Tyler Cowen has put together a list of common mistakes made by left wing economists. I'm not an economist, but I'm left wing and I comment on economics, so close enough. So I'm going to go through the list and note where I stand on each of his items. I'm not going to explain things or justify myself, I'm just going to stake out my position in a sentence or two. Here are Tyler's 14 mistakes:...Hello? "Problems are indeed caused by obstructionists who will not consider tax increases"...like California?9. Overly optimistic views of the fiscal positions of state governments. Since the states don't have the same tax-raising powers that the feds do, and since state government spending is favored, there is a tendency to see these fiscal crises as not so severe, or as caused by mere obstructionists who will not raise taxes to the required levels.In general, there might be something to this. Right now, however, state problems are largely caused by drops in revenue, not out-of-control spending, and many state problems are indeed caused by obstructionists who will not consider tax increases in any way, shape or form. However, it's possible that I'm biased in my views because I live in California.
California is one of the most heavily taxed states in the country. High property taxes, high income taxes, high car taxes, high sales taxes, high business taxes, high environmental taxes, high breathing taxes. And yet Drum calls out California's tax "obstructionists" as being at fault in our fiscal nightmare? How about the fact that, despite full knowledge of California's meltdown, spending has skyrocketed under Schwarzenegger. Since 2003 spending has increased by 40%. This despite the fact that Grey Davis was recalled in part because of the cost overruns of the state government. Schwarzenegger and the Democrats went right on spending for the better part of another decade. And Drum thinks it's the revenue side that's the problem?
How about tallying up the unfunded mandates--in particular the unfunded pension leviathan?
Overall the numbers look like this: California's state retirement systems have promised current and retired workers around $3.35 trillion in pension, health care, and other post-employment befits as of 2008 but have $2.35 trillion on hand to pay for them. Strictly looking at the retirement system, there were $454 billion in pension and benefits on the book in 2008, $59 billion was unfunded liability, that means that the fund had the assets to cover 87 percent of its obligations. [ Data originated with a Pew Center study.]Sure, Drum. It's the revenue side that's the problem, not the insane amount of spending and promising to spend. California has been doomed for over a decade because the politicians can't help but spend our money, our kids' money, our grandkids' money, our great grandkids' money....
Run! Run for your lives!!!
Of course that's what everyone with five brain cells and the ability to do so is doing.