California is rightly considered a bellwether for American social and economic trends; just about every important shift in American life, from high technology to cheap food to McMansions to loose lending standards sexual license to the therapeutic view of life, was invented or at least adopted first in the Golden State. Which is one reason to watch California closely as the current economic crisis unfolds.
So far the news isn’t good. Given its current financial obligations, California now needs $42 billion more than it expects to collect in order to make it through the next eighteen months—and its expectations about future revenue are almost surely too optimistic. In order to conserve what little cash it has on hand, the state has begun to delay sending out tax refunds, scholarship checks, and some welfare payments. Most worrisome, it has delayed distribution of tax monies to the counties—and some counties may respond by keeping what tax monies they collect for themselves, rather than forwarding them on to the state.
Meanwhile, the courts have approved the governor’s plan to force state employees to take two unpaid days of leave per month, effectively imposing a 10% pay cut on 238,000 workers, saving the state $1.4 billion. Which gets the state about 3% closer to being able to pay its bills.
One thing that fascinates me about this is how deeply intertwined and unprioritized it shows the countless elements of a state government’s operation to be. You might think that a 10% pay cut to the workers would be a last-ditch effort to fix the problem, rather that an initial, relatively feeble attempt. But apparently the nerve center of the government has so little control over the extremities that there is no way to scale back the overall system intelligently; state worker pay is one of the few elements over which the nerve center has authority it can exercise without encountering a paralyzing resistance.
I’m actually very sympathetic to the idea that once again we will somehow muddle through a crisis. It’s happened before, many times, and I don’t know that in the midst of those crises I would have been any better at detecting the light at the end of the tunnel. So I don’t take this, or anything else, as evidence that we are doomed. But at the same time, “we’ll muddle through somehow” is not a satisfying response for me. I want to know as much as I can about how we will muddle through. For example, I would like to hear the specifics of a scenario where the California economy rights itself without a major social upheaval. So far I haven’t been able to imagine one, and I don’t think it’s because I’m blinded by a desire for it to end in disaster.