Gov. Jerry Brown is being hailed by the left media for balancing the state’s budget. Unfortunately, he did so by raising taxes, thereby continuing the state’s economic self-destruction, and by raiding the funds California had raised through its rather inept cap-and-trade system. He has done nothing about the state’s massive pension problem, its continuing high unemployment, its social decay and general sense of fatalism about the future. If it weren’t for Wall Street–and Ben Bernanke’s dollar fix–California would be in even worse shape.
Surprisingly, there are a few simple–and, right now, politically impossible–steps that would likely fix most of California’s problems and make the Golden State once more the land of imagination and opportunity. One of them (#3) was even championed by Gov. Brown himself many decades ago, before both he and the Democrats went so far into utopia that they lost their way back to reality. (Not that the state GOP is doing any better.) Here–borrowing heavily from City Journal‘s excellent book–are three “easy” reforms for CA.
1. Drill for oil and gas. Offshore if you can, but onshore will do. The state is sitting on literally trillions of dollars in energy wealth that could probably pay every penny of California’s unfunded pension liabilities, and create a booming economy again besides. The fossil fuel industry has the technology to explore and develop safely–and as for climate change, the state’s civil religion, perhaps some funds from fossil fuels could be used to build more high-speed rail (even as an amusement) or electric cars (for the state’s green elite).
2. Wisconsin-style labor reforms. Keep the public sector unions. Just don’t let them bargain collectively for anything other than wages, and don’t force employees to join them. (And exempt public safety workers from these reforms, as Wisconsin’s Scott Walker did and Ohio’s John Kasich did not.) That way, present-day promises could be kept to retiring workers, but new workers could be shifted to a more sensible defined-contribution pension system, and various other union moneymaking rackets could likewise be phased out.
3. Flat tax of 6%. This is a Jerry Brown classic, according to recent California emigré Art Laffer, who has shown that you could replace every other tax in the state with a 6% flat tax and still raise the same amount of revenue. The state’s politicians would then have an incentive to let the state’s economy grow, rather than trying to bully businesses and middle-class families into coughing up more cash for the bureaucracy. A flat tax would also draw businesses back to California from tax havens like Florida, Washington and Texas.
Note that these are basically all just fiscal reforms. Everything else that Californians obsess about, great and small, would be more easily fixed with money flowing into state coffers, a job-friendly labor climate, and a rapidly growing economy outside the boutique tech and entertainment sectors. The state’s environment, too, would be improved: just watch what low unemployment does for urban blight and neglected rural areas. It’s a fairly simple platform. Unfortunately, it awaits a completely different set of political circumstances.
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