Joel Kotkin, writing in the WSJ, says California is headed in the same direction as Greece.
WSJ: ... Mr. Kotkin, one of the nation's premier demographers, left his native New York City in 1971 to enroll at the University of California, Berkeley. The state was a far-out paradise for hipsters who had grown up listening to the Mamas & the Papas' iconic "California Dreamin'" and the Beach Boys' "California Girls." But it also attracted young, ambitious people "who had a lot of dreams, wanted to build big companies." Think Intel, Apple and Hewlett-Packard.I dunno ... still looks pretty good here to me :-)Now, however, the Golden State's fastest-growing entity is government and its biggest product is red tape. The first thing that comes to many American minds when you mention California isn't Hollywood or tanned girls on a beach, but Greece. Many progressives in California take that as a compliment since Greeks are ostensibly happier. But as Mr. Kotkin notes, Californians are increasingly pursuing happiness elsewhere.
Nearly four million more people have left the Golden State in the last two decades than have come from other states. This is a sharp reversal from the 1980s, when 100,000 more Americans were settling in California each year than were leaving. According to Mr. Kotkin, most of those leaving are between the ages of 5 and 14 or 34 to 45. In other words, young families.
The scruffy-looking urban studies professor at Chapman University in Orange, Calif., has been studying and writing on demographic and geographic trends for 30 years. Part of California's dysfunction, he says, stems from state and local government restrictions on development. These policies have artificially limited housing supply and put a premium on real estate in coastal regions.
"Basically, if you don't own a piece of Facebook or Google and you haven't robbed a bank and don't have rich parents, then your chances of being able to buy a house or raise a family in the Bay Area or in most of coastal California is pretty weak," says Mr. Kotkin.
It's just more WSJ propaganda. Like the piece today by Laffer and Moore pushing states to all eliminate income tax, ignoring the higher standard of living in states such as California and New York that have significant state income taxes. Kotkin's piece fondly remembers Intel, Apple and Hewlett-Packard growth years ago, and suggests companies are fleeing California for other states, but ignores that Google, Facebook, Twitter, the reinvigorated Apple, and many others are the big and hot items today, followed by thousands of smaller adventures such as Tesla - all headquartered in California, where San Francisco alone pulls in more venture capital than any other city, including New York, a metropolis many times larger and with inordinately more piles of money looking for the next new thing. With Facebook about to go public at $100B and Apple the most valuable company in the world, I'd hate to be in Kotkin's shoes. Sure, housing is expensive and the bubble hit hardest in places such as San Bernardino and Fresno, and the state coffers are still trying to recover from the bubble, Prop 13, and Schwarzenegger's idiocy, but any other state, pretty much any other country, would think heaven was here if it grew half as many new companies and industries as California.
ReplyDelete***Mr. Kotkin also notes that demographic changes are playing a role.***
ReplyDeleteDoesn't really elaborate on this. I suspect he's referring to the human capital issue mentioned in Alexiev's article.
http://www.npr.org/templates/story/story.php?storyId=112167023
Exactly!
ReplyDeleteI think Kotkin and his WSJ friends have been recycled these same sort of columns almost word-for-word for the last 25 years.
Despite its brilliant history, California now ranks near the bottom of all states in most social welfare categories. And it is in rapid economic and social decline. It even has a low level race war in parts of Los Angeles as immigrant Hispanics violently cleanse neighbors of blacks.
ReplyDeleteThe picture supports the comparison with Greece, which still has plenty of pretty beaches too...
ReplyDeleteWell, Greece and CA have something else in common: 5-10% of their populations consist of illegal aliens typically doing very hard work for low wages and almost no benefits. For the upper classes of the citizens this works out pretty well, but not so well for the working class ...
ReplyDeleteIsn't there a highly productive minority group in California whose numbers are increasing over time?
ReplyDeleteThere's a fellow named Ron Keeva Unz, whoever he is, who I believe has argued for years now that whites, Hispanics, and Asians get along just fine for the most part. I work in San Diego now, which is mostly white, Hispanic, and Asian, and it seems to be quite a tranquil and idyllic city...
