Economics

Recently at Reason.tv: Hasta La Vista, Arnold!—What California's Economic Mess Means for America

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Two updates since this video went live on Thursday, May 14, 2009.

First, Gov. Schwarzenegger has announced plans to sell off San Quentin Prison, the L.A. Coliseum, and other non-essential assets that cost the state money (just like we advised him to!).

Second, Teacher's union President A.J. Duffy, who appears in the video and talks about "twisting arms" and "threatenin' people" on behalf of public employees, has been arrested for blocking traffic during a protest held earlier today.

He was the perfect political superhero, sent to rescue California from spend-happy politicians at just the right time. And yet Arnold Schwarzenegger's reign as governor has turned into a disaster flick that could spell catastrophe for the Golden State-and the whole nation.

In 2003's historic recall election, the former Mr. Olympia pummeled dozens of candidates-from incumbent Gray Davis to former child actor Gary Coleman to porn star Mary Carey-on the road to Sacramento. He promised to abolish the odious car tax hike implemented by Davis. And to balance the budget, cut taxes and spending, and make California more business-friendly.

"He promised to stop the crazy deficit spending, cut up the credit cards, live within our means. And he did exactly the opposite. Schwarzenegger increased spending faster than we saw under Gray Davis," says Rep. Tom McClintock (R-Calif.), who was a state senator-and one of Arnold's challengers-six years ago. 

Now the Golden State faces yet another spending-induced catastrophe. California could simply go broke by July. Sacramento reacted to the latest crisis by passing a massive tax increase in February, squeezing another $1,100 from the average family. Even the dreaded car tax, the issue that catapulted Arnold to office, is back.

How could it all have gone so horribly wrong, especially after it looked so wonderfully right? Well, it turns out there's a force in California politics that's much more powerful than the Governator: a culture of spending pushed by public-employee unions, money-grubbing corporate-welfare cases, and more.

Sadly, California and Schwarzenegger are hardly alone in spending well beyond their means. As many as 40 states face whopping deficits that are only going to get worse as the recession continues.

If country-wide trends do start in California, Rep. McClintock worries about what's in store for our nation. "As high taxes, high borrowing and high spending destroy California's economy, Californians are moving to those 49 other states. If we allow the same policies to destroy our country where are we going to go?"

"Hasta La Vista, Arnold" is written and produced by Ted Balaker. Director of Photography is Alex Manning and Associate Producer is Paul Detrick. Approximatley 10 minutes.

For embed code, audio podcast, iPod and HD versions, and related articles and videos, go here.

NEXT: "Even in California, you may not be able to sustain a class action lawsuit against a product that worked fine and didn't harm you."

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  1. “As high taxes, high borrowing and high spending destroy California’s economy, Californians are moving to those 49 other states. If we allow the same policies to destroy our country where are we going to go?”

    Californians move out to other states and vote for the same policies that destroyed California. Liberal Californians are like a virus spreading and destroying the country one community at a time. In the 1930s, Californians tried to keep dust bowl okies from coming into the state. Now in 2009, innocent states like Oklahoma and Colorado, need to start turning Californians, especially ones driving Priuses or with Obama stickers away at the border.

  2. Is there something wrong with moving this story up from time-to-time or are we supposed to comment on every copy?

  3. Seems to me ole Arnold should stick with what he knows best. Making movies and pumping iron!

    RT
    http://www.whos-watching.net.tc

  4. What California’s economic mess apparently means for America is goddamn reposts on Hit & Run. Thanks a lot, Governator!

  5. Not only do we have to close the border to keep illegals out, we’d better make damn sure we do not let these fleeing Socialistic Californicators in either. The other 49 states fiscal lives depend on keeping these cretins OUT. Lock down the state borders.

  6. Sage,

    Maybe California can build a wall to keep people from leaving?

  7. “Sage,

    Maybe California can build a wall to keep people from leaving?”

    That is where socialism always leads. Give it time.

  8. Sounds like an “Escape From…” Reference to me, dude!

  9. If the problem was just socialism then New England would be in much worse shape than California, but the opposite is true. California’s problem is pretty obvious – it’s immigration. Immigration is creating massive social problems, and the millions of low skill, low income immigrants provide the fuel to keep the public employee unions at the troughs – money for schools, money for social programs, money to get low income kids into university, on and on. Unfettered immigration sounds like a nice libertarian principle on paper, but the reality is that it’s tearing apart the social fabric of California.

  10. What’s funny about this is that McClintock agress with Vanya; Reason apparently didn’t ask him about that issue.

    CA has spent billions and billions subsidizing crooked businesses, crooked politicians, and crooked governments. And, never once has Reason said they shouldn’t be doing that; in fact, Reason has done it’s part to help. Now, it’s coming home to roost.

