California Session Can’t Happen for Years – At Least

California secession has been a hot topic since the state’s citizens began collecting signatures at the end of January to place the issue on the ballot before voters. Often citing the fact that California’s economy would rank sixth in the world were it an independent country, about a third of the 40 million residents of the state support the idea.

There’s also been some blow-back, as the founder of the movement lives in Russia half the year and is said to have the backing of a right-wing faction there. He even opened – by his own authority – an “embassy” in Moscow. Secession would require a vast majority of Californians’ support to make it a reality; it is unlikely that this majority would permit an unelected individual to speak and act on their behalf should the movement progress.

Assuming that sufficient support is generated, there are a lot of hurdles to overcome. We haven’t found anyone discussing these. Look, for example, at what Great Britain (with a comparable population of 53 million and a current ranking of ninth among world economies) is having to consider with its 2016 Brexit vote. The realities start to come into focus.

While not insurmountable, it will take years for California to extricate itself peacefully from the United States. We offer some of those complexities that occurred to us:

The Military industrial Complex

California is home to 29,594 defense contractors who have, collectively, been awarded 723,841 contractors over the years 2000-2015. These contracts were valued at $537,311,342,851 (1). According to a Deloitte study a year ago, a disproportionate number of the United States’ 1.2 million defense employees are located in California (2).

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Making up for the value of those lost contracts would be, at best, difficult. Replacing over 100,000 equivalent jobs would be, as well. There are US defense contractors outside of the United States; presumably California could bid on some of those. Also, as a new country, California would need to have its own defenses. How much could be recouped is beyond the pay grade of this bunch of t-shirt makers, but some of the jobs could be saved.

There are a couple dozen military bases in California and a number of other military properties besides (3). Installations and their nearly 270,000 personnel contribute about 2% of the state’s GDP (4). Several local economies rely on their existence.

Additional Federal Funding

California received an estimated $252.6 billion in federal spending in 2015 – 25% of the state’s revenues (5). Many of these dollars are earmarked for education and Medicaid. The state’s infrastructure plan (6) includes $13.9 billion in federal funds over five years. That plan takes into consideration not only what you’d expect to fall under infrastructure, but also Natural Resources, California EPA, Corrections, Education and more.

Relationships between the state and federal are intertwined and interdependent. The new “smart” power grid relies heavily on new construction in California; that new construction is heavily funded by the federal government. Consider aviation, too. Air Traffic Controllers are federal employees; they all receive their training at one facility – which is not located in California. It might be enjoyable to imagine airports without the omnipresent gray bins, but without sufficient security to comfort the United States and other countries, both California tourism and business would suffer. TSA is, of course, federal.

California is home to one of only a handful of US National Laboratories. There are 11 federal prisons in California. There’s the Border Patrol. And the US Mint in San Francisco. There are a lot of moving parts to consider.

Treaties and Trade

Interstate agreements exist between California and other states. The Colorado River Compact is, importantly, one of them, and involves seven states in total. Upon secession, renegotiation of this agreement would be between the country of California and the US State Department. California had better build its desalination capacity, pronto!

California agriculture represents over 400 different commodities (7) – and already exports more than a quarter of the volume produced. But, of what currently falls under domestic sales, most would, post-secession, be subject to international treaty. Much of what California produces and distributes now is a matter of interstate commerce. The market will, no doubt, remain lucrative, but subject to international trade agreements.

Intrastate Governance

There will be other headaches for the state – again, not insurmountable, but requiring some up-front legwork. For example who’s a citizen of California? Will US residents with a California birth certificate be welcome to “repatriate”? Who, if anyone, is “out”? For those wanting to hightail it for the United States, will there be compensation for property left behind?

Will there be a potential “brain drain” if, say, the whole of Silicon Valley empties out? How will travel visas into and throughout the United States be handled? Will the citizens of California be able to take jobs in the US, like citizens of the EU do throughout the Eurozone?

Great Britain has demonstrated the importance of thinking and to planning prior to exiting. These are just a few of many things that will have to be considered before any major move can actually occur.

© 2017 Poligags

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Resources:

(1) Defense Contractor Data by year and by county, CA 2000-2015 http://www.governmentcontractswon.com/department/defense/california_counties.asp

(2) Deloitte Defense Study, Feb 2016 

https://www2.deloitte.com/content/dam/Deloitte/us/Documents/manufacturing/us-ad-labor-market-study-2016.pdf

(3) Military bases http://www.militaryauthority.com/wiki/military-bases/nationwide/california/

(4) Economic impact of bases http://www.ncsl.org/research/military-and-veterans-affairs/military-s-impact-on-state-economies.aspx

(5) CA revenues from federal government https://ballotpedia.org/California_state_budget_and_finances

(6) CA infrastructure plan http://www.ebudget.ca.gov/2016-Infrastructure-Plan.pdf

(7) CA Agriculture https://www.cdfa.ca.gov/statistics/PDFs/2016Report.pdf

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