California Caprice

We had just finished a ride down the South Bay beach bike path, huffing and puffing through the route's uniquely California mosaic. Behind us were the USC frat-like boys and girls of Playa del Rey, the inner-city flavor of Dockweiler State Beach, the always-puzzling encampment of Winnebagos at the very foot of the massive Hyperion sewage plant, and the body-wrapped opulence of Manhattan Beach.

My friend, a prominent Los Angeles lawyer and cast-iron liberal, was talking about the recall election. He wanted to vote for Cruz Bustamante. But he worried that a last-ditch appeal to a famously activist Ninth Circuit appeals court panel could moot his opportunity.

"Do you really think they have such hubris?" he asked. Few people I know have more familiarity with the judiciary. Yet, he was plainly discomfited by the thought that three men could turn aside months of preparation and choose to derail the pending Oct. 7 election.

Yes, I replied. I think they do.

I have long believed that the greatest threat to California's long-term prosperity is not so much the letter of the state's much-maligned regulations, but rather the lawless way they are increasingly applied. Most of the state's economy, after all, has flourished despite Sacramento's increasingly ill-conceived legislation. Businesses will always complain, often with justification, about higher costs and picayune, intrusive environmental, health, workers' compensation, accounting and similar rules. Yet, they have shown they can do well, provided that these laws are relatively certain and predictable.

But it's the loss of that confidence that puts so much of the state's future at risk. In my experience, there is nothing more maddening for a business owner or an investor than complying in good faith with phone-book sized lists of requirements, only to have utterly unforeseen lawsuits surface that demand even more. Lawsuit-induced uncertainty has become a sub-industry in slower-growth, urban California. The economic consequences of this trend are frighteningly clear.

In areas where legal caprice is especially high, such as Los Angeles and the Bay Area, big, well-funded entities supported by a phalanx of lawyers and consultants tend to be the only long-term private sector players that can survive. Needless to say, since their costs are incredibly high, they focus almost exclusively on relatively narrow high-end housing, office and similar big-ticket projects. Over time, an unbalanced, slow-growth economy inevitably results.

Mindful of slow-growth region legal risks, smaller, more dynamic companies, and motivated middle and working classes, shift their activities to the less ideologically volatile parts of the state. In most of these areas, the applicable rules and laws are more predictably interpreted and enforced. Faster-growing communities, often rivaling the most economically successful parts of the country, quickly emerge. That's one reason why the exact same formal laws have led to such dramatically different economies in slow- and fast-growth parts of California.

Indeed, the economic costs may prove to be the ultimate irony of the Ninth Circuit's decision. In deciding that they knew best for the state's 36 million residents, the three appellate judges determined that the dangers of using punchcards to vote vastly outweighed the benefits from complying with the plain language of the state constitution. Delaying the recall vote by what they airily dismissed as just "a few months," they reasoned, could hardly match the horror of having to poke holes in a ballot, or a hanging chad.

That's where the panel's balancing act went askew. California, in fact, has everything at stake in demonstrating to an increasingly skeptical world that it is not an arbitrary society where no rational, long-term calculation can be made. Granted, concern about the state's voting equipment might have merit. The consequences of capriciously subverting at the 11th hour a high-profile election previously reviewed at length and blessed by numerous state and federal judges should have been given incalculably greater weight.

But it wasn't. Reflecting all too well the damaging intellectual calculus that has crippled slow-growth California, the Ninth Circuit Court's three-person committee elected to exercise its power when taking a pass was plainly in the state's best interest.

I helped my friend finish putting his bike back up on the car. We turned to say goodbye.

"You know," he mused, "On second thought, I guess I think they really are that arrogant." He shook his head.

"That's too bad," he said.