Social

1
Social Political Environment of
BusinessUGBA 107 Discussion 9October 31,
2003Rachel Fleet
2
Housekeeping

• Rachel Fleet
• fleet_at_haas.berkeley.edu
• Office hours
• None right now
• E-mail me with questions
• Papers
• See Website
• Gerlach to discuss key issues in class

3
Blind Class Polls

• How many California citizens?
• Registered Democrats?
• Registered Republicans?
• Other/Independents?
• Voted in Primary?
• General election?
• Recall?
• Yes on recall?
• No on recall?
• Voted for Arnold?

4
Democrats vs. Republicans

• Characteristics of each
• Attitude toward business?
• Federalism
• Areas of difference and overlap
• On the spectrum, where are
• Arnold Schwarzenegger
• Bill Clinton
• George Bush
• Milton Friedman

5
Excerpt from Arnolds Op-Ed in WSJ (9/24)

• I have often said that the two people who have
  most profoundly impacted my thinking on economics
  are Milton Friedman and Adam Smith. At Christmas
  I sometimes annoy some of my more liberal
  Hollywood friends by sending them a gift of Mr.
  Friedman's classic economic primer, "Free to
  Choose." What I learned from Messrs. Friedman and
  Smith is a lesson that every political leader
  should never forget that when the heavy fist of
  government becomes too overbearing and intrusive,
  it stifles the unlimited wealth creation process
  of a free people operating under a free
  enterprise system.
• And that is the essence of the economic and
  fiscal crisis that confronts the state of
  California today. Over the past five years our
  state budget has grown nearly three times the
  pace of inflation. Our debt burden has risen by
  more than the other 49 states combined. The
  matrix of onerous regulations we impose on
  property owners and businesses has made the cost
  of doing business in California almost twice as
  high as in neighboring states. Our tax rates have
  become among the highest in the nation.

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California Politics

• What makes California different from other
  states?

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California Recall

• History of Recall
• In California, Initiative, Referendum and Recall
  were established (ratified by voters in special
  election) in 1911 by Governor Hiram Johnson and
  new Progressive majority in the legislature, who
  had launched a campaign against Southern Pacific
  Railroad-controlled Sacramento politicians.
• The first significant statewide initiative
  abolished the poll tax in 1914, and approved a
  construction bond initiative for the University
  of California
• Use of Recall
• 60.9 of U.S. cities have recall provisions,
  exceeding the percentages for initiative (57.8)
  and popular referendum (46.7).
• There have only been two successful recall
  efforts for Governor. 
• 1921 North Dakota Governor Lynn Frazier
• 2003 California Governor Gray Davis
• Grounds for recall?
• Results of recall
• More people voted in recall than in initial
  election

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Overall Recall Results
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Results by Candidate
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Additional Thought Questions

• What major challenges does Arnold face?
• What do you think of his plan?
• Will he run for US President?
• How will he fare?