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High Taxes, Regulations, And A Swell Economy

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High Taxes, Regulations, And A Swell Economy


In the mythology of the right, California must fail. Its high taxes, strict environmental rules, and thick book of regulations are all ingredients in the conservative recipe for economic meltdown. That California is prospering nicely throws a pie in the face of its harshest critics.

To get around this clash of ideas and reality, an alternative version of California-going-down has been created. It is built on cherry-picked facts, numbers out of context and anecdotes. And the right continues churning out stories of companies “fleeing” California.

The conservative City Journal has devoted its winter issue to what’s wrong with California. One piece accuses “coastal elites” of destroying drought-plagued almond farmers by “privileging the needs of fish over the needs of people.” (What the fish need is a minimum water flow to their habitats to save them from extinction.)

Not to mess up a sweet fairy tale, but the “coastal elites” and the farmers are often one and the same people. The largest producer of nuts in the state is a company owned by Beverly Hills billionaires Lynda and Stewart Resnick. Hedge funds and banks have also gotten into the almond game, now that a lucrative Asian market has sent nut prices soaring. Thus, in the jaws of a multiyear drought, California “farmers” continue to plant water-gulping almond trees.

What else is wrong with California? A state minimum wage raised to $10 an hour from $9. That Wal-Mart is raising wages to $10 nationwide should offer a hint that $10 an hour is not extraordinarily high.

Zoning and environmental regulations have made California real estate quite expensive, especially along the coast. This is true, although having the Pacific Ocean on a long border hampers development, as well.

One reason zoning and environmental regulations make real estate more expensive is they also make it more desirable. One shouldn’t have to explain this to The Wall Street Journal, but one does after reading its commentary about “the mismatch between supply and demand” in California housing prices.

Actually, supply and demand don’t match or mismatch. Supply is supply, and demand is demand. When demand rises faster than supply, prices rise. That’s the law of supply and demand working as it’s supposed to.

The writer is obviously trying to say that imposing high standards for preserving the quality of life causes housing costs to rise. OK. Those who can’t pay the price — or who want bigger spaces — can and often do consider other parts of the country.

Though the decisions by Toyota and Occidental Petroleum to transfer their headquarters to Texas may energize California’s critics, they represent narrow slices of a bigger picture. A new study from Beacon Economics and Next 10 shows that California remains a powerhouse in attracting companies and well-to-do people.

In 2013, California ranked fourth in job creation by new businesses and fifth in creation of new businesses (a growth rate of 5.5 percent). From 2007 to 2014, 49,000 more people with a bachelor’s degree moved into the state from other states than moved out.

So is California an easy place in which to do business? It’s not. Is it a paradise for less skilled workers? Sadly, no. Few places are these days.

What the strong numbers do mean, Beacon partner Chris Thornberg told the Los Angeles Times, is “that being ‘business friendly’ is not the be-all and end-all of economic development.” He went on: “When you actually look at the data, you’ll find that as kooky as California is, it’s not a state that’s underperforming.”

Let the critics carp. But do correct them.

Follow Froma Harrop on Twitter @FromaHarrop. She can be reached at fharrop@gmail.com. To find out more about Froma Harrop and read features by other Creators writers and cartoonists, visit the Creators Web page at www.creators.com. COPYRIGHT 2016 CREATORS.COM

Photo: Jimmy Emerson, DVM via Flickr

Froma Harrop

Froma Harrop’s nationally syndicated column appears in over 150 newspapers. Media Matters ranks her column 20th nationally in total readership and 14th in large newspaper concentration. Harrop has been a guest on PBS, MSNBC, Fox News and the Daily Show with Jon Stewart and is a frequent voice on NPR and talk radio stations in every time zone as well.

A Loeb Award finalist for economic commentary in 2004 and again in 2011, Harrop was also a Scripps Howard Award finalist for commentary in 2010. She has been honored by the National Society of Newspaper Columnists and the New England Associated Press News Executives Association has given her five awards.

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  1. FireBaron January 5, 2016

    According to the Conservative Pundits, California should have collapsed under its own weight within two hours of Jerry Brown being sworn in as Governor.
    The biggest problem in California is and always has been the Voter Initiative program. In this, petitioners can force an issue on the ballot, but are not required to say how the results are to be funded. As a result, the State Legislature is left to scramble to find the monies needed for X or to replace Y. So while this program does provide “direct democracy”, it also shows the problems with it in a state as geographically large and populated as California.

    1. Eleanore Whitaker January 5, 2016

      The biggest problem in ALL Dems states is getting a lousy 55 cents for the $1 we pay in taxes while the Republicans flush our tax revenues to their states. Dem states have high taxes because we are forced to cover our states’ needs and support Republican states.

