Friday, November 28, 2003


Sounds like Ed McMahon goading Carnak into a funny punchline.

Except this isn't funny at all. Want to know how bad it is in California? Read this brief description of Arnie's plan to try to fix it.

California's problem? Simple:

1. In the late 1990's the "" boom resulted in many, many Californian's earning salaries, bonuses and gains on stock options in the billions. And the state raked in billions on that income. And the state started spending like it was going to keep happening every year.

2. The year 2000 came around and, though no major computer systems failed (thanks to the billions paid to keep that from happening), the "dot.coms" started to falter. Companies that had never turned a dime in profits (yet made billions for their founders, employees and shareholders) began to die. And even companies that had been profitable saw a drop in their profits. And the market value of these companies imploded.

3. By the year 2001, the previous serendipetous windfall had evaporated. People who had made many millions in personal income were all of a sudden being foreclosed out of their multi-million dollars mansions in Atherton and Blackhawk. It was the single largest drop in personal income in American history since the great depression.

4. With this cataclysm, you'd think there would be a change in the state's outlook, policies and spending, but no-o-o-o-o. To the contrary, state spending kept increasing, while state revenue plummeted precipitously. And in a relatively short time span, the state budget was massively out of balance.

5. Gray Davis took no action to fix it. Being the complete political animal he was, he couldn't. He didn't know how to take personal initiative. He had only ever done what he was told to do. A superb follower, not a leader.

6. So now, we have Arnold, large and in charge. And people will hate him. Why? Because no matter how bad it is, Calfornians will never accept how bad it is. California has always ignored its way out of every problem it's ever had. There just doesn't exist the same sort of resilience that exists elsewhere in the country; no sense of sacrifice exists there.

What will happen tomorrow? Who knows? I gave up prognosticating on Calfornia's short-term fate awhile ago. I do know I'm not optimistic for the long-run. And not because of the budget gap, per se. I just don't see how California can succeed as it has in the past so long as it is a two-state state -- one being decidedly third world, comprised of Asian and Hispanic groups who will not be assimilated into the other state, which is decidedly above average in affluence compared to the rest of the country. Want to see what California may look like in 50 years? Go to Mexico.


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