Hey John,
I believe that there are a lot of inter-related factors. I believe a lot of it is directly caused by too much wealth being concentrated in California for periods of time. I call it the lottery syndrome. In the 90s, there was a disproportionate amount of wealth concentrated in california. This caused individuals, businesses and state and local governments to extend themselves. Individuals took on debt and other financial obligations that required that their income remain at high levels. Businesses expanded facilities and payrolls as if there would always be a boom and state and local governments started projects and hired government employees with all of the accompanying benefits as if the tax base would always be huge. When the boom busted, individuals lost their homes and declared bankruptcy. Businesses cut costs or disappeared. But government employees retain their jobs and all of their benefits. And then to meet the obligations to the government employees, taxes are raised that puts an even bigger burden on the individual taxpayers, thus making recovery even more prolonged.
Couple this with a large number of people having what I would call windfall income, and it creates a sense of unearned income that they assume everyone else has. I am talking about the entertainment industry and silicon valley. And as someone who benefited from the dotcom boom in the 90s, I can honestly say that the buckets of money that they were throwing at us were ridiculous. With the sense that money is unearned, it loses its value. It is then squandered more readily. And then there is the guilt that goes along with it. So people like entertainers and silicon valley millionaires want to give to the less fortunate so that they can share in their fortune. Unfortunately, they never want to keep it as their own private act of charity. They see that since they have been blessed with all of this unearned wealth, everyone must have been blessed with unearned wealth. Therefore it is easy to vote to give other people's money away as entitlements. And once an entitlement is put in place, it just doesn't go away because of a little economic hiccup.
individuals and businesses were forced to deal with the economic cycles. The fact that the government has not had to deal with it yet, just means that it is prolonging the recovery. The only way out of our current economic mess is to cut spending drastically.
It also doesn't help that California is very friendly to the illegal immigrant population. A population that largely doesn't pay taxes and yet enjoys the benefits of the state entitlements. |
