How Not To Fix A Broken State

OCT. 19, 2010

This book review was first published in City Journal.


California Crackup: How Reform Broke The Golden State And How We Can Fix It, by Joe Mathews and Mark Paul (University of California Press, 240 pp., $19.95)

California governor Arnold Schwarzenegger recently warned that if voters approve a November initiative legalizing marijuana, the state will become a national “laughingstock.” The only thing more prevalent than non-Californians poking fun at the state’s enduring political and budget mess these days is Californians who offer counsel on how to save the Golden State from collapse. The latest entry comes from two scholars affiliated with the Washington, D.C.–based New America Foundation, a think tank that advances the politics of the “radical center” in an effort to forge a new political consensus. Journalists Joe Mathews and Mark Paul have penned a short and readable book, California Crackup, that’s ultimately as unsatisfying as the radical centrist philosophy itself.

Mathews and Paul ably describe key historical events that led to California’s latest crisis. But as they examine the state’s problems, it becomes clear where they place most of the blame: on the anti-tax activists who, in 1978, brought California the property-tax-limiting Proposition 13, with its tax restrictions and requirements for legislative supermajorities to pass tax increases. Though the authors sympathize with homeowners who supported Prop. 13 because of the vast increases in property taxes that were driving them out of their homes, they endorse the discredited idea that Prop. 13 so severely limited revenues that it destroyed public services. “California became a meaner, shabbier, more dangerous place, one with fewer opportunities to get ahead,” they charge. “A tax revolt set off by low- and middle-income homeowners had become, in the hands of [Prop. 13 coauthors Howard] Jarvis and [Paul] Gann, a lever to widen the gap between the haves and the have-nots.” They neglect to mention that total property-tax revenues to California’s local governments have risen at a rate faster than inflation, or that state and local levels of government have far more money today, adjusted for inflation and population, than before the proposition passed.

Mathews and Paul claim that by capping property taxes—limiting the ability of localities to raise revenue and thereby directing more spending decisions to the capitol—Prop. 13 centralized power in Sacramento. Jon Coupal of the Howard Jarvis Taxpayers Association acknowledges that there’s some truth to this, but the real shift in power, he argues, came from a state Supreme Court decision (Serrano v. Priest) that mandated equalized school funding across the state. The amount of property tax collected at the local level remains generous and is plenty for localities to operate on, Coupal says. “The districts are complaining about state control because they have to go to the state for the extra revenue they seek to fund large pensions and salary packages.”

Though they claim the mantle of centrism, Mathews and Paul embrace the fundamental principles of the liberal mainstream: that activist government is a good thing, that it’s being starved of resources, and that there’s nothing necessarily wrong with raising taxes. Dismissing conservative complaints that California’s high tax burden is driving businesses from the state, the authors contend that California’s major problems have been “scapegoating” and the “clenched fist”— meaning divisive politics.

The authors champion the “commonsense progressive traditions of places such as Iowa and Minnesota”—states where, in my experience, liberal politics advance with little debate, and those critics who do speak up get maligned for lacking civic virtue. Mathews and Paul don’t reflect on the proper size of government, worrying instead about which governmental entity is making the decisions; they don’t fret over the issues of governmental waste and abuse, but they believe that better rules will address those ills. They don’t ask whether there might not be alternative, more efficient, ways to provide services.

Other centrist groups, like the Bay Area Council, have offered proposals to fix California’s mess. Mathews and Paul acknowledge the council’s stalled plan to call a constitutional convention. They criticize that proposal as too risky, however, even though the council shares one of their main goals—the elimination of the two-thirds legislative vote requirement to pass budgets. The authors fear that a convention would open much of the existing state constitution to tinkering, which could wind up eliminating as many good things as bad.

