Why Governments Are Lousy at Running Business, But Excellent at Scaring You About "Annihilating" Budget Cuts

Matt Welch | May 21, 2009

Good piece in yesterday's Wall Street Journal from John Steele Gordon (hat tip: Veronique de Rugy), reminding a forgetful nation why it is that state-run enterprises almost always end in tears. Here's one point that has resonance for those of us interested in California's tribulations:

Cost cutting is alien to the culture of all bureaucracies. Indeed, when cost cutting is inescapable, bureaucracies often make cuts that will produce maximum public inconvenience, generating political pressure to reverse the cuts.

What's that you say about "generating political pressure to reverse the cuts"? Here's the headline on an L.A. Times news piece today: "California braces for brutal budget cuts." The lede:

Gov. Arnold Schwarzenegger and lawmakers scrambled Wednesday to avert a financial meltdown, and public officials across California braced for annihilating cuts on the day after voters trounced their leaders' rescue plan for the state.

Italics mine, to emphasize the objectivity. In the parts of the newspaper actually labeled as opinion, Bill Maher blames California voters, UCLA prof Daniel J.B. Mitchell pines for a federal bailout, free marketeer Tom Campbell calls for a gas tax, and business columnist Michael Hiltzik advocates revising Prop. 13 and eliminating the two-thirds requirement for raising taxes, the latter of which the editorial board enthusiastically seconds.

Keep in mind that the "annihilating cuts" proposed thus far include trimming 5,000 employees out of a 235,000-strong state workforce (after a historic run-up in the state's employee-per-resident ratio). So: Only after hiking spending by 40 percent in five years, raising taxes across the board, matching even Gray Davis' deficits, and then getting spanked in a multi-tax suite of propositions, is California's debased political class even beginning to contemplate a 2 percent reduction in its bloated, tax-sucking workforce. Maybe voter petulance isn't such a bad thing after all.

Comments

Lefiti|5.21.09 @ 9:33AM|#

state-run enterprises almost always end in tears.

Like Enron?

Lefiti|5.21.09 @ 9:37AM|#

Goddamn you market fundie wingnuts are fucking stupid. I can't take this lunacy anymore. Delete me, I don't care. This is my last post here.

ChicagoRyan|5.21.09 @ 9:39AM|#

Lefiti,

All trolls are idiots.
The LA Times board is not a troll, yet they are also idiots.

And yet, both statements can be true! Amazing!

|5.21.09 @ 9:40AM|#

Maybe voter petulance isn't such a bad thing after all.

But will those petulant voters actually expunge the incumbents in the next election?

|5.21.09 @ 9:41AM|#

State behavior when revenues are down is indefensible. No matter what you think about the role of government, when a state threatens to free prisoners and shut down schools en masse, you know they're making such threats solely to justify tax increases or deficit/emergency spending. Obviously, there are other ways to cut costs temporarily that don't involve the government threatening public safety or the well-being of freakin' children.

Amy Alkon|5.21.09 @ 9:42AM|#

Also, the voter is consistently an ass, easily fooled by the propositions like the last one on the ballot, where the legislators have to balance the budget to get a pay raise. Of course, it doesn't say they can't raise taxes to do it.

Xeones|5.21.09 @ 9:43AM|#

Hey Epi, wanna work your magic and delete Lefiti? It said we could, so it's not coercion.

Colin|5.21.09 @ 9:44AM|#

Thank God for prop. 13 -- it's the only thing keeping this state afloat.

If it goes, so will the state.

|5.21.09 @ 9:45AM|#

But will those petulant voters actually expunge the incumbents in the next election?

As my mother often said "Why do you ask when you know the answer will be no?"

|5.21.09 @ 9:50AM|#

Lefiti pressed his Delete button, expecting himself to disappear as if he had never existed. In fact, he wanted to--his self loathing, though normally directed outward at others such as that idiot Xeones, was particularly acute today. The drugs weren't helping, and neither was the fifth of Bacardi 151 he'd slugged down. Maybe if he hit himself in the head with a hammer a few times? Maybe that would silence the voices, if only briefly?

