Tear it Up!

Populism is bad. You’re not really supposes to say that, mostly because it’s hard to put together an argument against it that’s not easily branded as elitist, but there it is. The problem with populism is that it rests on the idea of a very wise and dependable mass when, for the most part, the masses are largely ignorant on matters of nuts and bolts policy, influenced by self-interest in ways that make them incapable of setting good macro policies, or just generally prejudiced towards minority members. And so when you let populism run wild, you get situations like this:

But the problem isn’t just the economy, and California’s need to balance its budget. It’s Proposition 13. Proposition 13 was cleverly designed to make it virtually impossible for California to raise taxes. Any tax increase requires a supermajority. Property taxes are fixed at 1% of assessed value, and assessments themselves are fixed at the time of purchase, and can rise only very slowly thereafter.

This leads to all sorts of idiotic consequences. Back when I lived in California, one of the few ways of raising taxes available to cities and towns was to increase the sales tax by some fraction of a percent. Result? Cities and towns did this, and then tried desperately to induce people to set up car dealerships and other places where people sell big, expensive things. Did it make sense to have so many car dealerships? Who cares! It’s revenue!

Likewise, people in California don’t always sell their houses when it would normally make sense to do so, because as long as they stay in their existing house, the assessment will not rise much and their taxes will stay low, whereas if they buy a new house, it will be assessed at its purchase price, and their taxes will go up.

“Free markets”, indeed.

Now I genuinely detest the practice of popular initiatives, elitist as that may be, and Prop 13 is about as good of an example why as you’ll ever find. On it’s face it sounds like a great idea. Who doesn’t want to keep their property taxes low after all? And hey, since if there’s a really serious problem for which raising taxes is essential, surely a 2/3 majority could be found, right?

Well no, because in the real world the legislature is hampered by a minority party who simply refuses to raise taxes for any reason, even if it means bankrupting the state. And there’s nothing anyone can do of it, short of a repeal of Prop 13 which would require a full campaign to do. And this is the inevitable conclusion of a system that heavily features popular refererendum on public policy as a major feature of the governing system. The simple fact of the matter is that most people simply don’t think through the ramifications of a particular proposal, nor do they know enough about current policy to even begin thinking about how a proposal will act with the current budgetary reality. And so you get a lot of spending measures that sound good in their own right (and to be fair many of them are very good policies) coupled with a handful of measures that decrease revenue and limit the states ability to raise future revenue as needed. The predictable result is a budget mess, but one the legislature can’t work its way out of with so many expenditures appropriated at the ballot box.  The main reason for a representative system is to create a political structure that acts as a check on the whims of a largely ignorant public by establishing an occupation of governing. And if we’re going to pay people for something, we ought to at least let them do what we’re paying them for should’t we?

There’s really no foreseeable way out of this for California, which means there’s at least a very good chance the state government is literally going to go broke. And when the federal government bails them out, we really should demand that the propositions that created much of the mess be rescinded in some fashion, and that the initiative system be aboloshied entirely, at least with respect to appropriating state funds. Otherwise we’ll just see the same situation repeated in the future.