But if you’re the governor of that state, and the media think you’re a whiz-bang because there aren’t any more budget stalemates every summer, you can just blithely say that 24 percent poverty is just the way it is, man. This was in the Sac Bee.

“Brown defended California’s business environment, citing venture capital and foreign investment in the state.

“There’s a fellow named Schumpeter who talked about the creative destruction of capitalism,” he said, referencing the economist Joseph Schumpeter. “And, I put the emphasis on creative, and, change is inevitable. We’re getting 60 percent of the venture capital, we’re the number one place for direct foreign investment in the United States. Do we have everything in all respects? No. But we have an abundance that constitutes a two trillion dollar economy.”

Brown celebrates dynamics that are roiling San Francisco

As my Cal Watchdog colleague John Seiler notes, it’s pretty cool to see California’s governor invoke an economist who is a free-market icon, not a Krugmanite — even if it’s Texas that reflects Schumpeter’s core insights far more than Cali. But it’s also very curious in that anyone who celebrates the California status quo certainly isn’t looking at the 24 percent of folks in poverty. Or the stagnant middle class. More than anyone, such a celebration is about the tech titans of Silicon Valley and San Francisco — the allegedly evil 1 percenters.

It’s no stretch to say Jerry Brown is celebrating the same economic dynamics that have San Franciscan lefties going goon on rich techies.

But then we live in a state in which outside of Christopher Cadelago and Dan Walters at the Sac Bee and Steve Greenhut at the U-T San Diego and the editorial board of the U-T (which includes me), practically no one ever mentions that California has the nation’s highest poverty rate if cost of living is included.

Do these journos think cost of living shouldn’t be included? Or are they just clueless? Or are they scared to break with the pack?

I don’t know which of these is true. But it is stunning that so few of the articles about how California is doing simply omit our nation’s worst poverty ranking.

Who is Piketty and why does he matter? His 700-page book, “Capital in the Twenty-First Century,” newly translated into English, is the best-selling book on Amazon. No largely academic book has ever achieved this distinction before.

Piketty’s central thesis is that the world has returned to its pre-World War I norms of extended periods of slow growth that will result in a further stratification of wealth in which the 0.1 percent fare better than everyone else. This is not because of the Occupy theory that the economy is rigged in an evil way to help them. It’s because of Piketty’s theory that during extended periods of slow growth, the mega rich will see their sophisticated investments in capital (stocks and other financial instruments) gain more share of a society’s wealth than everyone else accumulates through their earnings (salaries).

Many economists on the left love this thesis as providing a grand theoretical way to understand how the world has come to be the way it is — a way they don’t like. Paul Krugman leads the way, proclaiming, “This is a book that will change both the way we think about society and the way we do economics.”

It’s gotten respectful reviews from some free-market economists, and some pretty good takedowns, starting with Tyler Cowen’s essay. (Here’s a round-up of links.)

But whether you think it’s hooey or too high-falutin’ or just arcane, if you’re a believer in Proposition 13, Piketty’s emergence gives you fabulous ammo with which to shoot back at the George Skeltons, Peter Schrags and Harold Meyersons — all the lefty pundits who say it is the prime evil force driving California’s downfall. Piketty says states that have property taxes that penalize homowners if their homes increase in value are imposing what amounts to “America’s secret middle-class tax.”

Property taxes (outside of CA) a ‘secret middle-class tax’

This is from a Matt Yglesias piece in Vox:

“Piketty’s big point about the United States is that we actually do engage in substantial wealth taxation in this country. We call it property taxes, and they’re primarily paid to state and local governments. Total receipts amount to about 3 percent of national income. The burden of the tax falls largely on middle-class families, for whom a home is likely to be far and away the most valuable asset that they own. Rich people, of course, own expensive houses (sometimes two or three of them) but also accumulate considerable wealth in the stock market and elsewhere where, unlike homeowners’ equity, it can evade taxation.

“Piketty also observes that the current property tax system is curiously innocent of the significance of debt. A homeowner is taxed on the face-value of his house, whether he owns it outright or owes more to the bank than the house is worth.”

So the next time you face Prop 13 critics, call them “middle-class haters,” and say that’s the view of Paul Krugman’s favorite economist, too. If Piketty’s PR boomlet continues, you can just use his name and skip the Krugman framing.

With or without Piketty, noting that homes are the single biggest repository of reliable wealth for most middle-class families is a strong defense. But if Piketty proves to be the enduring “rock star” of the progressive community that many lefties think, that gives this pro-13 argument way more juice.

