Last week I blogged about a very interesting article in the Manhattan Institute’s City Journal by Claremont Review of Books contributing editor William Voegeli titled “The Big-Spending, High-Taxing, Lousy Services Paradigm” (Autumn 2009). It compared the tax-services models of California and Texas. VC commenters were spirited as ever and raised a number of important questions.
Although I haven’t had the pleasure of meeting William Voegeli, I took the liberty of contacting him through the Claremont Institute and asked if he might have any additional thoughts for us, particularly responding to VC commenters. Mr. Voegeli was kind enough to say yes, and has sent along the following response, below. Let me add, on behalf of the VC community, myself as well as readers and commenters, our great thanks for engaging with us. And let me add to the VC commenting community, that in the spirit of the original article, you might call Volokh Conspiracy a ... Low-Taxing, High-Services blog! Mr. Voegeli:
Dear Prof. Anderson:
Thank you for bringing my City Journal article (http://www.city-journal.org/2009/19_4_california.html) on California and Texas to the attention of the Volokh conspirators, and for your generous and thoughtful analysis (http://volokh.com/2009/11/02/the-california-versus-texas-model-and-public-choice/) of the piece. Your post elicited many . . . spirited comments. It would be cumbersome to address them individually, but I can offer a few points that speak to some of the general questions your readers brought up.
My essay argues that it’s not enough to look at how much states and localities spend because how well they spend is very important. I understand several people in the comments section to be saying that this principle applies to the tax side of the equation, too. Thus, California’s problem is not so much that it is a high-tax state but, as one commenter says, that it is a “constrained-and-erratic tax” state.
That’s a fair point. The combination of direct democracy and the state’s belief that vast optimism could overcome mundane realities left Californians believing they could somehow be “taxed like libertarians, but subsidized like socialists,” as Troy Senik recently said (http://www.nationalaffairs.com/publications/detail/who-killed-california) in National Affairs. Not only did it prove impossible to achieve the best of both worlds, but the political impotence created by undertaking the effort helped bring about the worst of both: “In a grim irony, Californians are now being taxed like socialists and subsidized like libertarians.”
Proposition 13 is certainly not beyond criticism. Some things need to be said in defense of the law and its advocates, however. Lots of poorly drawn laws and state constitutional amendments have been passed at the ballot box. The ballot initiative is never going to be a precision instrument, however, and it’s unfair to hand the voters an axe and then judge their work as if they possessed a scalpel.
The best way to have averted the enactment of Proposition 13 would have been if California’s political establishment in 1978 had put forward a better alternative, one that addressed Californians’ anxieties about tax escalation without 13’s flaws. Instead, Gov. Jerry Brown and the Democratic legislature held off for as long as possible in offering any sort of response to the people angry and fearful about rapidly rising property taxes, in the hope that the political problem would blow over. When it didn’t, they finally devised a tax limitation alternative to 13 whose distinguishing feature was that it didn’t guarantee that anyone’s taxes would be limited.
In the 31 years since Proposition 13 was enacted that bait-and-switch problem crops up over and over. When people here complain that taxes are too high, especially given the doubtful quality of the public services they purchase, the enlightened response is always that taxes aren’t high so much as they’re arbitrary and complicated. The correctives proposed to enhance the quality of the citizen’s tax-paying experience all purport to make taxes fairer and simpler, but their one clear outcome is that taxes would be higher. Thus, the reforms that would streamline how California’s governments collect money would have the consequence of relieving those governments of any obligation to devise better, smarter and fairer ways to spend it. It takes a trusting spirit to believe that this outcome would be an accidental byproduct of tax reform.
A final note. One commenter argued that government is expensive in California largely because housing is expensive, thus disproving the idea that California governments spend their money in undisciplined, ineffective ways. Two points:
- 1) California’s state and local employees are the best compensated in the country (http://www.census.gov/compendia/statab/tables/09s0448.pdf) and the differences between them and their counterparts in states that are also expensive are not trivial. Local government employees make 11.5% more in California than Connecticut, and 21.4% more than those in Massachusetts. State workers in California make 13.1% more than New York’s and 19.9% more than those in Massachusetts.
- 2) The high cost of living in California, especially the high cost of housing, is a problem for government, in that it puts pressure on it to increase the pay scale for public employees. That fact does not preclude the possibility that the high cost of housing is, in significant measure, a problem caused by California’s governments.
Let me close on this point by bringing in an expert witness, Edward Glaeser of Harvard’s economics department and Taubman Center for State and Local Government. In a Los Angeles Times article (http://www.latimes.com/news/opinion/commentary/la-oe-glaeser4-2009mar04,0,4085382,print.story) earlier this year he said:
Although California is a populous state, it still has plenty of land. Santa Clara County, the home of Silicon Valley, only has about 2.2 people per acre. Even in denser places, such as Los Angeles, there is plenty of room to build.
California’s growth has slowed because the state has made it increasingly difficult to build new homes. There is an almost perfect correlation between the growth of an area and the amount of housing that is permitted in that area. California has some of the toughest land-use regulations in the country, which are often justified as environmental measures. When high housing demand is met with restrictions — not construction — California homes become unaffordable and new construction goes somewhere else.
Best regards,
Bill Voegeli
Dilan Esper says:
That’s a measured response and there’s some validity to it. But there’s a shuffling-the-deck-chairs-on-the-Titanic quality to it.
Proposition 13 isn’t simply deserving of some “criticism”. It is an absolute disaster. And saying “well you can’t expect ballot propositions to work like scalpels” is simply another way of pointing out that WE SHOULDN’T BE MAKING TAXATION OR SPENDING POLICIES THROUGH BALLOT INITIATIVES.
Further, while I have no doubt that one of the reasons Proposition 13 passed is because of the legislature’s complete dismissal of complaints about high taxes which funded California’s post-war Great Society-style government, this argument violates something conservatives are always telling us (and are right to tell us) about liberal policy arguments, which is that good intentions are not enough. Sure, it’s fine to want to give people a break from high taxes, but Proposition 13 did nothing to repeal the fundamental problems and desires of the populace that lead to government spending. It was simply an attempt to starve the beast, and starving the beast doesn’t work. Indeed, the same voters who voted for Proposition 13 and Proposition 9 also mandated K-12 education spending, voted for countless bond initiatives, and enacted 3 strikes and other costly tough-on-crime laws.
The bottom line is that NO government can function based on a system where there are strict limits on taxation and mandatory spending. That’s a recipe for deficits, or, worse, for contractionary fiscal policies during recessions. And Proposition 13 started that ball rolling– before that, under Govs. Warren, Knight, Pat Brown, Ronald Reagan, and Jerry Brown, there may have been many problems here, but the state’s fiscal house was always in relatively good order.
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November 9, 2009, 5:02 pmDan Weber says:
Democracy is the theory that the common people know what they want and deserve to get it good and hard.
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November 9, 2009, 5:42 pmRyan Waxx says:
Translation: I need to pump up the sheer evil of this amendment well beyond the bounds of reality or even rationality, because unless it becomes some larger-than-life bogeyman, I can’t shift enough blame to it. You see, if I didn’t shift the blame, I might realize that big spending and big cronyism causes inferior results to smaller government... and I can’t have mere evidence lead me to change my preconceptions.
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November 9, 2009, 5:42 pmDilan Esper says:
Translation: I need to pump up the sheer evil of this amendment well beyond the bounds of reality or even rationality, because unless it becomes some larger-than-life bogeyman, I can’t shift enough blame to it. You see, if I didn’t shift the blame, I might realize that big spending and big cronyism causes inferior results to smaller government
Ryan:
Maybe you should stop reducing everything to contentless slogans about “big spending” and “smaller government” and actually make an argument about Proposition 13. There are more things on heaven and earth than are dreamt of in your budgetary philosophy.
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November 9, 2009, 5:54 pmRyan Waxx says:
Maybe you could try to do more than a weak “correlation is causation” argument like “there may have been many problems here, but the state’s fiscal house was always in relatively good order (before prop 13)”
You have yet to make a valid argument about prop 13, so lets not call kettles black, eh?
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November 9, 2009, 6:02 pmRyan Waxx says:
More to the point, “The bottom line is that NO government can function based on a system where there are strict limits on taxation and mandatory spending.” is also faulty.
There are few governments indeed that don’t have mandatory spending, so it becomes apparent that either you are pretending that CA has such unique problems with mandatory spending such that it explains the lion’s share of CA’s problems compared to those other governments... or that your real complaint is about strict limits on taxation.
And I think we both know which of the above two is your real complaint.
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November 9, 2009, 6:09 pmBen says:
Let me begin by echoing Kenneth Anderson’s thanks to Bill Voegeli for appearing here on VC, particularly since I’m the commenter who described California as a “constrained-and-erratic tax” state, largely (though not entirely) because of Proposition 13’s limitation on property taxes.
You offer three kinda-sorta defenses to my “fair point” regarding the problems created by Proposition 13’s limitation on taxation and budgeting. First, you defend Prop. 13 on the grounds that the initiative process in California hands voters an “axe,” not a “scalpel.” Well, sure, but that’s just an argument for reforming the initiative process, rather than a defense of Proposition 13 per se. California voters like limiting their taxes — who wouldn’t? — but they also like all sorts of expensive government-provided toys, such as high-speed rail, stem-cell research centers, pre-kindergarten education, etc. It’s largely because of this disconnect between tax inputs and public-service outputs that we’re in the current mess.
