Book describes CA problems, how to fix them: Part 2

Book describes CA problems, how to fix them: Part 2

Beholden State cover

This is Part 2 of a two-part series. Part 1 is here. The book reviewed is “The Beholden State: California’s Lost Promise and How to Recapture It,” a collection of essays edited by Brian C. Anderson, the editor of City Journal, which is published by the Manhattan Institute; and which has a special California edition edited by Ben Boychuk.

Look for the Union Label

Political power is government power. And no political power in California is greater than that of the public-employee unions. Statewide, the California Teachers’ Association is the most powerful force. But the largest local union in the state is the United Teachers of Los Angeles, whose members are affiliated with both with the CTA and the California Federation of Teachers.

Room 222, wikimediaBen Boychuk, the associate editor of City Journal and a columnist for the Sacrament Bee, dissects UTLA power. His chapter is, “The Union’s Occupation: United Teachers of Los Angeles Wages Its Own War on ‘The 1 percent.'” It begins on the book’s page 222, a coincidental echo of “Room 222,” a 1969-74 TV series I used to watch when I was a teenager about a classroom in the LAUSD, featuring cute Karen Valentine. That was back when California schools ranked among the best in the nation, instead of near the bottom today.

He reports on the close affinity between the union and the Occupy Movement. In particular, he analyzes the October 2011 Occupy LAUSD protest, which included about 500 teachers involved in the Occupy Movement. The protest demanded, he writess, “more money, more teachers, and less student testing.” But there wasn’t anything new about the demands. “They are precisely the same demands that the UTLA has made for months.” They especially were objecting to how Eli Broad, Bill Gates and others of the “1 percent” were pushing charter-school reform on the LAUSD.

However, as Boychuk notes, the billionaires “are hardly the prime movers or the last word on education reform — a point that UTLA and its left-wing union allies refuse to concede.” The real locus of education reform is parents fed up with their kids’ substandard educations. The current system — especially the LAUSD/UTLA — especially harms poor and minority children, who are stuck in dysfunctional schools designed to advance bureaucratic and union goals rather than prepare kids for a high-tech economy.

Thus, the Occupy LAUSD movement, rather than being a radical protest designed to promote great education for the future, in Boychuk’s analysis is “reactionary,” perpetuating the failed model of “tax-funded schools operated by union-organized administrators and teachers with little testing and accountability and no choice.”

Hope for Reform

Is there hope for California? Certainly. The book includes some ways out. Boychuk writes in the “Triggering Reform” chapter about the 2010 “trigger” law, which allows the majority of parents in a school to vote to “trigger” the replacement of a failing administration. He details the ordeal parents at Desert Trails Elementary school went through against an intransigent Adelanto School District. Fed up with their school’s poor performance, the parents pulled the “trigger.” In 2012, the parents won a court case, and in 2013, the district “approved the Desert Trails charter plan,” creating a charter school more responsive to parents and students.

Since then, two “triggers” have been pulled at LAUSD schools. More “triggers” are likely to be pulled across the state in the future.

Tax reform?

Arthur Laffer heads the Laffer Center at the Pacific Research Institute,’s parent think tank. He helped design Proposition 13, California’s landmark 1978 tax cut initiative. His chapter in the book is, “Flatten Taxes!”

He writes how, on Jan. 5, 2006, he decide to leave California, taking his Laffer Associates firm with him, for the green pastures and twanging guitars of Nashville, Tenn., and no state income taxes. On that day, Gov. Arnold Schwarzenegger, having failed to pass four reform measures the previous November to rein in state spending, gave a State of the State Address calling for massive new government programs.

“I was utterly aghast,” Laffer writes, as Schwarzenegger “resolved to move in a big-government direction, making proposals that included issuing billions of dollars’ worth of new bonds to pay for statewide infrastructure projects. The last thing California needed was more spending. It was time for me to go.”

Laffer writes about the many other firms that have left the state. But he has a solution: a flat tax for the state of 6 percent, applied on all income. All other state taxes  would be eliminated. The reform would be revenue-neutral: it would bring in the same amount as the current system, so government would not have to be cut.

But it would free the state from the confiscatory, progressive income and capital gains taxes that currently encumber business and jobs creation. Sure, Twitter, Facebook, Apple, etc., don’t care much about tax rates. They’re the digerati elite. But an absurd tax system affects the rest of us.

With California seeming to be “back,” as Gov. Jerry Brown keeps insisting, Laffer’s reform is stalled. The time to bring it forward will be during the next big recession, when tax revenues plunge because the state so foolishly relies on rich people paying so much. When stocks crash, so do rich people’s incomes and stock gains, also crashing state revenues, as happened happens every business cycle, creating the infamous deficits that shock everyone. Such as the $40 billion state budget deficit of the dot-com bust in 2000-01.

