When a Curve Is Not Necessarily a Curve

Residents of the Golden State have become slaves to a new debt, to a lockdown and to previously ignored, unfunded actuarial accrued liabilities.  They must be freed from these chains.

By Sen. John M.W. Moorlach and Craig Keshishian

Maybe Benjamin Franklin was right.  In a 1755 letter to the Pennsylvania Assembly, he said, “Those who give up essential liberty, to purchase a little temporary safety, deserve neither liberty nor safety.”

It can be fairly argued that we as Californians did sacrifice some of the most essential liberties enshrined by our Constitution and our Bill of Rights for the ostensible tradeoff of staying at home and bending that famous curve: the right to assemble, the right to congregate in church and the deprivation of property without due process.

Whether the coronavirus infection curve is or was truly bent is now an academic matter.  It turns out Patient Zero wasn’t really Patient Zero.  The virus was lurking here, infecting many and killing some way before the whole nomenclature of “flattening curves” and “social distancing” entered our lexicon.

Californians listened attentively to Gov. Gavin Newsom when he warned us ominously of the impact of this highly contagious coronavirus and the horrific damage it renders to the human body.  Scary stuff, indeed.  And we obeyed.

Now we have a virus that not only complicated life, it destroyed lives.  But, in the same swath, the virus has disrupted the state in ways still invisible to the naked eye, just like the microbes that make up this horrific disease.

Businesses, small and large, lie in ruin. Many will never recover. Working men and women have been furloughed and furloughs often turn into permanent layoffs when the underlying hiring structure becomes permanently damaged.  It’s fair to say the restaurant and hospitality industry as we know it will never resemble the days of old.

The most frightening aspect of all is the longer-term ripple effects of the strict “stay at home, essential business only” edict out of Sacramento.  Keeping folks from pursuing their livelihoods because they are deemed “nonessential” is tantamount to the taking of their property and liberty without due process.

In effect, the governor, in his execution of his police powers, has cost restaurateurs, small shopkeepers and plain office folks their livelihoods, their inherent right to pursue life and liberty.

And that’s just for starters.  Businesses large and small have landlords. Those businesses can’t pay their rent, thus the landlords can’t make their mortgage payments, and soon enough you have empty spaces and empty buildings all over the state.

Some companies will realize they don’t need bricks and mortar to be viable, and poof – even more “dark” real estate. This scenario doesn’t bode well for the construction trades, the mercantile trades or any kind of trade for that matter.

Shuttered biotech and medical device companies, deemed nonessential if not concentrating on COVID-19 work, can’t even conduct lab experiments on diseases like cancer and diabetes because scientists and researchers have been locked out of offices and lab space.

Startups in oncology that have run out of money will be out of luck in raising more cash when no one at their venture capitalist’s office is answering calls.

Many of Silicon Valley’s “Unicorns” have also taken a torpedo hit, like Uber and the scooter service Bird, laying off staff and contractors because the virus dampened the appetite to be mobile.

The lockdowns cut across a large swath of the whole California economy, destroying livelihoods, jobs, enterprise value and, consequently, state tax revenue. Now, that’s when the real, everlasting damage can set in, much like a lethal gangrene, especially if property taxes are hiked to make up for the shortfall.

Watch for the split-roll tax-increase on commercial properties to get full horsepower on this fall’s November ballot. After that crack widens, the move to dismantle Proposition 13 for homes, in the spirit of making things more “fair,” is next.

Or will cities come at you with a series of parcel taxes?  Or jacked-up sales tax ballot measures?

California may well implement a Value-Added Tax (VAT) on “services,” eventually being extended to the sale of all goods.

Want to avoid this grim picture? Then we better get the economic machine that is California up and running again, right now rather than later.

We can do this with intelligence and creativity. With some pain and hard work, we can come back, especially if the governor and the Legislature pledge not to raise taxes or throw more regulations in the path of recovery.  Can the majority party conjure up the gumption to revamp a warped pension system into one of “shared-risk,” like Wisconsin, another Blue State?

Residents of the Golden State have become slaves to a new debt, to a lockdown and to previously ignored, unfunded actuarial accrued liabilities.  They must be freed from these chains.

This is the time to take bold risks and, much like a Phoenix arising from the ash heap, come back even stronger, a reinvention of our former selves. After all, this is what Californians do best.  Otherwise, Newsom will have proven Benjamin Franklin right.

Craig Keshishian is CEO of ISI Life Sciences in Newport Beach

John M.W. Moorlach, R-Costa Mesa, represents the 37^th District in the California Senate.