Californian William Voegeli compares his home state with the Antiplanner’s favorite state (at least politically), Texas. Being homes to the first- and second-largest populations in the country, both are “populous Sunbelt states with large metropolitan areas, diverse economies, and borders with Mexico producing comparable demographic mixes.”
But there are two sharp differences between them. California spends well over $10,000 per capita each year (and Voegeli argues that it is ineffectively spent), while Texas spends barely two-thirds that much. The second difference, argues Voegeli, is a function of the first: Texas is growing rapidly while California’s growth has stagnated. Companies are moving out of California, while in one recent period, Texas gained more jobs than the other 49 states combined.
Another reason California is growing so slowly is government regulation. For example, California mandates growth management; Texas forbids it (counties can’t zone, and without zoning you can’t do growth management).
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Moreover, to build even a politically correct, high-density, mixed-use development in California, you need not only government approval but approval from “union, environmental, affordable housing and wage advocates.” When the Sierra Club demanded that prospective developers of San Jose’s Coyote Valley donate $100 million to conservation funds, the developers — who had already spent close to $15 million on their applications and environmental studies —walked away.
Not only are taxes and regulation stifling growth, but California’s fiscal problems appear near-terminal. Governor Schwarzenegger is practically on his hands and knees begging the federal government for a bailout. But even if he gets one, it won’t solve the state’s long-term financial problem, which is that it is politically committed to spending far more than it takes in, and the legislature isn’t brave enough (or doesn’t have an incentive) to do anything about it.
Taxes, regulation, a willingness to cave in to special interest groups, an unwillingness to impose fiscal discipline — there are a lot of things wrong with the California political system. Unfortunately, what we see in California today is what the Obama administration wants for America tomorrow. And it all comes down to the same thing: an unwarranted faith in government and government planning. California and the Obama administration have it; Texas doesn’t.
Metalast is one example of a company that left California for Nevada. http://arc.asm.ca.gov/member/3/?p=article&sid=209&id=220393
In 2008 they were ordered by the EPA to comply with environmental laws. “Metalast–an aluminum anodizing company–has been discharging process-related wastewater into the Douglas county, in Minden, Nev. sewer system, without pre-treating the wastewater. EPA said the company also failed to comply with the self-monitoring and reporting requirements.” http://www.encyclopedia.com/doc/1G1-201713057.html
Another example is Apple and Microsoft, who use Nevada to dodge taxes that would otherwise be owed in the home state *that they continue to operate in and enjoy the benefits of state spending*. No, they don’t move out of California (or in Microsoft’s case, Seattle, because both areas have robust infrastructure and a pool of educated workers), they simply record some revenue elsewhere. http://microsofttaxdodge.com/2009/11/about-microsofts-nevada-tax-dodge.html
“Microsoft makes its home in Redmond, Washington. It has 40,224 employees and 79 physical sites here. Since 1997, Microsoft has dodged $782 million in taxes by recording its software licensing revenue in Nevada. If this practice is proven to be illegal, the company could owe as much as $1.24 billion with interest and penalties.”
They move their money out of these high-tax areas, but not their operations? Why is that? There might be something those taxes pay for that allows them to be successful. However, any blame is on politicians that left the loophole wide open.
Interstate Bakeries Corporation left California because they did not want to comply with clean air laws. http://realityalert.electionforum.org/Taxes-and-Regulations/Another-Company-Leaving-California-because-of-High-Taxes-Regulations.html
While Nevada has been absorbing all of these businesses, they have been one of the hardest hit states during the recession. http://www.nevadaappeal.com/article/20100103/NEWS/100109912/1070&ParentProfile=1058
The unemployment rate in Lyon County is 16 percent, higher than even LA County. In Carson City the unemployment rate is 12 percent. Whatever is working in Texas surely isn’t working in Nevada.
“Texas is growing rapidly while California’s growth has stagnated.”
At what cost is that growth in Texas? We have examples of companies leaving California because they do not wish to comply with laws that limit pollution. As Texas becomes wealthier, do you not think its residents will demand clean air and water? Perhaps their economy will implode like Nevada’s, which some people thought would grow forever. Now workers in Nevada are wondering where all the jobs are. Surely all these businesses that escaped California would have hired them by now.
