What a State We’re In

Wednesday, April 21, 2010

California is the poster child for the implosion of state governments across the land. What can be done about the crisis? Two general approaches exist. The first is structural and concerns the dividing up of political authority within the states; it holds little promise. The second deals with the concept of individual rights and duties of state citizens. As Americans, we should sense the merit in that approach. But, true to form, California seems to be moving in the opposite direction: tinkering with structure rather than rebuilding the foundation.

Many groups are preparing measures for November’s referendum process, which lets voters have the word on reform. These exercises in direct democracy consciously bypass the state legislature, in which public confidence has fallen to 14 percent—quite generous in light of its dismal performance.

Naturally, many of these proposals take aim at the legislature itself. Some try to slash legislative salaries in half, which won’t do much good because most people who crave their seats spend far more than they earn to obtain them. What drives them to office is the prospect of power: influence that will ultimately pay them far more than the gobs of cash they need to get elected in the first place.

Other proposals address legislative gerrymandering of local districts, a source of public malaise and discontent. Given the current mind-set, however, the only thing that redistricting will accomplish is a shift in power among the various interest groups that now vie for influence. It will do little or nothing to raise the overall level of legislative performance.

Still other proposals aim to alter the balance between state and local governments in ways that shift more education and public-safety responsibilities to the local levels. This is a form of mini-federalism; although it will probably do some good in education, when it comes to issues like land-use regulation and labor reform some local communities are as bad as the state.

Worse still are efforts to organize a constitutional convention to start matters over from scratch. Put that august assembly together, and every interest group in town will find ways to entrench its pet projects. A constitutional mishmash is no better than a legislative one.

We need to emphasize the theoretical mistake these would-be reformers are making. The diffusion of power in different branches of government is a key bulwark against tyranny, even at the cost of gridlock and paralysis. On balance, that trade-off is worth making.

Where is the ballot initiative that would relax the restrictions on land use exercised at both state and local levels? Or that takes on the bloated pensions of public unions or state protection of private unions?"

Tinkering with this balance will do little to cure today’s entitlement malaise. Whatever the importance of some division of power among political actors, no theory tells which division of power is likely to work better than the others. Look around the world and ask whether presidential systems of government, such as that of the United States, work better than parliamentary systems of government, such as that of Great Britain. We can’t be sure. Nations under stress often oscillate between the two, without any clear direction.

On the other hand, getting right the basic set of substantive entitlements does make a huge difference in the success or failure of government. It is only by taking on that unfashionable issue that real progress can be made in California and places like it.

The first order of business should be to rationalize the tax structure. Low, flat taxes on income will draw in capital, not drive it away.

None of the proposals takes dead aim at entitlements. Instead, the temptation at the state level is to hunt for ways to add back benefits to Medicaid, for example, often by asking the federal government (i.e., citizens in other states) to foot the bill. It’s a game that forces sensible states to subsidize the follies of profligate ones. We need instead to find a way to shrink such programs nationwide.

I have not seen one proposed initiative that would relax the restrictions on land use exercised at both state and local levels. None wants to take on the bloated pensions of public unions or state protection of private unions.

California is failing because its rapidly growing aspirations have choked off the productive base needed to fund them. The current set of reform proposals won’t stop the state from planting an ever greater set of entitlements onto a shrinking tax base.

Some of these ballot initiatives will be approved, but the underlying situation will only get worse. What we need is a sharp change in direction—a deep commitment to a smaller government along classic liberal lines.