Creeping Fascism Continues!

[NorCalBdyBldr]

Atlantabiolab said:

You must be joking!?! You are a novelty in your state, for strict constructionism does not exist in California. Your officials wrote the book on revisionism of law.

Whatever! You are entitled to your fantasy! The law has not been invoked for a hundred years. So obviously nobody considered it a problem or was revisionist about it at all until the Republicans saw a way to abuse and exploit a poorly worded hundred year old law so they could make a power grab.

Atlantabiolab said:

Did Greenspan state that Bush's actions CAUSED the recession, as you imply, or simply that he disagrees with their usefullness at correcting a recession? Big difference.

I didn't say that Bush caused the downturn. I said the his actions are exacerbating rather than helping fix it. However, the election of Bush DID help cause many people to start pulling money out which did not help before he was even inaugerated. From people that I know that pulled out, myself included, I expected things to turn down because I expected his spending policies to be recessionary in nature (economics 101-guns versus butter argument and impact on production possibility frontier curve) which they are and I expected his spending to be, as you say, socialist in nature because they would be completely out of control just like his father's were and Ronald Reagan's were. Anc by the way, I am largely driven towards the democrats for the very reason that the Republicans have abondoned the traditional values of fiscal responsibility and have adopted and modus operandi of fiscal irresponsibility over the last twenty years whereas the "tax and spend democrats" used to operate this way and ever since Jimmy Carter, reversed themselves and now seem to be more fiscally responsible. As Alan Greenspan stated, this continuing trend of increasing debt and yearly huge deficits will only make interest rates increase over time. This is inherently bad for the economy, both private and public sector, and is ultimately a self defeating strategy for the country as a whole. But like ideologue, Grover Nordquist (one of the Republican's top strategists) stated, the whole purpose of the Bush tax refund and huge Bush deficits is to bankrupt the federal government and force the end of the hated social programs (i.e. social security for one which by republican definitions is socialism). Unfortunately, this is cutting off the head to get rid of some warts and while it will ultimately succeed in getting rid of what they don't want, will also kill the patient as well. I have a very tough time dealing with the neo-con ideolgues that have hijacked the Republican party so I have no choice but to vote against them. And what good does it do to bankrupt a program through increased indebtedness when all you are doing is taking away benefits but not reducing taxes because you have exchanged benefits for transfer payments to pay the interest/principal on the additional debt?

Atlantabiolab said:

Also, what did Clinton do that caused the 90's economic boom?? Was he a part time computer genius creating the dot. com industry? If so, was he also the cause of the dot. com failure? Do you really believe that 9/11 would not have hurt the economy if Clinton was in office?

I did not say that Clinton cause the boom either. What I said is that he created favorable conditions that favored it. 9/11 would have hurt any economy regardless of who was president. However, as most top economists have stated including Alan Greenspan is that we are far beyond anything that could be attributed to the impact of 9/11 in terms of how much it impacted the economy in terms of severity and duration.

Atlantabiolab said:

I disagree vehemently with Bush's actions on the economy, for he is following a socialist mindset of spend without care, but that does not mean that I blame him for the economic downturn. Because I disagree with him does not mean that I blame him for all the ills of the world, as Democrats do.

I don't blame him or any other single person or any particular country or any specific group of countries for the ills of the world. However, I do blame him for fiscal irresponsibility and not doing appropriate actions to mitigate the recession. He is the only president since the great depression that has had negative job growth every month of his tenure which is hardly a record of success and his policies have only exacerbated things. The situation is still not improving after nearly three years of office nor are his policies.

Atlantabiolab said:

Key word: "traditionally". This is not the case today. California has lost over 1 million white non-hispanics between 2000-2001. The state's population increase is directly related to immigration of Hispanics, who I doubt are going to fill in the spaces of upper middle and high income rich individuals, who drive the economy. California's tax revenues from millionaires declined from 37% to 25% during 2000-2001, and individuals claiming millionaire status declined from 44,000 to 29,000 during this same time.

The illegal immigration of Mexicans in particular is of great concern. California, under former governor Pete Wilson (Republican) tried to address part of this issue by passing a law that prohibited anyone that is not legally in the U.S. from drawing benefits from California's social services and other programs. Unfortunately, the Federal Courts struck down this law stating that this was infringing on the Federal domain regarding immigration policy. Because of this rediculous ruling coupled with the fact that both major parties pander to the hispanic vote and therefore ignore enforcing immigration law in any meaningful way, the citizens and businesses are now forced into paying absurdly for benefits for people that are not only non residents of California in the legal sense but also not even in this state or country legally. This is insane and needs to be addressed as the illegals only contribute about 3% of the productivity to this state but are BY FAR the biggest drain on it.

Your insinuation that the decrease in millionaires in California has to do with out migration is misleading. The decrease in millionaires has everything to do with the collapse of the dot.com industry AND the decrease in the stock market. This is also the reason why the decrease in tax revenues from millionaires. As you noted it happened during 2000-2001 which corresponds to the collapse of the stock values as well.

Atlantabiolab said:

California is considered the worst state to start a business because of the Draconian tax structures and regulatory practices. Nevada and Colorado are catching the run-off of individuals and businesses who are escaping from California's "soak the rich" programs. Why would a person want to start a business in a state that hits you with high taxes and restrictive regulations, when nearby you can reap higher returns from lesser taxes?

