MAGICAL THINKING
Every day, I get the political headlines from California's major newspapers by email. And every day, I'm struck by how immature--no, how bratty--the state's policy process is. California hasn't lost its magic. To the contrary, it's possessed by magical thinking--assuming you can just wish for things and get them, with no costs and no tradeoffs.
The dean of the state's political writers, Dan Walters of the Sacramento Bee, recently proposed a solution. His column carried the headline "We act like a Third World nation--so treat us like one":
Here's a thought: When the World Bank is finished with Chad, it should come to California, whose public finances these days resemble those of a Third World corruption pit more than those of a modern, presumably enlightened, industrial society.
When Gov. Gray Davis and the Legislature received a $12 billion windfall of tax revenues in 2000 they, like the ruling clique of an oil-boom nation, lavished it on the politically connected with no thought as to the long-term consequences. Now California has an immense budget deficit, is dependent entirely on loans from out-of-state bankers and is locked in a seemingly intractable political war over the crisis.
The state will begin a new fiscal year Tuesday without a budget in place, and few in the Capitol doubt that it will be many weeks, perhaps months, before the underlying conflicts are resolved. In the meantime, those dependent on Sacramento for money--schools, local governments, the poor, medical care providers, etc.--will be scrambling to survive. Despite the immensity of its economy and its riches, in other words, California finds itself in exactly the same condition as one of the World Bank's basket cases.
The fiscal crisis is just one manifestation of California's magical thinking. I returned to my L.A. condo to find a notice from neighbors agitating against a developer's plans to raze a couple of older apartment buildings and replace 10 apartments and no parking with 24 condos and 60 parking spaces. They have all sorts of concerns about "the scale and character of the existing stable neighborhood," which would in fact be slightly altered by the new construction. (In reality, the neighborhood's character is largely maintained by the single-family zoning that begins one block to the south.)
Here's the magical thinking paragraph: "The project will continue the decline in affordable housing on the Westisde. Replacing 10 highly desirable rental buildings in the range of $1000-$1700 per month, by condos offered for $500,000-$550,000, will adversely impact a renter profile of students, artists, young workers and seniors, who are being driven out of the Westside by high housing costs." [Weird commas in the original--vp.]
These concerned neighbors are not offering to sell their tiny bungalows for less than a half million dollars--or, for that matter, to rent them out for "affordable housing." Instead, they want to block an increase in the number of multifamily units, which offer relatively more space and luxury for the money. In the magical twist, they imagine that limiting supply while demand is skyrocketing is the way to create affordable housing.
Of course, if they succeed, it will be good for the Postrels, if not for the general public, since we still own the old but spacious condo we bought at the bottom of the market. I suspect we aren't the only ones aware of the financial advantages of limiting competition.
On a positive note, Steve dropped by UCLA today and a former colleague told him that California's energy crisis disappeared as soon as consumer electricity prices rose. Now peak prices are very high, and people are careful about what they use. The price system works! It must be magic!