The Ricochet Podcast - Reversing the Califailure

Episode Date: April 4, 2025

It's been said that California is to America what America is to the world. This is troubling for all parties involved given the current state of affairs in the now-inaptly named Golden State. While today's guest Steve Hilton pulls no punches in his new book, Califailure, he carries some glad tidings in the form of voter trends that magnify what look to be glimmers of hope. Our resident Californians Peter Robinson and Steve Hayward soak up the glad tidings, putting them in a good enough mood to momentarily get over their post-Liberation Day jitters. 

I almost prefer you over Zoom to in person. Oh, that's pretty harsh. Ask not what your country can do for you. Ask what you can do for your country. Mr. Gorbachev, tear down this wall. Read my lips. Welcome everybody to the Ricochet podcast number 735. This is Steve Hayward sitting in James Lilac's chair on top of a booster seat. I'm joined with Peter Robinson today with a special guest who is Steve Hilfen. So let's have

ourselves a podcast. I agree. You'll never get bored with winning. We never get bored. Well, Peter, here we are without the dulcet tones and firm hand of James Lylex for episode 735. That's pretty amazing, isn't it? Staggering. Absolutely staggering. Oh, here's the good news in having done 735. If we just keep doing these things, John Potthorat's and the boys and girls at commentary will never catch up. I think that's right. Yeah.

Although I have to imagine how do they ever get a magazine out? Wait a minute. Of course they will catch up. Of course they will. Of course they will. They do it five days a week. In fact, they've probably done 10,000 already. It could be.

But I figured you were you're prey to the new math, Peter, which, you know, makes sense. I don't know. Right. In the new math. I'm always a step ahead of John Right, right. Well now, you know, I guess we should start with a two old Reaganites like you and me Remember that Reagan fought a value in the test a valiant effort while he was president to fend off protectionism and defend all tears He was a free trader. Now he did concede a lot. I went back and did research on this recently, you know. Oh yeah, you would know.

You of all people would know. You'd be the authority. Go ahead, you do the history, but here's my memory is he made tactical retreats, but only in the interest of a strategic position. Right. Yeah, yeah, the point is he compromised to stave off worse from his first days in office, right? And, but I was startled to find out some

particulars. For example, in 1986, Reagan threatened Spain with a 200% tariff across the board in order to get Spain to relax its restraints on American farm imports to Spain. And they did. Right? So Reagan was not averse to playing hardball with the trade measures. There were literally hundreds of bills introduced in Congress, many of them by Republicans for tariffs and protection. And some of the trade bills that Reagan vetoed were by Republicans, one of them by Strom Thurmond in his diary talks about how I had to veto a trade bill. It was a bad bill. I called him Strom Thurmond. He took it better than I thought he would. He said, so yeah,

that's the point is that you had a, you might say a Trumpist bipartisan majority in favor of protectionism in the eighties. And, and, uh, you know, I get impatient with my libertarian friends who say, yeah, Reagan talk like a free trader, but he was a hypocrite because they ignored the- He was a working politician. Exactly. He was a principled man, but a working politician. You put the two of those together, and if

you can't distinguish between tactics and strategy, you'll just not- you'll make a hash of the Reagan record. You just won't get it. Yeah, exactly. And so now the odd thing is there is, I think you'd say, a weak bipartisan majority now in favor of liberalized trade, maybe not complete free trade. I think Democrats are still protectionists at their core. But I mean, I have to say- Question, question. When you talk about the weak majority in the old days, a weak protectionist majority versus a weak free trade majority today. Are you talking about, I hate the term elites, but are you talking about the hill essentially or are you talking about the

general population? Because I have been very struck that in poll after poll after poll, the American people are against the majorities vary, but they're quite sizable majorities. It's two-thirds or so. I think tariffs are a bad idea. Yeah, you know. What do you have in mind when you're talking? I think it's both. I think there's a weak majority. I think it was a strong majority for protection in the 80s. I think it's a weak majority. I mean, look, you know, the NAFTA treaty got through with a lot of Democratic votes. You know, Bill Clinton had

to break arms to get it through and so forth, And we allowed Al Gore to debate Ross Perot. Remember that famous moment 30 years ago? Yes. But I saw, I think it's a weak majority that I think the public, you know, my hunch about that, Peter, is that people like getting inexpensive consumer goods. They say the made in China, made in Vietnam on the labels. And I think in an unsophisticated way, they recognize the benefits of liberalized trade.

It's benefited, especially lower income and working class people, right? And I think they understand that, tariffs could blow up and make their lives more expensive again. I don't know. I'm surprised there aren't more surveys that try to get at that more deeply

because I've seen the same numbers that you have that people oppose it, but that may be an odd combination of Republicans who don't like trade protection and Democrats who are opportunists. So I think right now there's a lot of opportunism. I mean, my joke is, is boy, Trump is a genius. Think of the things Trump has accomplished

in the last several months. He's made Democrats hate a Kennedy. We've been trying to do that for 60 years, right? What else has he done? The other one now is that he's made Democrats come out against a tax increase, which is what a tariff essentially is, and in favor of free trade.

