[EconProf]

Partnerships seldom work out. At the beginning, “newlywed” partners are inevitably optimistic about how things will go. As time goes by, their plans diverge, frictions arise, suspicions emerge. I have been in several partnerships and none have gone well, in contrast to investments where I have gone it alone.

[EconProf]

[quote=FlyerInHi][quote=EconProf]Since the recession of 2008 CA job numbers are up 7.5% compared to a 14.8% jump for Texas (St. Louis Federal Reserve).
As for GDP, CA up 11.3%, Texas up 38.2%

I’m guessing the low tax, business friendly states of AZ and NV are also welcoming refugees from CA.

Lots of other useful data from a Scripps Ranch economist, Richard Rider, at riderrantsblogspot.com.[/quote]

Economists say that people make rational decisions. So if Texas is so good, why don’t people who think so move there?

You know… mobility of labor, voting with your feet, etc…

If you stay in California, the CPU in your brain must have taken all the available data and computed a superior NPV for remaining here.[/quote]

Actually FIH, it is pretty well documented that outmigration from CA to other states far exceeds in-migration from other states. Our population still grows due to a higher than average birth rate plus the influx of foreigners, legal and illegal.
They leave not only for jobs but the lower taxes and cost of living. Your money simply goes farther.
Allow me to cite my own examples, since I spend half my days in San Diego and half in Yuma, AZ, two and a half hours east of El Cajon, (we own and manage commercial properties in and around Yuma).
A typical Mira Mesa house (3,2, 1600 SF) would cost $220,000 in a good Yuma suburb. Property taxes, @ 2% of market value would be less than the roughly 1.25% of the Mira Mesa house value.
BTW, That MM type house would rent for $1,000 in Yuma.
Yes, AC costs may be $300 during the summer, but drop to $100 in and around winter. Water and sewer bills much lower.
Since traffic is lighter and most everything is within twenty minutes, commuting costs are lower and you save scads of time in your day.
Gasoline is $2.09. Hired labor is cheap. Tonight we will go see La La Land for $5.50 each. Groceries are far cheaper, even compared to the same
grocery chain as San Diego. Fruit and vegetables are cheaper because Yuma is the salad capital of the country.
As for state income taxes, mine are 60% lower in AZ compared to CA, which has the highest rates in the nation.
I suspect Texas is much like Yuma in these respects (except no income tax whatsoever). In short, one’s standard of living depends heavily on the differing cost of taxes, goods, and services in each area.

[EconProf]

Since the recession of 2008 CA job numbers are up 7.5% compared to a 14.8% jump for Texas (St. Louis Federal Reserve).
As for GDP, CA up 11.3%, Texas up 38.2%

I’m guessing the low tax, business friendly states of AZ and NV are also welcoming refugees from CA.

Lots of other useful data from a Scripps Ranch economist, Richard Rider, at riderrantsblogspot.com.

[EconProf]

For the record, entitlements are 49% of the federal budget and defense is 18%. Equally important are the trends. Defense has been stable or shrinking while entitlements have been growing.

[EconProf]

You want to “…ban private education on the primary and secondary levels…”
So you are against parents having choices to direct their children’s education. Only the government monopoly should control k-12 education. Got it.

[EconProf]

You misunderstand how charter schools work. The students pay no tuition. They are public schools, government regulated, but operated for the benefit of the students and parents who want to opt out of the local public school. Funding accompanies the student in an amount at or below (depending on the state) the amount of per capita expense that student would have had at the public school. In other words, the charter school takes the same amount of money (or less) and does a better job with it.
It can do a better job because it is not saddled with the union work rules, salaries, benefits, etc. and silly rules that the public schools have. Their educational results are better, which explains the many people clamoring to get into charter schools.
Opposition to charter (and voucher) schools comes mainly from the powerful teachers unions, who do not want to see their government-enforced monopoly threatened. They are naturally embarrassed by the educational results of charter vs. public schools, especially for minority and poorer students.

[EconProf]

Charter schools and vouchers are spreading rapidly across the country because they give parents a choice to opt out of failing public schools. They are most desired by minorities, whose kids are stuck in the worst schools, staffed by the weakest unionized teachers who cannot be fired despite their proven incompetence.
Many of the comments here are from people unexposed to such teachers and such schools. Better neighborhoods naturally have the resources and teachers that deliver a better education, which is why vouchers face an uphill battle. But if one is concerned with the abysmal ranking of ALL our students vis-à-vis other developed countries, one has to challenge the status quo dominated by the unions.

[EconProf]

Bearish Girl, your lengthy response shows that you do not use data to come to reasoned conclusions. I suggested that academic studies for ALL of California properties could discover the revenue loss from heirs taking over their parents’ properties under Props 13, 58 and 193. Such a study would be peer reviewed to check for accuracy.
You countered this with a long string of….anecdotes. Anecdotes, whether from your personal experience or properties sold that you apparently looked up prove exactly nothing.
From this handful of examples, you concluded that “The golden state has undoubtedly lost trillions on (Props 58 and 193) since 1986.” Are you aware the upcoming entire state budget from all tax sources is only $171 billion?
Instead of cherry-picking examples of properties taking advantage of Props 58 and 193, why not use your time to look for real research that has surely been done on the subject since it is undoubtedly a question that has occurred to others. I don’t have the time to look up such studies, but you seem to have both the time and energy.

