California is a negligent deadbeat. It’s time to treat it like one.
Let’s come at this from another angle: felons are not permitted the same cache of rights as the lay citizen. The human rights enshrined in the Constitution apply to all persons—citizens and non-citizens—on the basis that these rights are derived from natural law (or if you prefer, God) and therefore cannot be withheld by the institutions of man. Yet there is a class of political rights that are withheld from felons because they have reneged on the social contract. Because of felonious dereliction of the obligations of citizenship, we withhold certain rights, including the right to vote, from felons. Somewhat uniquely in American politics, this is a virtually controversy-free law. It is a point of cohesion within the body politic with which all reasonable participants can agree.
When citizens break the social contract, they forfeit certain rights. What of governmental entities that are equally negligent in their obligations under the social contract?
Through colossal mismanagement, the state of California is in financial crisis, and is on the brink of a death spiral. The state has neglected to take affirmative steps to remedy the budget crisis. In 2003, the state elected Arnold Schwarzenegger in an election-turned-circus. Earlier this month, they elected Jerry Brown, a career politician who has held virtually every state-wide post in the state. It was a resounding victory for the status quo. Dennis Pager noted that the state elected Democrats to every state-wide office except one (which was still too close to call). With Brown’s obvious shortcomings, the mountains of cash the Whitman camp poured into the race, and Carly Fiorina’s failings in the campaign for Senate, California has shown us that there is nothing that can upend the one-party hegemony that is driving the state’s credit rating into junk-bond status and tacking billions onto the state’s deficit.
California is hardly alone. Illinois is a budgetary disaster, but the political situation is significantly friendlier to moderate conservatives. New York, Massachusetts, and Connecticut are dangerously indebted and have shown an equal inability to introduce policy reforms. Amongst red states, Arizona is also in trouble, although a significant part of that problem is related to problems with a porous border. Still, California has a little bit of everything, and remains, to this day, the worst of the bunch.
As the budget situation worsens, new companies are reluctant to move to California. Many are looking for excuses to get out. The impending exodus could deprive California of the tax base it sorely needs to even continue along its current trajectory. The result is what insurers call a death spiral. When relatively safe policies leave an insurance pool, the actuarial tables increase the price on the remaining policyholders, thereby encouraging even more policies to leave the pool. The result is an insurance pool with only the most risky policies. Similarly, when companies and wealthy individuals stop calling California home, the revenue shortfalls are likely to widen. The seriousness of the budget situation coupled with the ideological leanings of the one-party rule will inevitably lead to increased state tax rates. The natural reaction, of course, will be a further exodus of the upper-middle class. The middle class will follow. This is the political equivalent of the death spiral. The state of California will be asking for federal support before long, and the feds will give it to them. The problem is that California’s economy is roughly six times that of Greece, which is dragging down the EU as we speak.
In this regard, California’s fiscal irresponsibility is not only a dereliction of its duty to its own citizens—how can a state with massive debt, no credit, and no means of increasing revenue afford to protect its citizens?—but also a breach of the state’s contract with the other 49. I see no reason why a state which has deliberately refused to acknowledge its own dire straits should be allowed to impose itself on the federal government. Should the federal government agree to back California’s debts, then California should be forced to relinquish statehood, and return to the status of a United States Territory until such a time as their debts have been repaid.
This means that California’s elected representatives will be stripped of their rights to vote in the legislature and the federal government will retain the authority to impose austerity measures. The alternatives are exceedingly dangerous; by allowing California to utilize the backing of the federal government without repercussions, we have, in essence, enshrined a public policy of moral hazard.
Statehood is a privilege, and no member of this confederation has the right to impose its own failure on the others. California has shown itself lacking the requisite sobriety to effectively function as a state. Who’s going to start redesigning the flag?
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