Liberal downfall of San Diego falsely blamed on conservatives

June 4, 2012 - By admin

June 3, 2012

By Wayne Lusvardi

What passes for academic public policy analysis in California has deteriorated to the level of a bunch of children pointing fingers at everyone but themselves when it comes to answering the question, “Who broke the piggy bank trying to shake all the coins out of it?”  Answer: “The dog did it!”  Only in the case of the book reviewed below, it is more like a man-bites-dog story that gets everything backwards.

Paradise Plundered: Fiscal Crisis and Governance Failures in San Diego” (Stanford University Press, 2011, $24.95) is by professors Stephen P. Erie and Vladimir Kogan of the University of California, San Diego and Scott A. MacKenzie of of the University of California, Davis. The writing of the book was funded by the Academic Senate of the University of California.

The unstated backdrop to the book is that the U.C. system has been besieged by budget cuts due to the chronic state budget deficit. Apparently, the authors found a scapegoat: conservatives in San Diego — nicknamed “American’s Finest City” and California’s most Republican large city.  If you don’t want to find the real culprits, then “kick the dog.”

There is enough blame to go around on both Republicans and Democrats for the budget messes in San Diego and at the state level. But it is not logical to blame San Diego’s financial woes solely on conservative budgetary policies or Proposition 13.

“Paradise Plundered” is the story of how the near financial insolvency of the city of San Diego came about, due to purported “plundering” by conservative policy that “underfunded public services and infrastructure.”  Inaccurately calling the underfunding of public services “plundering” is an oxymoron — a combining of contradictory or opposite meaning words as a cliché for emotional effect. As with all clichés, it is used to divert attention elsewhere and stifle any useful discussion.

“Paradise Plundered” is chock full of clichés.  The authors keep trying to find a cliché or metaphor that will stick in describing San Diego’s financial problems: “paradise plundered,” “Ponzi scheme,” “Potemkin village planning,” “Armageddon,” “futureville,” “paradise ungoverned,” “shadow government,” “a mad juggler’s circus,” “the Land of Oz,” “Enron by the Sea,” etc.  But using a series of clichés makes the book nearly incoherent, with only a superficial understanding about municipal financial stress.  One must get beyond the overworked clichés and ideological warfare in the book to get an understanding of municipal financial stress in San Diego or the rest of California.

The Crash of 2008 and municipal decline

After the Mortgage Meltdown and Bank Panic of 2008, Californians awoke to find their state and cities suffering from excessive extravagance, debt and corruption. The Golden State had become a dysfunctional form of government.  California’s political class had run up enormous budget deficits and pension debts that would cripple the entire United States if the state were given a bailout. But neither California’s nor San Diego’s financial problems could be simply solved.

Thus, there was a search for theories of municipal decline. Some of these theories are ideological. Ideology has to do with ideas of groups competing for scarce resources.  Liberals denounce conservatives as underfunding public services, mainly due to Proposition 13; conservatives denounce liberals as wild-spending socialists with fat-cat pensions promised to unions. Facts can be selectively found to support both ideologies, though there is substantial proof and documentation that government employee unions went wild plundering public treasuries during the Housing Bubble.

But at bottom, California’s financial crisis was demographic: too few intact, self-sufficient families to take out mortgages and small business loans to provide a sufficient interest rate on the savings for the elderly and pension funds for public retirees. This is essentially the same demographic force that is melting down the economies of Greece, Spain and the European Union. But this doesn’t fit the under-taxed theory of municipal decline in “Paradise Plundered.”

Both the national and state policy solution to this demographic problem was to give single-parent and low-income families cheap housing so there would be enough economic base to fund public pensions, Social Security, Medicare, and local public services and infrastructure.

This false housing economy was hardly the “underfunding of public services” that authors Erie, Kogan and MacKenzie claim was the basis of the municipal decline of San Diego. Housing is never a driver of a genuine economy, but an asset that reflects the productivity of the commercial economy.  And the Housing Bubble resulted in a corresponding bubble in municipal budgets to spend on infrastructure and public services.

Infrastructure funding squandered, not underfunded

Contrary to the thesis in “Paradise Plundered,”, it wasn’t that too little infrastructure was funded. For example, from 2000 to 2006 California issued five water bonds totaling $18.7 billion (Propositions 12, 13, 40, 50 and 84). However, the bond funding was squandered mostly on open space acquisitions and greenscaping around wealthy residential enclaves and environmental studies, without any substantial new water being produced. California ended up in 2012 with only a half-year of water storage capacity in both state and federal reservoirs to withstand drought.  It wasn’t a lack of funding that created California’s permanent man-made drought.  A new water storage reservoir and a new water conveyance system around or through the Sacramento Delta arguably could have been built with that amount of funding.

