TW: I come back to this theme repeatedly and will do so until and unless some headway is made against the irresponsible governance we the American people demand. We are unwilling to face up to fiscal challenges much less address glaring threats such as climate change and health care. California's fiscal problems are increasingly well-known but in reality they are not that much worse relatively than dozens of other states only more important due to the size of CA. They are a metaphor for the U.S. as a whole.
Our country has always had demagogues, rogues and incompetents mixed with the wise and qualified politicians. Our political systems have always been somewhat creaky. But now we face secular and systematic challenges- an aging population and declining relative American power. This is a profound shift, a shift which cannot be ignored.
Huge constituencies of the American public including but not limited to: pensioners, public employees, the wealthy, the culturally strident etc. are refusing to compromise in the pursuit of rational, least worst solutions.
America figured out how to govern during times of improving demographics and growing relative world power, can it figure out how to govern when those dynamics shift. This shift is not the end of the world, Europe has been living through a similar shift for 100 years. Their quality of life on many metrics is superior to the U.S. We can chase the past or figure out the future.
From Wim Buiter at Financial Times:
"...The similarity between California’s state government budget deficit and the Federal deficit lies not so much in their magnitudes as in the political and institutional dysfunctionality that created and sustains both of them.
Like the country as a whole, California has become increasingly polarised politically. There is no common ground, no willingness to engage in serious negotiation and compromise. The state’s social capital, like that of the nation as a whole, has been thoroughly depleted. The willingness and capacity to strive for let alone achieve a new consensus appears absent, despite the presence of two rather unifying personalities at the head of both the federal and the state executive branches of government. Unfortunately, both president Obama and governor Schwarzenegger appear out of step with the mindless majority of their compatriots.
In the federal Congress, there is no majority either for the future steep tax increases or the future large cuts in public spending that will be required to restore federal fiscal sustainability. In a nutshell, the Republicans will scupper any future tax rise and the Democrats will veto any future cut in public spending...Both the President of the USA and the Governor of California are significantly more sensible and moderate than their parties, and less beholden to narrow special interests, but neither has the political clout to compel the least painful restoration of fiscal-financial sustainability.
...So what is to be done? For the fiscal plight of the US as a whole, prayer is all I can recommend..."
http://blogs.ft.com/maverecon/2009/07/from-direct-democracy-to-direct-federal-financial-rule-in-california/
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