How the public employee unions took over California (part 2)

A friend read our earlier post on the California budget crisis, responding with these comments:

I got all worried just reading your synopses.

Understood — California has nearly run out of rope. However, as I understand the situation, the train wreck happens first at the local level, like Vallejo, San Jose. I wonder how Los Altos, Palo Alto are doing? If your local community budget is in balance (to keep fire, police, libraries, schools going) how much are you personally impacted when California defaults? I really don’t know. The default of San Jose might turn out to have more local impact.

So, what can an individual do about it?

Try to educate all the people in your influence circle. This might not be true in your neighborhood, but it is obvious that the majority of California voters prefer ‘magical thinking’ to critical thinking.

Personally I do not believe any of the US state/local governments can be gracefully reformed. Especially California because the voters have supported a political redesign that is seriously dysfunctional. E.g., voting for an initiative with big costs BUT for which there is no attached funding legislation.

If I’m correct then serious reform is only likely to grow out of the ashes. When TV coverage every night is focused upon where all the money went (into union pockets) people will eventually figure out a better way forward.

Should we cash in and simply run away to sea?

Very interesting question! I wonder – would Warren Buffett say “get liquid because there are going to be best-of-lifetime deals to buy”? Fortunes were made by investing on the backside of a crash.

If you’ve not yet seen Bill Gates TED Talk on the state budget crisis, it is a terrific talk, highly recommended.

FWIW, there is one California candidate that we would support, Silicon Valley entrepreneur Steve Poizner (Steve lost the Rep primary race to Meg Whitman). Listen to his two talks at the California Commonwealth Club (first podcast, Oct 2010 Event, second podcast)

And there is this Poizner/Whitman May 2010 Republican primary debate on CSPAN (have not watched this video)

For more analysis on California, this book has been recommended (we haven’t read it yet): California Crackup: How Reform Broke the Golden State and How We Can Fix It.

Whatever happens, I’ll speculate that California taxes will have to go up, maybe via a EU-size 20% VAT (less dead weight than higher income taxes)?