Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Could California Make a Comeback?
The American ^ | 05/16/2013 | By Michael M. Rosen

Posted on 05/16/2013 8:15:18 AM PDT by SeekAndFind

An unexpected glimmer of hope might cast a new light on the Golden State.

It’s getting depressingly repetitive to keep writing about California’s problems, which are legion and seemingly intractable. But this time, I’m pleased to report on an unexpected glimmer of hope that might, just might, cast a new light on the Golden State.

First, a catalog of our recent woes, which, as ever, revolve around businesses and middle- and upper-income individuals decamping for other states that don’t suffer from California’s high-tax, high-regulation infection.

William Ruger and Jason Sorens of the Mercatus Center at George Mason University observe in their new rankings, “Freedom in the 50 States,” that about 1.5 million Californians departed for other states between 2000 and 2010, amounting to roughly 4 percent of the state’s population.

The Golden State’s not-so-golden regulatory and tax scheme, the authors contend, “costs Californians billions of dollars a year, makes their lives harder, and encourages more and more of them to move somewhere else.” They rank California 49th in terms of overall freedom.

Ruger and Sorens are not alone in attributing this disturbing trend of emigration to unbalanced labor and employment laws, a high minimum wage, stringent zoning regulations, loose worker-compensation requirements, and burdensome licensing requirements across professions and trades. Earlier in the year, Governor Rick Perry of Texas, through a combination of his recruiting visits to California and his radio ads on local stations touting the advantages of the Lone Star State, sought to draw Golden Staters inexorably toward an economically freer alternative.

Fleeing businesses and taxpayers mean lower tax receipts and a more uncertain fiscal future. In March, the state auditor found California’s net worth to be negative $127.2 billion. “Expenses that exceeded revenues and increased long-term obligations resulted in an 81.4 percent decrease in the total net assets for governmental and business-type activities from the 2010-11 fiscal year,” the auditor’s report stated.

Some liberal cheerleaders — most notably Paul Krugman of the New York Times — have erroneously hailed a California “comeback.” While it’s true that Governor Jerry Brown’s budget appears to be in balance, it relies heavily on the usual fiscal gimmicks, and even more heavily on a temporary tax hike that, in the long run, threatens to drive yet more companies and executives to Nevada, Arizona, Colorado, and Texas.

Victor Davis Hanson, a Hoover Institution scholar, historian, and second-generation farmer in California’s once-fertile, now-parched Central Valley, calculates that only 144,000 Golden State households “accounted for about 50 percent of the aggregate state-income-tax revenue — and personal income taxes usually account for about 50 to 60 percent of all state revenues.” Even if only a small fraction of those 144,000 depart for a warmer business climate, California’s already-shaky finances will fall even further out of whack. “We are learning,” Hanson notes, “that it does not take too many businesses or wealthy households moving to Austin, Paradise Valley, or Henderson to make a big difference.”

One such recent example: Bristol-Myers Squibb, the New York City-based pharmaceutical behemoth that absorbed San Diego-based Amylin Pharmaceuticals last summer, decided to close the doors of its San Diego facilities by the end of next year. BMS laid off 100 Amylin employees shortly after the merger and now seeks to relocate some 100-125 workers to its other facilities outside of the Golden State. But the remaining 300 or so California-based research and development, business, manufacturing, and administrative jobs will disappear entirely, while more than 700 former Amylin employees working outside the state — some in facilities in Ohio, others in sales or medical roles around the country — will keep their jobs.

But if dwindling jobs in industries of the future are threatening California’s fortunes, the promise of new jobs in a critical industry of the past may be the key to reviving them.

The Monterey Shale Formation stretches from Modesto, in the northern portion of the Central Valley about 60 miles east of San Francisco, almost 200 miles south to Bakersfield. It spans 1,750 square miles, an area larger than Rhode Island.

As many as 15 billion barrels of oil lie in the Monterey Shale — constituting 64 percent of all shale oil reserves in the United States, and four times as much as in North Dakota’s Bakken formation. The existence of the formation has been known to drillers and state officials for decades, but only with the advent of advanced techniques like horizontal drilling and hydraulic fracturing has a realistic opportunity for extraction arisen.

According to a recent University of Southern California study, these reserves could generate 500,000 jobs and up to $4.5 billion in tax revenue for the state by 2015, plus another 2.3 million jobs and another $20-plus billion by 2020.

The USC authors cite “the possibility that greater-than-expected in-state energy production not only could support a return to stronger economic growth within the state, but actually accelerate the state’s economic turnaround, perhaps profoundly so.”

Unsurprisingly, the usual suspects have harrumphed loudly about the perils of fracking. “If and when the oil companies figure out how to exploit that shale oil, California could be transformed almost overnight,” Kassie Siegel, a lawyer at the Center for Biological Diversity, told the New York Times in February. “Fracking poisons the air we breathe and the water we drink. It is one of the most, if not the most, important environmental issue in California.”

