Something nobody else seems to think about...
In short, the economy created by the new progressives can pay off only those at the peak of the employment pyramid — top researchers, CEOs, entertainment honchos, highly skilled engineers and programmers. As a result, California suffers from an increasingly bifurcated social structure.

This is not just a matter of politics, public v. private sector, and the competing vested interests in California. Those socioeconomic factors are all important, but the elephant in the room is that a very high proportion of our wealth derives from computers and software. We have automated away a great deal of what the labor force used to do, so successfully that many industries have pushed unit labor costs down to the level where only developing nations can compete.

Outsourcing is generally blamed for the decline in US manufacturing jobs, but I think that's a symptom rather than a cause. If there wasn't a large pool of cheap labor in Asia, then we'd just be seeing more robots in the US, as is the case in Japan to a large extent.

Of course the internet has brought all kinds of wonderful new opportunities. But because the key economic benefits are disintermediation and delocalization, the rewards are distributed very differently. Take Amazon - hugely successful company, clear benefit to the consumer, and a good advert for capitalism generally. Jobs at Amazon: warehouse drone, middle manager, engineer, senior manager. I simplify, of course, but what do you think are the chances for a warehouse drone to 'learn the business' and rise up the ranks? Virtually zero unless they study at home, because the warehouse job consists of picking up order slips, scanning things taken off shelves, and putting them in boxes. The inventory management, purchasing, accounting, and analysis aspects are entirely automated, so you're not going to pick up many skills on the job.

This isn't just an internet problem. In my supermarket the checkout is not staffed mainly by people whose job is recite scripts written by the marketing department and to make sure I'm not stealing anything. They wave barcoded products over a laser scanner and announce a total. All the price-checking, calculation and cash dispensing is carried out by a computer, and the job doesn't even require accurate data entry. The job requires so little that it doesn't pay much, and there's no real room for improvement, skill development, or competition. There's no opportunity to become the most efficient and accurate checkout operator; and it demands so little competence that getting fired is nearly impossible. So if you're tired of stacking shelves, don't hold your breath waiting for a chance to try life as a checkout clerk. You could occupy your thoughts with examining what goods sell best in which shelf positions, but display management is largely automated these days as well. You just scan the wholesale box and your scanning wand tells you which shelf section to put the inventory on today.

Work as a mechanic? Well, a lot of modern engines are just black boxes now, and your job is about running diagnostics and then either resetting the firmware or ordering whatever the manufacturer's website says you need. Clerical work/bookkeeping? Greatly reduced - spreadsheets take care of all the arithmetic, and even the data entry is increasingly automated. As we all know, writing is a good deal easier with a computer than a typewriter, and there's been a corresponding decline in the importance of writing ability, accuracy in spelling and grammar, and handwriting. For many people now, the most complex tasks they perform at home are operating the microwave and assembling Ikea furniture. Earning a living now requires either long hours in low paying jobs or long hours of study and professional commitment for well-paying ones, so for a lot of people housework and DIY are necessities to be minimized - there isn't the same time or economic freedom to develop ancillary skills for their own sake.

So it's not just how we divide the income or the taxes. It's how we divide the work too.