Contrary to your ascertions, the tax structure here favors people and businesses that own property which certainly makes it more regressive on people that don't. There is no doubt that the tax structure needs a major overhaul. The current governor talked about it but got no interest in legislative republicans because many of the problems with the tax structure here would hit particular pork barrel tax perks to specific special interests that were given over the last ten years. So that unfortunately is not likely to change soon. Interestingly, California's tax structure ends up tying it in to the stock market values by the nature of how taxes are collected here. Tax revenues from income taxes amazingly do not account for the major amount of taxes collected in this state due to several ballot measures in the recent past. Also property taxes because of a past ballot measure are relatively low compared certainly to all the northeastern states and quite a few others because they were rolled back and locked in based on price when the property was purchased and can not be increased significantly in any year. As for why anyone would want to start a business here are many inspite of the negativity you focus on. One is location on the Pacific Rim and ports of entry. Colorado and Nevada do not have coastlines. Also, California is still overall the wealthiest state in the nation. Therefore there is a ready market for people that actually have money to pay for things. There are many other reasons as well such as many companies locate here because of all the advantages of being here and that means they can attract the right kind of talent not to mention that there is an abundance of creative talent in this state that contributes to the potential pool. There are lots of other reasons that overcome the poor taxing structure and other negatives. Like anywhere else, you have to weigh the pros and cons considering your specific business and what type of markets you sell too and what kind of employees you need to attract. Also consider that the high end talent is simply not going to move to places like Oklahoma or Nebraska for the most part, no matter how cheap it is to live or buy a house because they simply do not have the culture or amenities there that they have here. It is interesting to note that New York City is another very high cost area and is also a high pay location as well as a location that attracts high talent. So draconian taxation is only a part of the consideration. Some businesses simply could not exist without the right availability of the type of employees that they require.

Atlantabiolab said:

Funny how things change, huh? You have a nice time in the Socialist Republic of California, with high housing costs, high gas prices, high energy costs, high taxes, etc. I'll stay here in my little third world economy, where I can buy gas at the lowest price in the nation, buy a 4 bedroom house at a price that you couldn't find an apartment for, and continue speaking English.

Yeah, all things are somewhat relative. I spent quite a few years living in the low pay, low cost south where you could buy a house for cheap and see little appreciation, etc. The truth is that I found out from personal experience that I was MUCH better off coming back to the expensive west coast and making more than twice as much for the same work. So I can afford to pay a bit more for gasoline as I don't spend that much on it a month anyway. Also with the climate that we have, I don't spend as nearly as much on energy costs for heating/cooling as I did in the south even though they had much cheaper per unit costs for energy and I had to pay those higher bills with a lower pay. So you keep enjoying your third world existence.

Atlantabiolab said:

To say environmental laws in California have nothing to do with the housing prices is laughable. You could read articles for days showing how your environmental programs have increased costs for housing and energy, but you would still deny it and continue living in fantasyland.

Actually your ignorance of market economics is what is laughable. When the current situation is 4 buyers per available house, the seller or builder can charge as much as the market will bear which is obviously considerable. Even if no such environmental laws existed, the market would dictate price and they would charge the same because they can easily get it. Got it?

Atlantabiolab said:

Your house appreciating by $100,000, in one year, shows a problem. Who do you think can afford 3 bedroom houses that cost $3-400,000....illegals? Do all the workers of California make $200,000/year? Even the ridiculous living wage programs couldn't help people afford houses of this cost. The high appraisal of your house does not show a strong economy, the ability to sell it does.

Considering the fact that the same model house with no improvements made since it was built sold just up the street two weeks ago after being on the market for about three weeks for $100,000 more than what I paid for mine when it was built supports completely my estimation of what it is worth. Like you said, it is what it sells for that counts and that is the current value. This is inspite of a weak economy. I never said the economy was strong here at this point in time. Also I haven't noticed any illegals buying houses in my neighborhood either. They don't make $200,000 per year either, even if you put ten of them together. And the fact that your house sits in a third world economy means that it appreciates slower and therefore you fall relatively behind in the scheme of things. Why do you think that so many Californians can sell their homes when they retire and retire very well off in practically any other state? You'll likely have to retire in an even poorer state when you retire than you are located in now like Louisiana or Mississippi. Enjoy the humid hot weather.

 

[atlantabiolab]

Strangled in the Crib
Jobs and Regulation in California
Joseph Farah and Mike Antonucci
Joseph Farah, the former editor of the Sacramento Union, is publisher
of Inside California, a newsletter covering state politics
and public policy. Mike Antonucci is a contributing editor
for inside California and editor oldie Right Mind.



"Do you want to make money?" a Northern California accountant asks his clients seeking to set up new businesses. Without waiting for an answer, he suggests they consider incorporating in Nevada. Why? Because the cost of doing business in California is considerably higher than in neighboring states. California's top personal income tax rate is 11 percent, compared to 7 percent for Arizona. Both California and Arizona have 9.3 corporate tax rates. Nevada has no personal income or corporate taxes. But perhaps worse than California's taxes are the regulations it imposes on businesses, some of the most draconian in the country.

The result has been a deep destructive, and long-lasting recession that has seriously tarnished the economic luster of the Golden State, driven out thousands of existing businesses and, perhaps most importantly, stopped dead in their tracks an untold number of potential business start-ups and expansions.

Studies of the effects of regulations often focus on aggregates, for example, the dollar value of lost Gross Domestic Product, the costs added to goods by transportation regulations, or the limits on credit availability form banking regulations.

But it is useful also to take an entrepreneurs' eye view of the difficulties they confront as they try to find their way through the regulatory maze and to overcome the regulatory obstacles in his or her path. Anecdotal evidence helps convey a realistic appreciation of what businesses actually face in a state. And it is these types of stories that one businessman hears from another when he or she asks about the local business climate, stories that influence decisions on where to open an enterprise. It is thus useful for policymakers and scholars to understand regulatory conditions from this perspective.

The Job Hemorrhage


California's unemployment rate is around 10 percent, well above the 6 percent average for the rest of the country. The state lost between 600,000 and 800,000 jobs between 1990 and 1993. And, according to a 1994 report by Pacific Gas & Electric of California, most of these job losses are the result of structural changes-not cyclical-and are therefore not coming back.

The manufacturing sector has been the most severely affected. Some industries, for example, shipbuilding, machinery and petroleum, have experienced job losses of between 10 percent and 30 percent over the past decade. Over 700 manufacturing facilities have moved or expanded outside of California since 1987, taking nearly 100,000 manufacturing jobs with them.

Neighboring states are experiencing solid economic growth at the expense of California whose businesses and would-be entrepreneurs are leaving the state in droves. Earlier this year, the California Business Roundtable found that 41 percent of California companies now plan to expand outside the state. Another 14 percent, including a quarter of all manufacturers, plan to relocate altogether. Earlier this year, the California Business Roundtable found that 41 percent of California companies now plan to expand outside the state. Another 14 percent, including a quarter of all manufacturers, plan to relocate altogether.

