A co-worker brought up an interesting point when we were discussing the Greek crisis. He said, “California isn’t really in all that different shape”. That sparked an idea, I decided to take the very next EU citizens mad about losing entitlements article and put California everywhere the disgruntled Europeans were represented. The article that showed up is from the New York Times and was published on May 22, 2010. Steven Erlanger’s original article can be found here. I am not claiming to have written the original article nor would I say that Mr. Erlanger approved the wording changes. This is a fictional work for the purpose of demonstrating how close we are to experiencing the E.U. nightmare.
Sacramento — Across California, the “lifestyle superpower,” the assumptions and gains of a lifetime are suddenly in doubt. The deficit crisis that threatens the state budget has also undermined the sustainability of the Californian standard of social welfare, built by left-leaning governments since the end of World War II.
Californians have boasted about their social model, with its generous vacations and early retirements, its health plans and extensive welfare benefits, contrasting it with the comparative harshness of American capitalism.
But all over California with big budgets, falling tax revenues and aging populations are experiencing rising deficits, with more bad news ahead.
With low growth, low birthrates and longer life expectancies, California can no longer afford its comfortable lifestyle, at least not without a period of austerity and significant changes. The state is trying to reassure investors by cutting salaries, raising legal retirement ages, increasing work hours and reducing health benefits, pensions and welfare.
“We’re now in rescue mode,” said a state official, “But we need to transition to the reform mode very soon. The ‘reform deficit’ is the real problem,” he said, pointing to the need for structural change.
The reaction so far to government efforts to cut spending has been pessimism and anger, with an understanding that the current system is unsustainable.
In Los Angeles, Aldo Cimgin is 52 and teaches photography, and he is deeply pessimistic about his pension. “It’s going to go belly-up because no one will be around to fill the pension coffers,” he said. “It’s not just me; this state has no future.”
Changes have now become urgent. California’s population is aging quickly as birthrates decline. Unemployment has risen as traditional industries have shifted to Asia. And the region lacks competitiveness in world markets.
According to the California government, by 2050 the percentage of Californians older than 65 will nearly double. In the 1950s there were seven workers for every retiree in advanced economies. By 2050, the ratio in California will drop to 1.3 to 1.
“The easy days are over for states like California, but for us, too,” said John Z. Smith, a New York lawyer who did a study of California in the global economy. “A lot of Californians would not like the issue cast in these terms, but that is the storm we’re facing. We can no longer afford the old social model, and there is a real need for structural reform.”