California

April 21, 2011: IN THE SWELTERING June of 1852, two years after California became a state and at the height of the Gold Rush, August Schuckman “came to the first sand desert” on the trail to the land of his dreams. It stretched for 41 miles. His wagon trek entered “at night and rode 19 hours in it”, Schuckman recorded in his journal. By the time they reached the next desert, the oxen died of thirst. “Thousands of cows, horses and mules were lying about dead,” Schuckman wrote. “The discarded wagons by the hundreds were driven together and burned,” states an article in The Economist.

In his matter-of-fact tone, Schuckman, a German immigrant, described what many of the pioneers endured as they pursued the first incarnation of the California dream, a dream of El Dorado, of a Golden State. Hardship and risk-taking, hopes and crushing disappointments have been part of Californian lives ever since, through booms and busts, euphorias and depressions.

Indeed Mr Schuckman, one of hundreds of thousands who came to California during the Gold Rush, was so typical that he might have remained anonymous, had he not sired an impressive line of Californians. One of his grandsons was Pat Brown, governor from 1959 to 1967. Brown played a big part in defining that generation’s California dream—a vision of prosperous middle-class living—by building many of the freeways and aqueducts that today connect and irrigate the vast and dry state, and by turning its public universities into some of the world’s best factories for talent and innovation.

The immediate cause for this cataclysm was the recession. The housing bust and foreclosure crisis struck hardest in the “sand states” of the south-west—California, Nevada and Arizona—and in Florida. At 12.2% as of February, California now has the second-highest unemployment rate (after Nevada) of all American states, compared with a national figure of 8.8% in March.

At first blush, the current crisis might appear to be just another iteration in the endless Californian story of boom and bust. To count just the gyrations since Mr Brown’s previous governorship, there was the defence boom of the 1980s that made swathes of southern California (an aerospace centre at the time) prosper, which turned into a bust (the “peace dividend”) in the early 1990s from which the region never fully recovered. There followed the dotcom boom in the late 1990s, which promised to make silicon the new gold in the San Francisco Bay Area. It became the dotcom bust after 2000. Then came housing.

Culturally, Californians seem to accept such feast-or-famine living more than others. Their northern neighbours like to remind visitors of the famous fork (somewhere in today’s Idaho) in the Oregon Trail that led the wagon trains to the Pacific coast. The builders and settlers, goes the story, followed the Snake and Columbia rivers and became Oregonians and Washingtonians. The gamblers and risk-takers turned south on the California Trail over the Sierra Nevada, ready to strike it big or not at all.

Fortunately, such reform has now become not only possible but likely. For the state retains a potential unsurpassed elsewhere. It has the most diverse population and economy in America. From Stanford and Apple to Hollywood, it is a magnet for talent, which is why venture capitalists invest about as much money in California as in all other states combined. Californians still have the imagination and frontier spirit that August Schuckman once had. And they know that sometimes one must burn the wagons to keep dreams alive.

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