California Economy

[Trajan]

They're not broke. Debt is, what, 7% of GDP? If California were an independent country, it would be the least indebted developed country in the world by far. They may be a basket-case, but they aren't broke. They have lots of money, but the will to pay isn't there. Orange County is one of the richest counties in the country, yet they went bankrupt in the 90s not because they couldn't pay but because they didn't want to. Same thing for the state now.

Size has nothing to do with the rate of growth.

I am trying to get what you mean exactly. They have a 20 billion year to year budget deficit, which all agree is much higher as creative bookkeeping has hid another 3-4 billion.The shortfalls are already forecast out to 2016.

They have set in stone payments that eat up 18-20% (roughly depending on their yearly revenue), so that % can easily go up as revenue continues to sink, bond payments, interest on loans from the feds etc.

Then there's the pension fund obligations, they have underfunded them for the last several years AND they were creatively finagled calculating higher income from the funds accruals than they realized or ever will. They are not sure how much that is exactly but can be between 450 and 500 billion ( Stanford study 6 months ago), thats 6 times the yearly state budget btw, this is defined locked in liability. They have a cash payment due to calpers for 55 billion this coming year.

where is this money you seem to think they have?

You're full of shit, which is why you have to inflate potential liabilities. For example, describing liabilities that depend on the future performance of the market and life expectancies as "locked in liability" is a bald faced lie.

State's pension liability tops $500 billion, Stanford study finds
April 5, 2010 | Lance Williams

In post-recession, post-stimulus-program America, we’ve gotten used to some frighteningly big numbers being thrown around in the discussion of public finance.

Nevertheless, it was difficult not to be alarmed at the bottom line in a study of California's pension obligations conducted by Stanford graduate students and touted Monday by Gov. Arnold Schwarzenegger.

The study concluded that the state’s unfunded pension liability has topped half a trillion dollars – six times the present state budget.

Put another way, future California taxpayers are going to be on the hook for more than $500 billion simply to make up the difference between the pensions we’ve promised to today's state workers and the money we’ve invested to pay for them.

That’s tax money that will have to be shelled out before a nickel is spent on the public services of the future.

The study was the work of the Stanford Institute for Economic Research. It was supervised by former Assembly Democrat Joe Nation, who represented Marin and Sonoma counties from 2000 to 2006 and who has run unsuccessfully for Congress and, most recently, the state Senate.

Today, Nation is a public policy instructor at Stanford.

The research project sought to put a realistic dollar figure on the state’s pension liability, which ballooned during the market turndown that drove the recession.

The study contends that the California Public Employees' Retirement System, California State Teachers' Retirement System and the University of California retirement system are understating the burden facing future taxpayers. That’s because the rules by which they calculate pension liabilities are unreasonably optimistic, the study says.

When using a more realistic set of assumptions about the size of the state’s obligations and the return the pension funds are likely to get on their investments, the study comes up with a grim fiscal scenario.
As of July, 2008 – before the worst part of the stock market slump – the state’s pension funds were reporting an unfunded liability of $55.4 billion.

rest at-

State's pension liability tops $500 billion, Stanford study finds | California Watch


Life expectancy can only worka against them as the retirees live longer there by pullling out of the system longer.

I'd post another link showing the overblown calcs used to create the illusion of higher returns the state ( in collusion with calpers) used so they could short pay the funds, but really, whats the point?

I realize you think you're smarter than say the blokes at Stanford, so I await your rebuttal.

Oh hey, wipe your chin before you post so you don't get the shit that drips from it all over your keyboard..

 

[william the wie]

The big problems with an internet discussion of any big state:

The regional economies are not very related. The panhandle vs. greater Miami is a huge contrast. Likewise the valley vs. Bayou country in Texas. California has the same problem.

Native posters are rarely from the affected areas and even more rarely are they among those most severely affected. I grew up on the west side of Jacksonville but today I am more likely to go to St. Augustine or Amelia Island than the westside and I go to those two places rarely.

 

[Toro]

Why did this surprise you?
California has a HUGE economy. And yet despite an also HUGE tax basin - they are broke.
That is what should surprise you.

