Ah, California — The land of enormous natural resources, a booming economy, top notch schools, technological innovation, world class infrastructure and a vital growing population of inventive people. Oops sorry, that was 1980.
Fast forward to 2013 where the California dream has literally turned into a nightmare, especially for those of us who grew up in this once “Golden State.”
Fortunately for progressives, who have taken over the state of California, they’ve had the wealth to keep the impractical utopian dream going for decades. But now California, the model of Obamanomics, with its soak-the-rich laws, faces enormous deficits because its economy continues to sink. California, once the seventh largest economy in the world, now has nearly 10% unemployment — 2% higher than the national average.
There are so many things wrong with California, including overcrowded jails, low performing schools, a useless cap and trade law (that will do nothing to lower C02 emissions yet will exponentially raise already escalating energy prices for struggling Californians), a high speed rail that nobody wants nor can afford, draconian regulations and unsustainable public employee pensions. It would take several articles just to cover each of these topics. But two of the most critical issues are high corporate and personal taxes and massive welfare entitlements, which are forcing businesses, the upper and middle class (i.e. the wagon pullers) to leave the once prosperous state in droves.
Nearly four million more taxpayers have left California 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 moving into California each year than were leaving. According to Joel Kotkin, a leading U.S. demographer, most of those leaving are between the ages of 5 and 14 or 34 to 45. In other words, families.
The fact is, the only remaining option for many in the middle and upper middle class (who will undoubtedly be the next tax targets) is to flee the state for one of the nearby red states, which are not embracing progressivism, entitlementism, or statism. Many Californians fear that Democrats, who currently have a two-thirds super majority in the state legislature, can now raise taxes to oblivion if they so choose.
Nearly 60% of the state decided to vote for the Prop 30 Bill (advertised as a tax increase on the rich for the benefit of education), because they were told it would only affect the ‘wealthy’ – that is if you consider a family that earns $250,000 or more per year, wealthy. Meanwhile, about 40% of Californians don’t pay any income tax, and 25% are on Medicaid.
The only thing more ridiculous than tax-hiking politicians is their belief that taxpayers, especially wealthy ones, will simply smile and surrender their wallets. But history has repeatedly shown that taxpayers will go where taxes are low.
Travis Brown, author of “How Money Walks,” demonstrates in his book how Americans between 1995 and 2010 shifted some $2 trillion in wealth by abandoning California, Illinois, New Jersey and other high-tax states and moving to low-tax states such as Florida, Nevada and Texas.
U-Haul rates adds evidence to this premise: For example, in May 2012, the price for a one-way, 26 foot truck rental from Sacramento to Houston was $2,370, and from Houston to Sacramento was $1,007. This 2 to 1 California-Texas price ratio suggests that demand for trucks leaving California is more than double the demand for trucks coming into the Golden State.
And it’s not just families leaving California; businesses are fleeing as well. Today, CEOs rank California as just about the worst place to do business in the country, and have for an incredible eight years in a row. And it’s not just the CEO’s who are angry; a survey by the economic forecasting firm EMSI shows that, in 2011, California also ranked 50th, just ahead of Michigan, in new business startups.
Still, despite the state’s efforts to redistribute the wealth from those who earned it to those who didn’t, California has one-third of the nation’s welfare recipients, even though it only has one-eighth of the population.
The chief reason that California is so dependent on welfare is due to its extremely lax enforcement of the provisions of the 1996 welfare reforms. And the reason California has such a high percentage of the nation’s welfare cases is because it is one of the few states that continues to provide welfare checks for children once their parents are no longer eligible. No surprise then that three-fourths of California’s welfare recipients are 18 years old and younger.
The generous benefits have made California a magnet for those seeking easy welfare.
Historian Victor Davis Hanson wrote:
“The result of 30 years of illegal immigration, the reigning culture of the coastal childless households, the exodus of the overtaxed, and the rule of public employees is not just Democratic, but hyper-liberal supermajorities in the legislature. In the most naturally wealthy state in the union with a rich endowment from prior generations, California is serially broke — the master now of its own fate. It has the highest menu of income, sales, and gas taxes in the nation, and about the worst infrastructure, business climate, and public education.”
It appears that California will serve as the prime testing ground and model for President Obama’s form of post-economic progressivism. Every dream program that the Administration embraces — cap and trade, lax immigration, huge entitlements, massive taxes on the rich, high-speed rail to nowhere, powerful public unions — is either already in place or on the drawing boards in Sacramento. Soon, there will be no states left to flee to as they will all resemble the (no longer) Golden State.
Maybe progressives should take a lesson from their hero Karl Marx, who famously wrote, “History repeats itself, first as tragedy, second as farce.”