In many cases, the regulatory costs of doing business in California are the major cause of business flight. For example:

The Zero Corporation moved 2 manufacturing facilities to Utah in 1991. Vice Chairman Howard Hill said this move meant a 50 percent reduction in health-care costs, a 60 percent reduction in worker's compensation costs, a 40 percent reduction in utility costs, and an elimination of legal consulting costs. "The relationships that manufacturing companies have with the EPA, AQMD, EEOC, OFCCP, Cal OSHA, worker's compensation, water control, and other agencies is nearly totally one-sided and extremely bureaucratic," he said.
Indicative of the problems was the 1990 decision by California-based Applied Materials to built a $100 million facility in Austin, Texas. It was a difficult decision for CEO James C. Morgan to make. His wife, Rebecca Morgan, was at the time a state senator. "Thc attitude of state and local government toward industry is pathetic," Mr. Morgan explained.

A Federal Reserve Board study conducted earlier this year found California lagging well behind the rest of the nation economically. While 12 percent of the nation's population resides in that state, about 30 percent of the nation's job losses occurred there. The loss of industry has been so dramatic that state tax revenue actually fell in 1992 despite passage of the largest state tax increase in American history during the previous year.

Causing Business Flight

Interestingly-but perhaps not surprisingly- some of the most intensive research on California business flight has been done not by government but by a private utility company fearful of losing some of its best customers. Southern California Edison, the electric supplier serving 50,000 square miles of southern and central California, devoted more than 2 years to studying why businesses were leaving the state-interviewing owners and managers, compiling data, and issuing a report that has been widely circulated among business leaders and government officials. Edison has even trained 500 of its own field personnel to discuss future plans with customers to head off possible out-of-state moves.

What the utility found is deep discontent with the business climate in California focused principally on increasing costs due to worker's compensation and health requirements, anti-business attitudes by regional agencies and local governments, complex environmental restrictions, and fear of greater regulatory controls. "Southern California just isn't a good place to do business anymore for manufacturers," one food processing company official told Edison's researchers.

Of the 31 business managers interviewed, most said they would have preferred to stay in California. According to Edison's report on the business climate:

Only after encountering community resistance or regulatory delays did many of the firms consider expanding their search to alternate sites inside and outside Southern California. Such encounters usually prompted an expanded review of the negative conditions associated with operating in the region. This review generally reinforced the decision to relocate.

Most companies gave more than one reason for relocating. But overwhelmingly the two major reasons cited were the cost of doing business and difficulty in complying with government regulations. Internal business reasons, quality-of-life factors and other reasons accounted for much less than half of the flight.

But even those businesses that have chosen to stay in California are fearful about the future and deeply concerned about the anti-business climate and the regulatory chokehold on the state. Barry R. Sedlick, Edison's manager for business retention, says many companies considering a more are reluctant to let government officials know about their plans.

"Frankly, we find the companies that are staying here are often fearful of recriminations," Sedlick said.

Another recent study of industry migration sponsored jointly by five public and private California utilities, including Southern California Edison, found that between 1987 and 1992, California lost 708 manufacturing plants and 107,000 jobs due to relocations. Mexico captured 21 percent of the facilities, with neighboring states claiming most of the rest. Of those that left, 87 percent cited California's business climate as the principal reason.

Since 1989, 233,000 manufacturing jobs have left the state. That is one reason the cost of taking a U-Haul vehicle out of California is 4 times higher than the cost of bringing one in. The effect of this flight is having an impact on employer-employee relations in the state as well.

"One by one I have watched businesses both large and small leave this county," said John L. Salem, a mechanic who recently decided to leave California for upstate New York. "Some went out of business when the recession hit, others simply moved to other states that were more business-friendly. When these businesses left, hard-working people left with them. It's hard to ask my employer for a raise when all his customers are leaving."

Another recent study found that between 1987 and 1992, California lost 708 manufacturing plants and 107,000 jobs due to relocations.
A Problem Defying Simplification

How difficult is it to deal with the regulatory web in California? One company, Touchstone Environmental Inc. in Oakland, has prepared a "simplified guide" to help businesses comply with state environmental regulations. This simplified guide is a 2-volume, 1,200-page report costing $266. The introduction to the report states that,

Environmental compliance in California is a very complex process-an uncomfortable blend of science and law, of engineering and economics, of federal, state, and local requirements. The rules are complicated, frequently overlapping, and rapidly changing. Firms large and small encounter grave difficulty in determining what to do: goals, objectives, techniques, priorities. In the face of this conclusion, they cannot successfully allocate their available resources of people, money and technology. Their attempts to comply are typically ad hoc, sporadic, and too late.
Even a 1993 Guide to Doing Business in California, published by the Business, Transportation, and Housing Agency, designed to encourage business starts, cannot hide the bureaucratic morass an entrepreneur must wade through:

Rohr Industries experienced so much difficulty in getting a permit for a new manufacturing plant that it gave up and moved to Arkansas. The permit that would have cost $750,000 in California cost only $750 in Arkansas.
Cities are authorized to impose a tax in addition to a license fee. Because of the difference in ordinances, local officials need to be contacted to determine the costs and types of businesses that are required to be licensed in the local jurisdiction. Note: most jurisdictions require license for each location. Local ordinances may require a business to have other permits in lieu of, or in addition to, a business license, such as zoning permits, entertainment permits and health permits. . . . Some business and vocations must also obtain a state license, registration or permit such as a Sales/Use Tax Permit issued by the Board of Equalization. Firms with employees must show proof of workers' compensation coverage and register with the California Employment Development Department and Internal Revenue Service for payroll taxes. Other state licenses are generally limited to occupations requiring extensive training, or where public safety or health is involved, or consumer fraud is a problem.

Fees and Red Tape

The costs of fees and delays in the permitting process are major problems faced by businesses starting up or expanding in California. The Office of Small Business in the California Department of Commerce, for example, in 1992 estimated that it costs between $45,000 and $90,000 annually for each of the 67,000 Los Angeles basin small businesses to comply with regulations. Red tape and fees constitute much of that cost.