[EconProf]

Bearish Girl: you have often made the claim here that Propositions 58 and 193 are huge giveaways to an undeserving group of Californians–those who take over the property of their parents and keep the same tax assessment. Please tell us exactly how big a tax break this is. How much money is involved? How many people?
First, I fully agree that it is an unearned and unwarranted giveaway. Why should the heir of a property owner, probably already above average in wealth and income, get this subsidy? Heirs of parents who are renters or are property-poor get nothing. From a wealth or income redistribution standpoint, the results are perverse. It’s like the government saying “Oh, you are going to inherit property? Here’s some more money, courtesy of all other California taxpayers.” Insane.
It was foolishly passed by the taxpayers (not, as you say, by the legislature) because it was a feel-good policy. The costs and benefits were not fully understood. As we economists often complain, policies that benefit a politically organized select few and harm a large, diffuse, and unorganized majority get approved.
But I suggest the dollar amounts involved are not huge. The reason is because property turns over an average of every seven years, which cuts in half the number of eligible heirs drastically since 1975–the base year of assessments for Prop 13. Furthermore, what percentage of sales involve an heir taking over a property? 2%? 1%? Please do not use personal anecdotes from your neighborhood. Bring data.
Back to that seven-year turnover rate, which may be off–I remember it from a few years ago. The 41 years since 1975 involve nearly 6 such turnovers. So whatever the number is of heirs who got the benefit must be cut in half every 7 years.
And what about the 2% increase Prop 13 allows every year? A cumulative 2% increase per year means a doubling every 35 years. So those original heirs did see a doubling of their tax bills. Oh, and there is the addition of taxpayer-passed bonds which makes the effective tax not 1% but about 1.25%. And there is the years when CA property values went down in the Great Recession, while those heirs still saw theirs going up 2% per year. But the main flaw in attributing a big welfare transfer to Props 58 and 193 is the rarity of its use when a property sells. Heirs seldom can or want to take over their parents property.
The actual dollars lost due to Propositions 58 and 193 would make an interesting research project, or Master’s Degree thesis. But I suggest it is a small and diminishing problem, and BG’s statement …”will eventually bankrupt our state.” is wildly exaggerated.

[EconProf]

A lot more people ought to be in trouble besides the former superintendent. Who approved those checks? Who signed them? Why didn’t annual audits reveal the misbehavior. The blame goes beyond one individual, and I’m surprised the reporter did not get into those others who were complicit.

[EconProf]

Phaster, you are largely correct in your analysis and I commend you for so thoroughly documenting your opinions.
The root of the problem, of course, is the fact that public sector unions have been able to control politicians with their contributions and lobbying while the hapless taxpayer has no one seriously representing them at the bargaining table. The unions are enhancing their members’ long-run economic interests, the bill for which will come due long after the politicians move on.

[EconProf]

The “high school straight to college” track assumes that teenagers can pick a major intelligently as freshmen or sophomores. This is lunacy. Better to take a year off to work, read, travel, maybe take a few courses. In other words, become an adult to discover where one’s interests are. My best students were always older and more worldly, and they were in college to learn, not go lockstep from high school to college.

[EconProf]

CA sends lots of fresh water out to the Pacific in order to save the endangered four-inch long Delta Smelt. That water could go to people if we chose to let the Delta Smelt die a natural death and disappear (like many other species do regularly).

[EconProf]

Yes, and that’s just fine.
The good thing is that this investment in wells will not be wasted–they will be available to keep producing once prices recover–to the benefit of us consumers.
I don’t think it is bad if big companies buy up the closed wells and produce in the future.
And about that “pennies on the dollar” possibility: the assets of bankrupt producers will sell for whatever supply and demand call for. Some may sell to other small entrepreneurs, some will be kept by those with staying power, some will be bought up by bigger companies. The prices of the wells will depend upon the collective estimates of future oil prices.

[EconProf]

[quote=harvey][quote=EconProf]Thank you fracking (plus a few other lucky developments).[/quote]

Are you claiming that an increase in fracking in the US is the dominant reason for the global decline in oil prices?[/quote]
As Svelte points out, our oil production has increased because of fracking by more than the total increase by all OPEC nations.
Another result of our fracking revolution has been the attempt by the Saudi’s to kill our fracking by going all out on their production in order to keep world oil prices down. Their thinking is that, since fracking wells start to become uneconomic when prices fall too much, they would drive American fracking operations out of business. In fact, many of our wells that need a $50 or more price of oil to break even have already shut down. Some that have a breakeven point at $40 or $30 are still open. There is a one-time expense to either shut down or reopen such a well, so some are still producing at a small loss in hopes prices have bottomed out and will keep recovering, as they have lately.
BTW, it is nice that we have lots of wells shut down that could reopen if prices climb above $50. That will put somewhat of a damper on price hikes in the future.
Obviously, other factors are also keeping oil prices down, such as weak demand from the worldwide growth slowdown.

[Author]

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