Illinois resident Mike Shedlock sees similarities between California and Illinois:
California and Illinois have many things in common:
- Harsh business environments
- High tax rates
- Both states are among the most pro-union states
- Both states lack right-to-work laws
That California and Illinois suffer from business flight and high unemployment should not be surprising.
Take away much of California’s benign climate, the mountains, ocean, and the desert and the similarities would be even more striking. Fortunately, here in Illinois we do have government corruption at a level that Californians can only aspire to.
California, at least in part due to the features mentioned above, has one thing going for it that Illinois does not: a belief that nowhere else is worth living. In Southern California that’s encapsulated in the wisecrack “there is no life east of Sepulveda”. I don’t see Illinois having that sort of hold on its citizens.
Ilinois’s recent decision to offer inducements, mentioned by Mish in his post, to Sears, the financial exchanges located here, Motorola, Caterpillar, and others to prevent them from leaving after the state’s ill-advised tax increases is an exercise in self-destruction. Established companies may be important to the state’s economic future but the facts are clear: new businesses are the engine for job creation. Subsidizing established businesses at the inevitable expense of new businesses is just another way of eating the seed corn.
First, a bit of California snark: Any sort of timeline yet on when your latest governor will be indicted, Dave?
The environment in CA is as you say a decisive factor. I’ve noticed that by moving from sunny SoCal to the foggy Bay Area the amount of state income tax I’m willing to pay has dropped a couple of points. I will pay for sunshine.
Or to put it another way, I’ll pay a hefty surcharge not to have to chip frozen dog turds out of the packed snow as I used to in Evanston.
I suspect that Pat Quinn will escape indictment. He’s one of a rare breed, part of the reform wing of the Democratic Party. He’s basically an accident.
I don’t believe I’ve ever asked where you lived in Evanston. I lived in Evanston for roughly 20 years, nearly all of it half a block west of the Northwestern campus, on a tiny one block street, Library Place, located in the north-south middle of the campus (south of Noyes, north of Foster).
1247 Hinman Avenue, at Dempster, a half block from Blind Faith cafe and a Starbucks. I loved the street and the town. . . in spring and/or fall.
And/or because as I recall we were never allowed to have both in a given year.
“there is no life east of Sepulvedaâ€
It’s interesting seeing that quote in a blog, as I only thought it was a quip contained in local groups on the westside of Los Angeles.
Southern CA may have more days of sun, but it is also log-jammed in traffic and metropolitan chaos. For those who enjoy the stimulus of constant noise and competition for parking spaces, it is a fantastic place to live. However, if there is ever a yearning for solitute or a slower pace of life then the northern part of the state is steller, despite the amount of liquid sunshine or condensed water vapor might inhabit the atmosphere.
Financially speaking, though, the entire state is mired down in party politics, union dominance, legislative pettiness, and an inability to balance debit columns with our state revenues. When you add in disincentives for business formation here, the latter continues to go down, while the former goes up, leading to even more economic insanity and instability.
Blind Faith is still there, little changed from when you lived there. We buy our running shoes at Murphy’s Fit, just east of Blind Faith (it’s owned by friends).
Years ago there was a resale shop right across Dempster that I loved. Central Evanston has become increasingly gentrified.
My wife is a third generation Californian, an early part of the California diaspora. Her family still lives there.
Southern California today is very much not the Southern California she grew up in. Of course, the Southern California of the 1920s and 1930s in which her parents grew up was very much not the Southern California of the 1890s when her great-grandparents and grandparents arrived there to farm.
Her in Florida we have:
* Friendly business environment
* Low tax rate
* Right-to-work laws
* Weak unions (outside of the public sector, no idea how strong the public sector unions are)
We also have great weather for 6-10 months out of the year (there’s a reason the homeless all move here) and warm ocean water.
We still have high unemployment. Bullet points only capture parts of the story.