They're not broke. Debt is, what, 7% of GDP? If California were an independent country, it would be the least indebted developed country in the world by far. They may be a basket-case, but they aren't broke. They have lots of money, but the will to pay isn't there. Orange County is one of the richest counties in the country, yet they went bankrupt in the 90s not because they couldn't pay but because they didn't want to. Same thing for the state now.

Size has nothing to do with the rate of growth.

I am trying to get what you mean exactly. They have a 20 billion year to year budget deficit, which all agree is much higher as creative bookkeeping has hid another 3-4 billion.The shortfalls are already forecast out to 2016.

They have set in stone payments that eat up 18-20% (roughly depending on their yearly revenue), so that % can easily go up as revenue continues to sink, bond payments, interest on loans from the feds etc.

Then there's the pension fund obligations, they have underfunded them for the last several years AND they were creatively finagled calculating higher income from the funds accruals than they realized or ever will. They are not sure how much that is exactly but can be between 450 and 500 billion ( Stanford study 6 months ago), thats 6 times the yearly state budget btw, this is defined locked in liability. They have a cash payment due to calpers for 55 billion this coming year.

where is this money you seem to think they have?

The state - meaning the people of California - could pay if they chose to. But they choose not to.

That Stanford study on CalPERS is widely seen as flawed in the pension community. It uses a much lower discount rate to discount future liabilities back to the present than is generally accepted. CalPERS is underfunded but nowhere near as greatly as that study implies.

 

[Toro]

Here is the article I read yesterday which got me started thinking about this topic. I think there is some inaccuracies in it, given that per capita growth in CA has only been slightly higher than in TX, not three times higher as the author alleges.

He also argues

California’s a basket case? The state has one of the highest living standards in the country, yet over the past 10 years the economy has still grown much faster, per person, than the national average. According to the U.S. Bureau of Economic Analysis, it’s up 15% — compared to 8.9% for the U.S. overall.

It’s grown faster than low tax neighbors like Arizona, Utah or New Mexico. It’s grown three times faster than Texas.

Most of the states that have grown faster than California during that time are farm states, riding an incredible boom in agriculture prices. ...

Back in the Silicon Valley glory days, in the late 1990s, California attracted an incredible 42 cents of every venture capital dollar invested in America. Ah, those were the days — when the private sector was still willing to back California with its own money. As any conservative will tell you, that’s the real voting in the economy.

How far has California fallen from those giddy days?

According to the latest data from PricewaterhouseCoopers and the National Venture Capital Association, in 2010 California just got a miserable, er, 50 cents of every venture capital dollar invested in America. ...

Are wealth creators fleeing? I keep hearing this. Did Apple Inc. and Google Inc. just relocate to Oklahoma? Is Twitter being run from Alabama? When Mark Zuckerberg left Harvard to run Facebook full-time, did he open shop in “low cost” Utah?

During the past decade, one of the biggest reasons its residents left California was simply because of the astronomical cost of housing. ...

Now let’s talk about taxes. This is where the lies really earn a Ph.D — as in “piled high and deep.”

The best study of state and local tax burdens comes from the venerable Tax Foundation, an independent non-profit that’s been acting as a taxpayers’ watchdog in Washington since 1937. The Tax Foundation is non-partisan, but by the nature of what it does it leans politically to the right.

According to them, as of 2008 (the most recent year analyzed) state and local taxes in the average state came to about 9.7% of the annual state economy.

What was it in crazy, liberal, communistical, socialistical, un-American, soviet-style California?

Er, 10.5%.

That’s right. The burden was all of 0.8 percentage points higher than the average. ...

In the late 1990s, when California was riding high, it was...10.6%. Thirty years ago, when even Meg Whitman thought it was a wonderful place to work, start a family, and hire an illegal immigrant to raise your kids, it was...10.1%. ...

But if you think the lies stop there, think again. Because we haven’t even gotten to the biggest of all.

That California “bailout.”

There’s no such thing.

California bails us out. ...

The numbers are simply staggering. In the quarter century through 2005 (the most recent year for which we have data), Californians bailed out the rest of America to the tune of about $620 billion in today’s dollars. In 2005 alone it came to nearly $50 billion.

That is 30 times next year’s forecast “budget shortfall” in Sacramento. The only reason California has a budget problem at all is because they have, foolishly, spent so much money subsidizing everyone else.

If it weren’t for that, California could cut its state and local taxes by around $1,300 a person. ...

