Yes, this article is written, it seems, with a bit of a vengeance. I'm not sure where "Go ahead, California, make my day." comes from...
There are some relevant points, but they're all contentious. California is in some dire straights, it's unfortunate. We'll get things sorted one way or another though, certainly.
"There is no housing boom (or bubble) about to inflate, as it did in 2004" - I don't know much about Mr. Malanga's finances, but I would presume he's a multi-millionaire, if his ability to see booms and bubbles is at all accurate.
He's a member of the Manhattan Institute, a heavily market-oriented "conservative" think-tank, and I can't help but wonder if a bit of ingrained bias played a part in this article.
I never feel like I can trust pessimistic opinion pieces on California's economy. Many pundits want California to fail for various reasons, and trying to dredge useful information out of them is difficult.
Why don't you watch that video again with less biased eyes. The video never ever even mentioned California was in an economic downturn. It said California was going through economic turbulence and called it a bump in the road in the first few minutes.
I recommend you watch that video despite it's length. It's much more digestible then raw statistical data and scientific papers. The YouTuber is an economist and his views are spot on. Specifically the part on hotel California is very very accurate.
The guy even mentions that CA has one of the largest economies in the world if it was classified as a country, so he's not actually attacking your team here.
You keep making the same mistake on thinking that the video and I are making the claim that California is in an economic downturn. Nobody ever said California is in an economic downturn. If anything California could be in an economic bubble. Keyword: could.
California is not a perfect paradise. That would be a delusional view. We can agree that California is definitely a successful economy. To think that successful economies are infallible would be an equally delusional view.
I also suggest you try to get away from this team California mentality. You may live in the state you may love the state you may have been born in the state like I was. But your analysis of what's happening must remain impartial. That means analyzing the possibility of economic apocalypse rather then closing all YouTube videos that even mention anything negative about California.
This is the core of the problem. My problem with this article is that you can apply the same arguments and paint a picture where the US itself has a rosy economic future. But the problem isn't even merely today, November 29th, 2010, it's the scope of the future obligations we've taken on. It's not that the US or California has necessarily that exceptional of a debt load right this second, it's that the money we might be using to service it is already nominally allocated to other "untouchable" projects.
That's the big change; entitlements (and pensions as a subset of those worth calling out specially). To do an article about how glorious the California future is and to criticize not just the arguments but the motivations of those saying there are problems, but for neither the word nor the concept of entitlements to show up is just constructing a straw man and cherry-picking the budget numbers.
For that matter reading the article straight you might be mystified about why California has very recently resorted to the very legally-dubious IOU-money-but-not-quite-money scheme. If it was even half as rosy as this guy is arguing that shouldn't have been even close to necessary, but in the real world, it was.
I am from out of state and live in the bay area. While I am pretty liberal I do think that the author has a point with respect to the cost of living, and abundance of inherited wealth. The only people I know who are buying homes are inherited millionaires or friends that got lucky picking the right startup. That said, I also feel like I understand local governments and Californians position on the issue of maintaining this artificial market. Lets face it This is a beautiful state, and the local population is trying very hard to maintains the 1960's charm of the area. At times I feel like I'm choking to death in overpopulation and an artificial market, but I do appreciate the open spaces and parks. I don't want to look at high rises, I like the California coast.
Maybe its a good thing people are leaving, I want this state all to myself.
California seems overpriced and the state budget is in bad shape
i live in california and love it...i think in so many ways it is the best place in the world to live...but i must admit (with trepidation since i hold so many state bonds)...that the state is doomed.
the size of the fiscal crisis here is not "state size", its "nation size". but california cannot engage in printing money, deficits, or anything else a nation can do to temporarily ease through. tax revenues are dropping like a rock in every city in the state as EVERYONE lines up to get their house re-assessed to get lower taxes.
california was crushed in the housing bubble and prop 13 makes revenue collection even more inflexible. i personally intend to have my property taxes cut in HALF, which is actually accurate and fair given that houses on my street are now...half off. whatever happens i will be paying less in taxes by some amount. now repeat for tens of millions of people...
and there's no stock market windfall to offset the gloom. google and apple are just high-salary employers now. that won't save this state. suffice to say i think the state finances are in doomsday mode. thankfully my kids do not go to public schools...
> The idea that California could become an economic wasteland is absolutely preposterous. It does have its problems: costs are high and there's extreme inequality (because of the nation's worst land taxation and land use policies combined, read your Henry George folks).
The wild housing market is 90% of the inequality. The other 90% can be summed up by this 1994 article in the New York Times [1].
The article is full of excuses to argue California has simply experienced lots of bad luck, burying the lede. Really, its just that California’s spending has been and continues to be unsustainable and it’s primary efforts to raise revenue - raising taxes - has the side effect of encouraging those with mobility (citizens and businesses) to relocate elsewhere.
> The article almost acknowledges this, but if taxes really are chasing away people, even more taxes gets you into a death spiral.
Maybe for a city like Detroit but California has something that most people, including most rich people, really want: great weather and lots of accessible nature. The other problems are solvable but geography is destiny.
This is the first article that has enough concrete data to make me worried but we've been through this before and the state is in a much better place than it was 20 years ago with Davis and Schwarzenegger.