Second, you blame former-but-perhaps-soon-to-be-again Governor Jerry Brown and state Democrats for failing to come up with a better tax-policy alternative in 1978. Barring a sudden appearance of Christopher Lloyd in a DeLorean, however, I’m not sure how to meaningfully respond to this point. On virtually every measurable metric, California’s public services have declined since the passage of Proposition 13. It would be nice to go back in time and do something different, but we can’t. The only relevant question now is what we can do to fix the state budget going forward.
Third and finally, you suggest that advocates of tax reform in California “purport to make taxes fairer and simpler, but their one clear outcome is that taxes would be higher.” I don’t think this is actually true — to pick just one example, Governor Schwarzenegger’s tax-reform commission recently recommended numerous changes to the tax code that would have lowered the effective tax rate in California — but even if it was, wouldn’t it undermine your main thesis? If certain people (we’ll call them “realists”) believe that the state should raise enough money to pay for the public services that the citizens have demanded, any tax reform that resulted in higher tax revenues would be a desirable outcome, no?
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November 9, 2009, 6:09 pmBen says:
Ryan Maxxx says:
Ryan, whatever your particular political philosophy, can you agree that, strictly as a matter of governance, it might be a bad idea to (a) require a 2/3rds majority for the state legislature to raise any tax, while at the same time (b) allow for a simple majority of voters to approve various spending measures via the initiative process? Because that is the situation California is in today. It’s not the whole problem, but it’s a very big part of the problem.
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November 9, 2009, 6:17 pmStarman says:
Re. Prop 13,
Perhaps we need some numbers, not just assertions as to how evil and/or how good it is.
Question 1: How much have property tax revenues increased in CA since the passage of Prop 13? Answer should preferably be in inflation-adjusted dollars per resident.
Question 2: Has Prop 13 changed how often people move? That is, since property taxes reset to market value when you sell a property, have people moved less often on average since 1978 in CA? Either with respect to how often they moved previously, or with respect to residents of other states?
If the answer to Q1 is that the inflation-adjusted property tax revenue per resident is significantly lower post Prop 13, then we might be able to agree as to how evil/good Prop 13 is. Similarly, if Prop 13 has seriously distorted the property market then we might be able to agree.
These numbers are curiously difficult to find!
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November 9, 2009, 6:28 pmAdam Scales says:
I lived in California for about eight months two years ago. I loved it, and it’s difficult to spend much time in San Diego or San Francisco without imagining how to order one’s life so as to remain there. It’s sad watching California’s decline.
Dilan, I think you make some good points, but I am at a loss to see how raising property taxes is going to help. Daydreaming idly one afternoon, I realized that, rather than pay the property tax (to say nothing of the mortgage, insurance, etc.) on an average-priced home in San Francisco, I could fly to SF six times a year, and stay at the Four Seasons. That pretty much wrapped it up for me. I cannot agree that it would’ve been better to force people from their homes because they were “unfortunate” enough to own property during a period of tremendous home-price inflation. At least, I would’ve known what I was signing up for, had I decided to stay.
Relatedly, families simply cannot afford to live in San Francisco anymore. There is something wrong with a state that cannot realistically offer this possibility to its bedrock citizens.
I have always believed in citizen initiatives, and little in California’s experience commends its elected representatives. I would be willing to forgo the democratizing influence of this process if there were reason for hope. But, I see none. That is, I — as merely an interested observer of California politics — see no reason to suppose that its government is capable of reforming its ways so as to make referenda superfluous. Perhaps I should instead say that I’d be willing to compromise on my principled belief in referenda if I felt the institutions of government would meet the California taxpayer halfway. I just don’t believe that. I think this is the kind of cynicism that frustrates all kinds of reforms. But, I don’t think the argument that California politicians are responsible has a lot going for it.
BTW, I agree with you that the starve-the-beast approach has failed. But does this incorrigibility mean that it would be better to capitulate to higher taxes? Let the elected representatives put something on the table first (or so I would think, if I lived in California), and we can talk about it then.
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November 9, 2009, 6:38 pmRyan Waxx says:
Although it would make better sense for the same body to approve taxes as they do spending, some disconnect between the two occurs even in Congress, with different groups handling taxing and spending, and even the president getting in on the act of submitting budgets but not tax bills.
You’re trying to make the argument that this is causing cali’s problems, and not the larger problem that there’s too much taxing and too much spending. Only a total tax masochist would argue that CA can’t survive on it’s total revenues... and only a deceiver would focus only on the property taxes and pretend all the others do not exist.
You complain that CA residents are being taxed the wrong way... but fail to explain how being taxed the right way would solve the problems. Unless being taxed the “right” way is just a sneaky way to recommend grabbing even more and more money...
Simple fact: Most others do more with less. Some of them even eschew one or two methods of taxing entirely... without collapsing.
Do not trust the “tax us the RIGHT way!” crowd’s crocodile tears about all the horrible spending their state is forced to do.
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November 9, 2009, 6:39 pmDilan Esper says:
There are few governments indeed that don’t have mandatory spending, so it becomes apparent that either you are pretending that CA has such unique problems with mandatory spending such that it explains the lion’s share of CA’s problems compared to those other governments... or that your real complaint is about strict limits on taxation.
My complaint is about both. I don’t vote for bond measures, unfunded tough on crime mandates, or unfunded spending requirements even for causes I find quite worthy.
What I would say to folks on the right is this system isn’t delivering what you guys want either. Yes, some taxes are restricted, but spending continues out of control and then when things get really bad, the governor has to buy off some Republican in the Assembly and pass a tax hike, usually during the middle of a recession. As far as I can tell, that isn’t exactly a model of conservative governance any more than it is a model of liberal governance.
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November 9, 2009, 6:52 pmDilan Esper says:
Relatedly, families simply cannot afford to live in San Francisco anymore. There is something wrong with a state that cannot realistically offer this possibility to its bedrock citizens.
San Francisco is like Hong Kong, New York City, or many other places on this earth. It is an extremely desirable place to live, and it is relatively small and cannot be expanded. In other words, the reason you can’t live in San Francisco is supply and demand.
I have always believed in citizen initiatives, and little in California’s experience commends its elected representatives. I would be willing to forgo the democratizing influence of this process if there were reason for hope. But, I see none. That is, I — as merely an interested observer of California politics — see no reason to suppose that its government is capable of reforming its ways so as to make referenda superfluous. Perhaps I should instead say that I’d be willing to compromise on my principled belief in referenda if I felt the institutions of government would meet the California taxpayer halfway. I just don’t believe that. I think this is the kind of cynicism that frustrates all kinds of reforms. But, I don’t think the argument that California politicians are responsible has a lot going for it.
The problem with this argument is that, as I said, good intentions don’t matter. Saying there’s all sorts of reasons to hate legislatures doesn’t prove that the initiative process is superior. It is, in fact, inferior. Because voters don’t know what they are voting for, are easily manipulated, and don’t do budgets– they just vote for costly new spending measures while also voting to slash their taxes.
BTW, I agree with you that the starve-the-beast approach has failed. But does this incorrigibility mean that it would be better to capitulate to higher taxes?
One thing I really think that conservatives don’t get is that taxes are delimited by spending. If we really did succeed in cutting the cost of government, we could have lower taxation. But if you don’t succeed in doing that and cut taxes anyway, you just end up having to raise them later (and, as I said, usually during a recession when revenues tank, which is the worst possible time to do it).
In other words, if you want your taxes low, instead of voting for lower taxes, you have to lay the groundwork for more limited government. And the conservative movement has not succeeded in doing that, because government programs are often extremely popular.
Passing limitations on taxation doesn’t force the spending cuts that you would actually need to make to keep taxes low.
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November 9, 2009, 7:01 pmMark N. says:
Good data is somewhat hard to find (as you mention), but the numbers I can dig up seem to be that total property tax revenues the year before Prop 13 passed, 1977–78 fiscal year, were about $10 billion, while in 2006-07, they were about $42 billion. Inflation-adjusted (by the feds’ CPI calulator), that’s approximately $32 billion (1977–78) vs. $42 billion (2006–07) in 2007 dollars. California had somewhere around 22 million residents in 1978, and approximately 36 million in 2007.
That gives:
1977–78: $1455 per capita in property taxes (2007 dollars)
2006-07: $1165 per capita in property taxes (2007 dollars)
That’s a decrease of about 20% in real per capita terms, unless something is wrong with my data or math somewhere.
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November 9, 2009, 7:02 pmDilan Esper says:
You’re trying to make the argument that this is causing cali’s problems, and not the larger problem that there’s too much taxing and too much spending.
I see conservatives say this all the time, and it makes no sense. All other things being equal, “too much taxing” would result in surpluses. Indeed, conservatives claimed exactly that in 2000 when they (and their tribune, George W. Bush) were arguing that the surpluses proved the people were overtaxed and we needed to give the money back to the people.
If you have deficits, they are a result of too LITTLE taxing and too much spending, or more accurately, the failure to tax at the level required to maintain the level of spending. Cutting taxes without doing anything about the spending will make the problem worse (see Ronald Reagan’s and George W. Bush’s presidencies) and cutting taxes and also cutting spending will be deficit-neutral.
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November 9, 2009, 7:06 pmStarman says:
Mark N.
Thanks for the numbers. I must admit to being a bit surprised, but maybe there is a problem with Prop. 13. by the way, where did you find the numbers?
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November 9, 2009, 7:24 pmMark N. says:
The main impact seems to have been the first year: there was a drastic single-year decrease from $10 billion in 1977–78 to $5 billion in 1978–79 in total property-tax revenue. Prop 13 also restricted yearly growth for existing properties that aren’t sold to sub-inflationary levels, so although real per capita property taxes have been slowly increasing since 1979 (from about $750 per person to about $1150 per person in 2007 dollars), they’ve never managed to get back up to that 1978 peak.
