California Bleedin’

With the Golden State on the brink of bankruptcy, Chris Ayres at the Times of London wonders how it came to this. “This is a state whose money comes from the most bankable economic assets on Earth – the Long Beach ports, the Central Valley agricultural region, the defence contractors out in the Mojave desert, Silicon Valley, Napa Valley… Hollywood.”  He adds, “How do you tax all this and end up amassing debts at the present rate of $1.7 million per hour?”

I agree.  I know it’s bad and that Southern California and the San Bernadino Valley in paritcular have been crushed, but the state should be better insulted.

In his must-read cover story in the Atlantic today, Richard Florida argues that California has the kinds of “talent-clustering” cities that should be able to weather tough times. “Los Angeles with film and music, and Silicon Valley with hightech are examples of high-metabolism places,” he writes, referring to “urban metabolism” or a community’s ability to take in talent and churn out innovation, growth and jobs.

So who’s to blame?

California Has its Faults

11 Responses to “California Bleedin’”

  1. Jay

    19 February 2009 at 2:25 PM


    There is no doubt in my mind what is too blame. California has become unbalanced politically just as NY did in the 1960s. It has gone so far to the left on social issues that the bill is finally coming due.

    California’s extreme left tax and regulatory policies have driven out the middle class suburbanites and small businesses that used to drive its economic engine. They also kept the state close politically.

    This has occurred especially in the Los Angeles area where once heavily GOP suburban areas have collapsed and now produce tiny margins for Republican candidates. The old white upper middle class in LA County have been replaced by younger liberal yuppies and Asians who at best split down the middle politically. As a result the heavily Democrat Hispanic vote now dominates the state’s largest county.

    LA County used to split down the middle politically until the 1992 presidential election. Even in 1994 and in the 2003 recall vote, Republicans were able to win by coming close in the county.

    The terminator’s victory was a phyrric one with Arnold finally determining that being more popular by pleasing everyone was more important than fiscal reform.

  2. JEK

    21 February 2009 at 2:43 AM


    You comment that social issues are to blame -and then you specify fiscal issues such as regulation and taxes. Your argument appears disjointed and more importantly you seem to misunderstand why this has happened.

    You make it seem like the people in California are stupid (except perhaps when Californians vote for conservative laws and legislation – then the liberal people complaining about stupid people are “elitist”).

    Maybe it is not the fault of the “Lefties”. Maybe the demise of the Republican Party is the fault of the Republican Party and the conservatives who have driven state policy for the last 10 years from Orange County.

    California became solidly blue when the California Republican party started to ape the national (and southern oriented) Republican party on social issues like race, abortion and gay rights. California is not Alabama and the winning industries of California place a high value on education and individual expression that are characteristic of a social type of liberalism.

    Another point is that the successful use of the intiative process by conservatives has rendered the Republican Party irrelevant at the legislative level. I would argue that term limits (another great conservative idea) has resulted in ideological extremes and legislaters who know enough to be dangerous but not enough to really understand the issues thereby impowering the state bureaucracy.

    Proposition 13, another great conservative idea, managed to empower the state bureaucrats by forcing revenues from the local to the state level thereby starving education of funds and defusing educational standards (The decline in education levels started at this point).

    Ironically, this use of the intiative process rendered the Republican impotent – and when the Republicans acted all “Alabama” people just abandoned the Republican party in droves. One of these days the reactionaries in the California Republican Party will get a clue that most people don’t agree with them on social issues and find the strident “us against them” Limbough mentality tiring.

    p.s. I strongly recommend that you read “Albion’s Seed”. It is great book that explains Patrick’s Map of Obama winning most of Lincoln’s states. This issue is beyond liberal and conservative. “Albion’s Seed” talks about how social patterns are reflected in the political responses (The last chapters is actually the most useful).

    You are so focused on politics that you remain blind to the fact that people are more then just ideologues. California has always been inhabited by people who escaped the East and South and their constricted social classes and their votes on social issues and taxes reflect that.

    As I tell my friends, “California is the Italy of America: Great food, super wine, beautiful people – and terrible government”.


  3. Patrick Ottenhoff

    22 February 2009 at 9:55 PM

    JEK – I’m in the process of reading Albion’s Seed and am at the point about the settling of Massachusetts and Puritan folkways. I love it so far – so much fascinating history and demographics.

    I also got a kick out of your line about California being the “Italy of America.”

