I’m hoping to enlist your aid in figuring out this op-ed, written by California’s treasurer and the director of the Center for Continuing Study of the California Economy. In the op-ed Messrs. Lockyer and Levy rise to the defense of California:
California no doubt faces serious challenges. But our obstacles are not insurmountable.
Fiscally, we have to get smarter, think longer and stop hoping for a miracle. Californians have to assume more responsibility for deciding what they want government to do and how much they’re willing to pay for public services. We have to design a saner system for financing public schools.
We will meet these challenges. California has the most diversified economy in the country. It has the most diverse population, and the youngest. These are huge advantages. But we also possess the unmatched imagination and entrepreneurship of our people and their abiding frontier spirit. A few insults aren’t going to get us down.
The gist of their op-ed isn’t that California isn’t really in that poor shape.
How can this op-ed be reconciled with the many contradicting stories in the media? With the manifest problems in the state? In virtually any state a decline in the construction sector will have serious consequences. In California, where real estate and construction accounts for a quarter of the economy and has for decades, it’s catastrophic. As I’ve written here before if energy costs rise, housing prices are flat, and unemployment remains high, it’s hard for me to see how the nation’s economy recovers. That’s especially true of California.
Can somebody explain the op-ed to me?
One final note: how many employees does the Center for Continuing Study of the California Economy have and where does it get its funding? I’ve done some quick searching and based on that it’s possible that Stephen Levy is its only employee. That doesn’t mean what he says can’t be true. I’m just curious. (I was working on the “the longer the name of the organization the less its significance” theory of organizational analysis.)
I think you’ve found the chink in his argument, but he does build from a fair reminder:
That’s not really the media story.
Now, his problem, if he has one, is that he sees this recession as an inconvenience to a steady spending plan. Obviously (though perhaps sadly, given higher state responsibilities in a recession) a state that cannot run long term deficits, must be more responsive.
ooops, should have closed quote after “15 years ago.”
If the general wisdom is wrong, then the basis for the misunderstanding must lie with either willful deceit or a misunderstanding of the fundamentals. So when someone sets out to correct the incorrect general wisdom they should do so in a manner which doesn’t raise doubt about their explanation.
I think that these authors don’t meet that challenge. They’re picking arcane statistics to rebut more traditional statistics. For instance, critics are noting that state spending as a percentage of the economy and as a percentage of state GDP per capita have been increasing. I just verified that this is indeed so. They rebut these points by noting that spending is decreasing when measured against personal income. They’re lying by omission. If spending is declining in relation to personal income yet it’s increasing in relation to the economy, then it’s obvious that the state is increasing taxes on business income. This is indeed one of the complaints we hear quite frequently.
I suspect that their sophistry is using the same trick when they reference spending from the general fund. I’m wagering that the State of California has a number of specific purpose funds from which spending is directed. Why manipulate the analysis to be so specific rather than looking at the aggregated spending. Secondly, how would they reconcile their claim that spending has remained constant when state spending as a measure of state gdp has been increasing?
Then they crow about the impressive gains in California’s GDP from 1999 to 2009. When a significant portion of your economy is construction related and you’re in the midst of inflating property values beyond the level merited by economic fundamentals, then this most certainly shows up in GDP stats.
As for their claim that a diversified economy, a diverse workforce and a young workforce are advantages. NO. They’re not always advantages. This is a good example of arguing from axiom via tautological reasoning . Diversity is our strength, if believed, leads to conclusions which reassures that everywhere we see diversity we see strength. A diversified economy is only good in that it offers counter cyclical protection against sector specific dislocations. If the state economy has a booming oil and mining sector, then it’s not really a strength that this is counterbalanced by receding farming, fishing, aerospace and auto sectors. As for a diverse workforce, there is no net benefit that derives specifically from diversity. The specifics of California’s diversity in its workforce, low levels of education and English mastery in some demographics likely eliminates the benefits that are derived from the presence of its Silicon Valley workforce, benefits that arise from specific competence rather than from the mingling of different races and ethnicities. As for a young workforce, if the demographics of the young are disproportionately from the sectors characterized by low human capital levels, then the balance between curse and blessing is not so easily determined.
The whole essay is pure sophistry. It’s not designed to educate and erase misconceptions, it’s designed to foster misconceptions in order to advance a political point of view.
This page has total California spending, state and local, from 1992 forward.
