Ep 116: California — the Next Revolution? A Conversation with Steve Hilton
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We are massively over-regulated. It's crushing the spirit of entrepreneurialism and innovation and all that California represents from small businesses. I hear all the time, it's just such a hassle and a struggle.

to do anything. It feels like you're guilty until proven innocent if you're an employer here right now. We're now in the 23rd year of Gavin Newsom's 10-year plan to end homelessness in San Francisco. $700,000, $800,000, a million dollars now in San Francisco per unit. So often in government, you've got to follow the money. People who are doing the wrong thing actually get rewarded. I was born in the UK. Both my parents were Hungarian, left communism as refugees. I supported Brexit and Donald Trump. I was the first to call out the lockdown.

There's something about California that to me is very, very special. You're not leaving. You're staying here and fighting. Here we are, running for government.

We talk a lot about how broken California is. My friend Steve Hilton is trying to fix it. He's running for governor. Steve helped run the British government in the UK, came over here to California, became one of the top hosts on Fox News, millions of followers there, but he got tired of just talking about what was broken. He wanted to be a leader again. Now Steve's running for governor. He has a lot of opinions on policy. He has a lot of people excited about what he's doing. Let's hear from Steve. Really excited to have

Steve Hilton here with us today, candidate for governor for California officially now. Yes, exactly. You were a former Fox News host. I think most people know you from TV. You also helped advise David Cameron in the UK. You know, a lot of people know you from TV, but not everyone knows your parents actually fled communism in Hungary to go to England, right? Yeah, so I was born in the UK, in England, London. But both my parents are Hungarian, left communism as refugees.

Ended up in England. My stepfather's also Hungarian. So the whole family is Hungarian. And really, we grew up in England, a very classic kind of immigrant, kind of working class lifestyle, you know, that kind of...

Trying to climb the ladder of opportunity are very much kind of think of that when I look at what's going on for people in California but that background the more I think about my background and my parents and and Hungary and all of that them the more formative It's been to me over the years it seems so you study to Oxford which means you can climbed up to the British elite there and used to work in UK politics What sparked your interest to come out to the United States into Silicon Valley?

Yeah, it was interesting. Exactly as you say. In fact, I wrote about that in a book about 10 years ago, More Human. And I was really at the beginning of, you know, I supported Brexit and Donald Trump and all of that, the beginning of that populist movement.

Uprising the revolution that's really sort of playing out now in so many different ways And whilst railing against the elite and the establishment acknowledge that of course, you know I was going to Oxford University and working in 10 damage tree kind of makes you part of that But I the way I was put it is I never forget where I came from and that's been a really important part of the story in terms of California we moved in 2012

I was working in Downing Street at the time. I was senior advisor to the prime minister. I was mainly focused on our kind of domestic policy plans and trying to help implement them after working for many years, kind of developing those ideas and developing the plans. I was in 10 Downing Street.

For a couple of years he became Prime Minister in 2010. It was a coalition government with the Liberal Democrats I shared an office in 10 Downing Street with my opposite number from another party and we were trying to work together to make stuff happen But at the same time my wife was working at Gucci had a big job at Google. I would say she has the real serious career in our family and she was global head of communications and and public policy and all of that for Google and

so she was doing her global job from London because of my My work in 10 Downing Street and when our second son was born Around about that time, you know, there's a lot of travel for her and the time difference And we were just thinking about it from a family point of view Let's see what it would be like just to move to California for a bit to be for her to be closer to her place of work so it wasn't really a

At that time, we didn't really think this is it. We're moving to California for good. But I remember very clearly a moment when I felt that, actually. It was 2016. So we'd been here four years.

You know, I'd done a bunch of things. I was teaching at Stanford and I started a company and did various things here in California, but went back in 2016. I wrote a book, came out in 2015, went back to get involved in the Brexit campaign in 2016. And I remember coming back from that, landing at San Francisco airport and just looking out of the window as the plane was taxiing in thinking, it's so great to be home.

I suddenly thought oh, that's interesting home. This is how I think of California now and really that was the moment I realized I Not just literally our home, you know where we're raising our family and starting a company and all those things But in a deep way, I feel at home in California. I think of California as

the place that kind of captures everything that I admire in the world and everything that I want to be involved in. Of course, as we'll discuss, it's gone way off track in my view, but I really love California. And that was the moment that it really crystallized for me. And that really began a process of saying, okay, well, this is our home. Let's put down roots here properly. And you got your citizenship after that. Became a citizen in 2021 after going through the process. And here we are.

running for governor. And I want to ask you about that, but I want to talk a little bit about politics and media first, because you've had a lot of experience in both. First of all, politics, what did you learn working with Cameron? And what'd you learn from the whole Brexit thing? Because I was actually a cautious supporter of Brexit from the perspective of like Brussels has like lost their mind and there's these crazy human rights courts and these things, but then you didn't even get out of the courts anyway. And then you, they kind of screwed it up. What happened with this? Yeah. Well, so those two things really interact actually, because I remember

very clearly in the work that I was doing in 10 Downing Street trying to help implement the The program that we'd been elected on and then that we'd negotiated with our coalition partners There was a coalition agreement that was written down here are the policies that we that we are the elected government trying to do to try to make happen and that daily grind of trying to work that through the bureaucracy and

was really...

