Fiscal folly humbles Calif. as it did USSR; who’s next?

I was able to get a high powered, expensive education courtesy of the taxpayers of the state of California. For only pennies on the dollar I got a BA from a Cal State and an MA and a PhD from the University of California. Unfortunately, taxpayers revolted and put a limit on how much the state can tax their property (Proposition 13), so the state now has to rely on other sources of revenue, like income and business taxes. For that reason taxpayers and businesses have fled California for states with lower taxes, as I did by moving to Colorado and not paying back the state for that education though a lifetime of heavy taxation.

Now students of the California university system will be paying higher tuition and are not happy about it. What they got on the cheap, will now cost them more. Now they have taken to the streets, demanding that the state continue to pay for their education, but where will the state get the funds to do so? So far, the State of California has borrowed to make up for the shortfall, since they can’t get away with raising taxes any higher than they already have without having the taxpayers revolt again or abandon the state.

What made that education so expensive? California is very generous to their state workers, which include billions of dollars paid to tens of thousands of people employed by California higher education. What caused their salaries and benefits to be so generous but the strength of the public employees union. It is ironic that one big government socialist scheme (free education) is clashing with another big government socialist scheme (unions demanding exorbitant wages for their members), and both of them clashing with the economic reality that we all live in a world of limited resources and unlimited wants.

Since California is now deep in debt and can’t dig their way out, they want the rest of the country to bail them out. Should the rest of us finance the generosity of California state government largesse? Our politicians promise to fulfill our desires, but can’t do it over the long term without collapsing our economy.

A historical example of this is the collapse of the Soviet Union. Promising to redistribute wealth, the Soviet big government socialists took from the rich, but gave very little to the poor. They eliminated the very people who know how to produce wealth (as Lenin did in the 1920s), leaving only those who know how to redistribute it. Soon they ran out of wealth and had to rely on terror to maintain power (as Stalin did in the 1930s). In order to finance World War 2, they relied on lend-lease from the United States, which provided them with much of the war material to defeat the Germans, then raped the wealth of half of Europe to provide the finances to get them through the 1950s and 60s. By the 70s they again needed to borrow from the West, which got them in debt, and by the 80s could not longer sustain their economy and collapsed.

Governments don’t produce wealth, they only expropriate it from those who are productive, then waste most of it and redistribute the rest. They cannot keep this up in the long term without destroying the very society which supports them, unless they can find others to pay for their generosity, as we are doing by getting China to finance our irresponsible spending, but that can’t last forever. They could also pass their debt on to the next generation, but that won’t work in the long term, and that generation is now protesting in the streets of California at the loss of government largess upon which they have been depending. They could print more money, but in the long run that too would collapse the economy with hyperinflation. The only thing that works in the long-term is fiscal responsibility, but there is no chance of that in our culture of dependence on government and our sense of entitlement without the willingness to pay for it.

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