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Nor is there any evidence whatsoever that deficit spending harms overall growth. In fact, deficit spending is utterly indispensable for optimizing growth.

big_chungus 7y ago
The principle of deficit spending is to spend when in a recession and repay when in an expansion. California _always_ overspends, no matter how much comes in. This is not financially sustainable, and when you consider that much of that is the pension system and retirement savings, quite un-ethical. I've seen plenty of people rag on private pensions for investing the money back into the company to prop it up, and justly so; the same people tend to over-look the same behavior when it is a public entity in question. California is having to tax businesses further to pay for the pensions of current retirees; paying out via those currently paying in is referred to as a Ponzi Scheme when conducted by a private entity. More importantly, most of California's spending is not to drive growth, but to keep its head above water. Investment is one thing, but never borrow to pay operating expenses if you can help it.
- nostrademons 7y ago
  It's more that a lot of California's spending is redistribution "because it can". It's home to several major national (agriculture, defense, finance) and global (tech, entertainment) industries. This funnels a lot of wealth from elsewhere into the world into California, making the people involved in these industries pretty rich. The nearly-socialist politics is a way of maintaining social stability in the face of extreme income inequality introduced by these global industries. The comparison with Venezuela isn't all that off the mark, structurally. Venezuela also spent dramatically on social programs and redistribution because it could, with an extremely lucrative source of foreign cash. When the gravy train dried up, the whole system collapsed, which is probably what'll happen to California when the tech & entertainment industries dry up (and did happen in 2001 in the wake of the dot-com bust). California probably has several decades before there's a reckoning though: networks of human capital like you have in Silicon Valley and Hollywood are difficult to move or replicate elsewhere.

big_chungus 7y ago

The principle of deficit spending is to spend when in a recession and repay when in an expansion. California _always_ overspends, no matter how much comes in. This is not financially sustainable, and when you consider that much of that is the pension system and retirement savings, quite un-ethical. I've seen plenty of people rag on private pensions for investing the money back into the company to prop it up, and justly so; the same people tend to over-look the same behavior when it is a public entity in question. California is having to tax businesses further to pay for the pensions of current retirees; paying out via those currently paying in is referred to as a Ponzi Scheme when conducted by a private entity. More importantly, most of California's spending is not to drive growth, but to keep its head above water. Investment is one thing, but never borrow to pay operating expenses if you can help it.

nostrademons 7y ago
It's more that a lot of California's spending is redistribution "because it can". It's home to several major national (agriculture, defense, finance) and global (tech, entertainment) industries. This funnels a lot of wealth from elsewhere into the world into California, making the people involved in these industries pretty rich. The nearly-socialist politics is a way of maintaining social stability in the face of extreme income inequality introduced by these global industries. The comparison with Venezuela isn't all that off the mark, structurally. Venezuela also spent dramatically on social programs and redistribution because it could, with an extremely lucrative source of foreign cash. When the gravy train dried up, the whole system collapsed, which is probably what'll happen to California when the tech & entertainment industries dry up (and did happen in 2001 in the wake of the dot-com bust). California probably has several decades before there's a reckoning though: networks of human capital like you have in Silicon Valley and Hollywood are difficult to move or replicate elsewhere.