something that obviously we've been told about and I Personally hadn't had experience inside of government until that point. So you're actually running a government You're the governor of the UK you're elected to do it and you can't do the things you want to do because you're not just that but Not not just Europe, but also the bureaucracy and there's many lessons from that that I think of all the time in relation to the task ahead in California in terms of really taking on the bureaucracy and the over-regulation and so on but

Specifically on on the role of the EU. It wasn't just that they were making it more difficult to do what we wanted to do They were making us do things that we didn't want to do And in fact, there was a moment pretty early on when I remember talking to the Prime Minister and we'd heard something on the new on the BBC radio news that morning and some government announcement and

And I didn't know about it. And I asked him, I said, did you know about this? And he said, no. And we didn't even, not just that we didn't know about it, we didn't agree with it. Wait, how come the government is doing something that the prime minister didn't know about and doesn't agree with? So that set me off on a path of trying to understand the actual process through which

things happen in a government and the visible stuff is legislation that goes through Parliament in the case of the UK here it would be the Congress but most of what happens that actually ends up affecting people and families and businesses the agencies the agencies at the bureaucracy the grinding machinery of government so that's what I started to really investigate the details of the process and

And there's, I mean, if you give me a minute to lay it out, I think it's highly relevant because this is what we need to understand in order to make change happen here. There will be some equivalent here in California. There's a lot of powerful agencies here in California. And the way that it works. So in the UK setting, the way it worked was,

Back in the day, most of the business of government, like approving things that the bureaucrats, the administrative state would do, went through cabinet committees. It's cabinet government, you've got a parliamentary system, members of the cabinet, and they're very powerful and they run their departments. But it's collective decision-making and it used to be in cabinet committees. So they would meet in a committee and discuss a policy or a proposal or some rule that they wanted to do and they'd vote on it and then it would be implemented or not.

As the EU took over more and more functions, it ended up being the case that cabinet ministers had to spend more time physically in Brussels attending EU meetings. That meant that they weren't physically present in London to attend cabinet meetings so often. So a process was already there, but it was expanded called...

requests for policy approval and this was basically that the jargon for it was a right round because because the if a government department or a minister or whatever wanted to do something they would write write write a letter literally a piece of paper with attachments to the other members of the committee and that would be the process for getting approval request for policy approval and

That massively expanded to take over almost all of how policy was made. And so I asked to see all of the requests for policy approval over a certain period. I actually took this and showed it to my Stanford class when I was teaching it. There's a pile of paper like this, like about a foot high. And that was not even one week. That was four days.

Wow. Four days of the UK. Now, there were attachments indeed, but that was a huge amount of people. How does anyone keep up with this? This is the point. So then I said, well, how does this actually happen? So there's two crucial ways in which the bureaucracy enable this. Number one is that if they don't, they're supposed to write these letters to the relevant cabinet committee and they're supposed to respond. If there's no response...

It's deemed to be approved. That's the first default that gives them power. The second is the time for sending in a response, 48 hours.

There's just no way that anyone reviews this stuff. Plus, there's a culture of, well, if you let my stuff go through, I'll let your stuff go through. So no one ever stops anything. It's like a broken investment committee, like we're both sides just getting whatever they want. Exactly. So that's actually how all this stuff happens. And then I said, well, where is all this stuff coming from? What's the origin of all this bureaucratic action and activity? And it turned out that about 70% of it

I said, what proportion of it is necessary for the implementation of what we're supposed to be here to do? The actual program of the coalition government. The answer is 30%.

The rest of it was either implementing EU directives or just stuff that the bureaucracy itself had generated. And that's the point where I realize this is totally out of control and unaccountable. These people are running the country for 70% of it and they're not even elected. It's crazy. Exactly. And it's coming from the EU. And again, people would say, well, I mean, let's not get too much into the EU unless you particularly want to, but

There's a fiction that the EU has a democratic kind of aspect to it because you've got the elected European Parliament and you've got what's called the Council of Ministers, which is the politicians from each of the member states. And they have their meetings and they vote on stuff. But you've got this qualified majority voting system. There's now 20-odd members. So everything is basically passed through because no one wants to block anything in case their thing is blocked.

So all the incentives for just government and bureaucracy to grow and grow and grow. And, and so to me, that was an incredibly valuable lesson of how you have to really understand the precise details of the process in order to make any dent in it at all. You can't fight to fix it unless you actually see what's happening there. And so you have this experience and then you had a very top show on Fox for a while. And what was that transition? Why'd you do that? So what, finally, if it was connected to Brexit, because as I mentioned, when we moved here, um,

I'd had some conversations actually enabled and facilitated by someone I'd met in the Obama administration who happened to be, who I'd worked with on some policy issue. And I remember them saying that they were going back to Stanford to teach. And so I said, well, that's nearby. Maybe they can help.