Doubt Piketty is the big deal that I say he is? Today’s NYT opinion page has both Krugman and David Brooks weighing in on his book.

Meanwhile, economists in Europe and America, who have won all the economics prizes but one (for a professor at Hebrew University), have seen their own economies stagnate. It’s not a language problem because all major economics papers and books today are published in English. And the prize is awarded by Swedes on Sweden’s central bank.

Certainly, there have been stellar winners, such as free-market winners Friedrich Hayek, Milton Friedman, James Buchanan and Ronald Coase. But most winners have been advocates of government controls, such as Robert Samuelson and Gunner Myrdal.

Rogers notes:

But 40 years later, the world is experiencing a historic shift from West to East. The great economic successes since 1969 are certainly not the United States or Europe. In this span, the US went from the largest creditor nation in the world to not just the largest debtor nation in the world, but the largest debtor nation in the history of the world. That U-turn may deserve a prize, but one that brings embarrassment rather than prominence.

Today, most major international creditor nations are found in Asia – economies like China, Japan, South Korea, Singapore, Hong Kong and Taiwan.

Of course, America and California have enjoyed the vast growth of the computer industry. But even that is underpinned by most manufacturing, and even the engineering now, being done in Asia. America rules on software and design, but not in other areas.

Singapore

Rogers:

Singapore has been the greatest economic success of the past four decades, but former prime minister Lee Kuan Yew and Dr Goh Keng Swee, a former deputy prime minister who died in May,have never been acknowledged by Stockholm. And Dr Goh even held a degree from the London School of Economics.

China has also experienced huge economic success during this time, yet neither Deng Xiaoping nor any of his economists were ever awarded the prize.

Rogers also pokes fun at Paul Krugman (who is not directly named in the article), the most eminent and influential of living Nobel winners, especially because of his influential New York Times column:

In fact, one esteemed Nobel laureate published a paper in 1994 titled “The Myth of Asia’s Miracle” in the journal Foreign Affairs. The same winner proclaimed loudly in 2009 that it was untrue that huge amounts of Western assets had moved to Asia. Perhaps he had to try to cover for his 1994 paper. He has not returned his award. (This same laureate insisted this year that Fannie Mae and Freddie Mac had nothing to do with the mortgage and housing collapse.)

I looked up Krugman’s paper of 20 years ago, “The Myth of Asia’s Miracle.” He actually wrote this, comparing the Asian growth to that of the Soviet Union in the 1950s:

Can there really be any parallel between the growth of Warsaw Pact nations in the 1950s and the spectacular Asian growth that now preoccupies policy intellectuals? At some levels, of course, the parallel is far-fetched: Singapore in the 1990s does not look much like the Soviet Union in the 1950s, and Singapore’s Lee Kuan Yew bears little resemblance to the U.S.S.R.’s Nikita Khrushchev and less to Joseph Stalin. Yet the results of recent economic research into the sources of Pacific Rim growth give the few people who recall the great debate over Soviet growth a strong sense of deja vu. Now, as then, the contrast between popular hype and realistic prospects, between conventional wisdom and hard numbers, remains so great that sensible economic analysis is not only widely ignored, but when it does get aired, it is usually dismissed as grossly implausible.

Thaw

What actually happened was that Stalin died in 1953. His successors, led by Khrushchev, freed most prisoners in the Gulag slave labor camps, which always consumed more resources than they produced; and freed some parts of the economy. And whereas Stalin executed his critics as “wreckers,’ even those trying to improve the system, the “thaw” after 1953 allowed limited criticism, provided it was intended constructively — such as to improve production methods.

The lessening of government controls seems similar to what happened in the Asian markets. First Japan enacted strong market reforms in the 1950s. Then the Asian “tigers” — South Korea, Taiwan, Hong Kong and Singapore — enacted free market reforms. Then, massively, China switched from starvation-inducing communism to Deng’s market reforms. Vietnam followed.

Unlike in the Soviet Union, these were not just reductions in socialist controls, but full-blown, and increasingly thorough, market reforms. That’s why the Asian economies have kept booming.

By contrast, in the early 1970s, the Soviet economy faltered. It couldn’t keep up with the free economies. Everybody could see the contrast, for example, between East Germany and West Germany: same people, same language, different results.

