Another One Becomes Part of the Solution

Things can get so bad as a result of the liberal/left agenda that sometimes even liberals/leftists recognize the folly of their ways.

That’s what happened to Gina Raimondo, the Rhode Island state treasurer who was mortified to see the union-driven state pension system turn into a black hole, sucking in money and resources at the expense of everyday public services. The leftist-dominated state has resulted in there being more public pensioners than workers paying into that system.

Ms. Raimondo read “an article in the paper about libraries closing and public bus service being cut nights, weekends and holidays, and I just thought it doesn’t have to be this way.”

Of course for most liberals, the solution would be simple: raise taxes. But the now-bankrupt town of Central Falls provides a good example of what happens when you do that. When it raised property taxes to finance worker pensions, “many residents fled, sending the city into a tailspin.”

So Raimondo helped push through pension reforms in order to help stem the state’s deteriorating situation.

Hey all you Wisconsinites who want to throw out Governor Walker: can’t you see that Walker has been doing almost exactly what Raimondo has been doing? He’s trying to prevent your state pension system from turning into a black hole that gobbles up everything in sight like libraries and roads and schools and parks. Quit being part of the problem and be part of the solution for a change.

Of course the only difference is the label – Raimondo calls herself a Democrat while Walker calls himself a Republican. Walker is having a tougher go of it because the term Republican has been so demagogued by the left, even though he, like Raimondo, is only trying to save the state from the ravages of union-created black holes.

California’s Vicious Circle Continues

California recently was ordered to free 55,000 prisoners because it can’t afford to hold them. It’s yet another manifestation of essential government services getting crowded out by wealth redistribution.

As pointed out below (under the Jan. 24, 2010 entry), in the past decade California state pension costs skyrocketed 2,000 percent. Many union workers can retire at age 50, with 90 percent of their pay, for life. 15,000 of them get more than $100,000 per year. That includes life guards.

In 2009, at least $3 billion was diverted from other government services to pension costs.

As Walter Russell Mead writes, “California’s public unions are sucking the state dry — like a parasite killing its host.” He quotes the “great Louisiana prophet of the blue social model Huey Long: ‘If you aren’t getting something for nothing, you’re not getting your fair share.'”

That so sums up what those on the left stand for these days. They’re always talking about getting their “fair share”. Most of the time, they mean getting it for nothing. (Typical is when some interest group gets free government benefits, and some other interest group screams that they should be getting the same or similar benefits in order to get their “fair share”.)

As explained here, California is caught in a vicious circle. “Constituencies sympathetic to businesses are leaving California in increasing numbers. Meanwhile the state’s generous social welfare programs pull in lower-income people – both from the within and outside the United States – who typically vote against the interests of businesses. With fewer pro-business and more anti-business voters (i.e. fewer Republicans and more Democrats), the result is even more regulations and higher taxes, driving even more businesses out, and so on.”

“Californians have slipped from having the 3rd highest per capita income in the country in 1959, to the 13th highest now. What’s their solution to reverse the trend? Measures to make the state business-friendly again? No. Most of the state’s elected representatives are trying to remedy the situation with more tax increases; part of the vicious circle.”

“So businesses will flee the state even faster. Fewer businesses will want to move there. Entrepreneurs won’t want to set up shop there.”

And its status as a failed state will be driven home even further.

For Government Workers, No More Job Security and Lower Pay. Now, it’s Job Security and Higher Pay. And State Bankruptcy.

Is it “conservative” or “liberal” to be concerned about public employees’ pensions that are devouring state budgets, leaving less and less left over for essential government services?

Usually that’s considered a “conservative” position, although it’s difficult for me to understand how liberals aren’t alarmed by that as well. Occasionally you come across a liberal or two who is. They include prominent California Democrats Willie Brown and Bill Lockyer. The latter said the pensions would “bankrupt” the state, and Brown astutely observed,

“The deal used to be that civil servants were paid less than private sector workers in exchange for an understanding that they had job security for life. But we politicians—pushed by our friends in labor—gradually expanded pay and benefits . . . while keeping the job protections and layering on incredibly generous retirement packages. . . . [A]t some point, someone is going to have to get honest about the fact.”

But don’t get your hopes up. My bet is that not enough liberals will come around to, in Brown’s words, getting honest about the fact. (If they did, wouldn’t they then be considered sellouts to the conservative cause?)

Get this: Just in the past decade, California state pension costs skyrocketed 2,000 percent. That’s 20 fold! At the same time state revenues only went up a measly 24 percent. Many union workers can retire at the tender age of 50, with 90 percent of their pay, for life! 15,000 of them get more than $100,000 per year.

This year alone, reports Steven Greenhut, $3 billion has been diverted from other government services to pension costs.

You can call wanting to fix something like that “conservative”. But in my book it’s just common sense.

No Surprise that “Blue” States Losing Folks Fastest

A CNN article shows that the states with the biggest population losses mainly were those where the left is dominant: California, New York, Michigan Illinois, and New Jersey, plus the “swing” states of Florida and Ohio.