You know helped me think through what I would do so I ended up at Stanford a couple of years including at the d. School at Stanford which is an amazing a science school institution where I really learned in order to teach it I learned the methodology of innovation which really has informed so much of the amazing success of the tech sector here in the Bay Area it was it was Founded by David Kelly who's the founder of IDEO which is the kind of original? You know so amazing experience teaching the d. School and

And it was during Brexit that I was back in the UK. I think the paperback version of my book, More Human, had come out in which I...

came out publicly in favor of brexit and i was doing some some tv stuff around that and someone pretty significant was in the uk at the time watching uh called rupert murdoch and he just reached out and said you know would you like to have a conversation and we did um got on well and then

Few months after that after various changes at Fox News He we had another conversation and he said I'd like to get you involved and that's how it started amazing So totally unexpected not nothing that I'd planned. I've never really done any television work before I mean a few small things in connection with my book, but never actually hosting a show Would you learn about the media world anything surprise you? Well, what was amazing to me was just the the experience of

Fox is just an incredible company. Of course, it's got very strong reputation, but for me, it's just been an absolutely wonderful place. A very warm culture, actually, in terms of

in terms of the it's a very kind of family it feels like a family business which i know people will probably think is they weren't trying to knife you or something no the opposite incredible freedom no editorial control at all um or guidance even it's like really because it seems like tucker when he's out is different than tucker when he was there just as one example like there must have been some control of certain boundaries or something no not at all i mean i remember being really shocked by that actually in a positive way um

and hugely supportive of some very controversial at the time things. Now they're commonplace, but I was the first on TV to lay out all the evidence showing that it was Fauci's experiments that were the origin of the pandemic. I mean, back in, when I put that out on television, that was seen as a, I mean, I think it's still online described as a,

conspiracy theory. I got my Facebook account throttled at the time for sharing similar suspicions. Right. And so, but I did a lot of research. I had a lot of help actually from people here in Silicon Valley who'd really understood the

That whole process and total support for that. I was the first to call out the lockdowns. I mean, that was in March 2020. I put Jay Bhattacharya on and you're right in the early days when again, that was a very, very tough thing to say. You were accused of literally killing people. This is very creative. So I want to shift to California, but I want to use this as a shift because

I think it's very courageous and smart to bring Jay Bhattacharya on. I think his statement that no one wanted to hear was correct. I obviously also posted about what Fauci did to cause that virus. The median California voter does not seem to want this type of courage, at least from what I've seen. So how is this...

How can you run for governor of California if you have a state that doesn't agree with you on a lot of these things? Well, funnily enough, I think that there's a lot of agreement on the issues. Maybe not on the political way to make it happen. But, I mean, the kind of path really towards that was that increasingly as I was talking about these policy issues and I tried to focus on my show, and you came on a number of times, and to talk about policy as well as the politics. I tried to really...

you know, make that a part of the show. It's called the next revolution. So you think people tend to agree with a lot of the policy, if you can take away some of the, some of the partisan nonsense. Certainly here in California. And so the thing that was really, you know, as the years went on, I found myself more and more, I don't know. They probably, the right word is frustrated at just talking about the problems and not given that I had spent time in my past, uh,

doing things whether that's you know developing policy ideas actually trying to implement them in the government starting businesses you know i think of myself as a doer yeah and here i am on tv literally as a talker which is like a fun and amazing opportunity but not really who i am you want to go be a policy entrepreneur and a leader and actually yes exactly so that's so i moved towards that um i the first kind of foray into that in california was some work to try and

Do some policy work around our housing crisis, which is the number one reason people are leaving the state We have the highest housing cost in America and so on that led to an attempt to a ballot initiative Which we're a bit late with didn't raise enough money for but that really got me going down that path I started a policy organization started doing the work on a whole range of different policies called gold at golden together was the name of the organization and

And then as that went on, I was just thinking, well, again, let's not just talk about it. Let's try and do it. And so that brings us to running for governor. And it seems to me when I'm on the road, I mean, I've been on the road the last couple of years, actually. It's around the state meeting people too. Exactly. And businesses and families and communities all across the state really learning about the issues. And now I'm doing it as a candidate. And I think there's broad agreement between

About the problems in California right across the political spectrum that we are massively over regulated the government is too big and bloated and intrusive and it's crushing the spirit of of entrepreneurialism and innovation and and all that California represents in its best version and also making life incredibly expensive so from small businesses I hear all the time is just such a hassle and a struggle and

to do anything yeah if you're rich it's okay if there's extra rules yeah and if but if you're a family it's like it's so impossible to to live because everything's so expensive we have a place here and we're trying to like build an adu because the law makes it really easy but it turns out there's like these extra couple hundred thousand dollars of expenses they make us do just to build it yeah it's like that would be that actually happened to be successful enough it doesn't matter for me but i can see like an average person this is insane right it's insane i mean the cost and the you know i mean it

Remember, one of the things back in the day before working in 10 Downing Street and doing all the political stuff, I started companies in the UK. Not with your level of success, Joe, but, you know, it was good. And among the businesses that I started were a couple of restaurants, which is an absolutely impossible business. That's a tough thing. At the best of times. It's really, really tough. And we made it harder for ourselves because...

