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California is A Case Study in What Not to Do

The mismanagement of budgets and resources, lack of preparation, and restrictive regulations shows California is a case study in what not to do.

January 20, 2025

By: Bobby Casey, Managing Director GWP

California is A Case Study in What Not to Do

People who are given large amounts of wealth, but aren’t taught how to manage it, tend to squander it. Most people who win the lottery, for example, aren’t wealthy for long. And that is a great allegory for the state of California… or at least its government. California has an insane amount of wealth and resources:

  • Fertile farmland
  • Greater dairy production than Wisconsin
  • Highly desirable real estate
  • Ports
  • Silicon Valley’s tech innovations
  • Entertainment
  • Tourism
  • Business hubs

How do you have so many assets, get away with imposing the highest or second highest taxes in the union, and still mismanage it so profoundly? You’d think they’d do even a half decent job of protecting that. California is a case study in what not to do.

The Conspiracy

Needless to say, those who don’t understand life in Los Angeles County, have very strong opinions about what caused the fires and led to the massive destruction of so much land and property. Here are the two major theories I’ve seen:

Foil Hat: These were coordinated fires, orchestrated by the California government to clear out premium real estate in order to install 15 minute cities and clear the path for the lite rail system. The insurance companies canceled thousands of polices just months before the fires, so they were clearly in cahoots.

Political: Of course it’s “Climate Change”… which at this point is the 2025 equivalent of blaming angry gods for a bad crop because your sacrifice was insufficient. That only works if you either don’t live there at all, or live there, but under a rock.

While California has a very appealing climate, it’s one of those places that averages out as normal and regular. Mixed in there are some extremes as well as unique weather phenomena to the area.

If you watch the rain patterns over the decades, you’ll see it hasn’t really changed much, but the fluctuation is regular. This is in part due to the El Nino cycles that comes when the Pacific get particularly warm around the equatorial regions. That’s the wet season. Following that is the very dry season called La Nina. You can find records of this happening dating back several decades. Both come from the West.

The Santa Ana winds come off the high deserts from the northeastern areas of Nevada and Utah during the cooler months. These winds can get up to 100 miles per hour. It’s a category two hurricane without water.

Now imagine those winds combined with the dryness of La Nina coming through a place like Los Angeles. A fire is quite predictable. And since these weather patterns happen regularly, the predictability is corroborated by the annual fires that take place in Southern California under these same conditions.

The insurance companies have been in crisis for years leading up to this event. In August 2023, we flagged the California Insurance Commissioner capped premium increases, in the wake of massive inflation and supply chain issues. This put insurance companies in an impossible situation:

Insurance companies are leaving California and the ones that remain, aren’t taking new clients; in fact they are finding ways to drop clients. It’s not the fires, per se. It’s the fact that they cannot charge the premiums needed to cover for those liabilities.

Insurance Business Magazine reports:

Last month, California’s insurance market was rocked by announcements from State Farm, Allstate, Farmers, and AIG, saying they would stop sales of new policies, citing headwinds brought on by catastrophic weather events, inflation, and economic conditions.

Almost a year after that blog, we posted again in July 2024 from the Los Angeles Fox affiliate:

  • Tokio Marine America Insurance Co. and Trans Pacific Insurance Co. plan to stop offering homeowners insurance and umbrella policies in California starting in July 2024. The decision will affect more than 12,500 policyholders.
  • In March 2024, State Farm announced plans to non-renew about 72,000 policies in California, including property insurance and commercial apartment policies. Nonrenewals for home insurance policies began on July 3, 2024. State Farm also stopped accepting new applications for all business and personal property in California in 2023.
  • In February 2024, American National announced it would stop offering home insurance in California, among nine other states. Nonrenewal notices are expected to be sent out in August 2024, and the decision is estimated to impact around 36,000 policies.

The policies that were canceled leading up to the fires were just the most recent rounds of an on-going insurance exodus from the state. The liabilities coupled with the caps on premiums is a major contributing factor to why California is a case study in what not to do.

The Mismanagement

There are inevitable conditions that naturally played a strong role in the fires in California. Just as there are conditions that lead to hurricanes or tornadoes. Conditions that no one can control or stop. But knowing about the weather patterns in your specific area should have everyone preparing.

These natural disasters are things human civilization have been contending with since time immemorial.