The state with the biggest population gain? Solidly-red Texas.

It affirms yet again that leftist policies result in a lower overall quality of life, driving people out. Click here for the California story.

No Surprise that “Blue” States Unhappier

U.S. states with the highest levels of happiness tend to be “red” states while the least happy tend to be “blue” states, based on a recent survey.

That’s because people who lean right tend to be happier than those who lean left. The latter tend to be upset and stressed out about various nonexistent problems, such as “evil” corporations, which are actually good – without them there would be few or no products available necessary for human consumption, resulting in most of us either living in poverty or dead from starvation. Or they’re stressed out about perceived racism or sexism that doesn’t actually exist. There’s also the powerful emotion of envy, which is much more prevalent among lefties than righties.

Yep, places like New York and California are rife with members of the Angry Left, which is why those states rank dead last in the happiness survey.

Sayonara, California

(A previous version of this article appeared in The Christian Science Monitor.)

Some people say California is one day going to break off and sink into the Pacific. In the literal sense, this is a myth. Figuratively speaking, however, it is an apt metaphor.

The state is known for its high taxes and myriad regulations. And with a budget passed in February that jacks up the top tax income rate to 10.56% and the sales tax to 8.5% (among numerous other taxes and surcharges), that reputation got driven home even further.

The inevitable result? Businesses will flee the state even faster. Fewer businesses will want to move there. And entrepreneurs won’t want to set up shop there.

California’s economy is larger than that of most countries of the world. But California is only a state, not a country. That makes it unable to get away with what countries can get away with. When the latter enact far-reaching social welfare measures, businesses grumble but almost all of them stay put; it is exceedingly difficult to relocate to another country. But if a U.S. state acts the same way, companies can move to another state with relative ease.

People and businesses vote with their feet – they pack up and move out. Given this reality, taxes and regulations have to be treated with even more delicacy at the state level than at the national level.

California’s social welfare measures are too numerous to mention here, but I’ll mention just a few. You’ve heard of family leave; California has paid family leave. Premiums that businesses pay for workers’ compensation have increased, as have unemployment insurance costs. And the statute of limitations for personal injury claims has been extended.

The state’s business-unfriendliness is borne out in surveys. Of all the states in the union, California’s business climate ranks dead last, according to a survey of 287 senior-level executives, conducted by Development Counsellors International. In the Small Business Survival Committee’s 2008 index, California ranks a dismal 49 out of 50.

The Census Bureau evidently does not keep figures on the rate of business out-migration, but one can get an idea of the trend by looking at net out-migration figures of U.S.-born people. More than 2 million of them left California during the 1990s, primarily resettling in neighboring states where the business climate is more favorable.

From 1997 to 2007, more than 1.4 million more Americans left the state than entered it, according the American Legislative Exchange Council. (This doesn’t include immigrants, who presumably view California’s quality of life as superior to the third-world country that most of them came from. But for how long?)

Of course, business out-migration is just fine with some Californians. Profit, in their eyes, is evil. As far as they’re concerned, the fewer businesses in the state, the better. Other more moderate Californians understand the benefits of having businesses around, but think their state’s quality of life will be enhanced by more generous social welfare benefits.

But what generally happens when businesses flee an area and/or fewer of them get established is the quality of life declines. Jobs get less abundant and incomes get lower (or at least don’t rise as quickly), and infrastructure tends to weaken. The environment may suffer as there is less money available to clean it up. The crime rate usually rises as well.

California won’t go downhill overnight. The perverse effects of excessive taxation and regulation typically manifest themselves over years or decades. To be sure, other things are keeping people and businesses in the state – e.g. a large market, good universities, beautiful landscapes, good weather – but more and more of them are deciding such attractions just aren’t worth it.

The state is caught in a vicious circle. Constituencies sympathetic to businesses are leaving California in increasing numbers. Meanwhile the state’s generous social welfare programs pull in lower-income people – both from the within and outside the United States. And they typically vote against the interests of businesses.

With fewer pro-business and more anti-business voters (i.e. fewer Republicans and more Democrats), the result is even more regulations and higher taxes, driving even more businesses out, and so on.

Californians have slipped from having the 3rd highest per capita income in the country in 1959, to the 13th highest now. What’s their solution to reverse the trend? Measures to make the state business-friendly again? No. Most of the state’s elected representatives are trying to remedy the situation with more tax increases; part of the vicious circle.

Occasionally, thanks to a quirk in California’s legislative process that enables a one-third minority to veto the majority’s wishes, the pro-business forces hold the line, such as this past summer when a budget was passed that cut spending and didn’t raise taxes. But it passed by the skin of its teeth.

It could be worse. California is one of only three states that require a two-thirds supermajority to pass tax laws. Were its constitution like that of most states which lack such a provision, taxes would be even higher, and businesses fewer.

Other states should take heed from California’s experience. It shows what happens when a U.S. state transforms itself into a welfare state.

Patrick Chisholm is editor of PolicyDynamics.