Monday, February 1, 2010

"A Milestone On The Road To Becoming A Third World Economy"

Now here's one of the greatest of our California conundrums. The State is in dire financial shape, the money has run out, debt is exploding, yet we remain one of the highest taxed in the nation. A fiscal crisis that has gotten to the point where Sacramento has been forced to confiscate property taxes from cities like ours, while issuing IOUs to some of the individuals paying just those very taxes.

A pretty lousy tradeoff if you ask me, and quite a metaphor for a state that has ceased to produce much of value itself. In California perhaps the most predominant influence on economic activity has now become the government itself, supplanting such things as private manufacturing. And government, as you know, is far more skilled at taking than making.

And there are some real consequences. In an article on the New Geography site called A Milestone On The Road To Becoming A Third World Economy, author Bill Watkins cites Northrup Grumman's abandonment of Los Angeles as yet another indication of where we are all heading.

The reasons for this exodus are both simpler and less flattering than those usually given. One big reason is selfishness. California's decline chose to consume, and not to produce. Wealthy, aging, Baby Boomers control the state. In the cause of "quality of life" or "the environment," they have succeeded in limiting opportunity for everyone else ... The other big reason for decline lies with governments, state and local, that now exist to serve themselves and not their citizens. The level of government goods and services, even infrastructure and basics, has declined, but state spending, adjusted for inflation and population, has continued to soar.

The notion that California has become a State that consumes goods and services while producing very little itself has become a widely accepted one. We are living off of our inheritance, and what has vanished just isn't being replaced with anything of similar value. Industries and jobs are going elsewhere, and what is now being produced here are little more than policy papers, useless regional planning councils, and thousands of new laws. As Watkins puts it:

Southern California is starting to look a lot like a third-world economy, service based, inequitable, serving a wealthy, mostly aging few, with little opportunity for younger workers and a large underclass.

An irony forward example of this could be the solar energy industry. One of the claims of those supporting such things as AB 32 is that it would help to create large amounts of new high paying green jobs here in California. Yet the costs of doing business in this state are so high that when it comes time for companies to decide where to build the plants that will manufacture green technologies such as solar panels, they don't come here. Here's how technology advocate Jack Stewart puts it in a Fox & Hounds article called More Solar Companies Producing Elsewhere to Sell to California:

It looks like Tennessee just attracted a $1 billion solar facility and 500 accompanying jobs from a German solar firm, Wacker Chemie, and an Associated Press story hints that the volunteer state put up a $50 million incentive package to recruit the high wage company ... This news adds to a previously announced $1.2 billion investment from another solar firm, Hemlock Semiconductor, looking to produce solar products in Clarksville, Tennessee. Why is it that little old unsophisticated Tennessee can attract $2.2 billion in solar power investments and the home of solar and other green power mandates can sit and watch its unemployment numbers skyrocket to the country's third worst rate - 10.1 percent - and leave behind an economy-altering number of manufacturing jobs?

Pretty good question. Bills such as AB 32 and SB 375 bring with them some radical changes to how we're supposed to live our lives here, yet the benefits that are supposed to accompany such sacrifices are apparently going elsewhere. The reason being that doing business is just so much more expensive here than it is in places like Tennessee. Like 38% more expensive. This being a stark example of how we have become merely a consumer society, one that only benefits the haves while disenfranchising a growing underclass of poorly paid service industry workers.

California tax advocate Richard Rider keeps a doomsday ledger of our economic decline that he calls Breaking Bad: California vs. the Other States. He cites these examples as a way of comparing what we have here with the business and tax environment in other states. I'm going to list some of them here.

California has the 3rd worst state income tax in the nation. 9.55% tax bracket at 446,349. 10.55% at S1,000,000. Click here.

By far the highest state sales tax rate in the nation, 8.25%. 7% is the next highest does not include local sales taxes.) Click here and see table #15.

California corporate income tax is the highest in the Western United States, and the 9th highest nationwide @ 8.84%. Click here and see table #8.

2010 Business Tax Climate ranks 48th in the nation. Click here.

Fourth highest capital gains tax @ 9.55%. Click here.

