Where slavery thrived, inequality rules today

More than a century later, some experts say, a terrible institution is still exacting its price.

By Stephen Mihm  AUGUST 24, 2014

EARLIER THIS MONTH, Standard and Poor’s Rating Services, a credit rating firm that rarely weighs in on social issues, published a scathing report on income inequality and social mobility in the United States. The firm warned that current levels of inequality were “dampening” growth, and predicted that “inequalities will extend into the next generation, with diminished opportunities for upward social mobility.”

This unusual report on inequality, like Thomas Piketty’s best-selling book on the same subject, addresses unequal fortunes, declining mobility, and stagnating economic growth as national or even global problems, which demand similarly large-scale solutions. But scholars are also well aware that these problems vary greatly from place to place. Consider a recent, much-publicized study of social mobility by economist Raj Chetty and his colleagues at Harvard and Berkeley. As the illuminating map generated by that study shows, children born in some regions—Salt Lake City and San Jose, Calif., for example—have a reasonable shot of moving up the social ladder. By contrast, many parts of the former Confederacy, it seems, are now the places where the American dream goes to die.

Why is that true? At first blush, you might guess race could explain the variation. When the study’s authors crunched the data, they found that the larger the black population in any given county, the lower the overall social mobility. But there was more to the story than blacks unable to break the cycle of poverty. In a passing comment, Chetty and his co-authors observed that “both blacks and whites living in areas with large African-American populations have lower rates of upward income mobility.” Far from being divergent, the fates of poor blacks and poor whites in these regions are curiously, inextricably, intertwined.

Institutions are Built to Maintain, Automate Collective Action

Slavers Built Inegalitarian Institutions

Instead of chalking it up to race, recent research points toward a more startling and somewhat controversial explanation: When we see broad areas of inequality in America today, what we are actually seeing is the lingering stain of slavery. Since 2002, with increasing refinement in the years since, economic historians have argued that the “peculiar institution,” as it was once called, is dead but not gone. Today, in the 21st century, it still casts an economic shadow over both blacks and whites: “Slavery,” writes Harvard economist Nathan Nunn, “had a long-term effect on inequality as well as income.”

His work is representative of a new, more historical direction within economics. Its proponents believe that institutions devised centuries ago tend to persist, structuring economic reality in the 21st century in ways that are largely invisible. Their hope is that, by tracing these connections between past and present, they may be able to point the way toward more effective solutions to today’s seemingly intractable economic problems.

Engerman & Sokoloff’s (2002) Institutional-econ Hypothesis Explains Inequality and Economic Stagnation

IN 2002, two economic historians, Stanley Engerman and Kenneth Sokoloff, published an influential paper that tried to answer a vexing question: why are some countries in the Americas defined by far more extreme and enduring levels of inequality—and by extension, limited social mobility and economic underdevelopment—than others?

The answer, they argued, lay in the earliest history of each country’s settlement. The political and social institutions put in place then tended to perpetuate the status quo. They concluded that societies that began “with extreme inequality tended to adopt institutions that served to advantage members of the elite and hamper social mobility.” This, they asserted, resulted in economic underdevelopment over the long run.

More specifically, they observed that regions where sugar could be profitably grown invariably gave rise to societies defined by extreme inequality. The reason, they speculated, had to do with the fact that large-scale sugar plantations made intensive use of slave labor, generating institutions that privileged a small elite of white planters over a majority of black slaves. These institutions, their later work suggested, could encompass everything from property rights regimes to tax structures to public schools.

Harvard economist Nathan Nunn offered a more detailed statistical analysis of this “Engerman-Sokoloff hypothesis” in a paper first published in 2008. His research confirmed that early slave use in the Americas was correlated with poor long-term growth. More specifically, he examined county-level data on slavery and inequality in the United States, and found a robust correlation between past reliance on slave labor and both economic underdevelopment and contemporary inequality. He disagreed with Engerman and Sokoloff’s claim that it was only large-scale plantation slavery that generated these effects; rather, he found, any kind of slavery seemed to have begotten long-term economic woes.

Nunn also offered a more precise explanation for present-day troubles. In Engerman and Sokoloff’s narrative, slavery led to inequality, which led to economic underdevelopment. But when Nunn examined levels of inequality in 1860—as measured by holdings of land—these proved a poor predictor of future problems. Only the presence of slavery was a harbinger of problems. “It is not economic inequality that caused the subsequent development of poor institutions,” wrote Nunn. “Rather, it was slavery itself.”