But to his credit, Governor Brown — affectionately known here as Moonbeam for his liberal, hippie tendencies — has taken some small steps in the right direction. “The fossil fuel deposits in California are incredible, the potential is extraordinary,” Brown stated last month, also noting that “between now and development lies a lot of questions that need to be answered, and I feel confident that the people are in place in my administration to handle the issues as they come up.” Brown also reaffirmed his commitment, such as it is, to the state’s oil economy, declaring that “our permits are dramatically up … California is the fourth-largest oil producing state and we want to continue that.” It may be some time before fracking becomes a reality, but Brown is plainly both feeling the pressure and sensing the promise.

So for all the talk of a new, high-tech, white-collar economy bringing California back from the brink, it may turn out that one of the oldest and dirtiest industries around will save the future of the Golden State.

-- Michael M. Rosen, a contributor to THE AMERICAN, is an attorney and writer in San Diego.


TOPICS: Business/Economy; Culture/Society; News/Current Events; US: California
KEYWORDS: california; comeback; economy

1 posted on 05/16/2013 8:15:18 AM PDT by SeekAndFind
[ Post Reply | Private Reply | View Replies]

To: SeekAndFind

If the “big one” takes out the libs and illegals, perhaps.


2 posted on 05/16/2013 8:17:23 AM PDT by Da Coyote
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Not without a change of management.... JMO


3 posted on 05/16/2013 8:19:03 AM PDT by Wings-n-Wind (The main things are the plain things!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

No.


4 posted on 05/16/2013 8:21:37 AM PDT by hadaclueonce (dont worry about Mexico, put the fence around kalifornia.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Da Coyote

Yeah...#1 Tamale producer of the world


5 posted on 05/16/2013 8:22:56 AM PDT by BubbaJunebug
[ Post Reply | Private Reply | To 2 | View Replies]

To: SeekAndFind

At this point total bankruptcy is the only thing that will turn this state around.


6 posted on 05/16/2013 8:22:57 AM PDT by Lurkina.n.Learnin (President Obama; The Slumlord of the Rentseekers)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Apparently no one bothered to read the story......(a dynamic on the upswing)


7 posted on 05/16/2013 8:26:30 AM PDT by C. Edmund Wright (Tokyo Rove is more than a name, it's a GREAT WEBSITE)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

This article comes down to one point: if California develops the “Monterey Shale”, it’s back from the brink.

Moonbeam seems to be in favor of it. If so, I’ll give him a pass on the bullet train boondoggle. We’re talking a couple of trillion dollars in product here.


8 posted on 05/16/2013 8:30:11 AM PDT by cicero2k
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
The answer is no. It is impossible with the current combination of political forces and special interest groups combined with ever increasing illegal immigration that is raising costs for taxpayers, an anti-business mentality causing businesses to leave the state in droves, and an out of control Democrat majority of both politicians and citizens whose only solution to every problem is to raise taxes. Even if the oil thing did work out, (which is impossible because of the strength of the environmental lobby) how long and how far would the gains go? The politicians would rapidly spend any new money on new “needs”, continuing to grow a bloated state government to newer and greater dimensions.
9 posted on 05/16/2013 8:30:25 AM PDT by rusty schucklefurd
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Saved by oil, carbon based fuel? Liberals will not allow that.


10 posted on 05/16/2013 8:34:07 AM PDT by VRW Conspirator (Cyprus - the beginning)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Moonbeam hasn’t said “no.” But he probably doesn’t dare say “yes,” either. His whole hippie base would no longer have any reason to vote for him if he did.

I think he’s pulling an Obama. Don’t say no, don’t say yes, but say it will take time to study the matter. And then hand it over to your environmentalists, who can be counted on to find reasons to block it—or to study it some more.


11 posted on 05/16/2013 8:37:02 AM PDT by Cicero (Marcus Tullius)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Da Coyote

No way


12 posted on 05/16/2013 8:37:30 AM PDT by WashingtonSource
[ Post Reply | Private Reply | To 2 | View Replies]

To: SeekAndFind

“As many as 15 billion barrels of oil lie in the Monterey Shale — constituting 64 percent of all shale oil reserves in the United States, and four times as much as in North Dakota’s Bakken formation.”

Just WOW!


13 posted on 05/16/2013 8:42:48 AM PDT by SMARTY ("The man who has no inner-life is a slave to his surroundings. "Henri Frederic Amiel)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Fracking has saved Obama from himself, and now it might save California the same way. It will be interesting to see how willful our suicide will be.


14 posted on 05/16/2013 8:47:11 AM PDT by Carry_Okie (An economy is not a zero-sum game, but politics usually is.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Da Coyote

I am not sure Californians are quite ready for economic salvation. The majority of Califoria voters seem to want jobs to go elsewhere, to pay higher taxes to state government, and to avoid politically-incorrect industries. What they want is an economy based on entertainment and silicon, which is fine as long as you can draw gullible young people to work in those industries and pay the high taxes. Along the way, people who want to earn a better living leave for lower tax, more varied opportunity, states like Texas.

