Bill Mundell: Knowing state balance sheet is key to a prosperous future

April 28, 2012

CALIFORNIA, the dream of dreams, the ultimate vision of America and the world, the land of the gold rush, Hollywood, Silicon Valley, is stuck. But it can and must restart its power; we must take back our future. How can we get back our prosperity, our dream? First, we must know this: The present crisis in California, in fact, is not just about its finances, it is not just about the mountain of debts threatening to crash the eighth largest economy in the world. It is about the rights of the people of California to their common wealth.

The people of California have the right to know clearly what belongs to the state and what it is worth. This will not simply serve to satisfy their curiosity, which could be reason enough for it, but to understand how many untapped resources are in the hands of bureaucrats often unwilling to reveal this information for fear of losing their power.

We don’t know for sure, because the state does not tell us, but I do think there are hundreds of billions of state assets that are unaccounted for or undervalued. All we know is that there are more than 33,000 assets. It is all state property, belonging to the people of California but not in their control.

The state of California needs a balance sheet to see its wealth and show to the people what is there. The balance sheet will not just make an account of the state’s assets, it will provide the tools to move power from the bureaucrats to the people.

This is the first step to thinking about what can be done about our economy and our future.

Knowledge is power. We know California ‘s weaknesses: almost $100 billion in debt, $100 billion plus in unfunded pension liabilities. These numbers could bust the state.

But California is strong, we feel it when we walk in the streets, when we look around our forests, our cities, our parks, our incredible beaches, at the creativity of our people.

For a century, Hollywood has been setting the pace of global storytelling, by creating the modern myths that shape the mind-set and the imagination of people from Africa to Asia. This is not changing: That hill is still the Mecca of everybody who wants to dream of a different world.

Moreover, Silicon Valley has brought a global revolution with its PC, Internet and mobile phones, every bit as important as the industrial revolution that moved the world from farming to modernity. The planet has shrunk, flattened, changed shape and form thanks to the immense boost brought by this contribution from California.

I trust that in reality the state of California is rich and powerful; it is only the lack of knowledge about our basic rights, our possessions that is blinding us into poverty and despair. We have to cast aside this veil: We have to know what is under our feet and belongs to us.

For years, Californians have seen ominous headlines about annual deficits in the tens of billions, and unfunded pension liabilities that will bankrupt the state. But if we had a real balance sheet, we could instead be hearing that the state’s assets far exceed its liabilities, and that California is solvent.

Just that simple knowledge would have very immediate and tangible results: its attendant impact on the ratings of the state and therefore its interest rates. That is, the state would pay less interest on its debts and we all would be richer.

Why aren’t we doing it? Does someone wish to make Californians poor?

Is it a plot by some bureaucrats hoarding power and pulling the strings from behind?

No matter what the answer, the power has to be given back to the people in order to rekindle our state’s fortunes and boost its economy.

If the state of California does not want to produce a balance sheet, which is its fiduciary responsibility, then perhaps we should do it ourselves.

Bill Mundell is a Los Angeles-based entrepreneur, who was the executive producer of the acclaimed 2010 documentary “Gerrymandering.” He has taught economics at the Anderson School of Management at UCLA.

[Daily News]

[Fleischman Report]

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