Invitation to Economic Roundtable Speech Turned into Socialism Debate

I was invited to give a talk to an Economic Round Table group that has been meeting for many decades. I was told the members and guests come from a wide range of professional disciplines, and the group has hosted many distinguished speakers over the decades.

I replied:

Thank you for the invitation. Wow. First, may I ask why your group is interested in having me speak to the Economic Roundtable? I’m no economist. But I do appreciate how economies work, and how governments ignore the basics. 

I asked for some guidelines on talking points, was told “I think our members would be interested in your perspective on a number of issues, including:”

• The current direction of government and public policy and its implications for the economy and business
• The relationship between government spending, taxes, regulation, and economic growth
• California’s economic and political environment and what you see ahead
• Some of the issues and developments that you think are being overlooked or misunderstood

These are all in my wheelhouse, so I prepared, and did a deeper dive into many of our own researched articles, and into the state budget, Legislative Analyst’s Office recommendations and analyses, state GPD, and US economy. I explained that California’s high-tax, high-regulation, high-spending progressive model has produced real, measurable problems, and spent some time on the relationship between government spending, taxes, regulation, and economic growth.

“California’s current direction of government and public policy is a Socialist disaster waiting to happen – when we finally run out of other people’s money.

California has a long-standing Democrat trifecta – governor and both houses of the legislature – and with a supermajority in place for many years,” I said. 

And then I offered details and analysis, including that California’s GDP – Gross Domestic Product – is good. However, the top five industries contributing to the state’s GDP was telling:

1. Professional and business services
2. Information
3. Real Estate, rental and leasing
4. Government
5. Manufacturing

…according to the US Bureau of Economic Analysis.

Manufacturing, which should be number one, is 5th, behind government.

I explained how California has shifted from a manufacturing base to a service based state, with service based businesses paying lower wages and offering fewer benefits to workers.

And I covered how California’s Revenue structure is Highly progressive and volatile, heavily dependent on personal income taxes and capital gains from high earners and tech/AI stocks, and said strong recent performance from AI has boosted collections, but this is sensitive to market corrections, as well as tech and AI companies moving out of the state – Palantir, HP, Oracle and McAfee are just a few.

I shared that Gavin Newsom, who took office January 2019, inherited Jerry Brown’s final $203 billion budget (2018-19).

From roughly $200 billion at the start of Newsom’s tenure, he has grown the state budget to $350+ billion by 2026-27. Newsom took the $200B Brown left and expanded it to $350 Billion with actual population decline.

It is important to note that the Legislative Analyst’s Office warns, “deficits have persisted even as the state’s economy and revenues have grown, underscoring that the problem is structural rather than cyclical.”

A very interesting comparison was comparing California, Florida and Texas, and the per-resident share of the state-controlled budget:

California: $350 Billion budget; 39.5 million residents; $9,000 per resident.

Florida: $113.9 Billion budget; 23.4 million residents; $4,850 per resident.

Texas: Texas Legislature approved a biennial (two-year) all-funds budget of approximately $338.2 billion for fiscal years 2026–27; Annualized budget $169 billion; 31.7 million residents; $5,285 per resident. 

However, Texas General revenue-related spending is lower (roughly $150 billion for the biennium in recent figures), which would put the pure state-tax-funded portion closer to $2,300–$2,400 per resident per year.

I discussed California’s distinctly worse unemployment rate than the U.S. average at 5.1% – the highest of any state – a severe housing and cost-of-living problem, a fragile and volatile budget, and ongoing net domestic outflows of people and business headquarters.

California’s labor and household picture is weaker. Unemployment was 5.1% in August and has stayed above 5% for more than two years. UCLA describes an ongoing “employment recession,” with total employment expected to edge down in 2026 and recovery not starting until early 2027, with predicted unemployment averaging about 5.2% this year, then 4.9% in 2027.

A California household survey showed fewer people employed and a smaller labor force over the same period tech hiring has been contracting. Housing construction remains constrained by mortgage rates, material costs, regulations, state and local fees, environmental regulations, and labor.

I covered California’s self-inflicted oil/gas crisis, the closure of refineries, and California’s solar and wind mandates, which have dramatically added to the state’s highest-in-the-nation gas prices, and energy bills.

These are serious issues not being addressed by Gov. Newsom and the state Legislature.

When it came time for questions, I was ambushed by several obvious leftists, who did not want to discuss or debate what I presented, but instead took umbrage with me using “Socialist” and “Communist” to describe many of the state’s legislative policies, as I warned that this is where we are headed if voters do not elect fiscally responsible lawmakers.

One fellow asked me to explain communism to him. The same guy tried to argue that Ronald Reagan’s tax cuts led to economic disaster, and that trickle down economics don’t work. He said billionaires should be taxed at 90% because no one benefits but billionaires benefit from their wealth.

I explained that billionaires are employers, whose employees buy homes, buy cars, enroll their children in private schools and college, can afford to put braces on their kids teeth, take vacations, invest in 401(k) retirement accounts… all trickle down economics.

I also reminded him that Gov. Newsom’s administration threatened takeover of California’s oil and gas industry.

As I reported nearly one year ago, Economist Art Laffer and Chapman Economics Professor James Doti correctly said, Gov. “Newsom doesn’t appear to see is the deleterious long-term effects of a highly progressive tax system. Case in point: The ‘one-percenters’ who pay 50% of the tax are voting with their feet by leaving California in droves.”

They explained that the ten states with the lowest income taxes including Florida and Texas, gained a cumulative net inflow from all Adjusted Gross Income (AGI) classes of $391 billion from California just during the 2018 to 2021 period. We need updated numbers!

Another fellow said he thought he was listening to Sean Hannity, and gave a disjointed speech about how Ronald Reagan closed down all of the mental institutions. I corrected him, explaining that it was then-President John F. Kennedy who in his final executive order before being assignated, directed the closures of mental institutions across the country, in favor of more localized smaller facilities and group homes, closer to families. However, Congress failed to fund these, creating a crisis that fell to states to solve.

Before we ended, I told the group that if there was a Republican Supermajority in the Legislature, my reporting would likely not be that different from today’s, in that a political party supermajority is imbalance, and not healthy for any state.

I never mind debating issues, as long as I know it is a debate. I was invited to be a speaker, and then participate in a Q&A period after. I shared this with the woman who invited me so that future guest speakers are not ambushed, and suggested better Q&A moderation would help. I also suggested that this is likely also attributable to the brave new world of Zoom meetings. I suspect that if this was an in-person forum, the questions might have been more politely asked, and Q&A speeches would be averted. She agreed, was quite gracious, and expressed her frustration with the rude Zoom members/guests.

I hope my economic news and analyses were appreciated.