Former LA Mayor Richard Riordan on Schwarzenegger, Unions, and Bankrupt Cities
"Throughout the country, 90 percent of cities and states are going to go bankrupt within the next five years, probably many of them sooner," says Riordan, in his interview with Tim Cavanaugh. "Nobody wants to sell them bonds. Nobody wants to lend them money."
Taxing the rich isn't the solution, by the way. Being friendly to business is.
The legislature is controlled by the unions, Riordan said, which made it impossible for Schwarzenegger to do anything.
The legislature is controlled by the unions, Riordan said, which made it impossible for Schwarzenegger to do anything.
Yes. That said, Arnold made missteps of his own that made things harder. The large set of failed propositions he backed early in his tenure (remember when people were talking about whether the constitution should be amended to permit non-native U.S. citizens to become president. Of course, we've got one now, anyway) seriously misread his ability move voters, and cost him support in the political center.
My guess is that he also lacked much interest in stroking the egos of legislators, and that because he was not a politico with long term ties to that system, he lacked real allies in the legislature and the ability to arm-twist to keep his party in line when he made deals with the Democratic majority.
Arnold's one reform that may help in the long run is the change in our redistricting laws. It's too early to tell. Otherwise, his governorship is an example of the weakness of that office in California, and a caution to non-politicos who run for high office with a reformist agenda.
Christopher at January 14, 2011 8:16 AM
Arnold definitely made missteps of his own, and was an enormous disappointment. Also, California's "safe" districts, gerrymandered to the max, make it difficult to pass any reformative legislation.
Amy Alkon at January 14, 2011 10:33 AM
When a legislator knows he can simply out-wait a term-limited governor, it makes the governor weak. When one party has overwhelming control over the state, there is no chance of a voter rebellion (like we saw at the national level in 2010).
This is the state of things in California and this gives the legislators no incentive to cooperate or compromise with even a popular governor (which Arnold was not).
All this means Jerry Brown is not going to have the success he imagines as his due for bringing the governorship back to the Democrats (after it was lost by his former chief of staff, Gray Davis). Despite his being a fellow Democrat, the legislators will oppose him if he tries to take on the unions, reform education, control immigration, or make any other meaningful and long-lasting reforms.
Conan the Grammarian at January 14, 2011 11:29 AM
Arnold was popular, initially. But the 2005 special election hurt him when his initiatives defeated, and solidified opposition against him.
I think Jerry Brown certainly has his work cut out for him. He'll need some big wins early on if he want to do anything serious about unions or education (I'm certain immigration control is not on the list). As with Arnold; whether he succeeds or fails will be all about his ability to get a reasonable budget passed. Recent history suggests that is vanishingly unlikely.
Christopher at January 14, 2011 1:54 PM
California is lost.
We can just hope we can get Amy, Harrison Ford, Gene Hackman, and several other notable people out before the collapse.
When the state votes back in the same idiots that led the state to the point they are issuing IOU's -- you are lost.
Jim P. at January 14, 2011 7:58 PM
Being "friendly" to business (i.e. lowering their taxes; let's call it what it is) only results in them hiring more...overseas.
Patrick at January 15, 2011 12:28 AM
Amy Alkon
http://www.advicegoddess.com/archives/2011/01/14/former_la_mayor.html#comment-1822514">comment from PatrickActually, it prevents them from leaving California, for one. A friend of mine has done well for himself -- opened a law firm, hired a bunch of young associates (and he's good to them), and does substantial charity work, but he's paying huge amounts in taxes, and is looking to leave the state for a state with lower taxes: Tennessee, probably. He will shut his business down when he goes. Bye-bye jobs! And bye-bye tax money.
Amy Alkon at January 15, 2011 1:00 AM
Being "friendly" to business (i.e. lowering their taxes; let's call it what it is) only results in them hiring more...overseas.
You have the misconception that the government has a right to have the money that you (or your company) has earned from your labor.
Let's flip that around -- you have done your labor -- the government will let you have what is leftover after they have taken what they need. What if they need more? Then you get less. How much is reasonable? What can you survive on?
The government is "of the people, by the people, for the people." That means you own the government -- they don't own you and your labor.
Jim P. at January 15, 2011 5:52 AM
Amy, if that day ever comes, I will personally drive out there and fetch you and Greg and however many of your friends we can fit in the car.
Patrick: I think you're missing the point. A lot of that work is going overseas in part because of high taxes. Keep in mind that the cost to the employer to employ an American worker is roughly double the worker's gross pay, and then of course the worker's take-home pay is significantly less than that. Yeah, you can rail about the proverbial third world worker who earns $1 a day, but what gets overlooked is that when the employer pays that worker $1, that worker takes home $1 or pretty close to it.