The 1977–78 and 78–79 numbers are from here (p. 9), and the 2006-07 numbers seem to be available in a lot of places, with numbers ranging from $40b to $44b depending on who’s reporting.
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November 9, 2009, 7:32 pmBC says:
Someone alert the media: I’m going to agree with Dilan (kinda).
One of my enduring frustrations with Republicans is that they’re only slightly less horrible at constraining spending than Democrats.
Indeed, I’ve argued in the past that Democratic budgetary policy, while fundamentally evil insofar as it reduces us all to serfdom, is at least honest. The closest Democrats get to budgetary disingenuousness is support for PAYGO rules, through which they can spend like drunken sailors and then avoid accountability for the concomitant tax increases by pretending they’re compelled by faceless, inchoate Rules(tm). (What’s spectacularly pathetic is the Republicans who think this is sound budgetary policy, and fail to recognize it for the one-way-tax-ratchet sham that it is.)
Here’s a phrase that Republicans should begin rehearsing: “We can’t afford it.” It’s appropriate for any spending proposal under any circumstances.
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November 9, 2009, 7:43 pmAnthony says:
Prop 13 is a disaster for several reasons:
1) As implemented, it is horribly unfair, and places the vast majority of property tax burden on new homeowners. You can have a situation where you have two adjacent, identical homes, and one of them pays ten times the property taxes, because the occupant of that home moved in recently, and the occupant of the other home acquired it in a grandfathered way such that it’s still paying based on its value in the late 70s.
2) The rules on new taxes and passing budgets essentially force the use of accounting gimmicks, because there’s simply no way to pass a budget without creative bookkeeping (so you can avoid the 2/3 majority requirement).
Of course, prop 13 is not solely to blame; the entire initiative process is broken, most notably:
3) currently, initiative amendments have consumed the vast majority of the discretionary budget, meaning that sensible budgetary tradeoffs cannot actually be made.
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November 9, 2009, 7:43 pmBC says:
It makes plenty of sense, because all things aren’t equal. In California we have a legislature that, given an unanticipated spike in revenue, would spend it all and then some; see, e.g., FY2000-2001. Too much taxing in this state never results in surpluses, because the excess revenue is treated not as a signal that tax rates are too high, but an occasion for a further unsustainable spending binge.
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November 9, 2009, 7:54 pmPerseus says:
I’m surprised that William Voegeli failed to mention that the real problem wasn’t so much Prop. 13 as the failure of its close relative, Prop. 4 (Gann Initiative), to accomplish its purpose of limiting government spending (the notion that Prop. 13 was merely about “starving the beast” isn’t an accurate reading of history; it only became the de facto policy as a result of Prop. 4’s ineffectiveness). Commenting on the 2003–5 budget crisis, William Craig Stubblebine, an economics professor (and fellow “Claremonter”) who helped author Prop. 4, explained it this way:
If you had applied the original Gann limit, the state wouldn’t have gotten into the problem that it got into in the early 2000s. It would have smoothed out the spending increase in the late 1990s that came from the .com boom, and Gray Davis would still be governor.
What happened was that California’s legislators did an end run around the spending limitation by going to the sources of revenue not covered by Prop. 4, namely, non-tax revenues, chiefly “user fees” and debt. The spending limitations were further relaxed by Prop. 111, which allowed spending to increase with personal income rather than inflation. Thus there would needed to have been a stricter spending limitation that included all forms of revenue, and a way to entrench that limitation such that it could not be modified by a simple majority vote (Prop. 4 passed with 74% of the vote while subsequent initiatives relaxing Prop. 4 enjoyed far less support, e.g., Props. 98 & 111 received only 51–52%).
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November 9, 2009, 7:55 pmDilan Esper says:
It makes plenty of sense, because all things aren’t equal. In California we have a legislature that, given an unanticipated spike in revenue, would spend it all and then some; see, e.g., FY2000-2001. Too much taxing in this state never results in surpluses, because the excess revenue is treated not as a signal that tax rates are too high, but an occasion for a further unsustainable spending binge.
That’s actually not true. We ran surpluses in many of the Deukmeijian years, which coincided with the national economic boom of the 1980’s.
It IS true that there’s always a temptation to spend like drunken sailors when the economy booms and taxes produce a big windfall. But there’s also always a temptation to enact permanent tax cuts when the revenue booms are temporary (George W. Bush tried for 8 years to make his tax cuts permanent!). It’s the same thing, just in the other direction.
If you have temporary increases in revenue, you should either (1) save it for the bad times to come (the best idea), (2) do some one-time tax cuts, or (3) do some one-time spending increases.
But as dumb as the policies that you are criticizing are, they aren’t what caused the present crisis– that was caused by the more structural deficiencies in our budget process, which include Proposition 13 and the mandatory spending programs.
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November 9, 2009, 8:02 pmBC says:
And what happened to the money, Dilan? Was it returned to the taxpayers and tax rates cut?
No. It was spent. Taxes stayed high. The surpluses were an excuse for more spending.
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November 9, 2009, 8:04 pmDilan Esper says:
What happened was that California’s legislators did an end run around the spending limitation by going to the sources of revenue not covered by Prop. 4, namely, non-tax revenues, chiefly “user fees” and debt. The spending limitations were further relaxed by Prop. 111, which allowed spending to increase with personal income rather than inflation. Thus there would needed to have been a stricter spending limitation that included all forms of revenue, and a way to entrench that limitation such that it could not be modified by a simple majority vote (Prop. 4 passed with 74% of the vote while subsequent initiatives relaxing Prop. 4 enjoyed far less support, e.g., Props. 98 & 111 received only 51–52%).
This is a fantasy. The only way to cut spending is to identify specific programs to cut and cut them.
We are right now going through across the board budget cutting of the type that would have been required with a hard Gann spending limit. What does that mean? It means letting criminals out of prison. It means closing state offices, schools, courts, and universities one or two days a month. It means slashing Medicaid. It means not fixing potholes on the roads.
It takes real political courage to say “we can’t afford this”. But that’s how you do spending cuts. “Automatic” cuts don’t work, because they cut as much meat as fat, and because people, seeing that meat is being cut, react by demanding that their elected representatives reverse the cuts.
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November 9, 2009, 8:05 pmMr L says:
Currently, initiative amendments have consumed the vast majority of the discretionary budget, meaning that sensible budgetary tradeoffs cannot actually be made
Is this true? Even the most expensive initiatives — like high speed rail — seem like a drop in the bucket compared to the $40+ billion deficit. Given the vast numbers of people employed by the California government, the premium compensation vs. states with similar costs of living alone probably accounts for more spending than all the initiative-directed spending put together. Extraordinarily high pensions (90% of salary? really?) just compound the problem.
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November 9, 2009, 8:06 pmDilan Esper says:
And what happened to the money, Dilan? Was it returned to the taxpayers and tax rates cut? No. It was spent. Taxes stayed high. The surpluses were an excuse for more spending.
Do you know what it was spent on? No? OK, I’ll tell you.
The money was saved until 1990–91, when it was spent to make up for the shortfall of revenues that resulted from that period’s recession. In other words, we saved it for a rainy day, and then when tax revenues fell, we spent it to ensure that state services wouldn’t have to be cut as drastically during a downturn.
Now what, exactly, is wrong with that?
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November 9, 2009, 8:07 pmBC says:
That all said, I will readily agree that California’s budget process is structurally deficient. I think time has demonstrated that attacking the problem from the taxing side is basically hopeless, and that it’s necessary to attack it from the spending side. Spending has to be baselined and then indexed to inflation plus population growth; let legislators set tax rates as high as they want, but force them to return every dime over the spending limits to taxpayers less a (very modest) rainy-day provision.
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November 9, 2009, 8:09 pmBC says:
The fact that the state didn’t cut services during a downturn. The surpluses were used to sustain government spending rather than being returned to taxpayers.
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November 9, 2009, 8:11 pmMFS says:
It’s strange that no one seems alarmed by Voegeli’s point about municipal worker salaries.
Admittedly, I do not live in California. But, isn’t it true that the localities that have declared or are considering bankruptcy are pointing to the unsustainable pension liabilities?
What kind of taxation scheme would correct this? Why are the taxes even the primary focus?
Best wishes,
–MFS
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November 9, 2009, 8:13 pmMatthewM says:
I don’t understand the assertions that Prop. 13 was a “disaster.” Yes, Prop. 13 cut per capital real property tax revenues for California counties (those monies didn’t go to the state’s coffers) from the 1977–1978 tax year going forward, probably in the 20% range (I don’t have the figures in front of me right now.) This is only a “disaster” if you assume that the property tax revenues of 1977–78 are somehow the optimum rates. An alternative explanation is that they were too high to begin with by 1977–78, and that Prop. 13 simply knocked them down to a more reasonable level.
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November 9, 2009, 8:22 pmRyan Waxx says:
Because this is one of the many kinds of mandates that liberals don’t rail against, unlike three-strikes.
The other reason is that reducing those worker salaries isn’t feasible, given the political power of governmental unions. Easier to gut the referendum power.
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November 9, 2009, 8:24 pmBC says:
Yes. For example, some years ago the CTA, which is arguably the most evil of all the California public employees unions, persuaded the electorate that it was necessary to mandate education spending at a particular level.
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November 9, 2009, 8:25 pmAnthony says:
Is this true? Even the most expensive initiatives — like high speed rail — seem like a drop in the bucket compared to the $40+ billion deficit.
