The World

When people say that California represents the future, they usually mean it nicely – they are thinking about hi-tech industries, or popular culture, or environmentalism. But reading Matthew Garrahan’s piece on the golden state’s budget travails in today’s FT, I wondered whether California now represents the future of the west – but as a nightmare, rather than a pleasant dream.

The Californian budget crisis is so severe that all public employees are having to take pay cuts. Public-health services are under serious threat, and there is talk of pushing Aids patients and the terminally-ill out onto the streets. It has proved impossible to raise taxes any further and the bond markets are in revolt. California is looking to Washington for help. But with the federal government running budget deficits of 12% of GDP, and the federal debt pushing up towards 100% of GDP – you have to wonder whether California’s present might, once again, be America’s future.

Matt Garrahan’s piece also left me feeling slightly embarrassed. In my last column for the paper on the politics of autsterity, I argued that only countries in Central Europe or Latin America were having to make really tough choices about public-spending. California’s travails show that bits of the US are already having to face the politics of austerity. (And I know California isn’t a country – but, famously, if it were it would be the eighth largest economy in the world.) So far the political fall-out seems reasonably limited and Governor Terminator remains popular. Still, it’s early days.