Thoughts on a Surreal Depression

by Victor Davis Hanson

PJ Media

Here in Fresno County, in the heart of California’s San Joaquin Valley, the official unemployment rate in February to March ranged between 18.1 and 18.8 percent. I suspect it is higher in the poorer southwestern portions, especially near my hometown of Selma, about two miles from my farm.

Since 2000 we have both lost jobs and gained people, and the per capita household income is about 65% of California’s average, the average home price about half the state norm.

In some sense, all the ideas that are born on the Berkeley or Stanford campus, in the CSU and UC education, political science, and sociology departments, and among the bureaus in Sacramento are reified in places like Selma — open borders, therapeutic education curricula, massive government transfers and subsidies, big government, and intrusive regulation. Together that has created the sort of utopia that a Bay Area consultant, politico, or professor dreams of, but would never live near. Again, we in California have become the most and least free of peoples — the law-biding stifled by red tape, the non-law-biding considered exempt from accountability on the basis of simple cost-to-benefit logic. A speeder on the freeway will pay a $300 ticket for going 75mph and justifies the legions of highway patrol officers now on the road; going after an unlicensed peddler or rural dumper is a money-losing proposition for government.

The subtext, however, of most of our manifold challenges here in the other California are twofold: we have had a massive increase in population, largely driven by illegal immigration from Latin America, mostly from Oaxaca province in Mexico, and we have not created a commensurate number of jobs to facilitate the influx.

I often ask business people on the coast why there are not more industries in places like Selma other than agricultural related work that is locale specific. I would sum up their responses as something like the following: Our workforce does not have the educational and linguistic skills to justify, in global terms, the amount of wages and benefits necessary to employ them, hence jobs are mostly in service and government. Software engineering, computers, or Silicon Valley-like industry are out of the question. But apparently so are large manufacturing jobs, despite an abundant workforce. As I understand employers, they seem to suggest that steel pipe, electrical wire, or radios would not be better manufactured or fabricated here, and yet still cost two to three times more than a counterpart assembled abroad.

In addition, they believe that the state government would look upon any employer of a large industry not as a partner that would alleviate unemployment and lessen county expenditures, but more or less a sort of target to regulate, advise, lecture, and chastise, both to justify the expanding government regulatory work force and to achieve a fuzzy sort of social justice. There are, of course, large plants and businesses here, but hardly enough to absorb the thousands entering the work force.

The result is about one in five adults is not working in the traditional and formal sense. A morning drive through these valley towns confirms anecdotally what statistics suggest: hundreds, no, thousands, are not employed. Construction is almost nonexistent. Agriculture is recovering, but environmentally driven water cut-offs on the West Side (250,000 acres), increasing mechanization, and past poor prices have combined to reduce by tens of thousands once plentiful farm jobs.

We live in one of the most blessed climates in the world, without major floods, earthquakes, fires, or tornadoes. The soil is unmatched. The Sierra and its rich snowpack loom immediately to the east with all its recreational, hydroelectric, and timber wealth; we are but three hours from either San Francisco or Los Angeles. And yet this is now one of the most impoverished areas in the United States, statistically in many categories of income, education, and employment well behind Appalachia.

But we are experiencing a funny sort of depression, or rather a surreal sort. I grew up with stories from my grandparents of 28 people living in my present house. My grandmother, she used to brag, had a big kettle of ham bones and beans cooking nonstop each day and fed assorted relatives as they came in from the vineyard and orchard. My grandfather made one trip to Fresno (16 miles away) every 10 days for “supplies.” The pictures I have inherited from my mother show an impoverished farm — this house unpainted and in disrepair, ancient cars and implements scattered about, a sort of farm of apparent 1910 vintage, but photographed in the 1930s — one that I could still sense traces of as a little boy here in the late 1950s.

And yet all I heard were stories of happiness, hard work, and collective sacrifice. Relatives would say that the “’30s” were the worst and best years of their lives, as they related sagas of real genius involving fruit canning and curing, ad hoc repairs to equipment, and cobbled together furniture and clothing —all without spending any money. I just looked in my grandfather’s diary; he has a happy entry in 1958 about raisin prices over $200 a ton — quite in contrast to $40 a ton he received in 1936. (A ton of raisins would fill two of those huge watermelon bins you see in the supermarket.)

In contrast, in the present depression, the out of work and poor are as numerous, but both unhappier and yet far better off than prior generations. This is not the rant of some right-wing laudator temporis acti, or the death throes of an aging old white guy, but rather empirically based and shared by most of my friends in the ascendant Mexican-American middle and upper-middle classes, many of whom are becoming quite conservative.