The truth about California Brett Arends' ROI - MarketWatch: http://bit.ly/eEasoj

 

[sangha]

I am trying to get what you mean exactly. They have a 20 billion year to year budget deficit, which all agree is much higher as creative bookkeeping has hid another 3-4 billion.The shortfalls are already forecast out to 2016.

They have set in stone payments that eat up 18-20% (roughly depending on their yearly revenue), so that % can easily go up as revenue continues to sink, bond payments, interest on loans from the feds etc.

Then there's the pension fund obligations, they have underfunded them for the last several years AND they were creatively finagled calculating higher income from the funds accruals than they realized or ever will. They are not sure how much that is exactly but can be between 450 and 500 billion ( Stanford study 6 months ago), thats 6 times the yearly state budget btw, this is defined locked in liability. They have a cash payment due to calpers for 55 billion this coming year.

where is this money you seem to think they have?

You're full of shit, which is why you have to inflate potential liabilities. For example, describing liabilities that depend on the future performance of the market and life expectancies as "locked in liability" is a bald faced lie.

State's pension liability tops $500 billion, Stanford study finds
April 5, 2010 | Lance Williams

In post-recession, post-stimulus-program America, we’ve gotten used to some frighteningly big numbers being thrown around in the discussion of public finance.

Nevertheless, it was difficult not to be alarmed at the bottom line in a study of California's pension obligations conducted by Stanford graduate students and touted Monday by Gov. Arnold Schwarzenegger.

The study concluded that the state’s unfunded pension liability has topped half a trillion dollars – six times the present state budget.

Put another way, future California taxpayers are going to be on the hook for more than $500 billion simply to make up the difference between the pensions we’ve promised to today's state workers and the money we’ve invested to pay for them.

That’s tax money that will have to be shelled out before a nickel is spent on the public services of the future.

The study was the work of the Stanford Institute for Economic Research. It was supervised by former Assembly Democrat Joe Nation, who represented Marin and Sonoma counties from 2000 to 2006 and who has run unsuccessfully for Congress and, most recently, the state Senate.

Today, Nation is a public policy instructor at Stanford.

The research project sought to put a realistic dollar figure on the state’s pension liability, which ballooned during the market turndown that drove the recession.

The study contends that the California Public Employees' Retirement System, California State Teachers' Retirement System and the University of California retirement system are understating the burden facing future taxpayers. That’s because the rules by which they calculate pension liabilities are unreasonably optimistic, the study says.

When using a more realistic set of assumptions about the size of the state’s obligations and the return the pension funds are likely to get on their investments, the study comes up with a grim fiscal scenario.
As of July, 2008 – before the worst part of the stock market slump – the state’s pension funds were reporting an unfunded liability of $55.4 billion.

rest at-

State's pension liability tops $500 billion, Stanford study finds | California Watch


Life expectancy can only worka against them as the retirees live longer there by pullling out of the system longer.

I'd post another link showing the overblown calcs used to create the illusion of higher returns the state ( in collusion with calpers) used so they could short pay the funds, but really, whats the point?

I realize you think you're smarter than say the blokes at Stanford, so I await your rebuttal.

Oh hey, wipe your chin before you post so you don't get the shit that drips from it all over your keyboard..

I'm not surprised to see you totally miss the point

I did not dispute the #'s you posted, so by posting the source of the #'s all you did was create a strawman where there is no disagreement. I took issue with the way YOU (not the Stamford study) characterized the liability as "locked in".

None of that liability is locked in. The study by Stamford is a projection, and like all other projections, it makes assumptions about the future, which may or may not be accurate. For example

The study contends that the California Public Employees' Retirement System, California State Teachers' Retirement System and the University of California retirement system are understating the burden facing future taxpayers. That’s because the rules by which they calculate pension liabilities are unreasonably optimistic, the study says.

IOW, this study hasn't proven anything about future liabilities. The people at Stamford had opinion about the way future liabilities were calculated that differed from the way it is done by the State of Ca. There is no evidence that Stamford opinions are any more accurate than the current calculations performed by the state of CA.

 

[iamwhatiseem]

You're full of shit, which is why you have to inflate potential liabilities. For example, describing liabilities that depend on the future performance of the market and life expectancies as "locked in liability" is a bald faced lie.

