August 31, 2006
From the desk of Jane Galt:I'll take that bet
Kevin Drum wants to bet that California's greenhouse trading initiative won't cost the state business:
I'll bet all comers that not only does it not have a negative impact on California's economy, it will have a noticeably positive impact. It will spur R&D in new technologies, it will motivate businesses to become more efficient, and it will make California a better place to live. And as for businesses moving out, I'll bet against that too. Moving heavy industrial plants to new states is a lot less appealing than it sounds, and if it does start to happen I'll bet other states will follow California's lead. After all, what state wants to be the dumping ground for all the poor corporate citizens who are moving out of California because they want to relocate somewhere that doesn't mind them belching tons of pollutants into the air?
Now, before I start, let me say that I have nothing against this initiative: longtime readers know that I am one of those improbable libertarians who worries about global warming. And like the economics journalist I am, I looooooove cap-and-trade systems. Sometimes, late at night, I drive past their houses just to see if they're home. And when they finally go to bed and turn out the light, I sneak up on the porch to leave little poems I composed myself, signed "Your secret admirer."
Ahem. As I was saying.
I like cap-and-trade systems, and I'm happy for California to try and implement one (of course, I don't live in California, or have a job in manufacturing, so I would be, wouldn't I?). But given the relative ease of moving one's factories across state lines, I find it unlikely in the extreme that manufacturers will not implement their own cap and trade system on doing business in California. Given a choice between implementing a permanent 25% cut in energy use, or moving my plant to Nevada, it wouldn't take me long to start pricing land in Reno. California is already an outrageously expensive place to do business; this will add to it considerably.
Nor do I think that other states will necessarily worry about importing pollution--we're talking about carbon dioxide, which you yourself emit in relatively large quantities, not mustard gas.
As for spurring more R&D, etc, California is already a very nice place to live, which is why no one I know can afford to live there. I fail to see how a (globally speaking) trivial reduction in carbon dioxide emissions will somehow transform it into an earthly paradise irresistible to business executives. And there are multiple problems with the R&D argument: one, that it is a fine example of the broken windows fallacy; and two, that there's no particular reason the R&D has to happen in California. To the extent that it does happen, it will probably take place wherever it is that they manufacture power turbines and flourescent light bulbs.
So if Kevin really is taking all comers, and can formulate a target we can both agree on, I've got a couple hundred I'd like to put down . . .
Posted by Jane Galt at August 31, 2006 10:36 AM | TrackBack | Technorati inbound links"); ?>I'm not sure R&D on improving environmental quality fits the broken window concept.
the broken window is when you count current spending to return to the prior state of well-being -- like after a storm or fire.
Yes, you can argue that environmental spending is just to return to a previous environment but
that does not seem to fit.
Environmental spending is more a question of internalizing an externality rather then an example of the broken window. Environmental spending gives you both the value of the output and the benefit of the better environment, so you are not just return to the prior state as in the broken window fallacy.
Posted by: spencer on August 31, 2006 11:15 AMIn this case, however, the environmental benefit is not local--global warming will be reduced by some fraction of a fraction of one percent, benefitting everyone in the world very slightly. So I don't think that you can say that internalizing the externality will substantially improve California's economy, either on a GDP or quality-of-life basis. Any R&D spending in California will be replacing some other spending that could have been done; hence, it still seems to me like a very good example of Broken Windows.
Posted by: Jane Galt on August 31, 2006 11:20 AMThe problem will be measurement. How can we measure what is lost through government interference when much of what should be categorized as lost are opportunities that were simply bypassed as unprofitable - plus the loss of the resulting compound interest. Kevin will win the bet. There will be growth in California regardless and he will be able to point to it. Jane is correct, but she won't be able to prove it.
Posted by: Randy on August 31, 2006 11:22 AMP.S. My prediction is that California's initiative will have absolutely no impact on global warming. California simply isn't a big enough part of the problem, and the models will not be altered to reflect the change because they have too much political value.
Posted by: Randy on August 31, 2006 11:28 AMI think it's great that California has decided to test run Kyoto for the rest of the country. Driving more industry out, while accepting more illegal aliens, can only further push California into 3rd-world status, thereby demonstrating exactly what Drum and the other hysterics are asking for. Arizona, Nevada and Oregon will benefit, as will Utah and Idaho.
