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Jerry Brown Fights the Laws of Economics…and California Loses
Big Government ^ | 4/13/11 | Thomas Del Beccaro

Posted on 04/13/2011 11:24:40 AM PDT by Nachum

Politicians, being what they are, tend to have an inflated view of what they can do. Some claim to create jobs while others claim to raise taxes. In truth, they are limited to passing political laws. Once enacted, those laws run into the laws of economics – which have never been repealed and have been largely the same since the beginning of time. The results are often different than those intended – and so it is for Jerry Brown, whose policies fly in the face of economics and Californians are paying the price.

Few can doubt the magnitude of the economic problems facing our once Golden State. Unemployment is above 12% and underemployment is above 20%. Over 1.3 million less people are employed today than a decade ago. California homeowners have lost over $1.7 trillion in equity in the last 4 years – an amount nearly equal to the entire state economy. That combination has resulted in California suffering the worst of the nation’s foreclosure crisis including startling figures such as in Fresno, where 46.7% of the mortgages are under water, i.e. the mortgage is larger than the home value.

California businesses face taxes among the highest in the nation, even higher regulatory burdens and, just around the corner, potentially large workers’ compensation rate increases. It’s no wonder CEO Magazine ranks California 51st in the nation (behind Puerto Rico) as a place to do business.

All combined, these economic problems have resulted in revenue problems for California governments because people without jobs don’t pay taxes; homeowners without equity spend and borrow less; and businesses with mounting costs have lower profits. That’s economics – not politics.

For Jerry Brown, however, economics remains a mystery to say the least.

How else can you explain, amidst those bad statistics, his signing of a bill to force utility companies to obtain 33% of their electricity from “renewable” resources? No one can doubt that will increase energy costs significantly and reduce business profits — and therefore tax revenues — even more. Yet Jerry is completely undeterred. Of course, Brown’s budget proposal also seeks to extract over $60 billion in taxes from California employees, homeowners and businesses despite their dire condition.

Brown is pressing ahead as if the pieces of papers he signs magically and automatically result in higher revenues or a better standard of living. The laws of economics, however, overrule Brown’s political laws.

In the real world, when people already faced with economic uncertainty are told they will have less money in the future (higher or long term taxes), they spend less today – resulting in lower tax receipts today and tomorrow. Businesses, which are comprised of people, do the same.

In other words, when Jerry Brown signs into law higher energy costs today, those costs dampen economic expectations for tomorrow. His threat of sustained, high tax rates has the same bad economic results and works to compound our existing problems.

In order to change the economic conditions of California, Brown must accept the laws of economics and understand this analogy as told by John Maynard Keynes:

“Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance, than an increase, of balancing the budget.

“For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more–and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss.”

No business faced with declining sales raises its prices. Whether Jerry Brown understands it or not, California is in the exact position as manufacturer in Keynes’ analogy. Jerry Brown should heed Keynes’ advice, heed the laws of economics and stop gambling with our future in the form of higher taxes and more regulations.


TOPICS: News/Current Events
KEYWORDS: brown; fights; jerry; laws

1 posted on 04/13/2011 11:24:49 AM PDT by Nachum
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To: Nachum

Sometimes the only way people learn is with a good right hook from reality.

You cannot dissuade such people until that time.


2 posted on 04/13/2011 11:31:17 AM PDT by Jonty30
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To: Nachum

“...I fought the law and the law won...”


3 posted on 04/13/2011 11:40:21 AM PDT by Yo-Yo (Is the /sarc tag really necessary?)
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To: Nachum
Jerry Brown is a economic ignoramus and has always been so. He has never had any type of job or life experience that would expose him to the laws of economics or business.

