"Despite having just 12 percent of the national population, California represents nearly a third of all Americans on welfare. [...] In Texas, 6 percent of families in poverty receive welfare. In California, the figure is 66 percent. "
I don't know how welfare works in USA, but if it's a federal level program, it would seem California is pulling a pretty clever hack there.
> I don't know how welfare works in USA, but if it's a federal level program, it would seem California is pulling a pretty clever hack there.
Welfare isn't a program, it's many different programs, almost none of which are fully federally funded, and where (because of its strong aggregate economy despite poor distributional features) California gets less federal cost sharing than most other states (the absolute minimum) in most components that are partly federally funded with a variable federal share. California also has some of the most expansive state (or local) funds only welfare programs.
And, bottom line, California pays more federal taxes than it gets federal spending, unlike lots of poorer states; in summary, it's not hacking anything here.
Also, the 6 vs. 66 number for Texas vs California is almost certainly using the federal poverty line, not the local CoL-adjusted poverty figure as the base universe. California, on average, has a much higher cost of living than Texas, or the US as a whole, and so the comparison doesn't actually represent those actually in poverty.
It is correct that, as a whole, blue states are wealthier, stronger, and healthier. We pay more per-person in taxes whereas most red states consume more federal dollars.
Blue states have a higher ceiling (i.e. wealthier but more income inequality) while red states have a higher floor (i.e. poorer but less income inequality). Maybe we need more purple states. It's hard to strike the right balance between social liberalism and fiscal conservatism.
Edit: After looking at the stats, it appears that income inequality is generally higher across the Southern US than the Northern US, with CA and NY as notable exceptions. Income inequality is growing fastest in the Western and Midwestern US.
Technically, the US worked just fine, before there were fiscal transfers. What's really the case here is that a social safety net in the presence of migration can't be done on a state by state basis. It has to be national, which invariably results in net flows between states.
A lot of measures of interstate transfers mistakenly treat federal spending as a transfer. Really it's trade. A small percentage could be counted as a transfer.
I can't tell if they think they vast numbers of people in California working in tech, research, academia etc are working class, or upper class. Both seem ludicrous ideas.
The argument made in the piece is that there is increased polarization between the haves and the have nots. Successful professionals are haves.
I don't know what nuances the term "upper class" has historically had in California; perhaps it's not the right word for those earning (as little as) a hundred thousand a year. But the idea that there is now a privileged socioeconomic group which no longer blends, at the low end, into the traditionally larger middle class and lower middle class seems like a clearly testable proposition.
In other words, the claim is that the middle class is evaporating and tech professionals are left on the wealthier side of the gap, typically earning "upper class" salaries.
In the UK, a huge proportion of the population identifies as working class, somewhat bogusly. Tech workers tend to be part of what is sometimes called the "technical middle class", a new (post-WW2) and slightly wretched group with little cultural or social capital but strong finances. Ramen-eating programmers are in the technical middle class even if their earnings haven't yet matched those of more established professionals.
I agree that both "working" and "upper" are anachronistic categories.
I think if you're working a job and earning a salary or a little equity, then you're clearly middle class at best.
I think it's the working class that's being eroded, leaving the a middle class on one side, and the destitute on the other, with the upper class being the same as it ever was.
Well, the Pew research organization puts everyone who earns above a certain amount in the upper class. It's about 100k. And we know that the rich have got even richer in the last few years, with a thinning of the "middle" earners. There are plenty of articles out there which focus on the erosion of the middle class.
As I mentioned, some people (in the UK for example) are invested in the idea of the working class, and draw the class boundaries between working and middle so as to enlarge the working class. Often this is about preserving their own identity rather than assessing the wealth of different social strata. But living in relative comfort has been a middle class thing.
