Jerry Brown has just been inaugurated governor of California, and it's an opportune time to take a look at California past, present and future. Last week, looking backwards, Robert Cruikshank wrote a piece at Calitics, "Worst Governor Ever"
[W]hy exactly did Arnold fail? Getting that story right matters quite a lot as Governor Jerry Brown and the Democratic legislature seek to fix not just the 7 years of misrule, but 32 years of destructive policies that were initiated by the passage in June 1978 of Prop 13....
But this lets Arnold off the hook for his own failures, which were ideological in nature. Arnold Schwarzenegger became the worst governor in California history through his unwavering commitment to a far-right economic agenda, his fealty to the large corporations who helped elect him back in 2003, and his pursuit of a shock doctrine attack on the state's institutions and prosperity in the service of his ideology and of his wealthy backers.
Early in his tenure in office, Arnold rejected advice from Warren Buffet and others that he needed to raise taxes in 2004 to close the state's budget gap. Instead of this responsible - and necessary - solution, Arnold stuck to his ideological guns. He pushed through a costly campaign promise to repeal the restoration of a higher Vehicle License Fee, costing the state $6 billion a year in expenditures to local government to make up the lost funds.
Arnold's "solution" to the structural revenue shortfall was to borrow our way out of the mess. A total of $25 billion in bonds were sold to help pay the operating costs of the state in 2004 and 2005. While deficit spending in a recession is sensible, California's economy was in recovery during those years, and could have handled a tax increase. In fact, a tax increase, especially on property taxes, might have slowed the growth of the real estate bubble that eventually crippled the state's economy. The debt service on those bonds takes away from other spending priorities, and lessens the state's ability to borrow to build infrastructure.
This was how the twig was bent. Behind a mask of "social liberalism" (or at least moderation), Schwarzenegger was economically the most rightwing governor California has had at least since WWII. Both Ronald Reagan and Pete Wilson not only raised taxes as well as cut spending when faced with budget shortfalls, Wilson got downright nasty when faced with Republican opposition for raising taxes. Schwarzenegger never dreamed of raising taxes, though he did try to moderate his image after the California Nurses Association turned the tables on him and lead a coalition of public employee unions and others who kicked his ass at the polls on a range of initiatives he put on the ballot for a special election in Nov, 2005.
About this period of "moderation," Robert notes:
The only product of this period worth noting was his belated support for AB 32, a bill that any Democratic governor would have signed in a heartbeat. Meanwhile Arnold ignored other concerns, such as a growing property bubble and the need to wean the state off of its dependence on oil. While Arnold was signing AB 32 in the late summer of 2006, he was threatening to eliminate the funding for the California High Speed Rail Authority, risking the HSR project.
On Wednesday, Democracy Now! completed three days of coverage of Haiti six months after the earthquake. One segment served as a capstone: "Land Ownership at the Crux of Haiti's Stalled Reconstruction". Although it drew on other material, it was primarily an interview with Kim Ives, journalist with the newspaper Haiti Liberté. And what do you know, it turns out to be just one more example of the Shock Doctrine in action
First we start with the conditions people face, and how land is being used to funnel even more money to the haves:
SHARIF ABDEL KOUDDOUS:.... Well, the issue of land is at the crux of the recovery effort in Haiti. For the more than 1.5 million Haitians left homeless by the quake, plans for permanent housing are, to say the least, remote. Even plans for even just temporary shelters to get them out of the tent camps have not been drawn up. Where will all these people go? ....
AMY GOODMAN: .... We're now joined by Kim Ives.... In his latest article in Haiti Liberté, he writes that the earthquake, quote, "reveals that the principal fault-line in Haiti is not geological but one of class." Kim Ives is now back in Miami.
Kim, welcome to Democracy Now! Lay out this issue of land, which is not being raised very much.
