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Economic Narratives Vs. Reality


California’s Higher Cost of Living is a Reflection of its Prosperity


by Christopher Thornberg PhD

Editor-in-Chief: Rick Gibson

Publisher & CEO: Christopher Luna


Will Rogers, one of America’s sharpest wits, once famously quipped: “It ain’t what we don’t know that gives us trouble. It’s what we know that ain’t so.”

He was describing a deeply held human tendency—the ability to accept certain narratives as unquestioned truth even when the available evidence points in a very different direction. And that tendency explains much of what ails California’s political leadership today. Too many of the assumptions driving legislative efforts are rooted in narratives that simply aren’t supported by the data. The result is predictable: policies that do more harm than good, while the problems that truly matter remain unaddressed.


Take, for example, the oft-discussed “affordability crisis” in California. According to a recent PPIC poll, seven out of ten voters believe that the cost of living is rising faster than their incomes. Elected leaders—from the governor on down—regularly invoke this idea in speeches. Headlines reinforce it. From rent control and housing subsidies to expanded social support programs, much of the policy debate at both the state and local level now revolves around efforts to alleviate the supposed suffering of residents.


Now the issue has escalated even further. A ballot initiative scheduled for November would impose a one-time 5% excise tax on net worth exceeding $1 billion, aiming to raise roughly $100 billion for health and food programs. It is an extraordinarily risky proposal—one that could trigger capital flight and years of litigation. Perhaps such a gamble would be justified if the crisis were as severe as advertised.


But that is the problem. The crisis, as commonly described, simply isn’t there.


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