Perhaps other than Obama himself there is no other person in power today who is as foolish and stupid. And Californians are responsible for putting this clown back into power. They are delusional. Most of them are as stupid and foolish as Brown himself. I know this because I live here and most of my relatives voted for Brown. All the points that this author makes in this article, I made to these people but to no avail. It's sad when people have dug in their heels and will not listen to reason or logic. They have become complete ideologues and cannot be persuaded of their foolishness. Only a calamity might change their minds and I'm not even sure that would do it. This is a mental condition as best as I can tell and I'm not trained in this area. It's frustrating to no end and there are millions of people in this state who fall into this category. They are hopeless.

The problem in California is Californians.
4 posted on 04/13/2011 11:43:43 AM PDT by truthguy (Good intentions are not enough.)
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To: Nachum

The author is describing the typical Liberal, the typical Leftist impairment. It’s NOT a joke that liberalism is a mental disorder. It is true.

Jerry Brown, and this article about his economics impairment is right on the mark for NOT JUST Jerry Brown, but the entire lot of Liberally Impaired fools that just don’t get it.


5 posted on 04/13/2011 11:45:30 AM PDT by rockinqsranch (Dems, Libs, Socialists, call 'em what you will, they ALL have fairies livin' in their trees.)
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To: Jonty30

“Sometimes the only way people learn is with a good right hook from reality.

You cannot dissuade such people until that time.”

I used to believe that reality was an effective teacher. However, political power can easily override reality so I am not sure that the lesson will be applied even if learned. The left has an elaborate strategy to blame conservatives when the inevitable collapse occurs. It is long passed time that voters have discovered the power to vote themselves someone else’s money.


6 posted on 04/13/2011 11:46:58 AM PDT by businessprofessor
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To: Nachum
LOL! That's why I will never move to CA.
7 posted on 04/13/2011 11:47:20 AM PDT by ShadowAce (Linux -- The Ultimate Windows Service Pack)
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To: Nachum
Try again:

It’s no wonder CEO Magazine ranks California 51st in the nation (behind Puerto Rico) as a place to do business.

LOL! That's why I will never move to CA.

8 posted on 04/13/2011 11:47:46 AM PDT by ShadowAce (Linux -- The Ultimate Windows Service Pack)
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To: Nachum

Have a California Republican introduce a law repealing the law of gravity. Tell the Democrats it’ll reduce energy use. Brown signs it into law claiming he’s a genius. Get Brown up on the top of a tall building and tell him the clouds are cotton candy. He casually walks out to get some free candy and oops!


9 posted on 04/13/2011 11:52:49 AM PDT by blueunicorn6 ("A crack shot and a good dancer")
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To: Nachum
his signing of a bill to force utility companies to obtain 33% of their electricity from “renewable” resources

Reality will kick in when having maxed out the "renewable resource" electicity, the only way to get that finite amount to equal 33% is to drastically reduce the electicity provided to customers and the lower output means rolling blackouts.

10 posted on 04/13/2011 11:53:44 AM PDT by VRWCmember (Veritas vos Liberabit)
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To: ShadowAce

And that’s why I’m leaving. The vacuum left behind by the mass migration of producers from the state is being filled by unskilled, non-English speaking, illegal aliens. There will soon be (if we’re not there already) too few producers to finance the moochers, and at that point the remaining producers will be chased out of the state at knife point. Like Bob Dylan said, “A lot of people don’t have much food on their table, But they got a lot of forks ‘n’ knives,
And they gotta cut somethin’.”


11 posted on 04/13/2011 11:54:42 AM PDT by DryFly
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To: DryFly
And that’s why I’m leaving.

I'm not blaming you (I won't live there either), but perhaps this is the strategy for re-annexing CA to Mexico. :)

Make it so bad for the producers, that no one will complain when the unskilled labor shows up from down south and just stays.

12 posted on 04/13/2011 11:58:35 AM PDT by ShadowAce (Linux -- The Ultimate Windows Service Pack)
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To: businessprofessor
The left has an elaborate strategy to blame conservatives when the inevitable collapse occurs.

Obama is on TV right now blaming the current mess on Bush and explaining how by increasing taxes over the next 12 years he can save us 4 trillion.