State's pension liability tops $500 billion, Stanford study finds
April 5, 2010 | Lance Williams

In post-recession, post-stimulus-program America, we’ve gotten used to some frighteningly big numbers being thrown around in the discussion of public finance.

Nevertheless, it was difficult not to be alarmed at the bottom line in a study of California's pension obligations conducted by Stanford graduate students and touted Monday by Gov. Arnold Schwarzenegger.

The study concluded that the state’s unfunded pension liability has topped half a trillion dollars – six times the present state budget.

Put another way, future California taxpayers are going to be on the hook for more than $500 billion simply to make up the difference between the pensions we’ve promised to today's state workers and the money we’ve invested to pay for them.

That’s tax money that will have to be shelled out before a nickel is spent on the public services of the future.

The study was the work of the Stanford Institute for Economic Research. It was supervised by former Assembly Democrat Joe Nation, who represented Marin and Sonoma counties from 2000 to 2006 and who has run unsuccessfully for Congress and, most recently, the state Senate.

Today, Nation is a public policy instructor at Stanford.

The research project sought to put a realistic dollar figure on the state’s pension liability, which ballooned during the market turndown that drove the recession.

The study contends that the California Public Employees' Retirement System, California State Teachers' Retirement System and the University of California retirement system are understating the burden facing future taxpayers. That’s because the rules by which they calculate pension liabilities are unreasonably optimistic, the study says.

When using a more realistic set of assumptions about the size of the state’s obligations and the return the pension funds are likely to get on their investments, the study comes up with a grim fiscal scenario.
As of July, 2008 – before the worst part of the stock market slump – the state’s pension funds were reporting an unfunded liability of $55.4 billion.

rest at-

State's pension liability tops $500 billion, Stanford study finds | California Watch


Life expectancy can only worka against them as the retirees live longer there by pullling out of the system longer.

I'd post another link showing the overblown calcs used to create the illusion of higher returns the state ( in collusion with calpers) used so they could short pay the funds, but really, whats the point?

I realize you think you're smarter than say the blokes at Stanford, so I await your rebuttal.

Oh hey, wipe your chin before you post so you don't get the shit that drips from it all over your keyboard..

I'm not surprised to see you totally miss the point

I did not dispute the #'s you posted, so by posting the source of the #'s all you did was create a strawman where there is no disagreement. I took issue with the way YOU (not the Stamford study) characterized the liability as "locked in".

None of that liability is locked in. The study by Stamford is a projection, and like all other projections, it makes assumptions about the future, which may or may not be accurate. For example

The study contends that the California Public Employees' Retirement System, California State Teachers' Retirement System and the University of California retirement system are understating the burden facing future taxpayers. That’s because the rules by which they calculate pension liabilities are unreasonably optimistic, the study says.

IOW, this study hasn't proven anything about future liabilities. The people at Stamford had opinion about the way future liabilities were calculated that differed from the way it is done by the State of Ca. There is no evidence that Stamford opinions are any more accurate than the current calculations performed by the state of CA.

This doesn't change the fact that you alluded to California being in sound shape. To which Traj correctly showed you they are not, then you call him a liar, then he posts the source of his numbers - then you say you were just disagreeing with a method of future #'s.

This still leaves Trajan's original question...in what way do you see California being in a financial condition that others could only wish for?
And yet you acknowledge the staggering numbers that show the opposite.
You are either being obtuse, or just a drive-by idiot.
Which is it?

 

[sangha]

State's pension liability tops $500 billion, Stanford study finds
April 5, 2010 | Lance Williams

In post-recession, post-stimulus-program America, we’ve gotten used to some frighteningly big numbers being thrown around in the discussion of public finance.

Nevertheless, it was difficult not to be alarmed at the bottom line in a study of California's pension obligations conducted by Stanford graduate students and touted Monday by Gov. Arnold Schwarzenegger.

The study concluded that the state’s unfunded pension liability has topped half a trillion dollars – six times the present state budget.

Put another way, future California taxpayers are going to be on the hook for more than $500 billion simply to make up the difference between the pensions we’ve promised to today's state workers and the money we’ve invested to pay for them.

That’s tax money that will have to be shelled out before a nickel is spent on the public services of the future.

