The Green Behind California’s Greens
A handful of superrich donors have created the illusion of a grassroots environmental movement.
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California’s draconian global-warming laws, mandating that the state get one-third of its power from renewable sources by 2020, are already driving energy costs sky-high.
In the fall of 2010, an army of California groups—including blue-collar unions, small businesses, manufacturers, and big energy companies—tried to persuade voters to suspend the state’s rigorous anti-global-warming law, which mandates a rollback of greenhouse-gas emissions to 1990 levels. The advocates for delaying the law argued that, with an unemployment rate of 12.4 percent, California needed to focus on creating jobs and couldn’t afford costly new measures to slash carbon emissions, such as requiring utilities to generate power from renewable sources. But what proponents of the jobs measure, known as Proposition 23, didn’t count on was the financial might of California’s environmentalists. In just months, greens raised three times as much money as the initiative’s supporters. As the Los Angeles Times put it, the environmentalists then “steamrolled” their foes with a $30 million campaign that deployed television ads featuring Hollywood celebrities, millions of mailings, and hundreds of thousands of robo-calls and text messages. One environmentalist described the coalition that crushed Prop. 23—comprising entertainers, hedge-fund honchos, technology billionaires, and the many organizations that they back—as “the new face of the environmental movement.” It wasn’t the face of the movement, though, but its pocketbook that won the battle.
Californians have long had a green reputation. But for many years, interest in the environment expressed itself in modest programs of nature conservation, or in efforts to mitigate pollution problems such as the smog that once choked the state’s cities. Even as they gained political power over the last 15 years or so, however, California greens have moved steadily leftward—touting, for example, zero-growth initiatives that make it crazily expensive to create jobs, housing, and infrastructure. Credit, or blame, for this development should go to a small circle of superrich Californians, who made their fortunes chiefly in so-called clean industries like technology and finance, and who have poured vast sums of money into the green cause. These wealthy individuals bankroll hundreds of environmental organizations and spend massively to pass green ballot initiatives and elect green-friendly pols. So influential are these West Coast players that a recent report from Columbia University’s Journalism School—otherwise sympathetic to environmentalism—described the concentration of green power as “troubling.” Even more disconcerting, these true believers also seem intent on promoting their aggressive form of environmentalism around the country. Call it the Californication of the green movement.
California’s concern for nature has moved far from its origins. Back in the late nineteenth and early twentieth century, the state’s extraordinary beauty helped give rise to the antecedents of modern environmentalism. John Muir embodied the conservationist and preservationist spirit of the era. A Scottish immigrant with a deep love for the outdoors, Muir helped to get Congress in 1890 to establish Yosemite National Park in the central eastern part of the state and in 1892 cofounded the Sierra Club as a means for Californians to enjoy—and protect—the magnificent Sierra Nevada mountain range. Several decades later, a young San Francisco resident, Ansel Adams, discovered Yosemite, joined the Sierra Club, and, with a Brownie camera that his father had given him, began photographing the California landscape. Adams’s romantic vistas captured mid-twentieth-century America’s imagination, and he used his artistic influence to reinforce Muir’s appeals to preserve Yosemite.
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Early California environmentalism focused on conserving the state’s natural beauty, as captured by this Ansel Adams photograph of Yosemite National Park . . .
Struggles over the protection of undeveloped parts of California characterized the green movement for decades, until a new type of environmentalism began to emerge in the 1960s, amid growing concerns about the impact of pollution on air, water, and soil. The recognition that the burning of leaded gasoline generated urban smog prompted Californians—living in a state with the nation’s greatest number of automobiles—to lobby for better air quality. In 1967, Republican governor Ronald Reagan signed a law setting up an agency to pursue that end—the first such state environmental body in the country.
