Crisis is the best thing that can happen to California. However, California is not going to do any better or learn a thing from this crisis due to the paradigm of the government.
As Governor Schwarzenegger correctly stated, the state government is in trouble and cannot just print more money like the federal government (though the federal government really can’t do that either without destroying themselves).
So, instead California must take steps to fix this problem. Their steps could turn them into the leading state again and make them a model for the other states. California is in debt do to overspending but cutting any part of the government would hurt someone. However, California still has to cut 25% of its budget no matter what.
The solution is simple. The California government needs to increase the value of the dollar to the government. Instead of trying to figure which part of government should inherit more money, there needs to be a search to find out how to get more for the dollar. Money for schools needs to be cut and then returned based on performance. Or, even better, schools need to be privatized (and districts abolished) and made to compete for the money. The DMV needs to be privatized or forced to run on only its receipts. Government employee contracts need to be privatized (the unions would just love this). The operations of state parks and museums needs to be turned over to private hands, or the parks needs to be required to operate on the money they generate.
In short, the government needs to require that its services operate on the money they generate and the services that do not generate money need to be contractually privatized or given funding based on performance.
However, California will not do this. Instead, they will prepare themselves for even greater failure.The reason is because the paradigm of a politician (at least in our society) is to throw money at the problem. The examples of this expound on every level of government. Right now we are about to throw $4 Billion more dollars at GM before they have even submitted a new restructuring plan (hm . . . why don’t they just stop selling cars and give them away now?). And where did all that stimulus money go? It just got thrown at the problem, but did it fix the problem? The examples just keep going on . . . Money does not fix the problem. Thought , precision, and execution brought on by competition solves the problem.
However, all that California will do this year is cut budgets and hurt people. There will be no inspiration to improve value or production. Instead, ineffective people will lose the money they needed to be ineffective and they will just stop. That is the future, that is what will happen in California . . . and your state and my state are going to be next.