The study was the work of the Stanford Institute for Economic Research. It was supervised by former Assembly Democrat Joe Nation, who represented Marin and Sonoma counties from 2000 to 2006 and who has run unsuccessfully for Congress and, most recently, the state Senate.

Today, Nation is a public policy instructor at Stanford.

The research project sought to put a realistic dollar figure on the state’s pension liability, which ballooned during the market turndown that drove the recession.

The study contends that the California Public Employees' Retirement System, California State Teachers' Retirement System and the University of California retirement system are understating the burden facing future taxpayers. That’s because the rules by which they calculate pension liabilities are unreasonably optimistic, the study says.

When using a more realistic set of assumptions about the size of the state’s obligations and the return the pension funds are likely to get on their investments, the study comes up with a grim fiscal scenario.
As of July, 2008 – before the worst part of the stock market slump – the state’s pension funds were reporting an unfunded liability of $55.4 billion.

rest at-

State's pension liability tops $500 billion, Stanford study finds | California Watch


Life expectancy can only worka against them as the retirees live longer there by pullling out of the system longer.

I'd post another link showing the overblown calcs used to create the illusion of higher returns the state ( in collusion with calpers) used so they could short pay the funds, but really, whats the point?

I realize you think you're smarter than say the blokes at Stanford, so I await your rebuttal.

Oh hey, wipe your chin before you post so you don't get the shit that drips from it all over your keyboard..

I'm not surprised to see you totally miss the point

I did not dispute the #'s you posted, so by posting the source of the #'s all you did was create a strawman where there is no disagreement. I took issue with the way YOU (not the Stamford study) characterized the liability as "locked in".

None of that liability is locked in. The study by Stamford is a projection, and like all other projections, it makes assumptions about the future, which may or may not be accurate. For example

The study contends that the California Public Employees' Retirement System, California State Teachers' Retirement System and the University of California retirement system are understating the burden facing future taxpayers. That’s because the rules by which they calculate pension liabilities are unreasonably optimistic, the study says.

IOW, this study hasn't proven anything about future liabilities. The people at Stamford had opinion about the way future liabilities were calculated that differed from the way it is done by the State of Ca. There is no evidence that Stamford opinions are any more accurate than the current calculations performed by the state of CA.

This doesn't change the fact that you alluded to California being in sound shape. To which Traj correctly showed you they are not, then you call him a liar, then he posts the source of his numbers - then you say you were just disagreeing with a method of future #'s.

This still leaves Trajan's original question...in what way do you see California being in a financial condition that others could only wish for?
And yet you acknowledge the staggering numbers that show the opposite.
You are either being obtuse, or just a drive-by idiot.
Which is it?

If wingnuts didn't lie, they'd have nothing to say

This wingnut claims I "alluded to" CA being in sound shape. Of course, the wingnut will never post a quote of me saying that.

 

[Toro]

The study contends that the California Public Employees' Retirement System, California State Teachers' Retirement System and the University of California retirement system are understating the burden facing future taxpayers. That’s because the rules by which they calculate pension liabilities are unreasonably optimistic, the study says.

IOW, this study hasn't proven anything about future liabilities. The people at Stamford had opinion about the way future liabilities were calculated that differed from the way it is done by the State of Ca. There is no evidence that Stamford opinions are any more accurate than the current calculations performed by the state of CA.

They are, in fact, less accurate.

They are basing their actuarial discount rate on the last 10 years of returns as opposed to the long-term rate of asset growth, as well as making the argument that because liability streams are less volatile, liabilities should be discounted at a lower rate, which does not make sense since composition of assets is weighted to more risky assets, and using liabilities as the proxy creates an mismatch in asset/liability duration.

 

[boedicca]

I've always thought of California as something of a basket-case, at least politically. I was surprised when I ran the numbers and discovered that during this decade, California has actually outperformed Texas, albeit slightly.

From 2000 through 2009, per capita economic growth in California at 31.6% was slightly higher than Texas at 31.5%. California was disproportionately affected by both the collapse of the Tech Bubble and the Housing Bubble compared to Texas. Also, Texas is a net exporter of energy whereas California is a net importer of energy. You can calculate all the data from these sites.

