A review of California Crucible: The Forging of Modern American Liberalism, by Jonathan Bell; and Eureka!: How to Fix California, by Arthur B. Laffer
California's 38 million residents, a population exceeding Canada's, may not be getting the government they deserve but seem to be getting the one they want. In the 2010 election, while Republicans made unprecedented gains around the country, California Democrats won every statewide race for political office. Meg Whitman, the former chair of eBay, spent $178.5 million, $43 for every one of the 4.13 million votes she received as the Republican gubernatorial nominee, which was only 40.9% of the total in that year's contest.
How did California, which Republican presidential nominees carried nine times in the ten presidential elections from 1952 through 1988, become one of the country's most Democratic states? There's no better tutorial than Jonathan Bell's California Crucible for understanding how Golden State Democrats transformed a position of acute political weakness into one of great strength over the course of the 1950s. After a decade of defeats and disarray, the Democrats' sweep in 1958 took them from holding only 11 state senate seats in 1952 to 28 (out of 40), and from 26 General Assembly seats to 47 (out of 80). Their newly elected governor, Pat Brown (Jerry's father) won by a landslide and used his party's legislative majorities to enact an ambitious progressive agenda.
Bell, a historian at the University of Reading, stresses that from 1950 to 1960 California's population skyrocketed from 10.6 to 15.7 million. New residents arriving from across the country brought new sensibilities regarding civil rights, social progress, and government initiatives. The state GOP adjusted slowly and poorly to a political climate less fueled by McCarthyism, and drifted into intra-party feuds. Meanwhile, the Democratic message crafted in the 1950s called for using government to promote a common citizenship in terms of access to economic resources and basic civil rights. The victories of 1958, Bell writes, represented the "culmination of a process of political self-definition that had gathered pace in the decade since World War II and established California Democrats as trendsetters for the emergence of a left-of-center program for the later twentieth century."
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California Republicans might benefit from studying Democrats' adaptation in the 1950s to a changing population. After voters in 2005 rejected a series of initiatives designed to change the balance of power in Sacramento, the economist Arthur Laffer, father of supply-side economics, departed the state for the greener pastures of Tennessee. At the time Laffer wrote, "California is embarking on a radical path of tax increases and budget-busting spending programs. The Golden State is becoming one of the most oppressive, intrusive, anti-wealth states in the nation—if we're not there already."
It has been six years since his departure, but Laffer still thinks the state is worth saving. According to his trenchant new book, Eureka! How to Fix California, California lost some 869,000 tax filers from 1992 to 2008 (3.5 million moving in, 4.4 million fleeing). The exiles, mostly Republicans, relocated to Nevada, Oregon, and Arizona. Two of their other top destinations—Florida and Texas—pursue pro-growth policies, including shunning a state income tax. The emigrants to California over the same 16-year period overwhelmingly came from New York, New Jersey, Massachusetts, Michigan, Pennsylvania, Ohio, Illinois, Connecticut, and Maryland. Small wonder the state has grown more Democratic.
As Laffer sees it, Sacramento politicians have painted themselves into a corner. The progressive tax code showers riches on the state during prosperous times, such as the technology bubble of the late 1990s. When the downturn arrives, however, state revenues are reduced disproportionately because high-bracket incomes decline dramatically. Meanwhile, government expansion, which the booms make possible, proves far easier than contraction, which the downturns make necessary.
Laffer proposes some familiar remedies, including teacher merit pay, abolishing tenure, more charter schools, and putting the California Teachers Association on a leash. Others are novel. Charging all water users (residential, commercial, and agricultural) the same rate and quintupling water prices would promote conservation and open the public's eyes to the state's cozy relation with agri-business. Laffer also favors tying pay for politicians and functionaries to the state's economic performance, and sun-setting all state commissions.
His biggest idea is a revenue-neutral flat tax with one base for personal adjusted gross income, and another for businesses' net sales or value added. "What is needed is a true pro-growth tax code that eliminates the boom and bust revenue cycle and creates the largest incentives for firms and workers to come to California," he writes.
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If he were California's philosopher king, enacting these meritorious proposals and watching the state prosper would be easy. In California's democracy, however, ruinous ideas seem to flourish and sound ones whither. Laffer's when-all-else-fails proposal is to divide California into four states, each having roughly the same population as the entire state did in 1950. At least one or two of those new states might be interested in multiplying wealth instead of dividing it. Of course, even in the unlikely event Californians would consent to this cell division, the other states would have to agree to see their own power in the United States Senate diluted by the addition of six additional senators from the newly formed mini-Californias—an unimaginable prospect.
In other words, California—with enormous dangers and no discernible path for escaping them—is a state in deep, deep trouble.