ReplyDelete"Now, however, the Golden State's fastest-growing entity is government and its biggest product is red tape."
ReplyDeleteWhen a piece contains inane statements like this, I know to look elsewhere for careful reasoning, nuance, and usefulness.
Well, just as Kotkin claims, it's certainly true that housing in the SF Bay Area or other coastal parts of the state is quite expensive, and almost unaffordable to lots of middle class people. That's exactly why they tend to move to the inland areas like Riverside-San Bernadino or the Central Valley, which are much less expensive (and also much less pleasant).
ReplyDeleteBut these things are relative. Even after the collapse of the Housing Bubble and with double-digit unemployment, homes in those inland areas are still much more expensive than in most other parts of the country. So if things in California are so awful, why wouldn't more people sell their homes and move away to other states? For example, I just checked online, and median Riverside home prices are still just over $300,000, while they're around $120,000 in Wisconsin, $179,000 in Ohio, and just $103,000 in Georgia. So if you sell a smallish house in Riverside, you can probably buy a very large home in lots of Midwestern or Southern states. What's stopping them?
Similarly, people like Kotkin and Steve Sailer have been complaining how terrible things are in California for the last decade or two. But everytime I check, they're still living there. I guess they must be extreme masochists or something...
Yan Shen,
ReplyDeleteYou're always looking for white racists where there are none to be found. Kotkin is one of the loopiest open borders commentators in the media business. He's far better aware than you are of just how diverse California is, and he constantly and nauseatingly celebrates that diversity. His problem with California has absolutely nothing directly to do with immigration. Instead, he is critical of the Blue State Model.
His first book, published nearly twenty years ago, was called "Tribes: How Race, Religion, and Identity Determine Success in the Global Economy". It celebrates diversity. One section is about the Chinese. Another is about the Japanese. Another is about East Indians. Basically, his theme is, isn't it cool how these various people all learn to make money in the global economy. Another more recent book by Kotkin is called "The Next Hundred Million: American in 2050". It also celebrates diversity. Your bête noire, V-Dare, published a negative review of the book.
A recent op-ed by Kotkin says "Immigrants key to economic revival". Its content is about par for the course for him. That you could insinuate Kotkin is anti-immigrant is a little like someone criticizing the NAACP for being in bed with the Klan.
I'm a little surprised that so many smart people are so dumb about California. Steve Hsu adopts a flip tone, "I dunno ... still looks pretty good here", as if physical beauty is enough of a counterpoint to an argument that California's government model is falling apart. I can assure Steve that many parts of the Mediterranean look pretty nice, too.
ReplyDeleteRKU says that Kotkin and Steve Sailer, both critics of California, still live in the Golden State -- as if any honest critic would immediately move out of a place he constantly criticizes. Does RKU not have family, kids, or property? Does he not understand that those kind of life-altering decisions are often not something entirely left in the hands of the critic himself? Similarly, many business owners would also love to leave California, but they have too much invested in the place.
California's government finances are still in serious trouble. The state economy is still in serious trouble. (By announcing this, I feel like I'm telling you that the U.S. is involved in a war in Afghanistan.) The Golden State is now in its third year of double-digit unemployment. At 11.0%, it's three points higher than the rest of the country, and that figure almost certainly understates the state's job losses. Look at labor force participation rates and the number of people moving out of the state, and it looks much worse. Kotkin is an idiot commentator, but he's not such an idiot that he doesn't believe California is in serious trouble.
...but any other state, pretty much any other country, would think heaven was here if it grew half as many new companies and industries as California."
ReplyDeleteThen where are the jobs? Why is the state still having to cut more from a budget that's already been cut numerous times over the last five years? Those are basic questions that cut right to the heart of whether a place has a healthy business climate. Your anecdotes are just that: anecdotes.
Do you seriously think a few company HQs in the Silicon Valley is enough of a retort to the fact that California's job growth is anemic and indeed much worse than what is found in the rest of the country? Do you believe Apple's gleaming new HQ in Cupertino is going to pay for all those large state pensions that need to be paid for in the coming decades? Governor Brown doesn't think so, but maybe he's channeling the WSJ.
