Creating an Exodus
As much as I hate the high taxes, regulations and politics in California, I'm still pretty happy living here. But if eventually I'm forced to move, I think the state's unfunded liabilities (and what they will mean for taxes, services, infrastructure, etc.) will be the cause. IBD summarizes some of the key data:
"Unfunded pension and health care liabilities for state workers top $500 billion and the annual pension contribution has climbed from $320 million to $7.3 billion in less than a decade."(There's more in the editorial if you want to see a list of California's self-inflicted woes).
But if California's private companies are suffering, its public sector sure isn't. From 2001 to 2009, California lost 235,000 net private-sector jobs, but gained 163,700 government jobs. Those cushy union jobs also pay more than comparable private jobs and provide gold-plated benefits.
posted by Amit Ghate at 7:49 PM
1 Comments:
California sounds like New York in the 1960s. The city piled on huge pension obligations and rapidly expanded both a city and state "bespoke" welfare system.***
What was the result? Bankruptcy in 1975. The city was a miserable hell-hole throughout the 1970s. Widespread crime, physical destruction of property through graffitti and vandalism. The city lost 1 million of its residents; it declined from 8 million to 7 million people during that decade. It lost hundreds of major companies that moved their headquarters out of the city.
I don't know if that is where California or parts of California are headed, but it is possible.
I moved to New York permanently in 1985, so I saw some of the tail-end of the 1970s morass, but the city was already a lot better by then, and today it is a fabulous place to live.
We still have world-class high taxes, enormous pension and welfare burdens and we are at greater risk now than at any time in the past two decades of beginning to slide downward again. I hope it doesn't happen. However, that memory of the 1970s is pretty strong here. People do not want to go back to that. It is sort of like the impact the Weimar-era (1920s) hyper-inflation had on Germany. To this day, they are a "tight money" country, keeping the mark strong for decades (and trying to do the same for the euro, but that is another topic).
What does all this mean for California, or for the prospect of living there? Well, I leave it to you to make whatever conclusions you can from New York's experience. To what degree the analogy is applicable, I won't say.
Incidentally, I probably would have stayed in New York in the 1970s. The city was still New York, albeit a dangerous place. I just recently saw again Woody Allen's classic movie, "Annie Hall." The movie was made in 1977 when New York was in the pits. Allen acknowledges that fact in a wry manner, even drawing an explicit comparison with California, which was in its multi-decade-long rapid ascent, then. But, the movie showed that, despite New York's flaws, there were reasons to be in love with the city.
Each person finds their own reasons to love where they live.
*********
***This is *the* place to be a welfare recipient. Free housing is a legal right in New York City (established by the courts). Welfare recipients have swipe cards that they can use to buy pre-made sandwiches in stores. (It is too much effort for them to prepare their own food.) Topping it off -- I kid you not -- I saw subway advertisements once asking whether one needed free "homemaking services." Apparently, the city will provide welfare recipients with free maids because it is too much to ask them to clean up their own messes.
One way to think of welfare is that it is simply forcing all of us who work to pay for the life-messes of those who screw up their own lives, through drugs, laziness, etc. (And, yes, mixed in there are some legitimate sad cases who are suffering through physical or severe mental malady. Naturally, those should be the objects of private charity, not mandatory welfare.)
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