It’s official: California now a Third World republic

Nov. 18, 2012

By John Seiler

Dan Walters writes:

“About a quarter-century ago, I wrote a book about California’s social, economic, demographic and political evolution and quoted a couple of academics as predicting ‘the possible emerging of a two-tier economy.’

“Today, we can eliminate the ‘possible’ qualifier because it’s a proven fact.

“A Census Bureau poverty report and another from the Center on Budget and Policy Priorities,released simultaneously last week, should remove any lingering doubt about California’s stratification.

“The Census Bureau is experimenting with a new way of gauging poverty, one that uses more measures of income and outgo and the cost of living. And by that new standard, California has — by a wide margin — the highest level of poverty of any state, with nearly a quarter of its 38 million residents in that category.

“Meanwhile, the CBPP calculated, state by state, gaps in various family income brackets and found that California has the third largest ‘income inequality‘ between those in the highest and lowest levels, and the second largest between those in the highest and middle quintiles.”

That shows how prescient has been Walters, the dean of California reporters. Since I came to California 25 years ago, I’ve learned more about the state from him than anybody.

As Aristotle was the first to write, the key to liberty is a large middle class. That’s because only if the vast majority of people are financially able to take some time off to participate in politics can you have the discussions necessary to ensure and advance freedom.

If a society has a large number of poor people, such folks are too busy scraping together the means to survive to engage in politics adequately, meaning not just vote, but take the time to learn such things as the evils of socialism and the high taxes needed to pay for it. Such is the very definition of what we now call a “Third World” country — which definition now fits California. Wikipedia’s map of the Third World, posted above (click to enlarge), should be changed to include California.

Explanations

Walters’ explanation:

“The decline of a once-vigorous industrial economy wiped out countless well-paying, middle-class jobs. The emergence of a post-industrial economy rooted in trade, services and technology marginalized those without the specific talents and training the new economy demanded.

“Public policy did not adjust to that new economic reality, nor to the rapid ethnic diversification of the state’s population.

“In particular, public education failed to adjust — in part because school finance and governance shifted from local hands to state politicians and bureaucrats and became politically polarized. The very wide disparities in educational outcomes, from test scores to dropout rates, between white and Asian students on one end and black and Latino kids on the other attest to that failure.”

That’s pretty good. Here’s my explanation:

1. The California Coastal Commission, imposed in 1972 by voters most of whom now are dead, severely restricted housing construction in coastal areas. Other anti-housing measures were added, such as SB 375 in 2008, sponsored by Senate President Pro Tem Darrell Steinberg, D-Sacramento, and signed into law by Republican anti-California obsessive Gov. Arnold Schwarzenegger, further restricted the housing supply. California also has a very high divorce rate, leading to two households instead of one, which increases demand for housing and thus the price of housing.

The result is housing prices more than twice that of the rest of the country. Along with other high expenses (see below), you have to make about twice what you do in the rest of the country just to stay in the middle class.

2. You’re forced to pay sky-high taxes that just went higher. Forget the rich, who just got their taxes jacked up by Proposition 30, passed by another generation of misguided voters. Prop. 30 also increases sales taxes, already the highest in the country, grabbing another $1 billion a year, mainly from the middle class.

The top middle-class tax rate, 9.3 percent, also kicks in at around $48,000 of income, by far the highest of any state. California is the only state whose income tax is both “progressive” (aimed at the rich), because the top rate now is 13.3 percent, and “regressive” (aimed at the middle class) because of that 9.3 percent kicking in at $48,000. Indeed, $48,000 puts you in the lower-middle class. You can’t even raise a family on that in California (although you could in low-cost Michigan or Arkansas).

3. The crummy K-12 government school system means you need to pay for tutors or private-school tuition. That means you have to make even more money — which is taxed at the 9.3 percent rate!

4. Anti-jobs legislation, such as Arnold’s and Gov. Jerry Brown’s beloved AB 32, have killed hundreds of thousands of high-paying, middle-class jobs in industry.