BTW, that's quite a statement that other states are jealous of California's new business formation, given how much of a joke the state has become for national business leaders who continually rate it the worst in the nation.
I actually agree that CA has a lot of problems. I was trying to express that nevertheless there is something ineffable about the sunshine and natural beauty here. It wasn't a serious policy/economic/demographic analysis.
ReplyDelete"I was trying to express that nevertheless there is something ineffable about the sunshine and natural beauty here."
ReplyDeleteWell, I can't disagree with that. My apologies for misinterpreting your comment.
"Similarly, people like Kotkin and Steve Sailer have been complaining how
ReplyDeleteterrible things are in California for the last decade or two."
I get the feeling that many of Steve Sailer's critiques of California really have nothing to do with how well off the state is by some objective metric of value. If the demographic makeup of California altered radically over a period of time and it suddenly became Singapore, Steve Sailer would probably be even angrier and more disgruntled than he is right now.
Quick, tell us Pincher, do you spot any blacks, Hispanics, Jews, or Asians on that beach in Steve's picture...
ReplyDeleteWell, those are certainly reasonable excuses for not relocating in individual cases or in short time periods. But do those really apply when you're talking about many, many millions of people over a decade or more? Don't forget, CA housing prices were in a ridiculous bubble for years, and people could sell their small homes and buy mansions in other states. Yet they stayed around. Now the Bubble has collapsed and unemployment is indeed higher than elsewhere, but most of them could still leave and buy larger houses elsewhere (or put lots of money into savings). Yet they *still* stay in CA. I'm the first to admit that CA has lots and lots of problems, but it can't be *that* bad if almost everyone wants to stay.
ReplyDeleteI think Steve Sailer moved *back* to Los Angeles around the mid-1990s, soon after the horrible Rodney King Riots and lots of other negative occurances. After he came back, crime dropped enormously and lots of other things got much better. Yet he still complains quite a lot.
I think Kotkin's been complaining about California for something like twenty years. Just as you say, there are reasons somebody can't suddenly pull up stakes and leave, but I'd think twenty years including a gigantic Housing Bubble would provide lots of opportunities to relocate.
Obviously CA has huge problems. But most other states also have huge problems. If Sailer and Kotkin want to say CA isn't perfect and should be fixed or improved, that's fine. If they want to say that CA used to be much better 30-40 years ago, that's also fine, and I'd probably agree with them. But they really make it sound like CA is much worse than most other states today, while their personal behavior seems to indicate its probably no worse and perhaps quite a bit better.
It's a little like the old joke about the third grader complaining to his mother about the food at the school cafeteria: "It's terrible, awful, rotten, disgusting...and they wouldn't even let me have seconds!"
It's Santa Barbara, so there are very few blacks and surprisingly few Hispanics (at least on the beach). The city's idea of diversity is Oprah Winfrey and Whoopi Goldberg.
ReplyDeleteTell you what, I'll say how many wealthy liberal Protestants, Jews, and Asian tourists I see in the photo, if you tell us how many white racists you see. Perhaps you'll even catch a glimpse of the notorious Kleagle Joel Kotkin strolling on the beach. He does live in southern California, so anything's possible.
No one mentioned anything about racism of any kind except for you. It almost seems as if you're hysterically sensitive to accusations of racism, to the point where you assume that people are complaining about racism when really they're not.
ReplyDeleteI hear that Steve Hsu is going to write a post soon where he predicts in exquisite detail just how the future of California will unfold, all the way up to the year 2100.
ReplyDeleteYan Shen Yesterday: "I'm sure that Mr. Kotkin would be mortified to find the kinds of people who populate the halls of UC Berkeley these days. It sure as hell ain't like the California he grew up in."
ReplyDeleteYan Shen Today: "No one mentioned anything about racism of any kind except for you."
What could possibly be the reason Yan Shen believes Kotkin would be mortified by what he found at UC Berkeley?
