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CA economists to Meg Whitman: Your “policy proposals will deepen Californias budget crisis and are likely to reduce employment and economic growth.

By Climate Guest Contributor  

"CA economists to Meg Whitman: Your “policy proposals will deepen Californias budget crisis and are likely to reduce employment and economic growth."

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No to Proposition 23!Guest blogger Rebecca Lefton is writing regularly to keep us up to date about Big Oil’s tricky proposition 23 initiative to kill California’s clean energy economy. Read more on Prop 23′s national repercussions and funding from Texas oil companies.

A group of California economists signed an open letter to Californians warning that gubernatorial nominee Meg Whitman’s economic policies would only leave the state’s already suffering budget worse off and raise unemployment.  The experts, including Stanford University economist and Nobel laureate Kenneth Arrow, probed Whitman’s economic proposals concluding that Meg 2010 is not based on facts or solid economic analysis.  They write, “If implemented, her policy proposals will deepen California’s budget crisis and are likely to reduce employment and economic growth.”

Michael Reich, University of California-Berkeley professor sums up the arguments in a new Center for American Progress Action Fund report.  Reich concludes:

Meg 2010 is based on faulty economic theories and on studies that are fundamentally unsound. The nonpartisan California Legislative Analysts Office states that one of these studies is “unreliable” and that the other “contains a number of serious shortcomings that render its estimates of the annual economic costs of state regulations essentially useless.”

Because Meg 2010 is not based on facts or experienced analysis its economic policy prescriptions are equally dubious. If implemented, Whitman’s program would worsen California’s budget malaise and its economic performance. Californians need to examine carefully her faulty economic assumptions as well as understand the consequences of her misguided conservative economic proposals.

Whitman has pledged to suspend the state’s progressive clean energy and climate legislation for a year, citing a study by Sacramento State University professors Sanjay Varshney and Dennis Tootelian that exaggerates costs and is inconsistent with other analyses on the impacts of the law on jobs and the economy. Whitman continues to use the Varshney and Tootelian study even though it has been discredited (See UCLA economist Matthew Kahn’s examination here and the Legislative Analyst’s Office’s debunk here.)

In reality, California’s landmark clean energy and climate law is creating jobs and giving the economy a much needed boost (see Economists agree, don’t block AB 32!).  That’s why even in the face of a recession and budget crises, the majority of Californians continues to support the law.  But it seems that Whitman is on the side of the oil industry which is spending record amounts to orchestrate the proposition 23 campaign to repeal the law.

This may work against Whitman come November.  A Public Policy Institute of California poll in July found that the 79 percent of voters believe gubernatorial candidates’ positions on the environment are at least somewhat important.   Of those that say a candidate’s environmental position are very important in determining their vote, only 16 percent would vote for Whitman.

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6 Responses to CA economists to Meg Whitman: Your “policy proposals will deepen Californias budget crisis and are likely to reduce employment and economic growth.

  1. Mike says:

    All those economists are Keynesian… they would think that

  2. Jeff Huggins says:

    My Plea To Economists

    One of my pleas to economists is that they should energetically educate the public about one aspect of markets regarding which substantial chunks of the public are totally confused and often misled.

    A “free market” will not lead to outcomes that reflect all key factors if one of those key factors is completely invisible to it. In other words, if it’s free to dump GHGs into the air, you can’t expect a “free market” to recognize the problem of putting GHGs into the air and to weigh the cost of doing so (and the value of not doing so) in its decisions, i.e., in the decisions of market participants. Here, I haven’t put the matter eloquently, but you understand what I’m saying, of course.

    That point should be made crystal clear, and illustrated with easy examples, and put into plain English that a kindergardener could understand. And then it should be a top priority of the entire economics profession to make sure the public understands it.

    Far too many people are saying, and wanting others to think, that a “free market” can solve matters if we just let it do so, but without any means of putting a price on CO2 emissions (or on carbon). That’s a big problem that can, and should, be corrected by all economists, of all political stripes.

    Be Well,

    Jeff

  3. Gord says:

    Mike – regarding Keynesian economists … even idiots can speak the truth. So just because an economist is of a certain ‘stripe’ does not mean he can’t have valid things to say on issues.

    Jeff – Indeed! Externalities cannot be controlled by Free Markets unless the externalities are given economic value. It’s only then they can become part of the market.

    Some where, some time an economy will move from a carbon base to a renewable base. Hopes are high for California. It’s always tough for first adopters.

  4. Jeff Huggins @2, I’m still waiting for it to come out in some electronic form or other (these days, I read everything longer than a blog post on my Kindle), but Dean Baker has been consistently good on such economic issues as you mention, and his Taking Economics Seriously looks like just the sort of thing you are pleading for:

    http://mitpress.mit.edu/catalog/item/default.asp?ttype=2&tid=12083

  5. Harley Smith says:

    The bureau said 2009 income statewide totaled $1.56 trillion, down about 2.5 percent from $1.6 trillion in 2008. The 2009 level also came in just under the 2007 total.

    First time income dropped in California since WWII

  6. Antipropaganda says:

    Economists are pseudoscientists no policy should ever be initiated on an economists recommendation..