Even if California went full-tilt for energy production, the revenue by 2020 would, according to figures in this article, only touch 20 percent of the negative worth of the state. That shortfall has to be covered somehow and I am not sure the rest of the US is ready to bail out the “Golden” State.


15 posted on 05/16/2013 8:59:53 AM PDT by iacovatx (Conservatism is the political center--it is not "right" of center)
[ Post Reply | Private Reply | To 2 | View Replies]

To: SeekAndFind

The majority commu...uh, democrats never can nor will admit they were and are wrong. Unless their lock on power changes, no way.


16 posted on 05/16/2013 9:06:26 AM PDT by onedoug
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Krugman has hailed a “California comeback”? What does Krugman think a comeback means? A return to 1848 conditions? Return to the pre-Bering Sea land bridge era? Comeback? He writes favorably if not nostalgically about 91 percent tax rates—what kind of “comeback” arises from that except a comeback to a feudal society? Honestly, do his readers understand what a Krugman world would be like in his vision? It certainly isn’t individual prosperity and reward for hard work and accomplishment.


17 posted on 05/16/2013 9:07:03 AM PDT by iacovatx (Conservatism is the political center--it is not "right" of center)
[ Post Reply | Private Reply | To 1 | View Replies]

To: C. Edmund Wright

I read the story. It puts all of the eggs into one basket; development and exploitation of the Monterrey shale. Not gonna happen while the usual inmates run the asylum in Sacramento. The shale will only be developed when the Chinese have purchased all the mineral rights for nothing, then bribed the politicians in the Assembly to lift the government ban. Then the Chinese Shanghai all the oil.


18 posted on 05/16/2013 9:07:20 AM PDT by henkster (I have one more cow than my neighbor. I am a kulak.)
[ Post Reply | Private Reply | To 7 | View Replies]

To: henkster

you did indeed,
and yes it did,
and yes Cali will probably screw it up....
but many did drive by no read comments...a pet peeve of mine.


19 posted on 05/16/2013 9:12:56 AM PDT by C. Edmund Wright (Tokyo Rove is more than a name, it's a GREAT WEBSITE)
[ Post Reply | Private Reply | To 18 | View Replies]

To: C. Edmund Wright

A pet peeve of mine as well, of which I have myself often been guilty.

As for Cali, the title of the article is correct. “Could California make a comeback?” Well, yes, they COULD. The problem is they lack the political will to make it a reality.

You could sum up their problem with America’s at large: There are too many people who need to be told “No” who are not accustomed to hearing that word, and the politicians don’t have the guts to say it.


20 posted on 05/16/2013 9:20:13 AM PDT by henkster (I have one more cow than my neighbor. I am a kulak.)
[ Post Reply | Private Reply | To 19 | View Replies]

To: SeekAndFind

I remember years ago talking to a former homeless man about a young man who was on something of a personal rampage of abusing alcohol and drugs, while living on the street.

The former homeless man observed that this was what the young man wanted, and until he had “hit rock bottom” he would continue doing this. He has to learn things the hard way.

Then and only then, he added, does he have a chance to redeem himself. Or, he’ll die.

Yeah, pretty much California in a nutshell.


21 posted on 05/16/2013 9:22:30 AM PDT by yefragetuwrabrumuy (Best WoT news at rantburg.com)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
As many as 15 billion barrels of oil lie in the Monterey Shale — constituting 64 percent of all shale oil reserves in the United States, and four times as much as in North Dakota’s Bakken formation. The existence of the formation has been known to drillers and state officials for decades, but only with the advent of advanced techniques like horizontal drilling and hydraulic fracturing has a realistic opportunity for extraction arisen.

According to a recent University of Southern California study, these reserves could generate 500,000 jobs and up to $4.5 billion in tax revenue for the state by 2015, plus another 2.3 million jobs and another $20-plus billion by 2020.

The enviro-whackos in California will never allow the shale oil fields to be developed, especially if it involves hydraulic fracking. They would much rather have all of the businesses and most of the people move out of the state so that they can turn California into one big nature preserve, accessible only to rich liberals.

The only jobs that they want in California are government jobs and low paying jobs for illegal aliens taking care of their yards and children.

Liberals must really love poor people, because they are determined to make as many of them as they can.

22 posted on 05/16/2013 11:09:45 AM PDT by Bubba_Leroy (The Obamanation Continues)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Bubba_Leroy

RE: The enviro-whackos in California will never allow the shale oil fields to be developed, especially if it involves hydraulic fracking.

Tell me about it.

New York Gov. Andrew Cuomo has SAT on the approval of Hydro Fracking for the Marcellus Shale ( which would create tens of thousands of jobs for the part of NY bordering PA ) for the longest time.

He did this even after studies by the EPA, various scientific organizations and even neighboring Pennsylvania have shown that Hydrofracking is safe and can be done in an environmentally friendly way.

Everytime the approval date arrives, Cuomo commissions another study. he wants to study the issue to death.


23 posted on 05/16/2013 11:47:57 AM PDT by SeekAndFind
[ Post Reply | Private Reply | To 22 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson