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Mar. 16 2010 - 1:45 pm | 10,242 views | 1 recommendation | 20 comments

Is California Becoming a Third World Nation?

California on the brink?

California on the brink?

A new day, a new sign that California is sinking into a metaphorical, if not literal, ocean.  True/Slant colleague David Knowles points out a new UCLA study that shows 1 in 4  Californians are uninsured. The day before, Michael Roston took a look at the state’s spectacularly bad unemployment numbers and saw nothing short of a Dust Bowl migration in reverse. The number of people  unemployed is now equivalent to  the total populations of Nevada, New Hampshire and Vermont combined.

Let’s not forget that nearly 22,000 of the state’s teachers were handed pink slips yesterday.  Let’s not even start on the usual steady march of fires, mudslides and early-morning earthquakes. Is it any shock that even immigrants are choosing places like Detroit or Minneapolis to live, instead of California?

So, California’s doomed, right? Maybe. Fans of schadenfreude should think again, though, because if California goes under, so does the U.S.  Here’s why California is the state that’s too big to fail.

The rest of the nation has a tendency to overstate the troubles of California when it’s doing badly and understate its successes when it does well.  13% of the U.S. GDP comes from California. Alone, it would be the world’s 5th largest economy.  However, the real sin committed by the other 49 states is a failure to acknowledge the primacy of California in the national economy.

A quick tour through recent history proves my point. The first tech boom of the 90s, the second tech boom, and the real estate bubble all not only started in California, they ended there, too.  The nation’s fortunes rise and fall with California’s in a way know other state (ok, maybe Texas on a bad day) can match.

No Jobs Here

No Jobs Here

Yet, it’s also the Rodney Dangerfield state, unable to get any respect. In January, Republican Gov. Arnold Schwarzenegger asked for $6.9 billion in federal funds to save the state. The Obama administration, which moved so rapidly to shore up the financial markets, has essentially told the state that it’s on its own. It’s technically illegal for the state to declare bankruptcy,  but services across the state continue to be axed and the threat that state employees will once again be paid through state I.O.U’s (as they were last summer) looms large.

At the same time, California’s economy has always been one of boom-or-bust, starting with the gold fields of the 49′ers. When the gold dried up, silver came along and so on and so forth through defense contracts, oil, tech and real estate.  Obama & Co. keep talking about how they want to move America off the boom & bust cycle and create long-term sustainable growth, but then ignore the place that’s the poster child for booming and busting.

Admittedly, many of California’s problems are its own. The state government is a mess and thus far, all attempts at reforming it have failed. There’s a pretty good bill in the legislature right now that would go a long way to ending the gridlock, assuming gridlock doesn’t kill the bill first. However, it’s naïve for the rest of the country to leave California to sink or swim on its own, when so much of its fate is bound up in the rest of the country.


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  1. collapse expand

    One of the biggest problems in California is the impossibility of tax reform. Despite our near double-digit sales tax rate, changing any tax law for any reason (ex: to save us from financial armageddon) requires a labyrinthine process to go through as well as enjoy an overwhelming plurality amongst voters.

    The state-wide joke of California is as such:

    “What do you think about education?”
    “Oh, well we have to give those teachers and schools some more money. Have to.”
    “What about jobs?”
    “Gotta pump some more money into job creation.”
    (and so on and so forth)
    “What about taxes?”
    “Oh they have to go down.”

  2. collapse expand

    Mr. Grant,

    You wrote:”Admittedly, many of California’s problems are its own.”

    California is like the United States, only more so. All of California’s problems are the same problem every other state government has as well as the Federal government’s, only worse. In an effort to increase “bipartisanship” there was an amendment to the constitution requiring a 2/3rds majority to approve a budget. The US Senate only needs 60% to pass a budget but California needs a super-duper majority of 66%. This of course had the opposite effect, it gave a handful of reactionary Republicans veto power over the state budget. State government has been paralyzed for years as a result of Republican scorched earth tactics (where do you think the U.S. Republicans got the idea?).

    California did nothing wrong, she just do it first.

    • collapse expand

      Davidla, yes, it’s all the Republicans — thanks now that we know what the cause is, it will be fixed tomorrow. Except maybe, just like the problems of our country, it is both parties’ fault. You’re right only in the sense that signing no pledge tax increases is just as stupid as giving public employee unions salary and pension increases that would rival CEO’s.


      In response to another comment. See in context »
  3. collapse expand

    Mr. Japhy, you wrote:

    “The number of people unemployed is now equivalent to the total populations of Nevada, New Hampshire and Vermont combined.”

    You seem to fail to grasp the obvious solution here: de-populate NV, NH and VE. Duh.

  4. collapse expand

    Gold was discovered in 1848. The Gold Rush started around 1849. Hence, it’s the 49′ers, not 69′ers.

    There is more to the story behind the teacher layoffs. First, migration out of the state usually includes children, necessitating fewer teachers. Second, if people can’t pay their mortgage, they’re not going pay their Mello-Roos. Third, school “administration” is the biggest bureaucracy boondoggle after the prison industry. No matter how many billions are given to the schools (Lottery proceeds, taxes, bonds, etc.) it never seems like enough. Where does all that money go?

  5. collapse expand

    California’s crackpot politicians have driven out jobs with oppressive taxes and oppressive environmental rules

    California has 340,000 teachers…all feeding off the taxpayers like piranha….they have a $131 billion dollar teachers retirement system, calstrs…..and all california public school teachers are exempt from social security taxes……these people have nothoing to complain about

    The private sector is the one hurting for jobs,,,not school teachers

  6. collapse expand

    California needs to take it’s no-fault lesson to heart and split up. It’s got too many irreconcilable differences.
    The trick is finding that border to draw.

  7. collapse expand

    The State suffers from bad politicians. The whole lot of them. They all need to go and we just need to start over. Let’s begin with the California Constitution, which reads more like a software shrinkwrap license than an enumeration of our basic rights.

    We’ve let the political class go too far in this nation and it’s time to reel them back in. Government power is derived from the consent of the governed. WE are government power.

    I do not consent.

  8. collapse expand

    It is becoming a third world nation. Its debt is too high, their laws in shambles, THE TERMINATOR is doing what he does best: Destroy

  9. collapse expand

    California is already a third world country in many cities because of years of out of control illegal immigration. Almost half of the households in So.Cal. speak Spanish as their primary language! The media ignores this for the most part.

    IF YOU ARE ANYTHING LIKE ME: http://www.youtube.com/watch?v=29zLFpp7VMo&NR=1

    HOW TO JOIN NUMBERSUSA: http://www.numbersusa.com/content/about-us.html

  10. collapse expand

    All California needs is a new constitution. Sadly, though, everyone’s in a “every man for himself” mode. And sometimes, fuck bipartisanship. Getting things done and doing the right thing is more important than attempting to impress everyone.

    Though Canadian, I have a few ideas of my own:
    ~kill the two-thirds majority requirement on taxes
    ~initiatives should only affect statutes proposed by Sacramento, not the State Constitution
    ~recall representatives instead of the Governor

  11. collapse expand

    I went to CA 3 times on business in 1999/2000. The place made no sense to me. The cab ride was $30. We passed a car yard selling cars for $8. Wednesday 2pm the streets were filled with shoppers. “Don’t these people work?”, I thought. The streets were also filled with homeless. Thousands of them. “This is the world’s 5th biggest economy and so many destitute?”, I thought again. Then I’d see a street filled with broken down homes and stumbling poor. The very next street over would start swanky hotels and boutiques. Driving down the coast road to San Diego the road was in terrible condition. Then I’d hit the entry limits of some district and the road would suddenly be perfect. And exactly as I left the limits the road would turn lousy again. So weird, even back then, it looked as fictional as a movie. I just kept telling myself, “This place is unreal and I don’t see it lasting”.

  12. collapse expand

    California is simply a place that people love to hate. That’s remarkable, since as Wallace Stegner pointed out, “California is America…only more so.” The implication is that, at heart, they really don’t think too much of America. Clearly, when some claim to love America, what they really mean is they love how they can exploit America.

    When I lived in California the economy was booming, yet I never once heard Californians disparage, or even compare themselves to, any other state. (I suppose some people, especially those who are prone to hate California, conveniently interpret that as “arrogance.”) Now that I live in Texas I constantly hear “friendly” Texans boasting about how their economy is currently doing better than that of California. And of course, anyone who followed the Enron debacle knows the role Texans gleefully played in California’s economic demise.

    The thing is, the ultimate cause of California’s current troubles is the same thing that other states have employed to be more “successful”: Reaganomics. I suspect that once again, given time, these other states will prove only to have followed California’s lead.

  13. collapse expand

    the west is on the wane only canada and australia will be left as rich western countries asia will rise and become the super region such balance in nature

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    About Me

    I'm a web TV producer and journalist living in Los Angeles. I've written for Salon, Out, The New York Observer, The Advocate and have directed music videos for bands like Grizzly Bear, as well as creating ads for BCBG/ Max Azria.

    I have a website at www.japhygrant.com because that seemed easier to remember than www.thatguywhoifollowonfacebookbutihavenoideawhyidothat.com

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