Drawing on new intellectual currents, Reagan’s successor, Democrat Jerry Brown, took office in 1975 proselytizing for a more radical form of environmentalism. In 1973, the Norwegian philosopher Arne Næss had characterized conservation programs and efforts to limit the harmful effects of pollution as mere “shallow ecology.” Næss instead propounded a sweeping “deep ecology,” which argued that every living thing had a right to its existence and which sought sharply to constrain human activity. That same year, the economist E. F. Schumacher authored the bestseller Small Is Beautiful, a book promoting a “sustainable economics” based on limits to growth. Brown’s governing agenda showed the influence of these ideas, including a reduced pace of government-sponsored infrastructure construction and other development. Some of the consequences of Brown’s left-green enthusiasms proved too much for Californians to swallow, however. In 1980, a Mediterranean fruit-fly infestation threatened the state’s crops, but the governor hesitated to attack the outbreak with pesticides. By the time Brown ordered spraying, the pest had spread so extensively that buyers were threatening to boycott the state’s produce. Brown’s popularity plummeted, short-circuiting his bid to win a U.S. Senate seat in 1982. For the next 16 years, his successors—Republicans George Deukmejian and Pete Wilson—often used their office to check the power of environmentalists, including those working for the government’s environmental bureaucracies, which had proliferated during the 1970s.
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. . . but by the 1970s, in his first tenure as governor, Jerry Brown was pushing a more radical brand of environmentalism.
Despite forcing this temporary pushback, California’s greens would be emboldened by mutations in the state’s economy. For decades, two largely blue-collar industries—manufacturing and agriculture—had driven the state’s economic growth. But in the early 1960s, advances in semiconductors transformed the area around Stanford University and San Jose—once known as the Valley of the Heart’s Delight because of its agricultural riches—into the center of American technological innovation: Silicon Valley. With this dramatic shift came staggering affluence, not only from the technology being invented but also from burgeoning financial services, which took off in the Valley and nearby San Francisco to help fund the tech boom. A 2013 census report found that the greater San Jose/Santa Clara area, the heart of Silicon Valley, had the nation’s second-highest concentration of wealth, behind only Connecticut’s suburban bedroom communities, filled with high-paid Wall Streeters. The San Francisco peninsula, home to many working in the Valley’s tech industries, ranked as America’s fourth-wealthiest metro area.
The riches of two Silicon Valley pioneers, David Packard and William Hewlett, have flowed heavily into California environmental causes—though not because the men themselves directed much money that way. The Stanford engineering students famously started Hewlett-Packard in 1939 out of a Palo Alto garage, with an initial investment of just $538. By the time Packard resigned as chairman of the board in 1993, ending active management by either of the cofounders, their respective stock holdings were worth billions. The pair poured lots of that money into philanthropy. Packard, who served as Richard Nixon’s deputy secretary of defense, spent philanthropic dollars on scientific fellowships, children’s health care, and family and youth problems. His giving also supported conservative policy nonprofits, including the American Enterprise Institute. When he died in 1996, the Packard Foundation received some $4 billion of his estate; it now has $6 billion in assets. Hewlett’s charitable dollars helped pay for scientific research, efforts to solve urban woes, and the arts. His modest contributions to the environmental cause focused mostly on the philanthropic work of his wife, Flora, who had spent some of her youth in the Sierra Nevada and wanted to protect the area’s beauty. Hewlett died in 2001; today, his foundation’s assets approach $8 billion.
Since the deaths of HP’s cofounders, their heirs have pushed the two foundations’ philanthropy ever-leftward, and activist environmentalism is a prime beneficiary. Under the direction of Packard’s three daughters, the conservative Republican’s philanthropic wealth has gone to the National Abortion Rights Action League Foundation, the Feminist Majority Foundation, and the very green Earth Action Network. This liberal giving has prompted Packard’s son, David, whose political views are closer to his father’s, to withdraw his money from the foundation and form his own nonprofit, which gives to more traditional and nonpolitical causes.
In a signature moment in green giving, the Packard and Hewlett Foundations decided in 2007 to boost their spending on climate-change issues, funneling the money into a new, San Francisco–based nonprofit, ClimateWorks, led initially by the former head of environmental programs at Hewlett. The Hewlett Foundation, according to the Columbia Journalism School report, agreed to put $500 million into ClimateWorks, with the Packard Foundation adding approximately $390 million since 2008. Two other major California funders have joined Packard and Hewlett in the climate-change cause: the Energy Foundation, a San Francisco nonprofit that bundles smaller contributions into large environmental grants; and the San Francisco–based Sea Change Foundation, created by Nathaniel Simons, son of the enormously successful New York hedge-fund manager Jim Simons of Renaissance Technologies. The younger Simons operates his own fund, Meritage, based in San Francisco, and has been described by Inside Philanthropy as the “quiet hedge fund manager engaged in massive climate giving.”
