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California: Keynesian Economics Put to Test

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While red states run by Republican governors cut social programs, California’s Governor Jerry Brown is doing just the opposite, much to the chagrin of the California Republicans. Using John Maynard Keynes’ theory of taxing and spending, increases in taxes on the wealthy and corporations will be used to reinvest in the state’s infrastructure like water, schools, highways, and other public sector jobs.

Any good economist worth their salt knows that spending and taxing would help boost an economy. Much like a business, when demand is high and people have money to spend, people reinvest in the community allowing it to grow. Contrary to the Republicans/Libertarian’s supply-sided economics, John Maynard Keynes helped Former President Franklin D. Roosevelt rebound the economy. Even Richard Nixon said, “…we are all Keynesians”

Currently, California’s unemployment rate is 10.8%, and back in 2008, Californians voted for Proposition 1A, High-Speed Rail Act. The high speed train would travel between San Francisco and Los Angeles. Traveling from Los Angeles to San Fran usually takes six to eight hours by car, the high-speed rail would take two. The two cities are travel destinations between each other and the tax revenue would benefit not only the two cities but the state.


After years of delay by the Republicans as well as anti-tax conservative groups, funding has been approved by the governor after securing the necessary votes. Even President Obama gave his love for the high speed rail. The power to run the trains will be off the grid as the grid to run these bullet trains will be energized by wind power:

Image Courtesy of CHSRA


An addendum to this project is a high-speed rail from San Francisco to Las Vegas Nevada. Though a red state, the high speed rail would cut down on travel time and lessen the carbon footprint and the state of Nevada is excited about this project.

Other projects in the work for California is the Delta Plan. The Delta Plan would help farmers and thirsty Californians to the south with a new aqueduct system. The current system is outdated, and if the an earthquake 7.0 or greater were to happen, a drought would ensue causing harm to not only to the people but to the U.S. economy.

California has one of the biggest faults, the San Andreas Fault, and in Los Angeles the State’s economic hub sits atop of one of the most deadliest faults, the La Puente Fault. If a 7.2-7.5 quake were to occur, not only would it cause billions of dollars of damage, but the San Pedro ports which load and unload goods from other countries would cause a major disruption in the United States.


So with federal help, California is rebuilding our aqueduct to prepare for this and to make sure that WHEN the big one hits, we will be prepared for any disaster and our farms and people will not die.

Californians are also pushing for a single payer health plan. SB810 may not have passed the Senate Floor according to State Senator Mark Leno of District 3, but he’s encouraging everyone at the grassroots level to keep pushing, make phone calls and so on. With the passage of the Affordable Care Act, if the Medi-Cal for All passes, California can opt out of the ACA and have their own insurance for all Californians.

How will this be paid for? A state bank. Much like the Bank of North Dakota, the State of California would open up a state bank, loan money out to Californians, tack on a 2% interest and the interest would go into the general fund. So if someone buys a home for say $300,000, $6,000 or $72,000 a year would go straight into the general fund and and that $72,000 would go to pay for the Medi-Cal.

Bank of America is worth more than $600 billion. California, if it were a country, would be the eighth largest economy in the world. Even at 10% unemployment, our assets would surpass Bank of America. Doing so would help rebuild California and bring jobs back, as well as talent from around the country.


As depressing as our country is because of U.S. Senator Mitch McConnell’s goal of making President Obama a one-term president, at least one state will do their best to make sure that we would be above the fray caused by the Republicans. And yes, you are all welcome to live and work in California…oh and imagine free or affordable college tuition with a job after graduating?

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