Why San Diego’s water rates are overpriced

San Diego has few local water supplies. In the 1930’s, President Franklin D. Roosevelt denied San Diego’s request for the use of federal land to build its own aqueduct from the Colorado River. Thus, San Diego has been waging a water war with the Metropolitan Water District of Southern California over high-priced water rates since the 1940’s.

The route of the Colorado River Aqueduct was originally designed to expensively pump water over the Mojave Desert mountain ranges, instead of a route that conveyed water cheaply by gravity flow. The huge electrified pumping stations to get water over the mountains relied on hydropower from the Hoover Dam.  The intent of picking the most costly route was to compel Southern California water ratepayers to pay for the immense cost of building the dam. San Diego has for decades had to pick up the largest share of the cost of paying for Hoover Dam, instead of building its own cheaper water conveyance system.

Taking an alternate cheaper route, private farmers brought Colorado River water by gravity flow through the All-American and Coachella canals to nearly the same place that the San Diego  Pipelines Nos. 1 to 6 water to San Diego County. If markets are the cheapest way to produce any good, then government is the costliest way.

But Erie asserts the opposite — that Los Angeles has been subsidizing San Diego’s water rates for decades. What Erie fails to report is that San Diego has had to pay a higher price for water than it needed to.  San Diego’s share of the cost of the regional Colorado River Aqueduct was not “underfunded,”, but a lost opportunity cost to build its own cheaper system.

Ag to urban water transfer not “underfunded”

Oddly, Erie singles out San Diego’s recent transfer of agricultural water from Imperial County not as an “underfunded” infrastructure project but as an overly “expensive proposition.”

Erie fails to mention that the only new major source of water for urban California in the past few decades has been San Diego’s recent transfer of excess agricultural water from Imperial County. This is the largest agriculture-to-urban water transfer in U.S. history. And it originated in the lining of agricultural irrigation canals by the San Diego County Water Authority. This resulted in bringing enough previously wasted farm water to serve 1.2 million people in the San Diego area. It freed an equal amount of water in the rest of Southern California for other cities.  And it used existing water canal and pipeline infrastructure to do it. Erie has been an outspoken opponent of San Diego conserving wasted agricultural water for use by San Diego.

Underfunded public services thesis refuted

What the authors contend is that San Diego is an “ungoverned metropolis” that is “America’s cheapest city” and the “victim historically of a libertarian political culture.”  According to the authors, this has caused the underfunding of sewers, libraries, public pension programs, affordable housing and wildfire protection in semi-rural areas.

But their book is not social science. It does not advance a hypothesis that they try to reject or affirm, nor do they attempt a comparative analysis. Anyone can connect impressionistic dots like in a Michael Moore fake documentary and convince you.

The authors don’t explain why cities with heavily socialized political cultures and liberal budgetary spending — such as Los Angeles, San Francisco or Stockton — find themselves in nearly the same boat as San Diego.  Neither do they explain why liberal suburban cities with top bond ratings — such as Santa Monica, Palo Alto or Pasadena — don’t have the same magnitude of budget problems as San Diego.  Nor do the authors discuss why the most libertarian city in California — the city of Laguna Niguel in Orange County that contracts out nearly all its municipal services — has none of the financial problems of San Diego or other cities in California.

Contrary to all the blurbs by reviewers on the book jacket and at Amazon.com, “Paradise Plundered” is a pretend book of social science and public policy analysis.  It is a polemic — a one-sided attack on straw-man anti-government groups, libertarian ideology and Republican-run municipal regimes. As such, I found the book a huge disappointment and not worthy of publication by the prestigious Stanford University Press.

As someone who has worked in a social service agency and the courts, a redevelopment agency, a public housing agency and a large regional water district in California, and who completed a graduate program in municipal budgeting and finance, I would not recommend this book to city managers or policy analysts to grasp an understanding of California’s municipal financing problems.  This book is mainly for ideological warfare.  If you want to hear that fiscally conservative and libertarian public policies are at the heart of California and San Diego’s municipal financing problems, this is your book.  Otherwise, look elsewhere.