      1. @HawaiianTater January 5, 2016

        It would actually be quite hilarious to see the outrage from the people who are anti-welfare and pro states rights if we stopped funding the red states with blue state money.

        1. Otto Greif January 5, 2016

          It would be hilarious seeing blacks lose their welfare.

          1. ray January 5, 2016

            Otto your hilarious.

          2. Otto Greif January 5, 2016

            Thank you.

          3. bobnstuff January 5, 2016

            Along with a whole bunch of good old boys. Watching people suffer is oh so much fun. Hungry children are so funny. Old folks eating cat food must be one of your great joys in life.

          4. Otto Greif January 5, 2016

            Cutting off welfare wasn’t my idea.

          5. bobnstuff January 5, 2016

            No it comes from those people you support. I’ve read your posts so your stands on things are well known.

          6. Otto Greif January 5, 2016

            It came from the guy I was replying to.

  2. Bren Frowick January 5, 2016

    Apparently those who decry California’s high housing prices prefer the only OTHER solution: allow completely unregulated and unrestricted building anywhere and everywhere a developer feels like squeezing out more cash, regardless of irrelevant (to them) issues like availability of water or traffic congestion, leading to a plunging quality of life for EVERYONE living there, until it becomes so grossly overpopulated and starved of resources to maintain it that people simply do NOT want to live there anymore. That’s “freedom” for ya…

  3. yabbed January 5, 2016

    Right wingers won’t understand a word of it. 🙂

    1. Eleanore Whitaker January 5, 2016

      Right wingers are still in their Pampers. Narrow minds are found most often in mental institutions. No winger can be reasoned with anymore than you can reason with a psycho.

  4. bobnstuff January 5, 2016

    California is about to fail, at least that’s what the conservatives will tell you. Just like Obama is going to take your guns and is going to declare martial law and last summer the army was going to take over Texas. You got to love the pundits, they are always good for a laugh.

  5. LCR78 January 5, 2016

    California’s biggest problem is too many people want to live there.

    1. paulyz January 5, 2016

      Yup, mostly Illegals.

  6. paulyz January 5, 2016

    Another NM post that is misinformative. States that are ranked by fiscal condition show California in poor shape. They are rated only #44 out of 50. N.Y. #46, Illinois #50, N.J. #49, Mass. #48, Conn. #47. Best States are Alaska, N. & S. Dakota, Wyoming, & Florida. Add to that the serious water shortages, & things don’t look so “swell”.

    1. Eleanore Whitaker January 5, 2016

      Alaska pays $1 in federal tax and ranks No. 1 in freeloader ROI .Here are the GAO facts about Alaska…It gets back $1.87 the No. 1 freeloader state for every $1 they pay in federal taxes. But wait, it gets better. In addition to that, every man, woman and child gets a $1200 tax subsidy just for living in a “frontier” state. Wait…more…Alaska gets another $22 billion a year in tax subsidies for its fishing industries.

      North and South Dakota like OK are Oil states and in on that $16 billion in Oil tax subsidies the rest of the states are paying for.

      1. paulyz January 5, 2016

        More excuses to hide the facts?

        1. Eleanore Whitaker January 5, 2016

          Truth is your Republican states are about to get their butts dumped…Your oil industries are in the toilet. Your gun manufacturing industries are about to be controlled and your military industries are also being investigated for fraud.

          Jerks of the right love to call truth “excuses.” Your states have lived off our Dem taxes for so long. Which states get the most in oil, military and prison industry tax subsidies?

          When you thieves of the Corn Pone and Mutton Chops states take more than your fair share and play Walmartian plantation owners, you think this will just go on and on. Your idiot states suffered most from the Great Depression and before that the Civil War…let’s hear your “excuses” loser boy.

          1. paulyz January 5, 2016

            Thanks for showing us the Liberal/Socialist agenda to CONTROL everyone, including youself. Mostly all the Blue Socialist States are broke & wanting the rest of the responsible States & people, to bail your ass out!

          2. 788eddie January 22, 2016

            It is an interesting point, pauleyz that for a large portion of the electorate (those under 40) there is no memory of the USSR. For these people, the term “socialist” is not necessarily an undesirable thing.

            You’ll have to find a new way to try to scare people.

          3. paulyz January 22, 2016

            All people need to do to be scared, is read idiotic, Socialist comments from you Lefties.

          4. 788eddie January 22, 2016

            BTW, I’m a registered Republican. Always have been. I’m just not a card-carrying member of the Rabid Right.

            When the dust settles down after the election, once again the Republican Moderates will be able to pick up the pieces and move forward.

