… California is now called a “dysfunctional”, “ungovernable” and even “failed” state. When Mr Brown began his first stint as governor, California had an AAA credit rating, the best there is. Today its rating is A-, the worst among all 50 states and not much better than “junk”. The boss of JPMorgan Chase, America’s second-largest bank, last year told investors that he was more worried about California’s solvency than Greece’s. For three years and counting, California has been mired in a budget crisis. At its nadir, the state was paying its bills in IOUs instead of cash. …
I’ve never understood how California can be failing. This article helps clarify:
The people’s will
California is an experiment in extreme democracy gone wrong, says Andreas Kluth. But reform could make it a model for others …
starting in 1978, the culture and system mutated. Jerry Brown was governor when Californians passed Proposition 13, ostensibly an anti-tax measure but in reality a fundamental constitutional change with vast, and mostly unforeseen, consequences. It led to hundreds of ballot measures as citizens increasingly legislated directly and in tense competition with their own representatives.
Economist blames “voter initiatives”. What seemed like a good idea at the time, doesn’t seem to work in practice.
Better than the article is the accompanying audiocast – Lessons from California – The Perils of Extreme Democracy
Rick McCharles 
I think this is not extreme democracy but bad use of voting. Voter initiatives almost always fail because people, especially in the “I’m more important than society” U.S. (hmmm….makes me wonder a bit about your Ayn Rand post) think that keeping all their money makes more sense than sharing it via taxation. In other words, human beings are pretty short sighted.
This could be why we are on the verge of electing a party in Canada that holds parliament in contempt while promising to hold the line on tax increases. The irony of course is that the majority government (if it happens) will be because of a shift in the centre left towards the NDP!
Canada also has a poor system of democratic voting. First past the post means that many people feel totally disenfranchised because in reality their vote is meaningless within their own riding (which often gets translated as “voter apathy”). When will Canadians wake up and demand a system that gives representation by area *and* by popular vote?