K. Lloyd Billingsley - Contributor
[Courtesty of Pacific Research
Billingsley is Editorial Director for the Pacific
Research Institute and has been widely published on topics
including on popular culture, defense policy, education reform,
and many other current policy issues. [go to Billingsley index]
The Governor's marketplace ideas meet Sacramento's socialists...
[K. Lloyd Billingsley] 5/18/04
A survey of California in the May 1-7 Economist ventures that
something remarkable might be happening in the state. The governor
has the right ideas, says the highly regarded British publication,
but problems remain, including waste, energy, and the business
Even if the entire
deficit were to be closed out by spending cuts, that would
still leave per-capita spending higher than
it was in the late 1990s when, says the Economist, California
spent "like a drunken sailor." The state even spent
$722,000 to monitor and house one released child molester.
California has been
destroying its competitive advantage by snarling up business
in red tape, a state of affairs the Economist
blames on "too many left-of-center politicians." As
a case study, the magazine cites Rodeo Carpet Mills, a business
in the City of Commerce owned by Carmen Saenz-Murray, an immigrant's
daughter who rose from receptionist to owner.
This firm, which employs 30, must devote one of five administrative
jobs just to deal with government. Workers compensation costs
rose from $1,200 to $4,900 a month in three years. Saenz-Murray
told the magazine that if things have not changed when her lease
comes up in 2007, her company will move out of the state.
On the energy front,
the main cause of the electricity crisis was California's "adamant refusal to let anybody build power
plants," and a "deregulation" scheme that held
retail prices stable but let wholesale prices fluctuate. Nothing
much has been done, the Economist warns, to prevent the crisis
from happening again. But energy reform is back on the table.
In late April, Governor
Schwarzenegger noted that high energy prices are one of the
biggest obstacles to business. "By
fostering competitive wholesale and retail electricity markets
that are properly monitored by regulators," he wrote, "California
can begin to lower electricity bills and once again become the
job-creation machine it once was."
The governor advocates a system that would allow big business
to bypass traditional utilities and shop around for competitive
rates. That is a sensible approach but it drew fire from Assembly
Speaker Fabian Nunez.
In a statement, the
speaker accused the governor of relying too much on "the so-called 'invisible hand' of the marketplace
. . ." Note the double pejorative, dismissive quotes coupled
with "so-called." Mr. Nunez has an energy plan of his
own, one that evidently relies on the visible hand of regulators
and politicians, but his scowling is instructive in other ways.
Hostility to the marketplace
is the hallmark of those the Economist calls "left-of-center politicians." Those
unfamiliar with arguments for regulation instead of the market
an area more vital than energy: food. No visible hand of regulation
determines the food supply in California. No politician or bureaucrat
mandates how many acres should be planted in corn, how many potatoes
should be sent to Fresno, or how much milk and bread shipped
to San Francisco.
Individuals acting in the marketplace determine all that. Food
is plentiful and cheap. Where the state commands the food supply,
on the other hand, rationing, scarcity, and even starvation are
As the Economist shows, California's current attempts at reform
are commendable. But as the Speaker's reaction reveals, what
lies beneath is a political culture wedded to the heavy hand
of government and hostile to competition and freedom of choice. CRO
2004 Pacific Research Institute