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Comment by gibsonf1 | Hacker News Reader

Financially, the primary problem of California is that the state spends more than it has, no matter how much comes in. Raising taxes will just increase spending even more. There is no concern whatsoever that spending more than you have consistently causes a problem at some point.

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This seems to be a universal property of governments. Or of budgets, really. Within major corporations departments tend to spend up to the limit of their budget (and then some, with debt) regardless of whether it's efficient, and then continue to do until the parent company goes bankrupt.

Eliminating Prop 13 would at least fix some of the misincentives in the housing market so that senior citizens living alone could afford to downsize to a 1BR condo and free up the empty 4BR house for a family with 3 kids.

With the current limits on construction in CA eliminating Prop 13 would mean the fixed income senior citizens would have to sell their house to pay property taxes and then move out of state because they can't afford the rent on a 1BR.

Yep.

I think my Mom is typical: because of Prop 13, she can't move. Her property taxes on a new home would be 20X as much.

Due to this, she's kinda 'stuck.' She lives in a house that's larger than what she needs, but she can't justify moving. I think she'd love to "cash out" some of that equity, but she can't.

This is how we got reverse mortgages (which are horrible.)

If your mom is over age 55, she can't use that excuse due to Propositions 60 and 90.

Not all companies -- we're seeing many companies that have been able to stockpile massive amounts of cash, e.g. Apple.

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

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.

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.

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