The author cites a variety of statistics regarding California's government programs and poverty rate, then draws the completely unsupported conclusion that the one creates the other. Generally, the conservative argument against taxes and regulation is that they handicap business and consequently hurt economic growth. It's hard to make that argument for California, which has had one of the strongest state economic growth rates in the nation despite being the largest state economy. Faced with this clear contradiction, the author simply dispenses with any kind of coherent theory and simply takes as a given that California's poverty must be due to taxes and welfare programs.
The idea that California is a prosperous state is a myth. California is a very expensive state, with higher salaries that do not compensate for the cost of living. And it has a few very rich people (in tech, entertainment, etc.) that don't do much to move the needle on averages.
[1] One can debate the relevance of the cost-of-living adjustment for engineers making $400k/year, but in the middle class salary range, where groceries and rent make up a bigger fraction of expenses than toys or savings, cost of living is a driving factor.
California’s GDP is almost $3 trillion per year. That’s larger than the U.K.’s (the world’s 5th largest economy) with far fewer people (40M Californians vs. 66M in the U.K.)
Of course it has its problems. The cost of living is high especially in the cities. Still, it’s a real stretch to say it’s not a prosperous state.
I mean relatively to other U.S. states. The U.K. has lower GDP per capita than every single U.S. state: https://www.forbes.com/sites/timworstall/2014/08/25/britain-.... Nobody would say "Mississippi is a prosperous state" but it is in fact richer than the U.K.
According to the Bureau of Economic Analysis at the US Department of Commerce, California is in the top ten US states for per-capita GDP growth since 2009. Not 'middling' at all, particularly considering it was the country's largest state economy to begin with. And a big reason the cost of living is high there is precisely because the economy has been so good. The middle class hasn't been hurt by taxes and regulations, it's been hurt by low wage growth as the top 1% of the population has absorbed a grossly disproportionate share of the robust economic growth. The same problem shared by the rest of the country. Taxes aren't too high, they're much too low, particularly on the wealthy.
Not sure where your numbers came from (the link at the bottom of the image, referencing a report at alec.org, is broken).
I wouldn't call growing at about the same rate as Iowa and Tennessee as being particularly exceptional, even if it's technically in the top 10.
More important, because cost of living continues to explode, California continues to be middling in terms of purchasing power: https://spectator.org/adios-california/ (California 37th in GDP per capita adjusted for cost of living). For real people, that's the most important benchmark of economic health. (Which is why when you're comparing different countries, you always use PPP-adjusted numbers.)
Note that this particular problem isn't something you can fix through redistribution. California's COL-adjusted GDP per capita being in the middle means that, no matter how you distribute it, California's on average just can't buy as much stuff (food, housing, etc.) as Iowans.
I wouldn't call growing at about the same rate as Iowa and Tennessee as being particularly exceptional, even if it's technically in the top 10.
I would. Iowa and Tennessee are much, much smaller economies. It's truly remarkable that California, with an economy ten times larger, can nonetheless grow at a comparable rate.
While it's true that the cost of living is higher (in large part because the quality of life overall is higher), it is simply not true that "it doesn't matter how you distribute it." The subjective experience depends quite a lot on how it's distributed. I assure you that millions of middle class Californians would be much happier if their wages had grown even half as much as the massive increases taken by the top 1%.
> I would. Iowa and Tennessee are much, much smaller economies. It's truly remarkable that California, with an economy ten times larger, can nonetheless grow at a comparable rate.
No it's not. California's economy is larger simply because it has more people. That doesn't make it any harder to grow the economy further. According to the same BEA data, the Great Lakes region as a whole (which has a population comparable to California) grew faster than California. If your theory were correct, it should be much harder for the U.S. to grow than France, and for France to grow than Sweden. But that's not borne out by the data: https://snbchf.com/wp-content/uploads/2013/11/GDP-Per-Capita...
(If California's economic production per capita were much higher, you might hit "diminishing returns" effects, but that's not the case.)
That doesn't make it any harder to grow the economy further.