Soares, Assuncao & Goulart (2012) clarify that not race but slavery intensity begets long-term economic inequality

This finding was echoed in a study by Brazilian economists Rodrigo Soares, Juliano Assunção, and Tomás Goulart published in the Journal of Comparative Economics in 2012. Soares and his colleagues examined the connection between historical slavery and contemporary inequality in a number of countries, largely in Latin America. The authors found a consistent correlation between the existence—and intensity—of slavery in the past and contemporary inequality. Moreover, this relationship was independent of the number of people of African descent living there today. As Soares said in an interview, “Societies that used more slavery are not more unequal simply because they have relatively more black people.”

The question, then, is how exactly did slavery have this effect on contemporary inequality? Soares and his colleagues speculated that limited political rights for slaves and their descendants played a role, as did negligible access to credit and capital. Racial discrimination, too, would have played a part, though this would not explain why whites born in former slaveholding regions might find themselves subject to higher levels of inequality.

Inequality-transmission Mechanism: Public Institutions are Stunted in Slavery Zones

The Toll of Inegalitarian Anti-public Institutions Over Time: A Dearth of Public Infrastructure Translates Inegalitarian Economic Growth into Economic Stagnation

Nunn, though, advanced an additional explanation, pointing to an idea advanced by Stanford economic historian Gavin Wright in 2006.

In lands turned over to slavery, Wright had observed, there was little incentive to provide so-called public goods—schools, libraries, and other institutions—that attract migrants. In the North, by contrast, the need to attract and retain free labor in areas resulted in a far greater investment in public goods—institutions that would, over the succeeding decades, offer far greater opportunities for social mobility and lay the foundation for sustained, superior economic growth.

As it happens, a contemporary critic of slavery took it upon himself to measure some of these differences between North and South. In 1857, a Southerner named Hinton Rowan Helper published an incendiary book titled “The Impending Crisis.” Though a virulent racist, Helper was no friend of slavery, and he quantified in excruciating detail the relative number of schools, libraries, and other institutions in both free and slaveholding states, finding time and again that his region failed to measure up to the North.

In Pennsylvania he found 393 public libraries, but in South Carolina, a mere 26. In the South, he observed, “the common school-house, the poor man’s college, is hardly known, showing how little interest is felt in the chief treasures of the State, the immortal minds of the multitude who are not born to wealth.”

Antisociological Denouement, or Even Institutional Economists are Professionally, Dogmatically Adverse to Admitting Preferences Are Socially-constructed through History

Institutionalized Hegemony Can Divorce People from Their Own Interests: Southern Whites Surprised to Find They Benefit When Public Institutions Imposed

WHAT SOMEONE like Helper may not have foreseen is that the abolition of slavery would not cure these ills. The destruction of slavery did not destroy all the political institutions, social mores, and cultural traditions that sustained it. Nor did it make public institutions, of the kind that the north had been building for decades, suddenly come into being.

This notion about the “persistence” of economic institutions is part of a larger dialogue within economics. Economists ranging from MIT’s Daron Acemoglu to Harvard’s Melissa Fisher have examined how institutions and practices adopted centuries ago can shape economic reality. But not everyone buys the idea that the past can structure the present in such an enduring, predictable fashion. Wright is among the critics of this approach; he is skeptical of Engerman and Sokoloff’s hypothesis. “The persistence of inequality per se is a myth,” he says, pointing to research that highlights the degree to which inequality has ebbed and flowed in Latin America.

Wright counts himself “unconvinced” regarding comparable claims about the United States. “No doubt slavery has played some kind of background role,” he concedes. But he sees the relationship between historical slavery and contemporary inequality as an interesting correlation, not a directly causal one. Correlating one variable with another across the centuries “isn’t the same as writing history,” he notes. “If you don’t connect the dots, you’re just groping.”

Another criticism of the “persistence” school is that it may justify passivity. If counties or countries have always been poor or unequal because of something that happened so long ago, what chance do contemporary policy makers have at deflecting the dead hand of the past?