5. The government-worker unions run roughshod over the state, totally dominating everything, as the recent election showed. With the Democratic supermajority now in both houses of the Legislature, the unions will be demanding payback, raising taxes and imposing regulations at will. With union power so great, the only people thriving in California are: Silicon Valley billionaires with  180-plus IQs, Hollywood moguls and stars, drug dealers and government workers.

6. As Walters notes, California now is a heavily Blue state, meaning (my interpretation) its political culture is pro-government, pro-tax, anti-business, anti-jobs, anti-middle class.

7. There’s one “good” development. The continued exodus of productive people from California will cause another housing crash when the next recession hits, likely some time next year. Then those who haven’t fled will have a slightly better chance of moving up into the middle class.

16 comments

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  1. CalWatchdog
    CalWatchdog Author 18 November, 2012, 08:23

    Walters is good, and one of the only remaining truth tellers in traditional media.

    Katy

    Reply this comment
  2. Douglas
    Douglas 18 November, 2012, 10:13

    “Prop. 30 also increases sales taxes, already the highest in the country, grabbing another $1 billion a year, mainly from the middle class.”

    One more time: California has the highest sales tax RATE,….NOT the highest sales tax.

    http://taxfoundation.org/article/state-general-sales-tax-collections-capita-fiscal-year-2010

    WE’RE NUMBER FIFTEEN!! WE’RE NUMBER FIFTEEN! !

    Reply this comment
  3. Dedicated Democrat
    Dedicated Democrat 18 November, 2012, 10:26

    Douglas is right. Taxes are not nearly high enough in this state.

    The only reason why the state is having problems is because people like you are not paying your fair share.

    Well, all that is about to change. Now the Democrats can do what Douglas and I know need to be done: raise taxes early and often!

    Reply this comment
  4. jimmydeeoc
    jimmydeeoc 18 November, 2012, 10:42

    You know that as late as 1970 or so, California housing prices were about on par with national averages?

    Meanwhile the hacks/cub reporters at left-leaning Reuters claim the “super-rich” are unlikely to stray.

    http://news.yahoo.com/super-rich-flight-california-not-fast-130754271.html

    Naturally they fail to distinguish between the “super-rich” and the broader slice of $250,000+ earners when it suits their case, then turn around and lump them together when it does. The same cat-and-mouse is played when sourcing evidence, interchanging data from both the Manhattan Institute and Stanford’s Center on Poverty and Inequality. (Three guesses as to what perspective the latter has!)

    Moreover, like much that is written on this topic, they fail to address what might broadly be termed as opportunity costs. What is the likelihood the next HP or Apple or Google is founded not in California but in a competing state – or country? Less and less.

    Reply this comment
  5. jimmydeeoc
    jimmydeeoc 18 November, 2012, 10:56

    Another canard is all this talk about how California can ONLY retain its technological dominance if we pour billions more into education. The extra billions won’t juice results one bit. And even if it did – it really doesn’t matter.

    If we lose tech dominance it will be because of tax policy, quality of life, deteriorating infrastructure, and overall economic dynamism (or lack thereof).

    Everyone with half a brain knows that the firms hiring those 180 IQ types do so not from a statewide pool of talent, but from a global pool.

    Reply this comment
  6. Dyspeptic
    Dyspeptic 18 November, 2012, 13:56

    I can always count on CWD for a ray of morning sunshine 🙂

    So I guess it’s official now because Dan Walters says so. I have been saying for years that Crazyfornia is going third world. Let me see now, we have 30% of the nations welfare cases, 25% of our families are impoverished, 25% of us are foreign born, the education system is increasingly dysfunctional, the whole place has gone deep blue politically and deep red fiscally and as an extra special bonus white folks are a minority and English is not a necessary language skill. Just a little preview of tomorrow’s America.