Mathews and Paul position themselves as post-partisan visionaries. “Our method has been to stand above the political fray—high enough to be out of earshot of the empty spin and consultant-speak that dominate political talk and the media, but not so high, we hope, as to lose sight of how politics work,” they write. “Our concern is not to advance the policy preferences of the left or the right. It is to re-imagine government in a way that lets Californians debate their choices, settle on the best ones, hold elected officials accountable for results, and choose anew if something doesn’t work or the world changes.”

Their reform package begins with remaking elections and the legislature. It proposes, as one alternative, a system of proportional representation that would let California voters elect legislators from multimember districts. “Instead of picking one representative in each of eighty Assembly and forty Senate districts,” they suggest, “California would elect five legislators each in sixteen Assembly districts and eight Senate districts.” The goal: allowing Republicans to elect more members in Democratic areas, and vice versa, to create more balanced representation.

Mathews and Paul also propose a unicameral legislature, which they claim would help limit lobbyists’ influence on legislation, because there would be fewer committees and processes for them to kill bills. Their logic here is particularly unpersuasive; a single body could just as well make it easier for lobbyists to wield their power. The authors would also increase the number of legislators, pointing out that California has the nation’s most populous and therefore least accountable legislative districts. They would make some statewide offices (attorney general, insurance commissioner) appointed rather than elected. They suggest a statewide election system of Instant Runoff Voting: one statewide election, without a primary, in which voters would rank the candidates by preference. The authors claim that this system would eliminate spoilers and elect more centrists. And freed from party primaries, such campaigns would be less polarizing.

Their best idea is a proposal to shift power from the state to local governments and to eliminate many of California’s special districts—such as its water districts, which often operate with little oversight or accountability. But far less persuasive is their desire to hobble the initiative process with many new rules and restrictions, seeking to reduce its use drastically. For instance, they would allow legislators to amend or eliminate proposed initiatives and to place a counterproposal beside the initiative on the same ballot. To counterbalance the gutting of the initiative process, the authors would make it easier for the public to overturn legislative acts through the referendum process. But given the state’s political demographics, these changes would strengthen the legislature and likely eliminate any hope for passing the sorts of government-cutting reform measures that could lift the state out of its fiscal morass.

A reader coming to the end of this book can’t help asking, “Is that it?” After all, Mathews and Paul promised a major solution for California’s crisis, suggesting that they were ready to swing for the fences. There is an oddity to a book’s claiming, on the one hand, that political reforms have ruined the state, and offering, on the other, yet another round of unproven political reforms to save it. Still, the authors could be forgiven that superficial fault if they had confronted the real tax and spending questions at the core of California’s problems. How about cutting government down in size, eliminating collective bargaining for public-employee unions, privatizing services, and slashing regulatory burdens? Instead, Mathews and Paul merely offer electoral gimmicks that won’t do anything to save a state on the fiscal brink.


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  1. stevefromsacto
    stevefromsacto 19 October, 2010, 12:16

    Public workers in California earn 7 percent less on average than private sector employees, but make about the same amount after benefits and other compensation are factored in, according to a study released Monday.

    The study by economists at UC Berkeley and Rutgers University found that the similar wages and benefits exist despite the fact that 55 percent of public employees in the state have a college degree, compared with just 35 percent of California’s private sector workers. Education levels are usually the most important factor in determining wages, but public employees do not get the same return for their education level as private sector employees, said co-author Sylvia Allegretto.

    Allegretto, deputy chairwoman of UC Berkeley’s Center on Wage and Employment Dynamics, co-authored the study with Jeffrey Keefe, an associate professor of labor and employment relations at Rutgers University.

    Allegretto said the findings should put to rest some of the arguments over high public compensation, which has been a huge issue this election season and one that became particularly acute in California on the heels of a public corruption scandal in the Los Angeles County city of Bell.

    “There’s no significant difference between public and private sector workers in California. … It’s basically a wash,” Allegretto said.