I hope Texas is even more successful in the future. I wouldn’t want them to end up like Nevada.
For the most part, moving truck rental is a zero-sum game. U-Haul, Ryder, etc. count on this. It costs the same to rent a truck going from Glendale to Mesa as from Mesa to Glendale, because on average the migration evens out and the truck company doesn’t have to actually go out and retrieve their truck. Another will be along to replace it soon enough.
California’s current quagmire breaks this equation. One can rent a U-Haul truck to go from Omaha to San Francisco for $150. The same truck from San Francisco to Omaha costs over $700. That’s because the net migration is out of California, and U-Haul has to pay to fly their people out to retrieve trucks from flyover cities and bring them back.
Not only are taxes and regulation stifling growth, but California’s fiscal problems appear near-terminal. Governor Schwarzenegger is practically on his hands and knees begging the federal government for a bailout. But even if he gets one, it won’t solve the state’s long-term financial problem, which is that it is politically committed to spending far more than it takes in, and the legislature isn’t brave enough (or doesn’t have an incentive) to do anything about it.
It is certainly true that the lege cannot govern – the initiative quagmire, the lack of cojones, the basic structure itself.
And it is also true that CA has just about reached its limit on how much waste from human activity the biosphere can absorb. But just as importantly – CA can now see the deficit in how much water it can provide to current and future ag ops and populations. The groundwater is rapidly effectively (or economically) approaching being gone – groundwater used to make up surface deficits can easily be pictured as not continuing economically beyond this decade – and surface water is decreasing as the West warms and snowpack decreases. As in Australia, the limits might not be right here, but they are in view, and coming this way.
The future may not work because CA is tapping out its ecosystem services, and money can’t buy more.
Nature will bat last, and she sent out her setup man already – he of the massive heater and jug-handle curveball and the current stiff is a career Mendoza-liner in a long slump.
Stifle growth? Something will make that happen in CA, surely. One way or the other, but incompetence will have a lot to do with it, and also incompetence will shape the effectiveness of the reaction and policy formation.
DS
“California’s current quagmire breaks this equation. One can rent a U-Haul truck to go from Omaha to San Francisco for $150. The same truck from San Francisco to Omaha costs over $700. That’s because the net migration is out of California, and U-Haul has to pay to fly their people out to retrieve trucks from flyover cities and bring them back.”
Is this true? I just tried that for a move on February 24, 2010. Both quotes used the 10 foot basic truck.
San Francisco, CA -> Omaha, NE = $1,211.00
Omaha, NE -> San Francisco, CA = $1,367.00
I got a quote for today. Same thing. Where did you get your numbers? There’s a disparity in price, but not nearly as much as you claim. Ryder requires the pickup/drop-off location to be the same, so you didn’t even check this claim.
I got that second-hand, and I apologize but I quoted the wrong destination city. Not Omaha; Austin.
SF to AUSTIN, TX = $1330
AUSTIN to SF = $614
Both figures reflect the 10 foot truck in 2/2010.
You can verify this for yourself if you like, since you’re getting all reference-checky today. Thanks for the correction, because now I have firmer numbers to present.
I wonder why they’re so much higher now than in 2007/2008 when I read the original article? I wonder if the original article perhaps did not count days of use but only mileage, since I noticed those quotes are for 7 days of use (and I guarantee it doesn’t take a week to make that drive). If the daily use charge is $60-70, the final figures are almost exactly what I quoted from memory originally.
Don’t worry, we’ve had plenty of migration from illegal immigrants, something that libertarians do not oppose 😉
http://reason.org/news/show/122411.html
I wonder how much the U-Haul rate is from Mexico to California, hahaha.
Spokker,
Interesting article linked. Like libertarians often do, their pragmatic approach leaves them with what military folk call RAWR: Right Answer, Wrong Reason. When you get the right answer for the wrong reason, your position is politically/scientifically/whichever-attribute-is-applicably assailable.
Dalmia’s rationale that illegal immigrants do in fact contribute to the tax base more than people realize is worth repeating to the “close the borders!” crowd. What would be even MORE effective would be dismantlement of the welfare state. Then open immigration could be implemented without the danger of breaking the public treasury (uh, more so than usual, that is). It is very much in keeping with the independent American ethic that anybody is welcome as long as they’re paying their own way. Dalmia never reaches this underlying issue, and as such is arguing about the color of the drapes instead of realizing that it might be better to buy a different house.