I mean, there's, you know, I don't go in for the 3D chess stuff very deeply, but I do wonder sometimes what the political thought behind all this is, because it's certainly confused the scene. Yeah, it has confused the scene at a minimum. So let's rehearse the arguments, shall we, very briefly? Excuse me, what I mean is let me rehearse the arguments

and then you tell me where I'm right and wrong. As I understand it, so first of all, we can grant, I think we can stipulate that even a very cursory examination of American history shows that the protectionist impulse, I would almost call it a protectionist temptation, is permanent. It is all with us. You are always going to find political figures, major political figures at any given time who are willing or insist on putting up protectionist barriers. Item one. Item two, you have the counter argument of Milton Friedman, for example. Milton had what I would call the strong free trade position, which is that

it is always in your favor to engage in free trade, even if your counterparties are not. We hear a lot about, I can remember Milton saying, I do know, I knew Milton Friedman in his final years when I was, I overlapped him for a few years at the heritage at the Hoover institution. In fact, his office was down the hall from mine. So Milton would say, we hear a lot about Chinese dumping products in the United States. What that means is they're willing to give us their products for less than it costs them to produce them. If they intend to make us a gift, why should we object? Over

the longer term, the people who are out are the Chinese, not us. Okay. So, that's the strong argument. The counter argument is that if you're going to engage in a welfare state, actually I had this conversation with an economist, my friend Tom McCurdy, who argued the point with Milton Friedman himself, and Tom argues that if you're going to engage, if you're going to set up a welfare state, then you have to think twice about free trade, because you have two ways of helping the poorer people. One is income transfers, and that runs through the tax system. The other is to increase their wages, and that would imply tariffs. And if you use tariffs to increase their wages and benefit workers, you don't

have to run it through the federal government. It is a tax, there's no doubt about that, but you don't have to send it to the IRS and get bureaucrats involved who will take the vig so to speak. Tom said in a certain sense, you could even argue that tariffs are a more efficient way of benefiting workers, the less privileged people, less privileged persons in the United States. Okay, so you put all that together and there are some pros and there are some cons. What do you make of it? Of the arguments? I'm not, yeah, I'm not sure I buy that.

I think there are better arguments than the one for in favor of tariffs. Better arguments in favor? Okay, give me your best argument in favor of tariffs. Better arguments in favor? Okay, give me your best argument in favor of tariffs. Well, let me just say, make one comment about the argument you just gave, which is tariffs may protect domestic workers' wages, but only at the effect of lowering the wages of workers overseas. And it takes a lot to explain why that's true. And I think that makes for instability in trading relations and so forth, and can't be sustained over time, which is why it's likely a mistake I think the argument in favor of tariffs is not their intensive sweet goodness or whatever Trump is saying about him It's that they are an important tool for two reasons. One is when other nations are practicing predatory trade

Which certainly would be the case of China and they do that ways, either by dumping or in the case of China, currency manipulation, which means that the basic straight up econ 101 flows of currencies that would adjust their values and then the currency we send overseas to buy stuff comes back here in the form of investment capital. It distorts all that badly. And then remember, domestically, the theory about why trade protectionism could be justified is the same as antitrust, right? We prosecute predatory pricing,

where someone credibly uses predatory pricing, right? Yeah, you wanna crush your competition, then you have a monopoly and you get monopoly rents, as the economist would say. I think those are both sort of limited, and the basic idea that trade deficit is in and of itself bad is just I think economically illiterate and totally illiterate. Trump seems to have bought into that. I don't know whether he yeah is it possible that he doesn't know better himself I mean the

argument is Jonah mentioned someplace on the web the other day that if you go into whatever you go into McDonald's and buy a hamburger on the Trump argument, McDonald's is stealing from you unless they buy your jeans in return. This makes absolutely no sense. John, you and I have been talking about how we need to tear up against McDonald's for their untrained trade advantages over us.

Right? Right? Especially with that predatory product at McRib that he loves so much. Yeah, you know, look, I think Trump's instincts and his policies are mostly fantastic, but I have joked over the years that I don't think he knows the difference between Friedrich Heyerich and the Salma Hayek. There's the problem, right? It pains me to say this, but it's

very worrying because, again, going back to the Reagan example, the Reagan people knew from day one that if they didn't fix the economy they couldn't accomplish anything else they wanted to do and now the the hazard for Trump who I think has made the biggest bet of any president ever perhaps is that if he screws up the economy it's gonna crush all the other great things that he's doing. So I think this is right. A, correct as far as that goes but B, if you're going to try to save the economy, if you know if you screw it up you can get nothing else done, then you say to yourself in politics as you know Steve, sequencing matters.

And this guy has decided to impose tariffs, cause turmoil in the market, shrink everybody's 401k, and then extend his tax cuts. He only has a margin of three or four seats in the House on a good day. He's already lost four Republicans in the Senate. He's got four Republicans, McConnell, the usual suspects, Mikulskey, Collins, but also Rand Paul have now voted against Trump to reduce or eliminate the tariffs on Canada. You just get this slight stirring in the Senate of the constitutional position of the Congress, which is that the Constitution gives Congress authority over tariffs and taxation, not the President. Well, if you lose Rand Paul, you're in a position to lose three,

four, five, a dozen in the House. And if you do that, as you're coming up on extremely complicated, huge bill, the centerpiece of which is to extend the tax cuts, and that fails, or gets hung up, or turns into a long protracted process, he will get wiped out in the midterms. It is, to me, it is just a silo. Right. Just, and then he's done. Then he's just done. Well, my big worry immediately, not the midterms,

is this could screw up a tax bill. You can see things on the next, right, yeah. Exactly what I'm saying. Exactly what I'm saying. Well, let's get out with, I'll give you two more quotes, Peter, you'll like, or instances that- I'm getting animated on, I'm getting animated on the anti-tariff side, but I mean, as you are, I was about to say

gamely pointing out, but you're doing it more than gamely. You're granting real credence to the pro-tariff, particularly if he's using them just as a tool for...if the idea is impose tariffs to get to a world without tariffs, all right, that's sensible. You can argue about sequencing and how you do it and so forth, but at least there, tariffs become tactics in the interest of a larger and sensible strategy. Pete Slauson Yeah. Well, let me give you three quick quotes to get us out, because we can go

on forever on this. One is, you know, here we are as we're talking, the stock market is crashing for a second day. And I remember there's a moment in the fall of 1981 when the stock market started going down after Reagan's tax cuts passed, and a reporter, you know, a typical antagonistic border said, gee, Mr. President, Wall Street doesn't seem to think very much of your economic policy. And Reagan's response was, I've never found Wall Street to be a very good source of economic advice, which I thought was terrific, right? Boom.