    @ jimmydeeoc,
    Generally speaking Reuters is about as misleading and phony as Network News or AP. Big Media simply can’t be trusted, they’re usually either incompetent, lazy or dishonest. However, I think they are right to assume that the super rich won’t leave. By that I mean people with incomes of approximately $1 million or more per year. Life is pretty good here for the truly super-rich despite the high taxes. Most of the poor get subsidies and welfare and can make some money in the black market economy. It’s the middle class that gets hammered by the outrageous taxation levels. Amazingly, many in the middle class just voted to make their taxes even more outrageous. Does Crazyfornia have a death wish?

    Reply this comment
  7. Rex the Wonder Dog!
    Rex the Wonder Dog! 18 November, 2012, 16:59

    Doigie, CA has the HIGHEST SALES TAX in both absolute AND relative terms…..yeashhhh!

    Reply this comment
  8. jimmydeeoc
    jimmydeeoc 18 November, 2012, 18:01

    Ohh I completely agree, Dys….

    The million-a-year club will just pay the extra few percent and continue to live the easy life in Palo Alto or Brentwood.

    But let’s say you do tractor service and sales out of Bakersfield. You happen to pull in $400K/yr, do 70-hour weeks and plow most of it back in your business. YOU’RE the enemy, acc’d to Obama, and in California you’ll get the Prop 30 AND AB 32 double-whammy.

    And some point in the not too distant future you’ll just say F-it and go Galt.

    Reply this comment
  9. Bob Smith
    Bob Smith 18 November, 2012, 18:42

    “You know that as late as 1970 or so, California housing prices were about on par with national averages?”

    Yes, and soon after California started practicing “smart growth” (it was not called that then). The Coastal Commission and SB375 are “smart growth” in all but name.

    Local governments have bought up billions of dollars in productive land and taken it out of circulation in the name of “greenspace”, lowering their tax revenues which required higher rates on the taxpayers.

    Low-income housing setasides, “impact fees” costing $100k+ per unit, and years worth of regulatory costs and studies before you turn a single spade of dirt, vastly increase costs and cause builders to stop building low-end housing entirely (because, after the losses due to setasides and the extreme fees added onto land costs, you can’t make money doing low-end projects). And, now that you’ve pushed builders into ever higher-end markets, they’re doing fewer units, further constraining supply.

    Reply this comment
  10. Hondo
    Hondo 18 November, 2012, 20:06

    This disaster is hardest on my parents. Born in 31, raised in the depression in El Monte and Whittier, my grandparents blown here by the depression. They grew a garden and ‘put up’ a lot of the food they ate. There were no food stamps. There were soup lines at churches. Most simply ate less. They grew up thin, but they grew up.
    Then came the war. Coming of age during the greatest war of all time. Every man of age went to war. Very few stayed back for certain industries. My Gramma Greene was a ‘Rosie the riveter’. And beyond all belief, we won. We won the greatest victory over evil of all time. With the rest of the world in shambles, America was the last place on earth that could manufacture something. So we did. A boom beyond all belief occured.
    My parents were married in the early 50’s, in the greatest state, in the greatest country, at its greatest time ever. They were people who came from no means or money and proceeded to prosper. They bought a house in an ok neighborhood. My dad had a good job in the exploding telephone industry. My mom stayed home. Almost every mom in my neighborhood stayed home. They didn’t need to work. People of my generation, both parents began to work. Nowdays, no young marrieds have a mom at home. Unless its the welfare class, where it prospers to not work.
    We belonged to a small country club. Just a pool, a vollyball court and a lodge on a corner across the street primary school I attended. A public school. A good public school.
    The 50’s and the 60’s, up until Jerry Brown became governor, were the best of times. Up until the gas crisis of the early 70’s. Things began to change. It was never as good as it was for us kids as it was for our parents. I shunned ‘government work’ as did my older brother. I rue the day I turned down that job at the public library. My younger brother and sister work for the government. They think they got it good, that their future is protected by the government unions. They got it better than me, or my older brother who hasn’t worked in years. He has made a ‘less than honest living’ at times, but he has a mortgage to pay. My younger brother works for San Berdoo county. He is in ignorant bliss thinking retirement is secure in such an insecure county. It’s just the city is bad, he says. My sister thinks her public school pension is safe too. She is blissfully ignorant of the coming horrific conflict between the welfare class and the public union class. When, in the coming few years, we will see gigantic cuts to the welfare class to pay for the gigantic salaries and pensions of the government class.
    The young kids in our extended families mostly have drifted to other states to find work. So many of the kids under 30 are of the welfare class or are out of state. No one in this welfare class ‘puts up’ food or grows a garden. No one is really thin, they all have those plastic cards in their wallets
    My parents cannot believe the catastrophe that is California. Their golden state. I can barely call them now for their depression. Sure, there is the depression of very old age. But to see their progeny doing so much worse than them, far worse. That this greatest state in the greatest country, so close to it’s greatest times, is now a very real third world country. An illiterate turd world country.
    I took Eucharist this morning at church and dreaded calling my mom. She cries often. I put it off till this eve, but they weren’t home, to my relief. I’ll call them in the morning.
    Hondo…….