Eventually, in 1989, the Berlin Wall was ripped down. In 1991 in the Soviet Union, the Communist Party was abolished and some market reforms were established. The Soviet Union broke part. Russia, despite many problems, is much better off than under communism.

Nowadays, it’s American and Europe, with their own growing governments and massive debt loads, that  resemble the Soviet Union in the early 1970s. No wonder Nobel economics laureate Krugman is our most famous economist.

The Asians should establish their own economics prize and give to their top free-market economists. Call it the Lao Tzu prize because the ancient philosopher said: “The people are hungery: It is because those in authority eat up too much in taxes.”

“Covered California said Monday that two of the numbers it had released regarding October health insurance enrollment were wrong. The agency said it had mistakenly transposed the numbers in two categories: the people who bought plans with federal subsidies, and those who bought unsubsidized policies.

“The corrected numbers for October are 25,978 individuals who enrolled with a federal subsidy, and 4,852 individuals who enrolled without a subsidy.”

“KPCC raised questions about the numbers last Thursday after Covered California issued new data for combined enrollment in October and November. The numbers indicated that unsubsidized enrollment had gone from 84 percent of all enrollment in October to just 14 percent of the total for October and November combined.”

So the state agency initially said there were five unsubsidized sign-ups for every subsidized sign-up — and more than a month later, after the initial round of good reviews is in, it says, “Oh, wait a minute — it’s the other way around.” Five subsidized sign-ups for every unsubsidized sign-up is not impressive at all.

The tiny numbers of unsubsidized sign-ups makes it very likely that come Jan. 1, more people in California will have had their health insurance cancelled because of Obamacare than have signed up for Obamacare. The subsidized people are easy to attract, relatively speaking — not the unsubsidized people.

Not first time Covered California put out deceptive numbers

The explanation for this self-serving supposed screw-up?

“A spokesman had initially insisted the numbers were correct, and that the huge fluctuation was due to such things as cancellations, duplicate records and changes in eligibility. Covered California now says it discovered the error after further review of its data.

“‘It was an unfortunate error, and we apologize for any confusion,’ said Covered California Communications Director Oscar Hidalgo.

“The corrected data confirm that the number of people buying unsubsidized plans has been a small part of the overall enrollment picture since Covered California opened for business on Oct. 1.” 

Covered California’s dishonest streak has been evident from its very first press releases, which depicted its rates as cheaper than policies available to most Californians. They may have been cheaper than alleged experts “expected.” But that is not remotely the same thing as cheaper than the alternatives they were replacing.

So count me as completely unsurprised that a “mistake” was made on reporting of enrollment figures that made Covered California seem as if it was off to a better start than it actually was.

This spring he claimed that California was in the middle of a roaring comeback. Has he ever been here? Read coverage of our Legislature? Read the Census Bureau’s declaration that the Golden State has the worst effective poverty rate of any state?

His blathering led to a harshly funny response from a professor who actually does know California because he lives here, Victor Davis Hanson, writing for National Review Online.

Now Krugman is at it again, suggesting Covered California is doing so well that it’s a confirmation of the glory that is Obamacare. And once again his blathering has inspired lots of sharp responses, this time including from other East Coast folks.

D.C.-based health-policy blogger Robert Laszewski, for example, notes that the Golden State is on track to have far fewer people covered by insurance than it did before Covered California began accepting applications.

“So, let’s summarize:

“–California has 5.3 million uninsured eligible to buy in the exchange with half estimated to be subsidy eligible.

“–California is cancelling another 1 million people of which Covered California has estimated hundreds of thousands will qualify for a subsidy they can only get if they go to Covered California. At least 80% need to act by December 23 to avoid losing their coverage.

“–The state is spending $250 million in federal money to get people signed up––dramatically more than any other state.

“–The Covered California goal is to sign-up 500,000 to 700,000 subsidy eligible people by March 31.

“Why should we be so impressed with Covered California because they have signed-up 80,000 people so far? Or, even that their goal is to sign-up 500,000 to 700,000 of the state’s 6.3 million people––half subsidy eligible––who are uninsured or having their insurance canceled?”

Two very good questions.

And here’s a funny point: California Sen. Dianne Feinstein, a Democrat, can’t think things are going well with the Obamacare rollout in her home state or she wouldn’t have endorsed this bill.

Obamacare and the Orwellian gap between promises and reality

Krugman declaring success for a state health insurance exchange that will lead to fewer Californians having health coverage isn’t the only example of the amazing rhetorical baloney-fest surrounding the Affordable Care Act.