Redevelopment as a policy parable

The one part of the book I concurred with the authors was on the binge spending of San Diego on redevelopment projects for sports stadiums and its Old Town District.  Redevelopment agencies were “plundering” $5 billion per year statewide in property taxes from local public schools, mainly for building shopping malls and luxury affordable housing projects.

In 1900, Mark Twain wrote the following description of progressive public policy: “Every time you stop a school, you will have to build a jail. What you gain at one end you lose at the other.  It’s like feeding a dog on his own tail. It won’t fatten the dog.”  This sums up the “underfed” public services and infrastructure thesis of “Paradise Plundered.”

By 2012, California had reversed Mark Twain’s parable of progressive policy so that every time you build a mall or a sports stadium you rob a local school district of property taxes. Every time you issue a “waterless” water bond, you get more man-made drought. Every time you block an agricultural water transfer, you end up with overfunded, not underfunded, infrastructure costs.  Every time you build so-called affordable luxury quality housing, you demolish truly affordable older housing stock and inflate the price of new housing that can’t be recouped when the market falls.  Every time you use redevelopment to build a new luxury mall, you overprice goods and services beyond what most people can afford anymore resulting in more online buying and not eating out.

As Twain would say, “What you gain at one end you lose at the other.”  California has invented a regressive policy of thinking it can fatten up the dog of big government by eating its own tail.

Tags: , , , , , , , , ,

Comments(17)
  1. Ted says:

    I don’t think it’s fair that I always have to be the first poster on all of this stuff. Someione else step up.

  2. Beelzebub says:

    “Housing is never a driver of a genuine economy, but an asset that reflects the productivity of the commercial economy”

    The real estate market is just as much a driver of economic productivity as any other sector of the economy. Probably moreso with all the jobs it creates. The economy has lots of drivers. Using the same logic – you could say that aerospace, health care and construction trades are not drivers of a genuine economy. The fact is they all work synergistically where 2+2=5.

    One sector that is NOT a driver of a genuine economy IMO is the public sector – since it does not produce any real productivity – it just sucks revenue out of the system at a very inefficient and rapid rate.

    Why would you bother wasting your time reading the propoganda trash written by these clowns? There are so many good pieces of factually based literature out there without biased spin. Better to read a good piece and applaud it’s merits than to read a shoddy prejudiced piece and tear it apart.

    You just gave these clowns sorely needed publicity to sell their book.

    Fill your mind with good stuff. Not bad.

    That’s my advice.

  3. SkippingDog says:

    If everyone took your advice, Beelzebub, all of your bitter and incoherent posts would go completely unread.

  4. Beelzebub says:

    “If everyone took your advice, Beelzebub, all of your bitter and incoherent posts would go completely unread”

    My posts are truthful and intended for educated people who can connect logical dots. They are not intended for those who are in blatant denial or who are ignorant of the facts and unwilling to learn.

    None of my stuff is incoherent to educated and intelligent readers.

    As a matter of fact, I disputed your post on Machiavelli and you failed to answer. When posters fail to answer a challenge I must assume they’ve been stumped. If the shoe fit – slip it on, Skipper!!! heh.

    Those who only insult a poster without replying to the points of his comment are losers.

    If this were a chess game you would’ve already lost. :)

  5. Richard Rider says:

    EXCELLENT REVIEW!! Erie is a long-time San Diego apologist for the labor unions and their destructive liberal policies. Kagan and perhaps Erie have actually been employed by the bogus local liberal “think tank” CPI (Center for Policy Initiatives) — they are hired guns hiding behind the fake objectivity of college academics.

    One way to you know he is wrong is that he sees San Diego fiscal problems as the fault of local conservatives — essentially indicating that this was an anomaly that is not found in liberal controlled local governments Of course, that’s a silly assertion. Just about EVERY city in California — no matter the constituency or political ties of the politicians — is suffering the same fate as San Diego.

    By and large, local politicians are owned by the labor unions. The results are exactly what you’d expect. It’s only a matter of degree.

  6. Richard Rider says:

    Erie’s book fails to cover the unique double pension paid in San Diego — our “general” city employees get TWO full pensions.

    They get a very lucrative defined benefit plan (75% of highest pay for a 30 year employee at age 55) PLUS a full matching 401-k type plan (the SPSP plan) — matching dollar for dollar up to 7.5% of employee contributions. Only in the last four years has this plan been scaled back, thanks in no small part to the work of Carl DeMaio.

    Even now, the city still offers a 3% full matching SPSP plan (actually MANDATORY), which is considered a pretty good pension in the private sector.