My stepfather owns a small business. Some of their products are manufactured in China. He isn't crazy about it. Getting products shipped from overseas is a PITA; it's hard to supervise when your manufacturing is on the other side of the world, and dealing with Third World governments is always dicey. So why does he do it? Because if he didn't, his competitors would kill him on cost. Obviously, in the current economy, everyone is looking to economize, and that includes his customers. Yes, the Chinese factory has some quality problems. You know what? The American factory he was using had quality problems too. The Chinese factory isn't better, but it's not worse either.
And then there's the other thing you didn't mention: regulation. The company my wife works for has an explicit line item for "cost of compliance", and they figure that it's about 10% of their gross. Most of this is not quality-related; it's simply the cost of keeping up licenses and permits, compiling mandatory reports, and interfacing with regulatory agencies. They have people who are designated specifically as compliance officers. Think about that: a group of employees whose sole job is to interface with the government.
As you are aware, the sole growth sector in the American economy is government. In the aerospace industry, while contractors are laying off left and right, the DoD is planning to hire 30,000 people over the next two years (there ya go, BOTU, I gave you a little bit of ammo). I work for a contractor, on a project that employs about 100 people, and over the past year we've had six people that I can think of quit to take civil service jobs. Because that's where the opportunity is these days. What does that say about the state of our private sector?
Cousin Dave at January 15, 2011 8:50 AM
As you are aware, the sole growth sector in the American economy is government.
Not so. The tech sector is booming right now, at all levels. Big companies - e.g., Apple, Intel – newer stars – e.g., Facebook, Demand Media, Groupon, Twitter – and hot startups are growing like crazy. If you've got programming skill or tech product management skills, you've got a good job. If you've got a good idea, you can probably get it funded unless your people skills are lacking.
Christopher at January 15, 2011 10:47 AM
"We can just hope we can get Amy, Harrison Ford, Gene Hackman, and several other notable people out before the collapse."
I think you would be amazed at how many of the Hollywood celebrities are actually official residents of states other than California even though they may work there and pay taxes on what they earn there. Last I heard Harrison Ford is actually a Wyoming resident, and owns a place in Jackson Hole. I think this has been true for the last ten or 15 years. No state income taxes in Wyoming. :-)
Isabel1130 at January 15, 2011 6:23 PM
"Being "friendly" to business (i.e. lowering their taxes; let's call it what it is) only results in them hiring more...overseas."
Like South Carolina (Bridgestone, BMW, Pirelli, Michelin...). Thank you!
And, next time you walk into Wal-Mart, be sure to buy the American-made merchandise.
What? You voted with your wallet. What do you mean, you can't find anything made in the USA?
Radwaste at January 15, 2011 7:04 PM
What? You voted with your wallet. What do you mean, you can't find anything made in the USA?
That is because there are no or limited tarrifs on stuff made in overseas. In addition companies have billions offshore in tax friendly countries that will not bring it back into the U.S. because the government will tax the shit out of it.
Jim P. at January 15, 2011 8:22 PM
I got an American-made snowboard.
brian at January 16, 2011 7:41 AM
"Not so. The tech sector is booming right now, at all levels. Big companies - e.g., Apple, Intel – newer stars – e.g., Facebook, Demand Media, Groupon, Twitter – and hot startups are growing like crazy."
That's very true, but it actually proves my point. Consider: with the exception of Intel, all of the things you named are essentially facets of the entertainment industry. And the entertainment industry is one of the few industries in America that is not suffering from an onslaught of taxation and regulation. It shows what American industry can do when the government keeps its paws off.
Cousin Dave at January 16, 2011 8:12 AM
"That is because there are no or limited tarrifs on stuff made in overseas. In addition companies have billions offshore in tax friendly countries that will not bring it back into the U.S. because the government will tax the shit out of it."(sic)
Gee, this is what the public wanted, right? They ignored Congress, and elected and re-elected Bill Clinton & Al Gore, who explained how NAFTA was a great idea and Smoot-Hawley wasn't. China got MFN status while John Huang funneled cash. America turned their heads, just as they have recently when asked what they know about the person elected President.
Will Rogers said once that as long as an American can have five gallons of gasoline and a hamburger, he's happy. I doubt that many others have seen that as the keen observation it really is.
Radwaste at January 16, 2011 1:03 PM
Hej, jag tror detta är ett utmärkt blogg. Stötte jag på den på Yahoo, jag kommer tillbaka igen. Pengar och frihet är det bästa sättet att ändra, kan du bli rik och hjälpa andra människor.
new body strumpor at June 2, 2011 2:19 AM
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