Big Government and High Taxes Definitely Didn't "Save" California

California is far from being saved.

GNU Free Documentation LicenseGNU Free Documentation LicenseSACRAMENTO – Ever since California’s voters approved the Prop. 30 sales- and income-tax increase on the November ballot, liberal commentators have been gloating about the resurgence of the Golden State after many years of predicted doom and gloom. Their evidence: Higher taxes seem to have cleared up the state’s budget deficits.

As New York Times columnist Paul Krugman wrote recently, “California isn’t a state in which liberals have run wild; it’s a state where a liberal majority has been effectively hamstrung by a fanatical conservative minority that, thanks to supermajority rules, has been able to block effective policy-making.”

Krugman blames the “radical right-wing” for California’s problems, claims that the school system – which captures 40 percent of the state’s general fund plus local bond initiatives – is insufficiently funded (thanks to those evil right-wingers again) and believes that all is well now that “Mr. Brown [is] free to push an agenda of tax hikes and infrastructure spending … .”

It’s odd to blame Republicans in a state where they have had only miniscule power for at least a decade and even weirder to suggest that California’s milquetoast GOP is beholden to the radical right. The real questions: Has California been saved? Are higher taxes, more regulations and massive debt spending on public works the answer for the rest of the country?

California still has a great future, but we need to be realistic about its problems rather than embrace this “California is resurgent” myopia from ideologues pushing a big-government, union agenda.

For starters, California is far from being saved. All that has happened is a temporary elimination of the deficit on paper. That can quickly change and the state is still living off of borrowed money. Longer term, many businesses will move. They’ll probably leave their headquarters here because this is where the CEOs like to live, but job growth and expansion will take place elsewhere. That's already happening.

California’s dominant Democrats can now raise taxes, float debt and expand government at will. Republican “obstructionism” forced the state’s liberal leaders to control themselves, but that control is over. Every hare-brained idea will have at a high likelihood of passing. Democrats already are pushing a host of new taxes and proposals that will make it easier for local officials to raise taxes, also. So the taxing and spending has just begun.

Of course, to Krugman and other leftists, that’s the goal. As William Anderson of Frostburg State University in Maryland writes, “The fact that California has the highest taxes in the country, has a virulent anti-business governmental culture, and has rules that increase the cost of just about everything has nothing to do with it. After all, in Wonderland, higher costs translate into more spending, and more spending creates more wealth, so these ‘problem’ to which Krugman refers actually are opportunities for more government spending, which means a brighter future.”

Note that these massive infrastructure projects – most of which are needless – will saddled the state with a crazy level of debt. Gov. Jerry Brown, who during his first time as governor adopted a “small is beautiful” approach that halted infrastructure projects, is now pushing obscene projects such as High Speed Rail, which is now even opposed by the author of the rail initiative because the project doesn’t live up to its original promise. Brown also is pushing a Delta tunnel project – something that will cost tens of billions of dollars to change the flow of the Delta to save a tiny endangered baitfish known as the Delta Smelt.

Krugman skirts over the obvious bigger issues. The state’s public schools are poor performers thanks to the lock that the California Teachers Association has over the school system. There used to be a time when liberal writers cared about poor kids, but no more. They rather defend the bureaucrats and the union officials that put their job protection above education.

Krugman claims that the right wing has invented a “new line of attack” – i.e., claiming that “liberal big spending and overpaid public employees were bringing on collapse.”

But look at bankrupt Stockton. That city is decrepit largely because it spent most of its money on absurd levels of compensation for its workers and could no longer provide crucial services. Stockton may have taken it further than most, but it exemplifies the situation throughout California, which faces a half-trillion-dollar unfunded pension liability according to Stanford (obviously run by right-wingers!).

Then there’s that little thing called freedom. California ranked as the 49th freest state in the union in a new Mercatus Center study. As the authors noted, “California not only taxes and regulates its economy more than most other states, but also aggressively interferes in the personal lives of its citizens.”

This isn’t to say that California is hopeless. I have no intention of leaving. But despite some good news on the revenue front, the state has abundant problems that need to be addressed. California may be a model for those who believe that most other states have not sufficiently copied the unsustainable welfare-state models of Western Europe, but it should offer warnings for everyone else.

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  • prolefeed||

    Higher taxes means the legislature will try to go on a spending spree.

    The voters have to not get politicians -- to not get reality -- to think otherwise.

  • DarrenM||

    The voters have to not get politicians -- to not get reality -- to think otherwise.

    After prop. 30 passed (raises taxes 'for education' without accountability) out here, I think you may be correct on this.

