Wednesday, February 22, 2017

- The National Divorce From California

I was reading this piece on the political problems of California secession. Like many people in America with no few close ties to California, I'd live to be spared the condescension of the Hollywood idiots and dream for a day when they have to live by the rules they would have us set for everyone. But there are issues that the piece glosses over too lightly.

In the piece there is a cavalier statement I take exception to:

But mores matter even more than money, and most Californians have been more than willing put up with the state’s problems so long as their way of life is protected and perfected. Resistance from a stubborn conservative remnant in the far north and central valley has never been able to halt the libidinous, drug-friendly, welfare-statist juggernaut that is the state’s dominant culture. From climate law to immigration law (or the lack thereof), California’s elected Democrats see themselves rightly as the strongest center of opposition to American conservatives and to Trump alike, and the one with the deepest popular legitimacy.

Money is like Oxygen or water. It doesn't matter at all until you don't have any. And I think that would happen quickly even if California were allowed to peacefully secede. Right now, the state of California has a credit rating of AA- from Fitch, and Aa3 from Moody's. Still investment grade but hardly the top of the heap. But that isn't a rating based on California the country, it's for California the state. The Federal government has been backstopping the states for decades when it comes to cost overruns and budget woes. The minute that backstop disappeared, the ratings agencies would have no choice but to downgrade the credit rating, radically increasing the new 'Republic's cost of borrowing'.

The liberals that dominate Californian politics love borrowing. They live for it. And they would have to do considerably more of it if the Federal backstop that is implied for all 50 American states is taken away by secession. There are other issues too.

Right now, the Army and Navy protecting the 900 mile long California coastline and it's shorter border to Mexico are all employees of the US Federal Government. The equipment they use is Federal Government property, and the Defense Secretary would be unlikely to allow the new California Republic to keep all that gear free of charge. I can imagine the secession advocates arguing that California's strategic position would require the US Navy to continue to protect it free of charge to ensure US interests, and that's probably true. But a US Army speaks to US interests, not necessarily the interest of a group that saw such big differences with our direction that they asked for a divorce.

Then there is the California National Guard. Californians love a good riot, and the National Guard plays an important role in keeping the peace there. And while they may be under the command of the Governor, they are funded by the departments of the Army and Airforce. Those are the "US" Department of the Army and Air-Force. The State will have to find a way to pay for that itself. Oh, and it will have to buy all it's own bullets, guns, and planes.

The people arguing for California secession are political idealists. They aren't thinking about the nuts and bolts of administering a National Government. If they gave it even a cursory glance, it would become clear immediately that this is a very expensive path relative to their current road.

And here's a thing that is secondary to those issues. The reason the US government has maintained it's AAA rating in spite of its financial profligacy is that army. When the Government says "you will be paid" it's a difficult point to scoff at because of the immense military might of the US. When California starts printing it's own money, absent an Army of their own, and with a deeply scaled back National Guard, their financial indiscretions will all be reflected in the value of their currency. I'm confident the value of that currency would instantly collapse, but the need for money will not.

Sacramento will then be forced to borrow and print even more money. And the only thing that will prevent it becoming another Zimbabwe will be to abandon the California Philosophy of rewarding unproductivity and punishing the productive. Again, this would be fun to watch, especially if California residence were required to transfer their savings and assets in US banks to the local currency. But that would mean that all the Hollywood imbeciles who have ruined California would instantly emigrate to the US, and we'd have to learn to put up with them all over again.

Much as I'd like to see them go, we won't be rid of the land of fruits and nuts anytime soon.


MikeCLT said...

Why would we let Californians emigrate to the US after secession? I would wonder if AZ and CO would continue to allow CA to tap into the CO river for a significant part of its water supply after they seceded.

Tom said...

They'll bring big money of course. The fact that they're political neophytes won't keep us from letting them bring in their big earnings. It's all silly anyway. We'll never be rid of them.