prop 98 and prop 99
Topics: Regulation
05 Jun 2008
From: Ervan Darnell
On the last California ballot there were two propositions:
98 - real reform of eminent domain abuse that shut down private transfers (after the ruinous Kelo decision)
99 - a sham alternative that does nothing [1]
The most controversial part of 98 was that it would have prohibited rent control for _future_ leases. Rent control is obviously a taking like any other, but beyond that Prop 98 supporters argued that absent that provision local governments would act punitively with rent control measured to force owners into a loss position so they would sell to the city at low rates (were eminent domain itself limited).
Prop 99 was created to confuse voters, because whichever one passed with the most votes would win. So, even if 98 passed and 99 got more votes it would supercede 98. 99 was a deliberate ploy by a statist alliance of developers, politicians, environmentalists, and rent-control advocates.
The corruption angle is obvious. Developers are engaging in rent-seeking behavior of trying to bribe their way to the authority to grab property they want at below market rates. Local cities used tax dollars to buy ads advocating prop 99 [2]. Talk about corrupt right out of the starting gate!
Of course, prop 98 failed and prop 99 passed. Not enough people could see past the confusion.
But it's the last two groups, the liberals in effect, for whom I have the most ire.
Let's start with the flat earth policy of rent control. I don't need to belabor what a really bad idea this is [3]. Beyond the usual failings, the California version (at least in SF and Berkeley) is particularly silly because many high-income people have rent controlled apartments. So, my first charge is that liberals just don't understand economics, and are willing to impose their fallacious beliefs on others instead of quietly advocating them over dinner at vegan restaurants.
The Prop 99 advocates wrote (in the voter guide): "[98] Eliminates Rent Control. Would devastate millions of renters...". Not true, it explicitly grandfathers existing renters. All of the hard luck stories of the old woman who has been ripping off her landlord for $10K/year for 20 years is bogus, but they used it anyway. Even forgetting that, it doesn't necessarily devastate anyone. Nobody said that rent vouchers were illegal. We already have section 8. If it's worth keeping rents down, then let's have an honest vote on doing so with the burden spread across everyone instead of just landlords. Prop 98 absolutely does not prohibit subsidized housing.
My second charge is the hypocrisy of being "democratic". I mean this in the sense of "every vote should count" thinking, and somewhat more broadly the intent that more things be run by vote than by free individuals.
The hypocrisy is two fold here: First, Prop 99 is a sham. It's meant to cheat democracy. Prop 98 was real reform. Maybe it would have passed on it's own, or maybe not. But it was a simple proposition. The submission of Prop 99 was a ploy to negate popular sentiment for 98, so it could either fail on its own merits or by being outvoted by 99. That's not about democracy, that's about subverting it.
The second hypocrisy is that eminent domain abuse is very anti-democratic. Instead of reaching a consensus that something is worth paying for out of tax revenues, a tiny minority is crushed and their voice ignored. Isn't it liberals who say all voices should be heard and minorities protected? Yeah, except for the ones that disagree with them.
The third hypocrisy is on good government. Liberals mostly (though obviously McCain concurs) believe that the government should censor political speech in the interest of stopping corruption via campaign contributions (or in the interest of protecting incumbents). The relevance to Prop 98 is that it shuts down a bribery machine: Developers donate money to politicians who abuse eminent domain to impose a transfer of private property back to those developers that gave them donations. The city councils that do this should be in jail, not campaigning to keep it this way. If you really want to stop corrupt politics, Prop 98 was an excellent place to start.
[1] http://voterguide.sos.ca.gov/title_sum/prop_98_title_sum.shtml
http://voterguide.sos.ca.gov/title_sum/prop_99_title_sum.shtml
Unfortunately, these links will change with time.
[2] http://www.hjta.org/commentaryV6-21, not the most trustworthy source, but you can track down the newspaper article links at the end.
[3] http://jim.com/econ/chap18p1.html
====================================================
Ervan Darnell
ervan@kelvinist.com http://www.kelvinist.com
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