Wednesday, May 14, 2014

How Bad Is It In California?

This bad:
Unless otherwise noted, the following data have been culled by Chapman University Professor Joel Kotkin, and published in the Wall Street Journal, the Orange County Register and elsewhere. (For the record, Kotkin is a self-described "Truman Democrat" who voted for the Democrat governor Jerry Brown of California.)
--In the last 20 years, about 4 million more people have left California than came in from other states. Most of those leaving are young families.
--In the last 15 years, one-third of California's industrial employment base has disappeared. That's 600,000 jobs that have disappeared.
--California has the 48th-worst business tax climate. (The Tax Foundation)
--California's electricity prices are 50 percent higher than the national average.
--Middle-class workers, those who earn more than $48,000, pay a top income tax rate of 9.3 percent. That's higher than what millionaires pay in 47 other states.
--California's unemployment rate is fourth highest in the nation.
--From 2010-13, California produced fewer than 8,000 jobs, while the country added 510,000.
California faces enormous underfunded public employee pension obligations. (Bloomberg)
--An estimated 25 billion barrels of oil are sitting untapped in the Monterey and Bakersfield shale deposits. California is therefore sending billions of dollars to Texas, Canada and elsewhere to buy natural gas and oil that it could have produced itself.
--Twitter, Adobe, eBay and Oracle, among other major California tech companies, have moved many operations to Salt Lake City.
--Hollywood is doing more and more of its filming in Louisiana, Canada and elsewhere to avoid California taxes.
--Toyota just announced that it is moving its U.S. headquarters from Los Angeles to Dallas. This will eliminate 3,000 or more generally high-wage jobs.
--Occidental Petroleum recently announced that it is moving its headquarters from Los Angeles to Houston.
--Until relatively recently, half of the country's top 10 energy firms -- ARCO, Getty Oil, Union Oil, Occidental and Chevron -- were based in California. Today, only Chevron remains, and it is gradually relocating in Houston. (Reuters)
--Houston has added nine million square feet of new office space. Los Angeles has added one million.
--Tesla will likely locate its proposed $5 billion battery factory, which would employ upward of 6,500 people, in Nevada, Arizona, New Mexico or Texas. According to, California "didn't make the short list because of the potential for regulatory and environmental delays."
--California's Monterey Shale offers a potential employment bonanza for workers needing access to entry-level jobs in the high-paying energy sector. But California's green lobby is striving to deny them that opportunity. (John Husing, chief economist of the Inland Empire Economic Partnership, Los Angeles Daily News)
Read the whole article to see what the author says is the reason why things in California don't change.


3rseduc / handsinthesoil said...

Its ridiculous and the lawmakers seem to think adding more ridicuolousness is a good idea, and then wonder why we are in debt. Soon there will be no one left to pay for anything.

allen (in Michigan) said...

To quote Herb Stein, things that can't go on forever, don't and this sort of nonsense will come to an end some day. The big question is what sort of state the state will be in when forever arrives.

The implicit plan, if it can be dignified with that word, is to keep doing what they've been doing until things get so bad that the federal government's forced to step in and then demand a big, fat payday rather then reign in the excesses.

What we'll be treated to is the spectacle of left wing Democrats invoking states rights to fend off any demands that might be made by the federal government to bring California's fiscal/policy house into order while demanding lots of money to prevent the fiscal collapse of the state.

That spectacle will kick off a counter-reaction by the currently slumbering adults of the state but whether those adults can curb the excesses of their currently unsupervised, self-indulgent children before or after fiscal collapse is anyone's guess. I'd like to think "before" but the spoiled snots of California have been making decisions for some time and they won't easily relinquish the power. They might easily oversee the fiscal collapse of the state rather then give up the power to do so.

But I'm a cockeyed optimist and I believe more moderate Democrats will take a page from the Tea Party movement's play book and run more moderate, and more responsible, Democrats in primaries to unseat the more radical, more irresponsible Democrats who are steering California towards a cliff.

But I am a cockeyed optimist.

maxutils said...

Yet another example of economic principles, which I am frequently mocked here for touting, actually being proven correct. Fundamental rule: that which is taxed will be used less; that which is not, or subsidized, will be used more. California has one of the highest state income taxes (I think NY is worse) as well as a really high sales tax (about 9%) and is bordered by two states that have 0% sales tax (OR and NV). So, of course people leave. And if you live anywhere near the Oregon or Nevada border and want to make a large purchase? Guess which state you buy in. That, combined with the fact that very few people have any concept of economics ... they just know it's expensive. They don't understand why, keep voting for candidates and propositions that make it worse.

The only way you fix this is to tax the one thing you can't avoid: earned income. One tax, lump sum. Collected by the Feds, who do this anyway, then distributed back to the states proportionate to population. It will never happen, because then the poor/middle class will realize how badly they are being screwed ... because most of our taxes have a greater impact on the poor. And no one in government wants us to realize how much we are paying. But if Texas can undercut California, they will. And they are.