Economics

Is it true that California's "bad laws and regulations are not a license for lawlessness"?

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High taxes and intrusive regulations suck, but you should knuckle under anyway.

Over the weekend, the office of California Board of Equalization Vice Chair Michelle Steel took offense at my Friday H&R post about her state's new shadow economy-targeting Centralized Intelligence Project, which means that her obviously hard-working communications director, Arie Dana, had to kill time on a Saturday typing up a "correction." Much of that document is spin for an elected Republican who "has distinguished herself as the state's leading tax fighter" and yet linked herself to a grandiose tax-collection scheme. But there's an important philosophical point buried in there that's worth discussing.

Before philosophy, though, let's dispense with the basics. Arie objects, "J.D. is wrong in saying that there is a new bureaucracy if he means to imply that there will now be a new state department." But I don't mean there will be a new state department. Nor an agency, committee, troika or soviet. That's why I used the word "bureaucracy." SB 1185 calls for the hiring of new government workers to work on the Centralized Intelligence Project, hence "new bureaucracy."

Also, I'm supposedly "incorrect in saying that the cost of the measure is $2.5 million. Outside of the initial cost to interface IT and house integrated information, the other estimated costs or 'cost pressures' will be absorbed in each of the nine agencies existing budgets." But I drew my numbers from an analysis prepared on May 29 by the Office of Senate Floor Analyses. Click here, go to the "Bill Analysis" tab and select the top link. All I added was … well … the numbers, to get a total. And yes, the analysis does refer to "increased staffing costs to each of the participating state entities, likely in the range of $500,000 to $1 million," plus "[a]dditional staffing costs, likely in the range of $200,000 to $500,000 beginning in 2013-14, to hire an administrator and staff" plus "[a]dditional increased staffing costs in the range of $300,000 annually…" You get the picture, right? If the numbers are wrong, take it up with the source.

Oh, and by the way, costs allocated to "hire an administrator and staff to the Partnership" and "$750,000 to establish and house the Partnership's processing center" do sound, just a bit, like a new bureaucracy.

More important than whirling and twirling the words "bureaucracy" and "cost," though, are the following assertions in the "correction":

On the bill itself, it is a law enforcement bill, which passed out of the Senate without any opposition - not a single "no" vote. In each committee hearing and on the Senate Floor, the measure passed out unanimously.  …

While freedom-loving Americans must keep up the fight for liberty and against the State, we also have to live within and follow the laws that exist on the books. Bad laws and regulations are not a license for lawlessness.

This echoes Michelle Steel's statement in the BOE press release that "In a high-tax and high-regulation state such as California, it becomes attractive to operate businesses outside the law in order to obtain a competitive advantage over law-abiding citizens. We must work together to ensure that no California business is put at a competitive disadvantage for simply following the law."

While I'm aware that, in GOP circles, "law enforcement" occupies roughly the same status as the cult of Mithras did for Roman legionaries, not everybody shares that veneration. To insist that "[b]ad laws and regulations are not a license for lawlessness" is less a governing philosophy than a suicide pact. People aren't fleeing to the shadows because they really like looking over their shoulders and surrendering access to the courts and other legal protections. They're doing so because, as Michelle Steel concedes, California is "a high-tax and high-regulation state," and individuals and small businesses find it increasingly difficult — even impossible — to make ends meet under "the laws that exist on the books."

The legal way to avoid those taxes and regulations is to leave. From 2008-2010, according to the Tax Foundation's migration calculator, 112,186 more people left the state than moved in. Those people took $2,661,488,000 in adjusted gross income with them. Those who stayed behind but illegally ducked underground are still spending their money in the state — a better outcome, you'd think, for California.

Would Ms. Steel prefer that everybody follow the law — and leave?

But, as SB 1185 demonstrates, defiance of bad laws brings a lot of pressure on governments to change things. Enforcement is always the first recourse of control-freak officials, but many a truly shitty piece of legislation has shuffled off into the sunset only after being rendered unenforceable and ridiculous by mass disobedience. Family lore holds that my great-grandfather, Giuseppe Marano, was a grade-A prick, but nobody did more than he and his customers to promote the repeal of Prohibition simply by exchanging cold cash for colder beer across the bar of a Bronx speakeasy year after year. That simple act, multiplied millions of times across the country, made the re-legalization of alcoholic beverages inevitable in a way that magazine articles and speeches never could have all by themselves.

And that disobedience preserved a strong measure of freedom in the face of anti-freedom laws.

So it is with California's destructive taxes and regulations. People defy them so they can keep putting food on the table. In so doing, they stay a little freer than they would by obeying. And they put pressure on the powers that be to make changes that those powers don't want to make.

If I owe Michelle Steel a bit of an apology, it's for singling her out. I did so because she was quoted acknowledging her state's lousy business environment, and then endorsing the wrong "solution." Her colleagues, such as Chairman Jerome E. Horton, were quoted favoring the legislation just because it would put the screws on people and help increase the state's take (they assume). They're idiots; she apparently knows better.

And the people of California are fully justified in doing what they can to survive the state's ruinous policies.