Golden and Loaded: The Geopolitics and Strategic Economics of California

Picture this. The year is 2032, and the unthinkable has happened. The United States, an imperfect union for over two and a half centuries, has splintered along cultural and regional lines. The election of President Nathaniel Haas was the last straw in a long line of triggers that defined the conflicts of the Partisan Age of 2007-2032. Increasing plutocratic capture of government and worsening bureaucratic stagnation, rising militant populism on the left and right and in the urban jungles and rural hinterlands, the elite’s increasing disconnect from the masses of the American people and hyperpartisanship among itself, the loss of a coherent and inclusive national identity, and the flourishing of rival economic elites in different regions of the country weakened America over two and a half decades. Four powerful fragments have arisen, and none trusts the others.

The National Bloc, led by the remnants of the Federal government in DC and buttressed by the New York-Philadelphia-Boston elite, controls the territory from New England to the Potomac, west to the Appalachian Mountains. The Midwest Bloc, controlled by the state governments of Illinois and Ohio and based in Chicago, rules the Great Lakes region out towards the Great Plains. The Southern Bloc, commanded by Texas, dominates Dixie and extends its influence north to Kansas. And the Western Bloc, led by California, holds influence along the West Coast into the interior. None of these blocs are formal polities- they are the skeletal remains of the most powerful state governments, bound together by informal treaties and agreements for survival. Dozens of smaller states and city-states dot the land, while the Mexican and Canadian governments are shadows of their former selves. New England, California, Texas, and Illinois now vie for influence on the American continent while predatory empires in the Old World extend their tentacles back to territory formerly guarded by the Monroe Doctrine. Hamilton’s and Lincoln’s deepest fears have come true.

You are the chief economic advisor to Governor Alexander Pinto of California, now one of the most powerful figures in the New World. Your task is to advise him on the proper course to navigate through these tumultuous times.

There are three main imperatives for the government of the new Republic of California- maintain territorial integrity, maintain political autonomy, and ensure a high standard of living for the 50 million Californians living within the state’s borders. A secure, unified, independent, prosperous California capable of defending and asserting itself in a dangerous world is the goal. Getting there- and keeping us there- will not be easy. These are strategic goals few countries have ever managed to fully meet, and California has no history of accomplishing them on its own. We need strategists, and we need them fast.

There are two main baskets of imperatives that will inform strategy moving forward: Geopolitics, and Strategic Economics. They are interrelated, but distinct enough to be examined separately.

The Geopolitics of California

In order to maintain territorial integrity, political autonomy, and a high standard of living, the Californian state must maintain secure borders and buffer zones, command resources capable of supplying a decent military, and control the resources necessary to support a mass middle class. To do this, we must identify the core of what must be defended, and expand outward from there.

The Los Angeles Basin and the San Francisco Bay Area form the population centers and economic hubs of California. These two regions are California’s geopolitical cores- they must be defended at all costs. It’s unwieldy for a nation to have two separate geopolitical cores- for one thing, it creates rival power centers that might sew internal dissension- but it’s the fundamental reality of Californian geopolitics. If ever both came under severe threat, the Californian government would have to choose which to defend more fiercely, and in which to invest more resources. That choice would be contingent on which was more strategically relevant- a judgment which could go either way at this point. Additionally, should internal dissension ever threaten to split California along a North-South axis, the whole project would be finished. Therefore, it is imperative for the government to solidify the bonds between the L.A. Basin and the Bay Area so far as possible, to quell internal conflict.

Aside from beefing up both cores and tightening the bonds between them, Californian strategists need to consider food, water, and energy. California needs a secure water source, and the current use of Sierran rivers is not sufficient. Absent desalination, the two closest reliable water sources are the Colorado and Columbia Rivers, both of which are far removed from California’s population centers. But they would have to be secured, somehow. As for food, the Central Valley is capable of feeding California’s 50 millions with extra for export. It must be defended, too. And if California is unable to make renewable energy work and unwilling to build a fleet of nuclear plants, it still has enough natural gas and oil in the Monterey Shale and off the coast to fulfill its needs for decades. These areas must be defended, too.

So out from the inner cores, there is an outer core region crucial to California’s autonomy- the region stretching from the Columbia River in the North to the Colorado River in the East, to the Central Valley and the Gold Coast in the West. These are all strategically significant, though less so than the inner cores.

To defend all this, two perimeters must be made- one specifically to defend the LA Basin-Bay Area axis, and one to defend the resources and hinterlands securing that axis. Two additional perimeters beyond those must be made- a naval perimeter to protect the coast from naval raids and invasions, and an additional forward perimeter in the Rocky Mountains from Mexico to Canada to serve as a first line of defense against Texas, the Midwest, and the National Bloc.

