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The Value of “The California Premium”

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Yesterday, I added a link to my Thursday post about the sad environmental state of California to a Jonah Goldberg piece in which he discovered that, “California is the poverty capital of America.”  However, before he gets to that startling fact he argues that California more-or-less “works” because due to climate, natural beauty and other social perks, people are willing to pay higher taxes.  Says Goldberg in part:

If Amazon’s Jeff Bezos got off his derriere and rolled out a weather machine, I would gladly spend at least 10 percent of my annual income to have the weather of Santa Monica or Palo Alto. Los Angeles has 284 days a year of sunshine, and California has 840 miles of mostly spectacular coastline. Is it any surprise that people are willing to pay extra for that?

I get it.  Let’s call this the “the California premium.”  Everybody is willing to pay a premium for extra value, but if the premium is far costlier than the extra value is worth, not so much.  There are really two factors at play in California that are negating the California premium.

For one thing, the charge for the California premium seems constantly to be growing.  Even Dems are worried about it now. That article just linked address the really wealthy and their potential departure in light of the recent changes to federal tax law.  If I was in a position, I know I would.  I have any number of friends and acquaintances, the kind that can afford multiple residences, that make sure they reside out of state just long enough each year to make sure their residency is not in California.  They enjoy the benefits of California without having to pay the premium.  The practice is becoming more-and-more common as the cost of the premium rises and rises.

But the affect on the middle class is devastating.  I make far, far more money than my greatest dreams of avarice every imagined.  Yet I live a decidedly middle-class life style.  If I could make this kind of money someplace else I’d be one of those multiple residence types, but not here in California.  The ever increasing cost of the premium makes getting to the next rung of the ladder harder and harder.  That’s pretty much the origin of the whole poverty capital thing.

The traditional path to wealth in this country has been through manufacturing employment and real estate investment.  Well, not only is the cost of real estate prohibitive in California, manufacturing is leaving in droves.

My business was founded to service manufacturers.  The tremendous growth my business has experienced in recent years has been in servicing the retail sector.  My manufacturing customer list has seen serious decline in the last decade.  When approached by someone to assist them setting up a manufacturing operation in California, rare as that has become, I wave them away.  Sure, I can get it done for them, but they’ll make a whole lot more money, and much sooner, setting up in Nevada and trucking the work in and out of California.  This decline in manufacturing leads to a decrease in jobs for the lower and lower-middle class to use to raise themselves up.

At some point we are all going to be stuck on the lower end of the income scale without enough people on the upper end to pay the bills.

But paying a premium to government to live in a place like California is only worth it if the government actually delivers what a government should.  The point I was trying to make in my Thursday post was that they are failing miserably in such delivery.  Said Goldberg, “The point is that California attracts an enormous number of rich people who think it’s worth the high taxes, awful traffic, and even the threat of tectonic annihilation to live there,” but think about that for a moment.  Why is traffic so awful?  (Trust me, unless you live here you don’t have a clue how awful it actually is.)  The government is failing to provide enough infrastructure.

My own demographically upper-middle-class neighborhood often takes on a ghetto-like appearance because of the failure of large-article trash pick-up.  Potholes?  Oh dear lord.  Forget swallowing my car – my pick-up truck is in danger.

Then there is policing.  My neighborhood has a petty crime problem.  I have spent countless hours dealing with municipal police and the City Council trying to get some relief.  I have received all sorts of promises.  Finally one day I cornered the local patrol cop in the neighborhood quickie mart.  When he revealed to me the size of his patrol area, my petty crime issues became entirely understandable.  I was told the local municipality was hiring police to try and resolve it.  So when I referred a few young police officers I knew I learned how very little money was being paid to the cops because the city was too busy using its available budget for things it deemed more important.

In other words, I am seeing no value for the premium I am paying.

California has become a bad movie with a great advertising campaign.  The opening is spectacular – anybody in the colder, snowier parts of the nation looked at the Rose Parade and the Rose Bowl and dreamed of such sunshine and warmth.  But the reality is a far different thing.  Trust me Jonah, to this thirty-plus year resident, it’s not worth it.


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