But then I got to thinking about something a little older. Back in the 1920s when Churchill was chancellor of the Exchequer, and facing a decision that parallels this one in some respects, and it was when and at what valuation to return to the gold standard, which they botched. But he had a line that it sounds very Trumpian. He said, I would rather see finance less proud and industry more content. That is in substance what the Trump pro-tariff people say.

All right. Except that industry doesn't seem to be content at all. Oh yeah, I correct, right. They're whinging and whining and reshoring as the term now goes very crutching. Well, and particularly these tariffs, there are industries that over the last couple of years has made a real effort to get their supply chains out of China. So they put them in places such as the Philippines and Vietnam.

Boom, Trump puts tariffs on them as well. Yeah. All right. Well, I'm not sure contented industry is quite the right way to put it. Well, no. I mean, there's evidence that capital investment is pausing right now, which is a bad thing because of the uncertainty. But I did dust off, it's very rare that I would say anything nice about John Maynard Keynes, but he wrote a pretty good essay at the time called The Economic Conquences

of Mr. Churchill. And after going through a very cogent explanation about why they made a mistake in their valuation point for gold, he has a sentence which you can use right now. He said, what now faces the government is the ticklish task of carrying out their own dangerous and unnecessary decision. I have a hard time running away from that right now, but I'm hoping for the best. There's a lot more illumination we can bring to the subject, Peter, but right now that reminds me that, speaking of illuminating things, our sponsor Lumen.

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And so we thank Lumen for sponsoring this, the Ricochet podcast. Steve Hilton joins us now. You may know him well from Fox News, but you should know him now for his brand new book called Calif Failure. And boy, for a native of California like me and for a transplant like Peter, this is a subject near and dear to our heart and about which we have lots of thoughts, but we want to hear yours. So Steve Hilton, welcome to the Ricochet Podcast.

It's fantastic to be with you. I was so happy we could do this. It's great. I don't know what, you know, I feel terrible, Peter, you know, it's so why haven't I done this before? It's outrageous. Yes, exactly. Exactly.

And we see each other quite often, actually. We only live a few miles apart. We should simply start recording our own conversations. All right, Steve, let me ask you the large question. Yeah. I'll give the large question as a touch of biography here. So you can see why I really care about this question. So I grew up in the Northeast,

I had relations who had moved to California and written at the end of the 19th century, as it happens, and in the family collection we have letters that they wrote back to the men who were still farming Northeastern Pennsylvania. And they said, come to California, don't go through another winter again. They were describing paradise. I worked for Ronald Reagan in the White House. Reagan, his old California hands, Ed Meese, Lynn Nofziger, they spoke about California as if it were paradise. They really loved it. It meant everything to them. Ronald Reagan himself used to say that if the Pilgrims had landed in California instead of back east, nobody would ever have bothered to discover the rest of the country. The state was that beautiful, it was that much of a paradise to ordinary working people, which by the way, the families of Ed Meese and Lynn Nofziger and Ronald

Reagan were when they went to California. What went wrong? How could you take a state so blessed with talent and beauty and natural resources? What went wrong? Well, I first want to underline how much I agree with all those sentiments. And I'd add to it, it's not just the physical beauty, the magnificence of our landscapes and the diversity of them and the weather and all those things. There's also something magical and inspirational about the idea of California, the ideal of what California represents. And to me, there's a spiritual, emotional, intellectual dimension to it. It's not just it's the most amazing place to live in that sense, or should be, it's that it represents the best of what I think of as America. And there's a line right, I think it's actually the first line in the book,

I can't recall now, but which is this, I feel very strongly about this. California means to America what America means to the world. And what I mean by that is that I had this love for California even before we moved here. And it represented to me the best of what I thought of as America. And we can throw around words, but I think we will kind of have a feeling for innovation and energy and optimism and ambition and swagger and startup hustle and this sense of anything is possible. And also another dimension, which is less referred to, but I feel it very strongly. And it very much connects to where things have gone wrong. The rebel spirit, that this that's why we've got so many people creating in these incredible industry, you know,

that's Hollywood, you know, San Rico, Silicon Valley, and so on inventions, and just the rebels, and the builders and the dreamers and the creators, that's what it's all about. And I felt that very strongly, I'll just tell you a very quick story, which is that back in the day when I was working for David Cameron, before he was prime minister, there was a story, a cover story in the Spectator magazine, which is the print edition, I remember. I know people in America read the Spectator online, but I think it's the oldest political

magazine in the world printed. And the headline was California Dreaming. And the theme of the article was Steve Hilton, David Cameron's policy guru, as he's developing the ideas that will drive the Cameron administration is inspired by the notion of making the UK more like California. And that was, I mean, you know, 20 years ago. Yes. That seemed like a good idea at the time. And now, as we all laughing because there's not a single policy advisor to a single political leader anywhere in the world that would want to make their country more like California, which just tells you how far and fast we've fallen. And we could go

through the details, but the real answer to your question I think I'll just very quickly get to that, which is the headline is, Why it's all gone so wrong in California California is the combination of one-party rule and really bad ideas. And that's what we've had. The one-party rule has been achieved over the last couple of decades with a couple of, that's mechanical and structural things. The building up of the government unions is a dominant funding block for Democrat politicians. This seriously hard-to-beat Democrat machine has emerged, funded primarily by government unions. And I mean the other aspect of that that's very important of the lawyer,

the trial lawyers, then there's a real issue there. But it's really the government unions that control them. So you've got this big machine that wins elections because they just got a lot of money and activism and union members that go out and phone bank and work and all the rest of it. Secondly, very important and not discussed enough is because of the fact that the policies that have caused this decline that have given us these absolutely catastrophic outcomes in California, the highest poverty rate in the country for most of last year, the highest unemployment rate. Imagine that, the highest rate of unemployment of all 50 states. Right now we're number two, you know, great progress.

