Tag Archives: California

We’re Gonna Ration

The allocation of scare resources: Rationing.

There are a lot of ways of doing it; time, money, connections even luck.

Some of us think that rationing by money optimizes quality and supply.  Others think that rationing by time does the same thing.  I disagree:

SACRAMENTO — As the state moves to expand healthcare coverage to millions of Californians under President Obama’s healthcare law, it faces a major obstacle: There aren’t enough doctors to treat a crush of newly insured patients.

So, California is going to ration on time.  And one of the metrics that time based rationing optimizes is – low quality:

Some lawmakers want to fill the gap by redefining who can provide healthcare.

They are working on proposals that would allow physician assistants to treat more patients and nurse practitioners to set up independent practices. Pharmacists and optometrists could act as primary care providers, diagnosing and managing some chronic illnesses, such as diabetes and high-blood pressure.

Now, to be sure, allowing non-doctor health care providers could very well be positive; after all – why do we need an MD to refill a prescription for blood pressure medication?  However, I’m sure that California isn’t embracing this is an open-market mindset.  Rather, docs are just fleeing the medicaid business.  In fact, in California, only 57% of doctors are accepting new medicaid patients.


Laffer Curve: PGA Style

Imagine a curve.  On the left hand side the value is zero.  Then, as you move from left to right, the slope goes up peaking somewhere then slides down back to zero.  That’s the Laffer Curve.

If you tax income at 0%, you realize $0.00 of tax revenue.  If you tax income at 100% you will also realize $0.00 of tax revenue; no one works for free.  In between is the sweet spot.

And it appears that, for Lefty, a 63% take is just too much:

LA QUINTA, Calf. — Phil Mickelson started his 2013 PGA Tour season at the Humana Challenge in partnership with the Clinton Foundation with a tie for 37th place. But after a final-round 66, Mickelson did more than hint that the 2014 season may see some big changes for the World Golf Hall of Famer.

“Well, it’s been an interesting offseason. And I’m going to have to make some drastic changes,” Mickelson said at the Palmer Course at PGA West in La Quinta. “I’m not going to jump the gun and do it right away, but I will be making some drastic changes.”

And what changes might he be making?

PHIL MICKELSON: Well, it’s been an interesting offseason. And I’m going to have to make some drastic changes. I’m not going to jump the gun and do it right away, but I will be making some drastic changes.

Q. Meaning leaving from California?

PHIL MICKELSON: I’m not sure.

Q. Moving to Canada?

PHIL MICKELSON: I’m not sure what exactly, you know, I’m going to do yet. I’ll probably talk about it more in depth next week. I’m not going to jump the gun, but there are going to be some. There are going to be some drastic changes for me because I happen to be in that zone that has been targeted both federally and by the state and, you know, it doesn’t work for me right now. So I’m going to have to make some changes.

And why does he think he needs to make these changes?

PHIL MICKELSON: Yeah. I’ll probably go into it more next year or next week. But if you add up, if you add up all the federal and you look at the disability and the unemployment and the Social Security and the state, my tax rate’s 62, 63 percent. So I’ve got to make some decisions on what I’m going to do.

France learned it.  And now California is about to.  When you tax the living snot out of people they are going to react.  They’ll either move or quit.

And that results in $0.00 tax revenue.

The State of States

If only federal republicans could govern in the way and manner of state republicans:

Thanks to a Republican governor committed to developing its natural resources, not punishing entrepreneurs who do, Texas legislators are facing an $8.8 billion surplus over the next two years. To the east, Republican governors Bill Haslam of Tennessee and Rick Scott of Florida have also turned recession deficits into budget surpluses. Moving north, Michigan’s Gov. Rick Snyder, Iowa’s Gov. Terry Brandstad, and Indiana’s out-going-Gov. Mitch Daniels, also can now all boast surpluses in the hundreds of millions of dollars. All of these governors managed to turn their state’s fiscal situation around through spending cuts, not tax hikes. Now their budgets are in the black and their economies are growing.

I think it’s important to focus on the second to last sentence in that quote:

All of these governors managed to turn their state’s fiscal situation around through spending cuts, not tax hikes.

And lest we think that this is just a series of circumstances related to an overall nation economic rebound:

Things do not look as good in Democrat-controlled states. Illinois, who massively raised taxes on the rich, still has a $5.9 billion stack of unpaid bills. California, who also raised taxes on the rich, was supposed to post a small surplus this year. But tax collections are coming in at 10.8 percent below budget projections. As a result, the state is now projected to be $1.9 billion in the red by the end of this fiscal year.

