California: Into Oblivion?

I don’t think it is possible to make this story worse. California is on the brink of financial collapse. It is so close to the precipice that each day is now vital for its economic survival.

California has long had a peculiar and toxic public finance record. After all Orange County went bankrupt a few years back, so why not the entire state? For the nation as a whole it is horrifying to watch as a state supposedly so diverse and economically sound lurches deliberately off the cliff. It is beholden to a small minority of intransigent and reactionary politicians who have absolutely intention of accepting compromise. Its system of voter mandated public expenditure – those famous ‘propositions’ – have crippled any ability the state might have to channel money from one expense item to another. The legislature is thus hamstrung and less accountable for its hopeless management of the state’s coffers. And, to make matters worse, its Governor is constantly at loggerheads with his own party. Here is today’s story from the New York Times on what has become our most dysfunctional state: California Lawmakers Struggle to Strike Budget Deal

California truly has become the poster child for legislative ineptitude and voter complacency. Long self regarded as the epicenter of new ideas the state is now hell bent on self-destruction. This is hardly the kind of innovative thinking the state likes to think it exports to the rest of us.

The notion that it is any way acceptable to lay off 20,000 public workers; or to stop the payment of tax refunds; or to pay creditors with IOU’s is straight from some appalling low budget comedy. Peter Ustinov is the role model that comes to mind as leader of the State when the actual movie is made.

This is the closest we have to emulating the collapse of the Great Depression. Other states are no where near this awful although some, like Kansas, have also stopped tax refund payments.

So what will happen in California? I have no idea. The entire state needs an overhaul. Its legislative process allows a small dug in group of Representatives to hold the budget to ransom. Its voters have allocated money to specific tasks without having a holistic framework. Both political parties are more extreme than their average counterparts in other states. And its governor is now totally ineffective.

This crisis was years in the making. It looks as if the tragedy unfolding there will also take years to play out.

But remember that old saying: “We the people …”. Blame no one else but the voters who consistently voted in weak and inept leaders and supported popular, but ultimately unaffordable tax cuts. A smiling face and happy thoughts do not necessarily mean someone can run a sound State budget. And those propositions were proposed by people who did not necessarily have the State’s future stability in mind. Either the voters were gullible or horribly complacent. Perhaps both. They are now the ones who will pay the price for the State’s financial implosion.

What a mess.