Of course, if the long term climate changes dating back over the last 1,000 years or so happen to be driven more by our friendly, neighborhood star than by anything mere humans can do, then none of this fiddling around will matter...
Posted by: ellipsis on August 31, 2006 11:30 AMI am a libertarian who thinks cap-and-trade for carbon dioxide emissions is just another government boondoggle. When implemented, I expect you will see a plethora of rent-seekers offering all sorts of dubious CO2 offsets and sequestration methods. The regulatory apparatus required to ensure compliance with the actual caps will lead to eventual government control of industry to an extent not seen today.
A far better method of internalizing the costs of CO2 emissions is institute increased excise taxes on fossil fuels. Couple this reductions in other taxes, and even I would support it.
Posted by: Yancey Ward on August 31, 2006 11:32 AMMy question is; if we're really concerned about global warming why don't we just fertilize the earth's oceans with dissolved iron?
Unlike various attempts to regulate and limit growth, this would actuall increase growth since animals would eat the phytoplankton blooms and fishermen could harvest the fish.
Since very small amounts of iron are needed for pretty remarkable results, I've often wondered if there's a case to make for funding such a project by increasing the cost of fishing licenses.
Why are all these projects to control global warming focused on limiting economic growth rather than increasing the rate of carbon fixation (plant growth) in the earth's oceans?
Posted by: Ryan on August 31, 2006 11:45 AMKevin Drum recongizes one good point - it IS far from easy to move heavy industrial facilities. A company that's kept its facilities in California despite the state's high costs and other drawbacks isn't likely to pack up and move to Nevada just because of this initiative.
Posted by: Peter on August 31, 2006 11:49 AMThis bill will succeed as ghost towns do not emit emissions.
Power-using industries will move out of the state or out of the country. Even low power using industries will flee as It prevents virtually every company from expanding its operations.
The impact of this bill will fall almost completely on the shoulders of poor people.
Posted by: Jake on August 31, 2006 11:51 AMCA is large enough that the margins matter. there are likely many, many companies in CA for whom an additional cost from the reduced emissions will the expense that pushes them over the edge and makes them decide to move (it's not like this is already a well-documented exodus from CA in light of its worker comp laws, etc.
Posted by: dj superflat on August 31, 2006 11:52 AMCA is large enough that the margins matter. there are likely many, many companies in CA for whom an additional cost from the reduced emissions will the expense that pushes them over the edge and makes them decide to move (it's not like this is already a well-documented exodus from CA in light of its worker comp laws, etc.
Posted by: dj superflat on August 31, 2006 11:53 AMWhat you will see is already marginal facilities such as refineries not get upgrades or close altogether. There was a to-do about Shell wanting to close a small refinery in Bakesfield a few years back. Under this proposal all plants like this are a goner.
It will also doom any extractive industries such as mines etc. All of these are in areas of the state not likely to do R&D. Their margins compared to overseas locations are already low. Cement plants will all go to Mexico (CEMEX is already a huge player but hemmed in by residual tariffs).
Other than these, CA does not have many big CO2 emitters EXCEPT TRANSPORTATION! So who will Joe Commuter cap n'trade with!
Posted by: Dave Moelling on August 31, 2006 12:02 PMRyan,
The Clinton Administration tried that (i.e. funded an experiment) and it didn't work. I'm too lazy to look up the evidence.
Moving industrial plants and other fixed capital is not easy or cheap. But the notion that no one will do it is just plain wrong. At the margin there will always be losses due to increasd costs, and there will be those for who this is the straw that broke the camel's back and thus they will leave and never come back.
Just as importantly, there will be new industry that simply doesn't start up in CA to begin with, or that starts in CA, but loses out to lower cost competition. I'm inclined to think that it is not a coincidence that the two most dominant pc makers were Dell and Compaq (before Compaq sold itself to HP), and that they were based in low cost Texas.
Taking the bet will be a fool's errand though. The losses will mostly be as invisible as the Greenhouse Gases, and CA will merely grow less than it would have otherwise, much the same way "Old Europe" has grown much slower than it would have otherwise during the past 30 years or so because of too much government.