Los Angeles homes don’t have basements. Why? Because they have earthquakes. Houses in the Midwest have basements. Why? Because they get tornadoes. This isn’t complicated. Our predecessors were able to prepare with far less technology just by watching what happens and chronicling it all.

If we are to indulge any conspiracy, it would be one of willful stupidity and ineptitude. Remember, you have to take all the following and compound it with the aforementioned weather conditions.

Without knowing if a fire is coming, but knowing the conditions under which fires can spread a few things could’ve been done: clearing out the chaparral, clearing out homeless encampments, situate fire trucks in high fire prone areas, maintain the foliage around electrical wires or even turn off electricity service during high alert times. These things were not only NOT done, they were severely neglected.

54% of fires in 2023 were started by homeless people according to an LA Fire Department report. However, according to the Hoover Institute:

Since 2019, California has spent about $24 billion on homelessness, but in this five-year period, homelessness increased by about 30,000, to more than 181,000. Put differently, California spent the equivalent of about $160,000 per person (based on the 2019 figure) over the last five years.

In Los Angeles, the homelessness has gone up 40%.

At least one warning of fire hazard from the National Weather Service was made on January 3, 2025, the day before Mayor Karen Bass flew to Ghana. She ran on a campaign promise that she would not take any international trips during her time serving as mayor. And while a mayor isn’t a firefighter, she is the chief executive of the city who can expedite things and cut through the red tape to address emergencies quickly.

This is the same mayor who cut $17.5 million from fire budget, and the same mayor who, “demanded her fire department cut an extra $49 million just ONE WEEK before wildfires broke out“. Just one week before the fires broke out was around the time the warnings came down from the NWS. There weren’t enough firefighters working due to budget cuts. There weren’t any mechanics to work on the trucks’ maintenance. So with limited fighters and limited resources, the response was not as it should’ve been. Michael Shellenberger expounds more here.

The Santa Ynez reservoir was offline and empty during the fire. That reservoir services the Pacific Palisades as it is only minutes from that area. When the firefighters said there was no water… there was NO water. Not because of a drought. Not because of weather gods. But because the reservoir was drained for maintenance on it’s cover. The actual reservoir was fine, but there was a tear in the tarp that covers it. Reading the articles, you would think the tear just happened and it was a horrible coincidence of timing. No. It was empty since February of 2024.

While no one expects government to stop wind or preemptively prevent fires, they did expect the fire department to be fully funded, prepared, and for there to be water in their reservoirs. They expected safety precautions to be taken, and none were. Another reason why California is a case study in what not to do.

The Regulations

The conspiracy theorist ascribe far more intelligence to the impotent brain trust that is California’s tiers of government. All those theories rely on people being smart, if not at least cunning.

Alas, that is not the case. Hanlon’s Razor prevails, and indeed it is abject incompetence and abdication of any responsibility. But so far we’ve only explore the negligence of the Los Angeles and California governments. Wait until you see how they are trying to “help”!

You already know about their efforts to prevent “price gouging” from insurance companies leading up to the fires. But now that the fires have struck here’s the new regulations:

California Gov. Gavin Newsom issued an emergency order barring “developers and land buyers from making unsolicited ‘below-market’ bids on fire-affected properties“.

The mayor offered expedited permits to rebuild, “but her order also comes with the biting restriction that expedited rebuilding projects can’t involve adding additional units to a property or changing its use“.

“…[O]nly people building back roughly the exact same structure that was destroyed by fire can get fast-tracked permits. Someone wishing to rebuild their home and create one for someone else in the process will have to get in the back of the line.”

People are fearful of the rebuild being some nefarious agenda, like the lite rail system. This would imply that the rail system is fast approaching the LA area. It isn’t. From a report in May of 2024, this is where they are at:

While California High-Speed Rail was intended to cost California taxpayers a total of $33 billion and be completed four years ago, not a single segment of the system has been completed to date. Meanwhile, the total estimated cost has ballooned to $128 billion (and counting), and there is no expected date of completion.

It’s also not running through the Palisades or Alta Dena. It’s expected to run through Burbank, but not right through the Getty Museum which is the area the Hurst fires struck.

It sounds very on-brand for these governments: inept, slow, poorly managed, and very conditional. It is truly that California is a case study in what not to do.

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