By John Seiler

I was reading about how, in the late 1980s during the Reagan prosperity, there was a shortage of workers. The top federal income tax rate was 28 percent. In California, the top state rate was 9.3 percent. Combined: 37.3 percent.

Today, there remains mass unemployment under the Bush-Obama big-government policies. Top federal income tax rate: 35 percent, and maybe rising. Top state tax rate: 13.3 percent. Combined: 48.3 percent, and maybe rising.

Now, workers from America are moving to other countries to find jobs:

“After applying for 279 jobs over two years, my husband finally got the offer he’d been hoping for: a well-paid position teaching philosophy at a respected university. We should have been thrilled. There was just one little thing.

“The job was in Hong Kong.

“’I feel like we’re being deported from our own country,’ my husband said.

“’It’ll be an adventure,’ I replied, trying to sound game.

“’I wasn’t looking for an adventure,’ he said. ‘I was just looking for a job.’…

“Stories like ours are everywhere.”

In Hong Kong, the top income tax rate is only 15 percent — less than one third what it is Taxifornia.

In the Heritage Foundation’s Index of Economic Freedom 2012, Hong Kong is tops, with an 89.9 ranking (of 100), a “free” rating.

But the United States is way down the list, at No. 10, with a 76.3 ranking, “mostly free.”

California isn’t ranked separately. But if it were, it would be ranked around 55, “mostly unfree,” at the level of Greece (55.4), another area with a beautiful climate and a profligate, bankrupt government.

Time to get a plane ticket to Asia.

By John Seiler

Just four more day to D-Day — Democracy Day. Then this dreadful election finally will be over.

If the ancient Greeks could have seen how things would have turned out, instead of inventing democracy, they would have drunk the hemlock rather than forcing it on Socrates.

The lying campaigns even are hurting our children. Here’s one with an opinion shared by most Americans:

By Wayne Lusvardi

Carles B. Warren, a real estate economist and appraiser in Pleasant Hill, California, asks: “In the Los Angeles region, who will be Greece and who Germany” if California voters approve Proposition 31 on the November ballot?

Warren once was a visiting professor at Istanbul Technical University in Turkey. He was referring to the European Union, where solvent Germany has been bailing out the overspending of Greece, Italy and other countries.  After more than a dozen years of regionalized money and shared taxes, the European Union is coming apart. Many countries are going bankrupt.

Something similar would eventually happen in California under Prop. 31, where the regionalization of taxes would just postpone the inevitable.

Prop. 31 is a Coercive Tax-Sharing Scheme

Prop. 31 is apparently intended for large public works projects such as the California Bullet Train.  Under Prop. 31, taxes could be pooled regionally to help fund large public works projects.  Under Prop. 31, environmental regulations and clearances could be drastically reduced or circumvented to overcome delays, lawsuits, and obstructionism.  But Prop. 31 could also be used for smaller local projects or the bailouts of insolvent cities or school districts.

Under the tax-sharing provisions of Prop. 31, suburbs could be coerced to “voluntarily” share a portion of their state road, school, and vehicle license tag revenues or forfeit them.  Unelected regional committees called Strategic Area Plans could divert the shared or forfeited taxes to plug budget and pension deficits in big cities and big school districts.

SAP committees would add an extra layer of government and its members would not be elected. They would not be authorized to raise new taxes. But they could shake down wealthy suburbs to pay for financially strapped cities and school districts.  And they could pledge confiscated tax revenues to pay for bond issues for public projects.

City councils, county boards of supervisors, and school districts mostly in the suburbs would lose home rule over zoning, transportation, housing, and even a portion of their property and income taxes for public schools. Unelected committees would determine spending priorities and how much money would be spent on affordable housing and where.

Additionally, such super committees could recapture a portion of property and income taxes from wealthy school districts that approved supplemental school parcel taxes and divert them to struggling school districts. A prime example would be wealthy school districts in Carlsbad or La Jolla in San Diego County sharing their property taxes with the Poway Unified School District and its $1 billion deferred interest on “capital appreciation bonds.”

Mostly wealthy school districts in Northern California that approved school parcel taxes could likely have an offsetting share of their property and income taxes diverted to “poor” school districts in Southern California.  Northern Californians that don’t like their water flowing to Southern California would end up having their share of school taxes flow south, too.

