Opposing super majoity

The impasse of state budget negotiation had let many people wonder whether the super majority requirement is really necessary. Indeed, a few Democrats have called for the change of the state constitution.

I am not sure about the political science theory on this issue. The super majority requirement seems to give a small group of people too much power. In the California budget case, a mere couple of Republicans can hold the budget hostage. It does not sound right. If the majority of California put Democrats in control of the legislatures and a Republican in the governor mansion, the budget should be a compromise of the governor and the Democrats. Not the Republicans. In any case, the super majority requirement is wrong.

Unless there is a more pressing issue to the suicidal behavior of Californians.

Liberal-leaning Californians have made some irreversible changes to the great state that brought the country Ronald Reagan. I don't expect to see any Republican president coming from California in the foreseeable future. Hollywood and the Silicon Valley breed the type of liberals that not only want to tax and spend but also want us all to become vegetarians. No, they don't mean persuasion. They want to make you change by passing laws. Don't believe it? Check proposition 2. Believe me a humane treatment to farm animals is only a first step. They will illegalize eating animals all together if they get their hands on it. I will post another one about proposition 2 later.

Come back to the fiscal issue. Tax and spend is all good as long as the tax revenues are coming like manna falling from the sky. Unfortunately, even California has recessions. When recessions come, who get hurt the most? Not the ones protected by tenures. More likely those who cannot find a job now and were promised tons of benefits before. I don't know how long the Democrats can exploit the unique status of California for. The Wall Street Journal says California has become France. Trust me. That is not a compliment.

And if there is an irreversible process that make checking and balancing Democrats' power impossible, Californians are better off with the super majority requirement.

Options are valuable

Many people lost a great deal of money in their 401K accounts lately. Again, they cry for the return of traditional defined-benefit plans. In essence, they do not want to have options, do not want to bear the risk of investing their own money, and do not want to reap the fruit of investing their own money. I believe that people's limited capability of dealing with big amount of information is one of the reasons why the liberals think the government should intervene with people's daily life. We see this argument in many places, such as the choice of schools, the labeling of drugs, and the use of guns. We economists call this as the market failure. In some occasions, I think the argument is valid and government intervention is indeed needed. But more likely than not, it is only a disguised way for the government to extend its power. We should object to that. In the case of 401k, it is particularly obvious.

What is a defined-benefit plan? It is a retirement plan that gives you a fixed amount of pension when you retire, either through a lump-sum payment or monthly installments. It is just a annuity, for Christ's sake! If you really like the annuity so much, just put all your 401k in an annuity account. If there is not an annuity option available to your 401k plan, well, I see a business opportunity! No laws say that you can't put your 401k in annuities. If your company's financial adviser does not have annuities, just call them three times a day! Soon enough, you will get your traditional pension back.

Options are valuable. I'd said that to my students in my investment class. And you should always keep this in mind as well. A 401k plan is better than traditional pensions because it gives you options. If you don't like varieties, that is fine. Just pick the most conservative one from your 401k menu. But never give your valuable options away!

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