we were trying to pioneer something. Actually, Jamie Oliver did a much better job of it, but a bit later on, but we wanted it to be a kind of, obviously commercially successful, but also make a social contribution. So we had a job training program for local disadvantaged youth. And we were trying to do the whole, you know, organic seasonal food, you know, like we put a lot of burdens on ourselves as it were in terms of the kind of business it was going to be. But the reason I bring it up is that

Now, here in California, I talk to restaurants. I like doing events in restaurants or bars and meeting the owners because they are on the receiving end of so much of the nonsense. The labor regulations, the environmental regulations, the cost for... It feels like you're guilty until proven innocent if you're an employer here right now. It's unbelievable. I mean, there's this incredible...

thing in California called PAGA, the Private Attorney General's Act, which is unbelievable. Like, they're basically, it's 2004, it was introduced and it's really like so much in California, the product of corruption because it's a gold mine for lawyers and lawyers along with government unions are the main funders of Democrat politicians in California.

And this thing, PAGO, the Private Attorney General's Act, basically outsources to lawyers the enforcement of California labor law. That's the idea of it. To make sure we don't let anybody get away with it and we don't have enough. This is the actual, I'm trying to be fair to them in how they conceived of this. We're the government. We can't possibly clamp down on every single business in California. We don't have the resources. So we're going to enable any lawyer

to do it for us. Private Attorney General's Act, PAGA. Where it ends up is every business in California just, it's these endless lawsuits. You know, your lunch break that's supposed to come in after five hours, you're supposed to have a certain amount of time, you started one minute late.

And that's a lawsuit. And then every single week that goes by of the, since the, beyond the filing, it's a hundred dollars accruing in fines for each employee, regardless of how much the size of your business. I mean, it's just absolutely not in the settlement. They all settle because you don't want to be in court for years. Exactly. The payouts, you know, just, these are just random numbers, you know, small, um,

Mexican restaurant in Orange County. I was talking to some ludicrous example where they were sued for gender discrimination on the menu because the section of the menu that was Describing egg dishes. I'm not making this up. Yeah was called Los huevos and this is and the argument was this this is discriminatory It should be non-binary

What? No, no, I know. And it was going to be, les huevos is what they wanted. Isn't that French? Which is not a word. Exactly. It's not a word in Spanish, right? I promise you it's true. And then, so that's a lawsuit. Yeah.

And of course it's nonsense and it would never kind of go anywhere, but you've got to make it go. It's just too expensive to tie me on money. So that particular 65 grand to make it go away for total nonsense. That's a low settlement. I mean, you've got many restaurant owners I meet. They say they factor into their cost of doing business a million dollars a year for PAGA lawsuits. You know, it's things like the blue paint used for your disabled parking is the wrong shade of blue. I mean, it's just the PAGA lawsuits are just ridiculous.

in terms of their impact. But that's just one of many things. This is why a lot of people leave and build things other places, but you're not leaving. You're staying here and fighting. So why stay and fight? Is it just the weather's nice? Like, what's the idea? It's more than that. I mean, that's of course true, but there's something about California that to me is very, very special. I really am in love with California. It's not just I love being here. The idea of California, what it represents, to me, it's the best of America.

Everything that we admire about America and, you know, I've admired for years from afar about America. Innovation, immigrant culture. And the sort of startup hustle, but also something that I, the term I use for it is the rebel spirit. If this is kind of, we're just going to look at the success of,

all the great geniuses like yourself in silicon valley it's people who've got that kind of no it doesn't have to be like this and that's what's being crushed that's what i hate about what we've got yeah they are crushed the rebels are a lot of relieving because there's your two but some of them are still here so you can still you still win but why did california turn deep blue because a lot of people cite that reagan did an amnesty thing that might have shifted the demographics like what was the real what in your mind's the reason it turned deep blue well i think there's there's a i just wrote a book called califalia um reversing the ruin of america's worst-run state and the the

at the beginning of the book, I go through the, the kind of steps to this. I mean, we've now had 15 years of one party rule, total control of state government by the Democrats. And a lot of it is, is technical, you know, changes. I mean, it did start with, I mean, the way I start the story is the, is the granting of collective bargaining rights to government unions, because that started the buildup of this incredibly powerful Democrat. Reagan messed this up too, right? Reagan started, exactly. And it was for, um,

really for law enforcement. And, you know, you could say at the time is late 60s. It's a populist thing. These are conservative people. You're helping the working class. So he thought he was doing something good. Exactly. But then Jerry Brown and his first term as governor in the mid to late 70s expanded it and it went to local government officials. And then suddenly you're in this world where you've got this enormous Democrat political machine, incredibly well funded because it's

that paid from you know taxpayer funded basically yes like two million plus workers that just give a piece of their paycheck to you when i think of california by the way it's a billion dollars a year so one billion dollars to politics just from the end i think i tend to think government unions i tend to think of california as having three parties you tell me but my view there's like the

union left which is again this billion dollars a year for free there's like some version of a moderate left and then there's some version of the right i think they're like equal size in california is this not right how should i think of this well it's interesting so going back to something you touched on earlier which is the position on the issues it's interesting last november so november 2024 yeah