I believe he could save us that much today, by resigning.

13 posted on 04/13/2011 12:02:25 PM PDT by oldbrowser (Blaming the prince of fools shouldn't blind anyone to the vast confederacy of fools that elected him)
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To: Nachum
Hey Jerry, just saddle several hundred unicorns and have them run on treadmills to generate all the power your state will need. Just pass a law, and it will be so!

Mark

14 posted on 04/13/2011 12:08:18 PM PDT by MarkL (Do I really look like a guy with a plan?)
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To: truthguy
And Californians are responsible for putting this clown back into power.

When you're robbing Peter to pay Paul, you can always count on Paul's vote.

Mark

15 posted on 04/13/2011 12:10:32 PM PDT by MarkL (Do I really look like a guy with a plan?)
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To: rockinqsranch; truthguy; businessprofessor

I don’t think anything would be different if the Republican had won. The people are the problem, and that is true of people everywhere. Even some who call themselves conservatives still believe they have a right to spend other people’s money. The 10th Commandment is largely ignored.


16 posted on 04/13/2011 12:25:44 PM PDT by Pining_4_TX
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To: Pining_4_TX
I don’t think anything would be different if the Republican had won.

I've got to disagree. Whitman would not have signed into law the idiotic bill which requires 33% of electricity to be generated by renewables by 2020. She would have vetoed it. I think she has a much better knowledge of business conditions and Jerry Brown couldn't run a lemonade stand.

But you are correct to a degree. It's the state legislature that's the problem and they are elected by the state voters. People here are simply idiots when it comes to politics and economics. There's no getting around it. Californians are dumb as a box of rocks when it comes to economics, at least most of them are.

The problem in California is Californians.
17 posted on 04/13/2011 12:35:53 PM PDT by truthguy (Good intentions are not enough.)
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To: truthguy

I wonder if she would have been successful in trying to change things in CA? As you say, the problem is the people, and that is true all over the world. Everybody wants to live on someone else’s dime, and they find a way to justify it in their minds. The entire US is on this road to ruin; CA is just farther along.


18 posted on 04/13/2011 12:44:58 PM PDT by Pining_4_TX
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To: Nachum
Brown is pressing ahead as if the pieces of papers he signs magically and automatically result in higher revenues or a better standard of living.

Brown is not stupid or crazy. He understands the laws of economics perfectly well. Brown, like the rest of the Republicrat/Dumbocan meat-puppets that serve the Globalist Banksters, want to run the country into the ground. They've been working at it for decades. When the American people are utterly ruined financially they'll be begging to be ruled over by the One World Government. The details of the NWO economic system are being hashed out by George Soros and his Bankster buddies in Bretton Woods this very day. Brown ain't no dummy. He'll be living in outrageous luxury like those Third World dictators while the Third World population Jorge Bu$h imported serves at his feet. What a racket.

19 posted on 04/13/2011 12:53:54 PM PDT by Roninf5-1 (If ignorance is bliss why are so many Americans on anti-depressants?)
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To: truthguy
Only a calamity might change their minds and I'm not even sure that would do it.

The democrats have been responsible for lots of calamities, but they always demagogue their way out of it. Their supporters truly are idiots.
20 posted on 04/13/2011 1:12:16 PM PDT by youngidiot (Hear Hear!)
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To: Nachum
For Jerry Brown, however, economics remains a mystery to say the least.

Because he has the typical libtard subjectivistic mentality which leads to decisions being arbitrary,irrational, and blindly emotional.

21 posted on 04/13/2011 1:17:14 PM PDT by mjp ((pro-{God, reality, reason, egoism, individualism, natural rights, limited government, capitalism}))
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To: businessprofessor

Experience is still a good teacher.
We may be able to delay her lessons for a time, but those lessons will still come.


22 posted on 04/13/2011 2:43:49 PM PDT by Jonty30
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