CALIFORNIA—Once Again the Golden State!
By Fred Mittag
“Economists know how to manage the economy; the problem is always political”—My economics professor, 55 years ago. But Charles Darwin explained biological evolution 154 years ago and they’re still arguing about biblical creation vs. evolution at the Texas State Board of Education. It’s embarrassing to our race that a percentage of humans are slow learners. They tend to be Republicans, who put ideology ahead of science, and thus retard their intellectual development.
A valid criticism of journalism today is that it strives for “false equivalency,” an attempt to be “fair.” It’s dishonest to pretend that a skunk is no more offensive than Mimi, my little dog – and it’s unfair to Mimi. What then, pray tell, is Chuck Todd’s job, if not to identify skunks? He recently said it’s President Obama’s job to identify Republican lies. What a dereliction of journalistic ethics!
John Maynard Keynes was a giant of economics. He advised President Franklin Roosevelt on the Great Depression of the 30’s. Keynes was openly gay. Conservatives have tried to use that to discredit his economic theories, for lack of any intellectual foundation of their own. A major contribution of Keynes was the principle that when the economy is sluggish, government should increase spending, and when it’s overheated, government should reduce spending. Years later, President Nixon said, “We are all Keynesians now.” We must remember, however, that in today’s Republican world, Nixon would be a flaming liberal.
John Kenneth Galbraith was F.D.R.’s man to make sure that the demands of war production didn’t cause runaway inflation. He also served as an economic advisor to Harry Truman, John F. Kennedy, and Lyndon Johnson. Galbraith showed that individual economic decisions are not necessarily rational. Like Keynes, Galbraith was counter-intuitive to long established economic thought. The 2008 financial meltdown was the result of irrational decisions on Wall Street, something Galbraith predicted and only government regulation can prevent.
There is ample empirical evidence for Republicans, if only they possessed critical thinking skills to set themselves free. California is the latest laboratory example. Under Republican Governor Schwarzenegger, things didn’t go well. He promised to reduce the state’s debt, but it tripled during his time in office. Following George Bush’s example, he financed the government on a credit card, even as he recklessly reduced taxes. He fired thousands of state workers, adding to unemployment, and cut funding for education, the single best economic investment possible.
Today California has a Democratic governor and a solidly Democratic legislature. They raised taxes and now produce a budget surplus that they are using to pay down the Republican debt. The conservative predictions were all wrong. Businesses and employers did not flee California for Texas, where taxes are low and regulation almost non-extant.
When California was beset by blackouts and electric bills that soared to eight times, the conservative Wall Street Journal wrote that California “has come to look like a hapless banana republic.” It turned out the reason was Republican deregulation that opened an opportunity for Enron to manipulate the market. Enron cut pipeline supplies of fuel and used other schemes to drive up energy prices. Before their financial implosion, Enron was able to engineer a recall election in which Democratic governor Gray Davis was defeated – because of voter anger at energy costs, which Enron had manipulated—unfettered Republican-style capitalism, in other words.
Proposition 13 was a California disaster. It requires a legislative supermajority to make tax and budget policy. It made California ungovernable. But now, the Republicans have lost many seats, allowing Governor Brown and the Democrats to pursue tax increases and infrastructure spending that is helpful to the economy.
The result is that California is now the world’s eighth biggest economy! Unemployment is down and housing prices are going up, an indication of increased demand. California accounted for a quarter of the nation’s job growth last month.
California increased income taxes on its wealthiest citizens to the highest rate in the nation. Could they still add jobs? Economists said yes, that the taxes wouldn’t matter much. Conservatives said increased taxes would be doomsday for California (yawn).
Bill Maher said it best: “And everything conservatives claim will unravel the fabric of our society . . . has only made California stronger. Without a Republican governor and without a legislature being blocked by Republicans, a $27 billion deficit was turned into a surplus, continuing the proud American tradition of Republicans blowing a huge hole in the budget and then Democrats coming in and cleaning it up.”
Amen!