Generous funders of the California environmental movement include other wealthy Silicon Valley techno-environmentalists and San Francisco hedge-fund greens. Intel Corporation cofounder Gordon Moore and his wife set up the Palo Alto–based Moore Foundation in 2000, staking it with $5 billion, largely accumulated through Intel stock. Moore initially targeted some of his green philanthropy at conservation, an interest he had developed as a recreational fisherman. But he, too, has veered toward antigrowth environmentalism, channeling huge amounts of money to nonprofits and trusts so that they can buy up land in Northern California and freeze future development. Moore has also spent money on green politics, including $1 million on the 2010 campaign to thwart Prop. 23. Just minutes from Moore’s foundation in Palo Alto is the charity founded by Google executive Eric Schmidt and his wife, Wendy: the $300 million Schmidt Foundation. The Schmidts have been large funders of major California environmentalist players like the Energy Foundation, but through their 11th Hour project, they also back smaller local environmental efforts, including anti-fracking research and campaigns to ban or restrict oil and gas exploration. The Schmidts gave half a million dollars to defeat Prop. 23.
The most visible of California’s rich environmentalists is Tom Steyer, who led the anti–Prop. 23 effort and seeded it with $5 million of his own money. Steyer made headlines in 2014 by pledging to invest $100 million in congressional campaigns in seven states, seeking to influence federal climate policy. Operating out of his 1,800-acre ranch in Pescadero, he and his wife have also pumped money into the TomKat Charitable Trust, based in San Francisco, which focuses on giving to “organizations that envision a world with climate stability, a healthy and just food system, and broad prosperity.”
Getting a clear view on the giving by these nonprofits, and by the individuals behind them, isn’t easy. For instance, Steyer made a good deal of his fortune as a hedge-fund chief investing in fossil fuels, the spread of which he now so opposes. Farallon Capital, where Steyer served as CEO and where he still has holdings, has invested heavily in a company that is building a competitor to the proposed Keystone XL pipeline—which Steyer is spending money to stop on environmental grounds. These investments, as the New York Times put it, “cloud” Steyer’s environmentalist reputation. Meantime, the Simonses’ Sea Change Foundation receives substantial sums from a Bermuda entity, Klein Ltd., with undisclosed sources of revenue. Indeed, there’s little public information about Sea Change. The nonprofit’s entire online presence, described by Inside Philanthropy as “quite possibly the least informative [charitable organization] website,” is a single page announcing that it does not accept unsolicited grant requests. One reason for the secrecy may be that Klein Ltd. shares an address with a Bermuda law firm that represents investors in Russian energy companies—prompting reports that some of the money that Sea Change showers on environmental groups in the U.S. may come from overseas oil interests, eager to kill fracking.
Whatever the source and purpose of the money, much of the giving in the California environmental movement ultimately seems to involve this handful of funders, contributing to the perception, even within environmentalist circles, that rich elites run the show. To combat the elitism label, the foundations devote a portion of their wealth to sustain hundreds of small, community-based organizations throughout the state. The Schmidt Foundation’s 11th Hour project, for example, has made hundreds of smaller grants to local groups working to stir green passion among clergy, journalists, small farmers, college students, and other constituencies. One such nonprofit is the San Francisco–based, clergy-led Interfaith Power and Light, which sponsors “preach-ins” about climate change. The 14-acre Pie Ranch in Pescadero, which educates high school students in the Bay Area in the “economic, social, environmental and political implications” of food, is another recipient of Schmidt money. Others include Oakland’s CoFED, which helps students create nonprofit college food cooperatives; and Physicians for Social Responsibility, who aim to “educate communities, the general public and policy makers on the importance of California’s climate laws.”
Some of this local giving bolsters green organizations that claim to represent constituencies not typically associated with environmentalism, helping to counter the criticism that the movement is made up mainly of “aging, white Americans,” as the Los Angeles Times put it. Schmidt money backs Los Angeles’s Communities for a Better Environment, which tries to mobilize “people of color—African-American, Latino, Filipino” to lobby for curbs on greenhouse gases. The Packard Foundation and Schmidt support Oakland’s People’s Grocery, which describes itself as “a leader in the evolving food justice movement”—that is, food produced in “sustainable” ways—in inner cities. Schmidt also funds Green for All, the Oakland-based nonprofit founded by former Obama environmental advisor Van Jones, “which works to make sure people of color have a place and a voice in the climate movement.” The Hewlett Foundation has given nearly $2 million to the BlueGreen Alliance, a nonprofit with offices in San Francisco and Minneapolis that tries to bring blue-collar private-worker unions into the green movement.
