May 21, 2012
California Dreamin': A Nightmare of Collapse
By Jim Mahoney
There was a time when the California dream conjured visions of sun, endless summers, hot love, cool breezes, and muscle cars. The California economy, once the world's 7th largest, supported these dreams -- carrying us into the future on its brawny young shoulders. Innovation in aviation, computers, and countless other industries, compounded by the creative forces of free people innovating daily in a manufacturing economy, spurred the growth that produced the greatest bounty for more people than any other place on the planet.
Today many of those industries are long gone. Today's California dream is more likely to take the form of a waddling, overweight, bureaucrat devising new schemes to hang on to her lavish lifestyle and cushy retirement. The California economy today resembles a sick and wounded old elephant carrying an impossible load of ticks and fleas each calculating how much more blood he can extract before it all comes crashing down.
How did this happen?
My home county has been clobbered by the recession. Taking the unemployment numbers at face value, the March 2012 rate was 11.1%. Next month the county will vote on a measure that promises to keep our libraries open. The implied threat is if voters don't extend the 1/8% sales tax they approved in 1998, libraries will close. Since the measure extends an existing tax, its prime selling point is that it doesn't raise taxes.
I have personal experience with my local library. In 1982, a friend got elected to the City Council and quickly discovered he had to find people willing to serve on various City boards and commissions. He asked me to sit on the library board. The library at that time was a relic of our city's impoverished past, squeezed into less than 4,000 square feet on a narrow residential street. The town had tripled in size since it was built, and a generation of yuppies was discovering both the charms and drawbacks of small town California life. The library was an outdated carbuncle.
By 1984 we hired the city's first professional librarian. She assumed a heavy load, reorganizing the existing library and laying the groundwork for the construction of a new building all while meeting the demands of an upscale population. She did a masterful job, and she earned a princely salary in the mid $30K range.
By the time the new library was built in 1993, she had moved on. Today, the building is a beautiful structure, well designed and well used. What can possibly be wrong with all that?
Our world is vastly different than when the 1/8% sales tax first passed. In 1998, the internet was a novelty. We were just entering the dot com bubble, and growth and prosperity were givens, as enduring a part of the California landscape as redwoods and increasing property values.
Today when I want something from the library I go online to check availability. When I pick it up, I check it out myself using a bar code reader. While the library building is a beautiful space to sit and read, I've never had the time or inclination to use it that way. In the last ten years, I may have spoken to a library employee twice beyond exchanging pleasantries. On the other hand, young people use the library and that has value.
However, looking at what that value costs is a case study of how California jumped off the financial cliff.
The building was the product of political connections. Although our town is the wealthiest in the county and could have easily found sponsors in the business and resident communities, we had the "benefit" of a politically connected mayor.
She used her influence in Sacramento to have a friendly State Senator propose a statewide $65 million library construction bond. As I recall, our library got some $5 million of that bond. What could be easier? A state politician proposes a motherhood issue, the saps in the voting booths fall for it, and presto, people who will never even hear the name of my hometown wind up paying principal and interest to buy us something we could have easily bought for ourselves.
Naturally since we used other people's money, we built more than we needed, to the tune of nearly 32,000 square feet. Keep in mind the population of our town today is essentially the same as it was in the 1980s, about 28,000.
Recently, after seeing enough of the campaign signs for the tax measure, I took a look at the library salaries.
From three employees in 1984, the library gave paychecks to more than 50 in 2011. Granted many were part time employees. Nonetheless, today instead of a one professional librarian we now pay a library director $202,052 and two managers $145,555 and $136,816 to oversee a full time staff of 3 librarians, 5 library technicians a literacy supervisor and an administrative secretary to whom we hand out an additional combined $935,909 annually. That's just the full timers. Including the 40 odd part timers supporting them, the total tab exceeded $1.6 million a year in salaries alone.
Considering internet booksellers deliver used books to our doors for less than an overdue fine, a lot of unemployed people are feeding one extravagant dinosaur.
In 1984 we paid a one librarian less than $40K to reorganize and operate an existing library and plan for a new one. In 2011 we paid three people $484,424 to simply manage an ongoing operation in a facility that should have increased productivity. What private investor would spend $5 million on a facility so he could hire 50 people to serve the same population he was serving with three? What private sector job paid $35K in 1984 pays $202K today?
The 2009 per capita income in my town was $41,058. Our Library Director makes almost 5 times that. The lowest paid full timer makes over $78,000. Who is the public servant?
Our library is just one department in one city of 482 municipalities and 58 counties in California. This theme repeats in every department at every level of government and in countless school and other districts throughout California.
Since 2008, local home prices collapsed by 60%, private sector wages tanked, and unemployment approaches hopelessness. Yet there is no organized opposition to extending the sales tax. More than likely voters will go to the polls next month under the usual spell, unable to connect cause and effect and miss another opportunity to confront the tsunami coming our way.
In the end, the California economy will die of self-inflicted wounds.