Sunday, October 02, 2011

California and bust

I keep roughly the same schedule on weekends as I keep during the week. I wake up early, I have a macchiato and read emails. However, in the weekend, I read blogs and personal emails I've saved up during the week. The Consumerist blog pointed me to an interesting article by Michael Lewis in Vanity Fair on California. Go read it - in its entirety. Here are a few interesting quotes to wet your appetite:
The average Californian, in 2011, had debts of $78,000 against an income of $43,000. 
The head parole psychiatrist for the California prison system was the state’s highest-paid public employee; in 2010 he’d made $838,706. 
San Jose has the highest per capita income of any city in the United States, after New York. It has the highest credit rating of any city in California with a population over 250,000. It is one of the few cities in America with a triple-A rating from Moody’s and Standard & Poor’s, but only because its bondholders have the power to compel the city to levy a tax on property owners to pay off the bonds. The city itself is not all that far from being bankrupt.
For instance, back in 2002, the San Jose police union cut a three-year deal that raised police officers’ pay by 18 percent over the contract. Soon afterward, the San Jose firefighters cut a better deal for themselves, including a pay raise of more than 23 percent. The police felt robbed and complained mightily until the city council crafted a deal that handed them 5 percent more premium pay in exchange for training to fight terrorists.
He didn’t view the city’s (Vallejo) main problem as financial: the financial problems were the symptom. The disease was the culture.
Dr. Peter Whybrow thinks the dysfunction in America’s society is a by-product of America’s success. ... The human brain evolved over hundreds of thousands of years in an environment defined by scarcity. It was not designed, at least originally, for an environment of extreme abundance. 

After reading the article, two things came to mind:
(1) It is wrong we spent more on prisons than on education. (And yes, they are related.) Let's start by  revisiting the three strike law, especially for minor, non-violent felonies. At the same time, nobody is worth an $800K salary.

(2) Where is the time when people lived within their means; people valued simple stuff. For my grandma, having survived two world wars in Europe, key was to have daily a good cup of coffee and a ham sandwich. It is a somewhat like in the old days on farm - live within your means.

I sometimes have the hear how in Europe this or that is better - "We drive smaller cars. We use less water. We produce less waste. We don't use as much plastics. etc. etc." All true. But it is only true because governments have made people care and adjust by levying higher taxes. As Peter Whybrow stated in the article, it is because we don't know what to do with abundance. So if you want the people to care, let's raise taxes (temporarily) to fix both at the same time: adjust the culture and have some funds to fix the educational system.

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