The highest cost for every essential housing, gas, electricity, water. The worst business climate in America, 10 years in a row. So it's the spectacularly bad outcomes. And the thing that's not discussed enough is that a lot of the policy that has led to that, which I'm sure we'll discuss, emanates from the legislature. And so what you've had is a legislature that since 2012 has had a super majority for Democrats, over two-thirds majority, which means that they can pass whatever they want with no Republican input, no real constraint.

And they've had no constraint from the governor because you had a governor that just simply hasn't pushed back on that. Jerry Brown a little bit did. That's why the decline has accelerated so much under Gavin Newsom because he really hasn't pushed back against what's coming out of the legislature at all. Too busy with his own podcast. Well exactly. And then you've got, so why, but the super majority is very important.

It is not a legitimate super majority, is the direct result of gerrymandering. It's very important everyone understands this. California is a much more Republican state than people think. People look at the super majority and the way people talk about it outside of California, oh, it's so deep blue,

California will never be Republican again. Well, oh, it's so deep blue, never be Republican again. Well, actually, if you look at the average share of the vote in statewide elections since the last time Republicans won, which was 2006, Arnold Schwarzenegger's re-election, the average share of the vote for Republican candidates is 41.7%. So that's not 50, but it's not 20 either. But 20% is the number that for many years was the representation of Republicans in the state legislature. Because in 2008, voters passed a ballot initiative on independent inverted commas redistricting.

That was high, the process was hijacked by Democrats. They're very good at that. And they completely distorted the intent of that ballot initiative. The superficially, yes, it was an independent commission with equal numbers of Democrats and Republicans. But now, you know, for this book, I spoke to people involved in that process. The maps were drawn up by government union members, the staff of the audit department and whatever in Sacramento. And then they inserted all these criteria, one notorious one that they inserted. The original intent of the ballot initiative was to have districts formed around existing city-county boundaries and so on. They added a new thing

called communities of interest which enabled them to, in the English phrase, drive a coach and horses through it. So you end up with this gerrymandered legislature instead of 40% representation in the legislature, which is what roughly speaking, Republican support would entail. It's not 35, 30, 20, it's 20%. Right now it's up by a little bit. So the super majority pushes through whatever it wants.

And then you combine it with the bad ideas, which is this ideology that has just gone, has been let run rampant and that's really what I try and define in the first chapters of the book. What does it mean? The phrase that I use is that California really has been treated like the Wuhan lab of far-left extremism. They've been hooking up this experiment. The same results too. Yes, right. And so what I've tried to do in the book is unpack what that is, because it's not enough just to say, oh, it's Democrats, California's bad,

because we had Democrat, but it's worse than that. The outcomes are worse than anywhere else in America. So what really has been driving it? And so the main thrust of the book, the first part is to understand this ideology, this new leftism that has had these calamitous results. Pete So, Steve, I'm going to turn you over to Steve Hayward in just a moment to discuss the ideology and the policy. But first, it occurs to me that there are people hearing you for the very first time who want to know why am I listening to a man who's written a book on California who has a British accent. So, I mean, your story is in all kinds of ways a California story in the sense that, like me, you're an immigrant. But briefly, so that we can get to

Steve and get back to the book, but briefly, you'd better explain to you, start in Hungary, and get yourself here, get your family here. What the hell am I doing here? Exactly. By the way, very beautiful moment. I had two lovely Hungarian moments. Why Hungary? Because my parents are Hungarian. Both my parents, my stepfather is Hungarian. Everyone's Hungarian, the whole family. Most of my family still lives in Hungary. And they lived in Hungary for what reason? Well, they, my father and step, my father was a sportsman in Hungary, pretty well known. He was the goalie for the national ice hockey team, played in the Olympics, pretty well known anti-communist, got targeted by the regime, defected, I think that's the right

word. He was playing in Berlin and actually went to the British embassy and ended up in Australia. My mother came in a less dramatic fashion. She was able to get to London for something to do with English, learning English or studying something like that. Met my father actually working at Heathrow Airport in the restaurant there, the cafe, that's where they met in the early 60s. But my stepfather has the most interesting story he actually really did. He was from a small village in the western side of Hungary. And he tells the story about how they when the when

the Russians get when the Soviets came and crushed the revolution in 1956. He they heard on the radio, the Russians are coming, the Russians are coming and they said okay, so we're going and they literally ran. He and his brother and some friends, they ran for the border. With Austria they climbed barbed wire fences, half of them were killed in the attempt, ended up in a refugee camp in Austria and thence to England where I was born. So that's the Hungary part.

We moved here in my family and I, in 2012. My wife, who you know very well, Peter, Rachel, she was then working for Google. Had a big job at Google running global communications and public policy for Google. I was working in 10 Downing Street as Senior Advisor to David Cameron, he was the Prime Minister at the time. And it was really when our second son was born, it was just very, you know, the time traveling for Rachel back and forth from California, the time difference. So we just decided to move. And we really didn't have an intent of staying.

