Coyote Blog

Over the last several years, there have been several proposals to split California into more than one state (I know what you are thinking:  Good God, more Californias?)  There was a proposal last year to split it into 6 states.  This election, there is a proposal on the ballot to split it into 3 states.  I am not sure what the entire process would be, but as a minimum either proposal would have to be approved by Congress.  For that latter to happen, the 3 state plan is probably more likely to get approved than the 6 state plan because it is an odd number.  Seriously.

For the rest of us, the main effect of a California split is that its current citizens would get more US Senators.  Each state gets 2 Senators so California would go from 2 to 6 Senators in a three-state proposal and 2 to 12 Senators in a 6-state proposal.  This also means that California would get some extra Electoral College votes, since a state's votes is the sum of its Representatives and Senators.

To some extent, this debate will be a flashback to the mid-19th Century when statehood decisions were made based on the north-south balance in the Senate.   This time around, it will be about shifting, or perhaps more accurately not shifting, the Republican-Democrat balance.  Right now CA is perceived by all to be +2 Senate seats for the Democrats for most of the foreseeable future.  The problem with even-number splits such as 2 or 4 or 6 states from CA is that they are almost guaranteed to shift the CA contribution away from +2D.  Take the two state solution.  If they were split north and south, you would likely get two blue states and the +2D from CA in the Senate would become +4D.  Republicans would barf.  If you split the state east-west, you might be able to create a red state and a blue state such that CA would shift from +2D to neutral, an effective gain for R's.  Democrats would hate this.  Neither party in Congress is going to agree on a solution here.  There is no way to gerrymander the thing without some party making a gain.  This is generally true for all even number state solutions.

Odd number state solutions could also be problematic, but they could also work depending on how the lines are drawn (making this probably the most watched gerrymander in US history).  A three state solution that creates two blue states and a red state would keep CA's total effect on the Senate as +2D.  I am not sure any split would clear Congress but this is probably the only possibility that might do so.   Two coastal states and one inland state would probably achieve this result, but I believe the current proposal is for three states split north to south, so a large heavily blue coastal city or two is in each state, which could push the thing into being +6D which the Senate would never buy short of a Democratic majority and elimination of the filibuster (which for a generation of +4 votes in the Senate they might consider).

All of this glosses over huge local problems in CA itself, like

• How do you split up state debts, such as Calpers obligations and assets
• Will current state officeholders (e.g. the governor and AG) who are incredibly powerful and have historically used these positions as springboards for national office (e.g. Kamala Harris, Jerry Brown, Ronald Reagan) accept a huge reduction in their power and budget
• If there is a red state created, how will blue urban areas put into this red state react?  (the opposite issue already exists with red rural areas already used to living in a blue state).

"Everybody with half a brain is coming to California"

-- Governor Jerry Brown

A new California mandate on employers I completely missed:

California Governor Jerry Brown signed a law that permits as many as 6.3 million private workers without a pension plan to set aside retirement money for management by the state.

It is the first state-run pension program for nongovernment employees and may add as much as $6.6 billion to funds managed by the California Public Employees’ Retirement System, the biggest U.S. pension. Calpers, as the fund is known, has assets of $242 billion.

The law is aimed at businesses with five or more employees that don’t offer pensions or 401(k) savings programs. The law requires companies to contribute 3 percent of a worker’s salary to a retirement account. Workers will be enrolled in the program unless they choose to opt out.

This is just insane, and I don't remember any public debate on it.  Given that the government already has a forced retirement program with a much higher percentage contribution (Social Security with 16% of wages when including the employer piece), my guess is that this is meant as a bone for or a bailout of Calpers.  Calpers wields enormous political power in the state, and it is entirely believable that they alone are behind this.  Calpers is about to be forced to acknowledge that it is billions short of what it needs to cover future pension obligations because it has been assuming unrealistically high returns form its investments.  Without those high returns, more money needs to be put in the fund to cover public employee pensions that march to ridiculous levels.

I have skimmed the law, and there is nothing in there about what returns will be paid to these new private employees.  My guess is that private contributions will be used as a slush fund to make sure public employees get paid, because they DO have defined benefits, as well as a justification to pay Calpers managers more money.  I can absolutely guarantee that when push comes to shove and Calpers is short of money, private employees will see their benefits rolled back and their contributions going to public employees' pockets.

This is also insane for two other reasons:

1. In California, there has probably been a zillion lawsuits with the state punishing private entities for running "opt-out" rather than "opt-in" systems.   Having to explicitly opt out to keep ones money is a scam only the government is allowed to get away with
2. In our company, all but a few of our workers are already retired, working part-time for us to keep busy.  The vast majority of our employees, for example, are on Social Security and many also have private pensions.  So why am I forced to set up all the expensive infrastructure to provide 401K contributions to people who are all drawing down their 401k's?