Nonsense. Economic growth depends on a complex web of law, culture and resources. Large economies are systematically harder to grow than smaller ones. It's not simply a matter of adding people. It is in fact harder for the US to grow than France, the fact that it actually happens doesn't negate that reality. Remember, the fundamental argument you're making is that California operates under a handicap because of its taxes and regulations. It should be laboring under both that burden and the additional inertia that comes from a larger economy. I think its growth (not to mention the historical success of the rest of the industrialized world, virtually all of it more socialized than the US) belies the conservative old wive's tale that you can't have a stable, growing economy and maintain a sensible tax and regulatory environment at the same time.
I’d be very curious to read a citation for that assertion.
> Economic growth depends on a complex web of law, culture and resources
If anything the opposite is true. Larger regions create economies of scale in these areas. A company can amortize the cost of complying with California laws over a much larger market than Iowa law. A product targeted at California cultural trends has a much larger market than one targeted to Iowan cultural trends. Historically, the size of the US internal market has been a huge benefit compared to smaller European countries.
It's harder to grow a large economy for all the same reasons it's harder to grow a large business (percentage-wise) than it is to grow a small one. Sure, there are some economies of scale. But in the end, there are always fixed components to growth that are less dependent on size, and those less elastic components are necessarily more significant for a smaller economy (or company) than for a larger one.
Going back to the original point of my criticism, even if you regard California's growth as merely average, that doesn't explain how that modest growth has resulted in the middle class squeeze. Any loss incurred by the middle class as the result of tax or other government policies pales in comparison to the massive loss of the wage increases that should have accompanied even modest growth. The problem is clear: left to its own devices, the market doesn't distribute growth in anything like a fair (by value actually contributed) manner. Wealth, in and of itself, creates a huge advantage in capturing new growth, and that advantage is nowhere counterbalanced. Money naturally runs uphill until some kind of catastrophe interrupts it.
Re: From 2003 to 2013, it slightly trailed the country in GSP growth...
CA was one of the hardest hit states in terms of the mortgage bubble, and thus had a slow recovery. Newer data would probably show better results as the effects of the bubble are dissipating.
But the hollowing out of the middle is a common pattern just about everywhere in the "mature industrialized world". The loss of factory jobs and loss of mom-and-pop stores due to the Internet is part of the reason, but may not be all of it. It seems to be growing into a winner-take-all world. Warren Buffett admitted his fund can take risks others can't because it has lots of companies in it to buffer against specific losses. And the big tech co's have a big portfolio of patents to use against startups that threaten them. Even if the claims are dubious, the sheer volume of lawsuits can end a smallbie: "courtroom DOS attack". Being big helps you to get bigger.
This is really an oddball collection of bad news (although it does properly add context to the %-of-population numbers). This bad news is well worth repeating, though there's plenty more.
However it's hard to understand the point of the piece. The author describes herself as a libertarian and wrote a book calling taxation a rip off. Yet the only real analysis seems, to my reading, to claim that more government would help. It seems especially at the end that she is criticizing unregulated capitalism.
(for context: I consider CA to be one of, if not the, best run states in the Union, despite its manifold problems and failures. And while like anyone I could easily make a list of rules I think should be eliminated, I hardly think the blanket libertarian position of "less regulation" is any sort of solution).
> '“Not In My Backyard” development and construction restrictions mean that California cities are much more expensive for the poor'
Don't agree with the rest of the article but this is the crux of the issue. Banning single family zoning in urban areas like Minneapolis is doing would be a good start. The hypocrisy among liberals when it comes to housing is just astonishing. Nothing epitomizes this as when the Mayor of Berkeley who independently joined the Paris climate accords called a pro-housing bill an attack on their way of life https://www.berkeleyside.com/2018/01/22/berkeley-mayor-wiene....
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[ 2.3 ms ] story [ 88.1 ms ] threadI don't know how welfare works in USA, but if it's a federal level program, it would seem California is pulling a pretty clever hack there.