The cars of our poorer brethren in our major discount stores are late model and often expensive. People get into them with full carts of food and clothing. Housing here is cheap and good. How to square this circle between official poverty and misery and the veneer of a well-off general public?

I’ve been discussing these disconnects with farmers, a professor or two from CSU Fresno, and local business people. All come to the same conclusions. There is a vast and completely unreported cash economy in Central California. Tile-setters, carpenters, landscapers, tree-cutters, general handymen, cooks, housekeepers, and personal attendants are all both finding work and being paid in cash. Peddlers (no income or sales taxes) are on nearly every major rural intersection. You can buy everything from a new pressure washer to tropical fruit drinks. For this essay, I stopped at one last week and surveyed their roto-tillers, lawn mowers, and chain saws, new and good brands.

New “restaurants” are sprouting all over the highways — mobile stainless-steel encased canteens with awnings and chairs set up along the road. And yet for all the cash economy, it seems almost everyone in the food stores and doctors’ offices are on food stamps, Medi-Cal, and rent subsidies. A carload of people drove in last week, inquiring about a house nearby; the occupants assured me that they had county housing vouchers.

A third ingredient is easy credit, whether for credit cards or late model cars. The result is statistically we are impoverished with near 20% unemployment; but in reality something stranger and weirder is transpiring. Prosperity and well-being are mostly assessed in relative not absolute terms. There is little appreciation of the wonders of the iPhone, whose computerized, and GPS-driven gadgetry would have been confined to millionaires ten years ago; there is frequent lamentation that the iPhone in question is not the latest model as others enjoy. A Camry is not worshipped as a wondrous machine that can get one 200 miles in 3 hours, in air-conditioned and musical luxury, only that one has a 4, not a 6 cylinder model, without leather seats and 6-disc CD.

The combination of 2 billion Indians and Chinese in the world marketplace, exporting cheap goods, has meant fewer jobs for Americans and far more material playthings now accessible to every stratum of society. Again, easy credit, combined with little shame or penalty in defaulting on what one owes, has allowed a superficial parity with the upper-middle class. Massive government transfers and relaxed eligibility have ensured households thousands of dollars in entitlements and subsidies. We have printed $5 trillion since 2009, and borrowed $1.6 trillion just this year. And the huge influx of easy government cash shows here.

Cash wages have meant augmented entitlement money and are competitive with those who are formally employed and who pay 30% of their money in payroll, healthcare, and federal, state, and local income tax deductions. The result is an odd sort of poverty, in which superficially the unemployed and poor to the naked eyed are almost identical to the upper middle classes.

Indeed what distinguishes the latter — the ability to pay a child’s tuition at college, frequent travel, higher end clothes and cars, a pool, or boat — seems rather superfluous. Need-based student loans and grants are now ubiquitous, one can learn more about Florence on a cable TV in-depth tour than going there, and a Lexus or Mercedes is not much different in reliability and comfort from a Honda or Nissan. I did an experiment the other day. I priced “wicker” furniture at Kmart and Wal-Mart and then drove up to an upscale North Fresno design outdoor living boutique. In short, the local version from China was about $300 for an ensemble, the high-end version was priced at $1700. To the naked eye, they were again almost identical and explain what I mean by the “veneer” of affluence. Ditto everything from jogging clothes to watches, and one can be outfitted in Selma for 10% of the cost of the brands of those popular in Palo Alto.

Some final tesserae in this confusing mosaic: The rhetoric of poverty and oppression is far more strident than the Depression-era, spread the wealth, Huey Long sort. The sense of injustice voiced by the SEIU [1] or public employee unions suggests wide scale Dickensian malnutrition, not an epidemic of obesity so amply chronicled by the first lady.

History’s revolutions and upheavals — whether the Nika rioting in Constantinople, the periodic uprising of the turba in Rome, the French upheavals, or the Bolshevik Revolution — are rarely fueled by the starving and despised, but by the subsidized and frustrated, who either see their umbilical cord threatened, or their comfort and subsidies static rather than expansive — or their own condition surpassed by that of an envied kulak class. Perceived relative inequality rather than absolute poverty is the engine of revolution.

These are strange and dangerous times. An insolvent federal government, an exporting China and India, and an almost complete indifference to federal immigration, tax, and regulatory laws have all combined to create a well-entitled but increasingly angry population, one “empowered” and made more, not less, bitter by the last two years of governance in Washington.

©2011 Victor Davis Hanson

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