Oh what a year 2014 was. Not so much for what actually happened – all said and done it turned out to be a pretty good year, in a relatively ordinary sort of way. But if you are a fan of irony (as I am), it was a fantastic year that kept on delivering. For example, did anyone here about the Exxon executive who joined an anti-fracking lawsuit when he realized the activity was going to diminish the value of his own house? Or earlier in the year when an anti-internet piracy group was accused of stealing the photo they used in one of their advertisements? Delicious!
So, with 2014 drawing to a close, here is a set of some of my favorite episodes of cognitive dissonance over the year past.
The Republican Wave: In November, the Democrats lost the Senate and lost ground in the House largely on a wave of popular dissatisfaction with the U.S. economy. This occurred right after the nation’s economy had grown at a 5% pace (in the third quarter) on the basis of rapid consumer spending growth, and as unemployment dropped below 6%. This is the best pace of growth for the United States since 2003.
Wave 2: Speaking of elections, did anyone notice how the budget was a complete non-issue in November? This after numerous threats to not raise the debt ceiling threw the bond markets into turmoil and caused U.S. debt to be downgraded by one prominent ratings agency over the issue. And that doesn’t even mention the shutdown of the government last fall. The big question: Is the non attention because the budget was never really an issue, but was made one for political purposes? Or is it because the budget is a big deal—but last year’s shut down debacle made it clear it’s not a ‘win’ issue for parties to campaign on?
Jerry’s Surplus: Speaking of budgets, it was nice to see Governor Brown win reelection, without a doubt. He has been very effective in his role. But during his campaign he mentioned numerous times that he had balanced the budget. Huh? It is true that in this past fiscal year the state took in more than it spent. But this was because of a surge in income tax revenues based largely on capital gains, which were in turn based on a hot stock market and rising asset prices across the board. I’m hard pressed to credit the recovery in the financial markets to Governor Brown. And in any case, it’s hard to see how we can claim the budget is balanced when pensions and other benefit programs are massively underfunded and infrastructure investments lag far behind where they should be.
Speaking of Ridiculous Claims: Better budgetary times have led some folks to start considering certain basic policy reforms, not the least of which is eliminating Prop 13 assessment controls for commercial properties. Our good friends at the Howard Jarvis Foundation, who fight for maintaining the status quo on Prop 13, decided it was a good time to re-roll out their claims that this shockingly unfair and regressive tax was helpful during the last downturn because it reduced the volatility of California tax revenues through tough times. Why is this ironic? Well, the volatility in state revenues is driven largely by the fact that personal income taxes make up such a large share of state revenues – a which is driven by the fact that property taxes are limited by Prop 13.
De León’s First Class Act: While on the topic of state government, it was quite a year for the State Senate. No less than three Senators were caught in a variety of misdeeds and have either been convicted or are in the process. Yet one of the very first acts of new Senate President Kevin de León was to eliminate a government oversight office on the basis of budget concerns. Why waste money when prosecutors are already doing the job? Hmmm…
I Hope It Doesn’t Rain: Speaking of big government moves this past year, Proposition B passed by a big margin. It expanded the ‘rainy day fund’, which is a funny way of putting it since this is exactly what it isn’t. A rainy day fund is money set aside for when you really need it. The funds tucked away through this proposition pay down long-run debt—which can’t be accessed in the future to balance a budget. Don’t get me wrong, I voted for it because it will prevent the financial malfeasance that went on under the Davis administration, when long-run expenses were ramped up sharply on the basis of short-term revenues. But don’t kid yourself into believing these funds will be available to cover future deficits in the next recession.
Who Cares If It Rains? On the topic of water, what a year it was. We heard all about the drought, over and over again, and the crippling impact on the state’s economy. Still, all this panic occurred during a period of time when farm revenues continued to grow—up 50% from 5 years ago due to rapidly rising crop prices. Farm employment also hit a 10-year high and the number of acres in current production in Fresno, Tulare, and Kern Counties hit record high levels. And the good farmers of Imperial County were apparently so flush with water that they grew thousands of acres of alfalfa in the desert to ship to China to feed pigs.
Speaking Of Fertilizer: Famously liberal UC Berkeley, with its even more famously liberal Center for Labor Research and Education, has been making waves lately advocating for sharp increases in the minimum wage across the state. They are using a series of ‘studies’ purportedly showing how a hike in the minimum wage can be good for the economy. Apparently, however, not UC Berkeley’s economy since the University has rejected their host City’s new minimum wage ordinance.
While On The Topic Of Minimum Wages: I think my favorite ironic moment of the year had to be the new hotel living wage ordinance that passed right here in the City of Los Angeles to help underpaid hotel workers. This one had so many elements to it, we had to save it for last:
- For one, the ordinance exempted small hotels from the provisions, despite the fact that large hotels pay their workers, on average, almost $10,000 more per year and are far more likely to provide benefits and career ladders.
- It did include waiters, bartenders, and valets however—despite the fact that at higher-end hotels these workers can make $70,000 per year on tips alone.
- This is worth noting, since the Mayor of Santa Monica came to City Hall to testify in favor of passing the ordinance—despite the fact that it was much broader and at a higher wage than Santa Monica’s hotel living wage ordinance.
- Hotels that are unionized are also exempted from the ordinance—it’s okay that someone is a poor hotel worker, as long as they are a poor unionized hotel worker?
- And as for the final irony, the leader of the charge to expand the hotel living wage ordinance was Maria Durazo in, as it turns out, her last major act as the head of the L.A. County Federation of Labor. Her new position? Vice President for Immigration, Civil Rights and Diversity at UNITE HERE, a powerful national union for hotel, restaurant, and casino workers. She will stay in Los Angeles or course, explaining to all the large hotels in the area how they can avoid the high minimum wage by simply joining her union!
Have your own favorite ironic moment? Please share—the more the merrier. And here’s to a healthy, happy, prosperous, and hopefully less ironic 2015!