minority of those members committed union activists bent on advancing the union agenda within their agencies. They rely on taxes to pay for their wages and benefits instead of having to earn revenues and profits in a competitive market. But there’s more.
Public sector unions inherently are driven to want to expand government. For government unions, the failure of a government program constitutes success for their organizations, since their remedy for any failed program is to increase the size and scope of government. For government unions, the fracturing of our society and the erosion of our values and traditions has the effect of elevating the importance of government, which becomes the secular referee, brokering distribution of benefits to a divided citizenry. And to the extent more citizens become more dependent on the government, the more unionized, dues-paying government employees have to be hired.
And there’s still more to this story.
The reality of absolute public-sector union power has led to corporate adaptation. California’s politically driven process of small business annihilation did not begin with the ongoing pandemic, which merely accelerated it.
The most important unheralded reality in America today is that unions, and Democrats, are not protecting consumers and small businesses from predatory multinational corporations. The opposite is true: the Democratic establishment is partnered with the wealthiest special interests in the world, and, crucially, the extreme left-wing of the Democratic party are their most useful idiots, their willing foot soldiers, their militant dupes.
This plays out in countless ways. Years before the pandemic struck, California’s extreme Left, with public-sector union backing, supported downgrading property and drug crimes, and partially emptying the prisons. Their environmentalist wing, also supported by public-sector unions, successfully promoted law after law, year after year, that tied the private construction industry up in knots. Their social-justice wing promoted “inclusive zoning,” the preposterous notion that low income (or zero income) households have the human right to live in high-income neighborhoods.
The result of these trends is an out-of-control homeless population and houses that can only be purchased in exchange for a lifetime of mortgage servitude.
But when the people lose, the public sector wins. More homeless dependency and anarchy mean more bureaucrats and first responders. Stratospheric real estate values mean more property tax revenue. And when the corrupt politicians set the table, the corrupt corporate cronies come to dine.
Instead of lobbying to repeal these ridiculous laws, the biggest corporations devise profitable pathways to exploit them. Large property developers have enough money to weather years of litigation and punitive costs for permits and eke out a profit on projects where no small construction contractor or landowner could ever hope to break ground.
Other developers find lucrative returns in the affordable housing business, collecting tax credits, low-interest federal loans, and myriad local, state, and federal grants to deliver an absurdly inadequate supply of subsidized housing units at a price tag that averages well over a half-million per apartment.
California’s legislature didn’t create the pandemic that grips the world. And nothing they do will fully counter what we’re in for—a cascade of devastating economic shocks for which recovery could take many years. But California’s legislature, and the leftist public-sector unions that control it, are doing exactly the wrong things.
This is merely a reflection of what they’ve done for years, and portends a horrific national response in the years to come if, as of January 2021, a Democrat occupies the White House and Democrats control the U.S. Congress.
Rather than using public funds to help renters pay their rent during this uniquely difficult time, California Democrats are proposing to use bailout funds to buy up the small income properties whose owners cannot hang on without income from their tenants.
Once they’ve moved some small fraction of the homeless into the units they’ve acquired—people who long ago could have been moved to less costly areas and helped to overcome their various challenges—they eventually will allow very large corporate developers, often hiding behind nonprofit shell corporations, to consolidate the properties and build high rises.
It’s not really property rights that are under attack in California. Property rights are alive and well, as long as the owner is a public agency, a multinational corporation, or a sovereign wealth fund.