We were told if you like your policy, you can keep it. Then we’re told if the president likes your policy, you can keep it, and if it was canceled, that’s because it was “crappy.”

We were told that it would sharply cut health-care costs for the average family of four. Now as reality demolishes this promise, the MSM rarely even bring it up.

We were told there wouldn’t be de facto “death panels” deciding what medical procedures would be denied to the very sick. Now even the MSM treats this as a given.

I could go on and on in this vein. But the larger point that needs to be made is this is Orwellian manipulation of the American public. The most profound policy change in the United States in decades was imposed by the narrowest of margins only after a sophisticated concert of lies.

And as for the people who compare this with George W. Bush/Iraq/weapons of mass destruction, the ACA Deceptathon is even worse. Bush 43 was a disaster in many ways, but at least he had foreign and U.S. intelligence agencies backing him up on WMDs.

Obama had his own administration telling him in 2010 that “if you like your policy, you can keep it” was just not true. But he kept peddling the lie until the cancellation notices made it impossible to keep asserting.

The reality is that there is lots of squabbling over the overall effect of a hike in the minimum wage. But there isn't much on the question of whether or not such hikes lead to the loss of jobs. I've been reading National Bureau of Economic Research reports for 20 years, as opposed to politically driven soundbites, and here's your common- sense consensus:

“Economists have long believed that minimum wages destroy jobs for low-wage workers. Nonetheless, many studies have found that the effects of minimum wages are small, even for young workers. But in a recent NBER study, Minimum Wages and Youth Employment in France and the United States (NBER Working Paper No. 6111), John Abowd, Francis Kramarz, Thomas Lemieux, and David Margolis find that the minimum wage has had very large negative effects on the group of French and American youths whose low wages put them most at risk.

“In France, the minimum wage has been rising in real terms in the last five decades. Between 1951 and 1994, the French minimum wage rose from 1.95 francs an hour to 6.92 francs an hour in 1994, both measured in 1970 francs, an increase of 255 percent. The French minimum wage in 1994, measured in 1997 dollars, was over $6.50 an hour.”

A clear finding, not a fuzzy one

“To check for an effect of the minimum wage, the authors tracked the employment of workers whose wage, just prior to the increase, was above the previous minimum wage but below the new higher minimum wage. Such workers, they reason, would be most likely to be priced out of work by the increase in the minimum wage. The authors find that, for French men aged 25 to 30 who were in this marginal category, an increase of 1 percent in the minimum wage reduced their probability of keeping their job by 4.6 percent.

“In the United States, on the other hand, the minimum wage stayed constant at $3.35 an hour from 1981 until the late 1980s, which means that, adjusted for inflation, the minimum wage fell. Therefore, the authors took the opposite tack with U.S. data, examining the employment records in earlier periods of workers earning the minimum wage in later periods. They speculate that many such workers are likely to be priced into the labor market as the real minimum wage falls, after having previously been unable to find jobs at the earlier high real minimum. The evidence confirms this: Abowd and his coauthors conclude that a 1 percent decrease in the real minimum wage increases by 2.2 percent the probability that a young man employed at the minimum wage was out of work in the previous period.”

'Low-skilled labor' to suffer the most

I give the last word to George Mason University economist Tyler Cowen, who runs the best economics blog and seems to me to be the most apolitical prominent academic in the U.S. (which is why he is Paul Krugman's most effective critic; he even co-authored a paper on disagreement that appears to be a stealth attack on Krugman's unwavering, messianic certitude):

By Chris Reed

Last week, when the California agency that has the lead role in implementing Obamacare announced the rate structure for various insurance plans to be offered beginning Jan. 1, 2014, the media jumped to a lot of conclusions — conclusions flattering to Obamacare, as one would expect from a media that mostly waited until after the health care overhaul was adopted to point out its many immense flaws. (The New York Times put out a devastating analysis — but it was three weeks after Obamacare was signed into law!)

On California’s version of Obamacare, here was what the Los Angeles Times emphasized early in its story:

“‘These rates are way below the worst-case gloom-and-doom scenarios we have heard,’ said Peter Lee, executive director of Covered California, the state agency implementing the healthcare law.”