There were four major ballot initiatives at least for those a few others But the big ones where the Republican position prevailed so on crime prop 36 which undid a lot of the damage of the notorious prop 47 that Kamala Harris pushed through do you steal whatever you want? Yes nine up to nine hundred and fifty dollars per day It's not just pretty is pretty good. You make a living off of that exactly per day So prop 36 last year kind of reversed most of that

That passed with 70% in every county. 70% statewide, majorities in every county. So we're not insane here in California. Also, there was a massive tax increase in the form of a pretty corrupt bond measure. That was defeated. Rent control expansion was defeated. Minimum wage increase was defeated. So it's interesting. You've seen across the... And going back a few years, you've had racial preferences.

in universities and elsewhere defeated in California. You know, there's been examples of whatever term you want to use, Republican, conservative position winning statewide. And then there are other signs that things are changing. Ten counties flipped from blue to red in November last year. This is a very moderate...

red, right? When in California, because it's the exact signature of California. How would you describe it? Well, I don't like that word, actually. You don't like that word? Because I think that what we need, that what's needed to turn things around on the core issues of very, you know, on the basic governance issues, which is like the massive nanny state bloated government

nightmare of a government that we have crushing everyone's soul and spirit and making it impossible to do anything in California, to build houses, to run a business, to do anything, right? You need to be very aggressive on that. Really aggressive. And so on the same with what's going on in schools. You know, we have this insane...

you know, ideological experimentation going on in public schools. And the results were a disaster in terms of actual outcomes. We have like barely half a student, less than half of students meet basic state standards in English. And meanwhile, they're getting rid of in San Francisco and Palo Alto, all the honors classes even now. Yes. And just on the insanity just continues. There's, I think there's a, but for people who don't follow it closely, there's a sense of, well, we've reached peak education.

in California. They're coming back to their senses. You know, George Gascon in LA was kicked out and new mayor of San Francisco who's a friend of mine and a bit more... So he's doing better. He's doing better. Right. But, you know, the insanity just rolls on. You know, the San Francisco schools, they just announced this whole new thing where they're going to have

I mean, it's just unbelievable, the list of things. So when they do grading, they don't have to take account of homework. B grades automatically become A grades. You can get passed with 20%. You're just on and on. It's craziness. It's equity. It's equity, yeah. It's just...

And again, even on the crime issue. So just a few days after we're taping this, there was this massive riot basically in Los Angeles and a party that got out of control and kind of masked and hooded

marauding around, graffitiing and destroying local businesses. Then they go on the Metro and they stop trains and then they break into the trains and assault people. Not a single arrest, not one. - Let's talk a little bit about public safety. So you mentioned obviously Prop 36 passed by a landslide to take away the $900, you know, free stealing stuff every day. But we also talk a lot about the homeless crisis. I think there was over $24 billion spent on it. It seems to have made it worse. It seems like there's a lot of corruption around this area. Like what should we be doing here?

So it's a massive, massive scandal that this has been going on for so long. I mean, as I like to point out, we're now in the 23rd year of Gavin Newsom's 10-year plan to end homelessness in San Francisco, which has just got worse. And it's his seventh year as governor, and he keeps saying he's going to do something about it. The numbers actually go up and up. And there's another number, which is 32 billion spent on homelessness. So the components of the problem are these. Number one,

It's illegal to camp and live on the streets in in most cities in California. We have not enforced the law. Yeah, um

they've hid behind the Ninth Circuit court ruling, which was the Boise ruling. But we overturned that recently. Well, I just want to make one very important point. That was total BS, right? If you look at the actual ruling, the original one, that they said tied their hands, can't clear homeless encampments. What it said was that you can't remove people from the streets unless you have sufficient shelter available locally. It didn't define what shelter was. It could be

You know a sort of massive tent that you erect overnight very cheaply as we saw you know we could do that

Cheap and available place to go basically. Yeah, but they defined shelter as what they call permanent supportive housing, which is an apartment unit Costing because of all the other corruption and regulation involved in house building in California $700,000 $800,000 a million dollars now in San Francisco per unit, right? So that's where the money's gone if you want to dive down that track But the reason the problem isn't solved is because in 2016 as well as that step one is they haven't been enforcing the law

Step two is they've got this, they passed a law in 2016, the only state in America to do it.

Implementing in legislation this approach called housing first Which says that you've got to the number one thing is and it sounds like a sensible thing Of course give homeless people housing But what it means is that you're not allowed and it's now actually against the law in California for any organization working with homeless people to require sobriety and

crazy drug addiction treatment or any kind of treatment now given that we know that over 80% of people living on the streets have an addiction of some kind and and or mental health problems you're effectively making it illegal to solve the problem so I've spent a lot of time with organizations working with homeless people in the right across the state and the way they describe it to me is like what we've been doing is giving people second homes

where you basically, here's an apartment and you can continue, because there's no requirement of behavior change, continuing to use, sometimes deal drugs from the new apartment you've been given or back in the street. Well, they're dying in the apartments that we're giving them. Exactly. And then the third component, which again, it's very important to understand the details, is given that mental health is such a massive part of the problem.