Yes, it’s true, and in fact high speed rail isn’t even a part of it, that was a bond measure. A relatively recent example would be Proposition 49, championed by none other than Arnold Schwarzenegger (proof that budget stupidity is bipartisan, if you needed proof), though Prop 98 is a much larger amount in absolute terms (though most of the money it allocates would have been spent anyway).
If you look at the general fund allocations, the largest single gain (as a percentage of budget) is DCR — the Department of Corrections. Which in turn can be mostly blamed on the ‘Three Strikes’ law. Yep, that’s sure a sign that liberal social policies are to blame...
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November 9, 2009, 8:34 pmAbdul Abulbul Amir says:
Correction:
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November 9, 2009, 8:35 pmCato The Elder says:
Let me ask you — what is the single largest demographic group in California’s prisons? Once you’ve answered that question, you might do yourself a favor, wander over the LAT’s Crime Blog, ponder the ancestry of the names that pepper their reporting of the most violent crimes, and then ask yourself again, whether or not the enactment of reactionary “Three Strikes” laws is somehow possibly connected to “liberal social policies.”
I say: Definitely not. I suspect, as you do, that beneath all the veneer of marijuana-loving, high-speed-train-funding, progressive politics, many Californians are just plain vindictive a-holes.
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November 9, 2009, 9:06 pmDilan Esper says:
The fact that the state didn’t cut services during a downturn.
That’s the last thing you want to do. Not only does it make the downturn worse (because spending cuts are contractionary) but it takes away help at the very time people need it most.
You want to do your spending cuts (and tax hikes) during GOOD times.
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November 9, 2009, 9:13 pmRyan Waxx says:
You could also ask which group in CA’s prisons make more money than their counterparts, which is connected greatly to liberal financial policies.
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November 9, 2009, 9:14 pmDilan Esper says:
San Francisco is like Hong Kong, New York City, or many other places on this earth. It is an extremely desirable place to live, and it is relatively small and cannot housing may not be expanded. In other words, the reason you can’t live in San Francisco is and artificial restriction on the supply of housing and demand.
If you are referring to rent control, yes rent control is stupid, and no, without rent control, there would still be more people who wanted to live in San Francisco than there is space on the peninsula for them.
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November 9, 2009, 9:16 pmTexasBeatsKaliforniastan says:
How about this theoretical:
California adopts Texas style constraints on taxes and spending, as well as legislative session lengths, moving forward
I would think that would help constrain spending growth enough that (hopefully) will allow tax revenues to “catch up”, if they can...
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November 9, 2009, 9:40 pmMark N. says:
That’s plausible, but the mess is that property taxes were constrained without also constraining spending. As a result, most of the money came from income taxes, user fees, and debt, all much more cyclical sources. One reason Texas’s budget has done comparably well is that it gets a large proportion of its revenues from property taxes, as it has no state income tax, which makes for more consistent revenues. (In fact, Texas’s per capita property tax is about $1450, almost exactly California’s pre-Prop-13 rate.)
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November 9, 2009, 9:50 pmtrotsky says:
When the NUMMI plant in the Bay Area recently shut down, it was striking that California was losing its last auto plant. Many “foreign” car and truck plants have opened in the state in recent years — but not one in California. Why?
Well, Toyota’s recently opened plant San Antonio, TX (where Toyota shifted its production from NUMMI) went from site announcement to production in three years — on a plant that is really a small city.
I don’t think you could begin to clear the California Environmental Quality Act hurdles in three years, especially in a major urban area, for a project that size, let alone actually begin turning a shovel of dirt.
For any business making capital plans, the uncertainty involved in business investments in California — the potential for seriously prolonged litigation with a law that fosters NIMBY’s on steroids — is a serious drawback.
The high taxes ain’t bad if you have the economic base to support them. Increasingly, we don’t.
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November 9, 2009, 9:53 pmOren says:
There’s also the structural distortion — the assessed value of a house may only be increased by a maximum of 2% per year. and hence AV of many houses to be far below market value, often by factors of 2–5. Oftentimes, this makes it cheaper to rent from a longtime owner than to purchase. In addition, if you make improvements, the county will use the opportunity (as given to them by law) to jack up the assessment to the prevailing market value, giving owners a huge disincentive (as if the permitting and zoning process wasn’t bad enough) to improve their property.
There are methods of taxation that do not structurally distort the housing market in such a perverse fashion.
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November 9, 2009, 10:22 pmOren says:
This only works if you don’t squander the surplus during the last expansion.
I will, without any hesitation, vote for the first party that can manage to coral its members to save a budget surplus for an unexpected recession/war/natural-disaster. Both the GOP and the Democrats seem utterly incapable of such basic financial discipline.
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November 9, 2009, 10:26 pmOren says:
It is utterly unreasonable for voters to simultaneously demand both low taxes and high spending at the same time.
I would have no problem with any of these budget propositions if each mandated spending clause had a tax attached to it. If the voters want to spend $1 million on a low level felon (25 years minimum @ $40k / yr), they should be prepared to spend that money. Something like an adjustable sales tax would have the most direct feedback — i.e. the special ‘3-strikes’ (or school-funding or whatever) tax should be pegged at the rate necessary to fund the program.
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November 9, 2009, 10:31 pmRyan Waxx says:
Except that that’s a false premise. Not only does CA not have low taxes, referendum spending is not the only spending out there... unless your theory is that the legislature isn’t spending anything? So if the public demands one set of spending items... and the legislature puts its own pet projects on to of that, can it fairly be said that the public is to blame for both?
And I’m starting to get really tired of this “three-strikes is the reason CA is in trouble” meme. You’d have to show that CA has a far, far, far higher rate of imprisonment than any other state, and also show that three strikes is directly responsible for that excess, and furthermore show that by and large the repeat offenders who get three strikes wouldn’t have kept reoffending and therefore been in prison anyway.
Having habitual criminals on the streets costs money too. But somehow, I don’t think any kind of this rationality would find it’s way into this so-called “three strikes tax”.
Isn’t it funny how the state CA is being compared to is evil, law-and-order Texas who maintains vile and expensive executions... and yet it’s CA that’s bankrupt? I guess Texas better not implement three-strikes! /sarc
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November 9, 2009, 10:51 pmRyan Waxx says:
But that’s OK. CA will soon be flush with cash since they aren’t prosecuting pot anymore. Since everyone in the reality-based community KNOWS that 90% of people in prison are there because they lit up a joint, soon the prisons will be empty and we’ll have to rehire the wardens to pump electricity in the new green economy that will make CA even richer.
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November 9, 2009, 10:59 pmDilan Esper says:
I will, without any hesitation, vote for the first party that can manage to coral its members to save a budget surplus for an unexpected recession/war/natural-disaster. Both the GOP and the Democrats seem utterly incapable of such basic financial discipline.
As I said, Deukmeijian– a Republican– did it. And then Wilson, another Republican, spent the surplus during a recession. It worked exactly how it was supposed to work.
Unfortunately, we haven’t seen any fiscal rectitude since then.
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November 9, 2009, 11:11 pmDilan Esper says:
Except that that’s a false premise. Not only does CA not have low taxes, referendum spending is not the only spending out there... unless your theory is that the legislature isn’t spending anything? So if the public demands one set of spending items... and the legislature puts its own pet projects on to of that, can it fairly be said that the public is to blame for both? And I’m starting to get really tired of this “three-strikes is the reason CA is in trouble” meme. You’d have to show that CA has a far, far, far higher rate of imprisonment than any other state, and also show that three strikes is directly responsible for that excess, and furthermore show that by and large the repeat offenders who get three strikes wouldn’t have kept reoffending and therefore been in prison anyway.
It isn’t 3 strikes alone. It’s 3 strikes, 10–20-life, the death penalty, one strike, etc. It’s a whole bunch of popular “lock ‘em up and throw away the key” measures, and corrections ends up taking up a huge chunk of the budget.
As for “pet projects”, that’s a load of crap. We have pork just like every state does, but pork isn’t the cause of our budget deficit. K-12 education is the biggest part of our budget– not pork. Community colleges, the CSU’s, the UC’s, not pork. Prisons, not pork. Medicaid, not pork. Highways, not pork. Mass transit, not pork. That’s the vast majority of spending right there.
Having habitual criminals on the streets costs money too. But somehow, I don’t think any kind of this rationality would find it’s way into this so-called “three strikes tax”.
This reasoning assumes the best and most efficient way to get habitual criminals off the streets is with a one-size-fits all solution that commits the state to $50,000 a year in imprisonment costs for every single one of them for 20 or 30 or 40 or 50 years, rather than approaches that might try to sort them by dangerousness.
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November 9, 2009, 11:16 pmMark N. says:
We can certainly argue over the causes, but in terms of dollars, California is certainly spending money on prisons at a far higher rate than Texas. California’s prison budget was $8 billion last year, while Texas’s was $3 billion. Adjusted for California’s 50% higher population, that’s still almost twice as much.
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November 10, 2009, 12:26 amBC says:
He said, parrotting the same Keynesian drivel that led to the U.S. House passing a $700 billion “stimulus” boondoggle that has demonstrably failed by its proponents’ own metrics at controlling unemployment.
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November 10, 2009, 2:04 amDilan Esper says:
He said, parrotting the same Keynesian drivel that led to the U.S. House passing a $700 billion “stimulus” boondoggle that has demonstrably failed by its proponents’ own metrics at controlling unemployment.
This is simply denial of reality. There’s no accepted economic theory that says it’s a good idea to slash government spending during a recession. Not even right wing economists believe that.
