
The Fiscal Truth about California - iamelgringo
http://finance.yahoo.com/banking-budgeting/article/111398/the-truth-about-california;_ylt=AjqnonCZcwlegzI834N0MIS7YWsA;_ylu=X3oDMTE1aWQ3dHI5BHBvcwM4BHNlYwN0b3BTdG9yaWVzBHNsawN0aGV0cnV0aGFib3U-?mod=bb-budgeting&sec=topStories&pos=5&as
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takrupp
Most of this data is for a ten year period. The US has been lucky to have a
place like California for the last 2 decades, but that doesn't mean it will be
on top forever.

Texas is leading most of these categories (except of course VC funding...) for
the last 2 years. Winds are turning. California isn't going anywhere, but they
probably wont be the cats meow for the next 10 years.

~~~
hga
Maybe ... I can see California killing SV in one way or another, slowly or nor
so slowly, but one _overwhelming_ advantage it has over every other state is
that non-competes are uninformative. (And for startups, a much more recent law
means you own what you do with your own effort, resources and ideas.)

A liquid market in talent, so to speak, can make up for a lot of other
problems, and arguably has.

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TomOfTTB
His point isn't completely off in that "California is going bankrupt" is a
much better news story than the truth which is the state is just deeply
troubled.

That said the problem with this article is it basically uses Silicon Valley to
prop up the rest of the state. Yes there's a lot of VC money in California,
yes tech companies choose to have their headquarters here and yes that pumps
up the overall GDP. But that doesn't negate all the other problems we have.

As anyone knows you can make a ton of money and it doesn't matter if you spend
more than you make. Right now California is doing just that to the tune of $20
billion a year.

Beyond that he is using twisted numbers. For example he uses the Tax
Foundation's tax burden index but the Tax Foundation themselves say that isn't
a valid comparison metric because that calculation doesn't include local taxes
and...

“some states accomplish at the local level what other states accomplish at the
state level, so a degree of comparability is lost as a result.”

He also uses a lot of first level thinking. Like justifying the high pay given
to public sector employees by quoting the high cost of living but not asking
why there's such a high cost of living. Or saying how Google, Apple and
Facebook all choose not to move from California without mentioning they've all
chosen to build their data centers elsewhere.

Like I said people do make this out to be more than it is. You never hear
about Texas' equally sizable budget deficit for example. But that doesn't
change the fact that things are bad.

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iamelgringo
_California isn't going anywhere, but they probably wont be the cats meow for
the next 10 years_

I don't know if the VC data includes angel investment. And, while I'm sure
it's a much smaller amount in terms of total dollar figures, there have been
several hundred startups funded in the Valley this year.

Granted, most of those will fail, but if even 20-30 of them succeed (10%
success rate), that will be a huge boom to the California economy.

Not only that, but we're going to be seeing a number of really interesting
exits/huge acquisitions in the next few years: Facebook, Twitter, Yelp,
Linkedin, Zynga et all... If 2 out of those 5 goes IPO, that will add tens of
billions of dollars to the economy.

Companies like Google, Apple, Cisco, Intel, etc... are all doing quite well.

Nation wide, companies have an estimate of $1.4 Trillion dollars of cash on
hand, and they really don't want to hire. but, as soon as the economy starts
to rebound, they are going to be interested in growing fast, and merger and
acquisitions are typically one of the fastest ways to do that. $1.4 Trillion
buys a lot of small recently funded startups.

No, I think California is going to be doing just fine in the next few years.

~~~
JCThoughtscream
Specifically, its businesses and citizens'll be doing just fine.

The government will probably be fucked up. But when was the last time it
/wasn't/? I suspect even the older of HN's community'd really have to dig at
their memories to remember a time when Cali's government was functioning at or
near spec, regardless of party-in-power. We're pretty good at the whole
revenue-generating shtick, but the governance bit seems to keep eluding us.

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DanielBMarkham
That was quite a contrarian rant. Thanks for posting it.

I have a feeling both sides spin this issue for their own purposes. Things
like total VC dollars spent take on new meaning once you realize that VCs are
trending to invest in much larger companies using much bigger investments.
Then the question becomes: where are all the big companies that VCs might
invest in located? Which isn't the same question as: where are all the
startups located?

CEO Magazine voted California the worst state to operate in. California has
hundreds of thousands more people leaving than arriving. Numerous politicians
from all parties have commented on what a basket-case it is. The two states
have the worst credit rating? Illinois and California.

Those are also facts.

As for me, who knows? Who cares? My gut feeling says that there's a lot spin
on both sides. I don't have a dog in this fight, so I'm more than happy no
matter how it turns out. I'll just sit back and see what happens. I _do_ know
that if the California-will-default crowd is correct, its not like it will be
a secret. It will be a long drawn-out affair, will all sorts of accounting
tricks, yelling at each other, voter referendums, and budget crises that just
continue to get worse.

Kind of like we're seeing now.

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duffbeer703
States like California and New York are mostly the victims of politicians in
the 60's - 80's who deferred all sorts of costs to the future to make the
books work. Welcome to the future.

Examples: "No money to give raises to state workers, cops and teachers."
Solution to get contracts signed: Richer pensions, bigger benefits

"Crime is out of control. Drugs are bad. Rural economies are collapsing from
de-industrialization." Solution: Build prisons.

"We're enlightened and want the poor to get better healthcare." Solution:
Spend more on Medicaid. (In New York, pass the bill down to the county while
you're at it)

"The Mayor can't afford a 7% raise to the Police and Fire Departments. The
arbitrator will give them 6% that we can't afford if we go to arbitration."
Solution: Allow employees to bank unlimited sick time that gets paid out at
retirement and free healthcare for life.

Hopefully a crisis will fix things.