BEA : Gross Domestic Product by State
California QuickFacts from the US Census Bureau

Texas benefited greatly from a quintupling of oil prices during the decade, was not as affected by the collapse of the Tech Bubble in the earlier part of the decade as much as California, and did not experience the same catastrophic boom/bust real estate cycle as California did. Yet California actually outperformed Texas.

I have an article I will post later.

Texas doesn't have an income tax; CA has one of the highest in the country, as well as high sales taxes and property taxes (the latter due to property values, not rates).

The regulatory environment and growth of public employee unions in CA has also made in very hostile to business.

 

[sangha]

The study contends that the California Public Employees' Retirement System, California State Teachers' Retirement System and the University of California retirement system are understating the burden facing future taxpayers. That’s because the rules by which they calculate pension liabilities are unreasonably optimistic, the study says.

IOW, this study hasn't proven anything about future liabilities. The people at Stamford had opinion about the way future liabilities were calculated that differed from the way it is done by the State of Ca. There is no evidence that Stamford opinions are any more accurate than the current calculations performed by the state of CA.

They are, in fact, less accurate.

They are basing their actuarial discount rate on the last 10 years of returns as opposed to the long-term rate of asset growth, as well as making the argument that because liability streams are less volatile, liabilities should be discounted at a lower rate, which does not make sense since composition of assets is weighted to more risky assets, and using liabilities as the proxy creates an mismatch in asset/liability duration.

Thanks for those details!

IOW, it sounds like you're saying the report is deliberately slanted. I don't understand what you said about the liability streams, but basing the discount rate on just the last 10 years seems blatantly dishonest to me.

 

[sangha]

I've always thought of California as something of a basket-case, at least politically. I was surprised when I ran the numbers and discovered that during this decade, California has actually outperformed Texas, albeit slightly.

From 2000 through 2009, per capita economic growth in California at 31.6% was slightly higher than Texas at 31.5%. California was disproportionately affected by both the collapse of the Tech Bubble and the Housing Bubble compared to Texas. Also, Texas is a net exporter of energy whereas California is a net importer of energy. You can calculate all the data from these sites.

BEA : Gross Domestic Product by State
California QuickFacts from the US Census Bureau

Texas benefited greatly from a quintupling of oil prices during the decade, was not as affected by the collapse of the Tech Bubble in the earlier part of the decade as much as California, and did not experience the same catastrophic boom/bust real estate cycle as California did. Yet California actually outperformed Texas.

I have an article I will post later.

Texas doesn't have an income tax; CA has one of the highest in the country, as well as high sales taxes and property taxes (the latter due to property values, not rates).

The regulatory environment and growth of public employee unions in CA has also made in very hostile to business.

I wonder if the wingnut can explain how these high taxes, burdensome regulations, and growing unions explains why CA is growing faster than TX?

 

[Samson]

Why did this surprise you?
California has a HUGE economy. And yet despite an also HUGE tax basin - they are broke.
That is what should surprise you.

They're not broke. Debt is, what, 7% of GDP? If California were an independent country, it would be the least indebted developed country in the world by far. They may be a basket-case, but they aren't broke. They have lots of money, but the will to pay isn't there. Orange County is one of the richest counties in the country, yet they went bankrupt in the 90s not because they couldn't pay but because they didn't want to. Same thing for the state now.

Size has nothing to do with the rate of growth.

THere are a couple of inconsistancies in your statement that I wonder if you'd be so kind to clear up for me:

"They may be a basket-case, but they aren't broke," means what? Do you mean a political "basket case?"

"They have lots of money, but the will to pay isn't there," means what? Again the mystery is who has "lots of money" vs who doesn't have "the will to pay" for what? Are they the same Californians? If debt is only 7% GDP then for what should "they" have the will to pay?

 

[sangha]

Why did this surprise you?
California has a HUGE economy. And yet despite an also HUGE tax basin - they are broke.
That is what should surprise you.

They're not broke. Debt is, what, 7% of GDP? If California were an independent country, it would be the least indebted developed country in the world by far. They may be a basket-case, but they aren't broke. They have lots of money, but the will to pay isn't there. Orange County is one of the richest counties in the country, yet they went bankrupt in the 90s not because they couldn't pay but because they didn't want to. Same thing for the state now.

Size has nothing to do with the rate of growth.