Now, if that same fiscal responsibility could translate to the national level.

Public Transportation – Going Private

There’s often talk of public transportation.  And I get the idea; the more accessible work, shopping and other services are to folks who might be struggling, the better off those folks might be.  A second argument surrounds the environment.  The more people use mass transit, the better off we are in terms of gas use, pollution and, recently, CO2 emissions.

Not to mention the fact that traffic just sucks and anything that we can do to minimize it is a plus.

All arguments aside, suppose, for the same of this discussion, that I cede all points.  That mass transit is the way to go, my question is this:

Does it matter what agency provides that transit?

The answer is:

Apparently so.

By now you’ve heard about the perks that come with working in Silicon Valley. Free lunch, 20 percent time — that’s the work time you can use to pursue independent projects.

Well, another perk? A private bus that picks you up in your neighborhood in San Francisco and shuttles you down to your corporate campus about an hour south in the suburbs of Silicon Valley.

During rush hour in San Francisco, you see them everywhere, said Eric Rodenbeck, the creative director of Stamen Design in the Mission District of San Francisco.

“They’re just so big,” Rodenbeck says. “These buses are two stories high and they’re barrelling down residential streets, and no one knows where they’re going except the people who are on them.”

So now the complaint against “Big Business” is that they bus people to work.  It’s almost like if the government isn’t providing it for you, it’s just this great big secret conspiracy or something:

“You know it’s almost like this masonic ritual,” Rodenbeck says.  “If you’ve got the key, this whole other city layer unlocks itself to you. And that’s the kind of urban puzzle we like to solve.”

I mean, serious.

So what we have are private companies shelling out their own money to transport people from where they live to where they work.  All this to reduce traffic, reduce emissions, pollution and dependence on oil and other fossil fuels and it STILL isn’t good enough:

Rodenbeck says he thinks the locations are secret because the companies are “sensitive to this idea that they are funding a change in the infrastructure in San Francisco without it being regulated.”

The San Francisco Municipal Transportation Agency is in the midst of studying what’s essentially emerging as a private mass-transportation system, says Jerry Robbins, a transportation planner for the agency.

“The increase in employer buses has sparked some reaction from residents,” Robbins says.

He says that since tech companies contract out the work to private bus companies, which are regulated by the state, the city has little say in what they do.

But Robbins says the agency has fielded complaints that the the private shuttle buses, which often stop at public bus stops, are causing delays and traffic.

Again, private companies are providing transportation, almost exactly like that being provided by the government, but residents don’t like it because it’s not regulated.

But how many folks does this private system haul everyday?

When the map was finished, Stamen counted busses from Apple, eBay, Electronic Arts, Facebook, Google and Yahoo, and they found the buses ran through almost every neighborhood in San Francisco. Stamen estimates that about 14,000 people ride the private shuttle buses every day.

Fourteen Thousand.  People.  Everyday.  In government speak that is 28,000 trips. Everyday.  For free.  And how does the private sector seduce such riders?

“It’s pretty sweet,” Birch said. “They let us choose the type of seats and decor inside. And it’s got dim lighting with the Google colors.”

There’s also free Wi-Fi on the shuttles, and Birch said it’s basically another hour of work.

The tech world is driven by young, educated largely urban workers. But companies like Facebook, Google and Apple are located in the suburbs of Silicon Valley, which is about an hour south of the San Francisco.

“I think a lot of young people who work at the tech companies they want the city life they want something that’s fun and entertaining, and you don’t get that in the suburbs,” Birch said.

Yeah.  By offering what people want.

Look, I like buses more than I like cars.  And I like trains more than I like buses.  And I like lite rail more than I like trains.  But more than any of that I like solutions that actually work.  So maybe the public sector should take some clues from the private sector and begin to work to loosen the grip of public transportation and let it move into the private space.

You might just get free WiFi.


Laffer Curve – California Dreamin

California is broke.  Way broke. And spending is the problem.  So what did California do?  They enacted new laws calling for new taxes on the rich:

The big state tax news is that California voters said to sock it to the rich–specifically those with income of $250,000 and up. California Proposition 30, which Gov. Jerry Brown’s budget and public education in particular depended on, passed.

Proposition 30 creates three new upper income tax brackets for the next seven years. For example, folks with $250,000 to $300,000 a year in income will pay 10.3%, up from 9.3%. The new top income tax rate–for folks with income of $1 million-plus–will be 13.3%, up from a current top rate of 10.3%. That eclipses New Yorkers’ combined state and local top rate of 12.7% and Hawaii’s top rate of 11%. The income tax hikes are retroactive to Jan. 1, 2012, but the extra bill isn’t due until April 15, 2013.