Here was what The New York Times’ Paul Krugman emphasized:

” … important new evidence — especially from California, the law’s most important test case — suggests that the real Obamacare shock will be one of unexpected success. … the California bids are in — that is, insurers have submitted the prices at which they are willing to offer coverage on the state’s newly created Obamacare exchange. And the prices, it turns out, are surprisingly low. A handful of healthy people may find themselves paying more for coverage, but it looks as if Obamacare’s first year in California is going to be an overwhelmingly positive experience.”

LAT and Krugman: What they didn’t mention

Not so fast, say two journalists who have written extensively about Obamacare, and not from inside the tank that houses the mainstream media.

This is from Avik Roy of Forbes:

“If you’re a 25 year old male non-smoker, buying insurance for yourself, the cheapest plan on Obamacare’s exchanges is the catastrophic plan, which costs an average of $184 a month. (That’s the median monthly premium across California’s 19 insurance rating regions.)

“The next cheapest plan, the ‘bronze’ comprehensive plan, costs $205 a month. But in 2013, on eHealthInsurance.com (NASDAQ:EHTH), the average cost of the five cheapest plans was only $92. In other words, for the average 25-year-old male non-smoking Californian, Obamacare will drive premiums up by between 100 and 123 percent.

“Under Obamacare, only people under the age of 30 can participate in the slightly cheaper catastrophic plan. So if you’re 40, your cheapest option is the bronze plan. In California, the median price of a bronze plan for a 40-year-old male non-smoker will be $261. But on eHealthInsurance, the average cost of the five cheapest plans was $121. That is, Obamacare will increase individual-market premiums by an average of 116 percent.

“For both 25-year-olds and 40-year-olds, then, Californians under Obamacare who buy insurance for themselves will see their insurance premiums double.”

This is from Peter Suderman of Reason:

“… this good news is not as good as it might sound, because it’s based on a misleading comparison: next year’s individual market rates with this year’s small-employer plans. A more useful comparison would be with this year’s individual-market premiums. And what that comparison reveals is that rate shock is real, and that the hikes are far larger than the comparison with small-group rates would suggest.”

Karma time: Bay Area to be hardest hit

The good news here is that as much as the media has been cheerleading for Obamacare, it remains highly unpopular — even before it kicks in. When people actually have to pay much more for insurance than they used to, the backlash is likely to reach a whole new level.

And here in California, the hardest-hit will be Obama’s biggest fans. Karma, baby! Avik Roy of Forbes says Obamacare’s impact on premiums for 40-year-olds “is steepest in the San Francisco Bay area, especially in the counties north of San Francisco, like Marin, Napa, and Sonoma.”

More from Roy:

“Supporters of Obamacare justified passage of the law because one insurer in California [Anthem Blue Cross] raised rates on some people by as much as 39 percent. But Obamacare itself more than doubles the cost of insurance on the individual market. I can understand why Democrats in California would want to mislead the public on this point. But journalists have a professional responsibility to check out the facts for themselves.”

If only California journalists lived up to that professional responsibility.

By Wayne Lusvardi

Paul Krugman wrote in the New York Times an article, “Lessons from a Comeback.” However, a comeback for state government should not be confused with an economic or jobs recovery.

A number of liberal, conservative and moderate writers responded to Krugman that there has been no California comeback. Victor Davis Hanson wrote, “Krugman’s California Dreamin’.”

Walter Russell Mead wrote, “California’s Hollow Comeback.” Matt Miller, “Jerry Brown Still Has Much to Do.”

But as someone who closely follows California public policy and budgeting, I found myself thinking that Krugman’s critics are probably unaware that Krugman may be closer to the truth, although for all the wrong reasons.  California came back a long time ago. But like a giant redwood tree falling in Sequoia National Park, no one wanted to notice.

All the rebuttals to Krugman sound to me like a quotation from American jazz singer Billie Holiday: “I’m always making a comeback but nobody ever tells me where I’ve been.” 

The reasons cited for a comeback are income and sales tax increases from Proposition 30; a bullet train that isn’t even funded or environmentally certified; and a Sacramento Delta water fix that mostly backfills Colorado River water lost to Arizona.  

More taxes or public works projects won’t save California because it had the financial resources all along to meet its public pension crisis even after budget cutbacks resulting from the Mortgage Meltdown and Bank Panic of 2008.  That was because California government bureaucracies were bloated during the bubble, from 2003 to 2008.  Of course, once the budget bar has been raised, budget deficits inevitably arise.

The question that the media then ignores is: Whether the state budget should be balanced high or low?  It can be balanced either way.

How bloated is California government? 