  • John||

    In all honestly, how could anyone conclude California has a bright future? It is doomed to a death spiral of increasing taxes, lost businesses and lower revenues until it finally turns into a full on third world country. So what if it has a great climate and a bunch of natural resources. So does Mexico.

  • phandaal||

    Plenty of beautiful places are hellholes because of the people who live there. Many tropical countries could fit the bill. You could basically close your eyes and point to Africa and whichever country you landed on would fit the bill.

    Hell, even parts of Afghanistan have natural beauty and abundant resources.

  • John||

    Exactly. People keep telling themselves things will work out well for California because it is such a nice place. Well, a lot of nice places really suck thanks to liberals. California will be no different.

  • DarrenM||

    ...things will work out well for California because it is such a nice place.

    This just gives California a little more room to screw things up, but there is still a point where it won't be worth hanging around.

  • grey||

    You are all forgetting the Krugman Final Solution. I'm going to give you pass since you may not have seen the documentary film 'Battle: Los Angeles. When they come again and destroy even more infastructure the State of California will flourish. Two Words: Alien Destruction.

  • izzyabby||

    Nail on the head...

    Living in California is like living in a bowl of granola...what ain't fruits and nuts is flakes.

  • Muzzle of Bees||

    I literally feel anxiety every day when I realize that even as bad as things are here, the top men in Sacramento are actively working to make things even worse.

  • prolefeed||

    There used to be a time when liberal writers cared about poor kids, but no more.

    Wanting to steal more money to sink into government indoctrination camps -- public schools -- is not, and never was, "caring about poor kids".

    Giving them an economy where they can quit being poor is actual caring.

  • DarrenM||

    Poor kids don't vote. There is no significant lobbying organization for children.

  • allen||

    "Government indoctrination camps"? That's the hope but only a hope as the spectacular ineffectiveness of the district-based public education system, in every other regard, has demonstrated. If anything the attempts to use the public education system are counterproductive, at least from the left's point of view, nagging being universally annoying.

    There used to be a time when liberal writers cared about poor kids, but no more.

    Oh, not entirely correct. Davis Guggenheim, who directed and produced "An Inconvenient Truth" also directed "Waiting for Superman". There are plenty of other examples of lefties who are breaking with the teacher's unions and the district-based public education system. Not that long ago the NEA called for Arne Duncan's resignation and got bupkus from Obama.

    The schism has been papered over to a significant extent but it still exists and, were conservatives a bit cleverer, could be used as a wedge to split the left. Alas, so far no conservative politicians or pundits have proven clever enough to exacerbate the disagreement.

  • grey||

    I'm sick of teacher's being mischaracterized as selfish. They care about the children 1st, right after themselves. You would understand that if you knew 1st had no meaning of sequence. Johnny came in 'bestest', having achieved 47th out of 50 students.

    OOOps, I'm sorry, I was supposed to differentiate between the Union that they wildly endorse and the teacher's themselves.

  • sarcasmic||

    You mean when you constrain the creation of wealth through regulation, and destroy wealth through taxation, that society as a whole becomes poorer?

    Wow!

    At least there's that magical multiplier that creates value out of thin air when government spends money, or California would be totally fucked.

  • ||

    What percentage of the American population actually understands wealth creation?

    5% ???

  • sarcasmic||

    Wealth creation results in inequality, and inequality is immoral.

  • John||

    More than that. But not a majority. And even the ones who do don't consider it important enough to ignore bullshit culture war issues to actually vote based on it.

  • ||

    Not so sure. I've had to esplain it to some fairly intelligent people (and I certainly don't claim to be well versed in economics). The biggest problem is that a large portion of the population has NO schooling in economics. They cannot grasp what makes an economy work. They simply believe the bullshit that's bandied back and forth by politicians intent upon securing their vote.

  • sarcasmic||

    Most of those who have studied economics have likely been indoctrinated into Keynesian bullshit anyway.

  • DarrenM||

    Most economics is fairly basic. Something like Thomas Sowell's book should be required reading in High School. You don't really get to those things that differentiate 'Keynesians', 'Austrians', etc., until college. All that is theory, which is OK, but we are the guinea pigs and we have to suffer when those theories don't work. I lean toward having government just butt out. By the time these 'stimulus' programs actually start to have an effect (even assuming the effect is positive, which has to be taken on faith), the economy will be improving anyway. Worst, is that it's really just a rationalization for pols to spend even more money and put the children into debt even more.

