Time for Radical Reform in California

Looking at the budget crisis, Governor Schwarzenegger has ordered a temporary reduction of the salaries of 200,000 state employees to the minimum wage. This gesture is largely symbolic, for it will probably not last very long. Meanwhile, the governor is scheming to borrow $9.3 billion more in the form of a water bond.

Some commentators have pointed out this disconnect, but Schwarzenegger has consistently championed bonds while claiming fiscal discipline. He campaigned in 2003 on a platform including large bonds, and within a month of election he was campaigning around the state for a $15 billion bond.

He’s supported bonds since, most notably in 2006 when he backed a bipartisan $42.7 billion bond package for transportation and education infrastructure, housing programs and flood control.

California needs dramatic reforms. The budget crisis is very real, and with the recession kicking in nationwide, the reforms will have to be much more than a temporary cut in state employee pay.

For the last several years, the federal government through the Federal Reserve has been prompting an artificial, inflationary boom in the American economy, particularly among real estate. As the economic laws of gravity reassert themselves, as savings and investment, and supply and demand, fall back into balance with one another, an economic “bust” – recession, depression, downturn, whatever you want to call it – is inevitable. Prices must fall, as they have been in housing. Businesses will have to cut back on production costs. Americans will have to spend less. This is painful but it cannot be stopped through government spending. Delaying it will make it worse.

The government too, at all levels, must cut spending, in fact. It is only fitting that the public sector, which brought on this mess, should have to take a hit as well as the private sector and the millions of families and businesses throughout America.

State governments have no wealth of their own – only what they forcibly confiscate through taxation, forfeiture, and eminent domain; or borrow on behalf of future generations, without their consent, through bond schemes, but that can’t persist forever. Unlike the feds, state governments can’t just print more money – a blessing, because that is the cause of inflation.

So something has to give. Libertarians have always argued that the government should do virtually none of what it does today – that the best solutions to society’s problems and needs come from private enterprise, community, family, and individuals cooperating voluntarily, without a politician’s gun to their head.

This agenda might seem quite radical. Well, so will a much more modest vision of slashing government, at least compared to the budget-busters currently running the state. But we need relatively radical reforms for this severe budget crunch.

The state should sell off its extraneous assets. According to economist William Shughart at the Independent Institute, “California is sitting on a gold mine of surplus property that could be sold for ready cash. According to the real estate division of the Department of General Services, the state government’s landlord, on Jan. 2, taxpayers owned 22,727 buildings and more than 6.7 million acres of land at 2,313 sites.”

At last count, the state had 55 “surplus” properties. It should have none. And, as Shughart continues, this “is just a starting point. State and local governments nationwide own and often operate professional sports venues, convention centers and other public facilities that could produce billions in revenue if sold or leased to the private sector.”

Another way to save billions: End the war on drugs and the other wars on victimless crime. In the early 1930s, partly to deal with the Depression, the United States ended alcohol prohibition, which resulted in more tax revenue and, despite the economic hardships, lower crime. An economic slump is not the time for costly self-righteous crusades against vice.

The governor initially considered the early release of 22,000 minor offenders from the overcrowded prison system, but then backed off. Instead, he should immediately release all persons in the state criminal justice system who were convicted solely of drugs or other victimless crimes. He should cut police spending dramatically and stop wasting resources going after peaceful people. This would save billions of dollars. Even better, the freed prisoners and discharged officers would then enter the private, productive sector, where they could help build the economy rather than living off the taxpayer.

Yes, even these proposals will seem drastic to many Californians. But we can’t afford such luxurious public enterprises and a war on drugs. Even if you think government has a right to finance sports arenas and jail potsmokers, the state is going broke and will have to cut – and cut much – and soon, if we want to weather the recession.

23 thoughts on “Time for Radical Reform in California”

  1. Bob Bogus

    Everything you say is true but how can you not mention that Ahrnold wants to raise the sales tax another percent?  And with a recession kicking in to boot.  In some parts of the state that will kick the sales tax to almost 10%.  He also wants to borrow against future lottery revenue.
    Ahrnold is a true Republican. Borrow and spend, generate monstrous debt and when that becomes untenable raise taxes while repeatedly preaching from the highest mountain that he is a fiscally responsible conservative. Of course the Democraps will be more than happy to help him raise taxes and spend more money. Taxifornia sucks and has become a real shit hole.
    You can bet Ahrnold and his buddies in the legislature will keep up the spending, borrowing and taxing as long as they can. The only thing that will stop it is a very angry revolt by taxpayers.

  2. SteveC

    Anthony….. These are not MISTAKES…..The plan is to create this deficit and then be bailed out by turning over public infrastructure to privately held investment consortiums and sovereign wealth funds for cents on the dollar…The political leadership is the “paid back” by getting 7 figure salaries as “consultants” to the entities after they leave “public” office…. Ya Gotta know The Game.

    1. Phil

      Hey Steve,If this is California, you wonder what the books look like here in Jersey ??I worry about the pension funds being solvent as my wife is a teacher.

  3. MikeL

    Nice post, Anthony. We’re trying like hell to get out of California but it’s damn hard for us to do for about 1000 reasons. Have you ever thought about living somewhere else? If so, where? I grew up in the South and miss my family and aspects of the southern landscape dearly (unlike here, for example, you can actually get in the water there), but I cannot stand the southern welfare-warfare mindset. It’s no accident that Ron Paul’s worst showing was in the southeast. They are the worst of statists. . . . and damn proud of it! So, for the time being, me and mine will have to slug in out in Cal and cross our fingers that the economic collapse here will be as painless as possible for regular folks.
    thanks, m

    1. Bob Bogus

      I tell ya Mikel, ya should hear the fun Arnie and I have with the telemarketers.  :)  Maybe I otta record it sometime…

      1. MikeL

        Bogus, you must be the last man in Amerika who gets harassed by telemarketers. Put yourself on the “do not call” list for chrissakes. Unless you enjoy it, of course.

