Dealing with Late Great States

My comment posted at Transterrestrial Musings on a California bankruptcy which I have commented on before.

The most important revelation of a state bankruptcy is the demonstration that the people of that state are unfit for self government.  Hence revocation of statehood is not just punitive but recognition of the danger to the Nation of allowing a state of incompetents have a say in the management of the country.  If they are unfit for self-government they are surely unfit to govern me.  It becomes a check against the “A democracy will last until the people discover they can vote themselves money.”  Revoking statehood also becomes a huge win for federalism by allowing some states to fail and be reformed while the management of the country is handled by the responsible states.

If a state goes bankrupt it should loose its statehood.  But it should not become a territory.  That’s an insult to territories that have managed their own affairs successfully for a century.  It should rightly and correctly be called a “failed state”.  The state constitution is revoked because you’ll probably find that it is rive with corrupting clauses that were inserted that promoted the collapse.  Their congressional delegation should be ejected from the Congress.  The governor should be replaced by a governor-general appointed by the President with the advice and consent of the Senate to manage the executive functions of the state and essentially serve as the receiver, the finances fall under a team of federal bankruptcy courts to do what federal bankruptcy courts are supposed to do in place of the state legislature that failed in its responsibilities.  Congress would take over non-fiscal legislative activities.  This federal supervision would last until the failed state government is on a sound fiscal footing.  During this time, the failed people will not be voting on any federal or state elections.  Think of it as a time out.

Once the failed state is stabilized, state level elections can be organized to begin reassembling a failed state government, which will prepare a new state constitution, gradually take over state functions again and then reapply for full statehood so they can have federal representation again.

The 112th Congress should take up this issue.  If necessary, a constitution amendment may be required to authorize the federal takeover of failed states.  There are only three or four states in real threat of failing and more than 3/4ths of the states that have no desire to pay for them, so such an amendment could very well pass.

PS:  I believe US territories are exempt from federal taxation.  Something about no taxation without representation.  I don’t believe failed states should get that exemption.  They should not be reward for their incompetence.  And they had representation.  They just chose to throw it away because of their incompetence.

PPS:  Oh, yeah.  And one of the indicators of insolvency is the state paying in IOUs as California has done recently.  An IOU amounts to printing currency, since US dollars are nothing more than federal IOUs.

PPPS:  Oh, yeah.  And having the insufferable snobs in California declared unfit for self government and unqualified to vote in federal elections would be s-o-o-o-o-o-o-o sweet.

Failed States

The Weekly Standard has an article about a path for states to file bankruptcy.  Glenn Reylolds pointed to it and raised it with a comment from Volokh Conspiracy that states that file for bankruptcy should loose their statehood.

I like that idea.  For the simple reason that a state that drives itself into bankruptcy has proven itself unfit for self government.  What I will never support is a bailout of anything the state owes to itself. My rules:

• Statehood is revoked.  A state going bankrupt is not like  a person going bankrupt.  It invariably takes place over a long time with lots of people, including the People, involved and in spite of multiple layers of checks and balances including of course, elections.  It should not be called a territory.  It is unfair to territories that have managed to run their own affairs.  They should be called Failed States.
• All state property becomes federal property.  Parks, buildings, trucks, highways, you name it.
• The governor is replaced with a presidential appointee approved by the Senate.
• The legislature is dissolved and Congress has oversight.  Yeah, this doesn’t exactly sound like an improvement, but the legislature more than any other institution is responsible for the state failure.
• Federal courts acquire jurisdiction over former state courts.
• Federal bankruptcy courts take over all jurisdiction of state finances and go about reorganizing and liquidating the state’s assets just like any other bankruptcy.

I’m not sure breaking up failed states before bringing them back into the  Union is an advantage.  If California were broken up into San Fransiscostan, LAstan and the Former Great State of California Minus the Other Two Stansstan, it would make two permanent Democratic Senators four permanent Democratic senators and two open senate seats.  How does spreading the corruption improve things?

And no bailout.  There is no reason why solvent states should be dragged down by a failed state.  There should be punitive elements to this.  The intentional failure of a state should not be rewarded.  Not to the government politicos.  Not to the public unions.  Not to the people who voted stupidly for years.