  • grey||

    Basic economics is not complicated. Two hours listening to Bastiat on the tread mill and you have a damn good grasp of everything from interest to capital to taxes. A couple of Adam Smith webpage links and that'll take you most of the way as well. The list goes on, lots of easy sources a person can pick up in an afternoon. Economists get too much credit, it's only became a sophisticated engineering exercise thanks to Fed Policy and Tax Policy. I'll admit it gests complicated when you start talking about Fed Policy, but everything anyone needs to understand Sarcasmic said in the original thread post.

  • James Solbakken||

    The problem is not that people have wrong ideas about economics. The problem is people have been convinced by the communists that there is no such effing thing as "economics." "Economics" to the communists is just a bunch of BS that straight white Christian males pull out of their backside to keep the other folks down, man.

  • Virginian||

    Eh, I mean isn't the whole Hayekian knowledge thing proof that no one truly understands wealth creation.

  • John||

    You can understand the mechanics of it without understanding the real life specifics. Yeah, I know what creates wealth in the abstract. But I have no idea if this or that idea or company will actually create wealth.

  • Doctor Whom||

    Have you forgotten the law of conservation of wealth? All right-thinking people know that wealth is a zero-sum game.

  • DarrenM||

    Exactly, which is why we are still living in caves.

  • The Late P Brooks||

    "It's really quite simple. You put the lead in this pot, heat it up, wave the magic wand over it while saying the incantation; cover it, bury it under a full moon, and leave it for six days. When you dig it up, the pot is full of gold. So, what do you say? I'll trade you the pot for your cow."

  • The Late P Brooks||

    What percentage of the American population actually understands wealth creation?

    How many people can even distinguish between investment and expense?

  • sarcasmic||

    Or the distinction between money and wealth, or wealth and income.

  • John||

    Money and wealth is the big one. A lot of people honestly think that money is synonymous with wealth. Sadly some of those people are in positions of authority.

  • sarcasmic||

    Like when some libtard goes on about how concentrations of wealth result in starving children.

    Stock in a corporation will not feed a child. Neither will a luxury yacht.

    They would rather destroy the wealth than have the corporation or yacht builder give the starving child's parents a job.

  • Adam330||

    Please remember to reprint Krugman's article come the end of this year after the revenue projections have turned into revenue realities.

  • Sevo||

    Adam,
    Moonbeam may actually see a 'surplus' this FY; he emptied every 'emergency' fund in the state to do so. Can't do that twice.
    And 'surplus' means he can cover the minimum payment due on all the debts; no more than that.

  • fish_remote||

    As New York Times columnist Paul Krugman wrote recently, “California isn’t a state in which liberals have run wild; it’s a state where a liberal majority has been effectively hamstrung by a fanatical conservative minority that, thanks to supermajority rules, has been able to block effective policy-making.”

    We really need to begin considering that Paul Krugman may be seriously mentally ill! Not being flip or snotty but he just isn't tracking anymore.

  • izzyabby||

    Krugman...Idiot and a half

    California...49th Freest

    Is freest a word?

  • fish_remote||

    Krugman...Idiot and a half

    Not an idiot....crazy....full goose bozo crazy! I mean if your lifes work and everything you'd based your professional life on was revealed to be utterly false and detrimental to the common good you might snap your mainspring too!

    I think Krugman is realizing that he's a fraud and that he was too ignorant to know he was a fraud.

  • ΘJΘʃ de águila||

    Krugman is part of the gang of paid intellectuals that offer rationales for looting and warmongering by the state.

  • ΘJΘʃ de águila||

    FREEEST. hah.

  • space junk||

    I left California 10 years ago this year. The taxes are a killer. I had to go find new state where I could find work and work on a future for me instead of the moochers. California is 'FUCKED'. For too many years they let LA and SF dominate the politics. If you were to cut off SF and LA, you would have a conservative state. In fact, if it wasn't for Silicon Valley, that whole state would be screwed on revenue given it's current cost to do business structure.

    Now even Northern Virginia is being infested by these big government type parasites. Obviously, it is because the center of lustful power mongering and greed are in the local D.C. area.

    Think maybe we should buy some land down south...

  • JWatts||

    “California isn’t a state in which liberals have run wild; it’s a state where a liberal majority has been effectively hamstrung by a fanatical conservative minority that, thanks to supermajority rules, has been able to block effective policy-making.

    Translation: A Democratic majority for the last 40 years wasn't good enough, just give us a little more power and it will become a Liberaltopia. And if it doesn't it's because of the EVAL Republicans!

  • Otis B. Driftwood||

    I've noticed that Tony and the other empty-headed shill are always surprisingly absent when Reason runs a story on the ineptitude of California's legislators. Now why the fuck would that be? Why wouldn't they jump at the opportunity to dump mountains of data on us that disproves these misinformed Reason writers?