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November 10, 2009, 2:47 amWidmerpool says:
Mr. Esper, you do appreciate, don’t you, that being against a huge increase in government spending is not the same thing as being in favor of a huge slash in government spending? No one versed in mathematics–and here, I’ll be charitable and include economists, of whatever political stripe–believes, without further proof, that an opponent of the increase from number 4 to 5 is actually a proponent of a subsequent reduction to number 3. So, what’s wrong with the increase from number 4 to 5? Well, if the increase is due from borrowing, then, strangely enough, that has some impact on the ability of non-governmental actors to borrow money and make investments. Further, if the increase is due to waving a magic wand and printing money to fund the increase, it creates some downward pressure on the value of the now inflated currency. I know, this sounds quite kooky–and, from your point of view, probably a simple “denial of reality.” Don’t worry, you have good company in the present administration.
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November 10, 2009, 8:53 amTracy W says:
Dilan Esper: both Ruth Richardson, then Finance Minister of NZ, and Margaret Thatcher, then Prime Minister of the United Kingdom knowingly and intentionally cut spending in the midst of a recession.
See http://www.nzbr.org.nz/documents/articles/0610%20Naive%20Keynesianism%20and%20Other%20Fallacies.pdf
Whether cutting spending in the face of a recession is an accepted theory amongst economists depends on your definition of accepted. It certainly is not universally accepted. But as a theory it has been accepted by at least two politcians, and cuts in spending have been followed by economic recoveries (please insert normal disclaimers about causation and correlation here).
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November 10, 2009, 9:08 amray_g says:
I moved to California the year after Prop. 13 was passed, and that whole time politicians and pundits have blamed it for, well, almost every budgetary ill. But, somehow, during the 1980s, CA actually had a surplus at least one year, and, BTW, some of the money was returned to the taxpayer. I got one of those checks. The problem wasn’t Prop. 13, it was how the local and state governments reacted to it. Instead of living with the fact that they would get less property tax revenue, and so maybe spending would have to be cut, or other local taxes raised to cover local needs, the local governments made a Faustian deal with the state that the state budget, which was in fairly good shape then, would help the locals cover things like schools etc.
And as far as the supposed “mandatory spending” that the “stupid” voters asked for, most of that is bond issues. I recently found out the the debt service on these issues is about 8 to 10% of the state budget, which is a lot, but what about the other 90% of state spending?
The other things they like to blame: the 2/3 requirements for passing a budget. Whether that is good or bad, it has been in place since the 1930’s, and CA seemed to do OK for a lot of that time, so I don’t think that is the problem. The 2/3 requirement for a new tax was another attempt the the citizens to stop the cycle of tax and spend, and once more the politicians did not get the message.
The problem is that the state and local governments in California just have refused to keep spending under control. All the other supposed reasons are just politicians providing cover for their bad behavior.
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November 10, 2009, 11:49 amDan Weber says:
If you want to drive down property taxes, Proposition 13 is probably the worst thing in the world for you, because it exempts so many people from increases.
Prop13 is as misguided as rent control. They both have populist appeals — “people should be able to stay on living where they are” — but they run full speed into the realities of the market. Tax exemptions are very valuable and fungible.
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November 10, 2009, 12:13 pmray_g says:
I have actually read the report of the “Commission on the 21st Century Economy”, which is the BS name for the commission on looking at ways to improve the California tax system. (The main section, 41 pages, not the Appendicies, which are over 300 pages). I think it makes some very good points and recommendations. I did note that they did not recommend any changes to Proposition 13. I think that before any of the recommendations could become politically feasible the current system would have to break down completely, which hasn’t happened yet. I sincerly hope it doesn’t, but I think we are standing close to the edge right now.
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November 10, 2009, 12:30 pmlrC says:
Aren’t there debts — future (they hoped) surpluses which were pulled into the past from the future and spent on recessions/war/natural-disasters — to be repaid first?
Every level of government seems to be using future surpluses right now to fill in the recessionary trough and maintain what they believe is the “baseline” for revenue. What if the “baseline” — established during the past decade of .com and housing booms — represents an unusual high point above the long-term average?
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November 10, 2009, 1:41 pmDilan Esper says:
Mr. Esper, you do appreciate, don’t you, that being against a huge increase in government spending is not the same thing as being in favor of a huge slash in government spending?
But it’s a slash we are discussing. The point is the California rules force spending cuts during recessions and permit spending sprees during good times. That’s one of the things that makes them so bad.
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November 10, 2009, 1:48 pmDilan Esper says:
Whether cutting spending in the face of a recession is an accepted theory amongst economists depends on your definition of accepted. It certainly is not universally accepted. But as a theory it has been accepted by at least two politcians, and cuts in spending have been followed by economic recoveries (please insert normal disclaimers about causation and correlation here).
Actually, among economists who are not discredited cranks (i.e., not Austrians), Keynesian stimulus is basically universally accepted. Note, that conservatives who call for tax cuts in recessions instead also accept the theory.
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November 10, 2009, 1:51 pmDilan Esper says:
The problem wasn’t Prop. 13, it was how the local and state governments reacted to it. Instead of living with the fact that they would get less property tax revenue, and so maybe spending would have to be cut, or other local taxes raised to cover local needs, the local governments made a Faustian deal with the state that the state budget, which was in fairly good shape then, would help the locals cover things like schools etc.
This is more conservative fantasyland; it’s basically an argument that the point of Prop 13 was to starve someone else’s beast, specifically local governments. It’s really convenient to enact a big tax cut and then say that some other poor schmuck has to enact the spending cuts.
Again, SPENDING DECISIONS GUIDE TAX POLICIES. If you want to cut taxes, you have to cut spending first. If you cut spending successfully, then you can enact tax cuts that are relatively permanent. If you don’t cut spending, the taxes you cut will just have to be raised or made up for with other taxes in the future. I swear, like 85 percent of the right wing in this country doesn’t get this, but it’s true.
Blunderbuss mechanisms like across-the-board cuts or hopes that local governments will do the cutting don’t work.
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November 10, 2009, 1:54 pmChris Reed says:
Dilan Esper writes ...
“The bottom line is that NO government can function based on a system where there are strict limits on taxation and mandatory spending.”
This is a crock. All the initiative-imposed spending mandates can be repealed by the same two-thirds vote required to adopt a state budget. The “autopilot spending” theory is also flawed because the agency affected by a spending mandate usually is the party that determines what its mandate requires its next fiscal-year funding to be. Of course the empire-building impulse will be indulged.
Finally, the Legislative Analyst’s Office in 2006 concluded California was spending several billion more than it had to to meet these mandates.
This whole argument is an elaborate canard manufactured by the let’s-make-it-easy-to-raise-taxes gang who somehow can’t internalize the fact that even though there is a two-thirds legislative obstacle to raising taxes, California still has among the highest sales, income and gasoline taxes of any state and the highest corporate tax rate in the West.
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November 10, 2009, 2:25 pmAnthony says:
Hm. Just noticed something laughable in the original post:
Um. You know the ‘housing bubble’? You know why it impacted California so much? I’ll give you a hint: it was due to unsupportably large numbers of new homes being built...
California is a horrible place to build a new industrial facility, but building new homes, unless you’re doing it in an already heavily developed urban area, is perfectly doable. In any case, eliminating or modifying prop 13 would actually help here — property taxes in CA disproportionately affect new construction, because prop 13 limits how fast the assessed value of a property can rise while it’s owned by one entity, but it’s based on the assessed value as of the time it was created or ownership transferred. Thus, the longer you’ve lived in CA, the lower your property taxes.
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November 10, 2009, 4:10 pmBen says:
@ray_g: The fact that Schwarzenegger’s tax-reform commission did not tinker with Proposition 13 is a testament to its politically sacrosanct status, not necessarily the wisdom of Prop. 13 as a policy matter. It ain’t the third rail of California politics for nothin’.
@Chris Reed: It’s true that California has high sales and income taxes. I suggest that’s largely because property taxes are relatively low. The problem is that sales and income taxes fluctuate with the economy, whereas property taxes provide a far more stable source of revenue. Once again, Milton Friedman favored property taxes for precisely this reason. You like Uncle Milton, don’t you, Chris?
@everyone wondering about CA state-worker salaries and pensions: State workers have had their wages slashed 14% through furloughs, and most haven’t seen a cost of living adjustment in the last five years. Current pension obligations run about $1.5 billion/year — not chump change, but a relatively small fraction of the state’s $85-$100 billion General Fund budget. (That said, the pension issue does loom large in future budgets, but right now, legislators can’t plan more than six weeks into the future, to say nothing of sixteen years.)
@Dilan Esper: You’re doing an admirable job defending your views (and I agree with much of what you have to say); however, it’s an ad hominem fallacy to call all Austrian economists “cranks” — and a particularly ill-advised strategy on a libertarian-leaning website such as this one.
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November 10, 2009, 4:16 pmChris Reed says:
California property taxes are in the middle of the pack nationally. They are not low.
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November 10, 2009, 4:47 pmDilan Esper says:
Finally, the Legislative Analyst’s Office in 2006 concluded California was spending several billion more than it had to to meet these mandates.
Bear in mind that Prop. 98 (K-12 education) isn’t the only spending mandate. 3 strikes is a spending mandate, even though it isn’t packaged as one. So is 10–20-life. So is the death penalty.
All these things cost lots of money, and the amount isn’t fixed by some formula.
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November 10, 2009, 5:03 pmDilan Esper says:
You’re doing an admirable job defending your views (and I agree with much of what you have to say); however, it’s an ad hominem fallacy to call all Austrian economists “cranks” — and a particularly ill-advised strategy on a libertarian-leaning website such as this one.