          5. paulyz January 9, 2016

            p.s. I see your wonderful State of New Joyzey is number 1 in States where people (LEAVE), to go somewhere else! N.Y., Illinois, & Conn. are close behind.

          6. Eleanore Whitaker January 10, 2016

            Did you also notice NJ has a Republican slash and burn governor? Did you also bother to check the GAO and see that NJ people have one of the highest costs of living because our state gets a lousy 55 cents for the federal $1 we pay? YOu know where the remainder of that dollar goes? To your Republican freeloader states who live off our federal taxes. Get an education. A state that has to bear the burden of state needs AND your Republicana state federal handouts is the reason people can’t stay…so..they move to your states and guess what? Your states will turn blue when all of the NJ Dems move there. Oh…..geee…didn’t think of that did you?

          7. paulyz January 11, 2016

            Actually, the States that get the most Federal dollars are those with high poverty rates, largely due to high percentages of government dependent losers that are mostly Democrats, your kind of people. Your Liberal policies & voting cause this to happen, so quit your bitchin’ about paying taxes!

          8. 788eddie January 22, 2016

            Wrong, parleys; it is interesting that the list of the poorest states is also the list of deeply red states. They give tax breaks to their wealthy and nothing to support the less fortunate. They also shred the support services for womens health.

          9. paulyz January 22, 2016

            All you need to do is check the Facts I listed, instead of falsely stating min-information to fool low-information voters. Quite a despicable tactic.

          10. 788eddie January 22, 2016

            HaHaHaHaHaHa! You are really so funny, paulyz.

  7. Eleanore Whitaker January 5, 2016

    Here is the great CONservative plan…All Republican states get anywhere from $1.35 to $1.87 for the $1 they pay in federal taxes. This doesn’t count the numerous tax subsidies for businesses the Republican states know are eligible for tax subsidies. Compare this to the Dem states whose $1 gets them ROI of an avreage of 55 cents.

    The Great Republican Plantation Plan is to control the Dem states by flushing most of our federal tax revenues to Republican states. Don’t believe it? Then why is VA, TX, OK and the rest of the military and oil states getting over 70% of 2016’s tax revenues?

    If the Republicans keep control over Dem states by keeping these states broke, they7 can lie an say …”Look at how badly Dems handle their money.” BS. We handle it much better if the Republicans got their thug mitts off our federal tax dollars. So we do without in Dems states while the Republicans sit back and enjoy OUR federal tax dollars?

    The Grand scheme of the GOP is to turn Dem states into their “plantations” where we work harder, longer, for less and then turn over more than our fair share of tax dollars to their befrigged states.

    The new slogan for 2016 is “Anything but Republican.” Hell is a better state to live in than CONservative rule of the GOP.

  8. George C Saufley January 5, 2016

    “The state in the situation” like the “person in the situation ” works differently in different situations. don’t know what catastrophic situations that might be hidden. Just might work if well coordinated.

  9. Bob Eddy January 5, 2016

    But isn’t reality in general a rebuke to the conservative agenda?

    1. Eleanore Whitaker January 5, 2016

      Once you get that being “ignernt” is a trademark of wingers and the CONs, you see how profitable it is for them. But, while they live off your hard earned tax dollars, your states have to double down on taxes just to support these lunatics.

  10. Eleanore Whitaker January 5, 2016

    The entire premise of the GOP for the past 8 years was to create mindless austerity while they helped themselves to more than their fair share of federal tax dollars. Now, the shoe is about to be on the other foot and the rednecks who can afford to buy Bully Boy pick up trucks and their own arsenals whine they can’t afford healthcare insurance? All while they make public places more unsafe? While their contagious gun fever is jacking the cost of our healthcare premiums because they run to an ER for their medical care for free?

    The Corn Pone and Mutton Chops have been freeloading for far too long now. It’s time to dump their debts on their states. That’s what they do to Dem states. Why the hell should they get a free pass?

  11. Lynda Groom January 5, 2016

    Except for short periods in the military and staying with family in Florida I’ve lived in California for over 72 years. We’ve been exposed to the distortions and out and out lies regarding how horrible California is suppose to be for jobs for decades. The state just keep chugging along no matter the false hyperbole.

  12. Otto Greif January 5, 2016

    I thought liberals cared about inequality, obviously not.

  13. Otto Greif January 5, 2016

    What a dumb article, most states don’t have Silicon Valley and Hollywood.

    1. JPHALL January 5, 2016

      That was the point of the article. I know reality is hard for you and other right wingers to understand, but in states like California you can chase your dreams. Most people here came from other states, especially the Midwest and Southern states, to do things they could not pursue back home. The results are the freedom to pursue your dreams whatever they are. More companies across the spectrum of possibilities are started here as a result and not ideology.

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