It’s a pretty wavy line, perhaps as they didn’t wake up and spend the dot-com winnings until after they were over, and then only partially compensated.
You may be right Tango, that “general fund” is hiding something, but then again, the fact that general fund spending hasn’t expanded says something too.
Surely the Lisdsay Lohan of states would have left that fund in rehab.
test
Test #2
Test #3
You may be right Tango, that “general fund†is hiding something, but then again, the fact that general fund spending hasn’t expanded says something too.
There was so much whitewashing in that piece that I’m at the point that I’m not accepting their word on even this claim. I wouldn’t be at all surprised to see items which were funded out of the general fund in 1980 are today funded through some other procedure or accounting category or through some special use levy or tax.
A quick Google search yields the following from the State of California website:
OK, one more. When you look at the ratio between general fund spending and total state spending in FY 80-81, the 30 year reference that they cite, we find that general fund spending accounting for 60.5% of all state spending. When we look at the figures for FY 2010-11 we see that general fund spending accounts for only 40% of state spending.
I’m not really inclined to run this issue to ground because every point of skepticism I have which I do verify shows that these authors are engaged in misleading their readers through the use of selective references.
Sorry about the billboarding, but there was something in my post which your wordpress softeware refuses to publish and through trial and error I’ve isolated it to this link.
http://www.dof.ca.gov/budgeting/budget_faqs/
There was a #1 after the final / and Wordpress rejected publishing the entire comment with that URL as it was.
Tango reveals his real interest here:
As for a diverse workforce, there is no net benefit that derives specifically from diversity. The specifics of California’s diversity in its workforce, low levels of education and English mastery in some demographics likely eliminates the benefits that are derived from the presence of its Silicon Valley workforce, benefits that arise from specific competence rather than from the mingling of different races and ethnicities.
Then unwittingly analyzes his own comment here:
The whole essay is pure sophistry. It’s not designed to educate and erase misconceptions, it’s designed to foster misconceptions in order to advance a political point of view.
Yes, Tango, we get that about you: Pure sophistry designed to foster misconception in order to advance a political point of view.
And yet, Michael, the data back him up. Inconvenient that, no?
Tully:
The data? The data demonstrating that there is no benefit from diversity? What data would that be?
Which is the most ethnically diverse nation on earth? Probably the United States. The wealthiest nation on earth? The United States.
Within the United States where do we find the greatest diversity? New York City? Which also happens to be the most important and wealthiest city.
Taking the history of the United States and graphing its power and dominance relative to the rest of the world. Greater or lesser as its population became more diverse?
As for their claim that a diversified economy, a diverse workforce and a young workforce are advantages. NO. They’re not always advantages.
Not always. So sometimes. Aside from gravity is anything “always?”
This is a good example of arguing from axiom via tautological reasoning . Diversity is our strength, if believed, leads to conclusions which reassures that everywhere we see diversity we see strength.
And that’s a good example of an unsupported assertion.
A diversified economy is only good in that it offers counter cyclical protection against sector specific dislocations.
Um, no. A diversified economy can mean creative interplay between different disciplines and specialties. For example, it’s quite helpful to have iron mining, steel manufacture and arms manufacturing all working happily together. Or let’s say, software engineering and chip production. Publishing and film making. Trucking, agriculture, oil and chemicals.
Oil isn’t terribly cyclical — it’s been pretty reliable for Saudi Arabia. And Saudi Arabia remains a weak client state because oil is all they have. Imagine what fun they could have with chemicals. Too bad, huh?
As for a diverse workforce, there is no net benefit that derives specifically from diversity. The specifics of California’s diversity in its workforce, low levels of education and English mastery in some demographics likely eliminates the benefits that are derived from the presence of its Silicon Valley workforce, benefits that arise from specific competence rather than from the mingling of different races and ethnicities.
And here we have the VDare mind at work. See how carefully that’s constructed? The inherent assumption is that diversity must be of some value in Silicon Valley, but it’s erased by subtracting the drag of poor Mexicans.
Yep. Because diversity is just that easy to quantify and measure. Kind of like pounds or inches. Add, subtract. And even then he’s unwittingly conceding that there must be some advantage in diversity in the computer biz. Which we lose with . . . farm workers?
And this honestly makes sense?
I’ll offer a counterpoint: Sergey Brin. Russian Jew. Pretty sure that all by his lonesome he covers the costs of Mexican farm workers as imagined by VDare.
