Another East Coast liberal misjudges CA

Krugman - wikipediaApril 1, 2013

By John Seiler

California is such a complex state that it’s often amusing when East Coast liberals try to explain it to us. The latest is from New York Times columnist Paul Krugman. His article appeared in the April 1 edition of the Times, so maybe it’s an April Fool’s joke.

He writes of the ongoing supposed California comeback:

But a funny thing happened on the road to collapse: it turned out that the main culprit in the electricity crisis was deregulation, which opened the door for ruthless market manipulation. When the market manipulation went away, so did the blackouts.

Actually, there was no “deregulation,” only a different form of regulation that was worse, as I wrote in about 50 editorials in the Orange County Register as the crisis unfolded. There was no “market” to manipulate, only a rigged scheme that Enron and others figured out how to exploit. And when the crisis hit, Gov. Gray Davis signed up for high-priced, long-term contracts that gouged ratepayers until they expired only recently.

See what I mean? Krugman knows nothing of our state.

Writing in the Washington Examiner, Conn Carroll explodes some other Krugman misconceptions:

1. California has the nation’s highest unemployment
Krugman does mention that, “Unemployment in California remains high,” but he fails to mention just how high it is. In fact, California is tied with Mississippi and Nevada for the highest unemployment rate in the country at 9.6 percent.

2. California has one-third of all welfare recipients
Krugman says asserts that California’s “problems bear no resemblance to the death-by-liberalism story line the California-bashers keep peddling.” But he neglects to mention that California is home to one-third of all U.S. welfare recipients despite housing just 12 percent of all U.S. citizens.

3. California has the nation’s highest poverty rate
Despite all the welfare spending, California still somehow manages to have the nation’s highest poverty rate. Go figure.

4. California has the nation’s highest taxes
Krugman does mention that “serious studies have found very little evidence either that tax hikes cause lots of wealthy people to move or that state taxes have any significant impact on growth,” but he fails to mention that California’s taxes are not just high, but the highest in the nation.

Seiler comment: Krugman doesn’t specify the “serious studies,” but he probably is referring to one last fall by two Stanford sociologists, not economists. I demolished that “study” here.

5. California has the nation’s third highest income inequality
California’s already high taxes have failed to adequately redistribute income. Even before the Great Recession, California already had the third-highest income inequality in America (behind New Mexico and Arizona). And according to the Public Policy Institute of California, it only got more unequal during the recession: “Compared to the rest of the country, California experienced larger declines in income at the bottom of the distribution and smaller declines at the top — leading to the largest gap between upper and lower incomes in at least 30 years.”

6. California’s teachers are among the nation’s highest paid while its students are among the least educated
Krugman also claims that “decades of political paralysis have degraded the state’s once-superb public education system.” And it is true: California’s public education system is terrible. In 2011, the state’s eighth-graders finished 48th in reading, ahead of just Louisiana and Mississippi, and 48th in math, ahead of just Alabama and Mississippi. But California is not skimping on teacher pay. It’s teachers are the third highest paid teachers in the nation.

7. California has the nation’s highest energy prices
Krugman does mention the state’s blackout problems in 2001, but blames the entire incident on “deregulation” and “market manipulation.” But California’s failure to build new power plants, refineries, pipelines, and transmission lines is very real. There is a reason California has nation’s the highest gas prices and the among the nation’s highest electricity prices, despite sitting on billions of barrels of oil.

8. California’s budget isn’t balanced
Credit Krugman for noting that California’s budget is only a “projected” one, but he then fails to mention how unreliable California’s tax revenue projections have been in the past. A recent California Common Sense study showed that, since the recession began, the governor’s projections have overestimated revenues by an average of 5.5 percent. Apply that average to Brown’s 2013 projections and California’s budget would suddenly go from $1 billion in the black to $3.9 billion in the red.

9. California is deep in debt
Even if California’s current budget does produce a tiny surplus this year, the state is still deeply in debt. According to the state’s own auditor, California has a negative net worth of $127 billion, about half of which stems from “$57.5 billion in outstanding bonded debt issued to build capital assets for school districts and other local governmental entities.”

Seiler conclusion: Krugman should come out to California and see for himself what’s going on. He should drive around Los Angeles and see the boarded-up storefronts, the crumbling roads, the vast underground black market of tax avoidance. He should go to the schools where half of students never graduate high school.

He then should come to Orange County, where unemployment is 3 percentage points less than the state level — and where we have lower taxes and regulations than the rest of the state. But even here, thanks to high state taxes and city and county budgets raided to pay sky-high pensions, the roads are crumbling.

