Political problems, personal problems
Is there a better financial journalist than Michael Lewis? Is there a better narrative journalist in his generation? The guy could write about the most obscure and most dull subparagraph of the tax code, and make it interesting and important, almost novelistic. Fortunately, the fiscal mess California finds itself in is a lot more interesting than that, though Lewis still turns in a must-read report for Vanity Fair. Here’s a passage that stood out to me:
A compelling book called California Crackup describes this problem more generally. It was written by a pair of journalists and nonpartisan think-tank scholars, Joe Mathews and Mark Paul, and they explain, among other things, why Arnold Schwarzenegger’s experience as governor was going to be unlike any other experience in his career: he was never going to win. California had organized itself, not accidentally, into highly partisan legislative districts. It elected highly partisan people to office and then required these people to reach a two-thirds majority to enact any new tax or meddle with big spending decisions. On the off chance that they found some common ground, it could be pulled out from under them by voters through the initiative process. Throw in term limits—no elected official now serves in California government long enough to fully understand it—and you have a recipe for generating maximum contempt for elected officials. Politicians are elected to get things done and are prevented by the system from doing it, leading the people to grow even more disgusted with them. “The vicious cycle of contempt,” as Mark Paul calls it. California state government was designed mainly to maximize the likelihood that voters will continue to despise the people they elect.
But when you look below the surface, he adds, the system is actually very good at giving Californians what they want. “What all the polls show,” says Paul, “is that people want services and not to pay for them. And that’s exactly what they have now got.” As much as they claimed to despise their government, the citizens of California shared its defining trait: a need for debt. The average Californian, in 2011, had debts of $78,000 against an income of $43,000. The behavior was unsustainable, but, in its way, for the people, it works brilliantly. For their leaders, even in the short term, it works less well. They ride into office on great false hopes and quickly discover they can do nothing to justify those hopes.
In Paul’s view, Arnold Schwarzenegger had been the best test to date of the notion that the problem with California politics was personal, that all the system needed to fix itself was an independent-minded leader willing to rise above petty politics and exert the will of the people. “The recall was, in and of itself, an effort by the people to say that a new governor—a different continued from page 183 person—could solve the problem,” says Paul. “He tried every different way of dealing with the crisis in services. He tried to act like a Republican. He tried to act like a Democrat. He tried making nice with the legislature. When that didn’t work he called them girlie men. When that didn’t work he went directly to the people. And the people voted against his proposals.”
More, from Lewis’s interview with the mayor of San Jose:
I ask him what the chances are that, in this pinch, he could raise taxes. He holds up a thumb and index finger: zero. He’s recently coined a phrase, he says: “service-level insolvency.” Service-level insolvency means that the expensive community center that has been built and named cannot be opened. It means closing libraries three days a week. It isn’t financial bankruptcy; it’s cultural bankruptcy.
“How on earth did this happen?” I ask him.
“The only way I can explain it,” he says, “is that they got the money because it was there.” But he has another way to explain it, and in a moment he offers it up.
“I think we’ve suffered from a series of mass delusions,” he says.
I didn’t completely understand what he meant, and said so.
“We’re all going to be rich,” he says. “We’re all going to live forever. All the forces in the state are lined up to preserve the status quo. To preserve the delusion. And here—this place—is where the reality hits.”
To what extent is this dynamic true of America in general, do you think? If Americans hate Congress overwhelmingly, why do we keep sending these people back? Could it be that democracy is working pretty well if the point of democracy is to give the voters what they want? Is it perhaps that what we want is not what anybody could give us, in particular, lower taxes but higher spending? Finally, there’s this, amid a discussion of how the city of Vallejo is bankrupt chiefly because it couldn’t afford to meet the demands of its public sector unions, i.e., cops and firefighters:
I notice on his shelf a copy of Fortune magazine, with Meredith Whitney on the cover. And as he talked about the bankrupting of Vallejo, I realized that I had heard this story before, or a private-sector version of it. The people who had power in the society, and were charged with saving it from itself, had instead bled the society to death. The problem with police officers and firefighters isn’t a public-sector problem; it isn’t a problem with government; it’s a problem with the entire society. It’s what happened on Wall Street in the run-up to the subprime crisis. It’s a problem of people taking what they can, just because they can, without regard to the larger social consequences. It’s not just a coincidence that the debts of cities and states spun out of control at the same time as the debts of individual Americans. Alone in a dark room with a pile of money, Americans knew exactly what they wanted to do, from the top of the society to the bottom. They’d been conditioned to grab as much as they could, without thinking about the long-term consequences. Afterward, the people on Wall Street would privately bemoan the low morals of the American people who walked away from their subprime loans, and the American people would express outrage at the Wall Street people who paid themselves a fortune to design the bad loans.
This is what happens, I guess, when a society loses a sense of the common good, and the ability to think about an act with respect to the long term. Yesterday, driving to Washington, I heard Indiana Gov. Mitch Daniels telling a radio interviewer that he worries the GOP, his party, will try to coast to victory in 2012 based on Obama’s unpopularity, and will in so doing fail to make the serious and necessary reforms of its own policies and worldview. I think this is a certainty to happen. The Dems will be no different. There is too much risk in change, because people don’t want that; people want the old verities, the old illusions upheld. And that’s what our politicians are going to give them — and give it to them hard.
But remember Herbert Stein’s Law: Whatever can’t go on forever, won’t. Read the rest of Lewis’s great piece to learn why he thinks we haven’t yet hit bottom, for cultural and even physiological reasons — that is, why Herb Stein and the Gods of the Copybook Headings have yet to take the stage.