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  • Ben Boychuk

Viewpoints: Making the 'Beholden State' golden again

Published: Saturday, Jul. 13, 2013 - 12:00 am | Page 11A

An inquisitive objection often comes up in the context of California's fiscal, political and economic woes: If the situation is really as bad as conservatives like me say, then why don't we just pack up and leave?

That's the charitable form. The uncharitable version isn't so much a question as a variation on "Don't let the door hit you on the rump on your way to Texas."

For me, the answer is straightforward: I don't want to leave. I stay for the same reason millions of others stay: Despite everything – the taxes, cost of living, dodgy public schools, idiotic policies conceived by craven and ill-informed policymakers – I like it here. I don't want to leave.

No, I'd rather stay and fight. A new book, published this week, is full of reasons why the state is worth fighting for. It's called "The Beholden State: California's Lost Promise and How to Recapture It," and although it offers a grim diagnosis for what ails the Golden State, the authors provide some robust prescriptions. I have two chapters in the book, which collects some of the best writing on California published by City Journal, the public-policy quarterly where I work.

City Journal is based in Manhattan, which might raise a pre-emptory challenge: What business is it of a bunch of New Yorkers to tell Californians how to save our state, assuming it needs "saving"?

You may recall how New York City 20 years ago was a cesspool of violent crime, social disorder and dysfunctional government. Much like California today, skyrocketing taxes and ever-expanding regulations had businesses fleeing in droves. Many supposed experts at the time asserted the city's woes were simply a fact of life and politics, and that nothing could be done.

But City Journal, which published its first issue in 1990, had other ideas about fighting crime, reducing multigenerational welfare dependency and bolstering the city's economic growth. Many of those ideas caught the attention of then-Mayor Rudy Giuliani, who put them into practice with great results. A few years later, some of those very same ideas would appeal to Oakland's mayor, a fellow named Jerry Brown.

"The Beholden State" argues that bad policy got us into this fix, just as bad policy sent New York into a downward spiral. Better policy revived New York – which, by the way, remains a fairly expensive and obnoxious place to live and work, but nevertheless is much better off today than it was two decades ago. Why couldn't better policy revive California?

To that end, the book's contributors – most of them native Californians – offer a number of policy prescriptions that might be narrowed to four broad proposals.

First, unfunded state and local pension liabilities – which range from $128 billion to $500 billion, depending on who's running the numbers – are going to destroy services and quality of life for everyone except the super-wealthy and a privileged class of government workers. Real reform begins with moving away from defined benefits toward defined contributions.

Second, the state's tax code should be considerably flatter and fairer, with fewer cutouts. The goal of any reform would be to ensure that the state continues to yield as much revenue as it does now, while making the treasury less dependent on those 30,000 to 40,000 Californians who report gross incomes of $1 million or more, depending on how their stock portfolios performed in any particular year.

Third, overhaul the state's Byzantine regulatory system. Republicans often lament "regulatory uncertainty." In fact, California's problem is regulatory "certainty" – such as the certainty that state and local rules suck $500 billion a year from the state economy, according to a 2009 Stanford University study.

Those cost burdens aren't getting any easier.

Assembly Bill 1098 by Sharon Quirk-Silva, D-Fullerton, would require the state's Office of Small Business to commission a study on the cost of regulations every five years.

God knows we've had more than our fair share of useless commissions, but it's a start. Even better yet, why not ensure that every regulation has to endure a brutal cost-benefit analysis and comes with a five-year sunset date?

Fourth, tap the state's tremendous energy resources. Wind and solar alone won't save us. California was once a world leader in oil production. With the discovery of the Monterey shale formation, we could be again – and put thousands of people back to work in the process.

Sounds simple enough. Politically, of course, none of these ideas would go unchallenged. Most would face ferocious opposition. So what? Too many Californians of a conservative bent have surrendered to the cynical view that our state is like New York two decades ago, that nothing can be done. It wasn't true then, and it certainly isn't true now.

Ben Boychuk is associate editor of the Manhattan Institute's City Journal. Reach him at bboychuk@city-journal.org.

© Copyright The Sacramento Bee. All rights reserved.

Read more articles by Ben Boychuk



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