Highest gasoline tax in the nation (January, 2010). Average now @ 65 cents per gallon. Click here.

1 in 5 in LA County receiving public aid. Click here.

California has 12% of the nation's population, but 36% of the country's TANF ("Temporary" Assistance for Needy Families) welfare recipients - more than the next 7 states combined. Click here.

California now has the lowest bond ratings of any state, edging out Louisiana. Click here.

America's top CEO's rank California "the worst place in which to do business" for the fourth straight year. Click here.

Consider California's net domestic migration (migration between states). From April, 2000 through June 2008 (8 years, 2 months) California has lost a NET 1.4 million people. The departures slowed in 2008 only because people couldn't sell their homes. Click here.

Well, hopefully you get the picture. There is a lot more, and if you're a real glutton for punishment, you can access the rest here.

But here is one final thought. If Sacramento has dragged this state down into the economic mess it is now, how can anybody be expecting any different result when they presume to tell us how we need to do such things as our General Plan? Since Sierra Madre is running a budget surplus, and has a handle on its fiscal situation that is really second to none, shouldn't we be allowed to chart our own course on planning as well? Rather than being forced to adopt the edicts of a vast and unresponsive bureaucracy far less skilled at governance than we are?

53 comments:

  1. $300,000 General Plan consultant anyone? Sacramento economics
    as practiced by the minority faction on the Sierra Madre City Council.

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  2. Many thanks for posting my "Breaking Bad" article. It's updated several times a month.

    If you would like to receive my free infrequent "Richard Rider Rant" with its emphasis on CA state and local matters, just drop me an email (on my blog).

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  3. The best link to get the latest update of my "Breaking Bad" article is:
    http://www.open.salon.com/blog/Richard_Rider

    My email is RRider@san.rr.com

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  4. Thank you, thank you, thank you.
    I am going to copy this post to everyone I know that gives a squat about our current state of affairs.

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  5. Awesome, Tattler! Excellent reporting on just how much trouble our State is in.

    "This [is] a stark example of how we have become merely a consumer society, one that only benefits the haves while disenfrachising a growing underclass of poorly paid service industry workers"

    Chilling, and dead-on!

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  6. Anybody pushing Sacramento's agendas now has to be brain dead.

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  7. This is why it is imperative to vote for:


    JOHN CRAWFORD
    DON WATTS
    PAT ALCORN

    This is why Mayor MacGillivray and Don Watts are attending all these SCAG and COG meetings, gathering support of small towns to fight Sacramento's insane attempted take over of Sierra Madre and other towns.
    It's crucial to keep Sierra Madre on the right track, we can and will do it.

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  8. That is what this election is all about, people who work for Sacramento's interests like Joe Mosca, and those who put Sierra Madre's interests first, like MaryAnn MacGillivray. A pretty stark contrast if you think about it.

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  9. Directly from the Franchise Tax Board:
    The top 4% pays 65% of all taxes collected.
    More amazing:
    The bottom 50% of tax filers only pay 1% of the state income tax collected.

    When those who receive more from the gov't than they put-in outnumber those who put-in more than they receive.. in a democracy.. you have an unstable system. The majority will continue to vote themselves more benefits until total economic collapse.

    We are teetering on the precipice.

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  10. If you enjoyed my friend Richard Rider's article, you can get even more bad news on a daily basis by visiting PensionTsunami.com. And there's an e-mail list, too!

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  11. True Freedom!
    You nailed it, that's exactly what's bankrupting the State.
    Everytime politicians try to take away from the people who work and produce and give it away to people who do not work or produce, but are allowed to vote...the end of Democracy is eminent.

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  12. http://www.latimes.com/news/local/la-me-rain-barrels1-2010feb01,0,1154413.story

    Builders are objecting to this plan.

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  13. There were some developers at the table when this ordinance was crafted. Everyone recognizes the necessity of returning rainwater to the aquifer at all possible opportunities, it's just how to do it remains the issue. Builders always squawk when things can't be done quick and dirty, harder to make a buck.

    But that's as it should be, the ethic has to change to how "development" improves ecology for everyone, not just how much it lines a few people's pockets. That's what ordinances are for, and why this one was triggered.