Looks good to me, too. Maybe I missed something, but the logic looks like "housing prices are so high lots of people can't afford to live there." But doesn't that get it backwards -- aren't high housing prices a sign of economic success? I know, I skipped restrictive zoning etc, but that high prices seem like the primary factor. Reminds me of an old ranking of cities that ranked Pittsburgh first. I'm from there, so it seemed ok to me, but it turns out they put a high weight on cost of living, which is very low there. Now why is it low? Because so many people left!
ReplyDeleteRKU1:
ReplyDeletean interesting and (though I hate the word, here it is) nuanced view.
There are holes in the logic of Mr Kotkin, and I know almost nothing about Steve Sailer, so I cannot comment on him or his complaints about California, whatever they may be. But if you review the points Mr Kotkin is making, which, specifically, would you disagree with? That the state is financially a mess? That the schools, especially the once great UC system is underfunded and crumbling? That the economy is slowly moving towards the third-world model where there is a minority of wealthy people, a huge mass of poor folks, and not much in between?
Noting that Kotkin and Sailer remain in California does not really militate for your point - both I presume are older and invested in Southern California. Simply moving away is really a desperate measure of last resort. That four million middle class folks have left the state - a datum that is either true or false - speaks to at least a symptom of the problems.Many people in fact ARE making the decision that the cost to remain in California - with its natural beauty and very nice weather - is simply too high. I lived most of my life in California - the first part in Southern California, the latter half in San Jose - and when our son came along, we opted to live elsewhere for some of the precise reasons Kotkin mentions.
It's going to be very interesting to see how things shake out in the Golden state over the next 20 years or so, as the middle gets hollowed out and an increasing number of people will be demanding "services" that they do not pay for. Thus far, much of the out-migration has been able to be covered by the people Yan Shen alludes to in his post (i.e., high-skilled immigrants, primarily from India and China). I suspect that as China and India develop, far fewer will feel the need to come to Silicon Valley, for example. And many of those already there will, I suspect, come to resent the heavy hand of government on their wallets, while simultaneously and ever more aggressively discriminating against them in school places, hiring, and other opportunities. I strongly suspect that without the significant numbers of immigrants and their children, the already terrible performance of California's public schools would look even worse.
Without that demographic, what will California's economy be in 20 years?
We'll see, I fear.
Pincher - you raise some very good points.
ReplyDeleteI thought I would never leave California. Turns out, it just took having a family to convince me that there was more to life than nice weather and a good view of the mountains and the sea.
To be fair, though, California's political dysfunction is much, much deeper than a facile "Hispanics have teamed with wealthy leftists and government unionized workers" cause. Surely, the out-sized power of the public workers in California has contributed to pension schemes that are bankrupting the state, but a significant part of the problem is the byzantine way the state is governed. Requiring 2/3rds majorities to pass budgets virtually guarantees that non-sensical "solutions" will be passed. And here, the GoP, rump party that it is, actually has enough muscle to block serious reform. And then there is the truly Weird Science initiative process that has resulted in incredibly stupid legislation (e.g., Proposition 98 for school funding) that severely restrict the ability of the state government to function.
The GoP is "dead" in many respects because it has embraced ideas that the majority of the state rejects, and have NOTHING to do with quality of life issues (TWO bites at the gay marriage issue - Proposition 22 and more recently, Proposition 8). If marriage laws for gays is related to road building, I am simply to blind to see it.
Maybe what he (Yan Shen) is referring to is the unacceptably high number of admitted students who need remediation in math and/or English?
ReplyDeleteProbably not, since you can't "see" who is illiterate or innumerate simply by looking.
You have to actually talk to the students to determine that.
Yan - I would agree that removing the barriers to immigration to our country that make it difficult for highly skilled, highly educated people from China and India would be a significant benefit to our country. I am not sure it would "ensure California's future," and I am also not really sure that making the US more akin to Singapore is, in the long run, a laudable goal, but our country has a self-destructive immigration policy.
ReplyDeleteUnfortunately, many of those in power, and especially in California, are motivated by a political calculus that is not, shall we say, particularly friendly to what you propose. They see potential voters for the Democratic party, in my opinion, and thus insist that what our economy needs is not thousands of masters and PhD graduates from China, but millions of people with less than a high school diploma from other countries.
