A Place to Stand

This is an article which compares the big government system in California with the small government of Texas. As the 2 biggest states, both on the Mexican border they are closely comparable & historically California (Hollywood, silicon valley, aerospace) has been the more successful. Dr Pournelle has described it as "A good article, if lengthy. Compares Texas which promises low taxes and a lower grade of public services with California which promises high grade public service and corresponding taxes: the problem being that California has the taxes but the public services are for the benefit of the public employees, not the middle class and the taxpayers. The consequence is the continued wreck in California."

What is surprising is the growing evidence that the low-benefit, low-tax alternative succeeds not only on its own terms but also according to the criteria used by defenders of high benefits and high taxes. Whatever theoretical claims are made for imposing high taxes to provide generous government benefits, the practical reality is that these public goods are, increasingly, neither public nor good: their beneficiaries are mostly the service providers themselves, and their quality is poor. For evidence, look to the two largest states in the nation, which are fine representatives of the liberal and conservative alternatives...

According to the most recent data available from the Census Bureau, for the fiscal year ending in 2006, Americans paid an average of $4,001 per person in state and local taxes. But Californians paid $4,517 per person, well above that national average, while Texans paid $3,235...Between April 1, 2000, and June 30, 2007, an average of 3,247 more Americans moved out of California than into it every week, according to the Census Bureau. Over the same period, Texas saw a net gain, in an average week, of 1,544 people... states without an individual income tax “created 89 percent more jobs and had 32 percent faster personal income growth” than the states with the highest individual income-tax rates...

[California's} public sector’s diminishing willingness and capacity to fulfill its promises to taxpayers. “Twenty years ago, you could go to Texas, where they had very low taxes, and you would see the difference between there and California,” Joel Kotkin, executive editor of NewGeography.com and a presidential fellow at Chapman University in Southern California, told the Los Angeles Times this past March. “Today, you go to Texas, the roads are no worse, the public schools are not great but are better than or equal to ours, and their universities are good. The bargain between California’s government and the middle class is constantly being renegotiated to the disadvantage of the middle class.”

...once you adjust for population growth and inflation, the state government spent 26 percent more in 2007–08 than in 1997–98. Back then, “California had teachers. Prisoners were in jail. Health care was provided for those with the least resources.” Today, Watkins asks, “Are the roads 26 percent better? Are schools 26 percent better? What is 26 percent better?”...

[on attempts to get rid of quangos] The path of least resistance was to do the same old thing, not the sensible thing. The resistance comes from the blob of interest groups, inside and outside government, that like California’s public sector just fine the way it is and see reform as a threat to their comfortable, lucrative arrangements. It turns out, for example, that all the pointless boards and commissions are bulletproof because they provide golden parachutes to politicians turned out of the state legislature...

The optimistic assessment is that things are going to get worse in California before they get better. The pessimistic assessment is that they’re going to get worse before they get much worse.

California is now bankrupt & being protected by loans & subsidy from central government. Hopefully this will not continue forever, since, however painful, bankruptcy is the ultimate pressure that gets resources taken away from the useless & put under the control of the competent. It don't think any state in a federation has ever been declared bankrupt but think that putting in the receivers would be the best thing that could happen.

What federalism has over lots of separate states is that people are relatively happy to vote with their feet moving “to that community whose local government best satisfies his set of preferences.” In selecting a jurisdiction, the mobile consumer-voter is, in effect, choosing a club to join based on the benefits that it offers and the dues that it charges. But this only works where national, particularly linguistic, differences don't exist. Hence the UK is a viable federation & the EU isn't.

Precisely the reason why I support full federalism across Britain & oppose full EU membership. Granted that in Scotland we have largely seen a California style 'orrible warning rather than a good example.

All of this is very reminiscent of Scotland where we also get about 20% more per head from Westminster than the national average; where we have a parasitic state sector that takes up 60% of the economy; a political class that is more interested in banning things, preventing us having nuclear power, stopping the free market building houses, golf clubs, factories etc & wants to destroy half our economy over the next 11 years; and where Jack McConnell's total failure to carry out his promised "bonfire of the quangos" shows how entrenched & bullet proof politicians are.

Perhaps a Cameron (Scottish father) government will grasp the nettle of fiscal autonomy (ie that we keep the tax money raised here but not more which is, at least officially, what the SNP want & let the SNP can prove whether they can run the country solvently or not. There is no intrinsic reason why the Scottish economy can out perform the UK average, particularly if we get the power to cut corporation tax which fiscal autonomy requires. All we need is to be rid of our useless political class who have unanimously voted to destroy our economy. Fiscal governmental bankruptcy with a thriving real economy would be far better than a the overstuffed government destroying our anaemic real economy we have now. Far better to have the admonistrators running it than these parastic numpties.

Labels: economics, Scottish politics