The primary perimeter that must be defended stretches in an arc from the Siskiyou Mountains around Mount Shasta down the Sierra Nevada Chain to San Diego. It includes coastal fortifications and naval defense. Should the other perimeters be penetrated by invading forces, these are the geopolitical barriers that must be defended at all costs to preclude an invasion of the homeland.

The secondary perimeter stretches roughly from Mount Rainier in the North, South through the Great Basin, and into the Rockies of Arizona. This perimeter defends the lengths of the Columbia and Colorado Rivers significant to Californian water needs.

The naval perimeter would necessarily be far more extensive. California would have to extend a naval presence North at least to Puget Sound and South at least to the Panama Canal, to preclude those harbors from being used as basing areas against the Californian homeland. And the naval perimeter would most likely have to extend West into the Pacific all the way to Hawaii, to deny that strategic island chain to any potential aggressors. This would grant California de facto command of the Northeastern Pacific Ocean, a feat of great magnitude. It would allow the California coastline several layers of defense against raids.

The final continental perimeter would start at the Front Range of the Rocky Mountains and extend North to the Canadian Rockies and South to the mountains of Mexico. This would be primarily an early warning system, a continental first line of defense. It wouldn’t have to be heavily defended, but it would still need to be stocked.

All four of these perimeters would need to be secured fortified, manned, and supplied in varying degrees, particularly the secondary continental perimeter in the middle of the Rocky Mountains and the naval perimeter in the Pacific Ocean. This feat would require massive and sophisticated land, naval, and diplomatic capabilities. The borders could either be physically fortified and staffed with Californian troops, or treaties could be made with smaller polities like the city-state of Las Vegas or the State of Washington. Ports and fueling stations would have to be established across the Pacific. It’s probably best to have a combination of diplomatic and military levers to secure each line of defense, to maximize their security.

And naturally, this strategic endeavor would require California to marshal immense resources to build and maintain the weapons, train and feed the troops and diplomats, and generally supply the strategic effort long into the future. That means that California’s domestic economic policy cannot be based on a Hayekian respect for liberty or a Keynesian passion for stability- it rather must be guided with California’s strategic requirements and imperatives in mind. The chief economic advisor to the Governor is less a Treasury Secretary and more a Quartermaster. His trade is not simply economics- it is Strategic Economics.

The Strategic Economics of California 

In order to meet its geopolitical imperatives, California should examine how the United States achieved its geopolitical imperatives in the Civil War, the First and Second World Wars, and the Cold War. It will find that in each case, the United States government marshaled the resources of the economy to the strategic effort and the war effort, through Hamiltonian means. Massive infrastructure projects, government partnerships with key industries, technological innovation, stable central finance, and targeted education helped turn the American economy into a sort of “Forge of the Republic,” capable of supplying American forces in the field for years at a time. This, and not any particular military genius, is what led the United States to victory over its foes in every case. As Omar Bradley had it, the professionals were thinking logistics while the amateurs were thinking tactics.

So what does California need to do to supply its forces in this terrifying future?

After the force estimates and strategic requirements have been established, no time should be lost in maximizing California’s productivity through strategic investments and the fostering of a better business climate. Key resources and assets should be identified. Goals should be set, and economic strategy should be carried out with military-political strategy in mind.

So let’s look at California’s economic assets.

First off, the geopolitical cores- Los Angeles and the Bay Area. These are massive economic hubs with respectable industries. Los Angeles is a hub for shipping, heavy manufacturing, and aerospace, and may soon possibly be a major energy producer. The Bay Area is a hub for education, information technology and cybersecurity, medicine, and biotechnology. Both are major financial centers. And both have elements of the other’s economy- there is major shipping in the Bay Area, and the LA Area has its own share of tech companies. These industries should be supported- the government should partner with them to accomplish key technological and production goals, like complete cybersecurity, a sizable navy, and next-generation energy technology. The regulatory and tax climate should be relaxed enough to allow them to attain their full effectiveness. It is these industries that will drive the Californian economy and support the Californian strategic effort. But the resources that fuel them must come from somewhere.

In particular, the populations of the Bay Area and Los Angeles must be fed adequately. This can be done using the farmland of the Central Valley, but that should be augmented by technology and improved techniques as much as is feasible. Industrial agriculture and GMO’s can potentially triple the food yield of the Central Valley, and because of the sheer possibility of crisis, we should make sure that California can produce more than enough food to feed itself.

Farms and people need water, and as has been noted, the rivers of the Valley and the Sierras are insufficient to water all of California’s agricultural and human needs. Having secured the Columbia and Colorado Rivers, California should build new pipeline networks to deliver their water to the homeland. But there is another option that can potentially eliminate the state’s reliance on outside water sources, and help it consolidate its resources over a smaller geographic area. California should build a desalination plant fleet along the Pacific Coast, watering its citizens and farms using desalinated seawater rather than river water. The ocean will never run out of water, and using it as a source will enable the state to consolidate its resources.

