Poor solutions to poverty

By Jedd Medefind

Written for Assemblyman Tim Leslie

“Poverty,” declared former California Governor Jerry Brown this week at a public discussion of social ills, “is a function of the deregulated system that allows other people to get richer.”

Intriguing. If we can just find a way of increasing regulation to such a degree that it becomes impossible to get rich in California, we will have successfully eradicated poverty. Why didn’t someone think of this before?

Actually, they have. In the early years of the October Revolution in Russia, with the words of Karl Marx ringing in their hearts, the partisans of equality eagerly sought to rid the world of the scourge of wealth. In the regions outside of Moscow, anyone who owned two cows was considered capitalist bourgeois and either liquidated, shipped to Siberia, or—if sufficiently repentant—merely punished and then relieved of their “excess capital.”

Unfortunately, this activity did not exactly eradicate poverty, just the incentive to work and save among Russian farmers. For the next seven decades, most citizens—with the notable exception of Communist Party elite—were taught that equality meant waiting in the same bread lines.

But while Marxist logic has been largely deflated in the minds of most Americans, it remains quite vibrant on our college campuses and, just as sadly, in California government.

If we can just tax and regulate businesses into oblivion, the rationale seems to run, we’ll somehow make poverty a thing of the past. As Senator Richard Alarcon put it, “Greed [i.e. capitalist business] is causing poverty.”

Driven by this logic, Alarcon and his fellow leaders of the Legislature’s majority party have unleashed a hurricane of tax-and-regulate measures in California over the past four years. Aiding and abetting, despite his “moderate” posturing, is Jerry Brown’s former chief of staff, Governor Gray Davis.

It is not surprising that during Davis’ years at California’s helm, a poll of business leaders nationwide has seen California steadily sink from the ranks of the top 10 states in which to operate a business to the bottom 10. Just this past September, a survey of senior corporate officials by Development Counselors International ranked California as the absolute worst state in which to expand or relocate.

And while few companies now contemplate relocation to California, quite a few are heading in the other direction. Buck Knives recently announced its decision to move its headquarters and 250 jobs from San Diego to Idaho. A week later, Hewlett-Packard revealed it would be relocating 500 positions from Sacramento to Texas.

The “little guys” who cannot relocate may be hurting even worse. Consider the story of Joe Bitson. At 16, Joe started flipping burgers at McDonalds. Twenty years and countless thousands of burgers later, he had scrimped and saved enough to purchase his very own franchise near Sacramento, CA. Thrift and hard work allowed him to purchase two more restaurants in the decade that followed.

Joe works hard, treats his customers right, and always tries to take good care of the men and women who fill the roles he filled for more than two decades. But the onslaught of anti-business laws has Joe—and his employees—reeling.

Sure, these employees can now take six weeks of paid family leave, cross-dress without fear of being fired, or go on workman's comp at a higher rate than they make working. But these benefits are not without cost. There now are only 40 employees per restaurant, whereas just a couple years back there were 50.

Joe also had always provided healthcare for the families of his employees. Following California’s latest round of workman's comp increases, he can only afford to provide it for the employees themselves. In this one little example, California’s purportedly compassionate laws and regulations have cost 30 people their jobs and countless families their healthcare.

Not surprisingly, the “Small Business Survival Index,” dropped California to 46th among the states in its most recent ranking. One has to wonder, is the California Legislature fighting poverty or promoting it?

California is unlikely to ever slog out of the swamp we’ve created for ourselves until our politicians grasp the fact that reasonably regulated businesses create jobs, provide paychecks, deliver services, and—believe it or not—reduce poverty.

If leaders like former Governor Brown and Senator Alarcon were to spend a little more time creating wealth and a little less time trying to strip it away from others, we would probably all be a little better off.

--Tim Leslie is Assemblyman of California’s 4th Assembly District, which reaches from the Sacramento metropolitan area to Lake Tahoe.