But there is room for hope, as Wright’s own research would suggest. In “Sharing the Prize,” an economic history of the civil rights movement published in 2013, Wright found that efforts to end discrimination paid substantial, enduring benefits to black Southerners. Perhaps more surprisingly, he found that the movement benefited whites, too. Many poorer whites found that that the destruction of the old order—the end of poll taxes, for example—ushered in increased levels of public funding for schools, newfound political power, and a host of other economic, political, and educational benefits, particularly in the years immediately following the passage of the Civil Rights Act.

Positive Affirmations for Liberals

That revolution, of course, is still a work in progress. As we’ve been reminded over the last two weeks by the clashes in Ferguson, Mo., between mostly black protesters and a mostly white police force, there’s a long way to go before the vestiges of slavery are fully and finally made a thing of the past. But this new body of research may help us grasp that solutions to persistent inequality will require more focused policies. Increasing the level of food stamps, as economist Paul Krugman has suggested, might help, but it is perhaps too diffuse and indiscriminate a solution.

Instead, the best way to deal with the lingering effects of dead institutions like slavery may be to create regional institutions aimed to promoting social mobility and economic growth. Georgia, for example, has tried to level the field with the “HOPE Scholarship,” which enables high schoolers with a “B” average or higher to attend in-state public colleges and universities for free and private in-state schools at a heavy discount.

Such programs, with some modifications, could go a long way toward promoting social mobility in the former slaveholding regions of the United States. That’s not to say that the problems will be easy to solve. But the progress we’ve already made, both politically and economically, would suggest that while we may live in slavery’s shadow, we are not prisoners of the past, either.

Stephen Mihm is an associate professor of history at the University of Georgia, and co-author, with Nouriel Roubini, of “Crisis Economics: A Crash Course in the Future of Finance” (2010).

This article was published online in the Boston Globe in 2014; but as of 2019 it is no longer available online, so I have added it here. I have added my own subtitles to help Sociologists navigate through Mihm’s disciplinary metaphysics and personal politics.

References

Chetty, Raj, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez. 2014. “Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States.”

(Note for Community Economic Development research: Patrick Kline is the econometrician in this group. He also publishes comparative economic assessments of “place-based policies.”)

Engerman, Stanley and Kenneth Sokoloff. 2002. “Factor Endowments, Inequality, and Paths of Development Among New World Economics.” NBER Working Paper 9259.

Helper, Hinton Rowan. 1857. The Impending Crisis of the South. New York.

Mihm, Stephen. 2007. A Nation Of Counterfeiters: Capitalists, Con Men, And The Making Of The United States. Harvard.

Nunn, Nathan. 2008. The Long Term Effects of Africa’s Slave Trades. Quarterly Journal of Economics 123 (1) : 139-176.

Piketty, Thomas. 2014. Capital in the 21st Century.

Soares, Rodrigo, Juliano Assunção, and Tomás Goulart. 2012. “A Note on Slavery and the Roots of Inequality.” Journal of Comparative Economics 40(4):565–580.

Wright, Gavin. 2006. (Note: Berkeley’s Wright is retired. I cannot locate this reference. Might have to email Mihm.)

Wright, Gavin. 2013. Sharing the Prize: The Economics of the Civil Rights Revolution in the American South. Cambridge, MA: Belknap.

 

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Canadian semi-public health care

The problem with Canadian health care is not that it is too socialized. It is that it is too capitalist. It places too high a priority on delivering profit to doctors and hospitals. Indirectly, this works out pretty well for those consumers who have pronounced medical-intervention requirements, and thus can serve as profit-delivery vehicles to doctors and hospitals.

In the US, by comparison, only rich people can serve as profit-delivery vehicles to doctors and hospitals, so the advantage of the US’s extreme, conservative-liberal medical market regime is that rich consumers deliver the fattest profits to the doctors, so that some doctors in the US, the ones with the richest medical consumers, can get FAT rich. On the other hand, the Canadian system controls pharmaceutical rents. US policy favors pharmaceutical sales reps’ power over doctors. And HMOs take rents and provide another layer of market domination over US doctors.

However, this is not to say that Canada’s is a fully-developed health care system for humans. It’s medicine, triaged for capitalist requirements. Because Canada is liberal.