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  14. It's time for another prop 13 style tax revolt, start by voting no on the parcel tax. Calif. has the highest paid teachers, and nearly the lowest performing school system.

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  15. old english teacher...February 1, 2010 at 2:53 PM

    10:44....."the end of democracy imminent"...not emminent, please, can we at least keep our apocalyptic jargon correct!

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  16. That is pretty much the problem. Public employees have basically been given the run of the state, which has had the effect of making the business climate here brutal. California is becoming hollowed out economically, and eventually government here will collapse under its own weight. As the article says, government now exists for itself, and not for the taxpayers.

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  17. old former student of englishFebruary 1, 2010 at 3:17 PM

    Is that a teacher of Old English or an elderly English teacher?

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  18. Not to digress too far from the main issue, but something to consider, nonetheless, is Sierra Madre MUST get out of the JPIA (Joint Powers Insurance Authority). This is yet one more of Bart Doyle's legacies that plagues us to this day.

    The California Joint Powers Insurance Authority is a quasi state government agency where municipalities pay premiums for general liability insurance. The overall sales pitch is that cities save money on their insurance premiums.

    But the DIRTy little secret that no one is telling us, is that the JPIA determines how far a city can legally defend itself. If people in Sierra Madre are curious as to why the City is constantly paying out settlements instead of going to court, it's because the JPIA dictates what cases we can fight and which ones we settle.

    Can anyone remember the last time the City defended itself against a frivolous lawsuit? Neither can I.

    If we're going to stand up to SCAG in order to defend our right to govern ourselves, then we should also stand up to the California JPIA.

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  19. The problem is nobody wants to insure small cities. The reason the JPIA exists is becasue all of the insurance companies pulled out of that kind of thing, leaving small cities vulnerable to whoever wanted to sue tham. It is an ugly mess, that's for sure. But I am not certain there are any options.

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  20. Hey Bart....Nice to see you visiting the Tattler. I expected to hear from you, but not quite so soon.

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  21. Um, sure. Whatever.

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  22. Wow....these sock puppets are all over the Tattler these days. Ready to respond to anything they don't like in a heartbeat.

    Typical Dirt line.....heard it for years...."No other option"....."There was nothing we could do".....yada yada yada.....

    There are ALWAYS options. The One Carter hearings proved that. We just need people in City Hall that are willing to WORK for the residents and NOT the special interests.

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  23. Anyone that can respond to such an arcane issue, such as the JPIA, with a pat, company line, answer in 9 minutes time is definitely a sock puppet.

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  24. Looks like the Dirts have decided to make the Tattler their battleground. Kind of pathetic considering all of the money they use to have at their disposal. You'd think they would have at least tried to reconstitute DowntownDirt, The Cumquat or The Qunt before lowering themselves to this level of desperation.

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  25. Actually the JPIA answer was from me. Just in case you're curious. I've looked into this and that is the dirty lowdown. Sorry.

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  26. Wow. Sir Eric gets called Bart Doyle. These are some kind of times by golly!

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  27. Wrong answer Sir Eric. You would have been wise to at least "reserve judgement". Your answer comes right off the JPIA web site. How depressing! Here's one more person that won't bother going to the polls this election.

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  28. Back to the matter at hand, this is the best description I've read of the current state of affairs in California:
    "...what is now being produced here are little more than policy papers, useless regional planning councils, and thousands of new laws."
    Amen to that Brother Eric, and surely at some point the state government will have to listen to the voices of leaders like Mayor MacGillivray.

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  29. Try something elseFebruary 1, 2010 at 4:49 PM

    To the Troll(s),
    So now Sir Eric himself is a Dirt, sock puppet, Bart Doily in disguise.
    That hair trigger Dirt calling is getting both quite predictable, and dull, dull, dull.
    How about trying to say what you want to say without attacking any and all comers with the Dirt label?

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  30. It does get tiresome, doesn't it 4:49? I mean, there can't be any difference of opinion here without the easily agitated going to the ramparts and throwing rocks at each other? And over an insurance plan? Ye God almighty!

