Crony capitalism is an economy in which businesses thrive not as a result of risk, but rather as a return on money amassed through a nexus between a business class and the political class. This is done using state power to crush genuine competition in handing out permits, government grants, special tax breaks, or other forms of state intervention. –Wikipedia, Feb. 2019

If the goal of public policy is to optimize the role of government, cronyism must be identified and curbed wherever possible. Cronyism wastes the limited resources of governments, at the same time as it reduces the efficiency of the private sector by using subsidies and other incentives to undermine healthy competition.

The harm caused by crony capitalism can best be illustrated by example. In California, cronyism is a major culprit in one of the worst policy failures in recent decades, the housing and the related homeless crisis.Several types of cronyism played into California’s housing debacle. The most significant was cronyism that took the form of regulations that favored the wealthiest, most established… Read More

Earlier this week the California Supreme Court ruled in the caseCalFire vs CalPERS. The case challenged one of the provisions of California’s 2014 pension reform legislation (PEPRA) which had eliminated the purchase of “Airtime.”

This was the practice whereby retiring public employees could purchase “service credits” that would lengthen the number of years they worked, which would increase the amount of their pensions, even though they hadn’t actually worked those additional years. While the amount these retirees would pay was always estimated to cover how much they’d eventually get back, with interest, in their pensions, in practice these estimates were always too low.

The plaintiffs in the case argued that airtime was protected by the “California Rule,” which, the argued, prevents pension benefits from being reduced unless some other benefit of equal value is offered in return. But… Read More

Here’s a helpful yet limited survey — comparing the states’ income tax paid on earned income — combined with the federal income tax. The comparison uses $50K and $200K salaries.

CA has a highly progressive state income tax, so we don’t rank TOO badly at $50K. At $200K, CA is a close second to Oregon — the worst state.

Indeed, at $200K, less than $100 tax separates these worst two states — they are essentially tied. CA moves to #1 above $200K (not included in the article), and the difference between the two states becomes more pronounced, the higher one’s income is above that $200K benchmark.

This comparison counts only earned income — capital gains and dividends are treated differently by many states (NOT California). And it understandably doesn’t include other taxes — notably property taxes and sales taxes. That would constitute a MAJOR project with lots of logistical… Read More

The new 2019 Tax Foundation report on state corporate income taxes ranks California as the 7thhighest rate — 8.84%. It’s a tax rate that starts at $1 of profit — some other high corporate tax states have tiered rates that can provide some relief for the smaller corporations.

But more important, when looking at California’s economic competitors — those states west of the Mississippi — California has THE highest corporate income tax rate (Alaska is not an economic competitor of California).

Not included is the fact that — unlike most other states — CA tries to tax corporations for money earned in other states as well as earnings in California. This is just one more reason why it’s folly for a company to establish a business operation in the Golden State.

Retailers have no choice — CA usually is too big a market to ignore. But non-retail companies generally are not keen on putting… Read More

America’s educational system is breaking, and the primary culprit is the diversity bureaucracy, now an industrial strength special-interest group that grows more powerful and more expansive every year. For years they have dominated America’s social sciences and humanities, and now they’re launching an assault on the hard sciences. If they are not stopped, they eventually will destroy America as a first-world democracy.

They’re well on their way. But it isn’t “racism”—the currency of the diversocrats—that is denying opportunities to “people of color.” It is failures in the social culture of the inner cities, even more than aggregate economic disadvantages, or the lousy, unionized public schools, that result in the chronic academic underachievement of their children.

There’s no money to be made, or votes to be had, however, in telling this tough truth, even though it might do a lot of good if enough people said it or heard it. The commitment to “diversity” in American university enrollment is absolute and all-powerful, despite the… Read More

In September 2016, Michael Anton published an influential essay entitled “The Flight 93 Election.” It compared the 2016 election to the tragic Flight 93 of 9/11/2001. Anton’s essay opened with this:“2016 is the Flight 93 election: charge the cockpit or you die. You may die anyway. You—or the leader of your party—may make it into the cockpit and not know how to fly or land the plane. There are no guarantees. Except one: if you don’t try, death is certain.”

California’s GOP faced a similar existential choice this weekend at their semi-annual state convention, when they had to elect a new party chairman. California’s GOP, like Flight 93, faces certain death. Many would say it is dead already. A new term has been coined to describe the status of the GOP in California, a “mega minority.” Whereas a “super minority” means your party holds less than one out of every three offices, a “mega minority” means your party holds less than one out of everyfouroffices. That would… Read More

Below are the top ten states in their PERCENT of population growth this past year. Economics seems to play a major role in this growth.

The top five states are all “right to work” states — eight of the top ten. Consider that 27 of the 50 states are right to work states. One “top ten” fast growing state that is NOT a right to work state is Washington — but it has zero state income tax. Only Colorado is growing without a strong economic advantage. Must be that Rocky Mountain high.

Academics have correctly pointed out that the right to work law in itself may not be the driving force in a state’s growth. But these researchers also point out that such states all have a more business friendly climate than do the non-right to work states. In other words, “right to work” is a good indicator that the state likes businesses.

California? As a very anti-business state, the CA population grew 0.4%. The national average is 0.6% — 50% higher than California.

BTW, four of the BOTTOM five states are labor union-controlled states. They have no right to work laws.

Oddly… Read More

NOTE:This is an updated, expanded article — using December, 2018 numbers.

A common misconception is that Prop 13 protects only the “old people” — that the new home buyers gain little benefit from Prop 13. It’s an educational (and scary) exercise to calculate what California homeowners’ property taxes would be if Prop 13 had NOT passed in 1978 — and no subsequent reforms in property taxes occurred (a fair assumption, given Democrat dominance of the state legislature since 1970).

Most people have forgotten the following crucial aspect of the old CA property taxes: In 1977, the average property tax rate in California was 2.67 percent.Proposition 13 fixed the rate at 1 percent of the purchase price[plus a 2% annual increase, or the COL, if it’s less].

On top of the 1% base property tax rate are whatever additional taxes are approved to cover indebtedness, such as bonds — plus annual assessments for special districts. Although the additional taxes rate varies around the state, it generally runs at about two-tenths of 1 percent, setting the overall Proposition 13 rate… Read More