Fi$cal woes in ¢alifornia

It's not often that I link to Vanity Fair, but this article by financial writer Michael Lewis ("Liar's Poker," "Moneyball") is well worth it. Lewis' subject this time is the looming financial crisis at the state and, especially, local government level — one driven largely (but far from entirely) by unfunded pension liabilities. And it is very interesting, utterly terrifying, stuff, but characteristically for Lewis, it's explained in a very human way that's clear and extremely accessible. Lewis has a dry wit and a keen appreciation of the ironic. He explains financial issues through the voices of the colorful individuals he tends to write about. And because he has piqued your interest in those individuals, you tend follow his discussion of the financial issues easily and keenly too, because his subjects' fortunes (literally and figuratively) are being determined by those same financial issues.

Lewis' particular focus is on the poster-child for the problem, California, of which he notes:

California had organized itself, not accidentally, into highly partisan legislative districts. It elected highly partisan people to office and then required these people to reach a two-thirds majority to enact any new tax or meddle with big spending decisions. On the off chance that they found some common ground, it could be pulled out from under them by voters through the initiative process. Throw in term limits — no elected official now serves in California government long enough to fully understand it — and you have a recipe for generating maximum contempt for elected officials. Politicians are elected to get things done and are prevented by the system from doing it, leading the people to grow even more disgusted with them. "The vicious cycle of contempt," as Mark Paul calls it. California state government was designed mainly to maximize the likelihood that voters will continue to despise the people they elect.

But when you look below the surface, he adds, the system is actually very good at giving Californians what they want. “What all the polls show,” says Paul, “is that people want services and not to pay for them. And that’s exactly what they have now got.”

And therein lies a nasty problem. Don't read this article if you're already depressed. Lewis tries to salvage an upbeat ending, but that, too, is another as-yet-unfunded liability.

Despite that, Lewis' article ends up making a powerful conservative statement by necessary implication: What's killing paradise? Government overspending. How to fix that? Lewis doesn't ever say in so many words, but ... well, duh. The cure is obvious, but when and how it will begin being seriously administered, and what chaos will wrack the patient in the meantime (especially in its most afflicted extremities, like California), is still anything but clear.