Californians got a rare look into how much California government was bloated in 2009 when the state Legislature deregulated the “categorical” programs in the education budget under Assembly Bill ABX-4-2.  Categorical programs are politically earmarked non-essential jobs programs.  ABX-4-2 forced categorical educational programs to be prioritized into “tiers.” Tier I reflected the highest priority for continued funding and Tier III the lowest.

The California Legislative Analyst’s Office (LAO) identified that there was $7.5 billion allocated to Tier I and Tier II programs and $4.5 billion to Tier III. In other words, of the $35.65 billion of state general funding for K-12 public schools in 2009, $12 billion or 33.6 percent was allocated for earmark jobs programs.  These programs have been so entrenched for so long that they are considered essential.

Recently, the California Auditor’s Office also gave us a window for seeing into where a portion of California’s state budget has been spent over the past 10 years.  According to the auditor, California is in the red by $127.2 billion.

What is interesting, however, is the Auditor reported about $79.9 billion of this “wall of debt” was spent on bonds for the state to give to local governments and school districts for public works projects. This included about $15.46 billion for five voter-approved water and parks bonds with annual bond payments of about $1.02 billion per year.  The total annual bond payment for the entire $79.9 billion is estimated from $4 to $5.2 billion.

If you take the $12 billion per year in education earmark funding and add it to the $4 to $5.2 billion in annual public works bond payments, you get from $16 to $17.2 billion. If the unfunded state and local public pension liabilities are $328.6 billion, as reported by Reuters, the annual amount needed to plug the pension gap would be around $10.95 billion.

That could have easily been met if the Legislature had not appropriated up to $17.2 billion per year in K-12 education earmarks; and the voters had not approved $79.9 billion in bonds for luxury public goods.

Stated differently, California has had enough discretionary tax revenues over past 10 years to fully fund its public retirement funding gap. Instead, it has squandered those revenues on luxury items: education earmarks, water-less water bonds, and luxury public works projects.  This is to say nothing about when former Gov. Gray Davis blew a $12.3 billion budget surplus on increasing public education funding when he took office in 2000.

This runs counter to the story that liberals like Krugman portray that California is just now experiencing a “comeback.” Or the story by commentators across the political spectrum that California’s budget deficit problems are due to a shortfall of tax revenues.  California’s state budget does not necessarily reflect a comeback or a comedown as much as a come on: it portrays an image of budget deficits due to funding shortfalls when the funding was available all along.

Lessons from California’s budget “comeback” 

The lessons to be taken from a so-called “California Comeback”: Voters should be skeptical of:

1. Annual threats of core teacher layoffs when the real fight is over discretionary “categorical” funding for non-essential earmark jobs programs;

2. Voters shouldn’t fall for popular water and other bond issues that end up crowding out meeting unmet public pension fund liabilities and other needs. A Zen proverb aptly sums it up: “Let go over a cliff, die completely, and then come back to life — after that you cannot be deceived.”

By John Seiler

At CalWatchDog.com, we’ve published some articles on Paul Krugman’s column praising California supposedly new, high-tax, big-spend liberal government. I read the column again and a few more comments are necessary.

He might have a Nobel Prize in economics. But if he were a journalist intern here and submitted his recent piece on California, I’d have deleted it and told him to start over. It’s obvious he did absolutely no research on it, but just wrote off the top of his head. Three thousand miles away, he thinks he knows everything about our complex state. Consider this howler:

“California isn’t a state in which liberals have run wild; it’s a state where a liberal majority has been effectively hamstrung by a fanatical conservative minority that, thanks to supermajority rules, has been able to block effective policy-making.”

In fact, on everything except the budget, a majority vote was all that was needed. For more than 40 years liberal Democrats have controlled the state Legislature, except for one year, 1995, when Republicans had a majority in the Assembly. So on almost everything — schools, abortion, health care, the environment (especially AB 32) — it really has been Liberal Democrats Gone Wild.

Even “supermajority rules” on the budget were ended in 2010 with Proposition 25; the only exception was taxation, which still requires a two-thirds vote. But despite that, the Republican minority never could do much on the budget anyway, except for one year: 2011, when they blocked Gov. Jerry Brown putting a tax-increase on the budget.

Taxes

But even the tax issue is not a story of a “liberal majority…hamstrung by a fanatical conservative minority.” In 2009, enough Republicans joined the majority Democrats to pass a $13 billion tax increase pushed by Republican Gov. Arnold Schwarzenegger, the biggest tax increase of any state, ever.