Dan wrote:
> And it is also true that CA has just about reached its limit
> on how much waste from human activity the biosphere can
> absorb. But just as importantly – CA can now see the deficit
> in how much water it can provide to current and future ag
> ops and populations.
Might the lack of market-rate prices for that fresh water in California have something to do with that?
> The groundwater is rapidly effectively (or economically)
> approaching being gone – groundwater used to make up
> surface deficits can easily be pictured as not
> continuing economically beyond this decade – and surface
> water is decreasing as the West warms and snowpack decreases.
> As in Australia, the limits might not be right here, but
> they are in view, and coming this way.
Are they? It would seem that California has a large untapped source of water – the Pacific Ocean! Yes, that’s saltwater, but it is technically possible to remove the salt and other minerals from the water, probably using nuclear energy to power the process. Yeah, I realize the Sierra Club and the rest of the anti-growth industry will loudly protest nuclear-powered desalination, but so what?
> The future may not work because CA is tapping out its
> ecosystem services, and money can’t buy more.
You sound like a disciple of Thomas Robert Malthus.
> Nature will bat last, and she sent out her setup man
> already – he of the massive heater and jug-handle curveball
> and the current stiff is a career Mendoza-liner in a long
> slump.
I do not believe Malthus was ever in the major leagues.
> Stifle growth? Something will make that happen in CA, surely.
> One way or the other, but incompetence will have a lot to do
> with it, and also incompetence will shape the effectiveness
> of the reaction and policy formation.
It has already happened, especially in the Bay Area.
Might the lack of market-rate prices for that fresh water in California have something to do with that?
I’m utterly against farm subsidies, esp for drilling fossil water or taking cheap off-stream water, but Markets cannot supply non-rival and non-excludable goods with equity. Utterly basic. Completely basic. I discussed this utterly basic fact on this site within the last 6-8 weeks wrt Bechtel and water.
Yes, that’s saltwater, but it is technically possible to remove the salt and other minerals from the water, probably using nuclear energy to power the process.
I said economical.
But sure, you can put another nuke on a major fault if you can find someone who doesn’t go 250% over budget as a standard, and you put it in your child’s backyard above future sea level rise and see if people will pay full cost of the product per af, and the pipe, the $2-4M per pumps, the meters, the new distribution… sure, you betcha. I’m sure the farmers will just fallow rather than pay that, esp in the salinated southern SJV.
You sound like a disciple of Thomas Robert Malthus.
You sound like you knee-jerk in familiar, narrow frames. Nevertheless, I have a top-tier ecological education all the way thru grad school. Nature bats last and cares not whether people are ignorant of the fact that the economies of the world are wholly-owned subsidiaries of the environment. I=PxAxT.
It has already happened, especially in the Bay Area.
I’ve asked this here several times, to no avail: how many parcels remain on buildable land in the Bay Area? Not the market-purchased open space, but buildable parcels not in seismic-flood restriction, and how much would that DU supply lower prices? How many more parcels can be up-engineered to be seismically OK, and how many rich people’s houses would that supply? Thank you in advance for those gigantic numbers. Bonus: how many more DUs can be supplied by the owner seismically retrofitting to go up (hopefully no viewsheds obstructed)…
Let us know the fantastic cost savings in our future with all these new DUs.
DS
CA has many problems, which have lead to its unemployment being 1/4 higher than the national avg. & highest housing prices, etc.
(Tom Campbell for Governor. PhD in econ, leans L; Meg Whitman will do, business experience & knowledge)
We can thank for the highness*: CEQA, UGB, unions, prop13 pensions, etc. (*no connection to pot, fine if responsible)
Hey, have you noticed? This high cost & irrationality is due to selfishness (ie NIMBY, but much more). It’s also labeled as the drawbridge principle. Spelled as: reduce supply & increase supply supply prices.
I want my space, but have compactness.
I want mobility, but fewer freeways.
You all do know that the LA UA is the densest (in US) & the has least freeway-lanes/capita?
In other words, LA is BAD example, for youse who want to force togetherness (good idea, kinda, on intention).
