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Explaining California “lifers,” or why people stay in a failed state.

November 13, 2012 3 comments

I have been a resident of several states across the United States, but two in particular stand out. One is California, to which I moved when I was ten, left at fifteen, and returned to for college. The other is Minnesota, where I was born, but to which I did not return until after college.

Just recently, my total time spent as a Minnesota resident surpassed my time as a Californian, capturing a plurality of my life’s years. Many have found it remarkable that I left a tropical paradise like California for the frigid tundra of Minnesota, but if you can look past the weather, California simply isn’t a great place to live. As I have been saying for years, “it’s a nice place to visit, but I don’t want to die there.”

Many of my friends disagree with me. One has spent nearly 70 years (aside from higher education back east) in the same beach community. Another calls himself a California “lifer,” which I find eerily similar to how prisoners with life sentences describe themselves.

In any case, while California has many things acting in its favor, it is nevertheless a failed state that I simply cannot find attractive as a home. To be fair, Minnesota is also heading in the wrong direction, but if California is just about to break the tape, Minnesota is still putting its running shoes on.

Victor Davis Hanson at the City Journal recently attempted to explain why he is a California “lifer,” in an article entitled “California, Here We Stay.” Many reasons he cites make perfect sense. Family heritage is one, and it is perfectly understandable. Indeed, it is the best reason I can think of for why I live in Minnesota and not Texas. There is the weather, of course. And there are certain cultural and educational institutions that are very attractive.

On the other hand, hegemony and inertia cannot prevail forever – just ask Britain, Rome, Greece, even Akkad. The general rule is that it is better to be present for the incline phase than the decline phase, and I can’t help but think that even the best of California has hit its peak. If UC Berkeley were a stock, it’d be Pets.com.

Hanson is honest about California’s shortcomings. Finances built on rainbows-and-unicorns accounting methods; poor primary and secondary education; hostile business climate running the productive out of state; environmental extremism – all of these things are conspiring to choke off the best of what the state has to offer the world.

On the other hand, he makes a point that I simply cannot get behind:

Another reason to feel hopeful about California is that it’s reaching the theoretical limits of statism. To pay for current pensioners, the state simply can’t continue to bestow comparable defined-benefit pension packages on new workers, no matter how stridently the public-sector unions claim otherwise. And as public insolvencies mount—with Stockton, Mammoth Lakes, and San Bernardino seeking bankruptcy protection a year after Vallejo emerged from it—public blame is finally shifting from supposedly heartless state taxpayers to the unions. The liberal unionism of an aging generation is proving untenable, as we saw in recent ballot referenda in which voters in San Diego and San Jose demanded that public-worker compensation plans be renegotiated.

California is reaching the theoretical limits of statism? This strikes me as remarkably naive, and it sounds hauntingly similar to things like “it couldn’t happen here,” or “it can’t get any worse.” Or perhaps “there are no black swans.”

I for one prefer not to underestimate the statist impulses of a polity that has consistently pushed the once-bright beacon of hope that was California back into the dark ages of economic and social thought. And they did it in less than a century and a half to boot.

In my personal opinion, the decay in California is not over, and it is not close to being over. I know that making predictions is the easiest way to be proven wrong, but here goes nothing.

I think that California will continue to be held in a chokehold by statists until the situation becomes completely untenable on a state level. At that point, the citizens of California will become enraged – not at their elected Judas goats, but at the federal government for not bailing them out. Seeing the practical importance of California’s electoral votes to their parties, the statist kindred spirits in Washington will forge a bipartisan grand bargain to bail out California, complete with all the crony capitalism and blatant corruption that entails. California will then double down on its failed policies and things will get worse. Another bailout will happen in quick succession, and while token gestures may be made to restore fiscal sanity, the damage will have been done.

California’s future is not bright. Perhaps California “lifers” have a reason to stay if they are already wealthy or comfortable enough to avoid the worst of the coming catastrophe. But if you’re a common person, your odds are poor.  I fully expect to see the middle class, whose livelihoods are far more likely to hinge on the day-to-day health of the economy than the wealthy, to continue to flee.

My only hope is that they don’t bring the politics of old California with them when they go.

More on Transit Insanity, This Time in California

June 3, 2011 Leave a comment

I got a little bit of blowback on my article a couple weeks back called Minnesota’s Billion Dollar Mistake with Light Rail.  It was not so much because people disagreed with me that building 10 miles of track that nobody will use for $1 billion that we have no hope of paying off is a monumentally stupid idea.  Instead, they disagreed with my elitism.

I enter a demurrer.