    I think I agree more with Jay’s description of the economics of the Golden State, but I agree with you that social issues A. have nothing to do with the crisis and B. have contributed to GOP declines. I guess you could describe me a social moderate and free market advocate.

  4. Jay

    23 February 2009 at 9:56 AM

    What you are ignoring is the constant drip drip of more taxes and regulation which has driven the middle class out of California.

    This has been caused largely by the liberal drift on social issues including massive enviromental regulation on business as well as excessive regulation on business on other social issues such as gay rights. The legislature is so far to the left that they even passed a law requiring businesses to hire cross dressers. In Calabasas, CA they have even made smoking outdoors illegal. This is the sort of social liberalism that has been pushed too hard in California. I could also mention the burden of illegal immigration on the state’s social services which the Democrats in California have not only promoted but applauded. And California continues to be a very high tax state in large part due to social liberalism.

    I dont see how the GOP is to blame since they hardly control anything. It is a falsehood to claim the state GOP has been excessively far to the right on social issues. They renominated Arnold easily despite his social liberalism on many issues. Their candidates for many statewide offices have been pro-choice on abortion and against restricting illegal immigration including Tom Campbell the 2000 US Senate candidate and Dan Lungren the 1998 Governor candidate.

    Like NY, California has become the captive of large liberal voting blocs who overwhelm the white majority vote which usually splits down the middle politically.

    At 61% for Obama in 2008, California is now well to the left of the nation and it is no surprise that its political liberalism and unbalanced left of center politics is causing its economic decline.
    The same thing happened to NY in the 1950s and 1960s.

  5. JEK

    24 February 2009 at 4:54 AM


    I would agree with you one one thing. Imbalance is usually not a good sign. But are you saying that the 60% who voted for Obama are wrong? Either you are an elitist (which is ok so long as you admit it) or you must acknowledge they must have become liberal for a good reason.

    And what does gay rights have to do with economic issues? In fact, a more libertarian view would probably argue that “liberals” want less government in personal lives while conservatives want less in their economic lives. How much regulation does it cost to regulate marriage?

    Your argument reminds me of my Dad’s dog. He had a dog which he encouraged to jump on his lap. I scolded him telling him that the dog would start jumping on everyones lap. But he was unrelenting: He insisted that the dog would know the difference. Of course it didn’t. If you want more regulation it can jump on you from both sides (and the inverse).

    Now to be fair, “liberals” often make the same mistake. i.e., the government has the right to tax for social issues and yet it doesn’t have the right to define marriage. There is a contradiction as well. But your falling into the trap of ideologies and pre-defined talking points.

    In regards to too much government regulation I point you to the government of Sweden. While the cultural and educational mix is quite different it does point out that despite a huge intervention of government, the growth rate and entrepenuralship in biotech compares favorably to the best high tech US state. If Sweden were a US state their GNP, growth, and patents would compare favorably to any US state. So just because there is a lot of government does not condemn it to have a poor education system and poor growth. Sweden is also considered to have “good” government (low corruption). Now I could argue that one reason we don’t have a government that works (especially in California) is that on a socialogical level multicultural societies may breed mistrust between groups which makes good government not possible – one paper implied this – but I have no citable evidence and this is a whole different ball of wax.

    You seemed to miss the point about the Californis politics. Due to social issues, the electorate has basically thrown out the Republicans. As I noted, conservative have used the iniative process to great effects, so that for instance there must be 2/3 of the legislature to raise taxes (See my previous note for other examples). These intiatives means that although California has a Democratic legislature, they must play by Conservative rules passed by the intiative process. As noted, for the California electorate, this was the compromise to get more diverse legislatures – and yet get conservative finances. The result of this contradiction is bad government and byzantine finances. I would prefer a less powerful intiative system so that voters would have to live with a fully operational legistlature that would write bills rather then “citizen legislatures” that do a half ass job from poor assumptions. If this results in more Republican so much the better. And the intiative process can work the other way in an economic crisis. I don’t like liberal or conservative intiatives. Or they need to be more restrictive so they are better written and so there are less of them. That way people can focus better on a few rather then alot.

    Plenty of minorites would be happy to vote Republican if they would approach them from a financial perspective. I could easily see Asians and whites voting Republican and even some hispanics (often in small businesses).


    Isn’t that an awesome book? Pretty dense stuff but the discussion and argument is really cogent and it really informs your lincoln/Obama map. Also, the crime map is interesting in relationship to gun control, i.e. it looks like culture rather then gun laws results in lower and higher violence. Interestingly I think the thesis of the book makes an implicit arguement that California has its own culture (hence my comment about Italy). Think of the Bay Area as Milan and L.A. as Naples…

  6. Jay

    24 February 2009 at 3:02 PM

    No matter how many arguments you make, the facts are that California is still failing as a good economic model, largely due to its liberal social and tax policies.

