California: A Recipe for Financial Disaster? (part 1)

How did the State of California get into such a financial mess?! Victor Hanson, an erudite California native, tried to explain it, but in my view, his article only touches on the forces we struggle with in California, and completely runs off the road by blaming it on societal attitudes. Do read his analysis, but then allow me, a California immigrant, to share my own perspective of California’s fiscal demons.

A number of systemic factors make financial stability very difficult to achieve for California.

  1. California is desirable. Laborers coming in illegally from Mexico often get the spotlight, but California attracts hundreds of thousands of legal immigrants every year as well. The natural environment and climate are idyllic, and our iconic cultures — Hollywood, the L.A. music scene, “sunny Southern California”, and Silicon Valley – appeal to people from all over the world. With all that immigration, we have ever-growing demands on infrastructure – roads, power, water, communications, health care, and education, to name a few. Infrastructure costs money, and much of it is provided by the state government.
  2. California has droughts on a regular basis. Global warming may or may not be affecting our water resources, but the burden caused by the constant influx of people is undeniable. Damming the rivers as Hanson suggests seems an easy fix, but he’s forgotten the lessons of Cadillac Desert. Perhaps Hanson needs a refresher on the tragedy of Owens Lake, and its more famous sibling, Mono Lake. Protecting the rivers may seem like a “greenie” thing to do, California has a fishing industry that cares quite a bit about the health of the rivers. Meeting the water needs of the fishermen, the farmers, and ordinary people with showers and toilets and taps isn’t easy. Managing our water supply takes lots of lawyers and engineers and scientists – not exactly low-cost labor.
  3. California has some very expensive, regularly occurring natural disasters — big earthquakes, mudslides, and wildfires  (remember the droughts?). Rebuilding the roads and bridges and schools and the government buildings after these disasters is expensive. Disaster relief funding is one of the infamous “piles of untouchable money” that the legislators can’t use when they’re trying to solve the annual budget. And that’s not the only disaster impact to the budget. The most tragic disasters are also lessons from Mother Nature to our civil engineers and architects — “New Ways to Kill People With Catastrophic Structural Collapse.” Those lessons turn into expensive retrofitting programs to make our infrastructure more earthquake-safe.
  4. California has a high cost of living. The law of supply and demand is in full effect here. Lots of people want to live in, or at least near, L.A., San Francisco, Silicon Valley, and San Diego. Huge as California is, most of us live in coastal counties. They’re beautiful places with terrific weather – but the amount of buildable land is limited, partly by the lovely mountain ranges formed by the San Andreas fault and its sisters, and partly by our picturesque shoreline. Take that limited amount of land, coupled with the ever-growing demand to live here, and voila — high housing prices. Those housing prices turn into a higher cost for labor — labor that the government needs to maintain and improve the infrastructure for all those people – an infrastructure that, ironically, is most vulnerable right where the labors costs are at their highest.

These systemic factors are “natural”, and with some effort, we might be able to make our state budgets work if they were all we had to deal with. But there’s another factor at work — a delightfully democratic feature of California’s state government dating back to 1911 – the ballot initiative.

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1 Response to California: A Recipe for Financial Disaster? (part 1)

  1. Pingback: California 2010 – a Tea Party victory « Jars of Water

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