THere are a couple of inconsistancies in your statement that I wonder if you'd be so kind to clear up for me:

"They may be a basket-case, but they aren't broke," means what? Do you mean a political "basket case?"

"They have lots of money, but the will to pay isn't there," means what? Again the mystery is who has "lots of money" vs who doesn't have "the will to pay" for what? Are they the same Californians? If debt is only 7% GDP then for what should "they" have the will to pay?

And to think this wingnut has worked in the school system, but he can't understand simple, written English

 

[Mr Natural]

If California was truly the shit hole conservatives make it out to be, it wouldn't have the property values that it does.

 

[Toro]

THere are a couple of inconsistancies in your statement that I wonder if you'd be so kind to clear up for me:

"They may be a basket-case, but they aren't broke," means what? Do you mean a political "basket case?"

It appears to be a political basket-case to an outsider because they are unable to solve a fiscal problem as special interests are so entrenched and passage of necessary reforms difficult because entrenched rules and powerful special interests block reforms. Both parties nominate candidates who appeal to each others' hardcore constituencies, making compromise difficult. Then they pass laws through popular voting seemingly without regards to fiscal consequences. To an outsider, this looks fucked up. However, I believe there has been a recent law passed which will allow independents to participate in the nominating process, which should alleviate all this somewhat.

"They have lots of money, but the will to pay isn't there," means what? Again the mystery is who has "lots of money" vs who doesn't have "the will to pay" for what? Are they the same Californians? If debt is only 7% GDP then for what should "they" have the will to pay?

California is a rich state. They can raise taxes and/or cut spending to deal with the deficit but do not have the political will to do so. California may one day default, just like Orange County did, but that doesn't mean they can't afford it. They just don't want to pay for the laws they've passed. They're like the successful plastic surgeon who chooses to stiff his interior decorator.

 

[Toro]

I've always thought of California as something of a basket-case, at least politically. I was surprised when I ran the numbers and discovered that during this decade, California has actually outperformed Texas, albeit slightly.

From 2000 through 2009, per capita economic growth in California at 31.6% was slightly higher than Texas at 31.5%. California was disproportionately affected by both the collapse of the Tech Bubble and the Housing Bubble compared to Texas. Also, Texas is a net exporter of energy whereas California is a net importer of energy. You can calculate all the data from these sites.

BEA : Gross Domestic Product by State
California QuickFacts from the US Census Bureau

Texas benefited greatly from a quintupling of oil prices during the decade, was not as affected by the collapse of the Tech Bubble in the earlier part of the decade as much as California, and did not experience the same catastrophic boom/bust real estate cycle as California did. Yet California actually outperformed Texas.

I have an article I will post later.

Texas doesn't have an income tax; CA has one of the highest in the country, as well as high sales taxes and property taxes (the latter due to property values, not rates).

The regulatory environment and growth of public employee unions in CA has also made in very hostile to business.

Yabut,

As the article mentions, California still receives half of all venture capital funding, and the best and the brightest go to California to work in Silicon Valley. (And do you know what state receives the second highest amount of venture capital in the country? Taxachussetts.)

Also, despite the high taxes and stricter regulation, they have grown slightly faster per capita than Texas while Texas has had a much more favourable macro environment. That doesn't mean that California will grow faster than Texas in the future - I'd probably start a business in Texas before California - but they have over the past decade, despite the issues you mention.

 

[boedicca]

I've always thought of California as something of a basket-case, at least politically. I was surprised when I ran the numbers and discovered that during this decade, California has actually outperformed Texas, albeit slightly.

From 2000 through 2009, per capita economic growth in California at 31.6% was slightly higher than Texas at 31.5%. California was disproportionately affected by both the collapse of the Tech Bubble and the Housing Bubble compared to Texas. Also, Texas is a net exporter of energy whereas California is a net importer of energy. You can calculate all the data from these sites.

BEA : Gross Domestic Product by State
California QuickFacts from the US Census Bureau

Texas benefited greatly from a quintupling of oil prices during the decade, was not as affected by the collapse of the Tech Bubble in the earlier part of the decade as much as California, and did not experience the same catastrophic boom/bust real estate cycle as California did. Yet California actually outperformed Texas.

I have an article I will post later.

Texas doesn't have an income tax; CA has one of the highest in the country, as well as high sales taxes and property taxes (the latter due to property values, not rates).