Posted by: happyjuggler0 on August 31, 2006 12:07 PMHappyjuggler-
Thx for the info. But any idea why it "didn't work?" What went wrong? I gave (or tried to give) a link to a study (http://www.ia.ucsb.edu/pa/display.aspx?pkey=1126) showing several man-made blooms that "consumed over 30,000 tons of CO2 each.
What am I missing?
Posted by: Ryan on August 31, 2006 12:15 PMRyan,
Thanks for the link. After doing a bit of googling I came up with this link and after reading it I decided I must have read an article written by someone on the "critics" side. My impression from reading my remembered article was that the Clinton administration had funded an experiment (maybe the first such experiment?) and it had all the apparent effects of your link, but they thought that the CO2 effect was permanent, e.g. didn't sink or got eaten by fish too quickly.
After reading my wiki link I realize there has been a lot of research in this area. My apologies. At worst it is not clear if this works (your link had a paragraph near the end doubting it could be useful enough), although if it hasn't worked yet it may be due to too small a scale or too short a time observation period.
I may have to follow up on this and read a bunch of the links contained in the wikipedia article.
I'm glad you got me started on doing my own reasearch into the available data instead of me relying on someone who perhaps had an agenda against iron fertilization.
Posted by: happyjuggler0 on August 31, 2006 12:49 PMbut they thought that the CO2 effect was permanent
should of course read
but they thought that the CO2 effect wasn't permanent
oops
Posted by: happyjuggler0 on August 31, 2006 12:50 PMContra Jane (a little snarkily), plenty of people can afford to live in California - homes in, say, Yreka are very reasonably priced.
Of course, the problem is, you have to live in Yreka, which doesn't have quite the same country-wide appeal that the Bay Area or LA have.
(Though, that being said, I'd probably rather live in Yreka or Red Bluff than in Oakland or San Dimas...)
I don't like cap-and-trade. I like carbon taxes, with the revenue either:
1. Allowing the state to cut other taxes (income, sales, property, etc)
or
2. Paying for global warming mitigation (improving levees, iron fertilization, etc)
California seems to have an economic death wish, and Schwarzenegger is going to aid and abet it. The local caps on carbon dioxide emissions will take out a number of industries, including a bunch of refineries. Watch energy costs soar, expect blackouts again and gas shortages. In addition, the California Legislature just passed a bill that will make private health care illegal and create a Left Coast variant of Hillarycare. The initial [and surely understated] funding will be from what will total an 11% increase in taxes on businesses. Believe me, businesses in California are watching closely to see if Ah-nuld will sign it. Finally, Wednesday the Legislature finished passing a bill that will allow local governments veto power over the building of any retail establishment over 100,000 sq. feet. Aimed at Walmart, it applies to all economic activity. Taken together, we are looking at an economic cascade effect that is going to be real expensive.
I will give an example. My daughter and her significant other run a company that is in the crane business. They don't operate cranes; they design and fabricate specialist cranes, do emergency maintenance and troubleshooting on others, and are one of the few companies that can inspect and certify them for the legally mandated state and federal licensing. They started on the Bay Area docks, and have grown to be the biggest in Northern California and actually have spread their activities well inland to the middle of the country. Their assets are people, tools, and computers. All eminently portable. After hearing about the health care cost increase coming, they were worried about whether they could afford to continue operating in California. With the coming energy shortages, and suppression of new business activity; they may very well pick up and move. Every industry has its niche specialists necessary for it to function. If the specialist service industries who keep things going [for instance, you cannot run any construction, industrial, or shipping process without cranes that require both very specialized maintenance and regular inspection and Federal and state certification] are unable to afford to operate in the new environment; the industries they support are out of luck. The industries may have to migrate to where they can get the services they need.
I do have a certain morbid curiosity about how long the "beautiful people" who are so vital to both the image and culture of California will put up with the inconveniences and increased costs of living there. Can you imagine the reaction of the glitterati to having to wait in line for a legally mandated public health service doctor? When they leave, California becomes just another overcrowded slum.
This link is complementary to the conversation on iron fertilization.
Posted by: happyjuggler0 on August 31, 2006 1:38 PMI have no doubt that you are correct Jane. Finding a measurement that you can agree on is going to be more than a little tough - good luck with that.
If I was to make a suggestion it would be to identify the 1000 largest manufacturing firms and track their progress over some time frame and then identify the firms that work on emmision type products before and after implementation to see if their growth offsets the man. losses.