The above is not far-fetched speculation and hysteria. Former State Assembly Speaker Robert Hertzberg is the co-chairperson of California Forward, the sponsor of Prop. 31. In 2002, Hertzberg spearheaded a study, “The New California Dream: Regional Solutions for 21st Century Challenges,” proposing the financial regionalization of local governments by way of a voter-approved constitutional amendment.  Prop. 31 is the culmination of what that report inferred was Hertzberg’s “dream.”

Diluted Government and Voting

As Warren puts it, Prop. 31 would result in the “dilution of representative government, the dilution of voter power, decisions made regionally rather than locally, and the redistribution of tax revenue beyond what is already built into the system.”

Why? “Because some cities and school districts, usually in older central areas, can’t control spending, pensions being a salient example. Prop. 31 is basically a covert bailout initiative.”

Warren points out that this problem has been around for decades.  He says, “Even before President Lyndon B. Johnson’s War on Poverty in the 1960’s, government has attempted to solve problems in central cities without success, but at great expense.  The literature promoting regional government goes back at least to the 1950s. Greater expense is unlikely to yield greater success. In fact history suggests that top-down decision making is more likely to spread high priced failure.”

Numbers Transposed: Prop. 31 is Prop. 13 in Reverse

Proposition 13, the 1978 tax limitation initiative, has served as a circuit breaker against both monetary inflation and falling property values. Warren points out that, under Prop. 13, property tax revenues have grown faster than inflation.  Moreover, since the 2008 Mortgage Market Meltdown and Bank Panic, property tax revenue has fallen more slowly than property values.

But Prop. 31 would be Prop. 13 in reverse, both numerically and fiscally.  This is because Prop. 31 would circumvent the supermajority vote requirements of Prop. 13 by tapping taxes from other cities without any requirement for voter approval.  No new taxes would be raised. Suburbs would just have a share of their existing taxes siphoned elsewhere.

Suppose Santa Monica Thinks It Will Be Switzerland

Like Prop. 31, the European Union involves fiscal regionalization, while leaving existing political boundaries and governments in place.

According to Warren, it is the opinion of the Economist magazine that the weakness of the European Union has been the enforcement of fiscal discipline on the Southern and other high-spending governments.  That is because fiscal regionalization — tax sharing — creates what is called the “free rider” problem, where weaker economies have no incentive to grow and only want to live off the wealthier economies.

The way Warren puts it: “Voila! — Greece.” In the pre-European Union era, the Drachma, Greece’s currency, had higher interest rates than the German currency, the Deutsche mark, to capitalize currency depreciation. The same things happened with Italy and, to an extent, France.  Locking them all together without enforceable means of controlling their taxation and spending only worked in good economic times, however. We’re now seeing the consequences.

Warren adds: “To an extent our federate system shares the same problem.  State by state and region-by-region, some gain and some lose by participating in the American Union. That is not what the European Union said it intended, but it’s what it’s getting.”

California cities, counties and school districts would be subject under Prop. 31 to the same predations and free riding as those in the European Union.

Some cities might think they can remain neutral like Switzerland, which is not part of the European Union. But under Prop. 31, a city such as Santa Monica or San Francisco could opt out of regionalized “Strategic Area Plans,” but at a price. They would likely have to forfeit a share of their road revenues.  Or wealthy school districts with supplemental school parcel taxes might have to forfeit an offsetting share of their school property taxes.

This is how revenue sharing of H.U.D. Community Development Block Grant funds works now in California.  Those cities that do not meet their affordable housing quotas have their share of Block Grant funds diverted to less wealthy areas. The mechanism the state uses to confiscate such funds is the Housing Element of a city’s General Plan.

So there would be no escaping the confiscatory policies of Prop. 31 by voluntarily opting out of a Strategic Area Plan. There would be no equivalent to a neutral Switzerland in the European Union under Prop. 31.

Once again, which California cities will be Greece and which Germany under Prop. 31?

By John Seiler

Greece is leading the way for California — off a cliff. The two polities are similar: beautiful mediterranean climate, creative people, massively powerful government-worker unions, busted budgets, impending bankruptcy. Greece is just a little ahead of California. The latest report: Greeks are abandoning the unworkable, corrupt two-party system:

MARATHON, Greece (Reuters) — Georgios Pasayannis was a Greek civil servant for 40 years, and the 73-year-old pensioner voted faithfully for New Democracy throughout, confident his future was safe in the hands of the conservative party.