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  31. Bravo 4:49!Seems like there are touchy subjects for a certain mind-set that cause those with toooooo much time on their hands to veer far and wide from anything of value.Or maybe that's the idea in the first place.Hurl out an insult or two and take the focus off the ideas that are being discussed....

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  32. People who spend too much time indoors online are usually not the most reasonable people.
    No one showed the effects of that reclusive computer lifestyle better than South Park on it's World of Warcraft episode.
    I'm afraid we may have a couple of Cartmans in town who like to kick up a fuss on the blog - and probably not just this one.

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  33. If you spend too much time in Sierra Madre you run the risk of being possessed by the angry spirits from the One Carter site. After centuries of quiet rest they were disturbed by the rock crushers and ground pounders of the construction crews up there. And now they are looking for living bodies to inhabit so they can better wreak their vengeance on the citizenry. I saw one at large at the Bottle Shop the other night. He was in the wine room and threatening to knock over the expensive vintages. You can imagine the sense of panic there.

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  34. This might have been a wild thread, but I laughed my head off.

    Funniest thing I've read in a while.

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  35. Carter Zombies! What have the land destroyers unleashed?
    A whole new take on the pod people - the avengers of the hillsides.

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  36. Wish the Carter Zombies would take a trip to Sacramento.

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  37. If the Carter Zombies are spirits from the violated ground up there, does that mean they are literally dirts?

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  38. Don't forget it is the workers who are suffering here, we are losing jobs! This is what is at the heart of this crises, if California does not have jobs, we are in deep trouble.

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  39. The jobs have left, and the workers will have to follow them....

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  40. Sacramento politicians and the special interests they represent are destroying California.

    Don't let them destroy Sierra Madre!

    Vote for DON WATTS, PAT ALCORN and JOHN CRAWFORD.
    They work for the people, not special interests.

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  41. I know few people do not want to hear it because of the controversey around education in California, but since it keeps coming up: We do not pay our teachers the hightest salaries in the USA. We are also one of the lowest per pupil funding in the USA, and we are the lowest in the USA in funding for the ARTS. Think about that. Here in Calif, especially Southern Calif where the huge industry of Television and Films booms, our children in public school do not benefit from the arts. It is a shame. Our govenor, supposedly a friend of HOLLYWOOD, has never supported children and the arts and neither has his wife, a Kennedy. This will have a greater impact on our society than a lack of money. With a lack of beauty in socity, our lives will be darker than anything history has ever known. We will never know the talents of children who can paint, draw, sing, dance, play music or write a story. No matter how low a politician can go, not putting the creative soul first is the true destruction of a society.

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  42. HotwhamsonofawitchFebruary 1, 2010 at 9:57 PM

    As always, your writing sends me off to do my own research. If the population by numbers of the aging are scary with the many sites available, the population growth of the young is scarier. It is as if you love your children you had best get them out of California while they are an employable age, but tell them you will never sell your house so they will have a place to stay warm when they are old and need to retire.

    But the cold issue is another matter, the united states eastern side is being ripped by cold, snow storms. Even though we have no water, and those baby tornadoes are getting close, we are still warm.. My friend in Clearwater, Fl always the same as the LA area in winter suddenly had 30 to 35 degree temps. We may become the new retirement state of the world, senior housing may be the way to go,our property values may rise again just because we are still warm in the winter, but the amount of kids who live 3 times under the poverty limit over proportional rate of growth, is not condusive to a peaceful safe retirement.

    Chin up Sir Eric it is hard to be the messenger..even anonymously..

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  43. @8:42

    Pasadena City Council unanimously endorsed the parcel tax tonight. Rationale: all the other local communities are doing it, and Sacramento has witheld monies that should go to schools. Which is true, regardless of what anyone thinks of the teachers' union.

    Due to Prop 13, State Government bloats at the expense of local funding that used to be provided by direct property taxes. Prop 13 sent all the money to Sacramento to distribute...the results shouldn't surprise anyone.

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  44. Sir Eric, regarding your JPIA research. Just remember that no good deed goes unpunished on this board.

    ;-)

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  45. PUSD spends $10,014 per student, which is 18% HIGHER than the county average. By comparison, SouthPas spends $7,822 per student.

    PUSD will still spend $9300 per student with the budget cuts and NO PARCEL TAX.. which is still MORE than the county average.

