AMERICAN CONSERVATISM IN 2008 AND BEYOND

@plainoldme,

I have waterboy on "scroll over."

@cicerone imposter,

Generally, I just vote his childish prattling down. A good place marker.

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@cicerone imposter,

You should check out the concentrations of the IT industry in Austin Texas and the Dulles corridor in Northern Virginia - both are nearly the size of that on the SF peninsula, and both are growing faster than the one here.

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@georgeob1,

I know about Austin, because our son lives there, and I visit him every couple of years. I have the opportunity to see a lot of Austin and its environs, because my son drives, and he knows most of the good restaurants. I know Dell is one of their biggest employers, while Apple, AMD, and many other companies have huge campuses there that employees thousands. They're a natural, because they collaborate with the University of Texas in Austin. I didn't know about Dulles, because I have never traveled to North Virginia.

BTW, Dell is one of the most successful companies in the world, because they carry very little inventory, and their ability to increase cash volume makes them a well managed company.

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@plainoldme,

We are fully aware of your irrational fear of all things true.

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@georgeob1,

georgeob1 wrote:

You should check out the concentrations of the IT industry in Austin Texas and the Dulles corridor in Northern Virginia - both are nearly the size of that on the SF peninsula, and both are growing faster than the one here.

I'm sure that this has nothing to do with the fact that the state of Texas basically pays IT companies to move there, by giving them large and long-lasting tax exemptions for their businesses. Nothing at all.

Not to mention the fact that Texas is hotter than hell. You pay a price to live there, not in terms of cash, but in quality of life.

Cycloptichorn

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@Cycloptichorn,

I read an article on this subject a few weeks ago in Forbes. What caught my eye was the rather humorous title:

California Suggests Suicide; Texas Asks: Can I Lend You a Knife?

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@Cycloptichorn,

Many states give tax breaks to new businesses locating there. The presumption is the new employment will more than offset, in terms of overall economic health and total tax revenues from all sources, for the temporary corporate or property tax breaks offered. Some of these deals are excessive; some not. However the underlying fact that many states encourage new economic activity, while California largely discourages it, should give you some concern.

I spent a few minutes searching the web for comparative state data for California, Texas and Virginia. In terms of real GDP, total state & local government spending (in 2009) was 17% in TX & VA and 23% in CA. Public Debt was 21% of GDP in CA & TX, but only 12% in VA. Forecast spending in TX is indicated to rise by 2014 to levels approaching those of CA, though I don't know the cause or how relatively accurate these projections may be.

The bottom line appears to be that government in California consumes 6% more of the state GDP in financing its operations than do the governments of Texas & Virginia. That's a lot ! (Certainly more than enough to cause a company to choose to locate elsewhere.) Both California and Texas appear to have dangerous levels of public debt.

It is hot as hell in Texas, and I wouldn't choose to live there, though I spent a year in Kingsville in flight training, a long time ago. My company has an office in Dallas. I notice that in mid summer most folks don't go outside much - except from A/C ed offices, restaurants & malls to & from their A/Ced cars. I like Virginia a lot.

1 Reply

@georgeob1,

Quote:

Some of these deals are excessive; some not.

Well, that's a hell of a way to minimize a real problem. Austin in particular has struggled with this.

These deals are rarely temporary. What ends up happening is that the same people who initially defended the tax breaks to BRING the businesses there, turn around and defend extending them - to KEEP the businesses there. What ends up happening to a city is that greater and greater percentages of the economic activity in the place is not subject to taxation, or to greatly reduced taxation. This is very harmful over time to the city's ability to fund its' basic services...

Quote:

However the underlying fact that many states encourage new economic activity, while California largely discourages it, should give you some concern.

Nah, not concerned at all. CA has no shortage of businesses or entrepreneurs. You should realize that it's a sign of worth, that CA doesn't have to go to extreme lengths to lure businesses to start there; and a sign of a problem when other places have to bribe businesses to come. Like you said, you choose to live in CA even though our tax and social policy regime isn't to your liking; plenty of other people do as well.

I'll note that the trajectory TX is heading in is as bad as CA, with much higher poverty and lack of education to back it up. And it wasn't that long ago that you guys were crowing about Ireland, right? I think that many of these 'Conservative paradises' are just houses of cards waiting to collapse.

Cycloptichorn

1 Reply

@Irishk,

Irishk wrote:

I read an article on this subject a few weeks ago in Forbes. What caught my eye was the rather humorous title:

California Suggests Suicide; Texas Asks: Can I Lend You a Knife?

Funny title, but a highly misleading article, full of half-truths.

Cycloptichorn

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@Cycloptichorn,

You didn't note the 6% of GDP difference in state government spending !

I simply don't know the details - good or bad - about business tax breaks in Texas - so I didn't comment on them. The Texas GDP has grown considerably faster since 2004 than has that of California.