THAT is the future for California, I am afraid.
I should add that the state's lefties and "moderates" love the political explanation because it prevents them from having to deal with harder political issues. Pension reform is hard. Educating Mexicans and their progeny to First World levels is hard. Giving up on your favorite environmental issues is hard.
ReplyDeleteBut political reform that focuses on changing the Constitution is relatively easy for anyone left of center. That's why you get books like California Crackup: How Reform Broke the Golden State and How We Can Fix It, which believes that the state's only real problem is its constitution and makes a few feints at attracting conservatives by complaining how Prop 13 centralized education spending in Sacramento, as if that's enough reason for conservatives to want to dump Prop 13.
"Maybe what he (Yan Shen) is referring to is the unacceptably high number of admitted students who need remediation in math and/or English?"
ReplyDeleteAt UC Berkeley? Are you kidding me?
I wish I were. Check the data. From the Legislative Analyst's Office in Sacramento, fully 10 per cent of students admitted to UC Berkeley require remedial English and/or mathematics.
ReplyDelete1 out of 10 freshmen admitted to the flagship campus cannot read, write, or do mathematics at the level of a high school graduate.
I shudder to think what the figures are for, say UC Santa Cruz...
I had written a long-ish reply, but my internet connection more or less ate it, so I will make a shorter comment.
ReplyDelete1) I don't anywhere argue that your reasons (demographic changes, including millions of low-skilled, low-education immigrants who require an out-sized welfare state; the creeping influence of public employee unions; radical environmentalism) are NOT valid. I only contend that they are but a part of the problem.
2) The initiative process, and especially the corrosive impact of Prop 13 that has radically shifted the way local governments are funded has distorted the economy of the state, and are at least as significant a problem as your big three, IMHO.
3) The cost of living - largely the predictable consequence of (1) and (2) above has created an economic situation in California that is unsustainable in the long term, and is resulting in a third-world economy. And in this, Kotkin I think is correct that the state ultimately will have a handful of wealthy barons and older, established families who are inoculated against the cost of housing and property tax burdens.
4) The "death" (more to the point, the irrelevance) of the state GoP is of course a consequence of the Democrat coalition of ethnic, labour, and environmental interests. But matters are made far worse because too many California Republicans, instead of focusing on issues that actually have an impact on the state, instead have opted for political wedge issues like gay marriage, abortion, and other social issues that have pushed them further into the wilderness.
You're right that gay marriage has NOTHING whatsoever to do with the state's economic and infrastructure mess. But if the local GoP focus on social issues like these, they necessarily will become an even smaller, disempowered political minority.
"It's Santa Barbara, so there are very few blacks and surprisingly few Hispanics (at least on the beach)."
ReplyDeleteThe Hispanics are all at Santa Monica beach. You know that.
"year 2100."
ReplyDeleteIsaac Newton predicted end of world in 2060, according to the History Channel. At which time Jeruselam would become world capital. While using Bible numerology and engaged in the alchemy of iron into gold.
Einstein believed WWI would be the last world war. Before WWII.
All respect to Steve, but I don't think physicists make great prognosticators of world history, even state history.
"Mr. Kotkin, one of the nation's premier demographers, left his native New York City in 1971 to enroll at the University of California, Berkeley."
ReplyDeleteHas this man ever, ever intersected with the day to day reality of actual people?
dwbudd,
ReplyDeleteI wish I had seen your lost reply because I find the abbreviated reply you did post to be an inadequate response to my points and occasionally even evasive.You continue to claim the initiative process is to blame. That form of direct democracy in the state is a hundred years old. You don't explain why something a century old is the cause of a problem which made the state ungovernable only in the last decade.
You also mention Proposition 13, which was passed in 1978 and enacted the following year. At least here you are on slightly stronger ground. There are respectable arguments for why Prop 13 has skewed revenue collection in ways that are probably not helpful to good governance. One can argue that by favoring older homeowners, the proposition discourages young middle class couples from making their home in the state. But you are vague. You don't mention the supermajority provision for tax increases that is part of Prop 13, as you did in your earlier post. What in particular don't you like about Prop 13, and how specifically has it hurt California?