We don't have sufficient mental... We are woefully inadequate in terms of mental health capacity in California. So you talk to... I was just in Sonoma County just the other week, random example. The sheriff there was telling me that 50% of the people in his jails...

have severe mental health problems. That's where we're actually treating them. We need some kind of asylum for them, not a jail, right? Well, here's the problem. So because of the asylum word and the stigma associated with that, remember that most of the people we're talking about in this situation are low income, therefore it's all Medicaid. And so often in government, you've got to follow the money. So local governments plan provision based on their reimbursements from federal Medicaid for this mental health treatment.

When Medicaid was set up in 1965 there was a rule put in place because there was public outcry against insane asylums and all of that Right that says we don't want these big institutions So there's a rule called the IMD ruled institutions for mental disease Which says that you cannot get states cannot get Medicaid reimbursement for any facility offering mental health care with more than 16 beds very precise number and

which is tiny. So you end up with these very inefficient outpatient kind of services instead of modern, effective mental health treatment. Now, you want bigger places to help people. Exactly. The first Trump administration created a waiver from the IMD rule that states could apply for. Guess what? California hasn't applied for the rule. So,

We have this combination of factors which mean that the underlying causes of the problem are never solved. And that's why you end up with California right now where 11% roughly of the US population, nearly 50% of the homeless population. Is it also just the fact that when you're putting so much money into it and so many groups are making money off it, somehow their incentive is to bring people here and give them more money, right? Yes, they see the system. Exactly right. And so it's just a classic example of a fundamental problem.

Values issue going on in California, which is so often on so many areas you are reward you are rewarded for doing the wrong thing and

and punished for doing the right thing. You're just trying to run your business, do the right thing, create jobs and opportunity in your community, and you're constantly harassed and punished. Whereas if you break the law or if you're cheating or trying to get, you know, healthcare that you're not entitled to, whatever it is, there's so many examples where people who are doing the wrong thing actually get rewarded. And so you can't run a society like that. Let's talk about housing affordability. That's another big issue, I think, for a lot of people here. When I used to live here, uh,

full time, I had all this staff that had to commute from like an hour away. It seems like a very offensive commute because you're driving by massive amounts of empty land, which is kind of obnoxious, you know? And then again, and I pay them very well. You're just like, even when you pay people well, like the working class can't afford to buy homes around here. And then at the same time, there's the other side of it. I was with someone earlier and he's in the neighborhood in Palo Alto and he's, you know, he's middle class for a talented person.

And they want to build a 17-story building right next to his house, which is also kind of scary for him. There's these nice four-story things going and they are more dense, but all of a sudden they want to do super, super dense. It's kind of scary, I think, to the average person here, too. They don't necessarily want to change their communities. What's the right solution here? Can we use more land? Can we get rid of the CEQA rules? What are we going to do? Well, there's so many elements to it. Let me unpack it. The actual simplest way of thinking about the solution is this.

instead of forcing housing into communities that don't want it, let's allow housing to be built in the places that do want it, which is, and there's a lot of them in California. What's underlying all this is just bad ideas

That have all come together in this housing crisis. So a big part of it is the climate ideology. Actually, that's driving a lot of when you actually look at what's going on. Because this used to say no to new housing in different places. Well, there's an ideology of infill only development. So they are against, and this has really been the dominant thinking on housing, what they call sprawl.

What they call sprawl, I call the California dream, right? That's how people want to live in California. Single family homes, raise your kids so they can enjoy the weather. Now, rich people have that. But the ideologues in charge of California say, fine for our rich donors to have that, but the poor people can't. They must live in apartment buildings in the center of town and take transit and not drive. You know, there's a whole...

way of thinking about this is how we want to live. And I hear them often say things like, we should be more like Paris or London. Well, we're not Paris or London. It's just anti-human. It's this ideological approach to everything, which I think is the really characteristic. So of everything where they've got a set view of how people should live.

rather than enabling people to live the lives they want. They're telling people, you've got to live in line with our ideology. So where does that get you? Number one, they're just massive amounts of regulation to stop single family homes from being built that expand the development footprint. They say we need more density.

If you actually look at the numbers, we already have pretty much the highest density in the country. Only about 5% of our land is developed in California. There's lots of open land. There's lots of open land. Just as you said, if we increased, we did the math in my policy group. If we increase the development footprint of California from 5% to 6%, which would still put us really low in terms of other states. Right.

You could have housing for 10 million people in single family homes on quarter acre lots, which is really big. So there's massive ability to do that, but they don't want it. They put in all these rules. For example, in 2018, the VMT rule stands for vehicle miles traveled. Any development, you have to calculate how many vehicle miles will be traveled.

