California's Governor Gray Davis has gotten himself some front-page headlines, not only in California but across the country, by signing into law the first mandated provision for paid leave from work (at half pay) for people who say that they have family problems to deal with. In one sense, this is something new but, in a deeper sense, it is something that is many centuries old.
Over a period of thousands of years, those with political power have used that power to confiscate part of the wealth of those who were not likely to support them and transfer it to those who were. This has happened in monarchies, democracies, and dictatorships, all around the world. It is a very old story.
Those who wrote the Constitution of the United States were well aware of this history, so they included in the Bill of Rights a provision that the government cannot take the property of private individuals without compensation. For more than a century, this made the kind of game that Governor Davis is playing harder to get away with. But, especially within the past half century or so, judges have allowed this provision of the Constitution to be eroded away until property rights now seem almost quaint.
What this means is that politicians can play Robin Hood with impunity. And Robin Hood has always been more popular than Adam Smith.
What Gray Davis has done is impose costs on private companies, to carry out a policy that the state government wants -- but is unwilling to pay for. He has confiscated private property without compensation, transferring it to those more likely to vote for him.
It is a short-sighted policy, but there is just a short time till the next election, and none of the long-run problems are likely to show up before then.
Moreover, this gets the public's mind off another short-sighted policy that created long-run problems for Californians -- price controls on electricity that led to what price controls have led to for literally thousands of years, namely shortages. In this case, the shortages of electricity meant blackouts.
What are the long-run consequences of paid family leaves imposed by law? To businesses, it is just another cost put on them by California politicians and another reason not to do business in this state. But what are the existing businesses going to do about it? In the short run, little or nothing.