California´s Problems

It is amazing how leftist Californians keep finding excuses for their economies woes.  First the standard meme was that Cal. is in the trouble it is in because the state has not taxed and spent enough.  If only they had taxed and spent more then it would be a paradise.  Now they are desperately clinging to the fantasy that their problems would all go away if they only had a bank.  Presumably they would then be able to give themselves an unlimited line of credit and endless debt would save the day with endless stimulus spending.  The reality is that Cal. got into the mess partially because of too much debt in the housing bubble and bust, and government is a poor allocator of finite financial resources.  Government spending should be reserved for areas where it can actually provide necessary services, not as a general stimulus paid for by endless and unsustainable debt.  Still for Cal. leftists the fantasy that more credit will save the say is infinitely more attractive than having to face reality, and their sacred cows.

The fact is that Cal. has plunged in 30 years time from the dream state to the disaster state is due a mentality in Cal. government that business is to be restricted and controlled and taxed instead of cultivated and attracted.  This has caused many businesses to move elsewhere taking their jobs and tax revenue with them.  Cal. is also suffering from decades of mass illegal immigration from Latin America which has significantly lowered its skilled workforce, its educational levels and generally increased poverty and dependance on the welfare state.  Since the 90s white Californians have been moving out while Latin immigrants have been moving in.  A state finds it difficult to maintain a prosperous middle class, and professional class when it is filling up with unskilled day laborers.   Finally Cal. is still suffering from a effects of a massive housing bubble and bust which has significantly disturbed the economy.

Instead of having to face the effects of over-regulation, excess spending and taxation, mass immigration from poor countries, and the excesses of the debt fueled housing bubble, it is easier to fantasize that all Cal. needs is its own bank with an endless line of cheap credit.  Cal. needs more credit and debt, like an alcoholic needs a distillery.

They have latched onto the fact that South Dakota has a good economy and a state bank, and tried to make a connection.  This is the classic causation or correlation confusion.  We too often tend to assume that when two things happen simultaneously that they are automatically causal, instead of just coincidental.  Maybe South Dakota has a good economy because of its state bank, or maybe because it is one of the whitest states with a decidedly non-Californian and non diverse low immigrant population, or maybe because it produces raw materials which are in demand, or maybe because they did not have a damaging housing bubble, or maybe because they are right wing, pro business and oppose abortion.   SD success could be because of all of these, none of these, or some of these reasons.  To determine which are causal and which are coincidental we actually have to analyze them, not just assume that because they both occur at the same time that one causes the other.

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