They aren’t a serious part of the economics profession, and it’s important to separate them from, for instance, mainstream conservative economists or even supply siders. For instance, the authors of the Reagan/Kemp/Roth tax cuts of the early 1980’s certainly did not reject Keynesian stimulus.
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November 10, 2009, 5:04 pmDan Weber says:
Housing bubbles happen much more in Zoned Zone than in Flatland. Where new housing is restricted, the only response is to bid up the value of existing stock. In Flatland, bubbles have trouble getting started because someone can build a new house instead of bidding up an existing one. Extra housing stock was a result of the bubble, not a cause.
Here’s the latest Case-Shiller index I could find at CR. Detroit didn’t have a housing bubble, but it still got the deflation.
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November 10, 2009, 5:44 pmChris Reed says:
Why won’t Dilan respond to this? Because he knows it knocks the bleep out of his arguments:
Dilan Esper writes ...
“The bottom line is that NO government can function based on a system where there are strict limits on taxation and mandatory spending.”
This is a crock. All the initiative-imposed spending mandates can be repealed by the same two-thirds vote required to adopt a state budget. The “autopilot spending” theory is also flawed because the agency affected by a spending mandate usually is the party that determines what its mandate requires its next fiscal-year funding to be. Of course the empire-building impulse will be indulged.
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November 10, 2009, 6:08 pmBC says:
Which demonstrates the political corruption of the discipline, not the empirical validity of Keynesian stimulus. But yes, it’s terribly inconvenient to the mainstream that these “discredited cranks” continue to, correctly, point out that the emperor has no clothes, and that acceptance of Keynesian stimulus is essentially faith-based given the negligible-to-nonexistent evidence that it actually works.
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November 10, 2009, 6:38 pmDilan Esper says:
This is a crock. All the initiative-imposed spending mandates can be repealed by the same two-thirds vote required to adopt a state budget. The “autopilot spending” theory is also flawed because the agency affected by a spending mandate usually is the party that determines what its mandate requires its next fiscal-year funding to be. Of course the empire-building impulse will be indulged.
Chris:
The legislature cannot repeal Prop. 98, 3 strikes, 10–20-life, one strike, the death penalty, or any of the other spending mandates I mentioned. Only the voters can.
Further, I might add that saying that you can do something with 2/3rds of the legislature is the same as saying you can’t do it at all. We can barely pass a budget, usually late and often after government shutdowns. Saying that anything else “can” be done under that requirement other than what is already done only kicking and screaming is silly.
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November 10, 2009, 7:44 pmDilan Esper says:
Which demonstrates the political corruption of the discipline, not the empirical validity of Keynesian stimulus. But yes, it’s terribly inconvenient to the mainstream that these “discredited cranks” continue to, correctly, point out that the emperor has no clothes, and that acceptance of Keynesian stimulus is essentially faith-based given the negligible-to-nonexistent evidence that it actually works.
I believe the best line about Austrians was what one Nobel winner said about them: “when I hear people talk about believing in the Austrian school of economics, I interpret this the same way I would a chemist professing belief in the alchemy theory of chemistry or a doctor believing in the humour theory of disease”.
Economics is a scientific discipline, BC, and there aren’t any Austrians out there whose work is surviving peer review and there hasn’t been for a long time. And this isn’t an ideological thing– there are plenty of very good conservative economists.
Austrian economics isn’t a scientific discipline– it’s a giant conspiracy theory. Unfortunately, it’s very ideologically convenient for libertarians and conservatives, so it still attracts followers despite its unseriousness.
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November 10, 2009, 7:47 pmChris Reed says:
Dilan, you’re wrong — all the spending mandates can be suspended on a simple two-thirds vote.
Prop. 98 was suspended a few years back.
Duh!
http://www.google.com/search?sourceid=navclient&ie=UTF-8&rlz=1T4RNTN_enUS341US351&q=prop+98+suspended
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November 10, 2009, 7:57 pmDilan Esper says:
Dilan, you’re wrong — all the spending mandates can be suspended on a simple two-thirds vote.
Suspended, yes. Repealed, no. This means you have to get 2/3rds of the legislature to vote to suspend it every year. And as I said, you can’t get 2/3rds of the legislature to do anything in this state.
Further, that’s ONLY Prop. 98. You can’t suspend 3 strikes with 2/3rds of the legislature, or the death penalty, or one strike.
Face it Chris, you are basically saying that Alcatraz wasn’t totally escape proof because you might be able to tunnel your way out under San Francisco Bay.
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November 10, 2009, 8:05 pmTim says:
It depends on what you mean by “Keynesian stimulus.” The fact that GDP increases when government spending increases and that it contracts when government spending is cut (all else equal) is a matter of an accounting identity that nearly any 100-level macro student can rattle off. C+G+I+(X-M)=Y
The assertion that $1 increase in G will produce more than a $1 increase in Y is where “stimulus” becomes “Keynesian stimulus.” And to say that a multiplier greater than one is “generally accepted” or the norm is false. I can expand the identity out more and explain how the case is made for such a multiplier or I can show you the work of mainstream, modern economists like John Cochrane who can show that it is theoretically impossible. Either way, it is not outside of mainstream economics to suggest that $1 of G gives us $1 increase in Y. It is a fact to some economists and disputed to others.
I also dispute that it is an ad hominem fallacy to call the followers of Austrian Economics “cranks.” Just like calling alchemists “cranks,” the Austrian School is not considered part of mainstream economics by most economists, and so it is no different than calling Marxian economists “cranks.”
There are rules in any scientific discipline as to what is “science” and “non-science.” You can argue that they are arbitrary, and I’m not even sure I’d dispute that with you, but the fact of the matter is that knowledge creation is not a perfect system, and people disagree on how to tell truth from falsity. So many people disagree with the Austrian school of economics that it is considered non-mainstream.
There’s no question that GDP increases with more govenrment spending. It is true as a matter of identity, which essentially means that if you deny it, you’re arguing a definition, not making an analytical argument.
Oops! I should have read that first...you made my points before I even bothered to type them out.
I will say that one point is incorrect, however. There are peer reviewed journals that will print Austrian stuff (as well as other obscure theoretical work).
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November 10, 2009, 8:19 pmChris Reed says:
You didn’t know it could be suspended until now!
The two-thirds’ threshold to suspend is the same as to adopt the budget. Duh!
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November 10, 2009, 9:02 pmDilan Esper says:
Chris:
I never said it can’t be suspended in theory. I said it can’t be repealed, and that 2/3 majorities are so hard to come by that it isn’t an answer to say you can suspend with a 2/3 majority.
And this is ONLY proposition 98 that can be so suspended.
All the rest of the spending mandates– three strikes, one strike, the death penalty, etc.– CANNOT even be suspended by the legislature, not even with a UNANIMOUS vote.
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November 11, 2009, 3:02 amTracy W says:
Ah, the no true Scotsman fallacy. Dilan said that:
When I cited some evidence of some economic leaders who did indeed slash government spending during a recession, Dilan moves from his statement that “Not even right-wing economists believe that” to “among economists who are not discredited cranks...” Notice that Dilan doesn’t try to show that Ruth Richardson or Margaret Thatcher or Roger Kerr, author of the paper I cited, were discredited cranks. Nor does he address the economic recovery observed in those countries in response to the cuts, an argument which rather implies that the idea of cutting government spending in a recession is not necessarily a disastrous idea. This is the True Scotsman fallacy, Dilan has carefully insulated his belief in the universally-accepted nature of Keynesian stimulus by redefining anyone who provides differing evidence as a “discredited crank” he can ignore.
Economics may be a scientific discipline, but Dilan’s belief in the universal-acceptance of Keynesian stimulus ain’t scientific.
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November 11, 2009, 7:36 amDilan Esper says:
The assertion that $1 increase in G will produce more than a $1 increase in Y is where “stimulus” becomes “Keynesian stimulus.” And to say that a multiplier greater than one is “generally accepted” or the norm is false. I can expand the identity out more and explain how the case is made for such a multiplier or I can show you the work of mainstream, modern economists like John Cochrane who can show that it is theoretically impossible. Either way, it is not outside of mainstream economics to suggest that $1 of G gives us $1 increase in Y. It is a fact to some economists and disputed to others.
The multiplier is a part of Keynes’ general theory, but it really isn’t integral to the concept of Keynesian stimulus. Keynes said that you can and should borrow money in recessions and repay it in good times. Supply siders want to do that through tax cuts; liberals want to do that through spending. But THAT aspect of Keynesianism is ONLY rejected by the Austrians, and the economics profession treats them the same way that biologists treat creationists– as ideologues, not scientists.
As for the multiplier itself, Cochrane cannot “show” that it is theoretically impossible, because it is theoretically possible. You are vastly overstating your claim, though I would certainly concede that some mainstream economists are skeptical about claims about the size of the multiplier.
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November 11, 2009, 1:25 pmDilan Esper says:
I also dispute that it is an ad hominem fallacy to call the followers of Austrian Economics “cranks.” Just like calling alchemists “cranks,” the Austrian School is not considered part of mainstream economics by most economists, and so it is no different than calling Marxian economists “cranks.”
But Marxist ECONOMISTS are cranks! Marx had plenty to contribute to political theory, social science, and all sorts of other disciplines. But Marxist economics doesn’t work, it is unscientific, it is not the basis of any valid, peer-reviewed work, it doesn’t explain the world, and the people who adhere to it do so for ideological reason (because they wish it was true). That’s Austrian economics to a T!