Ireland, Iceland and Latvia all got into trouble by (perhaps foolishly) trying to save overleveraged local banks after real property bubbles collapsed. That doesn't work unless yours is the world's anchor currency (and even that doesn't work for long). All three are taking their fiscal medicine in quick doses which indicates fairly swift recoveries ahead - Latvia's is already underway. My property in Ireland was underwater for a while, but not far, as I bought it a decade ago. Things are picking up, but it was bad for a while (and still is in some areas). However, prospects for the future look good - Ireland is still a relatively very attractive target for investment compared to the rather sclerotic and over regulated economies of its European neighbors. The countryside is still beautiful and the people unique.

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@georgeob1,

I need a return visit to Ireland, because when I toured there, I came down with the shingles from the beginning of the tour in London, and I missed seeing Dublin. Can I borrow your place when I visit? he he he...

1 Reply

@cicerone imposter,

No. But if I'm there you can visit.

1 Reply

@georgeob1,

georgeob1 wrote:

No. But if I'm there you can visit.

And he will inventory the silverware right before you leave.

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@realjohnboy,

I know Cicerone. In person he is a very amiable and interesting guy - not at all the cranky, irascable critic he often appears on these threads. He will be a welcome guest. (Of course, I am in person the same easy-going, tolerant friendly guy I appear to be here.)

1 Reply

@georgeob1,

georgeob1 wrote:

You didn't note the 6% of GDP difference in state government spending !

Yeah, I did. But I'm a fan of a more expansive social state, so this is a feature for me, not a bug. I don't judge a state by how little they do for the people who live in it.

Quote:

I simply don't know the details - good or bad - about business tax breaks in Texas - so I didn't comment on them. The Texas GDP has grown considerably faster since 2004 than has that of California.

Well, this is in large part b/c Texas was almost untouched by the sectors that crashed in 2008, and CA wasn't. Not only that, but the collapse of the Subprime market hit CA especially hard as that whole industry was located here. Also, real estate in TX never skyrocketed - nobody wanted to live in the damn heat, no matter how nice a McMansion you built - so there was no real corresponding drop in disposable income for those who lived there.

None of that has anything to do with the relationship between State and Business in CA or TX. Correlation, not causation.

Quote:

Ireland, Iceland and Latvia all got into trouble by (perhaps foolishly) trying to save overleveraged local banks after real property bubbles collapsed.

Ah, hahahaha. Only if by 'local' you mean 'located in the EU.'

Quote:

My property in Ireland was underwater for a while, but not far, as I bought it a decade ago. Things are picking up, but it was bad for a while (and still is in some areas). However, prospects for the future look good - Ireland is still a relatively very attractive target for investment compared to the rather sclerotic and over regulated economies of its European neighbors. The countryside is still beautiful and the people unique.

I'm glad your property is doing ok, but I wouldn't brush off the social unrest caused by the recent events so quickly. Ireland is second only to the US in terms of inequality of income now, unemployment is around 17% and as far as I know their economy is still contracting at a rapid pace.

I'm not sure why you consider it to be a 'good target for investment.' In what way? Those 'over-regulated' economies you so quickly deride experienced nowhere near the problems that the Celtic Tiger did.

Cycloptichorn

1 Reply

@Cycloptichorn,

Cycloptichorn wrote:

I'm glad your property is doing ok, but I wouldn't brush off the social unrest caused by the recent events so quickly. Ireland is second only to the US in terms of inequality of income now, unemployment is around 17% and as far as I know their economy is still contracting at a rapid pace.

I'm not sure why you consider it to be a 'good target for investment.' In what way? Those 'over-regulated' economies you so quickly deride experienced nowhere near the problems that the Celtic Tiger did.

Cycloptichorn

The problems in Ireland and the other countries I noted were unlike those that confront Greece, Portugual, Spain, Italy and most of the EU countries except Germany- i.e. unsustainable government outlays for social welfare spending accompanyied by a contracting workforce and population decline. Instead they resulted from overleveraged (and profligate) LOCAL (to the country) banks that the governments, perhaps unwisely, chose to bail out and guarantee. The former problems in the EU are structural and of long lasting effect, while those of Ireland and the others, while severe and critical now, do not reflect a continuing element of their society & government. They can expect resumed economic growth, because they have severely cut back on spending, and when the deficit is paid they will be OK. For the others, the chronic problems will remain.

By the way, I believe Switzerland leads the world in "income inequality". Are you forecasting social unrest there as well?

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@georgeob1,

I believe you are correct in your opinion/assessment about Ireland vs the other Euro countries. However, it's still incumbent upon the rich Euro countries to save Ireland's economy, because that will impact the value of their currency if they don't. It results in the same problem on the currency value.

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@georgeob1,

Quote:

By the way, I believe Switzerland leads the world in "income inequality". Are you forecasting social unrest there as well?

You're wrong about that. According to the UN, that would be the US of A.

Cycloptichorn

1 Reply

@Cycloptichorn,

I think we drag the bottom rung of developed countries on that score.

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AMERICAN CONSERVATISM IN 2008 AND BEYOND

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