Krugman is as unspecific as an amateur blogger. But he seems to be talking about GOP legislators in 2011 blocking putting an extension of the Schwarzenegger tax increases on the state ballot that year. Krugman:

“Over the years, California’s Republicans moved right as the state moved left, yet retained political relevance thanks to their blocking power. But at this point the state’s G.O.P. has fallen below critical mass, losing even its power to obstruct — and this has left Mr. Brown free to push an agenda of tax hikes and infrastructure spending that sounds remarkably like the kind of thing California used to do before the rise of the radical right.”

Acutally, the supermajority “spending” part, as noted, was taken care of by Prop. 25. As to the taxing part, it was not the Legislature that raised taxes last year, but an initiative for which signatures were gathered, and which voters passed in November.

2011

And as to the 2011 attempt by Brown to raise taxes — assuming that’s what Krugman is referring to — here’s what really happened. Brown wanted to continue the $13 billion Schwarzenegger tax increases, which were expiring. But Brown was elected in 2010 on a specific promise not to raise taxes unless the people voted for it.

In 2011, he tried to get a handful of Republicans to join with the majority Democrats to put the $13 billion tax “extension,” as he called it, on a Special Election he would call in Nov. 2011. Krugman probably doesn’t know it, but governors can call special elections if initiatives are ready for a vote, such as the Special Election in 2005 over Schwarzenegger’s reform plan; which was defeated in its entirety.

Brown is a savvy politician. He knew that, if a Special Election were called in Nov. 2011, the tax increase would be the focus of attention. So he wanted some Republican legislators as cover. He could say, “See, even Republicans are open to tax increases.”

But for once (unlike with Arnold’s 2009 tax increase), Republicans stood solid.

Even then — even then, Dr. Krugman, Nobel Laureate — Brown could have put the the tax increase before voters in Nov. 2011. All he had to do was get his “troops,” as he calls teachers’ union members, to gather signatures for a tax-increase to be put on the Nov. 2011 ballot, then himself call a Special Election.

He didn’t do that for political reasons.

He did do something similar, but with a more modest tax increase of $6 billion instead of $13 billion, for the Nov. 2012 ballot. Circumstances were more favorable then because it was a general election with a popular Democratic president heading the ticket, bringing out many more Democratic votes. So just five months ago, the Proposition 30 tax increase passed.

Ike

Krugman also writes, “Modern movement conservatism, which transformed the G.O.P. from the moderate party of Dwight Eisenhower into the radical right-wing organization we see today, was largely born in California.”

So he’s read some histories of conservatism. But everything has changed.

I just read a fine new book on the Eisenhower years, “Ike’s Bluff: President Eisenhower’s Secret Battle to Save the World,” by Evan Thomas. It mainly concerns defense and foreign policy. But I was reminded how different the 1950s were from today. For example, abortion was considered so abhorrent it wasn’t even mentioned in public, or in movies (See “Detective Story” with Kirk Douglas). Same-sex “marriage” was a joke at the end of “Some Like It Hot,” starring Marilyn Monroe. Ike even refused to hear ribald jokes.

On economics, Ike was obsessed with cutting waste in government, preventing inflation and paying down the national debt — all positions the opposite of Krugman.

The following graph shows the national debt as a percentage of GOP.

You can see how Ike paid down the debt, while Obama, following Krugman’s advice, is greatly increasing it.

(Yes, I know Reagan increased the debt. I wrote articles at the time urging him not to do so. As to the Bushes, did they ever do anything right? And Clinton should be commended for reducing the debt.)

So once again, Krugman doesn’t do even a little research to find out what really happened.

I suggest that Krugman move out here for five years and closely study our quirky state. He easily could get a teaching position at USC, UCLA, Berkeley or Stanford, probably making $400,000 or more a year. Combined with his New York Times salary, book royalties, speaking fees, and investment income from his Nobel Prize proceeds, he would make well over $1 million a year, qualifying him for the 13.3 percent top income tax rate he so lavishly has praised.

Currently, he reportedly lives in Princeton, N.J. So under Republican Gov. Chris Christie, he pays only the 9.97 percent top rate.

If he thinks California under liberal rule is so fantastic, he should move out here and pay for it.

By John Seiler

California is such a complex state that it’s often amusing when East Coast liberals try to explain it to us. The latest is from New York Times columnist Paul Krugman. His article appeared in the April 1 edition of the Times, so maybe it’s an April Fool’s joke.

