California Times Six

I live in California. It’s a great state. Too great.

A proposition to split California into six states may be on the ballot in 2016. “Six Californias” has announced that it has collected sufficient signatures. Why six? California’s population of over 38 million is six times lager than the US state average. The ruling powers may find a way to block the proposal, as some opponents claim that the signature gathering was unlawful. If “Six Californias” does get on the 2016 ballot, in my judgment, this will be a rare chance for fundamental reforms.

Many Californians have said that the state is too big to govern effectively. But the governance problem is not size, but structure. After the property-tax limiting Proposition 13 was adopted in 1978, taxes and political power shifted from the counties and cities to the state government. California could be governed well if decentralized, but the concentration of fiscal power to the state has made the state among the highest taxed and worst regulated in the USA.

There have been many attempts to reform the lengthy California constitution, but they have all failed. Attempts to replace the Proposition 13 have gone nowhere. The best option is to start over. Creating new states would provide six fresh starts.

Critics of the six-state plan say that the wealth of the new Californias would be unequal. The Silicon Valley state would include the high-tech wealthy counties of San Francisco, San Mateo, and Santa Clara, among others. The promoter of this initiative, Timothy Drapers, happens to be a Silicon Valley entrepreneur.

But the current 50 US states are also unequal in wealth. The income inequality problem is a national and global problem. Income can become more equal without hurting production by collecting the land rent and distributing it equally among the population. Since the critics of Six Californias are not proposing or even discussing this most effective way to equalize income, their complaints should be dismissed as irrelevant, immaterial, and incompetent.

US states have been split in the past. Maine was split off from Massachusetts in 1820, and West Virginia was carved out of Virginia in 1863.

If the initiative passes, a board of commissioners would draw up a plan to divide the state’s assets and liabilities among the six new states. A good way to do this would be to divide the value of the assets by population, but to divide the liabilities (including both the official debt and the unfunded liabilities such as promised pensions) by the wealth of each state. That would go a ways to deal with the inequality problem.

California’s complex water rights could be simplified by eliminating subsidies, instead charging all users the market price of water. There could continue to be a unified water system with a water commission with representatives from the six state.

If this measure is approved by the voters and by Congress, each state will design a constitution. The new constitutions should be brief, like the US Constitution, in contrast to the lengthy current California constitution that contains many provisions best left to statute law.

The new constitutions should retain the declaration of rights in the current state constitution, including Article I, Section 24: “This declaration of rights may not be construed to impair or deny others retained by the people.” This wording, similar to the US 9th Amendment, recognizes the existence of natural and common-law rights. This text should be strengthened with something like this: “These rights of the people include the natural right to do anything which does not coercively invade the properties and bodies of others, notwithstanding any state interest or police power.”

These new constitutions will be an opportunity to replace California’s market-hampering tax system with economy-enhancing levies on pollution and land value. There should be a parallel initiative stating that if Six Californias passes, the states will collect all the land rent within their jurisdictions and distribute the rent to all six states based on their populations. A tax on land value is by itself market enhancing, better than neutral, because it promotes an efficient use of land, it reduces housing costs for lower-income folks, and eliminates real-estate bubbles. Combined with the elimination of taxes on wages, business profits, and goods, the prosperity tax shift would raise wages and make California the best place in the world for labor and business.

This is all a dream, but the past dreams of abolishing slavery, having equal rights for women, and eliminating forced segregation all came true. This proposition will at least provide a platform for discussing such fundamental reforms.
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This article was first published at http://www.progress.org/views/editorials/california-times-six/

A California Crack-Up?

We can only hope.

There has been a small flurry of news articles covering the success of a political initiative by a Silicon Valley entrepreneur to split California into six states rather than one. If this sounds familiar, it’s because many Notewriters have been advocating for more decentralization – both in the US and abroad – since NOL was founded back in 2012. Because breaking up states within free trade zones is such a sophisticated idea, many mainstream pundits have been reluctant to read up on it. Instead, Left-wing reactionaries (and really, are there any other kind?) simply resort to slandering the entrepreneur responsible for the initiative (his name is Timothy Draper, by the way, and you can look up his wiki here), slandering libertarianism, and slandering rich people (Slate, predictably, covers all of the fallacious bases in one fell swoop).

Luckily, the internet now provides people with more than three television channels.

There are two things you need to know about secession within the US free trade zone. First, it is extremely hard to break up one state into many. There is a constitutional process for the whole idea (I don’t understand why the framers, and subsequent legal experts, can respect secession within free trade zones but cannot bother to apply their reasoning to secession in matters outside of a free trade zone’s jurisdiction; Texas, for example, provides us with a great case study of what happens when an administrative polity breaks away from a federal state only to join a rival federal state; Why should this concept not be applied to the West’s foreign policies today?).

In order for a potential administrative unit (“state”) to become an actual US state, it must first be approved by state legislatures. So, in California’s case, only the California legislature needs to approve of the secession. However, there are rules in the constitution allowing for states to join up with each other, or for one region between two US states (like the hippie area in northern California and southern Oregon) to apply for statehood as well. When two or more states are involved, the legislatures of each state must approve of the secession (or marriage). Are we all clear?

Second, after the state legislature(s) approve of the secession, the move must then be approved by the US Congress (both houses). Andrew Prokop, of the Left-wing site vox.com (lest I be accused of being too ideological), explains well what this means:

The biggest difficulty of all would be getting Congressional approval. Giving California 12 Senate seats would be an extremely tough sell. Though those seats wouldn’t necessarily be overwhelmingly Democratic […] they would dilute the power of every existing senator.

Indeed. Now you can hopefully see why libertarians generally support decentralized governance (and let it be remembered that federalism – even a territorially-expansionist federalism – is likely to be the quickest, but still legally-soundest, way towards decentralized governance). As I wrote in a ‘comments’ thread last September (2013):

[…] the federal pie itself would not grow in the event of a few states splitting up.

Think of it this way: suppose the federal budget is $100 for the year. Currently, there are 100 Senators and 435 members of the House, so altogether there are 535 politicians dividing up the $100 pie.

Now suppose the number of states suddenly doubled. You now have 200 Senators and say 870 members of the House.

Numbers like this guarantee that each politician will have less power.

Additionally, you cannot grow the federal pie simply by creating new states out of thin air. If this were the case, then politicians and intellectuals who favor the government redistribution of wealth approach would have long ago advocated for more states. Advocates of redistribution recognize that more decentralization of power makes it harder to come to a consensus about policy options.

And the less government does, the better off everybody will be.

Now, with this being said, there is more than one type of pie. There are state pies and county pies and private sector pies, too. Secession would weaken the power of state-level politicians (Governor Brown could only inflict damage on northern Californians rather than all Californians, for example).

County pies may or may not grow, but in my estimation I do not think growth at the county level is all that important.

The one pie that would grow would be the private sector pie, largely due to the lack of consensus (or, in other words, the greater amount of special interests) at the federal level that decentralization brings about.

Speaking of ‘comments’ threads: One of the things I like most about blogs is the fact that many of the insights I receive about an idea or an event are found in the ‘comments’ threads rather than in an original post. The openness of the blogging platform provides not only an avenue for individuals to express their thoughts, no matter how primitive or vulgar, but also a way for people to expand their horizons and learn something new. This is one of the reasons I try to encourage readers, as well as my fellow Notewriters, to get more involved in the ‘comments’ threads, although y’all are understandably weary of trolls.