Generating enthusiasm from these constituencies for California’s brand of environmentalism is a challenge. When the BlueGreen Alliance announced its opposition to the Keystone XL pipeline, the head of the Laborers’ International Union of North America blasted it for trying to deep-six a project that promised to create thousands of jobs. (See “State of Disunion,” Winter 2015.) The union bolted the alliance. Similarly, last summer, 16 California Democratic legislators from areas of the state with high unemployment tried but failed to persuade party leaders to suspend portions of the state’s anti-global-warming law. Many of the legislators, two-thirds of whom were minorities, hailed from districts representing struggling inland communities like Fresno, San Bernardino, and Modesto, or from troubled minority neighborhoods in Los Angeles and other cities. Their letter to the Democratic leadership in the assembly warned that the cap-and-trade requirements of the anti-global-warming law are “weakening the economy just as California is recovering from the last recession, and hurting the most vulnerable members of our communities.”
The California environmental movement’s primary work isn’t grassroots organizing and proselytizing, however: it’s the lobbying, campaigning, and legal advocacy of behemoths like the Sierra Club, the Environmental Defense Fund (EDF), and Earthjustice—a $40 million public-interest law firm that calls itself “the Earth’s lawyer.” These giants derive much of their considerable funding from superrich donors. Since 2010, the Sierra Club has pulled in at least $5 million from the Sea Change Foundation, about $4 million from the Energy Foundation, $2.4 million from the Hewlett Foundation, and another $500,000 from Schmidt. That kind of money attracts environmental advocates from elsewhere in the country, too. Over the last four years, the Natural Resources Defense Council (NRDC), headquartered in New York, received $1.5 million from the Schmidt Foundation, $2.42 million from the Hewlett Foundation, $4 million from Sea Change, and more than $10 million from the Energy Foundation. The EDF, also New York–based, got $600,000 from Hewlett, $1.1 million from Sea Change, and nearly $2.5 million from the Energy Foundation over that same period. No surprise that both the NRDC and the EDF have major operations in California these days.
The green giants have increasingly sought to impose expansive environmental policies through the courts. In this respect, they’ve learned from liberal judicial activists, who, failing to win their goals legislatively, have sought redress through the courts for everything from more public school funding to greater public housing subsidies. (See “Brennan’s Revenge,” Winter 2014.) In fact, recent green policymaking in California often derives not from popular votes or legislative actions but from judicial rulings. Earthjustice has been a major promoter of this trend. The group serves as legal counsel to several well-funded California environmentalist organizations litigating to limit new development, halt the expansion of businesses, and force firms and individuals to spend additional millions on environmental permits and legal costs. Recent cases brought by Earthjustice include an attempt to force the Port of Long Beach to stop allowing coal exports from its facilities. California’s environmental lawyers now also regularly challenge contracts made by the state’s utilities for the purchase of fossil-fuel-generated electricity, contending that they should buy more energy from renewable resources. And green lawyers press California’s utilities regulators to strong-arm energy firms to invest more in renewable-energy infrastructure.
Perhaps no environmentalist legal gambit has had more profound consequences on Californians than the nearly decade-long court battle waged by the NRDC and Earthjustice to protect the delta smelt, a three-inch baitfish, under the Endangered Species Act. (See “California’s Water Wars,” Summer 2011.) The greens have long sought to curtail water transfers from northern reservoirs to other parts of the state, including Central Valley farms; such transfers, they believe, violate California’s natural order. Now the green lawyers charge that the water transfers have disrupted the smelt’s habitat, endangering the species. The delta smelt’s numbers have shrunk, but research published in 2010 by Patricia Gilbert of the University of Maryland Center for Environmental Science suggests that the fish’s decline is attributable to wastewater flowing into the Sacramento–San Joaquin Bay Delta. Nevertheless, courts have ordered reduced water flows, one consequence of which has been dramatically to worsen the effects of California’s three-year drought—forcing farmers to retire formerly productive and now-parched land, lay off workers, and spend heavily to pump water from deep in the ground. (See “The Scorching of California,” Winter 2015.) Recently, the Ninth Court of Appeals in San Francisco ruled that the lowly smelt deserves “the highest of priorities . . . even if it means the sacrifice of . . . many millions of dollars in public funds.” That ruling sums up the ethos of the environmentalists who’ve funded and fought this legal battle.