We didn't really think long term about it. We just thought, let's see how it goes. But there was a very there really, really moment. I remember very clearly, which is four years in, we'd been living in the Bay Area to be close to Google. I was teaching at Stanford. That's the first thing I did. And then I did a tech startup and whatever.

But 2016, I went back to the UK to campaign in the Brexit referendum, which I felt very strongly about. I'd always been, especially since working in 10 Downing Street and seeing the impact of the EU, I was very in favor of leaving and back there for a couple of weeks doing that. And I remember really clearly landing in San Francisco Airport straight after the referendum. And we were just taxing to the term. I really remember this just looking out at the hills and I just thought to myself, oh, it's so nice to be home. And then I thought, oh, that's interesting.

Home. And really that's the moment when I realized and actually really de facto is, or, you know, we really had no intention of moving, but moving back to England, but it really is home in the deepest sense, like not just literally where I'm raising our family and with my wife and establishing our life here, We've now been here 13 years, but just spiritually I use that word a lot. I just feel so connected to California. I feel at home here in a way I never have anywhere else. And then just to bring everyone up to date, yes, I still have the accent, but I am an American now, I want to reassure listeners and viewers. I became a citizen in 2021, very proud American, but a proud Californian as well. You know, this is the, there's nowhere better than California and we just got to stop this disastrous ruining

of it, which is affecting us here, but the whole country because California means so much to the country. Yeah. In spite of it all, you can say that. I'm glad to hear that. I'm a native Californian, but there's actually a deeper personal parallel. My British grandfather, who struck out from London as a young man to some of the Far Eastern colonies, somehow made his way to Los Angeles in 1910 and never left. Wow. I mean, you know, he bought a little house and watched the Hollywood sign

go up and whenever that went up in the thirties, whenever it was, right? Sort of seen it all. And, you know, I grew up, you know, came of age in the sixties and seventies back in that era. Maybe I don't know if you know the famous article, worth finding, James Q. Wilson from 1967 and commentary on the guide to Reagan country. And he said, you know, long beach is Iowa by the sea. And I can go on a long time about the importance of the aerospace industry and its decline at the end of the Cold War for being one important factor in how we got to this point that I think

is an important part, but you're onto the more important enduring parts, which is one party rule, bad ideas, unions, and all the rest of that. You just said something there at the end, which is California is important to the country. Here's an odd thesis for you. California is what has brought the Democratic Party

nationally to its lowest public approval ratings in its history, the history of polling, right? And the reason I say that is California has always been the future. We always used to like to say that when California was conservative, or at least voted for conservative ballot measures and elected conservative governors.

And I think Democrats looked up at some point in the last 20 years, remember Democrats were anti-illegal immigration until very recently, even Obama made tough statements about immigration, right? I think they looked up and they made a simple conclusion that was wrong. It was, oh, California flipped from being, you know, a red state to a blue state really fast because of immigration. Let's do that everywhere. And they said, we're going to flip Texas the same way. We're going to

flip the whole country the same way. And it turns out that not only was that an unpopular policy, turns out a lot of those population groups that immigrated don't like it either. And we've seen this shift, right? And so I think that, you know, in an odd way, the fetish for California among liberals is what explains a lot of their current travel. Yes, I mean, it's absolutely right. That's why I use the analogy of the Wuhan lab and the virus, because it has infected the rest of the country and so many of the bad ideas that have caused pain and misery and destruction across the country really did start here, whether that's, you know, the, what is called global, the climate legislation in California that we've been stuck with that's been so disastrous for, you know, our economic competitiveness and jobs and people's living standards. That is the model for the Green New Deal. Banning gas stoves, gas cars, all that stuff, that all started here. The race and gender ideology, the extremism there, that started here. The

ballot harvest, you know, you know, you can go through all these things and say actually, pretty much all the bad things started here, but from this ideological kind of mindset, and I think actually it is connected to the one party rule because when you are in that position of complacency, like you think, well, I'm never going to be beaten by the other side, and it just makes you open to take over by the extremists and the activists because you're not paying attention to your voters and your constituents. You're only thinking about the party and pandering to what they want. And so it throws up, a one-party rule like that throws up, I think, this increasingly weak and useless mediocrities, these machine

politicians. You see that now in what California is producing on the Democrat side. People like Newsom and Kamala Harris and Karen Bass. And I want to give you a really, this may sound like a small example, but I think it's really significant in terms of why everything is a disaster. Karen Bass, classic California machine politician, just the other day, I saw her post on X. And it was, I think I'm getting this almost exactly right. I have just signed an executive order streamlining permits for

rebuilding in Los Angeles. This was like a week ago. I think, Oh, okay, fine. Good. I mean, four months too late, but I'll take it. Anyway, then I just, the post was above a video clip from her press conference making the announcement. So on the principle of, you know, do your research, I thought, well, I'll watch what she actually said. I did watch it. This is what she actually said. Remember the post is I just signed an executive or streamlining. What she said was I have just signed an executive order, tasking

agency heads with developing paths forward towards streamlining. This is it. This is the problem because you have people and you that's the attitude and the mindset that you that is everywhere in California and explains because the root cause of all of the you know when you look at the unemployment, the poverty, the housing costs, etc. So much of that category of problem, which really are the foundational problems, because housing costs, for example, are the number one reason people are leaving California. We lost representation in the Congress for the first time in our state's history. The projection is we'll lose another three or four seats in 2030. So what, because nothing is done, nothing gets done.