Take ~17 million from the lowest UAs, at their densities, & cram them together–it occupies twice what the LA UA does.
Is there a reason for the “Left coast” name?
The Bay Area is the most expensive & most leftist (all Dems).
Correlation?
When people can vote themselves, other people’s money….
Gov is 40% of GDP & growing.
Where does that money come from?
Braniacs: the private sector.
Try to understand the principles of the Laffer curve. Much more than just tax.
Scott,
Hey, have you noticed? This high cost & irrationality is due to selfishness (ie NIMBY, but much more). It’s also labeled as the drawbridge principle. Spelled as: reduce supply & increase supply supply prices.
I want my space, but have compactness.
I want mobility, but fewer freeways.
I think you’re right on target here, but that part of why you’re right is that people are misunderstanding the concepts in play here. We call this “selfishness” (and you’re quite consistent with general usage to do so) but it is more akin to short-sighted whim-worship, and NIMBYism is certainly applicable here.
“Selfishness” is a virtue when it means rational self-interest, or to put it another way “rational egoism.” The rational egoist understands that benefits come with costs; they recognize that TANSTAAFL. The rational egoist acts in accordance with his or her long-term best interests, which may require the individual to forgo immediate pleasure or comfort. Past generations understood this because there was no immediacy of media entertainment or immediacy of revolving credit or ubiquity of 24-hour-a-day goods and services. They had to save up if they wanted something, and bargain for it at arm’s length. In our society’s admirable effort to truly democratize communications and so create the “eternal now,” the notion that one must plan ahead and accept prerequisite costs in money and time has fallen by the wayside.
In the otherwise forgettable movie “In the Line of Fire,” the villain tells a group of financial brokers “American CEOs plan to deliver good numbers after the next quarter. Japanese CEOs plan to deliver great numbers after the next quarter-century.” There now exist deep systemic issues preventing that kind of long-term vision from coming into play, not the least of which that, as I have explained above, we have largely forgotten how.
People make too much of California’s budget problem. Maybe it wouldn’t be as bad if they didn’t have to “donate” so much of their tax-dollars generated to fuel low growth states like South Dakota, North Dakota, Alaska, Mississippi, etc.
http://www.taxfoundation.org/blog/show/1397.html
Hmmm…check out all of those smart-growth states and their subsequent money they give away to other states.
http://www.taxfoundation.org/UserFiles/Image/Blog/ftsbs-large.jpg
I suppose a liberal state can’t complain from its money being “taken” from it and appropriated elsewhere, but then again, how can a so called fiscally conservative state put its name in for so much federal spending? What would 20 cents to the dollar in tax money do for California? It would probably be spent, but it might also have helped them too.
ws,
Keep in mind that the vast majority of that spending is under USC Title 42. Eliminate redistributive social programs like SSI, Medicare, and Medicaid, and all of a sudden the federal net balance in and out of the states becomes little more than a rounding error.
A few states would still be net consumers of federal funds, most notably New Mexico. (The federal government is the state’s largest employer.) But those would be the exceptions and not the rule.
Mike wrote:
> A few states would still be net consumers of federal funds,
> most notably New Mexico. (The federal government is the
> state’s largest employer.) But those would be the exceptions
> and not the rule.
Umm, ever heard of the Commonwealth of Virginia?
In spite of the anti-federal government rhetoric spouted by its ex-governor and ex-senator George Felix Allen, it is very much dependent on federal funds, in part because the Pentagon and so much of the military-industrial complex that revolve around the Pentagon are located in Northern Virginia. Virginia’s federal-taxpayer-funded economy is also boosted by the massive U.S. Navy installations in and around the Hampton Roads area of the state.
Finally, Virginia’s economy is helped by the perceived anti-business climate (and plaintiff-friendly legal system) in the District of Columbia, which causes many employers wanting to near the national capital to also locate in Northern Virginia.
CPZ-
Virginia, sure, but they actually have the population density there that they might potentially not collapse if the federal government pulled up stakes. If there was no federal employment in New Mexico, it would practically become a ghost town. (Note that I’m not claiming it’s right or wrong for this to be the case, whether in NM or VA. An effective federal government does need to have functional facilities, and they have to be located somewhere.)