How does this red tape actually affect businesses? Typical examples include:

Officials of the Great American Food Stock Company needed a new facility for their growing business, if they stayed in their home city of San Diego, they could expect to pay $40,000 for a building permit and wait 18 months or more for a review of their plans. Instead, they decided to build their new facility in Rio Rancho, New Mexico, where the same building permit cost $2,250 and took all of 4 days to obtain.
In 1991, Target Department Stores applied simultaneously for approval of 2 nearly identical 500,000-square-foot distribution centers-one in Pueblo, Colorado, and the other outside of Los Angeles. The Colorado facility was completed and operating before construction was even permitted to begin in California.
In 1992, Lockheed Corporation decided to compare the number of regulatory agencies it had to deal with for plants in Sunnyvale, California, and Austin, Texas. Lockheed's analysis found that in Austin, the city building department essentially offered one-stop shopping, and fulfilled all of the requirements and paperwork of the other city, county, and state agencies. But in Sunnyvale, Lockheed was forced to deal with 16 separate city agencies, 12 county-regional offices, and seven different state bureaucracies.
Rohr Industries experienced so much difficulty in getting a permit for a new manufacturing plant that it gave up and moved to Arkansas. The permit that would have cost $750,000 in California cost only $750 in Arkansas.
The loss of aerospace jobs in California is not due only to defense cutbacks and the recession. One aerospace aluminum manufacturing company, which employed 750 Californians, spent 10 months and $360,000 on permit fees for a new plant. Faced with even stricter regional air quality standards, the company, like so many others, moved to Nevada.

The tough regulatory climate in California is even claiming some non-traditional employers as victims. Last spring, World Vision U.S., with 525 employees, announced it was packing up and moving to Seattle within a year thanks, in part, to government regulations, including a mandatory ride-share program that costs the organization as much as $100,000 a year. "It's not that (the mandate) is going to break anyone's back, but when you put all these things together, the arithmetic goes in the wrong direction," explained Robert A. Seiple, president of World Vision. "When you put what our costs are here relative to other states, it makes California look bad."

Peter Morrison, a demographer for Rand Corporation, said the announcement illustrates "how certain footloose industries that don't need to be tied to a certain location are picking up and leaving." Just 2 days after World Vision's announcement, another major for-profit company, Thrifty Drug Stores, said it was moving its corporate headquarters from Los Angeles to Oregon. Los Angeles Mayor Richard Riordan tried to intercede in the decision and offered to do "anything" to keep 899 jobs and a $40 million payroll in town. But officials of the company said the decision was final.

Most smaller companies that leave the state, however, never get wooed by city, county, or state officials. One durables manufacturer interviewed as part of the Edison study said: "In fact, this is the first time anyone has even asked us why we're moving out."

Sometimes the red tape and regulations that can drive businesses out of state are simply silly. An example:

The Gillette Company was sued and fined for leaving a warning off the label of one of its products-a tiny bottle of typing correction fluid with a label too small to fit the state warning.

An Environment Free of Businesses

Entrepreneurs seeking to start or expand businesses in California have been hit particularly hard by environmental regulations. For example:

Fox Studios wanted to expand on its Century City property but residents sued on environmental grounds and blocked the project. The local planning committee presented Fox with 500 "mitigating conditions" that had to be met for approval. One of these was a requirement that Fox hire a frill-time fossil expert to search the construction site for bones. Fox took the committee's demands under advisement, and immediately opened negotiations with Texas.
California businesses had been required to perform a self-inspection of their facilities, using a state-developed check-list, to document contamination and clean-up needs. The deadline for filing results was to be January 1, 1995. Yet as of this writing, in August, 1994, the State Department of Toxic Substances Control had yet even to adopt an approved checklist for businesses to use, forcing legislators to approve a bill deleting the deadline date.

Air quality regulatory agencies are among the worst offenders when it comes to choking off business activity and driving up costs. The Southern California Air Quality Management District, an unelected agency with sweeping powers, has estimated that its regulations would cost about $3 billion a year. But one independent analysis, in 1991 by Resources for the Future, placed the costs at $10 billion, while another, in 1992 by the National Economic Research Association, estimates the cost to be $12 billion.

Air quality regulatory agencies are among the worst offenders when it comes to choking off business activity and driving up costs.
Researchers with the National Economic Research Association and Resources for the Future found that Air Quality Management officials had decided some regulations had no costs at all. When asked how its staffers had arrived at those conclusions, district officials explained that they did not want to use "arbitrary" figures. So they arbitrarily picked zero as the cost.

An example of the results of the agency's policies: A Southern California furniture manufacturer, Panel Concepts, wanted to move its operations to a smaller plant in the area. But the South Coast Air Quality Management District would not permit the company to transfer its existing permits to the new site. Finally, the company packed up and moved to North Carolina.

The Perils of Risk-Reduction

In its April 23, 1992 report, the California Council on Competitiveness stated that, "Regulations should be based on good scientific and socioeconomic analysis to ensure that the public's money is being spent efficiently. The benefit of environmental regulation is achieved at a cost. For regulators to make informed decisions about proposed regulations, they must understand and balance these impacts and benefits." Yet California's environmental laws still generally fail to take account of costs and benefits. Evidence of this is documented in a report of the Office of Small Business of the California's Department of Commerce, which found that government regulations in the state often are designed to eliminate all risk to health-an impossible and costly goal.

Take the example of water safety. The Association of California Water Agencies says that regulatory requirements on radon, a naturally occurring radionuclide that in high doses can cause health problems, will cost California water suppliers about $3.7 billion in capital costs and hundreds of millions of dollars a year in operating costs. And what results will be achieved? Available statistics show no actual deaths attributable to radon poisoning. Some environmental activists claim as many as 8 lives will be saved in California each year due to such regulations, or $462.5 million for each hypothetical life saved.

These policymakers fail to understand that state agencies do not create any marketable good or service when they use taxpayer's money and regulatory policy to promote green industries.
In 1994, after studying the issue, California Environmental Protection Agency (Cal-EPA) Secretary James Strock recommended that public opinion be taken into account when determining environmental risks. Some believe this step could reduce the demand for "zero tolerance" of environmental risks.