Posted by: Chris on August 31, 2006 1:55 PMThere is no problem in combating global warming (especially, since everybody can do something! You all drive cars and they are the major contribution to CO2), however, you shouldn't call yourself libertarian, if you accept government intervention to "solve" this "problem".
Posted by: Max on August 31, 2006 2:55 PMOh and one last item. We are a little engineering firm supporting the power industry. We do work worldwide. Nowhere is business regulation for infrequent business as bad as CA.
Trolling expeditions by CA revenue agencies for sales tax and other items and by Franchise boards make it increasingly important not to set foot in the state if possible. So industry in CA is being starved of suppliers at the same time other costs are being raised?
Posted by: David Moelling on August 31, 2006 3:03 PMEllipsis
CA is pushing into "3rd-world status"?
Wherever did you get that from? CA is one of the richest states in the Union and its economy has grown faster than the US the last few years.
Posted by: GT on August 31, 2006 3:31 PMQuestion for the Georgists (and other "landowners capture all value" proponents) out there: Why hasn't this oppressive environment for business caused noticeable downward pressure on real estate price in California?
Posted by: Person on August 31, 2006 3:33 PMPerson,
One word - climate. The CA government can be about as stupid as it wants to be, because people will still want to live there. But like Manhatten, only the strongest survive - and the strongest can afford a lot of stupidity.
Posted by: Randy on August 31, 2006 3:48 PMConsider that this will have little effect on either GW or the CA economy for the simple reason that emissions will not be reduced. See, e.g., almost every nation signing Kyoto.
Posted by: Karl on August 31, 2006 3:54 PMRandy: are you claiming that is the Georgist perspective on this? Even if true, though, it wouldn't explain the marginal effects of changes in regulation that have happened since the 80's. People may "still want to live there", but shouldn't their "wanting to live there" (aggregate Calif. real estate demand curve) still go down as a result of these punishments to business? Aren't these taxes and difficulties going to impute back to land?
Posted by: Person on August 31, 2006 3:55 PM
GT asks:
CA is pushing into "3rd-world status"?
Yes. Politically and culturally, California increasingly resembles a banana republic, and not just in the southland, either.
Wherever did you get that from? CA is one of the richest states in the Union and its economy has grown faster than the US the last few years.
Saudi Arabia is one of the richest countries on the planet, and its economy has grown faster than most. Would you call it a 1st world country? Or would you call it something else?
Posted by: ellipsis on August 31, 2006 3:57 PMThe effects may be largely invisible. My employer has grown in the last 15 years, but we
have placed all the growth in Texas and Okla.
Sure, Penna. has a few more head count, but the
two other states are up 400%. Given that companies have sunk costs in fixed assets that are hard to move, you may not see many actually pick up and move. But you can bet all companies take business-friendlyness into account when deciding where expansion will occur.
Ellipis,
I don't know how you measure political and cultural "third-worldism" so let's try to stick to just economics.
Since CA is richer than the US as a whole and growing faster, are you saying the US is a 3rd world economy?
Posted by: GT on August 31, 2006 4:33 PMAlso ellipis, you might want to change the example. Saudia Arabia is hardly one of the richest countries in the world, that's a common misconception. It's not poor but it's not at the top either. It's about as rich as Poland (on a GDP per capita basis-PPP) and poorer than, say, Portugal, one of the poorest Western European nations. SA's GDP per capita is about 1/3 that of the US, hardly making it one of the richest countries.
Posted by: GT on August 31, 2006 4:49 PMGT wrote:
I don't know how you measure political and cultural "third-worldism" so let's try to stick to just economics.
I'm sure that would be a lot easier to think about. But if you read Adam Smith with care, you'd find that the culture of a country is a major factor in economic growth. Mexico is a case in point, and I do not choose it at random...
Since CA is richer than the US as a whole and growing faster, are you saying the US is a 3rd world economy?
Non sequitur.
Also ellipis, you might want to change the example. Saudia Arabia is hardly one of the richest countries in the world, that's a common misconception.
Well, that rather depends on how one defines "richest", doesn't it? The Saudi royal family rakes in stunning amounts of money because they happened to control certain parts of that big sandbox back when British and American infidels started drilling for oil. The wealth that they control is very nontrivial...
