George Rebane
[This is the submitted form of my August Union column which appeared in the newspaper’s 14aug2010 print and online editions.]
Almost all surveys, polls, and analyses say that California is at or near the bottom of America’s economic ladder. Our perennially inept legislature in Sacramento has worldwide notoriety – we are the international poster child of how not to do it. It? damned near anything related to public policy. More and more economists and commentators see us on the threshold of a “failed state”. Only the progressive elites, public service unions, and their local minions continue assuring us how more regulations and taxes are going to solve all of our problems.
The latest tumor metastasizing our Golden State was the passage of AB32, the claimed cure-all to man-made global warming. This new law is causing untold grief to our state’s businesses with reams of new regulations already in force, and new ones being discovered and enforced every day. Many businesses are escaping elsewhere as fast as they can. Others are cancelling plans for growth, and laying off as many workers as possible to reduce costs as the storm approaches.
The malady has already hit Nevada County businesses like Robinson Enterprises and Hansen Brothers. The only ones still baying for their bone from Washington are our legions of government funded NGOs and large corporations. These have learned to play the ‘Washington game’ of preferential subsidies and competition stifling legislation that spells oligopoly.
To illustrate the general and broad-based effect of laws and regulations burdening businesses and our economy, I offer the above graphic. It shows how piling on more reams of state mandates creates ‘friction’ in the growth of an economy. The horizontal axis shows the amount of regulations enforced by government, and the vertical axis indicates the resulting growth rate of the economy that such regulations enable/inhibit.
It is clear that some modicum of regulations is needed to enforce contract law, protect consumers, and maintain the environment. Without that an orderly society could not function. However as we witness today, once we exceed that parsimonious set of laws and regulations, economic growth rate begins to go down. Twentieth century autocracies have shown that growth rate can go negative leading to the collapse of the state. This is described by the illustrated Regulatory Impact Curve (RIC), which in its naming, modesty prevented my following the lead of Art Laffer.
When we try to peg California on the RIC, the Legislative Analyst Office in Sacramento has pronounced AB32 to be a net cost to the state. The LAO goes on to say that California Air Resources Board has done a poor job of analyzing the “economic leakage” that AB32 will cause. This means that AB32 pushes California to the right and downward on the RIC as indicated.
The jobs lost to this bad law are now in the thousands, and for that reason our Assemblyman Dan Logue is spearheading passage of Proposition 23 on this November’s ballot. Prop23 would delay the implementation of AB32 until California’s unemployment rate drops from its current 12+% to 5.5%. A YES on Prop23 appears to be the least we can do to help ourselves during this Great Recession which has been more than mishandled from Washington, and now threatens to become a double dip disaster or worse. We don’t need to make it worse in a state that is already scraping bottom. (Prop23 info www.suspendab32.org/resources/ab-32/)
Of course, all this is lost on the left that continues screaming for higher taxes, more state control, and bigger government. Their cry is loud enough to give second thoughts to established ‘middle of the road’ politicians who should know better. It has even scared the pre-natal RINO Meg Whitman into opposing Prop23 with the caveat that once she’s governor – wink, wink – she’ll postpone AB32 for one year through an executive order. That little ploy is designed to endear her to the left, and sweep up the innocents on the right. Right.
Meanwhile, CABPRO and the Tea Party Patriots are the only local organizations so far to have thrown their weight on the side of Prop23. Our electeds remain silent to sullen on the matter. Nevertheless, Supervisor John Spencer will soon ask the BoS to endorse Prop23. But business development outfits like the ERC are keeping mum. Does this mean that we in Nevada County have pretty well pulled in our horns and mortgaged our future to ‘Chinese Cash from Washington’? Exit question – and how long will that last?
George Rebane is a retired systems scientist and entrepreneur in Nevada County who regularly expands these and other themes on KVMR, NCTV, and Rebane’s Ruminations (www.georgerebane.com).
[Exit question #2] – Russ Steele at NC MediaWatch asks ‘What happens if Prop 23 fails?’
[18aug2010 update] – The future of California is clearly visible in Europe (here).
[19aug2010 update] – To once again illuminate the substance of loud, loutish, and shameless leftwing voices which are often found in these comment streams, please examine the US government data on recent California vs national GDP growth rates that the above RIC illustrates – US 0.7%, CA 0.4%.
rebanesruminations.com 
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