So, there is hope for California. Maybe a flat tax reform will be enough to lure Dr. Laffer back to the surf.


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  1. LetitCollapse
    LetitCollapse 13 November, 2013, 11:55

    Well, I thought Anderson would address one of the biggest problems facing California: The poverty rate.

    The anti-business culture, the public unions and the excessive taxation of the producers are certainly reasons for California’s progressive demise – but without addressing the poverty rate it’s sort of like troubleshooting engine problems without including the fuel injection system on the check list.

    And, no. It doesn’t just have to do with the high cost of living in California. A quick evaluation of the Census Bureau’s ACS state by state poverty rate report debunks that theory alone. When a state has a huge population of indigent illegal aliens and the state legislature/governor hands them official CA state driver’s licenses and enacts a law that forbids local authorities from obeying federal law and turning jailed indigent illegals over the the Feds for deportation UNLESS the indigent illegals have committed serious VIOLENT felonies (non-violent felonies and all misdemeanors are ok) would you expect the already record setting 23.8% California poverty rate to fall, stay the same or go higher?

    And when poverty rates rise tax rates climb, businesses flee and public unions thrive because it takes more public workers to serve the indigent’s needs and to respond to the higher crime rates that go hand in hand with increased poverty.

    Sorry for the logic.


    Reply this comment
  2. jimmydeeoc
    jimmydeeoc 13 November, 2013, 14:23

    Not so fast, Collapse…..

    First, understand the work is a collection of essays written over a period of many months, if not a couple years. Anderson is “merely” the editor.

    Second, don’t make the mistake that politicians make re: “jobs”. You don’t create jobs (or reduce poverty) by simply mouthing bromides about “….laserlike focus on jobs”.

    Job creation (and poverty reduction) is to be had only by the hard work, the blocking and tackling, of school reform, state spending, countering regulatory abuse, tax reform, etc.

    Only liberal democrats think you can “fix” jobs or poverty by waving a magic wand (i.e., legislative fiat). Grown-ups know better. A better economy is not an input, it’s what you get as an OUTPUT as a result of doing all the blocking and tackling first.

    As to where we agree: This state is horrible at blocking and tackling.

    Reply this comment
  3. Rex the Wonderdog!
    Rex the Wonderdog! 13 November, 2013, 16:09

    Is that a pic of Karen Valentine from the TV show “Room 222” from the 60’s?????

    Reply this comment
  4. Ulysses Uhaul
    Ulysses Uhaul 13 November, 2013, 17:00

    For your long term mental health… not read long CWD posts and dark books written by disturbed doomers!

    Fair and Balanced!

    Reply this comment
    NTHEOC 13 November, 2013, 19:18

    Lol!!! You chicken little doomers just keep at it with your ridiculous sky is falling mantra!!! California is BOOMING!!! Houses are selling like hot cakes where I live. New housing developments are selling out faster than they can build them, and traffic is back to its crawl on the freeways with all the jobs! This all comes at a perfect time for me, we jut entered into negotiations with the city and found our ity is fat with money!!!!!!!! Sounds like I will be paying more for my pension but the pay raises will balance that out. Oh, and all of my family,friends,and neighbors in the private sector are doing great!!!! So I’m sorry if I don’t listen to you doomers when everything you say and write is a dead wrong lie!!!!!!!!

    Reply this comment
    • John Seiler
      John Seiler Author 14 November, 2013, 11:06

      NTHEOC: Housing is “booming” because foreigners are buying the properties, then renting them to Americans at high prices. After SF, OC has the lowest housing affordability in the US. The roads are clogged because the state grabs the highway money to pay for the pensions. You may be doing well with my tax money, but I don’t see the private sector prosperity you do. I see my friends and relatives struggling to pay the high rents or mortgages with shrinking paychecks. Some are leaving the state.

      Reply this comment
    • Rex the Wonderdog!
      Rex the Wonderdog! 15 November, 2013, 19:40

      NTHEOC says: November 13, 2013 at 7:18 pm Lol!!! You chicken little doomers just keep at it with your ridiculous sky is falling mantra!!! California is BOOMING!!!

      CA is BOOMING for TWO, and ONLY TWO, groups;
      1) Tech workers
      2) Public employee/trough feeders

      For the other 90% of the state it is in dire straights.

      Reply this comment
  6. Ulysses Uhaul.
    Ulysses Uhaul. 14 November, 2013, 10:33

    Pass the jug wine…….the doom never ends!

    Reply this comment
  7. LetitCollapse
    LetitCollapse 14 November, 2013, 12:11

    I think what many opiners are missing here is that if the Fed gov wasn’t pumping in tens of billions of dollars into the financial system via QE that the nation’s GDP would be deep in the negative numbers. That’s not my opinion, btw. That’s a fact. If they stopped QE tomorrow the stock market would crash and interest rates would climb to 5%-7% within 3 months. Housing prices would crash and the debt service alone on the Fed debt would be over $1T on a roughly $3T budget. We are in another asset bubble. Do you think the Fed gov can articifially suppress interest rates @ the 1%-2% level forever? What happens to the price of a $600k home when the interest rates climb to 7%? Easy. It’s becomes a $400k home. What does that do to your economy?