The expected result?  Well, if past results can predict future ones, I would expect that California sees more people leaving:

Nearly four million more people have left the Golden State in the last two decades than have come from other states. This is a sharp reversal from the 1980s, when 100,000 more Americans were settling in California each year than were leaving. According to Mr. Kotkin, most of those leaving are between the ages of 5 and 14 or 34 to 45. In other words, young families.

Meanwhile, taxes are harming the private economy. According to the Tax Foundation, California has the 48th-worst business tax climate. Its income tax is steeply progressive. Millionaires pay a top rate of 10.3%, the third-highest in the country. But middle-class workers—those who earn more than $48,000—pay a top rate of 9.3%, which is higher than what millionaires pay in 47 states.

People aren’t gonna put up with it; they aren’t going to continue to work harder for less, pay more for smaller houses and face ever increasing costs associated with energy and transportation.

The Laffer Curve wins again.

President Obama’s Mandate

Here’s what Coyote thinks of Obama’s mandate:

Barack Obama argues that the last election gave him a mandate to raise taxes on the rich.  Put another way, he is arguing that 52% of the people voted to raise taxes on 2%.


I particularly like his illustration:

Let’s take a look at two propositions [in California]:

  • Prop 30, which propose to raise taxes on on the rich to help close the deficit (there was a token 0.25% sales tax increase for cover, but everyone knew it to be a tax on the rich).
  • Prop 39, which was a broad-based income tax increase which raised taxes on most everyone (or at least on the 50% or so who pay income taxes).

So, let’s look at the results:

  • Raise taxes on only the very rich:  PASS
  • Raise taxes on everyone (including me):  FAIL

Wolves and lunch and lambs people.  Wolves, lunch and lambs.

California’s Bullet Train Folley

The California senate voted on Friday to begin work on a bullet train:

 (Reuters) – California lawmakers gave a nod of approval to a high-speed rail plan on Friday in a make-or-break vote for $8 billion in funding to start construction on a 130-mile section of track through the state’s central agricultural heartland.

I have to admit that I’m thoroughly perplexed by the fascination with mass transit in general and high speed rail in particular.  I don’t understand the whole religion surrounding this thing.

Now, don’t get me wrong.  Railroads, in their time, helped to build this country.  They greatly reduced the time it took to get from one place to another and brought prosperity where ever they were built.  My little town in Minnesota was a railroad town.  Further, I love trains.  I love watching ’em, I love pictures of ’em and I love going to see train museums.

However, I don’t think that this is a love of trains that’s driving this.  I think it’s a combination of a couple of things:

  1. The “Green Movement”
  2. A desire to get people around more efficiently

Now, don’t get me wrong.  I love efficiency.  I would be very much in favor of supporting an infrastructure that was able to move more people in less time for less money.  And if we can do that, I think that we should.  Additionally, I resonate with the “efficiency” claims of the “Green Movement.”

In short, if we are, really, able to create a transportation model that gets people from here to there better than what we have now, and that includes cost, you have my vote.

So here’s the question:

How expensive would a train system have to be in order for the most liberal supporter say, “It’s just not worth it.”

Would it be $5.00 a ticket?  Maybe $15?  If the ticket were to cost, say $60, would you still support high speed rail?

California Budget Cuts: Inevitable

California Is Broke

It’s not even really a question at this point anymore.  California doesn’t have any money and is losing more every year.  In fact, the situation is getting worse and not getting any better, it’s not even slowing down:

California’s budget deficit will swell to nearly $7 billion greater than expected due to weak tax revenues and slow progress in cutting spending, Governor Jerry Brown said on Saturday.

Brown said the shortfall for the state’s 2012-2013 fiscal year now stands at $16 billion, up from a previous estimate of $9.2 billion made in January.

“We are now facing a $16 billion shortfall, not the $9 billion we thought in January,” Brown announced in a video posted on YouTube. “This means we will have to go much further and make cuts far greater than I asked for at the beginning of the year.”

There’s little reason to believe that this trend isn’t going to continue.  Individuals from California earning incomes in the top 1% are delivering less and less tax revenue:

In 2007, the top 1% of California earners paid about half of the state’s income taxes. Now it’s around 37%

Is this because salaries are dropping for the very rich or is it because they are leaving the state?  It’s hard to say.