It's not poor but it's not at the top either. It's about as rich as Poland (on a GDP per capita basis-PPP) and poorer than, say, Portugal, one of the poorest Western European nations. SA's GDP per capita is about 1/3 that of the US, hardly making it one of the richest countries.
From a GDP point of view, you are correct. However, the oligarchy in charge of Arabia makes certain that much of the wealth doesn't get strewn around too freely, so I submit the ruling elites are very, very rich indeed, and since they make up "the country' in some sense, it's a very wealthy place. Contrast it with Switzerland, which has few natural resources but a culture of industry & thrift going back some 800 or so years...
Culture matters, it matters a lot, it determines law and economy in the long term...
Posted by: ellipsis on August 31, 2006 5:28 PMIn 2005 real per capita gdp in California was
109.4% of the national average and over the last
3 years real gdp in CA grew 3.2%, 5.2% and 4.4% as compared to 2.6%, 4.2% and 3.5% for the total US. Last year it ranked number 15 in terms of real growth.
ellipsis,
I understand the importance of culture and politics but since there is no easy way to measure that, no easy way to see if CA has a third world culture or third world politics, whatever that may mean, I suggest we try to stick to something we can measure.
You claimed that CA is "pushing into 3rd world status" and I'm just trying to figure out what you mean by that. In what way is CA pushing into 3rd world status economically?
Posted by: GT on August 31, 2006 6:17 PMMax: ...however, you shouldn't call yourself libertarian, if you accept government intervention to "solve" this "problem".
Oh, I don't think libertarians are barred from recognizing the concept of external costs. Personally, like some other posters, I think a carbon tax is somewhat preferable to a system of tradeable emmissions permits. It'd be a little simpler to set up, harder to fiddle, and the cost would be more explicit.
Posted by: Bill Woods on August 31, 2006 6:19 PMPerson,
Re; "but shouldn't their "wanting to live there"... still go down as a result of these punishments to business?"
I would guess that it is "down" in relation to what it could have been. My experience of life in CA is that it is great for those who can afford it, but very hard on those who can't.
The net effect of the regulation may be a subtle form of population quality control.
Posted by: Randy on August 31, 2006 7:01 PMGT wrote:
I understand the importance of culture and politics but since there is no easy way to measure that, no easy way to see if CA has a third world culture or third world politics, whatever that may mean, I suggest we try to stick to something we can measure.
This reminds me of the drunk guy looking for his car keys under a streetlight, when he lost them somewhere else ... "It's easier to look for them here in the light, y'see".
You claimed that CA is "pushing into 3rd world status" and I'm just trying to figure out what you mean by that.
Culturally and politically, CA increasingly resembles a banana republic, as I stated before. The mass marches of illegal aliens earlier this year that will be repeated within a fortnight or less are one example, and if you look at what is going on in the Mexican Presidential election, the parallels ought to be obvious, and alarming.
In what way is CA pushing into 3rd world status economically?
That streetlight sure is nice and bright, isn't it?
Posted by: ellipsis on August 31, 2006 8:04 PMKevin:
"After all, what state wants to be the dumping ground for all the poor corporate citizens who are moving out of California because they want to relocate somewhere that doesn't mind them belching tons of pollutants into the air?"
I'm guessing that if the pollutant is CO2, which occurs in the air naturally, many states will be happy to accomodate.
Jane, if you ever figure out how to take Kevin up on his wager, count me in for a few bucks, too.
Ken
People aren't going to shut down currently running factories and rebuild them in Nevada. For one thing, they did that 20 years ago when the first major round of environmental regulation hit. Besides that, there won't be any big, spectacular moves like that. Instead, siting decisions will all go against California, if CA is even considered. Existing plant in CA will shut down a little earlier than it might have otherwise. Rarely will the two be directly linked in a embarrasing-to-Democrats headline-making way.
Posted by: Anthony on August 31, 2006 8:53 PMYes. Politically and culturally, California increasingly resembles a banana republic, and not just in the southland, either.
So don't live here, then. Personally, I think San Diego is heaven on Earth.