And that, by the way, is an anti-business thing as well. I was talking to a guy who's got a gin, an artisan gin business on the Central Coast. Lovely business. He wanted to build a second, doing really well, wanted to expand, build a second still. Yeah. Blocked because vehicle miles travel. It would cause more traffic. Yeah.

Yes, we call that growth. That's what we, you know, isn't that what we should be all about? And all these people go out abundance. But the ideology in operation in California has been scarcity. You can't do this, can't do that. So the way that's implemented is through all these different types of regulation. You mentioned CEQA, California Environmental Quality Act. That is...

a big barrier, but not in the way that people think. It's not about the environment. Right now, you've not so much about the environment. You've got over a million housing units in California that have been approved by local government, gone through zoning, compliant with CEQA and all the other environmental rules, blocked by lawsuits. It's a little bit like PAGA, going back to that. So everyone can sue. Anyone can sue under CEQA.

It's called the private right of action. That was granted. It wasn't in the original bill. Everyone says, oh, Reagan signed this in 1970. That's true. But over the years, the courts have granted this private right of action and expanded CEQA to cover housing. 70% of lawsuits under CEQA are used to block housing. Most of them are filed, guess what?

By who? Neighbors? The unions. Unions? Why unions? Because they use it as leverage in negotiations with developers. To force them to use union labor. Yes. So they call it project labor agreements. And they have two components, one or other or both. They call it skilled and trained, a nice euphemism for union only labor, or prevailing wage, which is when you... I mean, I asked, you know, I was talking to a house builder about this. What does that actually look like in practice? Well...

in the Central Valley, so the rate's a little bit lower than at the coast. So he said, I've got two jobs right now, current projects. One is a market rate, they call it market rate prevailing project labor agreement. The market rate, he had a team of plumbers, $25 to $40 an hour. The exact same people working on the project labor agreement site,

In the same town, basically. 95 to 120 dollars. And it sounds good to pay people more, but that means the house is going to cost 100, 200 thousand dollars more. Exactly. So that's my point. I'm very much a leader of what I call positive populism. I'm pro-worker. You want workers to be paid, but not at the rate that makes...

the cost of building a house four or five times more than in a neighboring state. - You don't want to destroy the economic activity, which is what they've done. - That's what they've done. And so you've got, I mean, the insanity of this, you know, for example, on the skilled and trained, which is they needed to have union carpet fitters, union. They didn't, there weren't any.

So they had to literally sort of bust them in from the bay area and put them up in a hotel. I mean, it's just insane. I mean, every single day I'm learning just the stories you hear of the insanity that make it impossible to do anything. A small independent winery in wine country, the owner was telling me this is just... And this is a typical story. They wanted to expand their visitor numbers, right? They had a patio. They had a permit for 30 people maximum. Yeah.

built an extension, they wanted to increase to 50. It took six years and a million dollars to do that. Six years to get the permit? Yes.

environmental reviews, consultants. It's all corrupt because the local planning department says you have to use these consultants if you want to get a permit. And of course, these consultants are the ones that they are going to go and work for in five years time. You know, the whole thing is... This property we're on right now in the People's Republic of Woodside where I live here, I wanted to build, modify this

to be this office we're in now as a barn and modify a couple other things. And in order to get the permission to build and to dig something, they had me dig an 80-foot trench that was 14 feet deep and three feet wide. And it was with the friends of the town geologists. And once I did that, they gave me the permit right away.

way i mean it's just which is like obvious it's like you kind of know what's going on i mean the house construction thing is such a great case study of everything that's going wrong like another another example i just i was just in san diego with a house builder apartment builder starter you know exactly what we want right small nice apartments for first time by he said like we if

He refuses to participate in the affordable housing scam, which is what it is. So he's doing it all market rate with no government subsidy or anything. It means he's not subject to all these regulations. So basically he bills 300, it costs 300, 300,000, $350,000 per unit to build. The exact same thing if he did a job, which was part of the affordable housing scheme,

700,000 like twice as expensive. This is what I've noticed is not only the homeless NGOs themselves, but also the affordable housing interest. He seems actually very powerful. These are very big donors, obviously to the party in charge and to the left in California. They're not going to like you. They're going to be against you. So we have to educate people around this. Yes. That's why it's really important. So when they talk about affordable, another friend of mine, really interesting business, he has building apartment units with what's a new, a really interesting innovation that,

in construction technology, which is mass timber, which is... And actually really connects to the whole argument about timber and our overgrown forests. It enables less good, perfect samples of, you know, not just a whole beautiful tree, but like off cuts and sort of random bits of timber and wood to be put together and used in a new way. It's mass timber. It's a new construction material of wood, made of wood. And...