As for changing conditions in a state – Orlando and the surrounding area has changed so much from what it was when I grew up here (call it from 1968 to 1990 to put dates on it) that I don’t even consider the place home anymore. I left at the end of 1994, and by the time I returned in the Fall of 2003 it was barely recognizable to me.
I suspect lots of pioneer folk have gone through this process too.
I lived in the Orlando area — Maitland and waited tables in Winter Park. Mid-80’s.
“Subsidizing established businesses at the inevitable expense of new businesses is just another way of eating the seed corn.”
We also have states like Texas with a poor public education system and the highest percentage of people, especially young people w/o health insurance. Is this not also eating the seed corn?
Steve
The flip side of high growth areas like FLorida and CAlifornia are the areas in decline. It wouldn’t be exactly the same, however. Whereas what I knew has been washed away by waves of growth, people going back to rust-belt cities or the abandoned towns of the Great Plains will see decay. Not exactly the same thing – the images will be there, rotted and wasting. Dead bodies, not ghosts, will haunt them.
I’ve complained about Texas’s health insurance issues myself but I don’t think the two sets of circumstances are comparable.
Illinois is creating a negative feedback loop in which the state raises taxes, grants tax benefits to favored, established companies, the Searses and Caterpillars, in order to keep them in the state, and drives the Searses and Caterpillars of the future out of the state. The large, established companies do employ a lot of people but they are pale shadows of their former glory, likely to have fewer employees in the future rather than more.
I see no signs of an out-migration from Texas due to its policies, it doesn’t seem to have any notable lack of people with the educations it needs to prosper. If it were a closed system, that might be the case but it isn’t.
Consequently, while it might be reasonable to complain that Texas is free-riding on the other states, I don’t think it’s “eating the seed corn” the way that Illinois or California are.
I might add that I think Texas’s policies are a coherent solution to the state’s immigration problems. Texas has elected to maintain a casual attitude to illegal immigration. That’s compatible with weak education systems and lack of healthcare.
There are two coherent and potentially successful strategies and one incoherent, unworkable one. You can have tight immigration and strong universal education and healthcare insurance requirements and that can be made to work (Canada). You can have lax immigration and weak universal education and healthcare insurance requirements and that can be made to work (Texas). Lax immigration with strong universal educational systems and healthcare insurance requirements can’t be made to work.
“Consequently, while it might be reasonable to complain that Texas is free-riding on the other states”
I think I would agree with this. Trying to apply this model to the whole country would create problems, I believe.
” You can have lax immigration and weak universal education and healthcare insurance requirements and that can be made to work (Texas).”
You also get very cheap, off the books, labor to help fuel your economic miracle.
Steve
The thing is, Texas isn’t all that bad with regard to education. It’s about average on math and science and a bit below average on reading (according to NAEP’s 8th grade scores). Texas also does better than most states educating Hispanics (especially including California but also including Illinois) which few seem to give it any credit for and also few seem to acknowledge the demographic differences in comparing states.
I’m originally from Denver and moved away in 1993. I still have family there and it is a much different city than I remember. Colorado in general and Denver in particular is seeing an influx of Californians which, personally, greatly annoys me. I hope they don’t do to Colorado what they did to California.
I also have relatives in Detroit and Cleveland. Generally I completely agree with Dave’s analysis on the negative effects of policies that increasing taxes on everyone except large, legacy businesses.
Dave, I’m curious though – Boeing move it’s HQ to Chicago a few years ago and I can’t quite figure out why there? Is that something you can shed any light on?
“Colorado in general and Denver in particular is seeing an influx of Californians which, personally, greatly annoys me. I hope they don’t do to Colorado what they did to California.”
Heh. As someone born in California in the 40s, I’m amused by that. How do you think California became what it is if not for the millions upon millions of folks from other places — like Colorado — moving there in the latter half of the 20th century? (Hell, I may have been born there, but my family moved there fleeing the Dust Bowl in the 30s.) (BTW, if you ever like to see what California looked like in 40s-50s, go to the Florida Keys.)