He writes of the ongoing supposed California comeback:

But a funny thing happened on the road to collapse: it turned out that the main culprit in the electricity crisis was deregulation, which opened the door for ruthless market manipulation. When the market manipulation went away, so did the blackouts.

Actually, there was no “deregulation,” only a different form of regulation that was worse, as I wrote in about 50 editorials in the Orange County Register as the crisis unfolded. There was no “market” to manipulate, only a rigged scheme that Enron and others figured out how to exploit. And when the crisis hit, Gov. Gray Davis signed up for high-priced, long-term contracts that gouged ratepayers until they expired only recently.

See what I mean? Krugman knows nothing of our state.

Writing in the Washington Examiner, Conn Carroll explodes some other Krugman misconceptions:

1. California has the nation’s highest unemployment
Krugman does mention that, “Unemployment in California remains high,” but he fails to mention just how high it is. In fact, California is tied with Mississippi and Nevada for the highest unemployment rate in the country at 9.6 percent.

2. California has one-third of all welfare recipients
Krugman says asserts that California’s “problems bear no resemblance to the death-by-liberalism story line the California-bashers keep peddling.” But he neglects to mention that California is home to one-third of all U.S. welfare recipients despite housing just 12 percent of all U.S. citizens.

3. California has the nation’s highest poverty rate
Despite all the welfare spending, California still somehow manages to have the nation’s highest poverty rate. Go figure.

4. California has the nation’s highest taxes
Krugman does mention that “serious studies have found very little evidence either that tax hikes cause lots of wealthy people to move or that state taxes have any significant impact on growth,” but he fails to mention that California’s taxes are not just high, but the highest in the nation.

Seiler comment: Krugman doesn’t specify the “serious studies,” but he probably is referring to one last fall by two Stanford sociologists, not economists. I demolished that “study” here.

5. California has the nation’s third highest income inequality
California’s already high taxes have failed to adequately redistribute income. Even before the Great Recession, California already had the third-highest income inequality in America (behind New Mexico and Arizona). And according to the Public Policy Institute of California, it only got more unequal during the recession: “Compared to the rest of the country, California experienced larger declines in income at the bottom of the distribution and smaller declines at the top — leading to the largest gap between upper and lower incomes in at least 30 years.”

6. California’s teachers are among the nation’s highest paid while its students are among the least educated
Krugman also claims that “decades of political paralysis have degraded the state’s once-superb public education system.” And it is true: California’s public education system is terrible. In 2011, the state’s eighth-graders finished 48th in reading, ahead of just Louisiana and Mississippi, and 48th in math, ahead of just Alabama and Mississippi. But California is not skimping on teacher pay. It’s teachers are the third highest paid teachers in the nation.

7. California has the nation’s highest energy prices
Krugman does mention the state’s blackout problems in 2001, but blames the entire incident on “deregulation” and “market manipulation.” But California’s failure to build new power plants, refineries, pipelines, and transmission lines is very real. There is a reason California has nation’s the highest gas prices and the among the nation’s highest electricity prices, despite sitting on billions of barrels of oil.

8. California’s budget isn’t balanced
Credit Krugman for noting that California’s budget is only a “projected” one, but he then fails to mention how unreliable California’s tax revenue projections have been in the past. A recent California Common Sense study showed that, since the recession began, the governor’s projections have overestimated revenues by an average of 5.5 percent. Apply that average to Brown’s 2013 projections and California’s budget would suddenly go from $1 billion in the black to $3.9 billion in the red.

9. California is deep in debt
Even if California’s current budget does produce a tiny surplus this year, the state is still deeply in debt. According to the state’s own auditor, California has a negative net worth of $127 billion, about half of which stems from “$57.5 billion in outstanding bonded debt issued to build capital assets for school districts and other local governmental entities.”

Seiler conclusion: Krugman should come out to California and see for himself what’s going on. He should drive around Los Angeles and see the boarded-up storefronts, the crumbling roads, the vast underground black market of tax avoidance. He should go to the schools where half of students never graduate high school.

He then should come to Orange County, where unemployment is 3 percentage points less than the state level — and where we have lower taxes and regulations than the rest of the state. But even here, thanks to high state taxes and city and county budgets raided to pay sky-high pensions, the roads are crumbling.

Krugman should stop believing the propaganda emanating from Jerry Brown’s office, leave his ivory tower, fly out here and find out what’s really going on.