    Reply this comment
  11. Rex the Wonder Dog!
    Rex the Wonder Dog! 18 November, 2012, 20:30

    Wow Hondo, you had a story to tell, and tell it you did.

    I am so glad to read and hear stories like your folks/your story, because it is so different from the story we see today.

    Reply this comment
  12. CalWatchdog
    CalWatchdog Author 19 November, 2012, 07:18

    Dedicated Democrat: You can’t tax them after they leave.

    — John Seiler

    Reply this comment
  13. Douglas
    Douglas 19 November, 2012, 07:34

    You don’t have your sarcasm filter activated, John.

    Dedicated Democrat is neither.

    And I never said our taxes were not high enough. My only point was there is a difference between highest RATES and highest taxes.

    Reply this comment
  14. Hondo
    Hondo 19 November, 2012, 09:17

    There are truly, moments of change, like BC and AD to point to a change in civilization 2000 years ago. In California there was BC and AC. BC is before Charley, Charley Manson, and AC, after Charley.
    Before Charley there were the Beach Boys. California was literally a Beach Boy song. ” the west coast has the sunshine and the girls all get so tan” was really how is was. Sure there were hippies, but they preached love and peace and smoked too much pot and were mostly a pain in the neck to themselves.
    Then came Charley, who just happened to hang out with one of the Beach Boys. The peace and love hippies turned overnight into an insane band of homicidal monsters. I grew up in SoCal and the effect was stunning. The trial was off the scale of belief. The Manson clan still worship Charley after it was obvious to everyone he was a homicidal nut. The three girls accused of these horrific murders looked like your own sisters or the neighbor girls from down the street, till they carved crosses into their foreheads like Charley did, and shaved their heads too. The Manson family clan outside the courtroom, the ones who had not been caught up in the murders all defaced themselves too, while chanting Charley’s songs on the sidewalks around the courthouse.
    All of these kids grew up in middle class families. All of their parents fought off the depression and won the war. There was nothing in their backgrounds that remotely pointed to their insane actions.
    California changed after Charley. The innocence was over. In our midst was a small time Hitler who could take our mainly moral and sane kids and turn them into something out or the Third Reich. Insane killers for no apparent reason. We lost our innocence then.
    Hondo……..

    Reply this comment
  15. Hondo
    Hondo 19 November, 2012, 09:22

    I meant, “out of the Third Reich”.
    Hondo…

    Reply this comment
  16. Hondo
    Hondo 19 November, 2012, 09:29

    Someone called me and said the new Charley Manson’s were the teachers unions but I wouldn’t go that far (yet).
    Hondo….

    Reply this comment

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