Inflation, Population & Government

For several months I have been privileged to receive informational emails from Senator Jeff Denham, who represents California’s 12 Senate District, a verdant (if gerrymandered) expanse of land that includes vast swaths of the San Joaquin Valley, along with virtually all of the beautiful Salinas Valley to the west. Senator Denham has been resolute in his opposition to California’s economically disastrous, politically opportunistic Global Warming Act, which has earned him credibility here, and hopefully elsewhere.

Today Senator Denham’s email dealt with another topic, the size of California’s state government, another area where Denham’s stated preference for smaller state government earns him additional points. Today’s email included some comments from one of his constituents that bear analysis – here they are:

“…in 1970, California took in 28 percent of state revenues from personal income taxes. Fast forward to 2010 and you find the state now pulls in a whopping 52 percent of its revenue from personal income taxes. During this same time period, our state budget increased from $6 Billion to $120 billion, an increase of approximately 2,000 percent. All the while, our population has barely increased 100 percent. As such, you could say that for every 1 percent increase in population, our spending has increased 20 percent.”

These are dramatic numbers – but they are misleading. Unlike people, who cannot be devalued, currency is a fluid asset, whose value is only pegged relative to other currencies and the commodities we use currency to purchase. And […] Read More