Don Boudreaux asks:

Here’s a quick question for anyone who takes seriously politicians’ pronouncements about what particular industries are “vital” or are “of the future” or are “crucial to meeting consumers’ needs”: Why do virtually none of these politicians, when they leave office, found their own non-political firms? Why do virtually none of these politicians, when they leave office, found their own non-political firms – firms that specialize neither in granting clients access to incumbent politicians nor in projects that depend upon getting subsidies or other favors from those same politicians?

This question occurred to me a few days ago upon hearing that former president Bill Clinton was off somewhere talking about something to some group concerned about some issue.  His career now is to make lots of money as a sort of high-brow social healer – to emit platitudes, attend state funerals, and (pardon my switch of imagery) be a show-pony for politically correct causes.  The post-Oval Office careers of every other recent president – to the extent that they haven’t simply retired to the golf course or the study – have been largely the same, with the groups and causes served by their attentions differing only as one former president’s political affiliations differ from those of another former president.

One guy comes to mind who had a sniff of the White House and then went on to run his own business:  George McGovern.  And though its just a small Inn that will never be even a blip on the economic radar screen, it has driven McGovern dangerously close to being a libertarian.  Actually, that might be a misnomer.  He probably is still a liberal, but from the days when liberals actually cared about individual freedom and saw aggregations of power in the government to be at least as scary as those in the private world.  Take this for example:

Under the guise of protecting us from ourselves, the right and the left are becoming ever more aggressive in regulating behavior. Much paternalist scrutiny has recently centered on personal economics...

Since leaving office I've written about public policy from a new perspective: outside looking in. I've come to realize that protecting freedom of choice in our everyday lives is essential to maintaining a healthy civil society.

Why do we think we are helping adult consumers by taking away their options? We don't take away cars because we don't like some people speeding. We allow state lotteries despite knowing some people are betting their grocery money. Everyone is exposed to economic risks of some kind. But we don't operate mindlessly in trying to smooth out every theoretical wrinkle in life.

The nature of freedom of choice is that some people will misuse their responsibility and hurt themselves in the process. We should do our best to educate them, but without diminishing choice for everyone else.

The only other place I have heard this recently on the Left was, perhaps not coincidentally, from that other child of 60's liberal politics, Jerry Brown

To the Members of the California State Senate:

I am returning Senate Bill 105 without my signature.

This measure would impose criminal penalties on a child under the age of 18 and his or her parents if the child skis or snowboards without a helmet.

While I appreciate the value of wearing a ski helmet, I am concerned about the continuing and seemingly inexorable transfer of authority from parents to the state. Not every human problem deserves a law.

I believe parents have the ability and responsibility to make good choices for their children.

Sincerely,
Edmund J. Brown

Postscript:  The answer to Don's question is one of two.  Either a)  They are not up to it.  And/or b) There is a hell of a lot more wealth that can be captured through the exercise of government power than through private enterprise.

It would be difficult to find many folks who are more paranoid protectors of privacy information than I am.  But I have to say the tone of this is really pathetic.  (via Overlawyered)   Seriously, how many people think these folks feel truly harmed and how many think they are acting in order to try to score a tort payoff?

Consumers are hoping to cash in on last week's state Supreme Court ruling that it's illegal for retailers to ask customers for their ZIP Codes during credit card transactions, except in limited cases.

More than a dozen new lawsuits have been filed against major chains that do business in California, including Wal-Mart Stores Inc., Bed Bath & Beyond Inc., Crate & Barrel andVictoria's Secret. More filings are expected in the coming weeks.

The flurry of litigation stems from a decision last week againstWilliams-Sonoma Inc. in which the state high court ruled unanimously that ZIP Codes were "personal identification information" that merchants can't demand from customers under a California consumer privacy law.

This rush to court is pathetic on a number of levels

• Zip code is personal, really?  Do you believe that?
• Just say no.  Seriously.  I do it all the time -- I get asked for a phone number or a zip code and I always answer "no, sorry."  You know how many retailers have decided they did not want to make a sale to me at that point?  Zero.
• It's ex post facto law.  Nowhere was it made clear to retailers that the law barred collecting zip codes.  Not until a group of judges effectively made this individual practice illegal did it become so, and then it was enforced retroactively on stores.  If the legislature wants collecting zip codes to be illegal, it should have written in the law that collecting zip codes is illegal.  Or, as a minimum, liability should begin on the day after the court decision.  Suing someone for taking a zip code last year when it only became clear this week it was illegal is classic ex post facto law.
• Ira Stoll has a funny comment - guess what the first piece of information Jerry Brown's web site asks for?