    Pumping fiat dollars into a system on life support can only continue for a limited time before the system flat lines. If you had an income of $27k a year and were spending $38k a year and had an outstanding debt of $170k how long would your financial ship stay afloat? Well, that’s exactly where we are as a nation. I know many of you don’t want to accept that. But it’s a fact. Call it doomer economics or whatever you want. But facts are facts. When reality rears it’s ugly head you’ll wake up and realize you’ve been conned.

    The politicians know all this. But for political expedience your leaders are kicking the can down the road for as long as they can until they can’t anymore. Obama doesn’t care. He and his family are set for life regardless what happens to you.

    Reply this comment
    • John Seiler
      John Seiler Author 14 November, 2013, 14:54

      Actually, if the Fed had not “stimulated” the economy beginning after 9/11 when Greenspan and Bush panicked, either there never would have been a crash in 2007-08, or the crash would have been much smaller, and by now we would have been fully recovered from it.

      Reply this comment
      • LetitCollapse
        LetitCollapse 14 November, 2013, 18:55

        It’s my understanding that the Lehman Bros. meltdown happened because the gov allowed Lehman to leverage to the hilt, as high as 60%, and it was holding a ton of subprime securitized mortgage investments that it was unable to offload to the market. Both the Clinton and Bush administrations were responsible for it. Massive fraud occurred in the RE market. Subprime mortgage loans were being given to people who had no chance of paying them off. All of us saw examples of this in our neighborhoods when homes purchased a year earlier at inflated prices went into foreclosure. The government turned a blind eye as Wall Street looted Main Street – and then were rewarded by the government with trillion dollar bailouts. And not one of the financial crooks went to jail for it. And the bailouts continue to this day. QE is nothing more than more bailouts for the Too Big To Fails.

        Reply this comment
      • Rex the Wonderdog!
        Rex the Wonderdog! 15 November, 2013, 19:46

        It’s my understanding that the Lehman Bros. meltdown happened because the gov allowed Lehman to leverage to the hilt, as high as 60%, and it was holding a ton of subprime securitized mortgage investments that it was unable to offload to the market.

        60%?? That is not correct.

        Wall Street investment banks were ALLOWED, by Congress, to leverage up. at 30-35 to 1. They were undercapitalized by trillions, and were a disaster waiting to happen. And that disaster happened in the 4th quarter of 2007.

        Hedge funds and private equity firms are allowed to leverage as high as 300 to google Amaranth Advisors, MF Global and Long Term Capital Management, that is what “leverage” does

        Reply this comment
        • Rex the Wonderdog!
          Rex the Wonderdog! 15 November, 2013, 19:47

          *300 to 1

          Reply this comment
        • LetitCollapse
          LetitCollapse 16 November, 2013, 11:32

          Yep. 60% was in error. I meant 60 to 1. Thanks.

          So the Republicans screw the middle class by allowing Wall Street to financially pummel Main Street and steal middle class wealth – while the Democrats screw us with programs like ObamaCare and high taxes that steals whatever wealth is left in the middle class and transfers it to all those living free off the gov. Like I said, the Democrats and the Republicans are teammates who wear different colored jerseys. The wealth that they extract from the middle class just goes to different extremes.

          The only way to win at that game is to belong to one of the extremes – either live off the government or be a member of the super wealthy elite. If you get caught anywhere in the middle you become an indentured servant and a walking ATM.

          Reply this comment
  8. Ulysses Uhaul
    Ulysses Uhaul 14 November, 2013, 17:23

    Nothing more relaxing than some Honey Jack Daniels on rocks listening to Al Jolson singing WW1 tunes on my antique Victrola… particularly….Happy Days Are Here Again!

    Reply this comment
  9. LetitCollapse
    LetitCollapse 14 November, 2013, 18:40

    Jimmmydeoc, you failed to grasp my point.

    We already have a massive impoverished population in California. Despite this, the Califonia State legislature is promoting even more poverty by giving out Ca drivers licenses to illegal aliens and enacting the “Trust Act” which releases illegal aliens back into the community after they’ve served their jail time for non-violent felonies and misdemeanors. This is willfully tossing buckets of gasoline on a fire which is already out of control. We already have 12% of the nation’s population and 33% of the nation’s welfare recipients. The illegal aliens violating our immigration laws are 95% indigent. They have nothing but the shirts on their backs. And the more that come here the higher the poverty rates climb. And the more the public treasure gets drained with free health care, education and welfare in some cases. Don’t you see that? Why is everyone so blinded?

    Reply this comment

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