Jim Manzi discusses “Uncontrolled: The Surprising Payoff of Trial-and-Error for Business, Politics, and Society”; Plus: American Dream Goin’ South and California’s Proposed Cigarette Tax, This Week on Gadfly Radio

Join us live Tuesday, 10 a.m. PDT, on CRNtalk.com, CRN1, for another spirited edition of Gadfly Radio with Martha and CalWatchDog.

Martha Montelongo could not stay away from the microphone for long, so she’s returning from her road trip a week early!

In the first half of the program, we’ll talk to Jim Manzi, author of the new book, Uncontrolled:  The Surprising Payoff of Trial-and-Error for Business, Politics, and Society. Manzi, a senior fellow at the Manhattan Institute and the founder and chairman of Applied Productive Technologies, argues ”we have much less formal knowledge about society than economists and other social scientists often claim, and that therefore we need to rely predominantly on practical expertise, federalism and trial-and-error learning to make useful progress.” It’s a fascinating book, and should make for a fascinating discussion.

Then, John Seiler, Ben Boychuk and Martha Montelongo will discuss some of the latest developments in California, including the pitch battle over Proposition 29, the “Tobacco Tax for Cancer Research Act.” If approved, Prop. 29 would raise the cigarette tax by $1, with the money ostensibly earmarked for cancer research.

Prop. 29′s backers are trying to portray the measure’s opponents—which do, in fact, include tobacco companies—as objectively “pro-cancer.”  L.A. Times columnist George Skelton flatly asserts that Prop. 29 will save countless lives, and that opponents of the tax increase are simply lying to protect Big Tobacco. And in a column at California Progress Report headlined “The Friends of Lung Cancer,” former Sacramento Bee editorial page editor Peter Schrag writes:

There are lots of good reasons to support Proposition 29, the tobacco tax initiative on the June 5 ballot, not least those named Philip Morris and R.J. Reynolds. Together, the two tobacco giants have so far kicked in about $40 million to the sleazy campaign to defeat it. If you count the nearly $700,000 that the Republican Party contributed to their cause you have yet another reason.

Incredibly, Schrag comes out in qualified opposition to Prop. 29, saying, “Anything that big tobacco is against – or big pharma or big oil – is usually good enough to be for. But let’s save it for a more worthy purpose next time around. There’s a long list of underfunded programs that can badly use the money.” Well, alrighty then!

The problem with Prop. 29—well, one of them, anyway—is that it would create yet another new agency with an unreliable revenue stream in a state beset with a multi-billion dollar deficit. Remember Prop. 71? That was a 2004 bond measure that set up a mostly unaccountable new agency responsible for spending billions on stem-cell research. The Sacramento Bee reported Monday that the California Institute for Regenerative Medicine is now in danger of running out of money.

And as CalWatchDog’s Katy Grimes noted last month, Prop. 29′s backers have plenty to gain if the measure passes: “Don Perata, a former state legislator, has been using the June ballot measure’s election fund as his own personal checkbook. Perata has paid nearly $40,000 to an Oakland City Councilman in order to win a contract for one of his lobbying clients, the San Francisco Chronicle and Contra Costa Times reported.” Grimes also reports that Prop. 29 includes “a clause prohibiting any changes in the spending decision that its politically appointed commission makes, for a full 15 years.”

What’s more, the measure, “is written in a way to exempt the CEO from normal state salary requirements, and why that CEO can hire whomever he wants, at whatever salary he chooses.”

How bad is California’s economy? People are voluntarily returning to Mexico. John Seiler at CalWatchDog lays out the numbers in ”American Dream Goin’ South,” which highlights the reverse migration of Mexicans from California. John writes:

Although the official California unemployment rate is 10.9 percent, the real level — including those working part time who want to work more and those who have given up looking for work — is 25 percent, just as during the 1930s, as I have reported.