Now, was Sergey’s “diversity” necessary to his creation? Well, golly, kind of hard to prove one way or the other, isn’t it? What we do know is that Sergey’s father chose to emigrate to the US of A because he knew we are good at dealing with diversity. So Google isn’t Russian, it’s American.
Wonder if Google in any way works with other diverse businesses and contributes anything beyond countercyclical effects? Hmm, any possible advantage in diversifying by having web search and movies, or trucking, or manufacturing, or well, everything?
The data? The data demonstrating that there is no benefit from diversity? What data would that be?
My, my, you come across as quite frantic and shrill. Take a look at Putnam’s work. Here are Rothman, Lipset and Nevitte:
Repeat a 1,000 times, Diversity is our Strength, Diversity is our Strength.
Taking the history of the United States and graphing its power and dominance relative to the rest of the world. Greater or lesser as its population became more diverse?
Interesting correlation, now show us the causality. What specific attribute of a diverse population leads to economic dominance that can’t be replicated in a more homogeneous society? Is there a uniquely Russian way of thinking that simply can’t be understood, or duplicated in the Anglosphere and which doesn’t do much good when exercised in Russia or in Russian expatriate communities, but when introduced into an ethnically diverse business environment results in revolutionary insights like the world has never seen?
Not always. So sometimes. Aside from gravity is anything “always?â€
You should be directing your criticism at the authors, for they wrote:
That’s a flat-out affirmation of the positive advantages (whatever they may be) of diversity qua diversity. That’s an axiomatic position.
Um, no. A diversified economy can mean creative interplay between different disciplines and specialties.
It’s not a matter of can, it’s a matter of must or a matter of will. The authors are stating that it is a strength of the California economy that the almond farming, the vineyards and silicon chip design companies are all located within state boundaries. The example you used, of iron, steel and arms manufacturing is better used to describe interlinked industries or production chains in that they’re more closely linked in SIC classifications. If the arms manufacturing business takes a downturn, that will have spillover effects on steel manufacturing and iron ore extraction, but not affect the almond groves or the vineyards too much.
The creative interplay you speak of takes place to greater effect between businesses in sectors which share dependency than between businesses in diverse sectors. When’s the last time you had to hire a welder or an aerospace engineer to help you write a children’s book? Compare to the last time you, or your publisher, had to use the services of a typist or a typesetter or a librarian or an artist?
See how carefully that’s constructed? The inherent assumption is that diversity must be of some value in Silicon Valley, but it’s erased by subtracting the drag of poor Mexicans.
Considering your stated line of work you sure demonstrate piss poor reading comprehension skills. Where did you get that I wrote that diversity must be of some value in SV? I wrote the exact opposite. Here, let me refresh your memory – “benefits that arise from specific competence rather than from the mingling of different races and ethnicities. “ I know that you exhibit a Pavlovian response to any post I make and you repeatedly demonstrate to us all that you don’t bother to read, or more accurately comprehend what you read, before you dash off your latest foaming at the mouth diatribe, but really, claiming that I wrote the exact opposite of what I actually wrote is a pretty feeble foundation upon which to base your strawman.
Let me offer you a remedial tutorial and break down the argument into small easily digestible pieces for you.
Here’s the argument: -The specifics of California’s diversity in its workforce, low levels of education and English mastery in some demographics likely eliminates the benefits that are derived from the presence of its Silicon Valley workforce, benefits that arise from specific competence rather than from the mingling of different races and ethnicities.
Notice that I take care to mention education and language skills in one demographic group. Notice that I take care to reference the SV workforce as the creator of benefits, not the diversity found in SV. That’s a pretty big clue. Next I take care to point out this workforce creates benefits from competence not from the attribute of diversity. Diversity is mostly immaterial to the measurable benefits most employers care about. The comparison that takes place within the universe of diversity is one between the benefits and costs associated between groups. The groups compared cross category. One group is an ethnic group, members of which are employed in a multitude of low skill economic sectors. The other group is employed in the high tech industry, members of which are drawn from a multitude of demographic groups. The subtle comparison is probably what threw you because I didn’t draw it for you by using crayons and bright colors. The conclusion of the comparison is that the low skill group is a negative drag on the economy and the high skill group is a positive contributor to society and the benefits are likely wiped out by the costs. A diverse workforce and economy, which mingles high value creators with low value creators, is not an unquestioned benefit for the state. There’s diversity for you. Diversity by itself isn’t creating benefits.
