February 27, 2009
Even discounting for the impact of global recession, the most populous state’s ills are unique and self-inflicted — and avoidable. In the last three decades, California expanded the public sector and regulation to Europe-like dimensions. Schools, state employees, health care, even dog kennels, benefited from largesse in flush times. Government workers got 16 official holidays, everyone else six. The state dabbled with universal health care and adopted strict environmental standards. In short, California went where our new president and Nancy Pelosi of San Francisco want America to go.
California is the canary in the US coal mine and it’s likely too late for Johnny Debacle’s Debacle Plan for California. Instead of isolating abject failure by pushing it into the ocean, the intention now seems to be to replicate many epic fails that plague California and apply them to the rest of the country. What are the differences between the state of CA and the US? First, the US is a couple years behind the west coast’s expansion into liberal fantasy. Second, the US can borrow to finance its deficits while CA is tapped out and on the staring down at a true fiscal crisis that awaits them below.
Don’t fret, Dear Taxpayer. The US will catch up with California soon enough. And then, when inflation has picked up and our growth rate is structurally slower due to the expansion of government as a % of GDP, the increase in regulations on all businesses, and higher tax rates on individuals and corporations, our foreign lenders will finally pull the plug. We will look a lot like California does now, or more aptly, a lot like like a pre-op France.
There is a argent doublure here. France is a pretty good place to live, with only a few caveats. That you are wealthy, that you have connections throughout the ruling class, and most importantly, that you are not an immigrant. Oh and make sure you are white too, just so there’s no confusion. To be clear, there is no upwards mobility but that’s great when you are already on top! Furthermore, the French have amazing cheese, put on exquisite union strikes and were responsible for Man on Wire, one of the best documentaries I have ever seen.
Recommendation: Quickly accumulate a large fortune, if you haven’t already. Punitive tax rates, prevalence of government jobs, and a stagnant business climate will prevent upward mobility so it’s critical to start on top. Second, acquire a taste for fine cheeses and wine. Third, begin practicing your strike routine; this will be critical to maintaining your benefits. Fourth, be cautious that you are not slowly being boiled without realizing it.