Tyler (you can call him T, you can call him C, you can call him TC, you can call him Professor TC, you can call him Dr. Ty, you can call him Ty Cow, you can call him Tyce, you can call him T-Dice, you can call him Dr. T Dice Disco Dorang…) asks how California might redesign its constitution.
The underlying problem here is that California is simply a beautiful place to live. It’s not just the climate, or the people, or the geography. It’s that something floating around in the air that just makes you happy all the time you are there. And then the second problem is that there is free entry.
So it really doesn’t matter what you do with the constitution. You can fix the referendum system, you could change the budget process, you could turn the government into Singapore. But that only means that something else has to get hosed to bring the quality of life again back down to the level that maintains the zero-rent equilibrium condition with free entry.
Given that the question boils down to which part of California do you want to screw up in order to achieve that? This is mostly a distributional question. Bad state government saps rents in one way. Give those back and bad local governments will do just fine to take up the slack.
Of course all that is really required for equilibrium is that the quality of life of the marginal resident (or resident-to-be) is sufficiently low. This is completely consistent with high average quality of life but its not clear to me why a well-functioning government would be better at achieving such a distribution than the one they’ve got now. That is, who but the marginal resident is more affected by high taxes and dysfunctional government?
(The cheapest way to target the marginal resident is to make it infinitely costly to enter. But that gives huge rents to those lucky enough to live there already and the temptation to take those away would be too great for any government.)
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April 23, 2010 at 12:02 pm
Karl Katzke
Partially correct. There IS a huge cost to enter the state, if you do so with possessions. The cost of registering a car, for instance, is atrocious — my sister about the same in taxes to move a car from Missouri to California as the car’s value (~$5000), even though it met California’s emissions standards. She would’ve paid the same to purchase a newer car in California. Not many people can afford to make that move unless they’ve got employment already, which is probably the key to California’s continuing success: There are companies that people want to work for there, and the climate is nice.
April 24, 2010 at 5:57 am
Ron Potato
The rents will just be higher.
Your post boils down to: Any great place must somehow be tempered into mediocrity. This may be true of a democracy, but a government of majesty and authority has no difficulty of ensuring quality of life in a land of such bounty.
If you had told an Englishman of Carlyle’s day that in 2010, California itself is bankrupt, he would simply not have believed you. For our state, of course, in the 19th century was a metonym for wealth itself – an almost literal El Dorado. If the San Francisco city fathers of 1910 could see their city now, they would pray for another earthquake to finish it. But Carlyle, among very few (Froude is another) both could and would say: “I told you so.”
When you read old books, are you reading the people who were right, or the people who were wrong? The people who told the truth, or those who lied? If the latter, step up to nothing at all. Better not to read history at all, than to read it uncritically. Ignorance of the past is a heinous and shameful thing, but I prefer it a thousand times to misinterpretation of the past. This is always a crime; that is, its systematic perpetuation is always attributable to some unsavory, depressing and mundane motive, which will one day be universally acknowledged.
April 24, 2010 at 9:31 am
Red County, California: California Dreaming: Economics And The Golden State
[…] Cowen mulls over changes to the California state constitution, Jeff at Cheap Talk asserts that California is such a nice place to live that fixing structural problems in the state constitution wo… in order to reach some kind of economic and social […]
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April 25, 2010 at 10:06 am
Blockquotes « Rhymes With Cars & Girls
[…] good theory of California government failure (HT Tyler Cowen). The underlying problem here is that California is simply a beautiful place to […]