Posted by: Dan on August 31, 2006 9:19 PMI spent some time in San Diego this spring and yes, it is the one place in CA that I would be able to live. BUT, a piece in the local paper put it all in perspective. It detailed the culture shock experenced by some former residents of the San Diego area, El Cajon to be precise, who now lived and worked in Boise ID. It seems that the 50 (70?)year old manufacturing company they worked for had up and moved manufacturing to Boise. The company is Buck Knives, one of the Big Names in the hunting and pocket knive biz. These were not low end jobs, and I'm sure that it was not cheap to move operations like a knive making plant. Lots of machinery, ya know. Now I'm sure there were only a few hundred jobs involved, but it quickly can be come the deaths of a thousand cuts, as hundreds of small companpies move a few hundred to a few thousand jobs each year. I had the opportunity to speak with a Buck rep at the NRA convention and they said it was the energy costs that had made the decision for them. What do you think energy costs with be wiht this new dictate.
Even intillectural property work is starting to move out. Check out Clayton Cramer, please be sure to not let you heads explode reading his site, a former CA resident, heck born and bred there. Who now works for a software firm in Boise, do I detect a trend? He works on software programs for printers.
That said it will be those types of businesses, that will be the last to leave. The movie business will be among the last to truely leave as so much of it is sitting around in meetings in big office buildings. The movies will be shot elsewhere, then final production done in CA. But even that will eventually be farmed out state as digital production becomes more common.
Culturally and politically, CA increasingly resembles a banana republic, as I stated before.
Utter nonsense. Banana Republics are (or were) characterized by poverty, authoritarian government, human rights abuses (death squads, etc), fascistic cultural oppression, and lack of modernity. California is rich, and enjoys one of the most robust democratic cultures on earth (look at the Davis recall, look at the referendum tradition). Moreover, California doesn't allow widespread human rights abuses, enjoys a libertine popular culture, and is surely the most "modern" place on the planet. You're just sore because most Californians don't share your political preferences. Nothing wrong with that; they don't share mine for the most part either. But your hyperbole is plain stupid.
Posted by: 99 on September 1, 2006 12:12 AMEllipsis,
OK, so you were not referring to economics, just politics and culture. You seem to think that politically CA is like Mexico or Bolivia.
OK.
I suspect it would result in a slow "winding down" of energy intensive industries, as new plants are sited elsewhere and existing plants are closed as they wear out. It somewhat reminds me of the antagonism from the landed aristocracy in the feudal period toward merchants and craftsman. Maybe the intent is to push the commoners away from the beautiful people.
Posted by: rmark on September 1, 2006 9:50 AMDescribing California as a "banana republic" may be good hyperbole, but only hyperbole.
Now having said that, the government of California is dysfunctional, and I do expect it to collapse within the next 20 years as it's debts pull it into true bankruptcy.
But the state itself will survive.
Posted by: Yancey Ward on September 1, 2006 9:54 AMWhile it is true that California is not a banana republic in any strict sense (e.g. lack of bananas) in some ways it looks a lot like one, particularly in comparison with other states. I'm thinking here of its relative indifference to property rights, which smacks of authoritarianism to me. One very large foreign company I did consulting work for had imposed on its operating divisions a prohibition a on any investments in California due to a fear that any investments might be effectively expropriated by the state.
Posted by: jl on September 1, 2006 1:09 PMThis is all Archimedes and his planetary lever; we have no fulcrum for it.
Posted by: Brett on September 1, 2006 2:01 PMI do have a certain morbid curiosity about how long the "beautiful people" who are so vital to both the image and culture of California will put up with the inconveniences and increased costs of living there.
That is easy:
1) Most people who own homes are either rich, or bought homes long ago.
2) Prop. 13 keeps homes from being reassessed for property taxes.
3) Young people move to california for the jobs, living a liberal life as the beautiful statists.
4) When the finally meet Mr. or Mrs. Right it rapidly becomes clear that they will never buy a house in California, or be able to afford to raise children in California
5) They move someplace where housing is affordable, typically red states but at least a suburb.
6) They reject their beautiful people politics, and start voting Republican.
Why You Can't Afford a House in a Blue State.
Posted by: Justin on September 1, 2006 3:21 PMI wrote:
Yes. Politically and culturally, California increasingly resembles a banana republic, and not just in the southland, either.
Dan replied:
So don't live here, then. Personally, I think San Diego is heaven on Earth.