    People used to look forward to how California voted on election night. Now no one cares. That tells you something.

    Gay marriage is an unrealistic abstraction pushed by militant gay activists and now suddenly adopted by the liberal pc police as a mark of enlightenment. Ten years ago most would have laughed at such an idea. Throughout history even in the most gay tolerant societies no society ever adopted gay marriage.

    It has not even been tried long enough for us to know how much it will cost the taxpayers or society.

    I may be a conservative who has libertarian tendencies but I am not an anarchist. The family is the key unit in our society and any change which weakens it adds countless costs to the taxpayer under the present welfare state that we have.

  7. JEK

    24 February 2009 at 4:27 PM

    I would point you to 8 years of the conservative George Bush and his “balance budget” -NOT- If liberals take reasponsibility for California I hope you take responsibility for the condition of this country.

    You have yet to provide any evidence that gay right results in problems for the family. In fact, that evil state of Massachusets has one of the lowest divorce rates in the country. The citidel of conservative values, Mississippi has one of the higher rates of divorce. Your comment that no society has ever supported gay marriage is also wrong. Sweden has offered something close to gay marriage for 40 years. The divorce rate didn’t rise. People didn’t turn gay. Maybe, just maybe, people are a little happier. Native American societies also recognized gay people (in a very different way though). There are alot more socities that have recognized gay relationship, often in different ways.

    I doubt if you talk to a gay person they would view marriage as unlrealistic abstraction – and it was conservatives who pushed this as an abstraction so that people would fear gay people and vote Republican. It is interesting that the societies which are homophobic or tend to be anti-gay also tend to be totalitarian. I’d prefer not to live in Nazi Germany, Communist Russia, Iran or Saudi Arabia thank you.

    I’m afraid you are so close minded it is difficult to even have an interesting conversation with you. You claim to have a “libertarian” streak but I don’t see it. How are you going to deal with abortion and gay rights, arrest people with the government? Yeh, less government!

  8. Jay

    25 February 2009 at 10:22 AM

    Sorry I did not mean to get into a long debate about gay marriage. This site is for electoral geography not gay marriage.

  9. David

    25 February 2009 at 10:57 AM

    I strongly suggest that anyone interested in the consequences of California and the nation’s current policies read The United States of Argentina. Very interesting read.

    As to California, what can I say. My wife and I are both professionals (engineers). We were living in the Bay Area and were paying $1800/month for an OK apartment and $1000/month in state income taxes. We moved in January 2006 to Texas. We own a 3500 square foot house in Houston (built in 2001) for a total cost of $1432/month. We pay no state income taxes. Our income is slightly higher. My way of looking at it is that we make an extra $1400/month in income for moving out of California. This is after tax income and we have, so far, saved $33,600. It is amazing what that extra money in your pocket does for your lifestyle.

  10. Jay

    25 February 2009 at 2:03 PM

    Here is an excellent article which explains why California is in such economic trouble. It is now even more in debt than NY.


  11. JEK

    27 February 2009 at 3:03 AM


    My point was to show that social issues have nothing to do with economic growth (I could even give a couner argument that freedom in basic personal decisions motivates people). But I digress.

    I think some of the article you cite has validity. One problems is that living in California is just expensive so salaries for government is expensive. I would like to see how they compare to other states with comparable property values. I was born in California but left because I just felt the state did not work anymore. I will continue to argue that the iniative process is underestimated as a negative force producing contradictions that produce a byzintine government.

    But keep in mind this article is written by an author from the Manhatten Institute (Conservative) in conservative RealClearPolitics. There are also some clear problems with the article. One example is that the author says that google moved their server farm due to the cost of California. The real reason they moved the server farm was the Bonneville Dam and cheap and consistent electric power of the Columbia River. Mississippi is cheaper then Oregon but they did not move there.

    The land use argument is also a problem. In fact those states with loose land use laws (Arizonia and Nevada) have had the worst problems with the housing bubble. Oregon has more strigent land us policies but does not have the same problem. We have one of the five best housing markets in the country post bubble. Note that Manhatten is very expensive and land use is not the issue. I do think that crisp and clear regulations with a definitive understanding of the tradeoffs is necessary. Of course they could just split the state into North and South California… Vive La Norte!