And folks are still moving there (For California, a Slower-Growing Population).
At present I’m living in New Mexico.
“The thing is, Texas isn’t all that bad with regard to education.”
I put some effort in trying to research this. I have come to the conclusion that states are able to manipulate test scores if they wish. There is quite a bit of evidence that Texas does this, but other states do it also. What is more difficult to manipulate is graduation rates. Texas clearly lags by this metric.
Steve
@Steve
As a former teacher I can tell you for a fact states manipulate their aggregate scores.
steve,
Graduation rate isn’t a good metric to rate an education system though. Again, one has to consider demographics and Texas (along with other border states) have a large, mobile, immigrant populations. How much of Texas’ comparatively low graduation rate is due to factors other than the education system itself? And, as we’ve discussed here before, graduating from high school isn’t necessarily a good standard because people who can’t read somehow manage to still graduate.
While the NAEP test scores are far from perfect, they do at least provide an apples-apples comparison and they do measure actual academic achievement. Another metric is ACT/SAT scores and there Texas is below average, but not by a whole lot.
In short I don’t think Texas is as bad as it’s made out to be.
Sam,
You’ve probably experienced it in New Mexico (which is a wonderful state, BTW), but there is a general cultural resentment against California by many of the other western states. A lot of this stems (at least in my experience) from the water wars, but there’s also more focus on money as status than there once was. At least that’s my perception which is undoubtedly horribly biased.
Yeah, I live on the West Side of Albuquerque, which folks on the older, whiter East Side call “Southern California” — no doubt because of the rapid build up that’s gone on over here. (Folks on the East Side towards the Sandias like to say they live in the Heights. We think more accurately that they live in the Whites.) But other than that “SoCal” thing, I don’t see a lot of anti-California sentiment around here. Hollywood makes a big economic contribution to New Mexico, so I’m pretty sure that gets factored in. (Santa Fe is filled with movie stars….)
@andy, IIRC part of the reason Boeing moved HQ to Chicago was additional legislative representation.
We might end up in Albuquerque after Florida – Kirtland AFB is one of the few places my Wife could get assigned to next.
“While the NAEP test scores are far from perfect, they do at least provide an apples-apples comparison and they do measure actual academic achievement”
Only if you test the same percentage and kinds of students.
OT- Spent 4 years at MacDill (excepting the time in Desert Storm), but of the TDY places I saw, liked Andrews and Wilford Hall.
Steve
“Illinois is creating a negative feedback loop in which the state raises taxes, grants tax benefits to favored, established companies, the Searses and Caterpillars, in order to keep them in the state, and drives the Searses and Caterpillars of the future out of the state. The large, established companies do employ a lot of people but they are pale shadows of their former glory, likely to have fewer employees in the future rather than more.”
Exactly correct. Further, this increases the tax burden on small businesses and individuals because – shudder the thought – spending shall not be touched.
He says from poolside………..in sunny, 80 degrees Naples, Fl. Sing along with me Muddy Waters fans…”…deep down in Florida, where the sun shines damn near every day…”
Off to Scottsdale on Wednesday. Hope you all had a good Christmas, wherever you may be.
Oh, and here’s something: On how California got fucked up big time and on what may be the way out (long shot).
I don’t think prop 13 screwed things up for California – it just transferred property tax revenue to sales, income and other taxes. It’s not like California has been revenue-constrained because of proposition 13 -it’s still considered a relatively high-tax state and its – revenues per capita are above average.
But Andy, I think the consensus is that Prop 13’s supermajority requirement set the stage for the all the tax/fee shennanies that followed. As Kevin said,
But discredit where discredit is due. Note that it was Proposition 13 that let the genie out of the bottle (rather than merely sticking a genie back in). California’s not helped by its crazy initiative system.
BTW, don’t California’s troubles have to be put in perspecitve:
Sam,
Yeah, your right, Prop 13 did create a lot of nasty secondary effects.