Semi-Daily Journal

" consistency is the hobgoblin of... was?.... schmall... meindt's."

Here’s how the state of California can save a lot of money on education (and other places too). Junk it’s present procurement system. I can buy office supplies from Costco or Office Depot for much less than what the state pays. How’s that, can’t they get a volume discount? They could, but they don’t, because they won’t. To sell to the state you need to be on an approved vendors list and to get on that list you need to have a politically correct firm. That limits the number of firms and also drives up costs. This goes for places like New York City too. NYC built a new public school in Queens that cost more per square foot than class A office space in Manhattan (see Wall Street Journal for article on this). In NYC the richest person in the school is the head custodian. He makes more than $100,000 and more than the principal. How does he do that? Simple. The city gives the head custodian in each school the right to subcontract all the janitorial services and pocket the difference. Nice deal. But not for the taxpayers, or the kids that have to go to dirty schools.

Zarkov, that only works if procurement costs are a large part of the budget. Many of the rules are lame, but they exist to prevent fraud and abuse.

I don’t know if procurement costs are a small part of the budget, the school system and the rest of the government buy a lot of stuff, and besides every little bit helps. Yes they have rules to prevent fraud and abuse, but I’m not talking about those rules. I’m talking about the politically motivated rules that dictate how many and which kind “minorities” you have to have on your staff. Or the kind of medical vacation benefits you must have in place. These kind of rules have nothing to do with fraud and abuse.

Ahnuld could do a lot worse than offer Hal Varian a job as his finance expert:

http://www.nytimes.com/2003/09/25/business/25SCEN.html?pagewanted=all&position=

----------quote--------------
Fundamentally, the deficit is a hangover from the days of irrational exuberance. California was the epicenter of the dot-com boom of the late 1990's, and tax receipts flowed to Sacramento. Tax revenue from stock-option grants and capital gains alone rose from $7.5 billion in 1998-9 to $12.7 billion in 1999-2000 to $17.6 billion in 2000-1.

When money flows in, governments find it hard not to spend it. This is particularly true in California, thanks to mandated spending constraints. For example, Proposition 98, passed in 1988, requires the state to spend 40 percent of general funds on education from kindergarten through high school. As a result, spending, both automatic and discretionary, rose in parallel with tax revenue.

Then the house of cards came tumbling down. Revenue from options and capital gains fell to $8.6 billion in 2001-2, and $5.2 billion in 2002-3.

Reversing those spending decisions was not as easy as putting them in place: much of the increased revenue went for education, tax cuts and other long-term commitments.

This brings us to the second lesson in economics: don't spend transitory income on permanent commitments.
------------endquote---------

The New Republic had hoped ARNOLD would explain how his spending increases and tax cuts might actually be consistent with fiscal responsibility. I heard only two substantive things from ARNOLD last night: (a) he wants to spend more on education; and (b) he wants to spend a lot more on public infrastructure. These may be laudable but where's the money coming from. He failed again to say where he would cut spending. But this morning, I heard ARNOLD attacking the Indian gaming issue by saying they should be taxes. Maybe so, but then is ARNOLD coming out for higher taxes on those who don't pay their fair share? Well not if they are the very rich Californians who turn out to be the ones who are financing his campaign. Warren Buffet would have done that, but Warren was told to keep quiet.

I'm not familiar with the complete body of Zarkov's work, so I don't know whether he is some form of conservative or a different form of liberal. But if he is a conservative, I wonder that he is complaining about the highly entrepenurial activity of the head janitor. Privatization! Privatization! Privatization! The mantra of the libertarian/conservative. How could he possibly complain?

If, however, he is a liberal, I agree that this is a bad policy. At a minimum, the head janitor should split the proceeds with the city. Of course, if he reports his income honestly, he will have to share somewhat with the taxpayers for whom he is supposedly saving money.

The activity of the head custodians at New York City schools is hardly entrepreneurial. It’s a sweetheart deal mixed with corruption and intimidation. I asked a retired NYC teacher why such an outrageous situation is tolerated. Her response: “They’re afraid the school will get burned down if anyone tries to reform the system.” What the city needs to do is outsource janitorial work for the whole system to a low bidder. Why do you need each school to have a head custodian? Incidentally the custodians pay the janitors very little, that’s how they make the big bucks. It could also just hire janitors and make them city workers. Almost anything would be better than the current system.

Whether it’s good policy or not has nothing to do with my being either a liberal or a conservative, assuming those terms have any meaning in current context.

Arnold is smart enough to realize this is a load of bullshit. Translated, this means "You voters are idiots and you will not elect someone who tells the truth about the harsh reality of tradeoffs between spending and revenue."

He may be right.

I wonder what his real plan is.

Forgive us Austrians for having given you Arnie.

After all, Americans have been bombing back countries back to the stone age for much less convincing reasons.