    If Reason had made their proposals all-or-nothing, that would be one thing. But, they have never done that: they’ve never said that they’ll only support OpenBorders once the WelfareState is demolished. They’ve supported OpenBorders and MassiveImmigration despite knowing what would happen in the real world where, for instance, many CA legislators act more like agents of the MexicanGovernment than U.S. elected officials.

    Here’s more on California governor Arnold Schwarzenegger, including things that – of course – Reason won’t tell you.

  11. In Schwarzenegger’s defense, he did sponsor the “Live Within Our Means” ballot initiative that sought to substantially reconfigure California’s budgeting system. The voters shot it down by something like 70-30. After that Schwarzenegger seems to have just given up.

    In retrospect it would have been better if he tried King Canute like to order back the tide of spending that Californians seemed to have craved beyond all other things. He would have spent years sidelined but once the bust hit, he might have had the moral authority to make real changes.

    On the other hand, California’s real problem is political culture hostile to commerce. Once you have that, a place is pretty much doomed. Our future goal should be to prevent Californians dysfunctional culture from spreading.

    Instead of building walls to keep out hard working Mexicans, places like Texas should build walls to keep out socialist Californians.

  12. Good job by Shannon Love to double-down. Despite the fact that the billions spent on “hard working Mexicans” (with much of that helping their corrupt government and corrupt CA businesses) clearly play a large role in CA’s problems, idiots like Shannon Love think doing the same thing CA has been doing all along will make things better. Somehow, in Shannon Love’s wee mind, giving far-left racial demagogues even more race-based power will make things all better, despite those far-left racial demagogues being one of the engines driving CA off the cliff.

    CA is a good example of how both the “libertarian” fantasy of MassiveImmigration and the “liberal” desire for race-based power can destroy a state.

  13. “Instead of building walls to keep out hard working Mexicans, places like Texas should build walls to keep out socialist Californians.”

    Of course the Mexicans are socialist to. I bet they voted against the initiative in greater numbers than the rest of Califonia. Of couse they come from a socialist hell hole themselves. If Texas should build walls to keep socialist californians out, perhaps they should do the same with socialist Mexicans.

  14. As high taxes, high borrowing and high spending destroy California’s economy, Californians are moving to those 49 other states.

    Well, not so much to Hawaii, now that we have the highest top marginal income tax rate in the country (raised from 8.5% to a whopping 11% a few days ago).

  15. In retrospect it would have been better if he tried King Canute like to order back the tide of spending that Californians seemed to have craved beyond all other things. He would have spent years sidelined but once the bust hit, he might have had the moral authority to make real changes.

    Moral authority doesn’t matter if you’re out of office. The Goveranator read the political winds and decided to save his career and plant his okole squarely in the political center, which in California is well to the left of the rest of the country.

  16. Typical liberals. Vote for spending and debt, then when the bill comes due, flee the jurisdiction. The place you flee to will get your smug, self-righteous lectures about your moral superiority when you try to repeat the cycle there.

  17. Why is nobody on the ball today? Shut the fuck up, LoneWacko.

  18. Why is nobody on the ball today?

    Yo, fuck Schwarzenegger.

    …and Lonewacko.

  19. In other news, Drudge is currently linking to this, about a GreenEnergyHouse failing. My comments are here. Reason definitely falls in the “ha-ha” camp. (Or in the 3b camp, which involves massive GovernmentSubsidies to ConnectedContractors.)

  20. Here is a breakdown of a poll taken the eve before the vote on Prop 76 the “Live Within Our Means” initiative.
    http://www.surveyusa.com/client/PollReport.aspx?g=6dc431a5-8970-4caa-8c41-8480863dfe28

    Decide for yourself if run away hispanic immigration is good for the US.

  21. Scott66:

    We find different things interesting in the link.

    To me the most interesting thing is that asians are not considered to be distinct racial group while blacks are. There are more asians than blacks in CA.

  22. There are more asians than blacks in CA.

    Damn immigrants!

  23. Lets stop bickering and finger-pointing. We all have to live together on this planet until we have the means to settle on Mars or elsewhere… Lets take those first steps to get our species sustainable within our means without destroying our only true home, our planet Earth… If we can get past party politics, and snobbish financial crap and (sorry but I hate to sound like a Trekkie although I will in a second) get rid of money entirely… What money in general has done is simply rename and reenforce horrific systems such as the caste systems many of us learned about in our earlier days in school… We need to stop acting solely based on what benefits our pocketbooks and start acting based on what is the right thing for the children of our childrens grandchildren, and so on… Abolish money and there will be no poverty… Simple as that. The truest form of equality can be found when there is no money to separate a rich man from a poor man… Do things based on what is best for our species and our planet… Kinda like how it is depicted in Star Trek… Imagine that. Think on that. Don’t laugh, it might be something that would work better than anything else – EVER.

  24. Abolish money and there will be no poverty… Simple as that.

    LOL, that’s cute. Abolish scarcity and there will be no poverty…theoretically. People will find reasons to keep even the most abundant of resources away from others, especially without property rights.