Krugman should stop believing the propaganda emanating from Jerry Brown’s office, leave his ivory tower, fly out here and find out what’s really going on.


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  1. Rob McMillin
    Rob McMillin 1 April, 2013, 13:03

    Responding to Paul Krugman is well into the “waste of time” category. For liberals, he provides an authority figure on the subject of economics who can simultaneously be relied upon to deliver up old timey Keynesian bromides. He long ago ceased to be an empiricist, and whatever value he may have had long ago slipped into the abyss with it.

    Reply this comment
  2. Deeply Anti-Intellectual
    Deeply Anti-Intellectual 1 April, 2013, 13:39

    I wanted to post a link to this photo, associated with the November 10, 2012 Huffington Post article “Paul Krugman: ‘Modern GOP Is Deeply Anti-Intellectual,'” that shows Paul Krugman – index finger holding inclined chin – looking like a thoughtful intellectual in front of a Princeton University logo. It now says “This Image License Has Expired.” How strange. Were too many people mocking it on the web?

    Reply this comment
  3. Deeply Anti-Intellectual
    Deeply Anti-Intellectual 1 April, 2013, 13:41

    You’ll see it near the top here:…4309.8157.4.8470.…0.0…1c.1.7.img.1MHiZIf7wiA&bav=on.2,or.r_qf.&bvm=bv.44442042,d.cGE&fp=20080b2f2d0e29d9&biw=1920&bih=894

    Article is here:

    I wish I could be an intellectual. Is there a college logo handy for some photos?

    Reply this comment
  4. SkippingDog
    SkippingDog 1 April, 2013, 14:34

    You’d have to do some serious thinking before you could be an intellectual, no matter which logo you use.

    Reply this comment
  5. jimmydeeoc
    jimmydeeoc 1 April, 2013, 15:34

    That’s not just “another East Coast liberal”, John…..

    Not when you’re the liberal establishment’s number one pet economist. Krugman stands head and shoulders over former favored pet economist Robert Reich (admittedly not a difficult feat).

    A man whose Nobel is second only to Obama’s as “Biggest Nobel Prank of All-Time”.

    (Whoops! I forgot about Arafat. OK…..So Krugman gets third place. Still quite a showing.)

    Reply this comment
  6. SkippingDog
    SkippingDog 1 April, 2013, 20:08

    Winning the Nobel Prize in Economics is hardly the same as winning the Peace Prize, Jimmy. You may need to review the Nobel awards and selection process so you don’t look like a rube.

    Reply this comment
  7. loufca
    loufca 1 April, 2013, 20:20

    Arrogance blinds intellectuals ro those who think they are. Krugman is but one fine example.

    Reply this comment
  8. Fourlocked
    Fourlocked 2 April, 2013, 00:10

    Typical Liberal claptrap. FUBAR something, then blame the conservatives (aka producers) for wanting to keep what they have produced (earned)

    He may have a Nobel Prize in Economics, but anyone who subscribes to the Keynesian economic theories that he spouts probably would have trouble passing third grade math. The numbers just don’t add up.

    Reply this comment
  9. us citizen
    us citizen 2 April, 2013, 07:41

    Wait a minute…….CA’s unemployment is 14.39% according to Zuckerman’s Grand Illusion……..this includes those off the line and those under employed. You’re both wrong.

    Reply this comment
  10. I'mjustsayin'...
    I'mjustsayin'... 2 April, 2013, 07:48

    Excellent article, but please rescind your invitation to Mr. Krugman, the LAST thing we need is another condescending blind intellectual telling us to drink the Kool-Aid.

    Reply this comment
  11. Ulysses Uhaul
    Ulysses Uhaul 3 April, 2013, 08:41

    Never met an intellectual righty!

    Reply this comment
  12. Ian Random
    Ian Random 4 April, 2013, 02:15

    I can’t find it, but the response to installing barge mounted turbines to alleviate black-outs was something like is that the best they can do.

    Reply this comment
  13. SkippingDog
    SkippingDog 4 April, 2013, 16:06

    You’re right, Ulysses Uhaul. One of their own TeaBagger leaders, Rick Santorum, told us why in a speech he gave last Fall:

    “We will never have the media on our side, ever, in this country,” Santorum, a former Pennsylvania senator, told the audience at the Omni Shoreham hotel. “We will never have the elite, smart people on our side.”

    As deluded as the TeaParty is, at least one of them recognizes the truth.

    Reply this comment

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