It's likely one factor is Medicaid expansion, which California participates in and Texas not. A significant percentage of those dollars are federal.
Welfare isn't a program, it's many different programs, almost none of which are fully federally funded, and where (because of its strong aggregate economy despite poor distributional features) California gets less federal cost sharing than most other states (the absolute minimum) in most components that are partly federally funded with a variable federal share. California also has some of the most expansive state (or local) funds only welfare programs.
And, bottom line, California pays more federal taxes than it gets federal spending, unlike lots of poorer states; in summary, it's not hacking anything here.
Also, the 6 vs. 66 number for Texas vs California is almost certainly using the federal poverty line, not the local CoL-adjusted poverty figure as the base universe. California, on average, has a much higher cost of living than Texas, or the US as a whole, and so the comparison doesn't actually represent those actually in poverty.
Edit: After looking at the stats, it appears that income inequality is generally higher across the Southern US than the Northern US, with CA and NY as notable exceptions. Income inequality is growing fastest in the Western and Midwestern US.
A lot of measures of interstate transfers mistakenly treat federal spending as a transfer. Really it's trade. A small percentage could be counted as a transfer.
I don't know what nuances the term "upper class" has historically had in California; perhaps it's not the right word for those earning (as little as) a hundred thousand a year. But the idea that there is now a privileged socioeconomic group which no longer blends, at the low end, into the traditionally larger middle class and lower middle class seems like a clearly testable proposition.
In other words, the claim is that the middle class is evaporating and tech professionals are left on the wealthier side of the gap, typically earning "upper class" salaries.
In the UK, a huge proportion of the population identifies as working class, somewhat bogusly. Tech workers tend to be part of what is sometimes called the "technical middle class", a new (post-WW2) and slightly wretched group with little cultural or social capital but strong finances. Ramen-eating programmers are in the technical middle class even if their earnings haven't yet matched those of more established professionals.
I agree that both "working" and "upper" are anachronistic categories.
I think it's the working class that's being eroded, leaving the a middle class on one side, and the destitute on the other, with the upper class being the same as it ever was.
As I mentioned, some people (in the UK for example) are invested in the idea of the working class, and draw the class boundaries between working and middle so as to enlarge the working class. Often this is about preserving their own identity rather than assessing the wealth of different social strata. But living in relative comfort has been a middle class thing.
The idea that California is a prosperous state is a myth. California is a very expensive state, with higher salaries that do not compensate for the cost of living. And it has a few very rich people (in tech, entertainment, etc.) that don't do much to move the needle on averages.
[1] One can debate the relevance of the cost-of-living adjustment for engineers making $400k/year, but in the middle class salary range, where groceries and rent make up a bigger fraction of expenses than toys or savings, cost of living is a driving factor.
Of course it has its problems. The cost of living is high especially in the cities. Still, it’s a real stretch to say it’s not a prosperous state.
Not sure where your numbers came from (the link at the bottom of the image, referencing a report at alec.org, is broken).
If we use 2009 to 2015 as the data points (which is the most I have on this chart), the following states grew faster than the U.S. average:
I wouldn't call growing at about the same rate as Iowa and Tennessee as being particularly exceptional, even if it's technically in the top 10.More important, because cost of living continues to explode, California continues to be middling in terms of purchasing power: https://spectator.org/adios-california/ (California 37th in GDP per capita adjusted for cost of living). For real people, that's the most important benchmark of economic health. (Which is why when you're comparing different countries, you always use PPP-adjusted numbers.)
Note that this particular problem isn't something you can fix through redistribution. California's COL-adjusted GDP per capita being in the middle means that, no matter how you distribute it, California's on average just can't buy as much stuff (food, housing, etc.) as Iowans.
I would. Iowa and Tennessee are much, much smaller economies. It's truly remarkable that California, with an economy ten times larger, can nonetheless grow at a comparable rate.
