Myths/liberal policies ruined California

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Myth: Liberal policies ruined California's economy.
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The Myth

California's economic problems during the 2008 worldwide recession are frequently blamed on liberal policies and Democratic politicians:

  • Governor Jerry Brown is not business-friendly.
  • The (Democratic) state government is corrupt.
  • Taxes are too high.
  • Regulations are stifling.
  • The state pays too much for social programs it can't afford.
    • e.g. education
  • Wages are artificially high.


  • "I believe you are mistaken about Cali [being the world's 8th largest economy]. Cali is in severe financial trouble. In fact they are releasing violent offenders from prison to save money. Not sure where you are getting your facts from but everything i read states that Cali was doing really well in the late 90's but now they are really struggling." [1]
  • "You people defending California crack me up. For many years California had the largest economy in the country. It was the 9th largest economy in the world. Now? North Dakota, Colorado and Texas all have larger economies. It's not a good trend and many expect it will get worse. Does anyone in that state understand economics? Unions aren't an issue since the makes up less than 5 percent of the workforce. Why is the current trend for businesses to leave California or not go there in the first place? Your governor say the least...not business friendly. Your state government is very corrupt, you have high taxes and stifling regulations. You pay too much for social programs you can't afford. Wages are artificially high. And the best anyone can do is act like spoiled children and say "Well let them go I don't want them here anyway." Year to year the California economy gets worse. It's a trend that is not going to change any time soon.Texas is happy to take all the businesses that leave California and has really benefited from it." [2]


California had an economic crisis along with the rest of the world during the 2008 worldwide recession, and recovered as the US economy in general did. As of 2013 or earlier, it was once again the largest economy in the US[3]; as of mid-2016, its economy was growing faster than that of any country.[4]

The economic problems in California which surfaced during that crisis can largely be traced to right-wing tax cuts for the rich, especially those embedded in Proposition 13. These cuts led to budget shortages, which led to service cuts, which inevitably had negative impacts on the economy.

For some reason, right-wingnuts don't seem to understand that a healthy economy requires a healthy government. California is just one more example of right-wingers cutting taxes and then blaming liberals for spending too much (aka the "Two Santa-Clauses" tactic).


To the extent that California has problems with its economy, right-wing Republican-backed policies have surely been the primary culprits – most notably a state initiative called Proposition 13 which, among other things:

  • creates a perverse incentive to hoard rental and retail property[5], thus driving up housing costs[6], thus creating barriers for young families – thus leading to "youth drain" as young families move out of California and couples decide not to have kids.
  • decimates tax revenue received by the state, leading to (who could have guessed?) budget problems, which in turn lead to economic problems[5] as essential services were cut were cut to make ends meet[7], including:
    • infrastructure
    • education
    • public transportation[5]
    • the prison system
  • has a chilling effect on new home sales, because new home buyers effectively subsidize public services for corporations and the landed gentry[5]


Undefeated by being wrong so far, right-wingers continue to claim that liberal policies will ruin California.





  1. bigphil303, comment on Google+
  2. 2015-05-23 J. Michael Krivyanski's comment on this post
  3. Wikipedia: Economy of California
  4. 2016-06-06 Bloomberg: California Makes America's Economy Great (via) "The high taxes and ubiquitous regulation critics cite when assailing Golden State government are proving no impediment to business and investment. They may even be a benefit, as public policy and people's preferences converge."
  5. 5.0 5.1 5.2 5.3 2010-10-26 How Right-Wing Anti-Tax Crusaders Ruined California "But one major source of blame that’s often overlooked is the role of brutal state budget cuts to public transportation, and behind that, the devastation wrought by Proposition 13."
  6. 2015-05-21 Soaring housing costs forces talent to flee Silicon Valley
  7. 2010-01-26 California’s Folly – Prop. 13 "I thought then, and am firmly convinced now, that the key elements in the proposition—the taxation formula and the two-thirds legislative requirement—would be responsible for causing a fiscal and social disaster. These two requirements have in time helped to lead the state into financial bankruptcy and created a dysfunctional state government. And the social consequences that I predicted then and which are all too apparent now are a race to the bottom in education (from K through our highly esteemed university system); public health; social services; public safety; arts, libraries and culture; and infrastructure development; as well as crippling the ability of local governments to provide basic amenities."