The Death of Inland California: Exaggerated?

Joel Kotkin likes to write about how the social and political elites in Coastal California are screwing over the inland part of the state, and his articles usually contain much truth and insight. In a recent piece, he returns to this theme in somewhat florid rhetorical terms.

California may never secede, or divide into different states, but it has effectively split into entities that could not be more different. On one side is the much-celebrated, post-industrial, coastal California, beneficiary of both the Tech Boom 2.0 and a relentlessly inflating property market. The other California, located in the state’s interior, is still tied to basic industries like homebuilding, manufacturing, energy and agriculture. It is populated largely by working- and middle-class people who, overall, earn roughly half that of those on the coast.

Fresno, Bakersfield, Ontario and San Bernardino are rapidly becoming the Bantustans — the impoverished areas designed for Africans under the racist South African regime — in California’s geographic apartheid. Poverty rates in the Central Valley and Inland Empire reach over a third of the population, well above the share in the Bay Area. By some estimates, rural California counties suffer the highest unemployment rate in the country; six of the 10 metropolitan areas in the country with the highest percentage of jobless are located in the central and eastern parts of the state. The interior counties — from San Bernardino to Merced — also suffer the worst health conditions in the state.

Just a couple paragraphs later, however, Kotkin unwittingly contradicts this narrative that the Inland Empire has been declining economically.

Between 2000 and 2013, the Inland region experienced a 91 percent jump in its population with bachelor’s degrees or higher, a far more rapid increase than either Orange or Los Angeles counties.

By curtailing new housing supply, California is systematically shutting off this aspirational migration. Chapman University forecaster James Doti notes that, in large part due to regulation, Inland Empire housing prices have jumped 80 percent since 2009 — almost twice the rate for Orange County.

I have no doubt that housing prices are higher than they should be due to regulation, particularly restrictions on land use and development. So the housing price situation is not ideal. But let’s step back and consider what rapidly rising housing prices imply about the Inland economy. If the economy were really in a tailspin, housing prices would not be rising, they would be falling or at least failing to keep up with the rise in other regions. But that’s not the case; Kotkin says Inland prices have experienced a more rapid rate of increase than at least some prominent parts of the coastal region.

Also the huge jump in the population with bachelor’s degrees is not indicative of economic decline, and on this metric Kotkin again notes that the rate of increase exceeds that for key coastal counties.

Kotkin’s reporting makes me think the death of the Inland Empire has been greatly exaggerated. The region undoubtedly trails the coast by most social and economic metrics, but that has always been true. Bakersfield in (say) the 1970s was not some kind of economic paradise.

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