I'm sure it is, where you are, likely on the west side of I-5. Having spent some time in other parts of San Diego, and seen the "Aztlan" T-shirts common there, it is clear to me that some parts are rather far from heaven...
Posted by: ellipsis on September 1, 2006 4:51 PM"Why hasn't this oppressive environment for business caused noticeable downward pressure on real estate price in California?"
Because California is ground zero of a global speculative bubble in real estate, with fully a third of buyers using negative-amortizing loans to afford median-priced homes costing ten times the median income or more.
Get back to me in mid-2008 on that one. Over $2 trillion in option ARMs are adjusting to fully-amortized payment schedules over the next two years. Let's see how well people making $65,000 per year adjust to mortgage payments going from $1,800 per month to $4,000.
Re: the actual topic at hand, great. As if my power bill wasn't gawdawful enough.
Posted by: TheProudDuck on September 1, 2006 4:54 PMI wrote:
Culturally and politically, CA increasingly resembles a banana republic, as I stated before.
99 replied:
Utter nonsense. Banana Republics are (or were) characterized by poverty, authoritarian government, human rights abuses (death squads, etc), fascistic cultural oppression, and lack of modernity.
Some of that was true and is no longer, other parts are still true. But some of it is rubbish; banana republics often consist of a relatively small group of rich people and a large group of poor, with the middle class squeezed nearly out of existence. Know any middle class people who still live in California, to pick but one example? Banana republics often have, or had, a facade of representative government over a reality of inside deals, "fixers", and other corruption. Do you wish to claim that there is none of that in California? Lack of modernity is a relative thing; some parts of Mexico are quite modern, but that doesn't change the fact that it was a one-party state for nearly 70 years, and may revert to being one again. Parts of Los Angeles, on the other hand, increasingly look like they are part of another country than the United States...
California is rich, and enjoys one of the most robust democratic cultures on earth (look at the Davis recall, look at the referendum tradition).
The referendum tradition increasingly is being chipped away at, and as Prop. 187 shows any referendum the elites do not like can be overturned or ignored. Another bit of the drift towards banana republic status IMO.
Moreover, California doesn't allow widespread human rights abuses, enjoys a libertine popular culture, and is surely the most "modern" place on the planet.
A libertine popular culture is hardly unknown in the banana republic, as any of the old folks who went to Havana in the 1950's can tell you...
You're just sore because most Californians don't share your political preferences. Nothing wrong with that; they don't share mine for the most part either. But your hyperbole is plain stupid.
Thanks for telling me what I think. So, what's my favorite color, while we are at it?
Do you understand the difference between "is" and "is becoming"?
GI wrote:
OK, so you were not referring to economics, just politics and culture. You seem to think that politically CA is like Mexico or Bolivia.
Given the increasing number of Mexican citizens who live, work, and march in the streets of California demanding that various laws not be enforced, it would be a surprise if California was not increasingly coming to resemble Mexico, wouldn't it?
The Proud Duck is certainly a succinct fowl. We shall indeed see in the next two years, if not sooner, what the plethora of clever home financing instruments devolve to as adjustable rates reset, and the result may well be a torrent of "jingle mail" to lending institutions, among other things.
Gee, Jane, isn't it about time to revisit the housing bubble, already in *pop*progress?
Posted by: ellipsis on September 1, 2006 5:13 PMBut some of it is rubbish; banana republics often consist of a relatively small group of rich people and a large group of poor, with the middle class squeezed nearly out of existence.
More nonsense. The middle class in California is hardly being "squeezed nearly our of existence". It's expensive to be counted among the 25 million middle class Californians. Why don't you just say it in simple terms, instead of employing over the top rhetoric? Squeezed nearly out of existence indeed. Many of these "squeezed" middle class folks have absolutely booming balance sheets thanks to their, um, prescience in buying tract homes within a 50 mile radius of L.A.
Lack of modernity is a relative thing...
Indeed. And relative to just about any other spot on the globe, California is a thoroughly modern place. Banana republicans aren't known for producing oodles of Nobel scientists, and stealth fighers, and iPods, and firms like Google.
Parts of Los Angeles, on the other hand, increasingly look like they are part of another country than the United States...
More inanity here. America has long had large urban neighborhoods teeming with immigrants. Google "lower East Side" and read up. There's not a thing unamerican about East L.A.
