Saturday, February 9, 2013

More on California ... The "Lost" State

Many individual states have serious financial problems. California, Illinois, Michigan and New York are a few that come to mind.

California is perhaps the worst of the bunch, although Illinois is probably a close second. In contrast, Texas is definitely one of our strongest states financially.

Texas has no personal state income taxes. California just raised its income tax rate again. Its top rate now exceeds 10%.

Texas has oil and drills lots of it. California has oil but doesn't drill much of it.

Jobs are growing in Texas and leaving California.

So it is with population as well.

California is run by "progressive" Democrats and Texas looks to fiscally conservative Republicans for its political leadership.

Lots of differences which make comparisons between the two states easy to make.

And that's just what Governor Rick Perry is doing --- making comparisons in an effort to attract more Californians to Texas.

Texas v. California has the story:

"Texas Gov. Rick Perry will be making a head-hunting expedition to the Golden State next week. Which apparently is just fine by California Gov. Jerry Brown. "Everybody with half a brain is coming to California," Mr. Brown quipped. "So Texas, come on over!" The Democratic governor may have been poking fun at his Republican counterpart, but the joke is on him.

California has been losing residents to Texas for the better part of the past two decades, a net of 150,000 in the past five years alone. In the same time span, Texas gained 400,000 jobs while California lost about 640,000. In fact, employment in California is lower than it was 10 years ago. While the Golden State's jobs market has begun to rebound, Texas's rate of job growth last year still outstripped California's by 33%.
Rick Perry

In the last three years, California companies such as eBay, Facebook, LegalZoom, Waste Connections, Electronic Arts, Visa and Petco have made major expansions in Texas. Most of the job growth in Texas, however, has been organic—meaning small businesses investing and expanding to meet the demands of a growing population.

"This isn't just Texas versus California," Mr. Perry tells me. "It's a competition of ideologies" with Texas representing freedom and California embodying government's ever-visible hand reaching into taxpayers' back pockets. That said, the Texas governor has "great respect for California." He even wants "California to succeed. It's too important to this country's fate. But you're not going to get better unless you play at a higher level."

By Mr. Perry's lights, he's merely goading California to step up its game by recruiting its businesses, not unlike how players on the same team vie for starting positions. "I'm a competitor," he says.

California pols have shown they can trash-talk, but can they handle the friendly competition?"

Summing Up

Our fifty states are laboratories for how well government functions or doesn't, as the case may be.

California is stuck in the old paradigm of unlimited funds to do unlimited things in a government that has no spending constraints.

Its taxes demonstrate that attitude and "progressive" government mindset vividly.

Texas has a freedom based entrepreneurial self reliance mindset. Its lack of taxes demonstrates that individual freedom mindset vividly as well.

Can you guess who's winning and who will continue to win?

Are you listening and watching, Illinois and Michigan, among others? If not, you should be.

Thanks. Bob.

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