Maggie's Farm

When I left New York City in 1968, after graduating college, I like many of my fellow graduates from working and lower middle-class families sought our opportunities elsewhere, and most metropolitan elsewheres were better than NYC.  The job market was still strong in NYC, but opportunities for advancement better elsewhere, the costs of living and taxes lower, the public services better, public safety higher.

Today, the New York City disease has spread more widely around the country.  Most major metropolitan areas, the hub of most states, have seen their infrastructure serving the upward mobility and the financial and personal security of their upward-striving or holding-on working and middle class deteriorate over the past 40-years.

Still, there’s striking differences among the states, and the results show.

William Voegeli writes in today’s Los Angeles Times, "The Golden State isn't worth it."  Voegli compares California to Texas, “Our high-benefit/high-tax model no longer works, especially compared with low-tax states like Texas.”  Voegeli says, “These alternatives, of course, define the basic argument between liberals and conservatives over what it means to get the size and scope of government right….[T]he superior public goods that supposedly justify the high taxes just aren't being delivered.”

It’s not ideologues who are moving.  For example, I recently ran into a couple I was friendly with in San Diego during the ‘90’s, he a French doctor-scientist and she a Dutch-Indonesian.  They compared San Diego favorably in all respects (except cuisine) to living in Europe, and were happy to be here.  Then they moved to a better job in Silicon Valley, where despite higher income they could afford a house half the size and they felt surrounded by selfishly aggressive strivers.  Then they moved to Austin, Texas, where they could afford a much larger house for their family, in an excellent neighborhood with top schools, the cultural life is vibrant, and the daily courtesies among residents are welcoming and provide good role models for their children.  These products of Europe are a reality test of America.

Voegeli continues: “Overall, the Census Bureau's latest data show that state and local government expenditures for all purposes in 2005-06 were 46.8% higher in California than in Texas: $10,070 per person compared with $6,858.”  Between 2000 and 2007, “16 of the 17 states with the lowest tax levels had positive "net internal migration," in the Census Bureau's language, while 14 of the 17 states with the highest taxes had negative net internal migration.”

Why?

The high-benefit/high-tax model can work only if things are demonstrably not equal -- if the public goods purchased by the high taxes far surpass the quality, quantity and impact of those available to people who live in states with low taxes.

Today's public benefits fail that test, as urban scholar Joel Kotkin of NewGeography.com and Chapman University told the Los Angeles Times in March: "Twenty years ago, you could go to Texas, where they had very low taxes, and you would see the difference between there and California. Today, you go to Texas, the roads are no worse, the public schools are not great but are better than or equal to ours, and their universities are good. The bargain between California's government and the middle class is constantly being renegotiated to the disadvantage of the middle class.

How?

None of this happens by accident. California's interlocking directorate of government employee unions, issue activists, careerists and campaign contributors has become increasingly aggressive and adept at using rhetoric extolling public benefits for all to deliver targeted advantages to itself. As a result, the political reality of the high-benefit/high-tax model is that its public goods are, increasingly, neither public nor good. Instead, the beneficiaries are the providers of the public services, and certain favored or connected constituencies, rather than the general population.

What to expect?

The recession will eventually end, and California's finances will get better. Given its powerful systemic bias against efficient and effective public services, however, the question is whether the state will ever get well. California's public sector has pinned its hopes for avoiding fundamental reform on increased federal aid to replace dollars the state's fed-up taxpayers refuse to surrender. In other words, residents in the other 49 states -- the new 49ers? -- would enjoy the privilege of paying California's taxes. Their one consolation will be not having to endure its lousy public services.

If, on the other hand, America's taxpayers (and China's bond buyers) succumb to bailout fatigue, California may reach the point at which, after every alternative has been exhausted, it is forced to try governing itself competently.

It’s not just California, or New York City, but throughout much of America today that we’re seeing the hollowing out of the infrastructure and services and opportunities that built America’s uniqueness and success compared to the rest of the world.  And, big-government advocates are clamoring for yet higher taxes. The New York Times reports today that “Faced with anxiety in financial markets about the huge federal deficit and the potential for it to become an electoral liability for Democrats” the White House and congressional Democrats are seeking some way to reduce the huge federal deficits they have created, and that more taxes are their prescription.

Government  workers and their unions are prime beneficiaries of our heavy taxes. Most of even the made-up stats recently released about jobs saved or created by the federal appropriation of the near $1-trillion “stimulus” show relatively few and most of those among government workers.  The $1-trillion, likely to be much more, cost of the wholesale upheaval of 1/6^th of the US economy in health care – which really only serves about the 25% of those who truly need it who don’t have insurance at the expense of the 85% of Americans who do have coverage -- will fall heavily upon the working and middle class.  The $trillions of indirect and direct taxes of the “cap-and-trade” illusory environmental bill will also add $thousands each year to each American's costs of living, to the economic benefit of profiteering fat cats and their politicos who garner contributions.

At root this may be an ideological battle, as Voegeli says.  But, it is really a practical battle between those who aspire and work for a better life and those relatively few who would squander its underpinnings for their own greedy benefits.  The real populist revolt is already shaking Washington and state capitals, and much more is to come.