But desalination, as well as intensive agriculture, requires power, as do all the strategic industries based in the hubs and as does the well-being of a mass middle class. Power must be plentiful and cheaply available, and shortages are intolerable. Renewable energy from solar and wind farms aren’t going to serve our purposes, and our oil and natural gas reserves will all run out someday. The state should invest in the construction of a fleet of nuclear plants, which can provide cheap and plentiful power veritably forever. It would be an expensive upfront cost, but it would truly make California energy-secure and serve our strategic interests.

Finally, California is a state that has been blessed with significant reserves of natural resources, from soil to water to minerals to timber fossil fuels to fish to everything in between. Uninhibited exploitation will waste these and render them useless to the strategic effort. A conservation regime ought to be established, and the resources protected by the state. Private ownership of certain resources, particularly forests and fisheries, may lead to better conservation practice if the right incentives are put in place. Overall, public-private partnership is the best way to manage California’s resources.

There are five general baskets of Hamiltonian economic policies California should follow to achieve these goals, alongside basic institutional reform to make the state government leaner and more solvent than it has been in generations.

First off, massive infrastructure funding. Infrastructure like improved highways and railroads and ports, water pipelines, nuclear and desalination plants, and better internet access can smooth the flow of people, ideas, and goods, while simultaneously uniting the disparate interests and identities of Californians from various regions. A significant section of the state budget should be set aside for this investment, and a state strategic infrastructure board should be convened, probably in tandem with economic and military planners.

Second off, public-private partnerships with key strategic industries. California’s government should target industries like the aerospace, tech, and heavy manufacturing industries that will be necessary for supplying the strategic effort, and work with them towards key strategic goals. These goals can include certain production quotas, new technologies, and the application of current technologies to particular problems. The government should make life easy for these industries and companies, too, through favorable tax and regulatory policy, easy access to grants and loans, and acting as a customer for companies whose products have an otherwise low demand in the private sector. This is Hamiltonianism at its finest.

Thirdly, massive technological innovation funding. California contains at least five major research universities- Cal Tech, UCLA, USC, Stanford, and Berkeley- and several major research labs, including the Lawrence Livermore Labs and the Jet Propulsion Laboratory. It also has several military testing grounds out in the Mojave Desert. These assets should be used to their fullest extent, and Hamiltonian public-private partnerships and innovation spending should be used to attain key technological goals. Some of these goals might include complete cybersecurity, A2/AD missile technology, advanced nuclear power, better medicine, automation, advanced GMO’s, advanced desalination, and more. The fact of the matter is, we don’t know what technologies are going to change the face of the game, but the California government indeed has a crucial role in finding them. This is how we keep our edge over our rivals.

Fourth, stable central finance. The state of California should establish a State Bank and centrally regulate finance in order to keep the state’s credit high to encourage investment, and to keep the state markets stable enough to be predictable.

Fifth, targeted education. The high-skilled industries that technological innovation abets will require a new class of highly-skilled workers, and California’s public-private education system- from K-12 through community college and university through graduate programs- should focus on training the workers and thinkers we need to man this economy, which will be diverse enough that there can be any number of specialists across various fields. We need to increase our education funding and ensure that it is spent wisely and strategically, in the interest of crafting the best citizens, making the most opportunities for students to pursue useful careers they love, and strengthening the complex economy of the state.

Finally, there’s a host of housekeeping duties. California has been notoriously bad at keeping itself in order, and it reflects in public policies that erode order and waste money. The state debt should be paid off, though it might be used as a source of growth in true Hamiltonian fashion. Pensions and entitlements must be reformed and made sustainable. The tax and regulatory climate needs to be more conducive to innovation and entrepreneurship. Immigration policy needs to include secure borders, tough laws, and generous openings- especially given that citizens of other states and countries may pour into California fleeing chaos and seeking opportunity. And the state’s dysfunctional constitution is long overdue for a rehashing and reformation. Just as good infrastructure is conducive to fluidity, so are good institutions.

This raft of Hamiltonian economic policies is the best way for California to make use of its excellent geopolitical situation and natural resources. But incidentally, it is also this series of policies that will provide the most opportunities for upward mobility and middle-class life for Californians 50 million citizens and the millions more outsiders who will undoubtedly join them. A look at the American economy after any major power war or period of strategic competition, when the United States practiced strategic economic policies similar to these, reveals the mass economic growth and opportunity that accompanies strategic economics.

Now clearly, the United States of America is not about to fall apart, California is not about to be thrust into a life-and-death struggle for survival, and Hamiltonian economic policies will not be the only logical way forward. But even so, California should implement Hamiltonian policies and act as though it were about to enter a period of intense strategic competition, because by preparing itself for war, a state ensures itself a better peace.