Sunday, April 26, 2015
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS


Study of state’s woes ignores profit motive

elias column sig

By
From page A8 | November 20, 2012 |

No academic or pseudo-academic study has had more impact on California public affairs this fall than a 32-page tome about what’s wrong with this state, coming from the New York-based Manhattan Institute and bearing the ominous title “The Great California Exodus: A Closer Look.”

Trouble is, this study doesn’t look quite closely enough to get at the real roots of the trend of the past 20 years, in which more Californians have departed to other states than have arrived here from elsewhere in America.

Of course, California has not actually lost population from this reversal of the pattern of the previous century: The U.S. Census showed state population was up 3 million in the 10 years between 2000 and 2010, with most of the increase from a combination of foreign immigration and live births. This, despite an outflow to other states of about 3.4 million people.

Few reported this, but even though California didn’t gain a seat in Congress this decade, its growth was still the largest in the nation. Growth seemed small only because the starting population was so high.

Yet, there remains the reality that when it comes to strictly domestic migration, California lost ground over the past 20 years – although you’d never guess it while sitting in stalled traffic on the Interstate 80 in Solano County or the Bay Bridge between San Francisco and Oakland. California also lost income, according to the Manhattan Institute report, principally authored by Thomas Gray, a Cambria-based freelance writer who was editorial page editor of the Los Angeles Daily News from 1984 to 1995.

Californians who moved to Texas had $4.07 billion in income between 2000 and 2010; those moving to Nevada took $5.67 billion of income with them, and those going to Arizona $4.96 billion, to name the three leading states in terms of money going to former California residents. Gray and co-author Robert Scardamalia used Internal Revenue Service summaries to reach those figures.

They attribute the outflow from California primarily to three factors: jobs, taxes and density. Yes, California’s big urban areas, the study says, are the densest in America, improbably topping even New York.

No doubt individual reasons for leaving California are complex, but even Gray concedes the Manhattan Institute’s list of factors is incomplete, at best. For there is no mention of the profit motive.

Rather, the study cites – and this is predictable considering that despite its neutral name, the institute is a libertarian-leaning outfit whose board of directors is peopled almost exclusively with representatives of big business – jobs and taxes as the two prime reasons for people to leave California. As the institute knew it would, that conclusion has already increased the push for lessening regulations on business and industry while also discouraging any possible tax increases.

If you’re trying to get regulations reduced or eliminated and you don’t want more taxes, why talk about the profit motive, or what Gray in an interview called the “cash-out factor?” That’s the incentive many Californians have to sell high-priced real estate, especially in densely populated coastal counties, buy a far larger place in Arizona, Texas, Nevada, Idaho or Oregon (the leading recipients of California emigrants), and pocket hundreds of thousands of dollars in left-over profits.

“If you’re along the coast, the difference between California real estate prices and those other states is very high,” Gray conceded.

Gray also concedes that, “If people are retiring,” the profit motive “can be very important.” But he says he didn’t include it in his study because, “No one can quantify this.” He also didn’t calculate how much of the income going elsewhere was in the form of Social Security payments and pensions – usually classed as unearned income.

Here’s an anecdote: A couple from Culver City (true story) retired last spring with hefty pensions and immediately moved to Las Vegas. They sold their longtime home for more than $800,000 and bought a larger, newer place for $280,000. These people had complained for years about California traffic, but was that or the more than half-a-million in profits they pocketed the real reason for their departure?

Similar stories have been repeated innumerable times, enough so it’s probably no longer an anecdote, but an indisputably significant factor in departures from California.

What’s more, someone else bought that Culver City house. Like many, that buyer was new to the state. But in measuring the outflow of income from California, Gray also didn’t attempt to balance matters by figuring the income of new immigrants. “That can confuse the issue a lot,” he said. No, it might actually clarify things.

The real confusion comes from not accounting for all the factors at work. When a study leaves out the profit motive, which even that study’s prime author concedes is important, and also ignores money brought to the state by immigrants, that study cannot possibly be considered complete, nor its conclusions valid.

Which means that politicians or pundits who cite the Manhattan Institute study to push for less regulations on business or to discourage any new taxes are basing their suggestions on something very incomplete and highly questionable.