Revenue Or Spending

Whatever the reason, the top 1% are no longer the cash cow they used to be.  Going from 50% to only 37% is going to massively impact balance sheet.  But is that the only cause for California’s current condition?  Not at all.  Committed spending on public pensions is also to blame:

(Reuters) – A radical plan to slash public employee pension benefits gets voted on by the residents of Silicon Valley’s San Jose on Tuesday – a decision that could set an important precedent for many other cities, not only in California but across the nation.

The nation’s 10th-largest city is also one of the wealthiest, but over the past several years it has cut its municipal workforce by a quarter, laying off cops and firefighters, shuttering libraries and letting street repairs fall by the wayside.

The problem? Mayor Chuck Reed says it’s simple: Retiree benefit costs eat up more than a quarter of the city budget – and are growing at a double-digit rate.

So, the mayor has identified a problem specific to San Jose.  Is this systemic across California?

Public finance woes are nothing new in California. The state budget deficit stands at an estimated $15.7 billion for next year, requiring further cuts in state services and, if Governor Jerry Brown has his way, higher income and sales taxes. Local governments and school districts have struggled for years to make ends meet.

The pension problem, though, may be the mother of all budget issues – for California, for its cities and counties, and for other states and municipalities across the nation. The main California state retirement systems have a total shortfall in pension-plan funding of close to half a trillion dollars, a Stanford University study estimated. The bill is not due at once, but payments on it grow steadily and can eventually squeeze out even basic services. Public officials like Reed, and academics who have studied the issue, say the day of reckoning is nigh.

Yes.  California has created a condition that is set to consume public budgets very soon.  In efforts to pander to the unions and the public employees, the state and her cities have engaged in reckless commitments that is has no hope of meeting.  There is only one solution in sight:

The solution he is pushing at the ballot box, after city council approval, would slash benefits for workers, increase employee contributions – and almost certainly prompt a precedent-setting legal challenge from the public employee unions.

“The best metaphor is cancer,” said Reed, a Democrat known as more of a technocrat than a firebrand, who is now cast as public enemy No. 1 by public employee unions. “It started a long time ago, it goes for a long time, and then it becomes life-threatening.”

Of course that’s the solution.  California is already taxing her people so much that the freakin’ Buffalo is puking*  I don’t know how much of a leftist/statist individual Governor Brown is out there in California, but if he’s at ALL interested in fixing his state he should gaze east and look and see what a government can do as exemplified in Wisconsin.


* This is an old reference to someone who is so cheap in the days when the buffalo adorned the nickel.

North Carolina School Lunches: Child Car Commission

So, North Carolina has taken center stage in recent weeks.  A Hoke County school teacher noticed that a child’s bag-lunch didn’t meet proscribed nutritional guidelines.  In one case, the bag-lunch contained a turkey and cheese sandwich, apples and apple juice.  Missing was the vegetable.  The lunch was either replaced or supplemented with a school provided hot lunch.  Further adding to the outcry was the fact that the child didn’t eat the veggies provided; she only ate the chicken nuggets.

I think this is the classic case of what folks mean when they say that government is too big.

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Occupy Wall Street: Oakland Style

There can no longer be any doubt that the serious individuals who may have made up any aspect of Occupy have left.  What is left is the professional protester, the anarchist and the anti-capitalist.  These are the people who use violence as an accepted means of normal discourse.

These are the criminals.  These are the fringe.

Label them as damage and route around them: Hat Tip: Ryan Grace

Reporting from Oakland—

Officials surveyed damage Sunday from a volatile Occupy protest that resulted in hundreds of arrests the day before and left the historic City Hall vandalized after demonstrators broke into the building, smashed display cases, cut electrical wires and burned an American flag.

Breaking and entering.  Vandalism.  Burning an American flag.  All the act of a sincere and thinking American to be sure.

And lest you think that this is a splinter group, a few outliers raging under the banner of Occupy, think again:

The Occupy action was publicized by the group as a planned takeover of a vacant building that would be “repurposed” as a “social center, convergence center and headquarters of the Occupy Oakland movement.” In an open letter to Quan on Wednesday, the group warned that if police attempted to thwart the takeover, “indefinite occupation” of Oakland’s airport, port and City Hall could follow.

This is purposeful.  This is deliberate.  This has the forethought of malice.  This is no reasonable objection to the direction of a nation.  This is no willingness to work within the constraints of a system.  This is children.  Children grown up acting like children none the less.

This is Occupy.