Lefiti headed out to the garage.

|5.21.09 @ 10:00AM|#

I can't believe you are disagreeing with high profile libertarian Bill Maher!

|5.21.09 @ 10:01AM|#

is California's debased political class even beginning to contemplate a 2 percent reduction in its bloated, tax-sucking workforce. Maybe voter petulance isn't such a bad thing after all.

Oh come on. They're only considering the reduction in those unionized state employees because they know that that threat will cause the Obama Administration to bail out the state, just like how the Administration said that California couldn't cut salaries of unionized employees to save money if it wanted any stimulus money.

|5.21.09 @ 10:20AM|#

Revoke statehood!
These people are incapable of ruling themselves. Their political class are incompetent and so corrupt, only fire could clense them. Their state constitution is un-workable.

Send some General to rule as Territorial Govenor and rule them with the iron fist they deserve.

SURGE AND PURGE!

some dude|5.21.09 @ 10:35AM|#

"bloated, tax-sucking workforce"

I don't get the anger at the workforce. To any person out looking for a job, a state job is the same as any other job. If they determine that working for the state is better for them than working in private industry isn't that what we should expect them to do, as a rational actor in a capitalist system? You can't blame workers because the managers hired too many people. Blame politicians, unions, etc, but the workers?

But then there are some that believe the butcher, the brewer, or the baker should give you dinner not for their own benefit, but out of benevolence.

Joel|5.21.09 @ 10:42AM|#

But will those petulant voters actually expunge the incumbents in the next election?

Oh, hell no. Being utterly discouraged when they're not utterly brainwashed, they wouldn't if they could. But they can't - you think U.S. congressional districts are safe? California districts are locked in, the hasps set in concrete. You get in the Assembly, you don't piss off the party apparatchiks, you've got a job for life. Not that job necessarily, since term limits, but a job. They'll take care of you, and the voters be damned. Sacramento laughs at the very thought of voters in actual elections, which is why voters can get so angry and motivated when these proposition votes come up. It does them no good, but it's cathartic.

Gilbert Martin|5.21.09 @ 10:43AM|#

"I can't believe you are disagreeing with high profile libertarian Bill Maher!"

Maher is a libertarian in the same way that Ghengis Khan was a humanitarian.

|5.21.09 @ 11:12AM|#

A state job is not the same as any other job. No job is the same as any other job. They all have different risks and they all involve working for different people. I have no problem with someone working for the state, but I also have no problem seeing them get fired when the state runs out of money.

Cal Lipigian|5.21.09 @ 11:49AM|#

Maher is a libertarian in the same way that Ghengis Khan was a humanitarian

If you read his article, he does sound more like the Pre-Bush Era Bill Maher. Maybe he is rediscovering his libertarian leanings now that the Dems are back in power.

mark|5.21.09 @ 1:10PM|#

Balanced Budget Amendment! Balanced Budget Amendment!

Your best chance for liberty. Pass it along...

Civil Discourse|5.21.09 @ 1:14PM|#

"Balanced Budget Amendment! Balanced Budget Amendment!

Your best chance for liberty. Pass it along..."

Stupid, stupid stupid. Pass it along...

johnl|5.21.09 @ 2:02PM|#

Once spending is under control maybe a gas tax will also be needed to carry all the debt we've built up. But it makes no sense to increase taxes before spending is cut.

|5.21.09 @ 2:25PM|#

Fire half of all administrators out of every department across the board. From the schools to the jails to the granite edifices in Sacramento. That would be a start.

Gene Berkman|5.21.09 @ 7:22PM|#

I voted the way California voted - No on everything except limiting the pay of legislators. And the one good response is that the commission which sets legislators salaries gave them an 18% pay cut the day after the election.

Bill Maher's column was annoying as usual, but his main point is valid - Californians want something for nothing. The government runs a deficit because people want something from government but want low taxes too. The federal government works the same way.

|5.22.09 @ 2:45AM|#

An 18% pay cut - - - THAT WON'T TAKE EFFECT UNTIL THE NEXT ELECTION TERM STARTS.
The trolls have already fixed it so that you can't touch them NOW. Any "pay cuts" can't be imposed NoW - by law, only at the start of the next legislative term.
Which is why after reading the hinkey language in the actual proposed legislation I explained to everyone I know the reasons for a no vote on 1f. The politicos in California are very experienced at making no read yes and black appear as a dazzling white.