A difference this time from the 1930s is that Mexico’s economy is not also in a slump, but is a hot tamale:

“First-quarter growth was 4.6 per cent compared with a year earlier, the fastest pace since the third quarter of 2010, prompting several analysts to upgrade 2012 growth forecasts.”

Other items of note: 

  • “California’s salary setting commission is bracing next week to consider a 5 percent pay cut for legislators and other statewide officeholders, in keeping with a similar cut proposed by Gov. Jerry Brown for state workers,” reports Jim Sanders at the Sacramento Bee.
  • Executives at California State University campuses would be prohibited from getting public pay increases during the next two years and then limited to 10% raises during the next four years under legislation approved Monday by the state Senate,” according to the Los Angeles Times. CalWatchDog’s John Hrabe has been on the cutting edge of reporting on the Cal State executive compensation scandal. Read his latest report here.
  • During last week’s episode, Ben and John discussed California’s exploding budget deficit, including the state’s high hopes for billions in new revenue from the Facebook IPO. City Journal contributing editor Joel Kotkin argues at The Daily Beast that Facebook won’t save the Golden State. Meantime, Facebook shares on Monday closed near $34 on the second day of trading—or about $4 below the stock’s initial offering price. Yikes.

This Week on Gadfly Radio: Troy Senik on the “Worst Union in America”; Plus: Jerry Brown and California’s Greek Ways

Join us live on Tuesday, 10 a.m. PDT, on CRNtalk.com, CRN1, for another lively edition of Gadfly Radio!

Troy Senik, has a dynamite article in the Spring issue of City Journal: “The Worst Union in America: How the California Teachers Association betrayed the schools and crippled the state.” Really? The worst? Worse than the SEIU? Worse than the NEA? Yes, yes, a thousand times, yes. But we’ll have Senik make his case, which will be excerpted in the Los Angeles Times in the next few days. And CalWatchDog.com editor-in-chief Brian Calle opines in his latest column at the Orange County Register.

We’ll also discuss Governor Jerry Brown’s May budget revision, which was released officially Monday but previewed over the weekend. Anyone not paying attention would have been shocked to learn that California’s current budget deficit is several billion dollars higher than Brown’s office reported in January—$16 billion, as opposed to around $9 billion at the beginning of the year. Anyone else wouldn’t have been the least bit surprised.

“This means we will have to go much farther and make cuts far greater than I asked for at the beginning of the year,” Brown said. “But we can’t fill this hole with cuts alone without doing severe damage to our schools. That’s why I’m bypassing the gridlock and asking you, the people of California, to approve a plan that avoids cuts to schools and public safety.”

Brown delivered the “news” on YouTube, where he doubled down on his pitch to voters to approve a tax increase in November.

“Please increase taxes on the most affluent,” Brown urged. “It’s reasonable and fair.”

”By the time I leave here, California’s budget will be balanced and the state will be back on road to prosperity,” Brown added. ”I am a buoyant optimist.”

It’s phony-baloney. All of it.

Katy Grimes at CalWatchDog: ”Jerry Brown twists out ‘pretzel palace’ budget,” which reports legislative Republicans’ reaction to the governor’s news.

“Tax revenue is up two years in a row, but not enough to satisfy the spending demands of Sacramento Democrats,” retorted Assembly Republicans. “It will be interesting to see if the liberal majority in the Legislature accept the Governor’s cuts, or reject them as they did earlier this year when they blocked the Governor’s health and welfare reforms and grew spending by $1 billion,” wrote Assembly Minority leader Connie Conway, R-Visalia, and Assemblyman Jim Nielsen, R-Biggs.

Tom Del Beccaro, chairman of the California Republican Party: “Amazingly, a year and a half into Brown’s Governorship and we still hear nothing of the unemployed. California will continue to face chronic budget deficits because so many people remain out of work; the conversation about revenues should always begin with how to restore jobs. So many people are wondering when Brown will offer plans to make California competitive, so that business will return to this state and bring jobs with them.”

