☆ Libertarian VP candidate Mike ter Maat: Prop 5’s defeat reflects a national tilt toward fiscal conservatism (1/2)
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The rejection of Prop 5 this November is a victory for democracy, communities, and the rights of property owners. So says 2024 Libertarian VP candidate Mike ter Maat, who argues that you don’t even have to be that fiscally conservative to shy from excessive borrowing. In this Opp Now exclusive Q&A, the Virginian economist also questions why a proposition to amend the CA Constitution could have been allowed to pass with only a bare majority.
Opportunity Now: You ran a national campaign on the Libertarian ticket. How did it go?
Mike ter Maat: I was pleasantly surprised. The truth is, most Americans have a libertarian streak. They wouldn't characterize it as such; but they are open to fiscal conservatism; avoiding a financial disaster; fighting inflation; and a new, fundamentally different form of monetary policy to avoid inflation in the future.
ON: You know that Californians defeated Proposition 5, which would have made it easier for local governments to borrow money.
MtM: Yeah, and let me make sure what I understand is correct. The vote to enact Prop 5 only required 50%?
ON: Correct.
MtM: That’s so interesting, is it not, that a 50% vote would have mitigated a 67% requirement down to a 55% requirement?
How did they pick 55%, instead of 50.1%, or 65%? I'm sure it was a political calculation.
ON: And yet, Prop 5 didn’t pass with even a bare majority. Why do you think that is?
MtM: I'm a Virginian, so I’ll be careful about anything a Virginian might say to try to interpret what Californians are thinking…
ON: You’re allowed.
MtM: So, if I were casting that vote, I would look askance at the idea that this proposition would, through only a bare minimum majority vote, change our constitution.
It just feels like a lack of control. I would feel better about making a change to my constitution if I knew it required a supermajority, something more than just 50%. I know that some people complained about that, too. I don't know whether that moved a lot of votes, but certainly that was a point of discussion.
ON: Do you think Californians are more fiscally conservative now than they've been?
MtM: A little bit, but you don't have to be terribly fiscally conservative to push back against local communities making it easier to borrow money.
There have been communities that have gotten into trouble because they borrowed too much. They’ve borrowed money for what people thought were legitimate purposes, and then ex post felt like those weren't very good decisions.
In other words, the history of public finance is truly riddled with mistakes and regrets and a lack of fiscal conservatism.
ON: A lot of people still think easy borrowing is a good idea.
MtM: Even if you thought it was a good idea for a community to borrow money, and even if you were okay with changing the constitution with just a plain majority, when it comes to something like Prop 5, there is a Libertarian pause.
ON: A Libertarian pause?
MtM: Yeah, to ask why a majority of people have the authority to impose on the minority an obligation to repay debt that they wouldn't have agreed with in the beginning.
There’s a philosophical conundrum, right? Even if you had a two-thirds majority, what are you going to tell the one-third that didn't want to borrow this money?
It’s one thing to get voted down. It's another thing to get voted down and taxed. That’s a tough pill to swallow.
ON: The two-thirds threshold goes back to California’s 1879 constitution, precisely to help protect the minority.
MtM: But that’s still philosophically challenging. Anything less than 100% causes you to ask the 99%, "Who do you think you are?"
I wonder, as a thought experiment, if you were to put a referendum on the California ballot that said we wanted to increase the voter approval requirement from two-thirds to four-fifths, or to three-quarters. I wonder how it would do.
A lot of people assume it would do very poorly, but based on what we just saw on November 5th, maybe we’re wrong about that.
ON: Well, Prop 5 got trounced, with fewer than 45% of Californians voting in favor. Is that encouraging to you?
MtM: Yes, and I believe we will move in the direction of measures failing to get two-thirds approval to borrow money. As a nation, we are going to become more fiscally conservative. Our federal government is headed for a financial crisis that's going to be quite impressive, and potentially quite disastrous.
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