The referendum tradition increasingly is being chipped away at, and as Prop. 187 shows any referendum the elites do not like can be overturned or ignored.
Nowhere in America do you or I have the ability enact laws -- whether through the referendum process or any other -- that violate the country's constitution. Adherance to the rule of law is a distinctly non-Banana Republic-like attribute. And at any rate, the elites got their asses handed to them when Gray Davis got recalled. Populism is alive and well in California -- much to the detriment of human embryos.
Posted by: 99 on September 2, 2006 3:35 AM99:
I ordered my iPod online directly from Apple on their website...custom engraving included...and it shipped direct to me from Shanghai, China via FedEx Worldwide in less than a week.
Now that's what I call globalization!
You cannot say that iPods are produced in CA.
I have visted SF and San Diego, and I say yuck to both! You can have CA. But, that's just my personal taste.
As a devoted Flyover Zone Gal, I know lots of former coasters who came back home. The CA escapees were tired of the crime, having had their cars stolen and houses robbed multiple times. They didn't feel safe staying there trying to raise a family. They also didn't feel it was family friendly at all. Libertine cultures are fun for young libertines, but as most people mature, they learn that libertine is license and liberty is true freedom. And they know where to find it.
The Flyover Zone. Welcome home, America.
Posted by: kentuckyliz on September 2, 2006 11:42 PMI wrote:
But some of it is rubbish; banana republics often consist of a relatively small group of rich people and a large group of poor, with the middle class squeezed nearly out of existence.
99 wrote:
More nonsense. The middle class in California is hardly being "squeezed nearly our of existence". It's expensive to be counted among the 25 million middle class Californians. Why don't you just say it in simple terms, instead of employing over the top rhetoric? Squeezed nearly out of existence indeed. Many of these "squeezed" middle class folks have absolutely booming balance sheets thanks to their, um, prescience in buying tract homes within a 50 mile radius of L.A.
Sure, the early participants in bubbles often make out well. We'll see how people earning $65,000 with a multi-hour commute to their McMansion do when the various adjustable rate debt resets this year and next year. In the mean time, one of the exports of California is middle class people; I know too many of them to dismiss it as a fluke.
I wrote:
Lack of modernity is a relative thing...
Indeed. And relative to just about any other spot on the globe, California is a thoroughly modern place. Banana republicans aren't known for producing oodles of Nobel scientists, and stealth fighers, and iPods, and firms like Google.
Do you understand the difference between "is" and "is becoming", and do you know where Apple computers, iPods and other such things are actually manufactured? As for stealth fighters, you may have noticed that the aerospace industry left SoCal in the 1990's, during the Clinton defense cuts, and hasn't returned...
Furthermore, Japan has more cell phones & other places have better wireless. So there.
I wrote:
Parts of Los Angeles, on the other hand, increasingly look like they are part of another country than the United States...
More inanity here. America has long had large urban neighborhoods teeming with immigrants.
That's true, but none of them previously demanded that their neighborhood really ought to be within a foreign country, did they?
Google "lower East Side" and read up. There's not a thing unamerican about East L.A.
For some definitions of "american" that's true. Aztlan is part of "america", in some sense...
I wrote:
The referendum tradition increasingly is being chipped away at, and as Prop. 187 shows any referendum the elites do not like can be overturned or ignored.
Nowhere in America do you or I have the ability enact laws -- whether through the referendum process or any other -- that violate the country's constitution.
Uh huh. Sure. Tell me another one, like "McCain-Feingold protects the 1st Amendment", or "denying the privileges of citizenship to foreign nationals breaks the Constitution" while you are at it...
Adherance to the rule of law is a distinctly non-Banana Republic-like attribute.
Yes, thanks for making my point for me.
And at any rate, the elites got their asses handed to them when Gray Davis got recalled.
Temporarily, that might be true, but Ahnuld has revealed himself as the elites girly-man now, so does it matter?
Populism is alive and well in California -- much to the detriment of human embryos.
Cute bait. Won't bite. Kalifornia is drifting into 3rd world status, and the slide seems to be accelerating. When mass marches in the streets by foreign nationals undo the work of the legislature, and become as important as an election, don't cry to me, or for Argentina either...
Posted by: ellipsis on September 4, 2006 12:43 AM