Riding Down Businesses

The state's policy to promote car pools to reduce automobile emissions is another example of failing to take account of regulatory costs to business. The "trip reduction mandates" of the South Coast Air Quality Management District force employers to develop and enforce employ ee cal--pool plans.

The cost effectiveness of this approach first might be questioned. For example, if a number of employees ride in the largest car, it may be the worst-polluting vehicle. Because that bigger, perhaps older, smog-producing auto is now forced to drive to various locations to pick up employees at their homes-and, thus, run more miles than it would have previously-the result might be more pollution, not less. In other words, while the air-quality boards have decided that forcing car-pooling is a good thing, they have not determined exactly what the benefits of such a program are.

Car pool rules still mean that employers will spend millions of dollars devising and implementing plans, and seeking board approval for them. And there is no limit on what the air-quality boards can charge businesses through fines and fees to fund their operations. One hospital, Kaiser Permanente in Los Angeles, that failed to submit its ride-share plan on time, was fined nearly $1 million.

The adverse effects of California's car pool rules do not end simply with fines and wasted time for businesses. Currently the state courts are trying to determine if injuries sustained by a worker while participating in a ride-share program are covered under workers' compensation laws. The legal reasoning is that workers are participating in "a company-sponsored alternative commute program and thus employers are liable for any injuries that may occur during the commute.

Curiously, some policymakers see these regulations that harm businesses as a positive thing, creating a climate suited for "reinventing" the state's economic base. Assembly Democrat Tom Bates and Mayor Loni Hancock of Berkeley call for a new "green" economy: "An economy of stewardship will put California in a position of leadership in developing programs and products needed for global survival. . . . We can create new markets by direct government purchase of recycled and environmentally sound products."

To restore the state's growth, economists Stephen Levy and Robert K. Arnold of the Center for Continuing Study of the California Economy in Palo Alto recommend "boosting [public] investment in education, infrastructure, research and development, and new technology, [and] improving the quality of life in the state by relieving traffic congestion, high housing prices, and pollution."

These policymakers fail to understand that state agencies do not create any marketable good or service when they use taxpayer's money and regulatory policy to promote green industries. In fact, they destroy wealth and penalize productive activities.

Few Reforms in Sight

Last year, it seemed California's elected officials had finally heard the wake-up call. Both Democrats and Republicans in the state legislature talked about reforming the regulatory process in an attempt to improve the state's business climate. There were modest legislative efforts to reform the state's worker's compensation system, to create tax breaks for manufacturers, to streamline regulatory operations, and to cut some steps from environmental reviews.

But, so far, judging from the lack of improved performance by the California economy, it may have been just too little, too late. "These reforms do not match the expectations that were raised by the Competitiveness Council and the 1993 Economic Summit," Gov. Pete Wilson announced after the 1993 legislative session. "it is imperative that the Legislature revisit this issue early next year.

Even though California's economic problems persist, there is a strange resistance to further reform. "It's usually prudent to let the new laws settle and then re-evaluate, rather than tinker year after year," explained Senate President Pro Tern Bill Lockyer. "In a society that is very, very diverse, there is a sound argument for making changes gradually. The business community just won enormous victories. They have to realize those victories meant a defeat for somebody else."

In some cases, elected officials simply react in an ad hoc way to business flight with legislation designed to deal with the threat of individual corporations leaving. Taco Bell, for instance, has been discussing relocating its corporate headquarters to Texas. In reaction, Assembly Speaker Willie Brown introduced AB 1313, better known as the "Taco Bell Bill," to provide a 6 percent tax credit to the company for investments in California headquarters. But even this limited response to a particular case was defeated in committee.

Now Senator Lockyer is talking about the possibility of creating a state commission that would allocate tax breaks to specific companies to keep them in California or lure them from other states. What the legislative leaders have categorically failed to address, however, is how you encourage new businesses to start up in the state.

Conclusion

California's regulatory regime is a principal cause of the state's job loss and the absence of new job creation. State policymakers might rationalize that any given regulation places only a small burden on the entrepreneur. Or they might claim that some vaguely defined social good will result that more than offsets the small inconveniences of the regulation.

But the costs and destructive effects often are large by any standard. In any case, the cumulative costs in time and money of California's regulations are barriers too high for many businessmen to surmount. The only jobs created by these regulations are in the other states, by businesses fleeing the Sunshine state. California policymakers have to date failed to deal effectively with the regulatory crisis and thus have a difficult economic road ahead.

Selected Readings
Ueberroth, Peter V., California's Jobs and Future. Council on California Competiveness,
April 23, 1992.
Gallaway, Lowell, and Anderson, Gary, "Derailing the Small Business Express." Republican staff,
Joint Economic Committee, U.S. Congress, November 7, 1992.
Hayward, Steven, "West of Eden: California's Economic Fall" in Policy Review, Summer, 1993.

 

[p0ink]

wow! things are far worse than i had originally thought.

 

[chesty]

California is a joke in this country. The state has caused its people to pay astronomical prices, fix everything with raising taxes, etc.

Liberals running that state have run it into the ground just like they have done in AZ.

Raising taxes is not the answer. The people didn't create the problem. Too much gov't interference is the problem.

Facism, Nazism, constructionism, etc. What ever the type, California needs to be rebuilt before they drag the rest of the country down.

 

[NorCalBdyBldr]

Chesty said:

California is a joke in this country. The state has caused its people to pay astronomical prices, fix everything with raising taxes, etc.

That is not true at all. The actual fact is that California has been undergoing tax rollbacks for years which began in the 1980's with property taxes due to a ballot initiative by voters. To this day, California property taxes are artificially low relative to actual value compared to many other states which benefits businesses and individuals that own property significantly because essentially your property taxes are frozen with little room for upward adjustment but no restriction on downward adjustment beginning with the date you purchase the property. So even if the value of the property triples, the individual owner or business that owns the property pays rates based upon the original property value at time of purchase. What is interesting is that if the property value falls lower than you paid for it, the taxes are required to be adjusted downward to reflect that but if the value subsequently comes back up, the taxes are essentially capped from rising significantly from the value established when the property was at its low value point.

Over the last ten years, California rolled back taxes, primarily to the upper end so the rich got "their social welfare" too. Up through 2000, the economy was so hot in California that taxes were rolled back even though costs of government increased and politicians on both sides of the aisle voted for spending increases which most politicians viewed as a win-win on both sides of the aisle.

