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The California State Capitol building seen on Wednesday June 10, 2009, in Sacramento, Calif. (Anda Chu/Staff)

California decision-makers must begin to think far more strategically and grasp the significance of developing economic and social trends or face losing a huge portion of the state's middle-class residents within the next two decades.

That was the harsh-but-important message delivered to members of the state Senate earlier this week by an economist who studies the long-term effects of public decision-making.

It is a message that is absolutely vital. The trick, of course, is to get elected officials who have their terms limited to think beyond the next election cycle.

California Lutheran University economist Bill Watkins dutifully pointed out earlier this week that the state's once-explosive growth already has dwindled to a veritable trickle. In fact, he expects the state's population to drop in the next 10 to 20 years because of out-migration and a drop in the overall birthrate. Perhaps the most disturbing part of his analysis is that the losses will be disproportionately among middle-class families who can find better opportunities in other places.

"We're losing the economic heart of our state," Watkins told the Senate.

The inevitable outcome of such a trend is a state of both rich and poor, and little or no middle class. To see how well that economic model works, one need only study about 40 Third World countries around the globe.


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But, as we said, members of the Legislature are not exactly prone to considering things beyond their own ideological talking points. Their idea of long-term thinking is deciding which office to run for after they are termed out of their current post.

If Watkins' analysis wasn't scary enough, he also offered a thunderbolt to the Bay Area. His analysis notes that even the high-tech sector, which has been the Bay Area's economic engine for decades, could face dramatic challenges and changes sooner rather later.

He pointed out that consumer technology is changing from computers with complex software and moving toward smartphones and tablets with cheap apps, which can be produced from almost anywhere.

Of course no discussion of the state's future can avoid its horribly flawed tax structure that helps create boom-and-bust budgets, its mountain of unsustainable debt and its dreadful business climate.

These pages have spent much time and energy hammering on those themes, but it is clear that without significant reform in them the state's economic forecast is shaky, at best.

Watkins said the state must create what he calls "an opportunity economy." He said the Legislature must make it easier to form and expand a business by reducing the amount of regulatory red tape such enterprises currently encounter.

He also argues that the state should actually encourage more immigration from other countries because he says immigrants found job-creating new businesses at a faster rate than native-born Californians.

But Watkins' overall message was that whatever steps the Legislature takes it must carefully examine the long-term implications of that action. It is a message we can wholeheartedly support and we will offer our strong support to any elected official -- regardless of party -- who works to make such reform happen.