  25. Think on that. Don’t laugh, it might be something that would work better than anything else – EVER.

    The Khmer Rouge implemented the most pure form of collectivism i know of.

  26. Unfettered immigration sounds like a nice libertarian principle on paper

    It’s not a nice libertarian principle, even on paper. Unfettered immigration is tantamount to invasion, which guarantees the destruction of any libertarian state stupid enough to permit it.

  27. All Scott66’s charts say is that people who are liberal minded– IE the great majority of Californians, no matter what race (whites were nearly 50/50 divided) voted against the budget reform.

    Immigration in itself isn’t the problem… it’s the ideals that everyone “deserves” to be taken care of by the government that is. No one seems to have the patience to wait the years and/or generations it takes to gradually grow out of poverty once living under a freer economic system– it doesn’t happen overnight. But contrary to what some might say, many immigrants’ children and their children are much better off than their parents and grandparents. The problem is with policies that try to make it happen immediately.

    Immigration can be good for growing areas and maintaining that growth. In an un-socialistic state, if there weren’t enough jobs to support this level of immigration, immigration would gradually stop or transition to a different area. Yet, even if jobs are hard to find, the incentives to moving to an area wherein normally they couldn’t make a better living, BUT receive free schooling and free health care, which by law must be given, interrupts that natural cycle.

  28. Nobody wants to move to Oklahoma; maybe Colorado or Arizona.

  29. At least the Mexicans aren’t Muslim. We could be like France.

  30. At least the Mexicans aren’t Muslim. We could be like France.

    That’s an explicit example of the “invade and take over” species of immigration, aided and abetted by their own government. The no-go zones are de facto Islamic mini-states within France where French law no longer applies. No sovereign country should tolerate that in the least.

    In many respects, the liberal demand that we “respect” Mexican culture and values has similiar results. It means that Mexican immigrants are under no pressure to drop the dysfunctional values that make Mexico a horrible place, so enclaves of Mexican immigrants tend to replicate the violence and oppression of their home country. While they do not yet attack fire fighters and police, like French Muslims do, if groups like MECHA have their way it would not surprise me to see that in the future.

  31. “It’s not a nice libertarian principle, even on paper. Unfettered immigration is tantamount to invasion, which guarantees the destruction of any libertarian state stupid enough to permit it.”

    Just ask the Mexicans about what happens when a bunch of Tennesseans move into an area which later became The Republic of Texas.

  32. You win in politics by saying Yes, not No.

    oat willie:

    You forgot the German and English settlers who’d been there far longer, and that Texas was Indian and Spanish territory, not Mexican, at the time.

    A great resource for your edification:

    “Lone Star” by T.R. Fehrenbach

  33. It isn’t so much the existing jobs that are going to lower tax and spending states. What matters is the investments, small business formation and future jobs in those states. An Apple computer today would not choose Cupertino. The lost opportunties are hard to measure, but will the California’s ultimate downfall. California still spends a lot on first class research universities like Stanford and Berkely, which spun off Silicon Valley. The new Silicon valley firms that stay in the U.S. won’t be forming in CA.

  34. If any posters here referred to illegal aliens, I missed it. The word “immigrant” is frequently used and refers to people who abided by our laws to become U.S. citizens.

    Is that what we’re talking about here?

  35. California’s problem is pretty obvious – it’s immigration.

    Oh, get bent. The problem is the tax-and-spend attitude in Sacramento, and the nazis weren’t exactly known as paragons of fiscal discipline.

    -jcr

  36. Decide for yourself if run away hispanic immigration is good for the US.

    I’d rather live next to the average Mexican than an asshole like you.

    -jcr

  37. -jcr

    The problem is shitheads like you who are so tied up in being cool that you refuse to discuss a problem rationally.

    Despite the fact that people come from different cultures, we all think exactly the same way. Your just a fucking genius aren’t you?

  38. Could the tax on capital gains be part of the problem? We just had a commodity and real estate boom. How much extra revenue was generated for CA by the CA income tax on these items? That money source has dried up, so how can we support the new programs begun in the boom years?

    At the same time I notice that property tax, which is the most stable source of tax revenue, is low — about 1% a year (may be 1.15% or so depending on the county), and acquisition value based, and can increase only 2% a year. What would happen if we banned the FTB from taxing capital gains but fiddled around with prop 13: For example what if we set the set the annual increase to 5%; or/and we make it market value based (as opposed to acquisition value based) depending on your California AGI; or/and we say 2nd and investment homes don’t qualify for the preferred treatment.

    Someone mentioned Hawaii on this thread. Do they have an equivalent of prop 13 as well?

  39. Maybe we should just keep all the Californian federal tax revenue in California. I’m sure that would solve our problems here… But what’s that ? The red states need our money or they starve ?

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