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California on the Edge of…?

November 9, 2012

I’ve been talking with a friend in California… mostly about property outside of California.  My friend appears to be done with living there, and is starting the plan to move out.  I can’t say whether this friend will really try that, but I’d bet that this is a likely calculus going on for many people in the state right now.

Ann Coulter once described California as a petri dish for liberal policies.  If you look at the election results from this week, you can see that California has elected a super-majority of Democrats to their state congress, supported by a relatively liberal administration, and has already driven a large tax increase from a ballot proposition.  Essentially, anything the liberals would like to see done to the country will be done in California over the next few years.  Here’s a McClatchy article from yesterday that discusses some of the consequences.

Immediately after the election, Art Pulaski, executive secretary-treasurer of the California Labor Federation, said Californians “need to take a hard look” at corporate tax breaks. Joshua Pechthalt, president of the California Federation of Teachers, said passage of Brown’s tax measure was “only Step 1.”

“California public education continues to be underfunded,” Pechthalt said.

Brown moved after the election to temper Democratic expectations. Asked at a news conference if electoral victories would inspire Democrats “to push their agenda,” Brown said he had reviewed the book of Genesis in preparation for the question. He suggested the state must save in abundant years to prepare for times of famine.

“I don’t underestimate the struggle over the next couple years to keep on a very calm, clear and sustainable glide path,” he said.

I would expect that we’ll see a lot of pressure from inside and outside the state to “fix” all the problems the state has by collecting significantly more revenue and growing the government to respond to every fuzzy need, which trying to “glide” to a soft landing when the revenue stream collapses.  Well, let’s talk about some pretty specific unintended consequences.  If there’s an expectation that raising taxes can drive revenues up commensurate to what this group is planning to spend, then I’d suspect that we’ll see a pretty serious outflow of citizens who really don’t want to be part of the fun.  I don’t think it’ll be so massive that most of the country notices (though I’d bet Texas happily will), but the chances of this optimistic plan working out are pretty low.

So pay attention to this one, folks.  It’ll be interesting to see how the culture in particular dish grows.  Let’s see what mold gets generated.

Updated five minutes after I finished posting…: “It’s a new world, and we’re playing defense.”

Updated again: Hot Air notes that Reuters is figuring it out, too.

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7 Comments leave one →
  1. November 9, 2012 6:35 pm

    As California goes, so goes the nation :P.

    My wife and I love the bay area, having fled here from Oregon. I absolutely hate writing 5-figure checks to the state, but I consider it a duty, not a pleasure. And really, California has an effective tax rate that is only slightly higher than the national average; but a standard of living that is much higher, IMO.

    Texas won’t be a respite for some of the concerns I’ve seen raised here, because:
    1) It has it’s own fiscal crisis and budget hole comparable in size to California’s.

    2) It is also following the same demographic/political trends as California (these are both majority-minority states). The republican party in Texas tried to “fix” this issue recently by gerrymandering their districts, but it was rejected by the courts.

    (note: I don’t want to be troll on this blog, so if people want me to shut-up, I will.)

    • November 9, 2012 8:07 pm

      We invite all opinions here, my friend. You might get us arguing back with some force on occasion, but we like you.

      I think the real difference at this point is that Texas is still reasonably business friendly. There are plenty of established businesses that might not move HQ, but would be happy to send employees to a state that requires less cost-of-operation.

      But your point about majority/minority states is valid, I had not thought of that.

  2. November 9, 2012 11:34 am

    The “stuck” part is negotiable. It might require significant changes in lifestyle or family relationship, but everything is possible with enough motivation from your local government.

    Ellen, it seems like Texas is happy to take the business people that are smart enough to run. I suppose it’s all a matter of the visa application…

  3. November 9, 2012 11:07 am

    We are stuck here. We are going to tell our children to move out of state. There is no future here.

    • November 9, 2012 4:20 pm

      I was in London this week at a multi-national event, and a very intelligent dedicated French woman told me that her daughters (who were just starting out their careers) were moving to Belgium to start companies there. Ultimately enough of THAT happening and either France votes sanity back in, or they start doing what Argentina does – raising the temperature on the frog a bit to keep him comfy before they slam the iron curtain on productive citizens attempting to leave….If you aren’t like the wealthy Romans based in Gaul (whose wealth was locked up in land – a non transportable resource), then you have no choice but to do what they did – accept loss of 40% of their wealth to the new King’s favored warlords & armies, swear loyalty to him and keep 60% of their wealth intact…otherwise, be like the Jews in medivial Europe

  4. Ellen D. permalink
    November 9, 2012 11:00 am

    And spread the same policies that are causing the demise of California to Texas? No thanks!

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