One of the issues that I discussed extensively in the first part of Red States, Blue States and the Coming Sharecropper Society is the concept of red state and blue state economic cultures, and their impact on the economies of the various states and regions of the country. In looking at the California state budget and the approaches that the Democrats and Republicans are taking, the budget highlights the nature of red state and blue state cultures, their historical roots, and how they affect us today.
In brief, the economic systems of both cultures date back to colonial times, with the red state culture centered in the South and the blue state culture centered in New England. Both cultures migrated from their base to other parts of the country and today we see these economic models functioning as they spread to what are generally called red and blue states (although people may have different lists that comprise these states).
The red state culture emphasizes conservative values in general, low taxes, and tends to favor capital over labor. It also tends to generate greater inequality and greater indebtedness. The blue state culture emphasizes higher taxes and more government involvement in the economy in the form of infrastructure projects, particularly education and transportation. In general, the states that have organized around a blue state culture model are the wealthier states in the union.
California has been the quintessential blue state since the advent of the Progressive Era. Key to its development as a blue state has been the development of its public education system, notably higher education. The development of the University of California, the California State University and the community college systems have been the bedrock of economic development in this state. Likewise, the development of the highway and water systems were also building blocks of the economy. Such projects do not come cheap. They require substantial tax revenues in order to maintain them, and California has among the highest income and sales taxes (though not property taxes) in the nation. The blue state culture formed in California has created one of the ten largest economies in the world.
The debate going on over the current state budget is essentially a referendum over whether the current blue state culture shall continue. The Democrats in the legislature are fighting to maintain the blue state culture and the educational system, in part through raising taxes either by higher rates or expanding the tax base. The Republicans in the legislature say that any tax increase is a deal breaker, even though the tax cuts during the Davis Administration have not been restored. This is classic red state culture thinking. Where it has been applied in the country, it has stifled real economic development, exploited workers, impoverished states and communities, and created a neo-third world economic environment in many parts of the country where it has been dominant.
What is at stake in this budget is no less than the political, economic and cultural future of this state. It is vital that the California Democratic Party impress upon the voters the need for California to continue its blue state cultural orientation to maintain the economic viability of this state.
Having said that, we cannot ignore the fact that we are at the beginning of a financial catastrophe created by a global real estate and financial bubble unlike anything we have seen since before World War II. By the time we come out of this crisis, we will be living in a state and a country that we will hardly recognize and Democrats and Republicans will be forced to make concessions on budget items that they never imagined would be on the table. But what we do know about previous financial crises is that those states that maintain blue state cultures are the ones that develop the new products and industries for the resulting new economies. It is essential that Democrats keep this in mind when advocating their proposals to the voters.
Steve Cummings is a member of the Ventura County Democratic Central Committee, Controller for CDC, and the Southern VP for the California Federation of Democratic Central Committee Members. His book, Red States, Blue States, and the Coming Sharecropper Society, was published by Algora Publishing, NY in April.