While it's true that the cost of living is higher (in large part because the quality of life overall is higher), it is simply not true that "it doesn't matter how you distribute it." The subjective experience depends quite a lot on how it's distributed. I assure you that millions of middle class Californians would be much happier if their wages had grown even half as much as the massive increases taken by the top 1%.
No it's not. California's economy is larger simply because it has more people. That doesn't make it any harder to grow the economy further. According to the same BEA data, the Great Lakes region as a whole (which has a population comparable to California) grew faster than California. If your theory were correct, it should be much harder for the U.S. to grow than France, and for France to grow than Sweden. But that's not borne out by the data: https://snbchf.com/wp-content/uploads/2013/11/GDP-Per-Capita...
(If California's economic production per capita were much higher, you might hit "diminishing returns" effects, but that's not the case.)
Nonsense. Economic growth depends on a complex web of law, culture and resources. Large economies are systematically harder to grow than smaller ones. It's not simply a matter of adding people. It is in fact harder for the US to grow than France, the fact that it actually happens doesn't negate that reality. Remember, the fundamental argument you're making is that California operates under a handicap because of its taxes and regulations. It should be laboring under both that burden and the additional inertia that comes from a larger economy. I think its growth (not to mention the historical success of the rest of the industrialized world, virtually all of it more socialized than the US) belies the conservative old wive's tale that you can't have a stable, growing economy and maintain a sensible tax and regulatory environment at the same time.
> Economic growth depends on a complex web of law, culture and resources
If anything the opposite is true. Larger regions create economies of scale in these areas. A company can amortize the cost of complying with California laws over a much larger market than Iowa law. A product targeted at California cultural trends has a much larger market than one targeted to Iowan cultural trends. Historically, the size of the US internal market has been a huge benefit compared to smaller European countries.
Going back to the original point of my criticism, even if you regard California's growth as merely average, that doesn't explain how that modest growth has resulted in the middle class squeeze. Any loss incurred by the middle class as the result of tax or other government policies pales in comparison to the massive loss of the wage increases that should have accompanied even modest growth. The problem is clear: left to its own devices, the market doesn't distribute growth in anything like a fair (by value actually contributed) manner. Wealth, in and of itself, creates a huge advantage in capturing new growth, and that advantage is nowhere counterbalanced. Money naturally runs uphill until some kind of catastrophe interrupts it.
CA was one of the hardest hit states in terms of the mortgage bubble, and thus had a slow recovery. Newer data would probably show better results as the effects of the bubble are dissipating.
But the hollowing out of the middle is a common pattern just about everywhere in the "mature industrialized world". The loss of factory jobs and loss of mom-and-pop stores due to the Internet is part of the reason, but may not be all of it. It seems to be growing into a winner-take-all world. Warren Buffett admitted his fund can take risks others can't because it has lots of companies in it to buffer against specific losses. And the big tech co's have a big portfolio of patents to use against startups that threaten them. Even if the claims are dubious, the sheer volume of lawsuits can end a smallbie: "courtroom DOS attack". Being big helps you to get bigger.
However it's hard to understand the point of the piece. The author describes herself as a libertarian and wrote a book calling taxation a rip off. Yet the only real analysis seems, to my reading, to claim that more government would help. It seems especially at the end that she is criticizing unregulated capitalism.
(for context: I consider CA to be one of, if not the, best run states in the Union, despite its manifold problems and failures. And while like anyone I could easily make a list of rules I think should be eliminated, I hardly think the blanket libertarian position of "less regulation" is any sort of solution).
Don't agree with the rest of the article but this is the crux of the issue. Banning single family zoning in urban areas like Minneapolis is doing would be a good start. The hypocrisy among liberals when it comes to housing is just astonishing. Nothing epitomizes this as when the Mayor of Berkeley who independently joined the Paris climate accords called a pro-housing bill an attack on their way of life https://www.berkeleyside.com/2018/01/22/berkeley-mayor-wiene....