Fixing the California Crackup

Last month, Joe Mathews and Mark Paul of the New America Foundation came to Sacramento to promote their new book, “California Crackup: How Reform Broke the Golden State and How We Can Fix It.” Few if any in the audience at the University of California Sacramento Center took issue with the “crackup” part.

“California doesn’t work because it can’t work,” said Paul. He outlined majority rule, a consensus-based system and the initiative system as three governments essentially at war, making for statewide dysfunction. Mathews explained that California never had a proper founding but needs one now because “it’s time to grow up.” No one else, he said, “has an initiative process the legislature can’t change.” As in the text, Proposition 13 was a big part of the problem.

On the fix side, Paul made a case for smaller districts, more legislators, and elimination of the “whips and chains of budget bondage.” It is time to “clean out the closet” and implement “democratic budgeting.” Mathews argued for making the initiative process less attractive and making it “impossible to circumvent the legislature.” His co-author conceded that “Californians don’t trust the legislature.” Their book gives plenty of reasons for that mistrust.

“California Crackup” is an entertaining primer on key campaigns and players in California government. Legislators may find merit in some of the recommendations, but all readers have reason to doubt whether they would fix a cracked-up state with a budget deficit in the range of $20 billion, an unemployment rate of more than 12 percent — likely much higher — and the credit rating of an unemployed carnival worker. “California Crackup” assumes we can fix things simply by remodeling the architecture of government.

This ignores the role of ideas and other realities. Suppose we had better representation, even an assemblymember for every Californian. If those legislators voted to spend more money than the state brings in, that would hardly amount to a fix.

In his list of warring “governments,” Paul neglected to include government of, by and for public employee unions. In this arrangement, which currently dominates California, public employee unions can elect those with whom they negotiate salaries, benefits and pensions.

The authors lament “the billions in borrowing that will hurt future generations” and “the billions more in retiree pensions and health benefits that there’s no money to pay for,” but they keep some issues off the table. They are unwilling even to ask whether California should maintain collective bargaining for state employees, which dates only from the 1970s.

Is it a good idea for California state and local government spending to represent 22.3 percent of the state economy? As a forthcoming study in PRI’s California Prosperity Project shows, that is almost twice the size, 11.4 percent, that corresponds to maximum economic growth, according to the best research.

Is it a good idea to maintain a top income tax rate of 10.55 percent, third-highest in the country? Californians who earn $47,055 are hardly “the rich,” but the state shakes them down for 9.55 percent of their income, in addition to what they pay the federal government. Would it help the state economy to give those workers some relief?

Mathews and Paul are right that California is enduring a crackup. But more legislators, more districts and a more restrictive initiative system won’t fix what ails the Golden State. We need smaller government, spending reductions, fewer regulations and a tax system that promotes enterprise and entrepreneurship. Without those reforms, the crackup will continue.

K. Lloyd Billingsley is editorial director at the Pacific Research Institute.

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