California is now issuing IOU’s in place of actually paying their bills. This is the same as a person living hand to mouth paying their bills with post-dated checks….it can’t go on forever, or even for very long. Very soon someone is going to refuse to take one, and then the house of cards is going to come tumbling down. Practically the entire budget of California’s is a collection of unfunded mandates. Thanks to their tangled political process there are few options for the legislature to change things without the approval of the voters on one hand or the courts on the other. They are required to spend much of their tax receipts in very specific ways, but the government gets so little return on the money they spend that it’s never quite enough. And now the legislature is in deadlock because each of the parties has chosen a different group to champion, and each of those groups has a diametrically opposed agenda. The Republican’s have chosen the taxpayers and the private sector, and the Democrat’s have chosen the unions and the public sector….and never the twain shall meet.
That’s the real political battle line of the next decade in America. It’s a battle between a harried, heavily taxed, and otherwise much put upon private sector that’s been conditioned to believe it has no choice in what government does to it, and a bloated and pampered public sector that’s grown accustomed to dictating its own terms with regard to government spending. Across the country, politicians of both parties have generally favored the public sector as well because it’s the sea in which they swim. And rather than facing the challenges of managing spending, they’ve found it easier to use a dim and pliable mainstream media to manipulate the public into believing that it’s in their best interest to let this sham continue. But now, like it or not, it’s all coming out in California. And in California we are all looking at the future of America. Soon New York, Michigan, Illinois and New Jersey will be in the same dire condition as California, and close behind them will be the federal government.
California has contracted to spend far more than they are taking in. They can try to cut some less popular programs (if the unions allow them to), or maybe renegotiate some contracts, but that would be confrontational and civil servants don’t go for that sort of thing. If the people in government wanted to argue they would have gone to work in the private sector. They don’t want to have to worry about where the money is coming from like some poor dumb slob running a business… that’s the whole point of a civil service job. And the contracts for California’s civil service unions all reflect that. Politicians get into government because they want power not money, but most people who go to work for the government these days actually do it for the money. When all compensation is taken into account, performing a job for the government pays a little more than it would to do the same job for the private sector, and comes with much better job security. And it’s a peculiarity of government service that the low profile jobs are the ones that pay the very best.
For example, did you know that California pays more for each prison guard it employs than it does for each policeman? Can you figure out why? More than anything else it’s because the team that negotiated the contract with the prison guard’s union was more incompetent, less aggressive, and more easily manipulate (strong armed) by the union than the team that negotiated the policeman’s contract. That team pushed back against the union harder during negotiations and therefore got ‘the people’ a better deal. And that isn’t an isolated example, it’s a real trend. Until the Obama administration, union participation in America had been falling at a dramatic rate in every area of the private sector, and the only area of growth for unions was in government. They expanded into the place that offered the least resistance to them… where there was no one worrying about a maintaining a profit and they didn’t care if everything cost just a little more than it did last year.
That’s how California has ended up with 50,000 people, (all ‘no name’ middle level managers at obscure government departments), who are now retired on government provided pensions in excess of $100,000 every year, with free medical care for themselves and their families…for life. That’s also why the bulk of the still working (if you want to call it that) California civil servants receive such lavish medical care, and generous other benefits. It’s all because government has never had to worry about where the money would come from so there was no one acting as a check on the greed of the civil service unions. And the same states with deep penetration of unions into the civil service are also the very same states with the most serious fiscal problems.
So what will California do? They have few options. They can raise taxes to continue to pump the unions full of even more money, but frankly, they are already at the breaking point. If they raise taxes anymore the entire private sector of California will fold up their tents and move to low tax Nevada right next door. They already have one of the highest unemployment rates in the country in California and any tax increase will only make it worse. And even the recently retread ‘tax the rich’ schemes won’t work because those are the people for whom it’s easiest to leave. They can try to renegotiate with the unions but since that would involve politicians growing a spine, that’s not likely to happen. Right now the latest political magic bullet being discussed in the media is a ‘constitutional convention’ but these people can’t agree on a simple budget so what makes you think they can agree on a state Constitution? Thomas Jefferson and Sam Adams they are not. Besides, what kind of twisted and perverted requiem for freedom and liberty do imagine will come out of a constitutional convention that includes representatives from La Raza and ACORN? I shudder to think of it.
So how do they resolve all of this? Here’s my take. The vast majority of services that the California state government provides should be sold off to be managed in the private sector where someone competent can be brought in to make the changes necessary to make things work again. The government should continue to provide those services involving the use of force. The police, the prisons, the courts and other similar services should remain within the state. But the rest of the government services should be sold off to the highest private bidder, and the funds used to retire the massive state debt. Private bidders should be allowed to renegotiate with the unions and vendors, and charge what they think the market will bear for the service. And if they are really essential services that Californian’s would be willing to pay for and that the people really want, then there should be a more than adequate market for them. But if there is no bid from the private sector then maybe it something the state shouldn’t be doing either? After all, if the people don’t really need enough to be willing to pay for it then why are they doing it at all? Think of it as an extreme method for eliminating bureaucratic momentum.
In short, the current ‘business of government’… the idea that it’s morally right to take money by force from one person and give it to someone else because some politician thinks they deserve it, should be ended in California once and for all. Instead, the size and scope of government should be slashed and the services it provides curtailed to the absolute minimum. That’s the only thing that will give California a clear and bright future. That’s what should happen…but we know how likely that is don’t we? Doing something like that would diminish the role of the government in the lives of the people, and THAT is the very last thing that the people running the government would ever want. Remember, politicians went into politics because they wanted power, not money. If they wanted money, they would have gone into the private sector like the rest of the chumps. And since its power they really want, its power that they will be unwilling to give up.
So we’re all at an impasse. California is burning and several other states (along with the federal government) are all close behind. The ‘public sector’ – ‘private sector’ clash is the big issue of our age and it’s the future for all of us. And we need to decide if we’re going to let them become our ‘public master’s’ in earnest, or if we’ll once again relegate them to the role of ‘public servant’. When you all decide … please call me in the Cayman Islands and let me know.
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Apparently I spoke too soon. They are still missing the critical issue, but the traditional media is beginning to notice the 800 pound gorilla in the room.
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