Fact is, I agree with the wise words of Jeremy Clarkson, who says that public transport is for poor people, and walking is for readers of the Guardian.  In any event, I would not seem so elitist if other people stopped being so shitty.

But on a serious note, my lament over the state of transportation financing in Minnesota has its corollaries across the country, and none seem to provoke any more optimism than Minnesota’s.

Over at Reason, Tim Cavanaugh spells out California’s coming disaster in an article called “America Pays for Villaraigosa’s Transit Legacy.”  Transit plans in Los Angeles are expected to cost $13.7 billion, which in government math is likely somewhere in the neighborhood of $20 billion.  But, as Cavanaugh says, the real joke is on American taxpayers, who will be expected to foot the bill when the transit projects inevitably fail to pay for themselves.

Perhaps befitting a town known colloquially as “la-la land,” politicians and rail boosters in Los Angeles have completely deluded themselves about the financial condition of their railway fantasies.  Here’s a fun bit of nonsense:

L.A. Times columnist Tim Rutten, one of the idea’s largest boosters, pronounces that the project—which includes an extension of a subway line to the West Side V.A. hospital and an at-grade rail line from USC to Santa Monica, as well as a plan to take away one lane of highly congested Wilshire Boulevard and turn it into a bus-only route—would “create 918,300 jobs paying $50.8 billion in wages.”

Cute.  Ridiculous, but cute.  If everything were this successful, why in the world would there ever be private industry?  The government could just employ every single person in the country and watch the money multiply!

And anyway, what better to way to rev the economic engine than to take away a lane of traffic in a bustling business district?

The idiocy doesn’t end there, of course.  When in 2008 Angelenos approved a 0.5% county sales tax, they were told that it would go toward things like potholes and road resurfacing:

The Los Angeles County MTA’s Measure R splash page highlights the road and driving elements of the measure, with its top bullet point noting that MTA has disbursed “$100 million for…projects such as pothole repairs, major street resurfacing, left-turn signals, bikeways, pedestrian improvements, streetscapes, traffic signal synchronization and local transit services.”

That’s worked about as well as (wait for it) …light rail:

More than two years in, Los Angeles now fixes nearly a third fewer potholes than it did before. According to the Measure R expenditure plan a mere 15 percent of money from the sales tax is designated for road service. The largest portion goes to new rail projects, though only the Expo Line from USC is currently under active construction.

I suppose I would be pretty angry to be told that road resurfacing funds directly applicable to my daily commute are now being funneled into a rail line so that spoiled children at USC find it easier to get to Sharkeez on Thursday night.  (Full disclosure: I used to be one of those spoiled children, though Sharkeez was never my scene.)

But I suppose I would be even angrier to be told that that particular waste of money is the only line that is even being built.  Only in the world of public expenditure can so much wasteful spending go to things that do not even exist yet.

But I am no longer an Angeleno, which means that I am angriest of all.  The half-percent sales tax is, as Cavanaugh noted, something that the morons who voted for it totally deserve.  But why do I deserve to have tax money siphoned out of my wallet so that someone half a country a way can feel good about how “green” their county is before hopping back into the car for their 40 mile commute home?

Ultimately, it is unfair for all of Minnesota, and all of the country’s taxpayers, to fund a rail line to get the spoiled children at the University of Minnesota to the bars in Lowertown more easily on Thursday night.  (Full disclosure: I was a Gopher too.)  It is unfair for the rest of the country to subsidize California’s rail lines that nobody will use either.  And fundamentally, the financing situation is dismal across the board – the projects are built on laughable projections and have no viable chance of independent financial success.

Nevertheless, you (yes, you) will be paying for them for decades to come.  It is time for some real outrage about federal involvement in local transit projects.  Let’s get angry.

Minnesota’s billion dollar mistake with light rail

May 18, 2011 1 comment

After reading approvingly about Florida Governor Rick Scott turning down a $2.4 billion federal earmark for a high speed rail line from Tampa to Orlando, my own home city of Minneapolis severely disappointed me just the other day.

You see, Florida turned down the money, wisely citing (1) the fact that ridership estimates were wildly overestimated, and (2) that like Amtrak and others, the project had absolutely no chance of succeeding without massive subsidies, which (3) would not come out of the federal earmark, but would instead be levied on Floridians and their kids and their grandkids. Minnesota was not so smart.

Just the other day, I noticed that Washington Avenue by the university has been closed off for the construction of the “Central Corridor” light rail line. This is 11 miles of stupidity.

