Skip to comments.Jerry Brown Fights the Laws of Economics…and California Loses
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 Once enacted, those laws run into the laws of economics which have never been repealed and have been largely the same since the beginning of time.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 nations 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. Its 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 dont pay taxes; homeowners without equity spend and borrow less; and businesses with mounting costs have lower profits. Thats 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, Browns 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 Browns 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 moreand 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.
Sometimes the only way people learn is with a good right hook from reality.
You cannot dissuade such people until that time.
“...I fought the law and the law won...”
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.
“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.
Its 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.
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!
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.
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’.”
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.
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.
When you're robbing Peter to pay Paul, you can always count on Paul's vote.
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.
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.
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.