However, what caused the problem in California is the economy stupid! Things came to a crashing halt about two years ago out here when the "energy crises" occurred. This crises was a result of a poorly written energy deregulation package that was litterally written by Enron for Republican legislators that proposed it. It was signed into law by Republican governor Pete Wilson. Even FERC has concluded that the entire "energy crises" in California was contrived and manipulated by the energy wholesalers like Enron and Duke Energy Corp. However, the Bush administration has done everything in its power to delay things, including the billions of dollars the state was ripped off of in energy that was paid for and not even supplied. Bush also stated that "I will do nothing for California" during the energy crises while his buddy Kenny-boy Lay was involved in stealing money from the people of California through ENRON'S energy manipulations to cause the crises. The energy wholesalers like Enron kept claiming it was "environmentalists" and California's laws that kept energy companies from building power plants here that was the cause. In the end, it was completely fictitious and the state ended up using up a HUGE budget surplus through extortion by the energy wholesalers to keep the lights on. The truth is that no company can function well when energy prices fluctuate as much as 300-400 percent one day to the next. That caused the final coupe de gras for California's economy which was doing amazingly well up until that point inspite of an already slow national economy and slow Pacific Rim economy. So liberal policies had little to do with it.

In the aftermath, California's home based retail energy companies that were forced to sell off all of their generating plants to others as part of the REPUBLICAN deregulation law, convinced Democratic governor Gray Davis that they needed to have some home based control and needed to build new plants that they owned to act as a buffer against any such future manipulations. Accordingly six power generating plants were proposed, went through the entire environmental and local review process, got permitted, got built and are operating in less than two years-actually it took 18 months total to do all of that. So when you talk about how cumbersome California's regulations are, think about how many other places that six power plants were proposed, permitted, built and began operations in 18 months? I doubt you will find any. I even doubt that you will find very many states where a single power plant can even be proposed, permitted, built and operational in just 18 months.

California's economic problems have more to do with republican mismanagement than any other factor. California's deficit is $38 billion dollars projected over 18 months. The republicans in the legislature blocked any tax give aways of the past ten years in particular from being rolled back. Funny thing is that everyone is pointing the finger at California, when predominantly Republican New York State had a very similar budget shortfall situation and had given essentially the same things away in terms of taxes as California had done over the same ten year period but their predominately Republican legislature rolled back the tax cuts to the rich that New York had given out and that damn near solved their entire budget problem. But why is it that everyone is screaming at California that didn't increase taxes and subsequently did not solve the problem as saying WE are socialist and that is the cause of our problem when the Republicans in New York State did exactly what California did not (raised taxes) and somehow the New York Republicans are heroes for solving the problem? Is it that they are Republicans? and somehow they can do no wrong but if they were democrats or liberals then they are socialist and everything they do is THE cause of the problem? What a bunch of hypocrites!

What is particularly funny is that you all seem to point the finger at California for its extra amounts of "democracy" here and you claim it is a socialist state that is the joke of the nation because you blame its social policies for its problems. Well that certainly is funny because California's social attitudes and policies did not just happen two years ago. Even the recall of the governor is based on a law that was implemented nearly 100 years ago to give more power to the people. California has long had a "social conscience" like other West Coast States. But you don't point at them as a joke. Oregon even had a territorial motto that said "she flies with her own wings" and a state bill of rights that grants considerably more rights to the people than the Federal Bill of Rights. But somehow we are the joke. And inspite of these social policies, many of which have existed before I was born, the state of California has built the largest single economy in the U.S. BY FAR. Even now, it takes the other 49 states PUT TOGETHER to surpass our productivity and what California adds to the gross national product. So maybe it is the other 49 states that are the laughing stock because inspite of their "non-socialist" policies and suposed "free market economies" they individually, with a couple of exceptions like New York, produce so little and have never been able to produce much. That is even with their "right to work" laws that all but legally prohibit unions and have laws that give all the rights to the employers and none to the employees. That is inspite of their low taxes and cheap labor. Inspite of all of this, they somehow can never seem to build a very interesting economy--why is that? But then again, New York City, which is the economic hub of New York State is also very similar to California in policies overall. And New York City is the economic heart of the nation. So why is that? Why isn't everyone fleeing New York City and California and moving to Oklahoma or South Carolina where you seem to think the business climate is so far superior with their lack of regulations and environmental laws, etc.? If your theories are so great than why is it the people that run the businesses mostly flock to the high cost, highly regulated places--the ones that also have environmental laws? They obviously know something you don't and maybe that is why they are in business and most of you aren't!

So if your theory that companies can't afford to pay taxes for social programs and that states impose too much on companies by imposing higher than Federal minimum wages is correct, then why are the biggest economies in the country in places that typically have laws that protect workers and provide social programs? If high taxes and property costs are the ONLY considerations as to what makes a place favorable for business then why is it that the high cost areas in terms of wages, taxes, and properties typically also the very places that also have the biggest and typically the strongest economies? Maybe there is something YOU need to rethink about all this because you are obviously missing the boat. Obviously, the people that ACTUALLY do run businesses do know how to make money in these places and find it a more favorable location than you all seem to think. Otherwise they would never have either located here or would not still be here. California, like New York, has been a very high cost area for many years.