    5,000 workers studied

    The researchers examined the wage and demographic data of 5,000 workers in a monthly household survey conducted in 2009 by the U.S. Census Bureau and the Bureau of Labor Statistics. Self-employed, part-time, agricultural and domestic workers were excluded from the sample. Benefit information was culled from the Department of Labor’s Employer Costs for Employee Compensation survey.

    The study – which says that government workers have been “vilified” in California – concludes that public employees are not overpaid when you make an “apples-to-apples” comparison of employees’ education, experience and other factors that might influence pay.

    The study did not compare workers with similar jobs in the private and public sector because its authors felt there were too many differences to draw accurate conclusions. For example, the study notes that there are no private sector police officers or firefighters; and that teachers at a public school face far different challenges than those at a private school.

    Instead, the study relied on education levels – “the single most important earnings predictor” – and other factors widely found to affect compensation levels, such as gender, race, ethnicity and disability, to compare the two sectors.

    The study determined that public agencies generally pay college-educated workers less than private employers do, and that the differential is greatest for professional employees, lawyers and doctors. But the public sector “also appears to set a floor on compensation,” so less educated public sector workers generally make more than people with the same level of education working for a private company. The study attributed this in part to the fact that “the earnings floor has collapsed in the private sector.”

    While public employees make about 7 percent less than their counterparts in private industry, the study found there is virtually no difference between the two sectors once you consider that state and local governments contribute nearly 6 percent more to benefits such as health insurance and retirement funds. But public employees also receive “considerably” less supplemental pay and vacation time, the study found.

    Fewer workers today

    Allegretto defended public workers, saying that there are 60,000 fewer government workers at the state and local level today than before the economic downturn began.

    And she noted that despite the attention being paid by the governor and other politicians this year to rising public pension costs, those costs make up a small fraction of state spending.

    “It is important to keep in mind that a huge state like California needs a lot of workers to keep going – and by and large they are highly educated, skilled workers who need to be fairly compensated,” she said. “This tells me that the problems in California certainly could not have been caused by pensions and cannot be cured by pensions.”

    Gov. Arnold Schwarzenegger has repeatedly targeted state employees in budget cuts since February 2009, when he began imposing unpaid furloughs. Soon after, the furloughs were expanded from two to three days a month, amounting to pay cuts of about 15 percent a year. The governor has also often criticized the public employee pension system and has pushed for state workers to contribute more to their own pensions.

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  2. DavidfromLosGatos
    DavidfromLosGatos 20 October, 2010, 13:09


    I have taken unwanted “pay cuts” (I am self-employed) of way more than 15% a year since 2008, but I have to do just as much work for the pleasure of less pay. No furlough days off to compensate for the lost income. And, I don’t care if some DMV employee has a college degree in “Art History” or “Liberal Studies” (or Chemical Engineering, for that matter); they “work” at the freaking DMV.

    Reply this comment
  3. Tylerle13
    Tylerle13 21 October, 2010, 10:01

    Steve, please explain how you can make an honest and accurate comparison between the compensation of California’s Government Workers and their private sector counter-parts, considering that the Private Sector does not have comperable positions. Our public sector is so full of positions that add no value to the state and accomplish nothing for the people of California, other than blow through the general fund and lead to increased taxes. Any private sector company that was littered with similar positions would be out of business in the blink of an eye, especially in the anti-business climate in California.

    The amount of unneccessary jobs that plauge our public sector cannot in any way be compared to the private sector, because the private sector does not throw money away and hire 20 people to do work that could be comepleted by 1 hard working person. Until you are able to find a comperable number of private sector positions that are as inefficient & wasteful as our public paper pushers, than you cannot argue the these public sector workers make less than their private sector counter parts, because their “counter-parts” do not exist. If you actually figured out how much the public sector paper pushers make for the actual neccessary work they do(and no, updating their facebook pages does not count as neccessary work), you will probably see a $-to-task ratio that rivals that of a Brain Surgeon. But have fun with you bogus, union supplied statistics though.

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