The state GOP's irrelevance has nothing to do with social issues. It is driven entirely by demography. The two propositions on gay marriage that you mentioned are far more popular with California voters than is the national or state GOP. Support for Prop 8 in 2008, for example, ran far ahead of support for John McCain for president. If social issues like the ban on gay marriage are such an albatross for the state GOP, why are they more popular with the state's voters across the board?
You keep repeating liberal media clichés about California. The state is ungovernable because of its constitution ! Social issues have wrecked the state's GOP ! I half expect you to say next that Pete Wilson damned the state GOP's chances with Hispanic voters. These are popular tropes with the editorial writers at the Sacramento Bee and the Los Angeles Times, but they have nothing to do with the problems facing the state.
I've responded to your post at the top of the page. The margins were beginning to push our discussion too far to the right.
ReplyDeletedwbudd (continued)
ReplyDelete"Finally, your claim that the GoP's irrelevance has little to do with social issues strikes me as Republican whistling in the dark. Exit polling data belie your claim (white voters voted NO on Prop 8 by 51-49; Asian voters did the same. Black and Hispanic voters provided the margin of victory.
The only claim I made about Prop 8 was that it was far more popular with every demographic group in California than is the national or state GOP, and that's true. Take a look at the exit polls for John McCain in 2008. He trailed the proposition with every single demographic. He lost whites in the state 46-52. He lost Asians in the state 35-64. I won't even bother to mention how far he trailed behind the proposition with California's Latinos and blacks.
McCain was not some extreme right-winger. He was a fellow Westerner who had much more potential appeal to California independent voters than George W. Bush. He was also running against a Democratic candidate in Barack Obama whose official position was also against gay marriage. It didn't matter. Gay marriage isn't why so many more California whites vote for Democrats than do whites nationally.
I would be willing to bet that if you looked at polling data on the GoP national stance on abortion in California, you would find it to be unpopular.
The key point is whether it makes a critical difference in how votes are cast, and the answer is no. You lose some because of the position, but you gain others because of it.
Another important distinction is whether a state GOP can effectively run away from the national GOP on social issues, and the answer again is no. Social issues are a critical part of the national Republican coalition.
The point is the calculus of coalition politics. Republicans largely will not get the votes of lower-income people who rely on social services. They similarly have a very tough row to hoe with respect to Hispanic and black voters, who respond to media distortions about putative 'racism' in the Republican party. These two blocs (blacks and Hispanics) were the ONLY ones who reliably voted yes on Prop 8. They will not be voting Republican.I agree. But you exaggerate the importance of gay marriage, and social issues in general, to political alignment in California. If the state GOP tomorrow declared itself for gay marriage and for abortion on demand, they would not make a net gain of votes.
Many of California's white voters are Jewish, gay, or the kind of well-educated urbanite who will always feel uncomfortable with Republicans and therefore always gravitate to the Democratic Party. Hence, if you take the constituencies where your economic platforms may be appealing, and then give the media a cudgel marked "racist, misogynist, homophobic" to hit you over the head, well, I hardly see that as a winning strategy.Those cudgels will be employed no matter what positions the GOP holds. They were heavily employed back when Republicans were winning majorities in state elections. They have nothing to do with Republicans' current problems in the state.You seem far more distracted by social issues than most Republicans I know. You certainly allow it to cloud your analysis.
Sorry for taking a while to get back to this thread...
ReplyDeleteAs I've indicated, I'd say that lots of the complaints of Sailer and Kotkin regarding CA are perfectly legitimate, but it's not clear whether many of other major states aren't worse off. It's always easy to pick metrics that prove any point, so let's look at some very basic ones.
Everyone complains that CA is a fiscal mess, which it is. But when I just now checked the CBPP website for state budget deficits, I found exactly what I expected. For 2013, CA's deficit is projected at 9.8%, which is terrible. But Texas is at 20.4%, which is far worse, Ohio is at 10.8%, Washington is at 19.6%, and Oregon is at 24%. So California is doing worse than some states, but better than others.