KIM IVES: Well, Amy, as we saw, in fact, the wolves have been put in charge of the chicken coop. The bourgeoisie has been put in charge of resettling the squatters' camps, and they have the best land in suburban Port-au-Prince, the large tracts of land very suited to building cities of new cities, where people could have good houses. And there's dozens of proposals of how to build those houses. But the good land is not being given. What they've done is give a place like Corail, which they own, too, and they pay themselves handsomely for its use. And so, what they're doing is keeping their best land; selling, at a high profit, their worst land. And the people are paying the price.
Then we move on to how the anti-democratic emergency governance structure is overseeing everything. It's classic shock doctrine, "a coup without an army":
Brad DeLong is more conservative than me. That's okay. Probably 99% of all Americans are more conservative than me. And 99% of the time, it really doesn't matter much that DeLong is more conservative than me. It's good to read folks who think clearly and freely share ideas, regardless of (if not because of) ideological differences. But this week a few weeks ago there was an exception, as DeLong pulled an old post quoting and commenting on a deeply flawed criticism of Naomi Klein's Shock Doctrine by Tyler Cowen. Given the ongoing potential destabilization of the world economy--caused by naked capitalism and resulting in unprecedented threats to the welfare state--the timing could not have been worse:
Tyler Cowen Thinks Naomi Klein Believes Her Own Bulls--- : October 04, 2007:
He reads her book. He doesn't think it meets minimum intellectual standards. I think he is right: now I can borrow Tyler's ideas and have an informed view:
Shock Jock - October 3, 2007 - The New York Sun: Rarely are the simplest facts, many of which complicate Ms. Klein's presentation, given their proper due. First, the reach of government has been growing in virtually every developed nation.... [T]he reach of government has been shrinking in India and China, to the indisputable benefit of billions.... [I]t is the New Deal -- the greatest restriction on capitalism in 20th century America and presumably beloved by Ms. Klein -- that was imposed in a time of crisis.... China was falling apart because of the murderous and tyrannical policies of Chairman Mao, which then led to bottom-up demands for capitalistic reforms.... [T]he reader will search in vain for an intelligent discussion of any of these points. What the reader will find is a series of fabricated claims, such as the suggestion that Margaret Thatcher created the Falkland Islands crisis to crush the unions and foist unfettered capitalism upon an unwilling British public.
I'm afraid that DeLong has it exactly backwards here. It's Cowen's review that fails the minimum standards test. And I say this as someone who's written hundreds of book reviews. For money. Not much money, mind you. But I was a paid professional, writing for daily and weekly newspapers, a political website, and Publishers Weekly magazine. In those capacities, I always regarded it as my duty to let readers know what the book was about. If I thought it was misconceived, I first felt obligated to say what it was, before saying why I thought it misconceived. I wanted people to find my reviews useful, even if they saw things quite differently. And this is the standard that Cowen's review utterly fails to meet. The condensed passage above gives no sense of her book, nor does Cowen's original. His clearest attempt to say something about it is this:
[Note]: This was not a diary I had planned for today
The Bush Administration jumped on Katrina as an opportunity to advance their privatization agenda, with two major targets: public schools and public housing. As Open Left's focus on education has shown (see Jeff's regular Sunday "Left Ed" diaries at 4 PM), Obama's education agenda has actually expanded Bush's attack on public education. Now, as David Kaib highlights in quick hits, Obama is attack public housing as well.
There is a need for money to invest in public housing, and it would have been a perfect fit within a decently-conceived stimulus package. But of course, there wasn't room for it because of all the tax cuts and its deliberate small size. So now, privatization is the answer, as if the private housing market hadn't already done enough damage to last the rest of the century. David links to a Dkos diary by George Lakoff. "Below the Radar: HUD is Trying to Privatize and Mortgage Off All of America's Public Housing" which begins thus:
The Obama Administration's move to the right is about to give conservatives a victory they could not have anticipated, even under Bush. HUD, under Obama, submitted legislation called PETRA to Congress that would result in the privatization of all public housing in America.
The new owners would charge ten percent above market rates to impoverished tenants, money that would be mostly paid by the US government (you and me, the taxpayers). To maintain the property, the new owners would take out a mortgage for building repair and maintenance (like a home equity loan), with no cap on interest rates.