And I have worked as a liason between state regulatory agencies and business for years--specifically dealing with environmental laws. And guess what? I find that California's government is actually fairly pro industry for the most part. They do have requirements to keep the "environment" cleaner but the environmental laws here include things like traffic considerations, visual impacts, noise, odor, concern over vectors for carrying diseases, pathogens, night lighting impacts in residential areas as well as the more traditional environmental issues like air pollution, water pollution, etc. The laws are here to keep areas that are nice from turning into shit holes of endless sprawling hodge podge development that ends up causing even worse traffic and air pollution problems and just looks plain hideous. They also are trying to prevent problems of pollution that end up being worse if preventive measures aren't taken in the first place. The California Environmental Quality Act (CEQA) requires mitigation of adverse "environmental impacts" to the extent that they are technically feasible and REASONABLE and do not pose an undue economic hardship on the project proponent. Mitigations are typically proposed by the project proponent himself or by his/her consultant rather than by the regulatory agency. The agency just reviews it and comments on the proposal. If an impact can not be mitigated to a level of not significant, then the project proponent can usually get a statement of over riding considerations for the project from the local planning board so it can get approved anyway. CEQA puts the greatest weight for approval on the local jurisidiction as they are the ones that will have to live with it. The state virtually never overturns a local decision to approve a project under CEQA and the state permitting process but typically can NOT approve it without the local approval. That is not only law, it is fact. I have seen many of these. The truth is that there is a fairly significant attempt to keep from ruining the entire state the way large tracts of it were ruined in the past and also an attempt to maintain a fairly decent quality of life here. In other words, California very much wants the business but wants it to fit into whatever area it is going to be located with as little "impact" as is "reasonable"-- cost of mitigations DO COUNT in terms of not proposing them because they are too costly. You probably don't even realize that California regulations allow the degradation of the environment for economic development. Often complying with environmental laws here is as simple as doing a few "aesthetic improvements"-- like making a building "look" nicer or planting trees along the property line as buffer or putting containment in under chemical storage tanks to prevent accidental release to ground or surface waters, etc. Most of the "horror" stories that you hear of come from NIMBYs (not in my back yard) that are against anything and everything and try to find any obscure regulation that they can to prevent it. Unfortunately, it has been my observation that California hardly holds the corner on the market on those. The other "problem" group is often from a company's competitors that are doing everything they can to legally harass a company, often under the "front" of a fake environmental organization that if you check you can find that they created and fully funded for this purpose. As far as the state agencies are concerned, however, if you understand the system, it is not that big of a deal. And the state agencies are not so stupid that they worry about illegitimate concerns from NIMBYs or trumped up issues from competitors. They typically know the players. The biggest complaints about environmentalists and California regulations seem to come from out of state companies that don't understand how things work out here and are too cheap to hire a consultant or someone that knows how the beauracracy works to make it work. Fine then, let them stay out because they are either not smart enough or are too cheap to do business in this state anyway IMO. There are plenty of others that are more than willing to work with local and state government to get their projects approved.

And if you think the liberal social policies are what caused the downfall of California, then maybe you should consider that they were in exisitence throughout the entire time that the state built up an economy so large that it ranks sometimes fifth and sometimes sixth in the entire world and has continued to add enough jobs to the statewide economy so that the economy can absorb the net 5,000 people PER DAY that have been moving here on average for quite a few years. How many economies can you think of that can provide a sustained level of growth of that magnitude? That is essentially like adding a city the size of Houston, Texas to the State of California every year and providing housing and jobs and schools for all of those folks. That is NOT what I call a failure! But maybe you do! So if you think that a little dinky economy that is supposedly "free market" where everything is cheap but there is little contribution to the GNP of the U.S. as a whole is a success then I suggest you stay there collecting money at your convenience store job because you obviously don't know much about how things ACTUALLY work.

California's economy is down now due in large part to bad decisions made by the Republicans and compounded by the current Democratic governor who made some very bad calls in how to handle the situation and keep it from getting worse. Oh well, the road to hell was paved with good intentions. He will likely be recalled under California's 100 year old law by the voters. I still will not be surprised if a Republican hypocrit (remember the republicans were the reason for no tax increases or tax giveaway-in-good-times rollbacks!) becomes governor and suddenly the republican hypocrits in the legislature suddenly decide that rolling back some of the past giveaways is not such a bad idea afterall. Remember, you heard it here first!

And if you think that California is such a laughing stock, then what does that make the U.S.? California's estimated shortfall is $38 billion over the next year and a half, but the U.S. Federal estimated shortfall (i.e. deficit) THIS YEAR ALONE is now somewhere in the neighborhood of $500-600 Billion dollars (about 15 times what California's is for 18 months) and the total U.S. debt is now approximately $7 TRILLION. California owed NO DEBT due to budget problems prior to this budget so the total debt of California will be around $10-20 billion by this time next year. Considering that it takes 49 states to produce more economically than California and the Nationwide debt is $7 TRILLION and the shortfall for THIS YEAR ALONE is $500-600 billion and continuously getting revised upward (and that doesn't even count the money being spent in Iraq) versus California's projected shortfall of $38 billion over 18 MONTHS (one year and one half which is actually only approximately $25 billion per year prorated to cover the same time period as the Federal deficit which is annual)--and California's total debt will be about $10-20 billion--NOW who looks like the laughing stock, California or the U.S. as a whole? You tell me. Not to mention that practically the ENTIRE TOTAL NATIONAL DEBT OF $7 TRILLION is the result of fiscally irresponsible spending by three REPUBLICAN presidents, Reagan, Bush I and Bush II. Democratic president Jimmy Carter was the last U.S. president to submit not just one but two balanced budgets to congress until Democratic President Bill Clinton who not only submitted numerous balanced budgets to congress but also submitted several budget surpluses to congress as well.

Chesty said:

Facism, Nazism, constructionism, etc. What ever the type, California needs to be rebuilt before they drag the rest of the country down.

In case you didn't already notice or figure it out from reading my posts, the rest of the U.S. is already a lot further down than California is considering the total national debt, the annual deficit and the recession. In spite of the situation in California, Southern California is already starting to show signs of an improving economy and northern California has unemployment figures around 7 percent which is fairly bad for us. We are more typically around 4 percent, sometimes less inspit of being a horrible anti-business socialist republic as you and others indicated in yours/their posts. Truth is that California will survive this economic downturn inspite of the rest of the country and sabotage of the national economy by a president that is clueless on how to do the right things to help turn things around. Even governor Davis admitted that we will get no help from the Republicans in the Federal government so we'll have to do it ourselves as we always have and possibly end up pulling the rest of you out of the recession behind us. You may laugh at me now but you just wait and see what happens--I have some inside sources on this that are quite credible.