Now he says he will never cast his ballot again for “those crooks” or their coalition partners, the centre-left PASOK party, since they cut his 1,500 euro per month pension by a third while pushing through tax increases.

Their mismanagement of Greece has turned the twilight of his life into a grinding struggle. Pasayannis, who worked for the defence ministry, says he plans to get revenge at the May 6 national elections.

“We pay and pay, but we have nothing for it,” said the man who had hoped for a carefree retirement in the seaside village of Marathon, 40 kilometres (25 miles) east of Athens. “They cheated us and lied to us for years. They’re a bunch of crooks.”

Greeks are in a fractious mood ahead of the election, and much of their anger is directed at the two parties that have long dominated the political landscape.

‘Decline to state’

In a similar way, Californians have been abandoing “those crooks” in the Democratic and Republican parties to re-register as “decline to state voters”:

According to a recent report:

California continues to witness a steady rise in the number of voters who choose not to affiliate with any political party. According to the most recent numbers released by the Secretary of State, 21.2% of California voters are now registered as having no party preference, a new high.

Back to Reuters on Greece:

At the other end of the spectrum, legions of young voters are also turning their back on the two parties that have taken turns ruling Greece for the last four decades. About 15 percent of the electorate — 1.4 million — is 18 to 29.

The unemployment rate for Greeks under the age of 25 tops 50 percent. Hordes of young Greeks who have seen their career hopes destroyed by the economic implosion are also expected to turn their backs on ND and PASOK, pollsters say.

Opinion polls show gains for small parties that oppose the steep wage and pension cuts imposed on Greece by the European Union and International Monetary Fund (IMF) in return for aid….

“Young people are suffering the most because of these clowns,” she said. “For young people in Greece now there is no job, no hope, no nothing.”

California youth nightmare

In California, young people also are restless. As has happened across the country, young people are rallying behind the only independent presidential candidate this year, Ron Paul:

Ron Paul attracted a peculiar 8,500-plus voters to the third of three town hall meetings he held in California this week, this time at UC-Berkeley. In drawing such a huge crowd to Berkeley, the 12-term Congressman from Texas shattered his unrivaled town hall meeting attendance record. The meeting took place at UC-Berkeley’s Memorial Glade, where he addressed the crowd from atop the steps of Doe Library in Berkeley, CA. Dr. Paul spoke about his platform of constitutionally-limited government, the enduring bonds between economic and civil liberties, and his fiscal blueprint that cuts Washington spending, shrinks the national debt, and reverses the federal government’s harmful growth and intrusiveness. Full video of the event posted at UStream, by msl209.

As in Greece, young folks know that there’s no future for them because of the immense debt piled up by their governments, and the inflation-low interest rate trap sprung by central banks. In Greece, the banks are the European Central Bank, which controls the inflationist Euro, and the IMF, mentioned above. In America, it’s the inflationist Federal Reserve Board that Ron Paul wants to get rid of.

Amercan kids also have it worse than Greek kids in one crucial way: American students owe an incredible $1 trillion in student-loan debt, which they’re finding impossible to pay back without decent jobs in the Bush-Obama-Greenspan-Bernanke-Republican-Democrat Great Recession-weak recovery.

Debt forgiveness 

The U.S. and California (and other states’) political regimes have strung this albatross of debt around youngsters’ necks at the time young folks should be building families and careers. The two politcal parties want to continue the status quo of the bank ripoffs. President Obama and Mitt Romney both have endorsed keeping interest rates low on the student debts. But how can that help when most of those holding the debts don’t have jobs, or have low-paying jobs?

What they should do is call for canceling the debts. Just as Greece’s government should simply cancel the country’s debts, much as Iceland did recently and Argentina did a decade ago. If bankers are stupid enough to loan trillions to bad risks, it’s the bankers who should suffer from their usurious greed, not the borrower-victims.

After Iceland dumped its loans, the economy recovered. The same thing happened in Argentina a decade ago.

Dumping student debt would benefit California’s kids, and America’s kids. But as in Greece, the politicians are beholden to the banks, not the people.