You can't build anything. You can't build the water infrastructure. That's why our farming industry is being crushed. We don't build energy infrastructure. That's why electricity prices are so high, gas prices. That's why industries costs go up and that's why they're leaving. Cause you've got this bureaucratic mindset. You've got people who think that doing something equals tasking

agency heads with developing paths forward. And they sincerely believe that is action. Yeah. I mean that, uh, that would have made sir Humphrey Apple be very proud to hear that statement. If you know the old reference, right? Uh, well, let me, uh, so I mentioned growing up in the 60s in California with aerospace, that was my dad's business, but it was also when liberals built things. Pat Brown built water projects, dams, lots of schools and abundant housing

was allowed. That was by the way, usually below the median price for the national average. It was the most affordable. It's unimaginable today, but California had the most affordable housing in the country. Exactly. Because we have the typical house price in California, the median, this is the real number. So half of the houses, homes in California

are more expensive than this, $909,000. Yeah, that's unbelievable. It's insane. Well, here's a two-part question for you. And I think they go together. I think I know which one you want to talk most about. I'll do it in reverse order. I'm following great interest these abundance liberals who have come along like Ezra Klein. And you know, we talked about it on the show last week. I wasn't on, but I, you know, and then and then also, uh, you know, in my time in the Bay area, like you, I've come, become aware to spend some time with the Yimby movement, the progressives who said, gosh, we're over-regulated. And what I find

in both cases is, uh, well, this, you may remember this, Peter, the abundance liberals we have now remind me of the Atari Democrats in the eighties. You remember them, Peter? They were going to be the pro they were, they were struggling to compete with Reagan and his pro-growth policy. So we're going to be Atari Democrats. And within months, Atari moved to the Philippines and then ceased to exist. So I think the abundance liberals are not going to get very far with their unions and all the interest groups you know about. But part two is, and you can skip that if you want, but part two, you can't. What do you make of Gavin Newsom trying to change his tune so radically, right? I'll put them together. So, abundance. Yes, agree. That's what we need. But who caused the scarcity? They did, with their bad ideas and the ideology and the incompetence and

the bureaucratism and all this. The detail in the book. If you look at the, two years ago I started a policy organization focused on California's policy problems and how we turn them around called Golden Together. And if you look at the policy papers that we published, it basically is the abundance agenda. I mean, we literally have a policy paper on energy is called energy abundance. Our policy paper on water is called water abundance. So no argument that we need that. Then you look at Gavin, I'm going to bring in Gavin Newsom. So in on this kind of fake rebranding tour in this podcast and elsewhere, he had Ezra Klein on his podcast to talk about a bundle. And it was just, it reminded me of the time, the time, a few years

ago, do you remember when you had those shocking scenes of the railway theft, the looting of the railway, the freight trains in Los Angeles? Do you remember that? And packages all over the railway lines? Yes, yes, yes, of course. And Gavin Newsom goes down there, he's the governor, literally does a press availability in front of all this chaos and mayhem and says, what the hell's going on here?

It looks like a third world country. I would say, yes, who's in charge? So reminded me of that, but this time with even less excuse, because that was three years ago and he'd only been governor for, I don don't know three years. Now he's been governor for over six years. So he's sitting there with Ezra Klein and they're talking about abundance. And, and in this hilarious he said, yes, terrible. The regulations so bad. It's really terrible on and on like this. Gavin Newsom is agreeing. And then at one point he said, yeah, that's on us. The sort of fake accountability he's expressing on us. No, well, that's on us. There's sort of fake accountability he's expressing

that it's on us. No, well, who's this nebulous us? It's not on us. It's on you. You're the governor. It's you. And so that's what I think about the Gavin News. There's this extraordinary detachment of himself from any kind of agency in these matters. So he says the party is toxic without any kind of acknowledgement that he drove a huge proportion of the agenda that made them toxic. He said on another podcast, we've become too judgmental without actually acknowledging that he's the one that constantly smeared people who I mean do you remember when he talked about people who didn't take the vaccine didn't comply with vaccine mandates like drunk driving do you like

killing people totally disgraceful smear right and he's now saying we're too judgmental I mean it's just unbelievable. And so, and then of course, the obvious and hilarious, if it wasn't so terrible one about agreeing with Charlie Kirk that the biological men and girls sports is deeply unfair and then doing absolutely nothing about it, even in the week where you have two Republican state legislators bringing forward legislation in Sacramento to you would to deliver what Gavin Newsom just told us he agreed with. Steve, the future. It looks hopeless to me, and here's why.

Supermajority, Democrats holding a supermajority in the legislature for more than a decade now. Republicans, the middle class leaving the state, fleeing the state, it has benefited some states. The state of Idaho has moved firmly into the Republican column. I have a friend who's in the state government in Idaho, and he said, it's really very simple. All the bad Californians moved to Colorado, and all the good Californians moved here to Idaho. Well, good and bad, they're not here anymore. You've got the unions running, raising, the union which you just described, that is now enshrined in law and long-standing political practice here. We have a demographic shift, Steve was talking about this, that the Democrats found it so appealing that the large influx of Hispanics tend to vote

Democratic that they tried to replicate that on a national level. That's a separate problem. Okay, it all looks pretty hopeless to me, and yet Steve has titled the second half of his book, Califuture. What can we do? book, Califuture. What can we do? Well, Califuture is the policy plan, turning things around, replacing this ideological extremism with positive practical solutions that address all the things and more that we've been talking about. People can read that in the book. I am very proud of it. I think it's a really serious comprehensive

plan that if delivered, would restore California to the glory that we all understand comprehensive plan that if delivered would restore California to the glory that we all understand. And that basic idea of the California dream, which is not complicated, it is a good job that pays enough to raise your family in a home of your own, in a safe neighborhood, with a good school so your kids have a better life than you. That's it. And we can get back to that with sensible policies, but they won't be implemented if we don't win elections and achieve power. So that's what you're really driving out Let's address that. I think that it is first of all, let me just say very clearly I think 2026 the next round of elections here in California is our best shot at winning power in California for at least 20 years Without question and here are the ingredients. I'm not

