In early May 2018, California surpassed the United Kingdom as the world’s fifth largest economy. Between the technology sector in Silicon Valley and the entertainment industry in Hollywood, you might assume that life is pretty good in the Golden State. However, that is not the case for most of the residents who live there.
California has a lot of wealth, but it is concentrated among just 61,000 (0.4%) of the state’s total 16 million households. This small group of high income earners, mostly located in the Bay Area, account for 20 percent of the state’s total income and pay about 35 percent of its income tax. So what about everyone else?
It is a fact that California is the poverty capital of the United States, with one in five residents being poor, and they rank last out of all 50 states when it comes to quality of life. There are a lot of variables to take into consideration, but arguably some the most significant are the welfare system, taxation, and regulations.
The Welfare State
While California has about 12 percent of the total U.S. population, they have one in three of the nation’s welfare recipients. About $958 billion has been spent at the state and local levels from 1992 through 2015 on public welfare programs. Immigrant families receive about 55 percent of these benefits, in comparison to around 30 percent of natives. So it is no wonder immigrants overwhelmingly vote Democrat.
Dennis Prager makes the case that a large scale influx of immigration from south of the border pretty much guarantees a long-term shift towards the political left:
“An estimated 70 to 80 percent of Latin American immigrants will vote Democratic. So with enough new voters from Latin America alone, the Democrats would essentially be assured the presidency and Congress for decades.”
Given California’s “sanctuary state” status, their political shift to the far left makes sense. Illegal immigrants are, not only allowed to be issued a driver’s license, but can participate in elections. As Judge Andrew Napolitano has pointed out, it is nearly impossible to monitor whether or not they are voting in federal elections without the cooperation of the state itself. This affects all American citizens.
As of 2014, California had over 883,000 government workers at the state and local levels. Why would we expect them to go against their own interests by making cuts to the very public programs that necessitate their employment in the first place? That would force many of them to find real jobs in the private sector. It is easier to just import a reliable voter base from abroad and smear people as “racists” for objecting to it.
When you tax something, you get less of it. The same principle applies with income. A policy like minimum wage is essentially a tax on low wage workers, resulting in less of them participating in the labor market. Governor Jerry Brown, after literally admitting that the policy does not make economic sense, signed the $15 minimum wage bill to go into effect by 2022.
California also has the highest state income tax rate in the entire country. Not to mention their plethora of other taxes. So it should be no surprise that the state is seeing an exodus of millionaires, especially following the substantial increases in tax rates with the passage of Proposition 30 in 2012.
Something similar happened in Maryland when one-third of the state’s millionaires disappeared from tax rolls in the matter of one year. Ironically, instead of gaining an extra $106 million in revenue like the politicians claimed would happen, they actually collected about $100 million less than the previous year. Leaving the burden on the shoulders of the middle class.
To say ‘the regulatory system in the Golden State is excessive’ would be a bit of an understatement. One of the most significant examples of this is how their housing sector has been affected by zoning laws, various fees, and other regulations. 16 out of the 25 least affordable housing markets in America are all located in California. That is more than half of them.
This is exactly why cities there account for around 25 percent of the U.S. homeless population, with a total of more than 134,000 people living on the streets. 55,000 of them are located in Los Angeles alone. Massive amounts of people living outside bring with them feces and public urination, as well as trash and used syringes, scattered all throughout the streets.
It is no wonder that two million people have left the state since 2010, and one-third of the current residents are considering leaving. Which also affects the rest of us.
California has been run by progressive Democrats for decades. The state is experiencing a shift further to the left with the influx of immigrants from Latin America and the ideas about government that they are bringing with them. This is yet another example of why central planning does not work, and it likely will get worse before any significant improvements are made.