  4. Anthony Gregory

    Thanks for all the comments. I wrote this for the CA LP, and it’s not online over there, so I stuck in here. That’s why it’s a little wonkish and gentle.
    But yes, Arnold’s sales tax idea is just horrible. Very horrible. And anti-poor people, of course.

    1. Bob Bogus

      Hey Anthony, I agreed with everything ya said and thought it was a good article.  I wasn’t tryin’ to be critical or anything but that sales tax increase proposal really fries my shorts.  I’m sick of how these parasites find every which way to pick yer pockets…Speaking of which did ya hear that these paraticians (parasite + politicians, but I repeat myself) wanna apply the bottle tax (aka California Redemption Value aka the Bottle Bill) to ALL plastic containers???  And the fuckers just raised the tax a few months ago.
      That and the sales tax increase makes me wonder why no one in California uses the ballot initiative process to get this shit knoced down.  Ya know the paraticians always make a big deal about how open (supposedly) the initiative process is in Taxifornia.  <b>So why isn’t it ever used to take back power seized by the state and special interests?  It’s ALWAYS used for the opposite.</b>

      I got some ideas for some initiatives: one to get rid of the bottle tax, one to lower (or better yet get rid of) the sales tax and some others.  Nothing like that Carla Howell in Taxachutes who’s trying to get rid of the income tax but shit why not start small?  Better than nothin’.
      Anthony, <b>why doesn’t anyone use the initiative process in Taxifornia to help advance freedom?????</b>

  5. Anthony Gregory

    Manuel Lora writes,
    Ah, but there’s a catch to lowering the salary: http://developers.slashdot.org/developers/08/08/05/1816206.shtml“Last week, California Governor Arnold Schwarzenegger ordered a pay cut, to minimum wage of $6.55/hr,, for 200,000 state workers because a state budget hadn’t been approved yet. The state controller, who has opposed the pay cut on principle and legal grounds, now says the pay cut isn’t even feasible because the state’s payroll systems are so antiquated. He says it would take 6 months to go to minimum wage, and 9 months more to restore salaries once a budget is passed. The system is based on COBOL, according to the Sacramento Bee, and the state hasn’t yet found the funds or resources, in 10 years of trying, to upgrade it.” The article quotes a consultant on how hard it is to find COBOL programmers; he says you usually have to draw them out of retirement. Problem is, if there were any such folks on the employment rolls in California, Gov. Schwarzenegger fired them all last week, too.

  6. SteveC

    I don’t know about the books in NJ….I got my $500 canned food stored, about 3 months of bottled water, but unfortunately no gun…… I also bought some heirloom seeds and will learn how to save seed…. If you have a shotgun I might be willing to share my food stores IF YOU ARE ARMED AND HELP GUARD THE FOOD.

  7. Phil

    SteveC,Put your faith in God. But I am not talking about the god that Hagee prays to.  Hagee better repent because based upon what he’s saying and doing, he has a one way ticket to Fire Lake.  He just isn’t smart enough to realize it yet. If things get that bad, you will be like the farmer in the movie,  The Day After.  He prepared for everything and wound up getting shot by those who didn’t (and he was armed by the way).   If people don’t pull together when things get bad, it won’t matter how much you prepared for.  I am not optimistic about this generation of Americans doing the right thing but I could be wrong.

  8. MikeL

    I’m on the fence about preparations for disasters and all that, but the realist in me leans toward phil’s position. If things got really bad you’ll find yourself defending your property and family from defenseless women and their children and a few fathers that are still around. Are you gonna shoot kids when you catch them stealing your tomatoes?
    But what if the disaster is only Katrina-like in scale and therefore a more likely occurrence? In that case I think that Steve is doing the right thing. You could conceivably get shut in the home, w/o electricity or other support, for five or six days, if not more. Without spare food around you’ll be knawing off your toenails in two days.
    So, Steve, how did you know what canned goods to buy? You got any links you can send? And what kind of containers do you hold your water in? Glass? Plastic will degrade of course. thanks, m

  9. SteveC

    Plastic will degrade?  I got about 25 cases of Dasani / Poland Spring Water in Plastice bottles (24 bottles per case)….I use the older stuff first and buy more, but always keep 25 cases on reserve….Bought Heirloom seeds from this guy…………http://www.survivalistseeds.com/Got a bunch of canned goods from BJ’s & Sams….A lot of rice…..A variety of canned beans (pinto, black, kidney, garbonzo)…..canned turkey, chicken, and tuna…Got  150 or so cans of Healthy Choice soups (all water based)….Spike them with a can of white meat chicken….I get a bunch of the smaller cans packaged together rather then a few large cans…. The kids like Dinty Moore Stew, Chef Boyardie, and then Ramen Noodles so I stocked up on them. Also, got a backlog of multivitamins and powdered green foods.

    1. MikeL

      Probably the best thing for long term storage of water is 5 gallon glass bottles. Glass is inert. These can be do double duty and hold noxious or volatile chemicals like gasoline, biodiesel, or home brews like wine and beer. You’ll be needing lots of the latter if the world falls apart. I have no idea how much glass bottles cost, probably about $25 from wine or beer supply places. This place sells a big plastic jug for wine-making so maybe it’s a good alternative to glass. Or just have a bunch of the sturdier 5 gal dispenser bottles, delivered. That plastic has got to be less noxious than the soft plastics they make soda bottles out of. Feel me?

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