California’s Cover Story

California’s Cover Story

Last month The Economist ran a cover story: “Where it all went wrong: A special report on California’s dysfunctional democracy.” The report blames “direct democracy,” the initiative process, for the state’s woes. The ruling class loves the report, but Californians have good reason to be wary.

The initiative process lets ordinary Californians become policy makers. For example, in 1996, the first time they had any say in the matter, Californians passed Proposition 209, which ended racial, ethnic and gender preferences in education, employment and contracting. That policy of institutional discrimination had been imposed by legislators and unelected bureaucrats.

In 1978, when Jerry Brown was governor, some Californians were being taxed out of their homes at a time when the state was running a surplus. Californians passed Proposition 13, which cut the property tax rate from average of 2.6 to 1 percent, and requires a two-thirds supermajority in the legislature for any tax hike.

The villain of the special report is not direct democracy but Proposition 13, an “unprecedented initiative that shapes the state to this day” and allegedly responsible for the budget malaise, a familiar ruling-class superstition in Sacramento. The report conveniently neglects to outline what this supposedly all-powerful initiative did not do.

The measure had nothing to say about state distribution of money. More important, Proposition 13 did not mandate any state spending and certainly no spending beyond state revenues. Proposition 13 did not create any new government agencies. The report does not complain about Proposition 71, (2004) which established a boondoggle stem-cell agency, nor Proposition 20, which created the California Coastal Commission, an unelected body with vast powers and staffed by zealots hostile to Californians’ property rights.

Proposition 13 did not authorize government employee unions for California, nor collective bargaining with the state. Proposition 13 did not impose any onerous regulations based on bad science, such as California’s Global Warming Solutions Act of 2006. Proposition 13 did not mandate any new state hires and did not approve any pay raises for California legislators.

Proposition 13 did not authorize state employees to retire in their 50s with most of their salary for life, nor did it spike any pensions. Proposition 13 did not set a top California income-tax rate of 10.55 percent, one of the highest in the country, and a second-highest rate of 9.55 percent that kicks in at only $47,055.

This special report, by Andreas Kluth, is indeed a cover story, ignoring California’s main problems, and maintaining the illusion that Proposition 13 is to blame. The report confirms that, as Saul Bellow wrote, “a great deal of intelligence can be invested in ignorance when the need for illusion is deep.”

California’s punitive and volatile tax system, the onerous regulations, the hostile business climate, all that and more is the work of California legislators. Interestingly enough, the report wants to restrict the initiative process and add more legislators. That places in a curious light The Economist’s “leader” (editorial) touting the special report.

California has a lot going for it but is “so poorly governed,” the leader says. As for the legislators, those doing the governing, they are “a pretty rum bunch.” So the prestigious publication got a couple of things right.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.