The regulatory environment and growth of public employee unions in CA has also made in very hostile to business.

I wonder if the wingnut can explain how these high taxes, burdensome regulations, and growing unions explains why CA is growing faster than TX?

It's clear this moron can't even click on a link and look at data.

The time series is distorts the growth. CA grew like crazy during the dotcom era. Since that time, the areas of growth have been Real Estate, Health & Social Services, and the size of Government. Hi Tech and Professional Services have grown, but I'd like to know how much of the former is due to consolidated revenues from foreign subsidiaries.

Overall, CA's economy has basically flat lined since 2007, and there is out migration from the state as businesses leave the hostile climate. TX is benefitting from this out migration as more high tech is relocating there, and will see stronger growth as the economy recovers.

In contrast, CA is strangling itself with the Green Economy nonsense.

 

[boedicca]

I've always thought of California as something of a basket-case, at least politically. I was surprised when I ran the numbers and discovered that during this decade, California has actually outperformed Texas, albeit slightly.

From 2000 through 2009, per capita economic growth in California at 31.6% was slightly higher than Texas at 31.5%. California was disproportionately affected by both the collapse of the Tech Bubble and the Housing Bubble compared to Texas. Also, Texas is a net exporter of energy whereas California is a net importer of energy. You can calculate all the data from these sites.

BEA : Gross Domestic Product by State
California QuickFacts from the US Census Bureau

Texas benefited greatly from a quintupling of oil prices during the decade, was not as affected by the collapse of the Tech Bubble in the earlier part of the decade as much as California, and did not experience the same catastrophic boom/bust real estate cycle as California did. Yet California actually outperformed Texas.

I have an article I will post later.

Texas doesn't have an income tax; CA has one of the highest in the country, as well as high sales taxes and property taxes (the latter due to property values, not rates).

The regulatory environment and growth of public employee unions in CA has also made in very hostile to business.

Yabut,

As the article mentions, California still receives half of all venture capital funding, and the best and the brightest go to California to work in Silicon Valley. (And do you know what state receives the second highest amount of venture capital in the country? Taxachussetts.)

Also, despite the high taxes and stricter regulation, they have grown slightly faster per capita than Texas while Texas has had a much more favourable macro environment. That doesn't mean that California will grow faster than Texas in the future - I'd probably start a business in Texas before California - but they have over the past decade, despite the issues you mention.

CA gets the venture funding because many venture capitalists like living in Woodside, Atherton, and Palo Alto. The VC industry in CA has earned virtually no returns for its limited partners during the past decade. There is a sad trend (most VCs are herd animals bred at ivy league schools with no real live experience) of climbing on the Green Economy band wagon and seeking government funds to derisk VC equity.

It's sad.

 

[boedicca]

If California was truly the shit hole conservatives make it out to be, it wouldn't have the property values that it does.

You are mistaken about that.

CA is blessed with truly gorgeous geography and a lovely climate. The property values increase started when CA had a favorable business climate. The regulatory environment has so restricted growth in desirable coastal communities that restricted supply keeps prices elevated.

 

[Toro]

It's clear this moron can't even click on a link and look at data.

The time series is distorts the growth. CA grew like crazy during the dotcom era. Since that time, the areas of growth have been Real Estate, Health & Social Services, and the size of Government. Hi Tech and Professional Services have grown, but I'd like to know how much of the former is due to consolidated revenues from foreign subsidiaries.

Overall, CA's economy has basically flat lined since 2007, and there is out migration from the state as businesses leave the hostile climate. TX is benefitting from this out migration as more high tech is relocating there, and will see stronger growth as the economy recovers.

In contrast, CA is strangling itself with the Green Economy nonsense.

You are data mining.

The time period 2000 through 2009 represents one of the worst periods in California's economic history. During that time, they have had to deal with the depression in the teleconomy - not the boom, just the depression - and the boom and bust of the real estate bubble, which did not affect Texas anywhere near it did California. Texas has benefited enormously from the price of oil rising from $10 to $90 in a decade. The rise in the price of oil is a happy accident of geography and has nothing to do with the Texas political culture given that almost all of the incremental demand in oil over the past seven years has come from overseas.

That is not to denigrate Texas, but had oil not risen nearly 10x, the Texas economy would have been much worse.