California's Unserious Elite

Every once in a while California’s business leaders rouse themselves to opine on the state’s problems. Their latest effort, a letter to the governor and Legislature on how to solve the budget crisis, makes you wonder why they bother.

Let’s look at their letter point by point:

They begin by saying we need to fix the “underlying conditions” that got California in trouble. And who would quarrel with that? But they fail to identify those underlying conditions. Most people agree that the budget crisis is partly economic and temporary—the loss of revenues from the Great Recession—and partly structural. Where they disagree is over which structural factors to stress. The big tax cuts in the years of the Internet bubble? Unfunded increases in pensions and retiree health benefits for public workers? Three Strikes and other unfunded “something for nothing” initiative measures? Unprecedented amounts of borrowing for infrastructure and to cover deficits? Which of these would they fix? The business leaders don’t say.

Yes, they do call for a “workout” plan. The word immediately sends up warning flags. We’ve been here before. In 2004, in the wake of the recall, business leaders similarly called for a workout plan. They joined Arnold Schwarzenegger in promoting a ballot measure that involved borrowing $15 billion and putting new budget discipline language in the state Constitution. How did that work out? Seven years later we’re still paying off the debt from the last “workout.” The lesson? Beware of business leaders bearing workout plans.

There are more warning flags in this section. It is not true that “since 1998, every annual budget has spent more than it received in tax revenue.” In the go-go years of the late 1990s–how could our business leaders forget that wonderful moment?–the state ran large surpluses even after heeding the advice of business leaders to cut taxes and increase spending on infrastructure and education. The state ran an operating surplus again briefly at the height of the housing bubble. This may seem like quibbling. But it doesn’t inspire confidence when you’re would-be leaders haven’t read the budget documents, or can’t.

However, here’s where they go off the rails: “Constitutional spending controls must be put place to ensure fiscal discipline.” This is doubly wrong.

It’s wrong, first, because California right now is in no danger of spending too much, as they themselves seem to understand in their criticism of the Republicans who seek “an all-cuts budget that will scar California’s future.” The share of California’s resources spent by state government will fall next year to either a 40-or 45-year low.

It’s wrong, second, because California’s constitution is already chock-full of budget whips and chains imposing budget discipline in various ways. Among these is the constitutional spending limit on the state and local governments.

California’s business leaders ought to know about the spending limit. They wrote it. In the late 1980s, after business leaders realized that the Gann spending limit adopted by voters in 1979 was preventing the state and local governments from making needed improvements in schools and infrastructure, they joined in writing Proposition 111. That measure revised the state spending limit so public investment could keep pace with the growth of California’s economy. Today, state government is $18 billion below that limit.

You can see the confusion here. Business leaders don’t want the state to spend too little; business needs public investment. They don’t want a budget with deep cuts. Yet they still worry about too much spending even though the state is far below spending limit they themselves wrote. And they think the right response is to create even more constitutional whips and chains. Among them would be “performance metrics” against which to benchmark programs and a requirement that legislators spend more time judging the “effectiveness” of the laws. Yet it is hard to find a single California happy about the operation of all the constitutional shackles we’ve already imposed on ourselves. Why are business leaders, if they care about “effectiveness,” prescribing more of the medicine that has already proven to be poison?

The confusion deepens in the second point of the plan. If there are any programs that have proven to be ineffective in creating jobs, they are redevelopment and enterprise zones. This year, the governor and lawmakers have done what business leaders say government ought to do–sort out and eliminate what doesn’t work. And what’s the business response? To ignore the evidence of “the metrics” and pimp for preserving their own handouts. It is hard to take unserious people seriously.

Many pundits say that California can’t hope to overcome its governing crisis unless ordinary Californians get better informed and engaged. That’s asking a lot. I’d settle just for having better informed and engaged elites.

Broken Government? Blame Your Readers

Stuart Leavenworth is baffled. Editorial editor page editor of the Sacramento Bee, my old stomping grounds, Leavenworth says he’s read all the recent literature on California’s governing disfunction, including California Crackup (“radical, but well-argued,” he calls it) and The Economist’s recent special report on the Golden State. And he wonders why none of the things he’s read explain why Californians, faced with that disfunction, seem so disengaged. “How has California changed in ways that limit civic participation?” he asks.

Which only goes to show that you can give a newspaper guy a book but you can’t count on him to read it.

Why might a typical Californian be cynical about the prospect of successful engagement in governing the state? Let’s consider what she faces if she were to get involved, say, in improving the state’s underfunded and underperforming public schools.

She might think to start in her own community and engage with the local school district and board. But she would quickly discover that the school board doesn’t have much to say about the big issues facing the school down the street. In fact, if she’s a young mother of school-age children, she would find that the biggest decisions about schools were made before she was even born or when she was still a child. Thirty-three years ago, Prop 13 took away the school board’s control over revenue and shifted all the power to the state Capitol. Ten years later, Prop 98 came along and put school funding on statewide auto-pilot. The school choices that matter most—funding levels, achievement standards, curriculum, testing, categorical uses of dollars—get made in Sacramento. School boards are for dividing up the scraps and transmitting the pain delivered from on high. Why would any smart young woman wanting to engage and improve the schools waste her time there?

Since the Legislature is now the School Board of the Whole, she might consider getting involved in legislative politics. But she would find few ways to effectively engage in that arena. There are few competitive election contests for the Assembly and Senate. Even where there is competition, the districts are so big (nearly a half million people in an Assembly district, nearly one million in a Senate district) that most campaigns are decided by money for media, not armies of involved citizens. Because of the success of “good-government” types like Leavenworth in weakening political party structures and ending party nominations for office in California, the normal channels by which Americans typically engaged in the past and people around the world continue to engage—through partisan political activity—barely exist here. Our young woman, desperately seeking engagement, would be well-advised to look elsewhere.

That leaves the initiative process. It was set up to 100 years ago to put citizens in charge, but it doesn’t offer many opportunities for engagement. It’s increasingly rare for groups of dedicated voters to band together to gather enough signatures to put measures on the ballot. In a state of nearly 38 million, money drives the process. The initiative is a world of paid signature gathers, high-priced political and media consultants, and million-dollar television ad buys. It’s no place for a nice young woman hoping to improve her children’s schools.

Leavenworth thinks Californians have checked out of politics because of our divisions and a lack of civic glue. But California’s history is a chronicle of division—Anglo vs. Chinese, labor vs. capital, Progressives vs. the railroad machine, Protestant vs. Catholic, white vs. black—often expressed in violence. As we tell in California Crackup, many of the big governing changes in the state’s past, from the 1878-79 constitutional convention to Prop 13, were products of those fights.

What’s changed is the way we try to govern ourselves. We’ve piled reform on reform, many of them directly aimed at keeping ordinary people from engaging in their own governance. The result is a strange and radical system, hostile to citizen involvement and too inflexible to be run by elites, the government version of the Winchester Mystery House.

There’s a good reason so few citizens want to engage with it. Having jobs to do and families to tend and lives to live, they can’t afford to waste their time on a system they know doesn’t work. And for making that rational choice, they get called “insular” and “cynical” by newspaper guys who get well paid to stroke their chins and blame their readers for California’s gridlock.

Is it any wonder that we’ve stopped reading newspapers too?