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What Would an Independent California Look Like?

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Dan Mitchell, a senior fellow at the Cato Institute, outlines some of the ways independence would force Californians to face reality.

Of course they’ll target the middle class. That’s what they want in Washington. That’s why they want a value-added tax.

Simply stated, you can’t have a cradle-to-grave welfare state unless the middle class is so over-taxed that they have to rely on government for healthcare, education, retirement, and just about everything else.

But that’s an issue for another day.

Let’s keep our focus on California secession, which I support both as a matter of self-determination and as a matter of public policy.

With regards to policy, I think it will be very interesting to see how a state with huge natural advantages (coast, weather, mineral resources, agricultural land, etc) can endure bad policy.

And there’s already plenty of bad policy in the state.

A big part of the problem is that the public sector in California is wildly overcompensated. Kevin Williamson explains.

State and local government spending adds up to nearly 20 percent of California’s economic output, while thriftier states such as Texas and New Hampshire spend less than 15 percent. …California’s government, like the federal government and most other state and local governments, spends its money on salaries, benefits, pensions, and other forms of employee compensation. The numbers are contentious — for obvious political reasons — but it is estimated that something between half and 80 percent of California’s state and local spending ultimately goes to employee compensation. …The first and smaller problem is that many government workers are paid too much. …The second and larger problem with public-sector workers is that there are a whole lot of them. …When politicians talk about “investments,” we think they mean bridges and research laboratories and canals to bring water to central California. But what they are investing in is dependency. In California, that means creating a lot of full-time jobs for Democrats.

But it’s not just that there are too many bureaucrats and that they are overpaid. They also become a big burden when they retire.

Read more here.

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Richard C. Young

Richard C. Young is the editor of Young's World Money Forecast, and a contributing editor to both Richardcyoung.com and Youngresearch.com.