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The New Nihilism

"[N]ihilism ... a doctrine or belief that conditions in the social organization are so bad as to make destruction desirable for its own sake independent of any constructive program or possibility." -- Webster's New Collegiate Dictionary (Merriam).

By Frank Gruber

Last week when I wrote that the rhetoric against the school parcel tax reminded me of a bad Howard Jarvis press conference I didn't know that on Tuesday I would receive in the mail a flyer with a picture of Jarvis himself -- fist raised like a suburban Lenin -- urging me seventeen years after his passing to vote no on S.

This during the same week that President Bush achieved his third huge cut in taxes -- part of a conscious policy to limit forever what government can do, by turning us into a permanent debtor nation to the world, without any "constructive" possibilities.

Strange that this country that is so successful has so many malcontents -- so much discontent among the most fortunate.

Right-wing nihilists.

* * *

Americans dump on government, but we have an amazing tolerance for capitalism and all its brutal vagaries. I suppose this is rational, since on a macro basis capitalism has been successful at what it purports to do -- create material wealth -- and specifically because it has been much more successful at doing so than those other more idealistic materialist systems that people have tried instead.

But the ups and downs of the "business cycle" show that those geniuses in the private sector aren't any smarter than the bureaucrats in government who bring us, day-to-day, a reliable product at a reasonable price.

In some cases -- public education, for instance -- the social return on the investment is better than that offered by the best mutual fund.

Some years ago when I was more active in the film business I used to invest occasionally in companies in the industry that I thought were well managed. I bought a little stock in New Line Cinema. A couple years later Ted Turner bought New Line -- he liked the management, too.

Turner was a capitalist genius who turned a couple second-rate sports franchises into a media empire. He knew how to create wealth. Later, in another strategic move, Turner merged his company into Time Warner, and then things really started to click for my stock.

At one point my little investment had become serious money, and I appeared genius-like, too. The relatives who had bought New Line on my advice looked at me with new respect.

Then Turner -- the biggest shareholder in Time Warner -- and the other genius capitalists there decided to sell the company to AOL, and did so based on the hugely overvalued price of AOL stock at the height of the tulip market, oops, I mean stock market.

The most brilliant capitalists in America couldn't recognize a bubble when it was staring at them in the face.

I bring this up because at the moment capitalism is clobbering government. Governments at all levels except at the federal, where the government doesn't need to balance the budget, are facing huge deficits not only because of the "slowdown" in the economy, but also because of the stock market "correction."

For instance, here in California, when the stock market was booming, governments increased their commitments to pay pensions to their employees. These commitments were easy to fund when stocks were up, but require hard cash now that the market is down.

The biggest factor in the City of Santa Monica's deficit is not the slowdown in the economy. Tax revenues, in fact, are rather stable. The biggest hit is a $7.3 million increase in one year in the amount Santa Monica must pay into the state's public employee retirement system. The increase over two years is $11.4 million -- about ten percent of the City's annual general operating budget.

Santa Monica isn't alone in having bet on the stock market -- the L.A. Times ran a story last week about how Orange Country has to come up with $734 million to fund its pension fund obligations.

I don't mean to let City officials off the hook for believing the good times would never end -- I've reported before how the City Council irresponsibly increased the City's operating budget 23.4 percent between 2000 and 2002 -- but then if I had sold my Time Warner stock in 2000 my retirement would be more secure now, too.

* * *

I'll be writing more about the City budget in the next few weeks, but whatever one might feel about how the City manages itself fiscally, it has nothing to do with the schools.

The nihilists who oppose the schools' parcel tax must know that the School District, as opposed to the City, has virtually no control over its revenues, and they must know that the School District runs a tight ship and delivers a good product, because the nihilists' primary argument against the parcel tax is that the City wastes money on programs they don't like.

In the good old days, school boards had the nearly unique right to raise taxes for the one, singularly important public purpose of educating children. They no longer have that right. Beholden to a state government that would rather fund prisons and highways, the schools have to beg.

It's perverse and disgusting to say now that we shouldn't support our schools because they can't beg enough from the City. If you don't like how the City is run, elect a different City Council -- but don't take it out on the kids.

Vote Yes on S.

The views expressed in this column are those of Frank Gruber
and do not necessarily reflect the opinions of The Lookout.
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