First of all, getting 11 miles by car is no herculean task requiring a billion-dollar capital project to achieve. And when going from Minneapolis to St. Paul generally, chances are that one would like to get to more places than downtown-to-downtown. I realize, of course, that the “smart-growth,” “green,” “sustainable,” whatever-you-want-to-call-it voodoo of urban planners requires people to cram themselves like sardines in major downtown areas. Do they actually do it? Given that I live in the real world, I am somewhat skeptical.

And you won’t be selling me on the idea that you can connect by bus from the central line, either. I have even less desire to get on a bus than I do to get on the light rail, and unlike seemingly everyone else on mass transit, when I am going somewhere, I actually have somewhere to be. Waiting forever and a half for the bus to show up and then stopping 28 times within the next couple miles is not my idea of efficient transportation. And let’s leave out for now the type of person one is forced into close proximity with on the bus, but suffice it to say I find my car’s empty passenger seat better company in every case that I can remember.

Unfortunately, Minnesota, by which I mean “I,” am paying a billion dollars for this useless tin can on rails. And that’s if it comes in on budget. Since I am a betting man, I am willing to lay a hundred that it won’t. I’ll even give you odds.

Add it up – a billion dollars for 11 miles of track that nobody will use, from one destination to another that is already connected by a wealth of better transit options, most notably the freeway. If you were issuing revenue bonds backed only by ridership on this thing, what new category of junk do you think Standard & Poor would have to come up with to grade you out? FFF? ZZZ?

And so I found it quite interesting to read G. Pascal Zachary’s new article on Reason.com, entitled “What Sub-Saharan Africa Can Teach San Francisco.” For all its vaunted and expensive trains, the fact is that ridership on San Francisco’s BART is trending downwards, despite a poor economy and the fact that parking in San Francisco can easily cost $50 per day.

And adding that to the fact that the average BART employee (average!) makes $110,000 per year, that fares do not cover the cost of service, and that taxpayer subsidies have been required for years and will continue to be required indefinitely for a service that fewer people are using, it is starting to seem as though the Bay Area (Not-So-)Rapid Transit is not quite such a good deal after all.

This is not to say that we should be rushing out and setting up a system of pedicabs (I hate those things), but it absolutely is worth thinking about the kinds of transportation that would be available if the government did not insist on spending my money on unsustainable transit projects to serve an unproven interest – which, of course, inevitably fail.

A little-known fact about “public transportation” is that it all used to be private. My line of work involves the wealth management arena, and in law school one of the major cases I studied was SEC v. Fifth Avenue Coach Lines. It was a seminal decision regarding what kinds of companies are regulated under the Investment Company Act of 1940. It involved a former city bus operator with a huge pile of cash and no business activities but investment.

More interesting to this discussion is how the company got that way. How was it that a business had no business? Well, prior to what we now think of as “public transit” being imposed, Fifth Avenue Coach Lines ran the same type of bus service. That is, until it was forced out of the market by the New York Omnibus government-provided bus system, a top-down monopoly imposed by local government.

A private “public transportation” system? Yep. And not just buses either. Trains, trolleys, streetcars, taxis, gypsy cabs, and pedicabs were all operated by private carriers until the government, more often than not, came along to put them out of business on the theory that they could provide better and cheaper service. City operation, however, doesn’t seem to be anything to brag about.

And I would be remiss if I did not include other examples of private transportation that work the world over. During the Troubles in Northern Ireland, the Catholic community could not trust the bus service, and a network of “black cabs” was set up to run on jitney routes, with shared rides, fast service, and wide coverage.

City planners must have found it odd that, in the midst of the chaos of the Troubles, Catholics found no serious difficulties getting around through private transportation that was emphatically not run by the Protestant-dominated English government.  It’s as if people – horror of horrors! – could take care of themselves.

 Consider also the “tuk-tuk,” the ubiquitous southeast Asian passenger moped. More stable than a Ugandan bicycle taxi, perhaps, but not by much. Nevertheless, in rapidly urbanizing city centers in Vietnam, Thailand, and Cambodia, these modern-day rickshaws get ordinary folks where they need to go without government fiat.

All in all, transportation is merely another example of the futility of top-down government planning. Despite highly-trained experts and the best of intentions, our billion-dollar government megaprojects fail far more often than they succeed. Meanwhile, with backyard mechanics, a simple profit motive, and minimal startup capital, fast, cheap, and effective private transportation networks are cropping up all over the world quite simply because the government removes itself from the process.

Hayek would be proud. But not of Minnesota.

**Update: I suppose I should take a moment to remind my readership of this post.  Becomes a bit more interesting now, doesn’t it?

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