saying it's easy or inevitable. It's going to be very difficult for the reasons we've discussed, but it is not completely impossible. And it seems to me it's looking more likely with time, not less. So if you look at the ingredients, first of all, the baseline is higher than most people think. It's not 20%. It's call it 40%. That's already the gap is less than most people think. It's not 20 percent, it's call it 40 percent. That's already the gap is less than people think. Secondly, the gap is growing less all the time. In the last election, you saw really interesting signs of progress for Republicans. Ten counties flipped from blue to red, including, but you know Fresno County, the fifth biggest city, you saw ballot initiatives, just to be partisan about it, Republicans won on

all the key policy-based ballot initiatives. So the big one that a lot of people paid attention to, Proposition 36, which reversed the worst excesses of Prop 47, the legalized crime up to nine,ized thefts up to $950 a day, Carmel Harris one Prop 36, which didn't completely reverse that but did some good work on it past 70% including in every county and majority in every county, George Gascon defeated in LA, the mayor and DA in Oakland and Alameda County defeated mayor of San Francisco defeated and so on. You saw signs of progress elsewhere locally. So Huntington Beach is a really interesting story. Huntington Beach, not a huge city in Norwich County, it's like number 30, I think, in the

league table in California, but iconic surf city USA. So just over four years ago, the council in Huntington Beach was 6-1 Democrat, Republican, 6-1. A friend of mine, Tony Strickland, put together a slate of candidates in 2022. They called themselves the Fab Four. They ran on a very, very strong conservative, common sense message, very Trumpy, you could use that term, and they won. Control, 4-3. Wow. And they went ahead and implemented a very direct and they did what they

said they would do. They cleaned homeless encampments, they prosecuted low-level crimes, they addressed the books in the library that parents were concerned about, they introduced a ballot initiative for voter ID, etc. They did the things they said they would do. Just now in November, they ran a bigger slate, seven-candle, they called themselves the magnificent seven. So for those who say you can't win in California's room, but you have to detach yourself from President

Trump. These guys literally called themselves the magnificent seven. They won seven zero. So you've now got a clean sweep. And just this week, Huntington Beach rated by Wallet.com or whatever, best run city in California. So you've got combination of political energy policy results being delivered and a city that was that's gone from six one Democrat to seven zero Republican in four years. So these are ingredients. Then you look at the Latino vote exactly as you said, there's the largest group in California, 40%. We're now 40% Latino, 35% white, 15% Asian, 5% black, 5% other. It's not true that Latinos are Democrat. It's more true that they're just disengaged.

And so, I mean, if you just think about the lot of it, and in California, particularly hammered by these policies, especially the climate extremism that drives up the cost of everything, you know, telling people you can't have a single family home when that's your dream, you have to live in some apartment like we're in North Korea, you can't have that truck that you've been aspiring to because you've got to have some electric thing that you hate and doesn't make sense for your job. All of these things are really, really core messages that can bring into the Republican fold working class Latinos. And that is the opportunity, I think.

And there's one more aspect to this. I think it's important for people to understand because sometimes you look at the percentage totals and you think, well, that's an insurmountable gap. You know, even if, you know, we're looking at it more positively it's 40% Republican 60% Democrat that the gap is less than some people might assume but it's still a very big gap big swing would be needed but here's another way of looking at it that's particularly struck me after the 2024 election in California which is the number of votes the total number of votes that you would need to win. So 2026 is a midterm election and midterm elections have a lower turnout and political people tend to, when they're projecting what the turnout would be, take the average of the last two.

And if you do that, the number you get for the reasonable assumption of how many votes will be cast in California in 2026 is 11.7 million. That's the number. So to win with 50 plus a little bit percent, 5.9 million votes. That's your target to win 5.9 million in California in 2026. In the presidential election just now, without even campaigning in California, without really doing anything, not spending any money. President Trump got 6.1 million votes in California. And so when people say there are not enough Republican votes in California, you've got to convert all these Democrats, how are you going to do that? All these independent, how are you going to convert them? There are enough Republican voters in California. To put it in a simple way, if every person who voted for Donald Trump in California in

2024 votes for the Republican candidate for governor in 2026, that Republican governor candidate will win. Now, of course, that is a big if because it's hard to get presidential level turnout in an off year, but that's a big if because it's hard to get presidential level turnout in an off year, but that's a solvable problem. That's something you can do with a good campaign. You can, and actually Republicans in 2024 really accelerated ahead of Democrats in their ability to turn out votes. And the whole delivery of those, you know, the swing state sweep for President Trump

was based on really good work, registering and turning out voters, especially what they call low propensity voters, voters who tend not to vote. Latino voters come into that category, California. And so you put all that together and you say, it's absolutely doable. We just got to get to those people who voted for a president. Of course, it'd be wonderful to persuade Democrats and persuade independents. And that's true. You want a big tent. But the argument that it's impossible because there's just not enough Republicans in California has just been comprehensively disproven. Well, I think, Steve, you may know the numbers from this Democratic analyst, David Shore,

who I've met, who's very, very good. And Peter, you're know the numbers from this Democratic analyst, David Shor, who I've met, who's very, very good. And Peter, you're oblivious to these nerdy number things I know. But he had a report recently that noted that Trump won not because of higher numbers among white voters, it's been flat for Republicans for 20 years. All of his gains came from minority groups, every single one. And beyond all that, Trump won the popular vote by 1.7%. Schor's analysis was, I think is bulletproof,

says if you'd had turnout of all eligible voters in the country, Trump would have won the popular vote by 5%. And some of his biggest gains were here in California, many of them in Los Angeles County. This is causing night sweats among Democrats who pay close attention, and the rest want to ignore all this.