As for the illegal immigrant situation, California tried to pass a law that prevented people that are not legally in this country from drawing benefits bought and paid for by the legal residents of this state. Unfortunately the federal courts threw that out because they said it infringed on immigration policy and that is solely the domain of the Federal government which fails to do anything but turn a blind eye to it. The sad fact is that the illegal immigrants add something like 3% of economic productivity to California's economy. However, they utilize something like 30% of our programs and services which is terribly unfair to the businesses and taxpayers and legal residents of this state that pay for those things. So we got screwed but we will survive them too. Truth is that Texas and Florida and Arizona face similar problems dragging on an already slow economy nationwide. I just wish everyone would get off of their asses and vote to send a strong signal to stop the illegal immigration and start having a realistic policy. But that is the stuff of an entirely new post.

 

[Chaucer]

California is being swamped by the third world. Things will continue to get progessively worse for Cali (and the US) until our immigration policy is reformed. Electing Arnie won't do shit. I repeat, electing Arnie won't do shit. The immigration act of 1965 is a major cause of this country's decline.

also: check out www.numbersusa.com

 

[NorCalBdyBldr]

Chaucer said:
"The immigration act of 1965 is a major cause of this country's decline."

That is true and we continue to get over run by illegal immigrants. This problem will eventually spill over to other states besides California, Arizona, Texas and Florida in a big way so people need to wake up. Only the Federal government can determine immigration policy. Our fucked up immigration policy began with this act under Lyndon Johnson and continues unabated and getting worse to this day. Another black mark for Lyndon Johnson, another of my least favorite presidents on my list:

John F. Kennedy (Democrat)--dislike because of Bay of Pigs and his perceived weakness because of it by the Russians was probably THE CAUSE for the Cuban Missle Crises. At least he worked that one out and did little else except get shot in Dallas, TX and cheat with more women than Clinton could even dream of but I don't know if I can hold womanizing against him.....LOL

Lyndon B. Johnson (Democrat) for lying about Vietnam and getting us deeper into a war and then not letting the military do they job they were trained to do but rather he called all the shots believing he was a military strategist--NOT! He also allowed a lot of fucked up social policies like welfare to take off out of control and become a "lifestyle" as well as his immigration policy that has haunted us to this day but somehow can't seem to be undone.

Ronald Reagan (Republican) for being a general dumbass and senile and beginning the era of fiscal irresponsibility that has characterized the Republican Party ever since. He did make some positive changes to the tax code however but it is not enough to offset the amount of debt (hidden tax) that he added to the U.S. and the amount of drain on the economy that ultimately causes. He also had horrible environmental policies and his secretary of the Interior, James Watt even proposed strip mining and clear cutting in National Parks!

George H. W. Bush (Republican) for knowing better but still continuing the fiscally irresponsible spending policies of his predicessor and plunging the U.S. deeper into debt. I had no issue with his leaving Sadaam Hussein in Iraq under the circumstances and because of agreements with coalition forces. He had the smarts to let the generals do what they were trained to do and asked them what they needed to get the job done. Unfortunately this does not counter the level of debt he added to the country and the undue burden this ultimately places on taxpayers and businesses as well.

George W. Bush (True Fascist hiding behind the American flag officially claiming to be a Republican even though his actions go FAR to the right of any traditional conservative). The man is too stupid to be president and is spending us into oblivion greatly outspending ANY former president BY FAR. His policies if not stopped in 2004 by removing him from office will likely cause severe economic burdens on individuals and businesses and recovery will only be a distant memory and hope as the true meaning of his hidden tax through spending and rising interest rates comes to bear. He undermines the country economically with bad economic policies and has scrapped diplomatic efforts by the U.S. to build up good will for the last fifty years. His environmental record is easily the least sound and the worst of any president I can ever remember. He has rolled back more rights and intruded more government into private lives than any president since John Adams signed the aliens and sedition act into law. The rights taken from individuals and the powers granted to the Federal government by the "patriot I and II acts" are roughly equivalent to the acts passed under Adolf Hitler circa 1933-4 post the Reichstag Fire in Berlin. Also the last leader to use the "doctrine of preventative war" was Sadaam Hussein when he launched an unprovoked attack against Iran resulting in a bloody 8 year long war. The last leader prior to Sadaam Hussein that used this doctrine was Adolf Hitler when he launched Germany into the Second World War. Based on this and many other reasons, I have to admit that George W. Bush holds the top honors of presidents that I least like and basically despise as I feel he is destroying the U.S. while pretending to be a patriot. Unfortunately, he is also the first president that there is not one thing I agree with him on and that is truly amazing!

Unfortunately, both democratic and republican administrations continue to turn the other way on immigration issues and allow HUGE numbers across the border every year. Both parties are completely guilty on this issue!

 

[Chaucer]

I know...The Neo Cons are just as bad as Marxists who masquerade as the left. But it isn’t just illegal immigration. It is legal as well. Believe me; I live in town that is swamped by the third world hordes.

 

[NorCalBdyBldr]

Chaucer said:

I know...The Neo Cons are just as bad as Marxists who masquerade as the left. But it isn’t just illegal immigration. It is legal as well. Believe me; I live in town that is swamped by the third world hordes.

I agree. Both extremes are equally as bad and as dangerous. And you are correct about legal immigration as well. The immigration act of 1965 is what shifted the emphasis of legal immigrants away from Europe to giving a higher priority to Latin America and the third world and making it extremely tough for Europeans to enter. The problem I have is that Europeans tend to be well educated and often bring valuable skills and education with them. The third world provides cheap unskilled labor. Unfortunately, we have enough unskilled and uneducated people in this country that we should be able to fill those jobs with our own by forcing them off of making welfare a lifestyle and going to work. I think Australia was smart in having an immigration policy that favors skilled people with something to contribute to their economy to immigrate. We should follow that example and do likewise.

I don't know what part of the country you live in but it is something all Americans should be concerned about because it is only a matter of time it will happen to their town as well if things don't change.

 

[chesty]

I lived in California in the 80's and when the poverty level is considered 40,000 a year and lower that is a joke. The house I own where I live would cost me close to 750,000 in Ca. right now. To me that is an economic joke. California has the most screwed up laws on guns, traffic, crime, etc. All of that is due to the liberal leadership in that state. Republicans have nothing to do with it and now you might have a Nazi for governor. This is as bad as your current gov.!

So property taxes are low, what's the point when it costs you 3 times the price for property there than it does elsewhere in the country.