California Recovery: No, It Is Not East vs. West
Crossposted on newgeography Every now and then, some East Coast based publication sends a reporter out to California to see how the West Coast’s economy is doing. I think they write these things sitting at a restaurant patio overlooking the Pacific Ocean. That can be seductive, and lulled into a comfortable sense that all is […]
Inequality and Economic Growth
Crossposted on New Geography There has been news and conversation about economic inequality and economic growth lately, mostly because the former is increasing steadily and the latter has been less than stellar. Of course, there is always a tension between economic growth and equality. Economic growth implies at least some inequality. That’s because most people need […]
California’s Deficit: The Jerry Brown and ‘Think Long’ Debate
Cross posted on New Geography California has three major problems: persistent high unemployment, persistent deficits, and persistently volatile state revenues. Unfortunately, the only one of these that gets any attention is the persistent deficit. It is even more unfortunate that many of the proposals to reduce the deficits are likely to make all three of […]
Do Standardized Tests Raise Dropout Rates?
Crossposted on newgeography The No Child Left Behind Act became law in 2002. Among other things, it required standardized testing of students, beginning in 2003. The scores are used to evaluate the quality of the schools. It sounds reasonable. Congress certainly thought so. It was co-authored in the Senate by Edward Kennedy (D-MA) and Judd […]
First Step for California: Admit There’s a Problem
Cross-posted at NewGeography. The October 29, 2009 issue of Time Magazine had an article titled “Why California is America’s Future.” I sure hope not. California is fast becoming a post-industrial hell for almost everyone except the gentry class, their best servants, and the public sector. We only need a few numbers to demonstrate that California […]
California: Club Med Meets Third World?
Cross-posted at NewGeography.
On March 25th, the Bureau of Labor statistics released a report that showed that California jobs had increased by 96,000 in February. The state’s cheerleaders jumped into action. Never mind that the state still has a 12.2 percent unemployment rate, and part of the decline from 12.4 percent is because just under 32,000 discouraged workers left California’s labor force in February.
Unfortunately, the cheerleaders are likely to once again be disappointed. It is unwise to build a case on one data point. Data are volatile and subject to all sorts of technical issues. For example, the estimate of California’s job growth is seasonally adjusted data and subject to revision.
Brown’s California Budget Proposals: a Big Step in the Right Direction
Cross-posted at NewGeography.
I admit it. I had low expectations for Jerry Brown’s third term as governor. After seeing his budget proposal, I’m ready to reconsider my expectations. I think it is a great effort, and it deserves the support of all of us tired of seeing our state reduced to laughing stock.
Being an economist, I first went to the Economic Outlook section of the Proposed Budget Summary. This is where governors put in rosy expectations and forecasts, thus enabling a multitude of fiscal sins. I was shocked to find a realistic and sober economic analysis. In fact the U.S. and California GDP projections were lower than ours, and we are among the least optimistic forecasters in America. There is no smoke here. There are no mirrors. It is apparent to me that if Brown is to be surprised, he only wants good ones.
This may be the most honest forecast accompanying a proposed budget that Californian’s have seen in decades.
The realistic economic forecast leads, reasonably, to lower budget revenue assumptions, lower by billions of dollars. With more realistic revenue assumptions, Brown forecasts a larger budget problem than did his more easily deluded predecessor.
The California Cheerleaders Are at it Again
Cross-posted at NewGeography.
State Treasurer Bill Lockyer and economist Stephen Levy published a piece in the Los Angeles Times that argues that California doesn’t really have any fundamental problems. In their piece, Lockyer and Levy don their rose-colored glasses and give us the same tired old excuses, twisted logic, and factual inaccuracies.
I’ll begin with the factual inaccuracies:
Lockyer and Levy claim that California is the state with the youngest population. That is just incorrect. The U.S. Census website has a map. California is not even the same color as that used to identify the lowest-aged states.
If California Is Doing So Great, Why Are So Many Leaving?
Cross-posted at New Geography
Superficially at least, California’s problems are well known. Are they well understood? Apparently not.
About a year ago Time ran an article, "Why California is Still America’s future," touting California’s future, a future that includes gold-rush-like prosperity in an environmentally pure little piece of heaven, brought to us by "public-sector foresight."
More recently, Brett Arends’ piece at Market Watch, "The Truth About California," is more of the same. California’s governor elect, Jerry Brown, liked this piece so much that he tweeted a link to it.
The optimist’s argument about California’s future ultimately hinges on the creativity of the state’s vaunted tech sector, in large part driven by regulation promulgated by an enlightened political class and funded by a powerful venture capital sector.
No fundamentalist evangelical speaks with more conviction or faith than a California cheerleader expounding on the economic benefits of environmental purity brought about by command and control regulation.
Jobs, Environmental Regulation, and Dead French Economists
Cross-posted at NewGeography.com.
The debate over the repeal of California’s global-warming regulation, AB32, has degenerated into a shouting match, each side claiming economic ruin if the other side wins. A couple of long-dead French economists can help us think about the debate.
The great French economist Leon Walras (1834-1910) showed that perfect markets result in an allocation of goods and services that can’t be improved on, in the sense that no one could be made better off without someone else being made worse off.
Of course, we don’t have completely unfettered markets. In fact, they have never existed. They will never exist. In particular, we economists like to talk about what we call negative externalities. These occur when I do something, but an unintended consequence is that it hurts you, and you have no recourse.