There are rules in any scientific discipline as to what is “science” and “non-science.” You can argue that they are arbitrary, and I’m not even sure I’d dispute that with you, but the fact of the matter is that knowledge creation is not a perfect system, and people disagree on how to tell truth from falsity. So many people disagree with the Austrian school of economics that it is considered non-mainstream.
It’s beyond that. There really isn’t any peer-review and research and testing and discarding or modification of hypotheses not supported by data in Austrian economics. It’s a theology, not a science.
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November 11, 2009, 1:41 pmDilan Esper says:
Notice that Dilan doesn’t try to show that Ruth Richardson or Margaret Thatcher or Roger Kerr, author of the paper I cited, were discredited cranks. Nor does he address the economic recovery observed in those countries in response to the cuts, an argument which rather implies that the idea of cutting government spending in a recession is not necessarily a disastrous idea.
1. Politicians =/ peer-reviewed, academic economists.
2. Post hoc ergo propter hoc, anyone?
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November 11, 2009, 1:44 pmChris Reed says:
Dilan, you keep making things up!
“Three strikes” on a practical level HAS JUST BEEN SUSPENDED!
How do you think the governor and Legislature are implementing their plan to release thousands of inmates to cut costs and comply with federal court orders?
You are simply uninformed about the nature of the initiative-created spending mandates.
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November 11, 2009, 2:17 pmDilan Esper says:
“Three strikes” on a practical level HAS JUST BEEN SUSPENDED! How do you think the governor and Legislature are implementing their plan to release thousands of inmates to cut costs and comply with federal court orders?
Actually, those aren’t, in general, 3 strikes inmates.
But further, what you are referring to is an emergency process whereby, because the 2/3rds budget requirement and the spending and taxation mandates prevent a rational budget from being passed, a court comes in and imposes some blunderbuss solution. And you say “you see, you don’t need to repeal spending and taxation mandates”.
With all respect, that’s just about the craziest and most idiotic argument about the budget process that I have ever heard. If your budget process is functional, you don’t need courts to come in and order the release thousands of potentially dangerous criminals. Seriously, that’s not only not a good outcome, but that’s not an outcome that any rational process could produce.
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November 11, 2009, 2:45 pmTim says:
I think you need to re-read my post again, because I was agreeing with you.
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November 11, 2009, 3:46 pmTexasBeatsKaliforniastan says:
So if Texas gov’t can live with their property and sales taxes, but California can’t make ends meet with “reduced” property + sales + state income tax, whats the cure? More/higher taxes? A “free” loan from the people who have the privilege of working in California?
Companies are either straight up moving out, or moving various functions (=jobs) out to Tennessee, Texas, Florida, etc. There goes some of your tax base. Somehow, the state legislature can create incentives for tv/film production in the state, but not for other industries, whats wrong with the picture here?
How about a mandate that the state budget CAN’T grow more than the rate of inflation if the current year is in deficit? Not even cut, but just not grow more than inflation. I’m not so much about who caused the problem before, as what to do moving forward.
Redistricting California can also help in putting less extreme pols from both sides. That may have to be re-visited again if the state gov’t persists in antagonizing its employers.
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November 11, 2009, 5:29 pmChris Reed says:
Dilan Esper thinks with sheer repetition he can just bully those who disagree with him into submission. Here is his original contention:
Dilan Esper writes ...
“The bottom line is that NO government can function based on a system where there are strict limits on taxation and mandatory spending.”
This is a crock. There is no “mandatory spending.” There is one “strict limit” on taxation — on property.
All other taxes can be raised on the same two-thirds vote required to adopt a state budget. All initiative-imposed spending mandates can be suspended by the same two-thirds vote required to adopt a state budget.
Dilan won’t address the fundamental fallacy of his premise. There is no “mandatory” spending. There is no across-the-board limit on tax increases.
He just goes on and on and on, however, ducking the fact that his basic premises are incorrect.
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November 11, 2009, 6:31 pmDilan Esper says:
This is a crock. There is no “mandatory spending.” There is one “strict limit” on taxation — on property. All other taxes can be raised on the same two-thirds vote required to adopt a state budget. All initiative-imposed spending mandates can be suspended by the same two-thirds vote required to adopt a state budget. Dilan won’t address the fundamental fallacy of his premise. There is no “mandatory” spending. There is no across-the-board limit on tax increases.
Chris, you are arguing in bad faith. I don’t need to respond to intellectually dishonest people.
How about a mandate that the state budget CAN’T grow more than the rate of inflation if the current year is in deficit?
Conservatives can try 1000 different variations on “starve the beast”, and it still won’t work. The way to cut taxes is to CUT SPENDING. Not to create automatic mechanisms or rely on court rulings or impose limitations on revenue or strip money away from local governments. CUT SPENDING. Spending decisions drive taxation decisions. If you can keep spending low by cutting specific programs, you can keep taxes low. If you can’t, no artificially imposed mechanism is going to substitute for the lack of fiscal discipline.
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November 11, 2009, 6:50 pmChris Reed says:
Dilan, what are smoking? I’m asking you to defend your assertions ...
“The bottom line is that NO government can function based on a system where there are strict limits on taxation and mandatory spending.”
... How is that intellectually dishonest?
There is one tax (property) that is strictly limited. The “mandatory spending” you claim is suspendable on the same two-thirds vote it takes to adopt a budget.
How am I being intellectually diehonest?
How?
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November 11, 2009, 9:03 pmChris Reed says:
Excuse the typos in the last post.
I know expecting coherence and fairness here is a long shot. I shouldn’t expect Dilan to honestly defend his claims.
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November 11, 2009, 9:06 pmTracy W says:
Dilan Esper:
1. So you’re redefining your argument again. First we had “There’s no accepted economic theory ... not even right-wing economists believe that”. Then we had a redefinition to “among economists who are not discredited cranks..”, now we have “peer-reviewed, academic economists”. Notice that Dilan didn’t start off restricting his claim to economists, he said “there’s no accepted economic theory...” Only when I present evidence that Margaret Thatcher and Ruth Richardson did accept an economic theory does Dilan redefine his claim to “economists who are not discredited cranks”, and then again to “academic peer-reviewed economists...” Nor has Dilan attempted to show that Roger Kerr is not an economist.
Also notice that Dilan has not attempted to provide any evidence supporting his claim that economists, apart from discredited cranks, all believe with him.
2. Do you know what “post hoc ergo propter hoc” actually means? It means, in English, “after this, therefore because (on account) of this”. If I was claiming that the economic recovery in NZ and the UK happened in the relevant time periods because the governments cut spending then I would have been committing the post hoc ergo propter hoc. But I was not. Instead I was responding to the belief that government spending should never be cut in a recession is presumably based on the belief that slashing government spending during a recession will cause the recession to deepen. However the UK and NZ slashed government spending during a recession and the economies started to recover at that point. Now correlation does not prove causation, but a lack of correlation does indicate a lack of causation. If it was always a bad idea to cut government spending in face of a recession then we would expect to always see the economy worsening when that happened. But in at least two cases we saw the opposite. This does not prove that cutting government spending in the face of a recession is always a good idea, but it does create a lot of problems for any economists who believe that it is always a bad idea to cut government spending in the face of a recession.
This is why I question your understanding of the “post hoc ergo propter hoc” idea.
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November 12, 2009, 4:41 amTracy W says:
Whadda you know, you hit post and then only discover the links you were looking for.
Economists saying there are some arguments for cutting government spending in a recession, or in their terminology: “expansionary fiscal consolidation”.
See Antonio Afonso, European Central Bank: Expansionary Fiscal Consolidations in Europe: New Evidence, at http://www.ecb.int/pub/pdf/scpwps/ecbwp675.pdf
Gabriele Guiduice, Alessandro Turrini, and Jan Veld, Non-Keynesian Fiscal Adjustments? A Close Look at Expansionary Fiscal Consolidations in the EU , http://www.springerlink.com/content/3r54828624lt2785/
Now what logical fallacy will Dilan Epser use to respond to this one? Earlier I would have bet on another case of the No True Scotsman Fallacy, but his misapplication of the post hoc ergo propter hoc fallacy shows some creativity.
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November 12, 2009, 5:05 amTexasBeatsKaliforniastan says:
Good, we agree that California needs to cut spending, so lets start with getting rid of the useless agency CARB, and paycuts for all gov’t employees so they are more inline with other states. Get rid of the ridiculous 100K+/yr pensions (how about some partial iou’s for those people eh? pay them 60k and the rest in iou’s). Perhaps its time for California to follow the tax and spending policies of Texas. Do away with prop 13, AND state income tax. Enact a law dictating shorter legislative periods. The less the pols “work”, the less damage they can cause.
I disagree that starving the best does not work. It doesn’t work in California because the pols keep coming up with ways to spend more than what taxes bring in. Close those loop holes, and maybe we’ll finally see some spending cuts.
However, with the way the pols are in Calif., its doubtful any of these ideas will come to pass. Which is why its time for the people to put redistricting on the ballot again, and give the more center-right/left folks a chance.
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November 12, 2009, 10:18 amDilan Esper says:
Chris:
I answered your points above. And you came back and lied about what I argued. There’s no need to address you further and I won’t.
Tracy:
You need to think harder about what the post hoc fallacy means. For all you know, the recoveries that you are pointing to were externally caused and would have been faster and stronger but for the spending cuts.
In any event, look, I realize that conservatives are always going to claim that spending and taxes should be cut under every situation (except military spending and tough on crime laws, which apparently don’t count as part of the budget). But the reality is that Keynes’ theories are widely accepted in the economics profession, you haven’t disproven that, and your materials really fall under Upton Sinclair’s category of things people have a hard time not believing when it is in their interest to believe them.