Calle at CalWatchDog: “If nothing else, the budget situation points to the power teachers’ unions have within the Brown administration and California government in general. This is particularly true of the juggernaut CTA, which was recently dubbed by City Journal as the ‘Worst union in America’ because of the lopsided influence it has on public policy in California. Education spending is perhaps the Holy Grail of politics in the Golden State. So it is no surprise Brown’s administration is using education as a justification for increasing taxes. Improving education is popular with voters. But money is not the major problem facing California’s education. Instead, the state is in need of structural reform.”

Robert Wenzel at Economic Policy Journal: “California is fast becoming the new Greece.” And Brown’s proposal to reduce the work week of many state workers—a move that would need to be bargained with the unions because the Democratic-controlled Legislature isn’t about to impose that change unilaterally—would be equivalent to a 5 percent pay cut.

Bill McGurn at the Wall Street Journal (subscription required): “Jerry Brown vs. Chris Christie.”

Hard economic times bring their own lessons. Though few have been spared the ravages of the last recession and the sluggish recovery, those in states where taxes are light, government lives within its means, and the climate is friendly to investment have learned the value of the arrangement they have. They are not likely to give it up.

Meanwhile, leaders in some struggling states have taken notice. They know the road to fiscal hell is paved with progressive intentions. The question regarding the sensible ones is whether they have the will and wherewithal to impose the reforms they know their states need on the interest groups whose political and economic clout is so closely tied with the public purse.

Mr. Brown’s remarks Monday suggest the answer to this question is no.

McGurn’s column follows on the Journal‘s editorial fusillade Monday:

Among the biggest surprises is a 21.5% or nearly $2 billion decline in personal income tax payments from what Governor Jerry Brown had anticipated. This reinforces the point that when states rely too heavily on the top 1% of taxpayers to pay the bills, fiscal policy is a roller coaster ride.

California is suffering this tax drought even as most other states enjoy a revenue rebound. State tax collections were up nationally by 8.9% last year, according to the Census Bureau, and this year revenues are up by double digits in many states. The state comptroller reports that Texas is enjoying 10.9% growth in its sales taxes (it has no income tax), while California can’t seem to keep up despite one of the highest tax rates in the land.

This would seem to suggest that California should try cutting tax rates to keep more people and business in the state, but Sacramento is intent on raising them again. Governor Brown and the public-employee unions are sponsoring a ballot initiative in November to raise the state sales tax by a quarter point to 7.5% and to raise the top marginal income-tax rate to 13.3% from 10.3%. This will make the state even more reliant on the fickle revenue streams provided by the rich.

The Orange County Register: “More bad news ahead of Brown’s revised budget”:

This is a man for all intents and purposes bought by, and in the pocket of, government employee unions. Likewise, so is the Democratic-controlled Assembly and state Senate, which all but precludes a legislative fix.

Sadly, California deserves better than it has gotten for more than a decade in Sacramento. An unwillingness to properly adjust government spending and an insistence on draining even more billions from the private sector is symptomatic of the runaway fiscal catastrophe under way in Europe.

Bottom line, courtesy of Reason‘s Tim Cavanaugh: “Where are the devastating cuts of the austerity of bare-bones of the starving beast in a state that will increase spending by six percent — from $86.5 billion in outlays last year to $91.4 billion this year?” Mighty good question.

 

 

John Hrabe on Cal State College Admin pay outrage, & Avik Roy on Obamacare and the Supremes

Tuesday, March 27, on Gadfly Radio, ‎Martha Montelongo and John Seiler are at a conference withformer CalWatchdog editor Steve Greenhut, so I will be hosting Gadfly Radio all by myself tomorrow on CRNtalk.com, CRN1. Tune in LIVE at 10:00 a.m. PDT.

I’ll be talking with CalWatchdog.com’s John Hrabe about the Cal State University administrative pay outrage. Manhattan Institute Senior Fellow Avik Roy will join me in the second half hour to analyze the latest from the fight over Obamacare this week at the United States Supreme Court. Don’t miss it!