Share This Page

The California miasma: Will a modest proposal wake up Americans?

| Saturday, Oct. 13, 2012, 8:59 p.m.
Hoover Digest

California was once the land of opportunity. But it is going down the tubes.

Several of California's prominent cities have declared bankruptcy, such as Vallejo, Stockton, Mammoth Lakes and San Bernardino. Others are on the precipice and that includes Los Angeles, California's largest city.

California's 2012 budget deficit is expected to top $28 billion and its state debt is $618 billion. That's more than twice the size of New York's state debt, which itself is the second-highest in the nation.

Democrats control California's Legislature, and its governor, Jerry Brown, is a Democrat. California is home to some of America's richest people and companies. It would then appear that the liberals' solution to deficit and debt would be easy:

They need only to raise taxes on California's rich to balance the budget and pay down the debt — or, as President Barack Obama would say, make the rich pay their fair share.

The downside to such a tax strategy is the fact that people are already leaving California in great numbers. According to a new Manhattan Institute study (“The Great California Exodus: A Closer Look,” by Thomas Gray and Robert Scardamalia), roughly 225,000 residents leave California each year — and have done so for the past 10 years. They take their money with them.

Using census and Internal Revenue Service data, Gray and Scardamalia estimate that California's out-migration results in large shares of income going to other states, mostly to Nevada ($5.67 billion), Arizona ($4.96 billion), Texas ($4.07 billion) and Oregon ($3.85 billion). And that's the problem: California politicians can fleece people in 2012, but there's no guarantee that they can do the same in 2013 and later years; people can leave.

Also, keep in mind that rich people didn't become rich by being stupid. They have ingenious ways to hide their money.

California has one-eighth of the nation's population but one-third of its welfare recipients. According to Businessweek, “it is one of the few states that continue to provide welfare checks for children once their parents are no longer eligible.”

There's nothing new about the handout strategy. As far back as 140 B.C., Roman politicians found that the way to win votes is to give out cheap food and entertainment, what came to be known as “bread and circuses.”

Given the widespread contempt for personal liberty and constitutional values, there might be a way for California politicians to solve their fiscal mess. They can simply stop wealthy people from leaving the state or, alternatively, like some Third World nations, set limits on the amount of assets a resident can take out of the state.

This would surely be within their jurisdiction and would not raise any constitutional issues because it would serve a compelling state purpose. In other words, if California were to set up border controls to stop people, as East Germans did at Checkpoint Charlie, before they cross the state line, such action would be protected by the 10th Amendment.

The fact that many Californians have managed to get their assets out of the state complicates the issue. Article 1, Section 8, of the U.S. Constitution authorizes Congress “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”

This is known as the Commerce Clause. There's no question that people who pull up stakes and leave California affect interstate commerce; California has less tax revenue and recipient states have more. What California Attorney General Kamala D. Harris might do is sue Nevada, Arizona, Texas and Oregon in the federal courts for enticing, through lower taxes and less onerous regulations, wealthy California taxpayers.

Were California to take such measures and have a modicum of success, one wonders how many Americans would be offended by such an encroachment on personal liberty. After all, how would forcing an American to remain in a state differ in principle from forcing him to purchase health insurance?

Walter Williams is a professor of economics at George Mason University.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.