So I think you're onto something there. Steve, could I, you began, we began this conversation by talking about matters, you used the word spiritual. Since then, you've been talking about practical politics, nuts and bolts of policy, and of course, that's what you have to do to accomplish anything.

But I wonder if I could ask a question. This is just occurring to me for the first time so I'm not even sure that I can formulate it correctly. But we have 40% Hispanic. I talked recently to my old friend Chris Cox who served 16 years in Congress from Orange County, a district in Orange County, and I said how does the GOP come back? And he said, oh, there's one answer to that question. Right now, the GOP in California is a white party doing reach out to Hispanics. It needs to become the other way around. It needs to become a Hispanic party reaching out to Anglos. So there's this problem that politicians, long-time political figures here understand. Archbishop Gomez of Los Angeles once made a remark to me that struck me as very beautiful, but I don't quite know what

to do with. But you, Steve Hilton, being the creative figure that you are, might know what to do with. There may be some kind of opening or some... Archbishop Gomez made this remark. Now, of course, he was born in Mexico. A huge proportion of his people, the Catholics in the diocese of Los Angeles, which is, by the way, the largest Catholic diocese in the country, are, of course, Hispanic. And he said something beautiful can arise from this. And he spoke of the double founding of America. We all know, of course, that the Declaration of Independence dates from 1776.

That's when Mission San Francisco was founded, 1776. So there's a kind of what was taking place the European Anglo founding of America on the East Coast, which of course built the country. All our great institutions arise from that. But there is something wonderful that at the same time, there was a Hispanic founding here in California. And there's maybe, there's some, it to me as though there this is one area where California could once again be the future for the country somehow or other and openness a fundamental openness to the to Hispanic culture

But as expressed through practical politics There is no recent immigrant from Mexico who doesn't want all the things that you just described. Schools that work, the ability to buy a car so that he can travel from the Central Valley over here to do his job as a gardener or construction work, all of that. But there's some, it feels to me as though there's some, anyway, I just put that to you because you're so creative in these matters. Well, I agree completely. And I would say I've, you know, personally been spending a lot of time really understanding that, you know,

literally living with families over, you know, in East LA over the weekend and so on, going to church with them and going to the baby shower, you know, and really understanding it. And it's really interesting to me. It reminds me totally. I mean, it really does remind me of the immigrant experience that we had in England as Hungarian immigrants. It's the same. It's exactly the same thing. You just want to work hard and climb the ladder of opportunity. And the Democrats have been in charge, who patronizingly assumed that these people are always going to support them, have smashed the rungs of that ladder one by one the The good job that pays well

Well, we have the highest unemployment and we tax you so much that you don't keep enough to raise your family in a comfortable Manor a home of your own that's totally out of reach to people a safe neighborhood. Don't make me laugh a good school Latino You know the proportion of Latino kids and students in our schools who read at grade level? About 30 percent. It's just unbelievable. You know, it's a crime what's being done. And so, you know, all of these things are just, it's almost that it's not like they're Latinos, it's just that they happen to be the largest group in our state. And so, of course, you have to be central to everything that we do, but it's a universal message and Republicans get it and Democrats seem not to because they've crushed it. And I think that it's going to be a really, really

exciting moment when we can like, you know, make those two things come together. And it's just restore that California dream that is so simple and basic and beautiful. It really is. And you just, it's, and that's what this state is all about. And when people think of the American dream, I think for many decades, they thought of California. And that's what we need to get back to. I'm very confident that we can and hopefully before people, you know, sooner than people think we will. Before everybody leaves the state, right, yeah. I'm glad Peter you asked that question about the second half of the book because, you know, if people only think about the main title, Califalier, they think it's only doom and gloom and how did we get in such a mess. But the second half, Calla Future. So the whole title for listeners is Calla

Failure, Reversing the Ruin of America's Worst Run State. Steve Hilton, thanks for doing this book. Good luck to you. Thank you so much. Great to be with you. Thank you, Steve. Well, you know, Peter, we could spend hours talking to Steve Hilton. I know you probably have, and hopefully we'll get him again. There was one other part of his personal story that resonated with me. You know, I mentioned how my British grandfather came to California and never left, but I didn't know about his Hungarian background. And you know, I never tire of mentioning my late friend Peter Schramm,

who left at exactly the same time, after the Revolution of 56, and his father said, we're out of here, we're going to America. Why are we going to America revolution of 56 and his father said we're out of here we're going to America why are we going to America dad and his dad said because we were born American but in the wrong country but his story of getting out is exactly the same they might have been in the same group of people walking across the plane to get to Austria having to dodge you know army troops firing at them having to ditch their weapons at the border, climbing a fence,

and then being in an Austrian refugee camp before coming to California. So I don't know, it's funny how small the world can be sometimes. And yet here we are. So anyway, I was thrilled to hear all that. That was great stuff. That's a cheery note on which to end this week

of tariff turmoil and trouble. And for listeners, you know what comes next. You're supposed to give us a five-star review on Apple or Spotify or wherever you source your podcasts. And please, we want to hear from you in the comments section at ricochet4.0. Peter, great to see you. I hope we have you back again soon. Steve, a pleasure. And I'm feeling encouraged about our beloved Golden State. Yeah. And it's not easy to make me feel encouraged about this place. All right. It's hard sometimes, right?

Take care. Right. Bye-bye. Next week, guys. Hello, I'm James Lytleks and I'm at The Diner. You know, classic American diner, chrome, long boomerang pattern from I could count on those little jukeboxes. We love these. And you can join me here every Saturday where we talk about whatever happens

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