By the way, what recessions are to conservative ideology, expansions are to liberal ideology. Liberals see all that tax money coming in and the last thing they want to do is save it, but that’s what Keynes said we needed to do.
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November 12, 2009, 2:04 pmTracy W says:
Well I wouldn’t use a strong word like need, but it’s good for me. And in this spirit I thank you for your efforts along this line, trying to explain to you what the post hoc fallacy is in as simple language as I can is really refining my own understanding.
This is theoretically possible, which is why I did not say that the recoveries disproved Keynesian stimulus, but instead “a lack of correlation does indicate a lack of causation” and “it does create a lot of problems for any economists who believe that who believe that it is always a bad idea to cut government spending in the face of a recession.”
The reason it creates a lot of problems for economists who believe that it is always a bad idea to cut government spending in the face of a recession is that if they adopt your response of saying well the recovery “would have been faster and stronger but for the spending cuts” they are turning Keynesian stimulus into an idea that is non-disprovable and thus non-scientific.
I hope your knowledge of the post hoc fallacy benefits from this explanation even more than mine did from explaining to you.
But the reality is that Keynes’ theories are widely accepted in the economics profession, you haven’t disproven that…
I have however disproven your claims that:
1. “There’s no accepted economic theory that says it’s a good idea to slash government spending during a recession. Not even right wing economists believe that.”
2. “Actually, among economists who are not discredited cranks (i.e., not Austrians), Keynesian stimulus is basically universally accepted. “
And your implicit claim that:
3. “peer-reviewed, academic economists” never believe that it’s a good idea to slash government spending during a recession. (I say it’s implicit, because your response to my disproof of your first claim was to say that politicians are not peer-reviewed academic economists.)
I am glad that I have moved your views away from the false one that “peer-reviewed, academic economists” never believe that it’s a good idea to slash government spending during a recession to a more realistic idea that Keynes’ theories are widely accepted in the economic recession. Even if I can never get you to understand what a post hoc fallacy is, at least I feel that I have accomplished something in this discussion.
and your materials really fall under Upton Sinclair’s category of things people have a hard time not believing when it is in their interest to believe them
I admire your intellectual honesty, but I must confess to some curiosity. Why is it in your interest to believe that it’s always a bad idea to cut government spending in the face of a recession?
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November 12, 2009, 4:30 pmRyan Waxx says:
You’d have to be pretty delusional to conclude that sorting people by repeat felonies isn’t at least as valid an approach as some vague “by dangerousness” (read: when the judge feels like it) standard.
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November 12, 2009, 4:59 pmChris Reed says:
Dilan is beyond hope.
I asked him to defend his assertions ...
“The bottom line is that NO government can function based on a system where there are strict limits on taxation and mandatory spending.”
... in light of the fact that there is only one tax (property) that is strictly limited and in light of the fact that the “mandatory spending” he refers to is suspendable on the same two-thirds vote it takes to adopt a budget.
What is the lie you are referring to?
On the other hand, why am I wasting my time dealing with someone as nitwitted as you?
Goodbye, Dilan, you birdbrained infant you.
How am I being intellectually diehonest?
How?
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November 12, 2009, 5:59 pmDilan Esper says:
The reason it creates a lot of problems for economists who believe that it is always a bad idea to cut government spending in the face of a recession is that if they adopt your response of saying well the recovery “would have been faster and stronger but for the spending cuts” they are turning Keynesian stimulus into an idea that is non-disprovable and thus non-scientific.
It isn’t quite that. Rather, we have some very specific examples in history that led to the development of the General Theory, examples that rather cleanly demonstrated specific problems that resulted from cutting spending (and especially pro-cyclical cuts in spending) during downturns.
Now, is it possible that the consensus is nonetheless wrong? Sure. It isn’t likely, but it’s possible. But it is going to take more than a couple of isolated examples of governments cutting spending and a recovery happening anyway to establish that.
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November 12, 2009, 6:38 pmDilan Esper says:
Chris:
Your last post, in tone and (lack of) substance, speaks for itself.
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November 12, 2009, 6:40 pmDilan Esper says:
You’d have to be pretty delusional to conclude that sorting people by repeat felonies isn’t at least as valid an approach as some vague “by dangerousness” (read: when the judge feels like it) standard.
What do you mean by “at least as valid”? There’s several goals here– incapacitation and deterrence, sure, but also cost-effectiveness (we could lock every offender up for life and have absolute incapacitation, but I assume you would agree that was a bad idea) and rehabilitation.
3 strikes laws preclude the system from making any attempt at differentiation, and commit the state to spend a ****load of money including locking up people 20 or 30 years after their last crime. Differentiation is difficult and sometimes mistakes are made. But 3 strikes just makes all the mistakes in the other direction and is a budget-buster.
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November 12, 2009, 6:42 pmDilan Esper says:
Tracy W:
I don’t understand the tit-for-tat nature of your posts. The reality is that the mainstream of economics thinks that you are selling snake oil. Citing a couple of dissenters and some obscure example that falls within the post hoc fallacy, and getting all cutesy about the Upton Sinclair quote, doesn’t change this. Your arguments are similar to climate change denialists or creationists who choose the 1 or 2 scientists, somewhere, who buck the consensus. Heck, even Holocaust deniers use the same technique.
What you really have proven is that if you look hard enough, I guess you can find someone to advocate anything. Meanwhile, thankfully, our President and the Democrats in Congress reject the deniers and are trying to spend money to fight the recession and put people back to work.
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November 12, 2009, 6:46 pmChris Reed says:
Dilan, you made a claim that is untrue.
You refuse to admit it.
There isn’t a blanket cap on raising all taxes in California, as you said. Only on property taxes.
The voter-approved mandated spending can be suspended by the same two-thirds vote of the Legislature that it takes to pass a budget. It is not 100 percent locked in.
You won’t defend your original assertions. Why? You can’t.
So you pretend to have answered them.
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November 12, 2009, 7:25 pmTracy W says:
Dilan Esper
Clearly I am not doing well in explaining the ““post hoc ergo propter hoc” fallacy to you. My apologies. Just because problems resulted in some cases after spending was cut during a downturn does not prove that the cutting spending caused the problems, any more than the recovery in the UK and in NZ after the government cut spending during the recession means that the government cuts in spending caused the recoveries. Can you see the parallel reasoning? Do you have any questions about the post hoc fallacy?
Jolly good thing then that rather than citing some obscure example I cited some rather famous examples (there is nothing obscure about Margaret Thatcher’s time as PM of the UK, and NZ’s reforms during the 1980s Labour Government and the National Government in the early 1990s are well known amongst macroeconomics, and of course I explained to you how they didn’t fall into the post hoc fallacy in my previous post), and of course you yourself can see that I found more than two dissenters. Roger Kerr, Anotonio Afonso, Gabriele Guiduice, Alessandro Turrini, and Jan Veld, that’s five by my count, and I didn’t exactly bother with an exhautive list.
As for cutesy, I suppose cute is in the eye of the beholder. You introduced the Upton Sinclair category, I presumed as an explanation of why you changed your mind about what every non-crank economist believed, and your way of doing it made me wonder why your own interest was originally tied up in it being a bad idea to cut government spending in a recession. I’m still curious, can you explain it?
Ah the ad homimen fallacy! I wondered when that was going to come up.
What you have forgotten is that you made the following claims:
1. “There’s no accepted economic theory that says it’s a good idea to slash government spending during a recession. Not even right wing economists believe that.”
2. “Actually, among economists who are not discredited cranks (i.e., not Austrians), Keynesian stimulus is basically universally accepted. “
And your implicit claim that:
3. “peer-reviewed, academic economists” never believe that it’s a good idea to slash government spending during a recession. (I say it’s implicit, because your response to my disproof of your first claim was to say that politicians are not peer-reviewed academic economists.)
You were making absolute claims, so one dissenting economist who meets your criteria was enough to disprove the claims you have quoted. And of course I found more than 1 or 2, but 5.
Nope. May I suggest reading Karl Popper? No amount of positive examples can confirm a theory, one negative example is sufficient to disprove it.
Whether we should be thankful or not depends on whether it’s a good idea to increase government spending during this recession.
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November 13, 2009, 2:31 amDilan Esper says:
Tracy:
You, like Chris, aren’t worth arguing with.
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November 13, 2009, 2:56 amTracy W says:
Dilan Esper, I am disappointed in your attitude. I have already brought your views closer to reality, leading you to abandon your false belief that:
““Actually, among economists who are not discredited cranks (i.e., not Austrians), Keynesian stimulus is basically universally accepted. ” and brought you to what you yourself recognise as a view closer to reality; to quote you again:
“But the reality is that Keynes’ theories are widely accepted in the economics profession...”
And now you say I am not worth arguing with. So you think that bringing your views closer towards reality is not worth doing?
Anyway, although you may not find me worth arguing with, I found it very worthwhile arguing with you. Attempting to explain what the “post hoc ergo propter hoc” fallacy is in response to your varied misconceptions, has refined my own understanding, even independently of any effect my efforts may have had on yours, and I have found out the term “expansionary fiscal consolidation” which might help my searches in the future. So I thank you for your contributions to my education and will be happy to argue more with you in the future if a suitable topic presents itself. And again, if you still have some questions about the details of the “post hoc ergo propter hoc” fallacy, please ask me and I will do my best to answer them.
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November 13, 2009, 6:13 amChris Reed says:
We have a consensus: Dilan is an idiot!
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November 13, 2009, 1:08 pm