Clearly, the CA Legislature is totally dysfunctional and incompetent. But lots of other states have similar problems. Hard to say where CA ranks in the dysfunctionality league tables.
I remember a year or two back, I was arguing with some WN-types on some rightwing blogsite. They were all endlessly denouncing CA (for obvious reasons), and argued it was such a gigantic fiscal drain on the federal budget, it should be expelled from the Union. I politely pointed out to them that if you actually checked the net-tax figures of the National Tax Foundation, CA was one of the heaviest relative tax *contributors* to the federal government, while most of the smaller, rightwing states they lived in were the heaviest net "tax eaters." To a rough approximation, CA is all that's keeping the U.S. from total federal bankruptcy. They were quite surprised at those facts...
Here's another way to look at it. These days, the U.S. is generally hated and despised all around the world, with the only two really positive American things being what comes out of Silicon Valley and Hollywood, both in CA. Probably no one overseas would shed much of a tear if all the rest of the U.S. suddenly vanished (I'm obviously exaggerating for effect, and to make up for all the CA-bashing in this thread).
As for the causes of CA's political problems, I think many of them are pretty similar to the causes for the political problems in other states. However, one huge additional factor has been enormous population growth, an increase of 150% since 1960. Since the state's land hasn't gotten any bigger, especially the really nice areas near the coast, the cost of housing/living has gotten ridiculous, and that's been driving middle class people away for the last couple of decades.
It sounds like you yourself are a perfect example of this. Los Altos is a very nice place to live, but you probably realized that for the same cost of buying a larger house there, you could buy an enormously larger and nicer house on the East Coast, and decided that the CA weather wasn't worth the trade-off. Obviously the CA cost of living would be much lower if not for all the ridiculous things the CA government does, but I'd guess that lots of other state governments are just as wasteful and do equally ridiculous things. The difference is that so many people want to live in CA, they tend bid up all the positional goods, like homes in nice areas. Meanwhile, the vast quantities of wealth thrown off by Silicon Valley and Hollywood make this much worse. Places in the country where fewer people want to live and where there's less free wealth floating around are much cheaper, regardless of how incompetent the local government might be. For example, I think you can buy an ordinary house in Detroit for something like $4,000.
"Everyone complains that CA is a fiscal mess, which it is. But when I just now checked the CBPP website for state budget deficits, I found exactly what I expected. For 2013, CA's deficit is projected at 9.8%, which is terrible. But Texas is at 20.4%, which is far worse, Ohio is at 10.8%, Washington is at 19.6%, and Oregon is at 24%. So California is doing worse than some states, but better than others."
ReplyDeleteThere are three major problems with your analysis.
First, unfunded liabilities. California's are huge and growing. They are at least two to three times the size of Texas's unfunded liabilities. This problem is directly related to the power of California's government unions.
Second, a (projected) budget deficit is just a one-year snapshot of a state's fiscal situation. It doesn't tell you the accumulated debt. It doesn't tell you the bond rating for borrowing (which gives you an idea of how sophisticated financial people view the state's finances). It doesn't tell you that California has one of the more stringent balanced budget amendments among the states (which has already forced Sacramento to make draconian budget cuts over each of the last several years).
Third, your state-to-state comparison doesn't tell you how well a state is doing running government operations with the money it is spending. If California had great roads, great schools, great infrastructure, etc., then at least we would be getting something for the debt we are running up. But as I showed in an earlier post, that is clearly not the case.
More Joel Kotkin:
ReplyDelete"Yet Silicon Valley represents just a relatively small part of the state’s economic base. Although the Valley—particularly the Cupertino to San Francisco strip—has recovered from the 2008 market meltdown, unemployment in the blue-collar city of San Jose hovers around 10 percent. The Oakland area, just across the Bay, ranked 63rd out of 65 major metropolitan in terms of employment trends, trailing even Detroit according to a recent analysis done by Pepperdine University economist Michael Shires. Other major California metros, including Los Angeles, Orange County, Riverside-San Bernardino, and Sacramento all ranked near the bottom."
