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Jon Coupal- Columnist

Jon Coupal is an attorney and president of the Howard Jarvis Taxpayers Association -- California's largest taxpayer organization with offices in Los Angeles and Sacramento. [go to website] [go to Coupal index]

Clueless in L.A.
L.A. Officials Ignoramuses On Finances…
[Jon Coupal] 2/4/05

A new study confirms what most of us have suspected for years: When it comes to basic economics, most local officials representing the Los Angeles area are clueless.

Authors of the report, issued by the Center for Economic Development, take officials to task for being uninterested, "if not repulsed," at how the economy operates. They criticize local leaders for being much more interested in pursuing social measures than sustaining job growth and business creation. Businesses "cannot be expected to thrive or expand in a community whose leadership remains fundamentally indifferent if not actively resistant to their endeavors," the report reads.

Jack Kyser, co-author of the report and chief economist at the Los Angeles County Economic Development Corp., stresses that officials need to have a long-term focus.

"Some have just gone off track and are getting involved in social issues, such as not smoking on area beaches."

According to Kyser, he has actually conducted "Econ. 101" classes for public officials, but most have played hooky or left early.

When considering the prevailing attitude of local officials, one is reminded of a "Peanuts" cartoon that Charles Shultz penned some 30 years ago. One of Charlie Brown's classmates asks him what kind of test he does best at: true or false, multiple choice or essay. Our favorite Peanut responds that he does best at those on which the answer is a "matter of opinion."

Local political leaders, especially those representing the city of Los Angeles, certainly have opinions, and these are often based on years of social activism. To them, no price is too heavy to pay to solve even the smallest perceived injustice. Most seem totally detached from an understanding of the source of the government money that they lavish on their favorite causes.

To these officials the operation of the private sector is a complete mystery. They seem totally oblivious to the economic axiom, "If you want less of something, tax it more."

This may explain the support by a majority of Los Angeles City Council members for a city sales tax increase that would make the sales tax in Los Angeles the highest in the state.

This sales-tax hike is really a levy on business activity. But tax backers seem to be under the illusion that we live in East Berlin before the fall of the Berlin Wall. For East Berliners, when it came to economic issues, their only option was to comply with government commands. In contrast, Los Angeles consumers are free to choose where they do business. In response to the increased cost the new tax would impose, many would take their business to neighboring cities.

However, because the concept that a tax increase could result in reduced tax revenue is lost on City Hall, officials could be left scratching their heads when they end up with less revenue to provide essential public services and to pursue new social-welfare proposals.

Those living outside the People's Republic of Los Angeles may be tempted to laugh. But they, too, are the victims of officials' ignorance. The state Legislature is dominated by those who share the view that they can do good by extensively regulating and taxing business and that there will be no adverse consequences. Our Legislature has attempted to solve myriad social problems by passing on the costs to business.

After imposing layers of expensive regulation -- from one-sided workers' compensation benefits, to health-care insurance, to wage regulation -- lawmakers are unfazed by the fact that California is rated by private-sector executives as one of the worst states in which to do business.

Although Gov. Arnold Schwarzenegger is leading the charge to make the state more business-friendly, many in business will sit on the sidelines and defer investing in the state economy until it is clear whether or not he will succeed. As Los Angeles consumers do, they have the option to take their business elsewhere.CRO

Jon Coupal is an attorney and President of the Howard Jarvis Taxpayers Association.

copyright 2005 Howard Jarvis Taxpayers association

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