    (source: http://www.ed-data.k12.ca.us/finance/GeneralFund.asp?reportNumber=4&level=06#Expenditures)

    PUSD has 2,256 employees of which only 1,007 are teachers. Yes, LESS THAN HALF THE STAFF ARE TEACHERS!

    PUSD pays their teachers LESS than the county average.

    Let's see... fewer teachers at lower pay... draw your own conclusion.

    However, PUSD's non-teaching staff (called classified employees.. business managers, secretaries, custodians, bus drivers, etc) are paid 18% ABOVE the county average.

    PUSD employee benefits for all staff are %14 ABOVE the county average.

    PUSD spends TWICE the county average (per pupil) on Professional Consulting Services/Operations.. to the tune of $14.5M dollars.

    How to save money?
    1) bring classified staff salaries to county average: save $4.7M
    2) trim classifies staffing levels to 66%(so teachers outnumber secretaries, custodians, etc):
    save:$11.6M
    3) bring benefits in line with county average: save $4.6M
    4) cut professional consulting services to county average levels: save:$7.5M

    This is more than enough savings, PLUS we could give our teachers a raise! This would help attract and retain the good teachers.. without having to increase class size and WITHOUT a PARCEL TAX!

    Put your thinking caps on, PUSD.

    NO PARCEL TAX

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  46. cp makes the boneheaded assertion that our CA teachers are not the highest paid in the nation. Check the "biased" website in my BREAKING BAD article! www.nea.org/home/29402.htm

    Yes, the source -- the NEA teachers union -- is biased -- but not against teachers!

    Liberals continue to repeat the canard that CA is near the bottom on per pupil spending. But they simply cannot explain how -- if that were true (which it definitely is not) -- we can pay our teachers the highest average educator salaries in the nation.

    Where we ARE near the bottom is student test scores. We are 49th.

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  47. To compare PUSD's spending per student to that of South Pas is irrelevant. PUSD's student population is far more complex and PUSD's infastructure far more extensive. Such a comparison would tend to make me think that the rest of the argument is equally thin.
    The last time I checked, PUSD's administrative costs as a percent of the total PUSD expenses were among the LOWEST in San Gabriel Valley; that would tend to indicate the opposite of what True Freedom argues. I like the true freedom that comes from having an educated citizen base, and cutting school funding is not going to do that. PUSD does need the money, and our children need our support here. The parcel tax is needed.

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  48. A good school system is, of course, needed. The question is whether or not PUSD is the vehicle to deliver it. Their record would indicate that they are not.

    Results can sometimes be an indication of performance, 8:11. Even if we're talking about a governmental agency.

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  49. OK, so leave South Pas out of it. PUSD is still 18% higher than the county average. Bringing this in-line with the county will save $21M dollars, which happens to be the budget shortfall.

    Public education IS very important. Our children DO need our support; however, throwing good money after bad to preserve the status quo is NOT in the best interest of our children.

    PUSD needs real structural change before spending more money.

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  50. PUSD's student base has a large percentage of special needs students and students of families without means. This is not nearly as simple as making a statistical correction in order to make the numbers line up.

    This PUSD administration is actually very responsive and responsible, and has been that way since Mr Diaz took over in early 2007. The fact that every elected official in Pasadena has endorsed the Parcel Tax proposal leads me to believe that this is absolutely what we need right now. Discounting, for a minute, the PUSD Board members, these City Councilors are, to a person, very bright and have put great thought into their opinions. I also think that what their unanimous support is saying is that the City of Pasadena is in no position to help, so they recognize the wisdom of having this added revenue to ensure that our public education system continues to have the opportunity to move forward.

    To top things off, Sierra Madre's PUSD schools are now the best performing schools in the District, so attacking PUSD for being incompetant would seem to me to ring VERY hollow in Sierra Madre in partiular. It is this PUSD administration and Board of Ed that has largely laid the groundwork that has allowed the great Principal, teachers and staff of Sierra Madre's K-8 program to thrive.

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  51. Isn't it possible that the students of Sierra Madre and their parents might have had at least some role in the success of PUSD's holding here?

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