All of this has happened before and all of this will happen again.
> California’s decline, then, flows from the same forces that destroy all once-great civilizations. It became decadent and nihilistic, escapist and intoxicated.
OK, had to fast-forward a bit before reading, to see if I could look forward to one of these articles. The bingo card almost scratches itself...
> If California were to deal with homeless addicts and untreated mental illness on a statewide level, as in Massachusetts
Hasn't California started working on this at the state level now with CARE? There's no mention of it in the article.
> If the state allowed parents to choose the best schools for their children and injected competition into school administration, student performance would undoubtedly improve.
Why does this increasingly sound like one of those libertarian blogs from the 2010s?
It also seems like a lot of the problems, possibly most of the problems, described here are well embedded all over the US, into Canada, easily located in Europe, and so on. But I'd hate to hand-wave everything like the author of the article.
Edit--Helpful to know: The City Journal - "A quarterly magazine of urban affairs, published by the Manhattan Institute" ... The Manhattan Institute for Policy Research (renamed in 1981 from the International Center for Economic Policy Studies) is a conservative American think tank [1]
The gist seems to be that despite numerous stories predicting its demise, California:
- is wealthy and talented
- has more (people, VC, etc.) than it did in 1999
- has been funding the rest of the country in federal transfers (he calls them bailouts, therefore you can't complain if CA asks for one)
- has a small budget deficit relative to its budget
It leaves out $138B of unfunded liabilities for state employees until the end, and ignores companies like Facebook opening datacenters out of state, a growing number of people leaving the state (I'm one of them), and its awful credit rating.
Unfortunately if I owe the bank money, I can't tell them how good of an investment I was up until 2008 and expect them to give me a pass. I need to figure out a way to come up with the money. California doesn't appear to be serious about that.
California does have tremendous wealth and vast continuing productive capacity, given the talent, resources, and opportunities extant within the state, and the author correctly characterizes any doomsday scenario as lacking credibility.
The problem, though, as seen from the view of one who has lived here for 40+ years, is that the powers that be in Sacramento had too much of a good thing during the boom years and, having raised public spending by large amounts when the tax coffers were full and exploding, don't want to make any systemic changes to spending levels now that receipts are way down in fear that this will short-change their pet programs when good times return.
That is why spending is strained to the limit even though fundamentals are still pretty good. The assumption all along, though, is that nothing can kill the golden goose and, while I agree with the author of this piece that extreme problems aren't imminent, that doesn't mean that the state can't ultimately wear itself down through fiscal irresponsibility. Only time will tell in the long term on this point.
> of having an extremely mainstream Californian outlook
One can have the outlook without the residency.
And what is that outlook? Certainly not what CS imagines it to be, e.g. "uncritical technological boosterism and the desire to get rich quick." If one wants the real California ideology, one only need look at Gavin Newsom and the Democratic Party supermajorities of a past decade-plus. Or at the policies enacted by San Fran, LA, and other major California cities in recent years.
Scottish national policy as of late hasn't been too far off this mark. ;-)
No. He has repeatedly made the same comment (or "meme", "canard"). It is not insightful commentary; it is not much more beyond propaganda at this point.
California has made horrible financial decisions for over a decade. To pretend it is somehow moral to trap people and their wealth to those decisions is complete insanity. Also it won't work, to point out the obvious.
The housing & job reports feel right and are welcome news.
But did the NYTimes just point to California's current budget as a sign of our State's "economic stability"?
They quote that the "California Legislative Analyst’s Office projecting . . . . [that] California might post a $1 billion surplus in 2014"
That is such an irresponsible thing to publish - a "surplus" makes it sound like the government is totally on top of the situation here and a model for success.
The reality is that CA would be going off the @!@W$! rails right now in 2012 if voters hadn't just passed Prop 30.
Prop 30 was an EMERGENCY, retroactive (from Jan 1 2012), and "short-term" (7 year) tax on high income earners + a moderate increase in sales tax which is going to raise $6B a YEAR to pull CA's ass out of the fire.
So while the gloom may be lifting, I remain pessimistic that our state gov't has any long-term solutions to their continued budgetary missteps.
Yeah, this is some serious political opinion masquerading as journalism:
Original Title: Why is liberal California the poverty capital of America?
With a permanent majority in the state Senate and the Assembly, a prolonged dominance in the executive branch and a weak opposition, California Democrats have long been free to indulge blue-state ideology while paying little or no political price. The state’s poverty problem is unlikely to improve while policymakers remain unwilling to unleash the engines of economic prosperity that drove California to its golden years.
Yet somehow the California economy is massive and thriving. So, apparently you're leaving something out or shading your analysis. I'll wait for peer review of your theory.
There are some relevant points, but they're all contentious. California is in some dire straights, it's unfortunate. We'll get things sorted one way or another though, certainly.
"There is no housing boom (or bubble) about to inflate, as it did in 2004" - I don't know much about Mr. Malanga's finances, but I would presume he's a multi-millionaire, if his ability to see booms and bubbles is at all accurate.
He's a member of the Manhattan Institute, a heavily market-oriented "conservative" think-tank, and I can't help but wonder if a bit of ingrained bias played a part in this article.
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