news story / By Ron Ross

Don’t Blame Reagan

Today’s California seems to hate the private sector. And vice versa.

(Oct. 29, 2009) please see also “The Broken State” by Steven T. Jones and Tim Redmond

We can all agree that California is a fiscal mess. As I have traveled around the country over the past few months, people I talk with seem to essentially view our state with a sense of pity. They ask, “What are you guys going to do out there?”

Ronald Reagan and Nancy Reagan celebrate Reagan’s California Gubernatorial victory in Los Angeles, Calif. Photo courtesy of the Ronald Reagan Library, Public Domain.

GALLERY >

The fact that this state, with all its natural beauty, delightful climate and creative population, has gotten itself into such dire straits raises the obvious question — why? How, exactly, did this come to pass?

Two Bay Guardian journalists, Steven Jones and Tim Redmond, present the rather implausible hypothesis that the true sources of our problems are rooted in the long-ago administration of Ronald Reagan and the free market philosophy that he espoused. More specifically, they blame the 1978 passage of Proposition 13, which limited property tax increases in the state. Attributing our problems to Prop 13 is an argument I’ve seen presented many times over the past few years.

Jones and Redmond assert that “opposition to taxes is now deeply embedded in the California electorate.” Their lament, essentially, is that we are in this predicament because taxes aren’t high enough. Granted, primarily because of Prop 13, California’s property tax rate is below the national average. That, however, is only part of the picture.

California has the highest state income tax rates and the highest sales tax rates in the nation. We are first out of 50 in those rather dubious achievements. (Our top income tax rate, 10.55 percent, is almost twice the average of the other 49 states.) I shudder to think how high our tax rates would be if the electorate were not under the spells of Ronald Reagan, Howard Jarvis (described by the authors as “a Republican landlord lobbyist”) and Milton Friedman. In spite of Prop 13, state government expenditures have increased more than 7 percent per year since its passage.

Jones and Redmond seem to believe that advocacy of free market economics and opposition to government growth started in California 40 years ago. They also believe that California is such a trendsetter that the philosophy contaminated the rest of the country, and the whole world as well.

Argument for the benefits of free market economics has been around for well over 200 years and was first elaborated by a Scotsman, Adam Smith, with the publication of “The Wealth of Nations” in 1776. The most famous tax revolt, the Boston Tea Party, occurred in 1773.

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