"Go West" heads south

Many analysts consider California to be a bellweather for the rest of the U.S. Here's hoping they're wrong this time.

...the state that was once held up as the epitome of the boundless opportunities of America has collapsed. From its politics to its economy to its environment and way of life, California is like a patient on life support. At the start of summer the state government was so deeply in debt that it began to issue IOUs instead of wages. Its unemployment rate has soared to more than 12%, the highest figure in 70 years. Desperate to pay off a crippling budget deficit, California is slashing spending in education and healthcare, laying off vast numbers of workers and forcing others to take unpaid leave. In a state made up of sprawling suburbs the collapse of the housing bubble has impoverished millions and kicked tens of thousands of families out of their homes. Its political system is locked in paralysis and the two-term rule of former movie star Arnold Schwarzenegger is seen as a disaster – his approval ratings having sunk to levels that would make George W Bush blush. The crisis is so deep that Professor Kevin Starr, who has written an acclaimed history of the state, recently declared: "California is on the verge of becoming the first failed state in America."

A couple of points worth pondering, further down in the story:

Levine arrived in California 32 years ago. "The concept of the Californian dream was a certain quality of life," he says. "It was experimentalism and creativity. California was a utopia." ...

Levine, among millions of others, does not think California is a utopia now. "California is going to take decades to fix," he says. ...

"If California was an experiment then it was an experiment of mass irresponsibility – and that has failed," says Michael Levine.

Utopia does not exist. The most successful societies are those that maximize incentives for individual responsibility, rather than subsidizing self-destructive behavior and mitigating the effects of wrong choices. In this sense, California is indeed a metaphor for the U.S. as a whole. The "California dream" that began with the '49ers who went west in search of gold transmuted into other versions of the "get rich quick" entitlement mentality. Suddenly, everyone thought they could affort million-dollar houses and lavish state services. The 'rules' no longer seemed to apply.

But the state's deficit, like the national one, is a function of millions of people expecting services that "others" pay for. Everyone resists raising taxes, but will brook no reduction in spending. What else is a politician to do but run a deficit? Yes, our political class has failed in terms of leadership, but their behavior was certainly reinforced by public expectations.

Perhaps the final "bubble" to burst will be the government one, after which people will once again seek to look after their own house, minding their own business, and expect others to do the same. That's as close to 'utopia' as any nation can come, this side of eternity.