Green greenbacks are also remaking California’s politics. While the fight over Prop. 23 in 2010 may have displayed the “new face” of the environmental movement in the state, the battles over a pair of 2006 California initiatives revealed the massive resources that green donors can now wield politically. One campaign (successful) sought to defeat Proposition 90, an initiative that would have curtailed eminent domain—the taking of private property by California governments for public purposes. Environmental backers lined up against it because it limited the power of state bureaucracies like the California Coastal Commission to make demands on private property owners and enabled owners to sue for compensation when government rulings battered the value of their properties. To stop the initiative, California greens formed the Conservationists for Taxpayer Protection, who raised some $1.9 million, including donations from the California League of Conservation Voters, the NRDC, the Sierra Club, and the EDF.
That same election cycle, greens also tried (unsuccessfully) to win passage of Proposition 87, an initiative that would have slapped $4 billion in new taxes on energy companies in California and then invested the revenue in renewable-power projects. The force behind it was real-estate heir Stephen Bing, who used a nearly $600 million fortune to turn himself into a Hollywood film producer and a prominent giver to Democratic causes on the West Coast. For the Prop. 87 campaign, he spent nearly $50 million of his own money, the largest personal expenditure ever made on a California ballot measure. Other green donors kicked in $10 million, including Wendy Schmidt ($1 million) and Nathaniel Simons ($225,000). The oil industry countered with $94 million of its own spending, making Prop. 87 the costliest California initiative in history.
Green causes increasingly dominate California’s individual political races, too. Their takeover advanced decisively in 1996, when a green-activist group, Vote the Coast, targeted a handful of state assembly seats in wealthier coastal areas and helped get seven environmentally oriented Democratic candidates elected. That tipped the assembly to the Democrats and created an environmental caucus in the lower house.
The new assembly majority proceeded to fill the state’s environmental bureaucracies with left-environmentalists, making those bodies much more likely to side with greens against businesses and landowners in any disputes. “There is a pitched competition between California agencies for which is the most nonsensical in its implementation of over-reaching regulations,” public affairs consultant Laer Pearce observed last year. The California Air Resources Board, he noted, has “tried to ban black cars in the state in its fevered effort to save the world from global warming.” The California Energy Commission has outlawed large high-performance plasma televisions because they burn up too much energy. The Coastal Commission—originally created to oversee coastal development in California—has relentlessly extended its reach over the property of individuals and businesses, often refusing to let owners build or rebuild structures, and even objecting to the type of beach furniture that homeowners use. The commission’s radical character was captured in the title of a 2014 speech by one of its retiring Democratic-appointed commissioners: “In Defense of Unreasonableness—Saving the California Coast.”
“Unreasonable” is an apt description for how environmentalist groups approach California political races. Ventura County Star columnist Tim Herdt complained last year that greens were now “hugging a tree too hard” in choosing candidates to back. The League of Conservation Voters, Herdt pointed out, spent $50,000 in a 2014 primary in an overwhelmingly Democratic district simply to try to elect the candidate with the greenest of green records. Local office seekers in some coastal areas must run a gauntlet of well-funded environmentalists if they want to win. For incumbents, proving nature-friendly credentials becomes an ongoing challenge. “Candidates who filled out the Sierra Club’s and [California League of Conservation Voters’] questionnaires this spring faced a minefield of potential litmus tests. They were asked about fracking, climate change, clear-cutting, proposed tunnels to divert Sacramento River water, offshore oil drilling, CEQA [California Environmental Quality Act] reform, renewable energy mandates, a ban on plastic bags and more,” Herdt observed. Even Jerry Brown doesn’t pass muster any more. The Sierra Club refused to endorse anyone in the 2014 governor’s race, explaining that it had major differences on issues like fracking with Governor Brown, a onetime environmentalist darling.