If you are not regularly sick or requiring physical relief and readjustment, then you are excluded from the Canadian health care system. You can’t deliver steady money to doctors and hospitals, then you are likely to not be able to access a doctor. You have to rely on continuing exercise, good food, luck, and, if you’re an adult with a little income or wealth, affordable physiotherapy. This is not too much different from Americans, though the adult access to effective, affordable physiotherapy is superior in Canada, and is an okay skeletal (ha! see what I did there?) health care system for usually-healthy adults.

However, normally-healthy Canadians often do not have access to doctors for health monitoring (eg. through childhood development or changes through aging) and consultation, nor for treatment of unusual, fleeting, or minor diseases and injuries, however much these may impact the body’s structural integrity and development. Thus, without exposure in their practice, Canadian doctors are not as adept at identifying health issues that crop up amongst a generally-healthy population. Canadian doctors tend to become experts in cancer, heart care, and broken bones. Neither liberal subject, Canadian or American, has decommodified access to dental care. This is to say that bodily structural integrity and development is never a right nor a priority in a liberal-conservative regime.

But if your luck runs out in a way that is a fast, explosive emergency (broken bones, cancer, heart events), then unlike most Americans, Canadian citizenship includes social protection in those emergencies, as access to medical treatment. And because the sick and differently-abled have access to medical intervention regardless of their own private wealth, Canada has better control over infectious diseases.

The carceral core

the carceral state 21st c

From Bauman, Valerie. 2018. “Incarceration vs. education: America spends more on its prison system than it does on public schools,” The Daily Mail, 25 October.

Trump Republican Support Base: Construction Firm Owners

Construction firm owners throughout the US are unified in their appreciation for Trump-led policies like diminished corporate income taxation (down to 21%), the removal of labor protections like the Fair Pay and Safe Workplaces Act, and federal infrastructure investment. Despite regionalized labor strategies, they are committed to maintaining their solidarity as owners along with their support for Trump Republicanism.

The US construction labor market has been developed so that it cannot be sustained without sub-socially-average wages. Thus, construction labor wages and markets are tiered in two different regionalized ways in the US.

In deunionized US regions, construction firm owners depend on imported labor from global regions with lower social reproduction costs. 25% of the US’s construction labor are immigrants or migrants. With not only reduced rights, but also the complete absence of state rights protection, these workers are highly vulnerable to wage theft and inhumane working conditions, which class predation is institutionalized and normalized in anti-union regions. Latino workers are at higher risk of on-the-job fatalities than other workers, according to a recent report from the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), and 67% of Latino workers killed on the job are immigrants. In 2016, 991 construction workers were killed, which was the highest number of any sector.

Firmly in real estate capitalist Trump’s political coalition, construction firm owners in unionized construction regions are not directly, negatively impacted by anti-immigration policy. For flexible, cheap labor, construction firm owners in unionized economies, like New York, use high school graduates, women, and veterans in apprenticeship programs. Their second option for obtaining cheap, flexible construction labor is importing construction labor from deunionized US regions, as North Dakota did to build oil fracking infrastructure.

The democratic advantages of the union-region approach to below-market cost, flexible construction labor are that there is possibility for below-cost apprentice labor to eventually move into working at social reproduction cost. Depending on to what extent women are transitioning from apprenticeship to full-paid work, apprentice-based cheap labor may or may not eventually de-gender the construction labor market. The economic costs of the union-region apprenticeship system are socialized and spread over time: It requires public subsidy to firm owners for the employment of that cheap, flexible labor market, and it saddles those workers with apprentice backgrounds with lower lifetime earnings, which will suppress their consumption capacity and intergenerational social reproduction relative to workers paid at the socially-average wage.

However they are differentially-impacted by anti-immigration policy, they are unified by anti-immigrant, anti-worker, and pro-capitalist policies, and construction firm owners are able to prioritize owner solidarity.  Together they are calling for the expansion, to construction firms, of ag owners’ slaver exemptions from labor laws. US policy, rooted in the slaver-region institutions and relations that had to be maintained in the New Deal, exempts ag and domestic workers from state-protected citizenship rights, including civil rights, political rights, social citizenship rights, and human rights.

While expanding labor power resources, the New Deal also expanded slavers’ labor institutions across the agriculture-dominated regions, so that Southern Democrats were able to secure some of the slavery-expansion ambitions that the 1861-1865 Civil War foiled.

