The road to serfdom is paved with good intentions, but history has proven that the results are the same.
The California Democrats have put the State of California on the “road to serfdom” through the promotion of a far left agenda that is completely detached from economic reality.
In 1944 Austrian-born economist and philosopher Friedrich von Hayek published “The Road to Serfdom,” which is one of the most influential books on political economy of all time.
Hayek warned of the danger of tyranny that inevitably results from government control of economic decision-making through central planning. Hayek further argued that the abandonment of individualism and classical liberalism inevitably leads to a loss of freedom, the creation of an oppressive society, the tyranny of a dictator and the serfdom of the individual.
Hayek essentially dismantled the long-term viability of a “collective” or “centrally planned” state nearly 50 years before the eventual collapse of the Soviet Union, East Germany and the communist block.
The State of California, at the hands of the California Democrat Legislature and its base, has been on the road to serfdom for quite sometime.
The recent 2015-16 Legislative Session is being hailed by the left as one of the “most progressive” and “far left” accomplishments of all time, and criticized by the political mainstream, business community, and Republicans as an equally big attack on the economy, individual liberty and the state’s business climate.
Some may object to the notion that California’s heavily regulated and taxed economy is “centrally planned,” but that is the direction it has been heading and government control of the California economy has reached a level that has overshadowed private enterprise and the workings of a free market.
The central premise of the current Democrat Legislature is that the State, namely Democrat lawmakers and their political base, know more about what is good for the people of California than the individual.
Furthermore, this Democrat Legislature believes in a heavily regulated, centrally-planned, or socialist economy in which the state controls the economy and tries to produce desired outcomes which including helping “working families” and the “alleviation or elimination of poverty.” Perhaps the most powerful underlying motivations of this Democrat Legislature is to transfer wealth from the individuals and businesses to the Democrat base, which includes the poor but also the state’s public employee unions which control the California Legislature.
Secondly, the Democrat Legislature uses strict regulation of business and the California economy to mandate wage floors, work hours and benefits, employee perks and “environmental” outcomes.
Polling shows that the majority of California voters favor a transfer of wealth from the rich to the poor through “progressive taxation” and some economic and environmental regulation, among other areas. But the current California Legislature has lost touch with the economic realities, and is pursing a “far left” agenda that is damaging to the state’s economy and individual liberty.
Perhaps the most appalling aspect is that they are doing a terrible job at what they are trying to accomplish, namely helping the poor and improving the welfare of the state’s citizens.
Liberal Democrats in the Legislature envision a “socialist utopia” where the farmworkers either own the farms or make as much as the managers. A world where every worker makes a “middle-class income” with great pay and benefits, and a state where there is no carbon emissions or pollution.
But the truth is that the Democrat legislators, with the exception of the public employee unions who reap the majority of the spoils, are actually hurting the very constituencies that they are trying to help.
Economists agree that if you require wage and benefit floors, either the jobs will disappear or the entire business will leave or shut down. Moreover, if you ban the use of carbon and other essential chemicals and means of production, there will essentially be no economy or jobs left to regulate.
For example, the California Legislature’s single most effective method to control pollution was not its cap and trade policy, rather it was the stifling of economic growth and the flight of business activity out of California which in turn produced a huge reduction in greenhouse gas emission in the state—far in excess of what proponents had envisioned.
The reality is that the California economy does not operate in isolation, and both capital and jobs are highly mobile. Excessive taxation and regulation encourage more and more businesses to flee California. And that is what has happened in California as more than 10,000 businesses have left the state since 2008 due to the high cost of conducting business in the state and the state’s worst in the nation business climate, according to a landmark business relocation study by Spectrum Location Solutions.
Furthermore, Democrat legislators are essentially trying to centrally-plan and regulate the 6th biggest economy in the world, arguably one of the most complex economies in the world, even though most if not all Democrat Legislators have a complete lack of any type of professional experience in business or economics.
Moreover, I don’t believe there exists even one Ph.D. economist in the whole Capitol building and surrounding legislative and committee offices, yet Democrat legislators claim they know what is best for the California economy better than California businesses, individuals, and even Ph.D. economists who question their policies.
This is what infuriates the California business community and Republicans. How can Democrats and the labor unions attempt to regulate and tax something that they know little or nothing about? Most California legislators have not likely ever had more than a high school class in economics, and almost none have credentials related to regulatory policy. Even moderate Democrat economists say that the California Legislature is by and large doing a poor job of drafting regulations to minimize negative economic impacts.
California Republican lawmakers acknowledge the limitations of the ability of government to ticker with the economy, let alone try to centrally plan a whole state economy.
But the most discouraging aspect of the California Democrat far left agenda is the rampant “cronyism, government inefficiency, and corruption,” that are inevitable products of “socialist” or “collectivist” regimes. Cronyism is the unfair practice of powerful politicians giving jobs and other benefits to friends and political allies.
The vast majority of the spoils accrue not to the poor and underprivileged but to the state’s public employee unions who bankroll Democrat legislators and the California Democrat Party. Moreover, those who give to the Democrat Party get rich and everyone else gets stuck with the bill.
The most egregious example of this is refusal of the Democrat Legislature to even consider addressing the state’s unsustainable pension system which is already an estimated $1.5 trillion in debt—more than 10 times annual state General Fund spending. Public employees collect six-figure checks while California taxpayers will be footing the bill for decades to come.
Another example is specific “green” industries, hospitals and health care profession, and marijuana industries that are closely aligned with the Democratic Party. These groups contribute heavily to Democrat legislators and the Democrat Party and they get favorable regulatory treatment and even large public subsidies. Moreover, these special interests drive excessive regulation on certain sectors of the economy, which in turn benefit their competitors—essentially a modern day “spoils system.”
Huge inefficiencies exist in California government, but the California Legislature will not even consider even the most basic civil service reforms or education reforms such as merit pay, pay for performance, teacher tenure, and school accountability. The California Environmental Quality Act is used not to protect the environment but as a vehicle for the construction trades unions and environmentalists to exact concessions from legitimate economic development projects.
Many intellectuals believe that Hayek’s classic work “The Road to Serfdom” is as relevant today as when it was first published in 1944. The California Democrat Legislature currently provides us with a great case study on the perils of violating Hayek’s dire warnings about empowering a “socialist” state at the expense of individual liberties and economic freedom.
David Kersten is the president of the Bay Area-based Kersten Institute for Governance and Public Policy (www.kersteninstitute.org). He is also an adjunct professor of public policy at the University of San Francisco and a commentator on California politics.
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