California politics is likely to grow greener still. After spending millions across the country in the 2014 election cycle, Steyer plans to bring his environmentalist giving back to the Golden State. He also may be considering a run for office—probably the governorship—in 2018. If so, environmentalism will be the Number One theme of his self-funded campaign. “The fight for justice starts with climate,” he recently observed.
If the past is any guide, a Steyer governorship would be exceedingly costly to California businesses. In 2012, he spent $30 million of his own money on a successful initiative to hike taxes by $1 billion on out-of-state firms operating in California, with half of the revenues from the tax going to projects that promote conservation and renewable energy. California, burdened by high taxes and labyrinthine regulations, consistently ranks dead last as a place to do business in Chief Executive’s annual survey of company executives. Environmental policy plays a huge role in the difficulties of operating in the state, especially for blue-collar industries. A 2014 study by Pepperdine University’s Michael Shires found that, thanks in part to the costs of California’s global-warming law and other regulations, manufacturers in the state must pay 40 percent above the national average for electricity.
Small wonder that the recent U.S. manufacturing revival has largely bypassed the Golden State. Though the country has added 660,000 industrial jobs over the last half-decade, California has managed to create a meager 8,000 such positions during that period—a 0.6 percent rate of growth. By contrast, Texas has generated 72,000 new industrial jobs. “High energy costs now make it too easy for out-of-state companies to undercut California manufacturers, take away their customers and hurt jobs,” says Dorothy Rothrock, president of the California Manufacturers and Technology Association.
Even green firms are looking elsewhere. Be Green Packaging, a Santa Barbara recycling company, recently built a manufacturing plant in South Carolina; Biocentric Energy Holdings, a Santa Ana energy company, moved to Salt Lake City in 2011; and Bing Energy, a fuel-cell maker, relocated to Florida in 2011. “I just can’t imagine any corporation in their right mind would decide to set up in California today,” the company’s CFO said. (See “Cali to Business: Get Out!,” Autumn 2011.) And while the revival of tech firms in the last few years has produced lots of high-paid white-collar Silicon Valley jobs, tech companies are sending their industrial and customer-service work to less expensive locales. Intel, the Santa Clara business that Gordon Moore cofounded, built a $3 billion production facility in Arizona in 2008. Google has built its massive, energy-gobbling server farms outside California, including in cheaper Oregon. San Jose’s eBay has been adding work in Austin, Texas, since 2011, part of a plan to expand by 1,000 jobs there. In 2013, after years of manufacturing exclusively overseas, Cupertino-based Apple decided to build a new production facility—in Texas. Apple is also spending $2 billion to outfit a new data center in Mesa, outside Phoenix.
Having reshaped the Golden State, California’s greens are now financing the spread of the environmentalist gospel to other states and to Canada. In 2012, for instance, a group of green funders, powered by California money, helped push on to Michigan’s ballot the Michigan Renewable Energy Amendment, known as Proposal 3, the aim of which was to require that at least 25 percent of the state’s energy come from renewable sources by 2025. The face of Prop. 3 was a local group, Michigan Energy–Michigan Jobs, with a $4 million campaign purse, according to state campaign records. But most of that money ($3.3 million) came from a San Francisco entity, the Green Tech Action Fund, which, in turn, receives most of its funding from its Frisco neighbor, the giant Energy Foundation—which gets much of its money from Sea Change, the Hewlett and Packard Foundations, and ClimateWorks. Notwithstanding the huge influx of outside money, Prop. 3 went down to defeat, earning just 38 percent of the Michigan vote.
Undeterred, California’s environmentalist funders have also helped finance initiatives in Colorado to ban fracking and a failed Nebraska effort to stop the Keystone XL pipeline. The Hewlett Foundation, Sea Change, and another Bay Area group, the Tides Foundation, have been behind a decades-long effort to stymie the development of vast oil reserves in Alberta, Canada.
Americans in places like Michigan and Nebraska have yet to embrace the left-environmentalism preached by the green activists—the antigrowth, frequently antihuman notions of deep ecology. But California is different. It may be the first state on the way to embracing deep ecology as public policy—thanks to the power of its green movement, fueled by billions of dollars earned in America’s pro-growth free markets.
Steven Malanga is the senior editor of City Journal and the author of Shakedown: The Continuing Conspiracy Against the American Taxpayer.