If such an exemption is granted, the current occupation of the US presidency, by real estate capital, may facilitate construction owners to further expand slavers’ labor institutions, shifting more weight in the US to the appropriation base of the capitalist economy.

It is for such reasons–opposition to slavery–that at the very least, the liberal-left should learn from all its regrets at repeatedly joining neoliberal intervention coalitions sold on behalf of the marginalized, including education privatization, managerializations and surveillance, and carceral expansion.

It is time to become politically literate to the fact that conservatism has an altruistic brand, and it has always been aestheticization and patronage of the marginalized, the exception. And yet, neoliberalization, the conservatization of liberalism, has not been, as it was philosophically marketed, a corrective to the excesses of egalitarianism. It offered us moral “sweeteners” for the marginalized, and diverted us from just egaliberte development.

Now here we are, with egaliberte at the vanishing point in the rearview mirror, with conservatism fully at the helm, and attempting to offer an expensive, wasteful, lame sweetener–a border wall–not for the margins, but symbolically for average people and materially, substantively for their construction bosses. This is what elitists call populism. It is time to consider the ways in which a contrasting egaliberte approach can alone humanize and liberate both average people and the exceptionally-dehumanized, at the cost of isolating those among the exceptionally-superhumanized who will not use their entitlements for democratic advancement–a cost which would be a benefit.

When I was in political policy, we had to, standard, concoct “sweeteners” to package with (and market) policies that civil society groups would dislike. For Republican coalition members like construction firm owners, that packaging is reversed, as massive social wealth is funneled to them, with bitter (or small annoyance) pills tucked in to maintain the broader coalition.

Construction owners in the Trump coalition contemplate the Trump regime’s package of gifts and bitter pills. The chief bitter pill for construction owners is reduced access to migrant labor, but this only immediately impacts construction firm owners in deunionized regions.

The US government gave construction firm owners the following gifts, acknowledged in the industry’s online reporting:
1) Reduction of the official corporate income tax rate down to 21%.
2) Making labor more vulnerable: Dismantling labour protection legislation, including the Labor’s Fair Pay and Safe Workplaces Act.
3) Proposal for $200 BN in federal infrastructure spending, with bipartisan support, as post-2007 economic stimulus ends.
4) $1.2 BN in federal funding to states for vo-tech training for the construction industry and to proliferate small business.

 

For construction trade news & analysis, see: https://www.constructiondive.com/deep-dive/

In 2004 the International Court of Justice, citing human rights and humanitarian law, ruled Israel’s settlement barriers through the West Bank to be illegal. In Israel’s online comms, it cites the following as justification for its walls clearing out Palestinians and North African immigrants and establishing Israeli settlements, and its further plans for surrounding the entire territory in a “security fence.” Note that the US plays a primary role in the justification, and Britain, Saudi Arabia, and India are also primary models of–and possibly exponents of–the policy and militarized gating market.

“The United States is building a fence to keep out illegal Mexican immigrants.

Spain built a fence, with European Union funding, to separate its enclaves of Ceuta and Melilla from Morocco to prevent poor people from sub-Saharan Africa from entering Europe.

India constructed a 460-mile barrier in Kashmir to halt infiltrations supported by Pakistan.

Saudi Arabia built a 60-mile barrier along an undefined border zone with Yemen to halt arms smuggling of weaponry and announced plans in 2006 to build a 500-mile fence along its border with Iraq.

Turkey built a barrier in the southern province of Alexandretta, which was formerly in Syria and is an area that Syria claims as its own.

In Cyprus, the UN sponsored a security fence reinforcing the island’s de facto partition.

British-built barriers separate Catholic and Protestant neighborhoods in Belfast.” –AICE Jewish Virtual Library

Open Borders has been the longtime position of the Chamber of Commerce. But since the rise of the DHS’s E-Verify employer-worker surveillance program at the turn of the 20th century, and subsequently I-9 software programs, and particularly since Trump instituted the Family Separation policy, the Chamber and the Business Roundtable have led a coalition of legal institutes, particularly immigrant-defending legal institutes, and organizations opposing ethnic and racial discrimination, around the fight for the Chamber’s Open Borders interest.