"The newer companies that can afford the sky-high costs of coastal California, and can pay their employees adequately to do the same—places like Google, Apple, Facebook, and Twitter—employ relatively few people compared to older, manufacturing-oriented technology firms such as Hewlett-Packard and Intel. While cherry picking highly educated professionals, the new firms create few local support positions that would spread some of the wealth. What middle-income jobs they do create tend to be located in lower-cost, more business-friendly American cities like Salt Lake City or Austin, or, increasingly, overseas.""Elite institutions like Stanford still thrive, but the state’s once-great educational system is creaking under reduced funding, massive bureaucracy, and skyrocketing pensions. Once among the best-educated Americans, Californians are rapidly becoming less so. Among people over 64, California stands second in percentage of people with an associate degree or higher; among those aged 25 to 34, it ranks 30th."
Yet Still More Joel Kotkin, this time in the City Journal:
ReplyDelete"Officials, including Governor Jerry Brown, argue that California’s economy is so huge that it can afford to lose companies to other states. But for the local economy to be hurt, firms don’t have to leave entirely. Business consultant Joe Vranich, who maintains a website that tracks businesses that leave the state, points out that when California companies decide to expand, often they do so in other parts of the U.S. and abroad, not in their home environment. Further, Brown is too cavalier about the effects of businesses’ departure. As Vranich notes, many businesses leave California “quietly in the night,” generating few headlines but real job losses. He cites the low-key departure in 2010 of Thomas Brothers Maps, a century-old California firm, which transferred dozens of employees from its Irvine headquarters to Skokie, Illinois, and outsourced the rest of its jobs to Bangalore.""The list of companies leaving the state or shifting jobs elsewhere is extensive. It includes low-tech companies, such as Dunn Edwards Paints and fast-food operator CKE Restaurants, and high-tech ones, such as Acacia Research, Biocentric Energy Holdings, and eBay, which plans to create 1,000 new positions in Austin, Texas. Computer-security giant McAfee estimates that it saves 30 to 40 percent every time it hires outside California. Only 14 percent of the firm’s 6,500 employees remain in Silicon Valley, says CEO David DeWalt. The state’s small businesses, which account for the majority of employment, are harder to track, but a recent survey found that one in five didn’t expect to remain in business in California within the next three years.""Apologists for the current regime also claim that the state’s venture capitalists will fund and create new companies that will boost employment. It’s certainly true that in the past, California firms funded by venture capital tended to expand largely in California. But as Jack Stewart, president of the California Manufacturing and Technology Association, points out, a different dynamic is at work today: once a company’s start-up phase is over, it tends to move its middle-class jobs elsewhere, as the state’s shrinking fraction of the nation’s industrial investment indicates. “Sure, we are getting half of all the venture capital investment, but in the end, we have relatively small research and development firms only,” Stewart argues. “Once they have a product or go to scale, the firms move [employment] elsewhere. The other states end up getting most of the middle-class jobs.”"
No offense, RKU, but I think your reasons for why the the US is hated are a bit superficial. In fact I think you got it exactly backwards.
ReplyDeleteEurope likes to see itself as superior to America, but is constantly reminded that it is less wealthy and less creative. This is bound to create incredible resentment, which then becomes a hostile obsession with America. When we have been told since childhood that we are superior, but see someone else consistently do better than us in important ways, this leads to hate and obsession. It is why Yan Shen is obsessed with and hates white people.
In a sense we are hated precisely because of things like Silicon Valley and Hollywood. The backwards and primitive aspects of America are hardly why we are hated - after all, much of the world is backwards and primitive. The primitive parts of America threaten no one's ego.
Take away Hollywood and Silicon Valley and we will be much more liked, although I am not sure why we should wish to be liked.
Anyways.
California is beautiful, but is only really paradise for nice weather fetishists. Personally I love a good snowstorm and could not live without waking up to a steaming mug of coffee on crisp autumn days, with the leaves just turning. I even relish the hot, sticky summers, though I suffer from them. Silicon Valley, where I am right now, is one of the blandest places in America. I doubt anyone is here for the beauty or character. They are here for the jobs. Any number of places in the country have infinitely more character and culture and opportunities for vice or pleasure.