It's very fire resistant, as strong as concrete, really good. But it's shut out of the rules for affordable housing. And so what it means, he says, I can build apartments for $250,000 each. The current rate in the Bay Area for affordable is about a million dollars. So that's affordable because there's literally a point system where to get the subsidy...

from the taxpayer subsidy. So money is coming from, whether that's bonds that were issued, I don't know how many years ago, to build affordable housing. So that is taxpayer money that is being handed in a check to developers. And in exchange for the money, they have to meet certain conditions. Use union labor. Pay this amount of...

use concrete that's a specific requirement which is so even though this thing could work just as well so let's step back a little bit you have a lot of special interests in california you have the government unions which are funding a billion dollars towards their interests you have these other you know unions and lawyers like suing people stopping things affordable housing groups themselves who unfortunately sounds good but they're making expensive you have homeless ngos what's the best case for california getting its act together so here's here's what i worry is that

all these policy things if you sit down with a rational kind of average person maybe they might say they're on the left but if we talk about this they're going to be like yeah i want steve i totally agree with you this is right i'm not tied to one of these interests making money i just want this to be functional place for my kids but the problem is is that's not how most people's brains work most people think oh i hate donald trump he's doing these all the list of bad things he's doing in their minds and they're offended by him and and and you are going to run as

Republican, I believe. And so aren't they just going to be like, oh, I hate Trump and therefore I'm just going to not listen to you and I'm going to vote against you? How do we overcome that? Well, first of all...

You're right that the stuff that actually in the end is vital to make real change happen, which is a thorough understanding of policy and how you make policy happen. And boldness to actually stand up to these guys.

The origin of the virus but also on issues like China, you know, I was like really first out of the gate on that decades ago actually about about the dangers of Becoming too dependent on China even on something as dumb as smartphones were not done But you know relatively not considered a major policy issue like smartphones for kids, you know ten years ago in my book more human I was arguing for that to be restricted so

So you have to have that attitude of being prepared to kind of take things on. But you're right that in a campaign, it's not like that. And I've done many campaigns. And I think just that is the job of the campaign. I'm just at the beginning of it. But I think the ingredients of success are there for change in California. So number one, you ask, as we talked about earlier, you've got

interesting results on statewide ballot initiatives a real move towards the republican party statewide at the county level 10 counties flipping from blue to red including major ones like fresno our fifth biggest city um you see individual pockets of change you know huntington beach where i launched my campaign you know four years or so ago that was a city council run 6-1 by democrats

now it's 7-0 Republican and when they won seven seats to zero just now in November they ran as a slate and they called themselves the Magnificent Seven. So it's really interesting that they were leaning into that. I guess they saw the policies and how much they were destroyed by that policy. But I think the biggest thing

There's two really big points in terms of well, how can you pull this off? How can you actually win in California? I'm doing this because I know that when I'm the governor I'll be able to really make a dent on some of these policy areas and start to make life better for families working families in particular who've been really hammered by these costs and small business I feel very strongly about and

I know I can do that. You've got to get elected first. And I think that the two big areas are, first of all, to acknowledge that it's actually much more of a Republican state than people think. The average share of the vote for Republican statewide candidates in the last 20 years, since the last time Republicans won, is 41.7%. So it's not 50%, but it's higher than I think a lot of people assume in California. So call it 40%. You've got to get an extra 10%. Where's that going to come from? I think number one is...

Actually, Donald Trump got more votes in California last time round even without particularly campaigning here Then you would need to win in a midterm election. If you just look at numbers of votes if you look at the data on roughly what you could expect in terms of turnout in 2026

It's about 11.7, 11.8 million votes. It's based on the average of the last two midterms. So to win, you need about 5.9 million. Trump just got 6.1 million. So the Republican votes are there. You just need to get them to turn out. So that is a function of a strong, positive, energetic campaign that says, yeah, it's worth going for it. The second big area...

is bringing to California the political revolution that's happened across the country, which is these two massive changes, the working class vote shifting from Democrat to Republican and the Latino vote shifting from Democrat to Republican.

In other states, that's been a huge transformation. Obviously in Florida, but Texas as well, Nevada, Arizona, not as much in California. So I think that's our big opportunity. The working class Latino who's been hammered the most by these policies and this assault on everything that they believe in. And that upward mobility, the dream of

making it in California and climbing the ladder of opportunity a Good job where you make enough to raise your family in a home of your own in a safe neighborhood With a good school so your kids have a better life than you every single item on that list every single I think of it as this ladder of opportunity every rung on the ladder has been smashed by these Democrats and it's not that I

Latino voters are attached to the Democratic Party is that they tend not to vote and so if you look at the numbers in California about 40% of the state now Latino the largest group. It's only about 23 24 percent of the electorate Wow, so if you get that community

Mobilized in favor of positive practical things that make their lives better. I really think that we can do this. Hablas espanol Not enough I can speak Hungarian. I don't know how much that helps as tough, but I love it Well, your policies are definitely good for that community Steve anything to leave us with that's on optimistic note. I really appreciate you being here get involved You know anyone who's watching listening anywhere? It's gonna be hard. I've never I'm not saying this is gonna be easy I say very clearly this is this is gonna be hard, but it's not impossible to

And that means we should go for it. And I'm going to need to build a real army, a grassroots army. I want people to get involved. I need money because we're fighting this Democrat industrial complex, this massive machine. So we've got to raise a lot of money. So please help Steve Hilton for governor.com, as they say. Awesome. Well, Steve, thanks for your courage and your leadership and good luck. Great to see you. Thank you, Joe. Thank you.