They are opposed by those software firms selling HR departments I-9 software, as well as by private prison corporation Southwest Key (Texas nonprofit that repurposes Walmarts into prisons as well as owning charter schools. Its CEO makes $1.5/year.); MVM (Virginia prisoner transport business); Comprehensive Health Services (Florida), Dynamic Services Solutions (Maryland), Exodyne-Dynamic Educational Systems (Phoenix, AZ) suppliers of child imprisonment guard staff. One-fifth of Americans today work in guard labour, according to Bowles and Jayadev.

Border Wall Profiteers:

Congress set aside $20 million grants for businesses to build border wall prototypes.

The companies chosen for the concrete prototypes were Caddell Construction of Montgomery, Ala.; Fisher Sand & Gravel/DBA Fisher Industries of Tempe, Ariz.. (HQ ND); Texas Sterling Construction in Houston; and W.G. Yates & Sons Construction in Philadelphia, Miss.

“According to the GAO report, CBP spent only about $5 million directly tied to the construction and testing of the prototypes themselves, including $3 million for the eight contracts awarded to the six companies, including two from Arizona.

Customs and Border Protection said the remaining $15 million was used for “planning activities such as environmental and real estate planning,” for the current fiscal year in Texas’ Rio Grande Valley, the busiest area along the border, and the top priority to build additional fencing.” –AZ Central.

 

Dysfunction-function junction

“Hamilton-Paterson sees the destructive impact of the ‘money men’ on industries more clearly. The catastrophic and unnecessary fate of ICI (which broke the hearts of some of my own chemical-engineering relatives) came about as men and women with long shop-floor experience and technical qualifications were pushed out of management by newcomers who claimed to be financial wizards. They weren’t. They played the great corporation for short-term stock-market gains, and they lost.

Hamilton-Paterson adds the example of Network Rail’s bungled electrification of Great Western (its cost rose in two years from £874 million to £2.8 billion). ‘That’s privatisation for you: layers upon layers of managers and accountants who know nothing about railways. The old British Rail alternative was layers upon layers of experienced railwaymen who knew nothing about accountancy but who did know exactly what electrifying a line entailed and simply got on and did it.’ Later in his book, he attacks the notion (‘holy writ’ today) that a college degree in management enrols one in a portable profession in which it hardly matters what a company does.”

Neal Ascherson, “As the toffs began to retreat” LRB 40(22).

If your goal is to play the institution housing an accretion of wealth–the corporation, or the privatized public good/service–for stock-market gains, then it very much doesn’t ever matter if you accomplish any substantive social or environmental goals.

“People talk easily about political ‘consensus’ in the postwar years. Edgerton disagrees. There was no lasting consensus between the parties on the welfare state, he says, and the idea of a ‘Butskellism’ common to Labour and Tory is a myth. Only for the ‘warfare state’ was there a consensus, to keep its secrets and to pay its vast bills. Britain’s hugely profitable arms trade is an enduring by-product of that state, and here Hamilton-Paterson contributes an unsettling thought. ‘It is the arms industry perhaps more than any other that best preserves the inventive standards and traditions of British engineering, research and technical expertise.’”–Ascherson

Michael O’Hare’s "Letter to my students"

Here is the link to Michael O’Hare’s “Letter to my Students.” Berkeley Blog 8/24/10.


An excerpt:


“Swindle – what happened? Well, before you were born, Californians now dead or in nursing homes made a remarkable deal with the future. (Not from California? Keep reading, lots of this applies to you, with variations.) They agreed to invest money they could have spent on bigger houses, vacations, clothes, and cars into the world’s greatest educational system, and into building and operating water systems, roads, parks, and other public facilities, an infrastructure that was the envy of the world. They didn’t get everything right: too much highway and not enough public transportation. But they did a pretty good job.

Young people who enjoyed these ‘loans’ grew up smarter, healthier, and richer than they otherwise would have, and understood that they were supposed to “pay it forward” to future generations, for example by keeping the educational system staffed with lots of dedicated, well-trained teachers, in good buildings and in small classes, with college counselors and up-to-date books. California schools had physical education, art for everyone, music and theater, buildings that looked as though people cared about them, modern languages and ancient languages, advanced science courses with labs where the equipment worked, and more. They were the envy of the world, and they paid off better than Microsoft stock. Same with our parks, coastal zone protection, and social services.

This deal held until about thirty years ago, when for a variety of reasons, California voters realized that while they had done very well from the existing contract, they could do even better by walking away from their obligations and spending what they had inherited on themselves.”