With rents set above market rates, the mortgage risk would be attractive to banks. Either they make a huge profit on the mortgages paid for by the government. Or if the government lowers what it will pay for rents, the property goes into foreclosure. The banks get it and can sell it off to developers.
Sooner or later, the housing budget will be cut back and such foreclosures will happen. The structure of the proposal and the realities of Washington make it a virtual certainty.
The banks and developers make a fortune, with the taxpayers paying for it. The public loses its public housing property. The impoverished tenants lose their apartments, or have their rents go way up if they are forced into the private market. Homelessness increases. Government gets smaller. The banks and developers win. It is a Bank Bonanza! The poor and the public lose.
And a precedent is set. The government can privatize any public property: Schools, libraries, national parks, federal buildings - just as has begun to happen in California, where the right-wing governor has started to auction off state property and has even suggested selling off the Supreme Court building.
The rich will get richer, the poor and public get poorer. And the very idea of the public good withers.
And Lakoff quotes from PETRA the statement that bill's intent is to:
provide the opportunity for public housing agencies and private owners to convert from current forms of rental assistance under a variety of programs to long-term, property-based contracts that will enhance market-based discipline and enable owners to sustain operations and leverage private financing to address immediate and long-term capital needs and implement energy-efficiency improvements.
In The Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein convincingly argued that "free market" capitalism did not spread worldwide because people welcomed it freely, but because it was forced on them against their will, imposed through a series of shocks--military coups, financial crises, physical disasters--that left people, and entire societies reeling, unable to get their bearings, much less respond critical to the most critical of situations.
Now, however, we've reached a critical turning point: the entire system that was built up by Shock Doctrine strategy is itself coming apart at the seams--and now, rather than standing back, and saying, "Now wait a minute!" the elite consensus in most quarters is to double down on our past mistakes. Now, the very shock of the systems collapse is being used to try to extend it--not just a little further, but far further than ever before.
The main focal point of this effort is the two-pronged battle to (1) prevent anything close to an adequate fiscal response to generate a full-employment recovery, and (2) prevent anything close the necessary re-regulation of the financial sector, so that the national and world economy can be restored to a sound financial foundation. The Obama Administration double-faulted on these twin challenges within its first few weeks in office, and things have been going downhill ever since.
Now passive failure is being turned into active malevolence, as Obama has appointed a commission to address the issue of America's long-term debt--a problem that only exists in the far long term--2050 or so, and only then because we've had an out-of-control health care sector for almost as long as our financial sector has been out of control--as I argued in my diary "Health care costs over time--how the US became so different & why conservatives can't fix it" earlier today.
Earlier this month, economist Dean Baker warned against the folly involved in a column titled "The Budget Deficit Crisis Crisis", which began thus:
The country faces a serious crisis in the form of a manufactured crisis over the budget deficit. This is a crisis because concerns over the size of the budget deficit are preventing the government from taking the steps needed to reduce the unemployment rate. This creates the absurd situation where we have millions of people who are unemployed, not because of their own lack of skills or unwillingness to work, but because people like Alan Greenspan and Ben Bernanke mismanaged the economy.
It should be noted that this situation should be impossible if the "magic of the marketplace" were real.
Free market ideology cannot explain unemployment except as a voluntary choice on behalf of workers. When millions--nay, tens of millions of people suddenly decide not to work, what's an economist to do? That alone ought to be enough to banish these cretins from the stage forever. Instead, they're running the whole show.
All legislative action on revenue and budget must be determined by a majority vote.
What a concept! Majority rule! Here's how the segment with Amy began, where he lays out the basic background:
AMY GOODMAN: We turn now to the budget crisis here in California. The state faces a projected deficit of $21 billion, according to a new report from the state's budget analyst. The prospect for further cuts loom.
