Economy

By Peter Allen

Competition vs. Regulation

A market economy depends upon competition. Real competition drives innovation, and keeps prices down. To have real competition, there must be rules - think of football without the rules against pass interference or offsides, or basketball without the shot clock or the rule against goaltending. These rules maintain real competition.

The key question is the quality of the rules and regulations, not the quantity. It is possible to kill all competition with one rule: "All computers must be made by Brand X." Suddenly there would be no reason to keep prices down, or to come up with new products.

There are rules that help ensure fair competition and prevent companies from competing unfairly by passing their costs onto third parties: "No computer sold in California shall be assembled by, or contain components made by, child labor." Or: "No manufacturer of computers sold in California shall discharge any significant toxic waste into any waterway."

California needs smart regulation that bolsters real competition while protecting our environment, our communities, and our health.

Education

In the long term, education is an economic issue. California's economic success, particularly in technology, is directly related to the quality of its educational system. Starving the schools, colleges, and universities of funds as we pour more money into prisons is a recipe for destroying California's economy.

We are ruining the fine educational system built and paid for by Californians of earlier generations. They thought they were investing in a valuable resource that would benefit California, but we are foolishly squandering that investment. California needs to maintain its educational system. It is not cheap to do so, but letting it fail will be even more costly.

Agriculture

In addition to its other attributes, California is an agricultural state. A healthy and sustainable agricultural sector is essential to California's economy. The key is to ensure that our agricultural practices are not harmful to people or the environment, and that they are sustainable over the long term.

California law and policy should support and encourage sustainable family-scale organic and pesticide-free agriculture, and move away from industrial scale and chemical-intensive monocultures.

Corporate Responsibility

If federal law is going to treat corporations like people, then corporations should act like responsible and considerate people, not selfish and greedy jerks. Right now, corporations' primary legal responsibility is to their shareholders. That is not broad enough. They should also be accountable for the impacts of their actions on the environment and their local communities, and should be required to take those into consideration, rather than just narrowly focusing on the bottom line.

Taxes

California's tax system is a cobbled-together mix of poorly coordinated parts, resulting in perverse incentives and an inability to forecast a realistic budget. Proposition 13, while succeeding in its stated goal of keeping fixed-income seniors and other low-income homeowners from being taxed out of their houses, has created other problems. Warren Buffett pointed out that California is too dependent on income taxes, which are highly volatile. We have high sales taxes, but no oil severance tax (even though every other oil-producing state has one). This simply makes no sense.

We need a tax system that works in a unified manner, consistent with the needs of California. We should lower our income tax and sales tax, and keep a Proposition 13 type cap on property taxes for primary residences. High rise office buildings and resort hotels do not need that same protection, and should pay taxes based on their appraised value. Instead of high income taxes and sales taxes, we should be getting more of our revenue from taxing (currently illegal) drugs, oil extraction, cars, gasoline or carbon, and pesticides and other toxic chemicals.