Success recipe: Pro-market progressives

ATHERTON -- Sometimes it's hard to remember what good government looks like: government that disciplines itself but looks to the long term; government that inspires trust; government that promotes social mobility without busting the budget.

That kind of government existed for decades here in California. Between 1911 and the '60s, California had a series of governors who were pro-market and pro-business, but also progressive reformers.

They rode a great wave of prosperity, and people flocked to the Golden State, but they used the fruits of that prosperity in a disciplined way to lay the groundwork for even more growth. They built an outstanding school and university system. They started a series of gigantic public works projects that today are seen as engineering miracles. These included monumental water projects, harbors and ports, the sprawling highway system and even mental health facilities.

They disdained partisanship. They continually reorganized government to make it more businesslike and cost effective.

"Thus," historian Kevin Starr has written, "California progressivism contained within itself both liberal and conservative impulses, as judged by the standards of today."

Most important, California progressives focused on the middle class. By the end of these years, California enjoyed the highest living standards in the country. The core of the state's strength was in the suburbs.

In fits and starts, California's progressive model has been abandoned. Both parties helped kill it off. Some assaults came from the left. First, there was the growing power of the public sector employee unions. These unions began lobbying for richer salaries and pensions. That, of course, is their job. But in the 1970s, governors started caving in. Money that could have gone into development went into prison guard benefits. Infrastructure spending, for example, has dropped from 20 percent of the state budget to 3 percent.

Then there was the growing power of the environmental movement. In the 1960s, environmental groups protested against the excesses of the infrastructure boom. Many of their complaints were absolutely legitimate. But over the years, environmental concern transmogrified into a "small is beautiful" ideology. A new cadre of activists arose -- hostile to suburbia, skeptical of capitalism and eager to impose greater regulations and costs on small businesses.

As Joel Kotkin of Chapman University has pointed out, the interests of the affluent class along the coasts began to crowd out the interests of the middle-class suburbanites and agricultural workers further inland. "The result," he writes, "is two separate California realities: a lucrative one for the wealthy and for government workers, who are largely insulated from economic decline; and a grim one for the private-sector middle and working classes, who are fleeing the state."

Another assault on California progressivism came from the right.

Conservatives refused to acknowledge the public sector's role in creating the state's prosperity. With Proposition 13 and other measures that cut taxes, they cut off revenue and pushed through structural reforms, making it hard for future administrations to raise funds. Many on the right became unwilling to think creatively about using government to promote prosperity.

The result is a state in crisis.

The answer is to return to the tradition of pro-market progressivism that built modern California. Except this time, it needs to focus on supporting the immigrant entrepreneurs, averting state bankruptcy and unleashing the industrial and agricultural base.

The antigovernment conservatives and the unions have built bases of support. The heirs to the pro-market progressive tradition have not. What's needed is not a revolution, but a restoration and a modernization of what California once had.