Noted PRI Economist Ben Zycher: Failing To Pass Prop. 23 Will Cost Hundreds Of Thousands Of Jobs
When Proposition 1A was “birthed” last year as a part of the terrible 2009 budget deal that gave us the largest tax increase in the history of any state, it was highly respected and noted economist Benjamin Zycher who poured over the details of the so-called “spending cap” in 1A, and came the unfortunate conclusion that the so-called “spending cap” contained in it was very poorly written, and helped us conclude that even without massive tax increases tied to it, it should be defeated. Happily, 1A’s tax increases and faux spending cap were given the heave-ho by the voters.
Zycher has this to say:
The California electorate next month will vote on Proposition 23, which would suspend the implementation of the state’s global warming (i.e., energy taxation) law (“AB32″) until the unemployment rate reaches 5.5 percent for four consecutive quarters. My new paper on the employment effects of this initiative can be found below.
In a nutshell: Based upon official estimates of the reduction in state energy use attendant upon implementation of AB32, Proposition 23 would increase California employment by over half a million in 2012, and over 1.3 million in 2020. (Total employment in 2009 was about 16.2 million.) This is based upon an econometric analysis of the relationship between California employment and energy use for the period 1976 through 2007.
That employment gain is no trivial benefit from suspending a law the original justification for which was—I am not kidding—“California has to be a leader,” a rationale utterly shallow even by the standards of political sloganeering. The California unemployment rate stands at 12.4 percent; it will be interesting to see if the voters in this deep-blue state will choose to turn away from a regulatory juggernaut promising massive costs and, literally, no benefits.