In fact, the compliance costs of satisfying the liberal fad for diversity are a significant cost center for businesses and they make society, in the aggregate, poorer.
“As the proportion of black students enrolled at the institution rose, student satisfaction with their university experience dropped, as did assessment of the quality of their education, and the work efforts of their peers . . .”
Shorter: Overcoming centuries of racism is hard, so let’s not.
“Interesting correlation, now show us the causality.”
Not really possible and you know it since we cannot create alternate universes. Michael does make a valid point that, for whatever reason, we have the most diverse country and we have also prospered the most. That would seem to suggest that at the least, it is not a drag.
Steve
Not really possible and you know it since we cannot create alternate universes. Michael does make a valid point that, for whatever reason, we have the most diverse country and we have also prospered the most.
Sure you can test it. Two ways. Internationally, measure each countries population diversity against GDP while holding other measures constant. Internally in the US, measure each census tract’s diversity against mean income while holding mean income and other variables constant. We want to see how beneficial heterogeneity is to our national wealth. The more unalike we are, the greater the dissimilarities, the greater the wealth we produce.
That would seem to suggest that at the least, it is not a drag.
It suggests no such thing. Before you make such an observation you have to acknowledge, and then dismiss, the alternative outcome of our national wealth being even greater and you have to account for why it wouldn’t. I suspect I’d have an easier time making the case that our diversity is holding us back, because I have reams of data on actual costs imposed on society by specific demographics. What you’ve got to do to support your contention is negate the effects that I can highlight and find counterbalancing positive gains.
Shorter: Overcoming centuries of racism is hard, so let’s not.
That’s another debate. What findings like that indicate though is that the mantra “diversity is beneficial” and “diversity is our strength” are merely empty slogans adopted for reasons other than having evidence backing them up.
So? We all would probably prefer an income based affermative action, but human nature what it is, a few years later somebody would be complaining about the poor people on campus.
Michael doesn’t care about the evidence, TangoMan. Only the polemic. He’s really only interested in playing word games. “Diversity” is a very mallaeble term. Easy to play word games with.
In any case, Dave wanted someone to explain the op-ed to him. I can. In pop culture terms, it’s a Kevin Bacon moment. Which invariably comes somewhat after a Flounder moment.
I checked the BEA data on that state-GDP claim the authors made. It doesn’t add up. By all measures I could find Texas grew faster than California for the period cited, with the sole exception of local/state spending, where California was the clear “growth” leader. I suspect much of the rest of their statistics share the same empirical basis of being somewhat creatively “adapted.”
every point of skepticism I have which I do verify shows that these authors are engaged in misleading their readers through the use of selective references.
Yep.
I think this is pretty much dishonest:
This data shows that spending per capita doubled since 1992 and increased by about 50% over the last decade.
Here’s another interesting chart that breaks out some of the spending categories.
Are you sure your chart is inflation adjusted, Andy?
The interesting thing is that if you use your first link, and flip to “pct GDP” it goes flat. The only way for that to work would be if each person were generating that much more GDP, in nominal dollars.
On your second link, yeah. That’s one of the reasons I go on about reinventing education.
John,
Both charts are per capita in 2005 dollars. You’re right about percentage of GDP being flat, and that is due to GDP growth. I’m not sure that GDP is a good measure for states, though.
Look at the charts for the Federal government. On a per-capita basis spending was basically flat through the 1990’s until 9/11. On a GDP basis, spending declined through the 1990’s boom, rose slightly and leveled out for most of the 2000’s until the financial crisis.
Maybe it’s not the best measure, but I like to look at spending per capita in constant dollars to gauge the overall size of government. Put the chart back to 1960 for example.
Some interesting California vs Texas graphs here.
I think “governementspending.com” data is per 2005 pop, rather than per 2005 pop (and dollars).
John,
It’s says, “$2005 per cap.” There is also an option for simply 2005 dollars.
Thanks for the comparison with Texas – interesting stuff. usgovernmentspending.com also has data for Texas. I’m heading out the door soon, so don’t have time to gen up some comparative charts.
It looks to me as though some of the California to Texas difference is due to increasing oil prices. Those help Texas and hurt California.
We are still a pretty good oil producer, though down from #1 in the world.
http://www.statemaster.com/graph/ene_pet_pro-energy-oil-production