I'm joined now from Berkeley, California by a man who says the real cause of the state's fiscal problems is its "dysfunctional system of government." George Lakoff, an author, progressive activist, professor of cognitive science and linguistics at University of California, Berkeley, he has sent the attorney general a ballot proposition for the 2010 ballot that he says can end the gridlock in the state legislature. It's called the California Democracy Act and reads, quote, "All legislative action on revenue and budget must be determined by a majority vote." It changes two words in the state's constitution, turning "two-thirds" to "majority" in two places. It would roll back the two-thirds majority needed to pass a budget and, Lakoff argues, end the gridlock created by minority rule in the state.
George Lakoff, joining us now from the University of California, Berkeley, I welcome you to Democracy Now! Lay out what your proposal is, Professor Lakoff.
GEORGE LAKOFF: It's a pleasure to be here, Amy.
The proposal is very simple: namely, end minority rule by simply having the majority decide on economic-day-to-day economic issues. That's what this says. It says, on revenue and budget, let the majority in the legislature, you know, decide these things, just as happens in forty-seven other states. California is the only state in the union that is completely-that has minority rule in the legislature on both issues.
AMY GOODMAN: How did it happen? What is the history of this?
GEORGE LAKOFF: The history was, back in the '30s there was a two-thirds rule on the budget put in. And then in Prop 13 back in the 1970s, over thirty years ago, there was a hidden part of Prop 13. Most people thought Prop 13 was primarily about, and only about, property taxes. And that said that you needed a two-thirds rule locally to raise property taxes. And what was hidden in there was the idea that you needed two-thirds rule to raise any taxes in the entire state. And that meant that the legislature was basically under minority rule, that one-third plus one, 34 percent, could thwart the majority on any major economic issue simply by saying no until the majority gave in.
AS far as the UC system is concerned, the result has been that as funding has been cut back in tough times, fees have increased. Then when the economy recovers, the fees stay in place, and public funding is never restored. There are multiple causes for this, but clearly a major factor is that even a majority of the state legislature can't easily act effectively--which means that people aren't even inclined to try lobbying them. And thus the rot of anti-democratic politics spreads throughout the system. A brief rundown of how that has played out from a diary at "Remaking the Univeristy", "Doomsday Medicine"
The student protests of the 32% fee increases approved by the University of California Board of Regents this week are notable for many reasons, not least because they are one of the few mass responses to widespread applications of the "Shock Doctrine" in the wake of massive budget cutbacks at the state and local level. First a quick review of how massively irresponsibility in drafting the stimulus set the stage for this event--and many similar cutbacks that have gone relatively unnoticed. Then, on the flip, a look at the fee hikes in historical perspective as part of a long-term process of privatization.
As I argued back during the stimulus debate, the failure to use federal dollars to help close state budget gaps was a terrible mistake. First off, every dollar taken out of state spending roughly offsets the stimulative effect of every dollar spent by the Federal government--meaning that until you've closed the state budget gaps (either actually or virtually), every dollar of stimulus spending accomplishes roughly nothing. I say "roughly," because the stimulative effect of spending a dollar can very tremendously, as shown in this chart from a Feb 4 diary:
So, $100 billion to extend the Bush tax cuts forever instead of assisting state governments would cost the economy roughly 700,000 jobs. If the $100 billion were used for temporary across-the-board tax cuts, it would "only" have cost about 230,000 jobs.
But making matters even worse than the massive loss in jobs saved or created alone, the state budget culs have wrecked havoc with all manner of state and local agencies and the services they provide. In many cases, the loss of continuity of service is itself quite costly, although ways of measuring these costs are partial and pimative at best. But one thing is quite clear--when the cost is cut-backs in higher education, that cost will continue to be paid for years, if not decades into the future in the form of lost productivity in a less educated and less cretive workforce--at the every least.
I didn't see the debate, but I understand that Obama brought up DC School Chancellor Michelle Rhee as an example of what we should do about eduction.
Rhee is like the Miranda Priestly character in The Devil Wears Prada, arrogant, capricious, and without a single care for anyone's view point but her own.
STATE BLOGS