  • fish_remote||

    Because to Tony .....government...any government and its attendant policies are just of an extension of the good time he had when he served at "Boys State". The resolutions, the proposed legislation, that first blow job he gave in the tent to that dreamy lad from Nebraska....

    HE WILL TOLERATE NO IMPUNING OF GOVERNMENT EVER! EVER!!!!!!

  • fish_remote||

    Shit! Dropped the "G"

    Sorry T o n y....you're involved in education in some capacity aren't you...spelling errors have no place in trolling!

  • izzyabby||

    Wouldn't be prudent...it's against anti-bullying rules to discuss harsh facts and a truthful version of the situation.

  • XM||

    Most immigrants is CA won't leave because moving is expensive and there's no guarantee they'll find jobs elsewhere. Southern California and the Bay area might as well be the spiritual American home for countless Asians. You can exist there without speaking a word of English. Somewhere in Minnesota or Montana, not so much.

    California will be finished when something happens to their tech / tourism industry. They're being sustained by the 1% their residents hate so much. And they make a ton of money outsourcing jobs and such.

  • fredtyg||

    I'll disagree with Greenhut on at least one thing: California is hopeless.

  • SumpTump||

    Lets roll with it dude. Wow.

    www.GoPrivacy.tk

  • buybuydandavis||

    "Longer term ..."

    Longer terms they'll come up with new lies to keep themselves in power. Same as the federal government.

  • John Galt||

    Judging from past performances progressives will always be convinced the absolute failure of their methods only means they didn't go far enough to force enough of their garbage down enough throats in large enough quantities.

  • Alex the wolf||

    Are we are supposed to take PK seriously because he won a Nobel Prize?
    So what?

    The truth is that your chances of getting a Nobel price, particuraly one rlated to humanities, increases dramatically if you are from the left.

    Krugman has become nothing but a left wing agitator

  • ΘJΘʃ de águila||

    Well, yeah, Warlord Obama got his Prize for Progressive Invasions, Assassinations and Ultra-Violent Regime change. Left-wing talk for peace.

  • lenaheadey572||

    as Rachel answered I'm blown away that a person can make $7310 in 1 month on the internet. did you look at this link http://www.great90.com

  • ΘJΘʃ de águila||

    Blown away?

  • Sevo||

    "What would be require real bravery is if Reason discussed why."

    Uh, did you read the article?:
    "That city is decrepit largely because it spent most of its money on absurd levels of compensation for its workers and could no longer provide crucial services. Stockton may have taken it further than most, but it exemplifies the situation throughout California, which faces a half-trillion-dollar unfunded pension liability according to Stanford"

  • SaltySeaCaptain(LAOL)||

    Why can't tReason just give up on California? California, like most northern and midwest states, are done, toast. Instead of trying to "save" a state that half of the country would rather see slide into the sea, how about we focus on free states like Utah, Texas, and most of the south?

  • triclops||

    CA is still the most populous state, and one that used to be relatively free and fiscally responsible. Its decline affects 12% of the US, and serves as a canary in the coal mine for progressive political outcomes, that is why.
    I agree though, that I it would be nice to see more articles on the freer states.

    Though honestly, it seems like they are doomed too. The progressive leviathan is attracted to engines of wealth creation, only to suck them dry and move on to the next target. CA is taking longer to bleed than most. Silicon Valley will end up like Detroit, sooner or later. It seems like the parasite is fixed on TX next.

  • susandaved||

    If you think Kathryn`s story is neat,, a month-ago my uncle's girlfriend basically also earnt $7921 working a ninteen hour week from home and their friend's half-sister`s neighbour did this for four months and recieved a check for over $7921 in their spare time at there computer. follow the tips from this site and go to home tab for more detail .. http://www.big76.com

  • Ventura Capitalist||

    Here's an idea... why don't you, Kathryn, your uncle, his girlfriend and the rest of you inbred, knuckle dragging, stump toothed, flatulent trailer trash crapweasels go back to your double-wide meth lab and take your pathetic spam with you. OK?

  • Ventura Capitalist||

    I was a skeptic but now I'm totally on board the rocket train! This thing is finally going to get me off the 405. I figure my trip from Culver City to Westwood at 200 miles an hour should take about a three and a half seconds. Yippee!

  • mayajan67||

    If you think Rosa`s story is good,, 5 weaks-ago my aunt's step son basically also earnt $6603 grafting 40 hours a month in their apartment and they're classmate's sister-in-law`s neighbour was doing this for 4 months and errned more than $6603 part-time On there laptop. apply the tips on this page...
    HTTP://BIG76.COM

  • richarddozier@gmail.com||

    Spell check!

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