    Bottom line — until recently, we had career San Diego city employees retiring with income equal to about 130% of their highest pay. And when they died, their beneficiaries could get a lump sum distribution from the SPSP plan equal to as much as 8 years salary! Madness.

  7. queeg says:

    Skippy getting testy!!!

    Bad day?

  8. Richard Rider says:

    I can’t remember — did Erie ET AL talk about the fact that fully 90% of the huge San Diego city water department (about 2,300 employees, I think) were getting annual bonuses? I suspect not.

    The question is, what in the heck were the other 10% doing wrong to NOT get the bonuses. Did they fail to show up for work?

    This stopped only this past year — again at the urging of city councilman Carl DeMaio.

    This is the madness that is indeed special in San Diego.

  9. Rex the Wonder dog! says:

    Stick a fork in the public trough feeders, they’re done.

  10. Wayne Lusvardi says:

    THIS EMAIL WAS SENT TO ME AND THE WRITER WANTED TO REMAIN ANONYMOUS:

    GREAT review of a super-nervy Erie (et al) book to make your own case about the truth of what is at the bottom of our troubles in California.

    I think Erie et al’s book should have been called “I’m Rubber, You’re Glue, Everything You Say Bounces Off Me and Sticks to You” because for one thing its title “Plunder, etc.” makes it look like a nyah-nyah-neener-neener answer back to Greenhut’s best-selling book “Plunder.” Bonus points if the authors and/or publisher are able to confuse the public by aping the title of Greenhut’s book (“Plunder!: How Public Employees are Raiding Public Treasuries”).

    Plus it’s got to be the height of chutzpah for Erie and his gang to use public funds to write a book on how public funds are underfunded by a skin-flint taxpayer. The authors are the very definition of our problem!

    Okay, although I thoroughly understand your argument that at the heart of our economic woes is a demographic imbalance, that doesn’t change the fact that public money is being wasted in California to the point that the absurd expenditure is the rule rather than the exception. Well, as you know.

    I have a question: Because of the UC grant the authors received, are the profits from the sale of this book being funneled back to the UC system? And/or is their book offered as a free textbook at the many universities throughout the country where students are undoubtedly required to read it in the classes of liberal/leftist professors? I’d really like to know.

  11. Ted says:

    9. Rex the Wonder dog! says:
    June 4, 2012 at 7:40 pm
    Stick a fork in the public trough feeders, they’re done.

    OMG LMAO Another of the now infamous predictions of the poodleboi….. I have followed thuis troll to websites all over the kingdom and so far here’s the tally–

    11 HUGE predictions

    0 actually ever happened !

    zzzzzzzzzzzzzzzzzzzzzzz
    nite nite poodlegirl…mmmmmmmmmmmmmmmmmmmmmmmm

  12. Beelzebub says:

    “nite nite poodlegirl…mmmmmmmmmmmmmmmmmmmmmmmm”

    Rex has got more brains in his pinky than you have between you ears. :)

  13. Rex the Wonder Dog! says:

    I was only wrong on the OC Sheriff pension lawsuit, but this win wil make up for tha ONE loss ;)

  14. SkippingDog says:

    More conservative whining. No, you don’t get any respect because conservatives are, by definition, opposed to anything that might challenge their existing world view.

    One thing conservatives really have developed a talent for is presenting themselves and their movement as oppressed victims of society. It is particularly amusing since that’s their canard when discussing the true social victims their policies have created.

  15. Beelzebub says:

    “It is particularly amusing since that’s their canard when discussing the true social victims their policies have created”

    You phony ex-cops are liberal with everybody else’s money but conservative as hell with your own.

    I read you like an old Keystone Cop dog-earred $0.25 paperback!

    All you pigs care about are yourselves. Screw the taxpayers!!!

  16. queeg says:

    Teddy…there will always be a golden trough for us….history is on our side.

  17. Beelzebub says:

    “Teddy…there will always be a golden trough for us….history is on our side”

    Research Rome. heh. I guess they didn’t teach you about Rome in HS or college. Either that or it went in one ear and out the other. That wouldn’t surprise me either. heh. There’s got to be something inbetween to catch it. :)

News Archive

Archive By Categories
  • Budget and Finance
  • Education
  • Health care
  • Infrastructure
  • Inside Government
  • Life in California
  • Politics and Elections
  • Regulations
  • Rights and Liberties
  • Waste, Fraud and Abuse