Thomas Elias is a California author. Reach him at [email protected]

LEAVE A COMMENT

Discussion | 1 comment

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

  • Rich GiddensNovember 20, 2012 - 10:21 am

    California recently achieved a new milestone as it is now the leader of all fifty states in poverty. In a recent finding by the federal Census Bureau, California has the most people living in poverty with 23.5% of the population living in poverty, stealing the last-place spot for the most impoverished state from Mississippi. The new measure of poverty, called the “Supplemental Poverty Measure”, incorporates a wide variety of factors such as the peoples’ ability to buy basic services and goods, welfare payments and the costs of food, gasoline and other essentials.

    Reply | Report abusive comment
.

Solano News

Children enjoy day of fishing at Fairfield pond

By Susan Hiland | From Page: A1 | Gallery

 
Solano cities celebrate Earth Day

By Susan Hiland | From Page: A1 | Gallery

 
Hard-fought battle ends in victory

By Amy Maginnis-Honey | From Page: C1 | Gallery

 
Expo shows Kroc Center fun for whole Framily

By Bill Hicks | From Page: A3 | Gallery

 
Suisun police execute tobacco sting

By Bill Hicks | From Page: A4, 2 Comments

CHP offers free class for senior drivers

By Kevin W. Green | From Page: A4

 
Edibles in your landscape

By Daily Republic | From Page: C4

 
Covered California offers Solano enrollment events

By Kevin W. Green | From Page: A5

Patrons raise a glass to toast a good cause

By Bill Hicks | From Page: A5 | Gallery

 
Walk MS hits stride along Suisun waterfront

By Susan Hiland | From Page: A5, 1 Comment | Gallery

Weather for Sunday, April 26, 2015

By Daily Republic staff | From Page: B6

 
Pay close attention to investment costs

By Mark Sievers | From Page: B7, 1 Comment

Be wary of next ‘big’ thing

By Bud Stevenson | From Page: B7, 1 Comment

 
.

US / World

With legalization, lawyers turn to business of pot

By The Associated Press | From Page: A1, 3 Comments

 
Spring storm delivers late rain, snow to Northern California

By The Associated Press | From Page: A5

Remains of dismembered newborn found in South Los Angeles

By The Associated Press | From Page: A5

 
Starbucks stores reopen Saturday after computer glitch

By The Associated Press | From Page: A6

 
Nearly 17 million watch Jenner interview

By The Associated Press | From Page: A6, 1 Comment

Italian navy rescues 274 from migrant ship off Libyan coast

By The Associated Press | From Page: A7

 
Aden hit by coalition airstrikes amid fierce street battles

By The Associated Press | From Page: A7

Mother in custody dispute freed after 8 years behind bars

By The Associated Press | From Page: A7

 
Italy marks 70th anniversary of anti-Nazi uprising

By The Associated Press | From Page: A7

 
European authorities stop illegal horse meat network

By The Associated Press | From Page: A7

Army shutting down wounded warrior transition care units

By The Associated Press | From Page: B10

 
Warrior pose: Yoga catching on as therapy for veterans’ PTSD

By The Washington Post | From Page: B10

Toll climbs after powerful quake hits Nepal: Things to Know

By The Associated Press | From Page: A11

 
.

Opinion

Obama sides with enemy

By Letter to the Editor | From Page: A8, 28 Comments

 
Who’s asleep at the switch?

By Letter to the Editor | From Page: A8, 1 Comment

How can we give them more?

By Brian Thiemer | From Page: A8, 8 Comments

 
Sound off for April 26, 2015

By Daily Republic | From Page: A8

 
Corruption tarnishes values of our ancestors

By Letter to the Editor | From Page: A8, 4 Comments

 
.

Living

Community Calendar: April 26, 2015

By Susan Hiland | From Page: A2

 
Today in history: Sunday, April 26

By The Associated Press | From Page: A2

Brides show short wedding gowns more of the love

By The Associated Press | From Page: C2

 
Vatican goes on offensive to defend US-Spanish saint

By The Associated Press | From Page: C3

 
You get what you need with Jesus

By Noel Reese | From Page: C3, 4 Comments

How can I trust my husband after he texted a younger woman behind my back?

By Kathy Mitchell and Marcy Sugar | From Page: C4

 
Horoscope: April 26, 2015

By Holiday Mathis | From Page: C4

 
Old standby body-weight training still has moves

By The Washington Post | From Page: C7

 
Milan spiffs up for Expo 2015

By The Associated Press | From Page: C7

.

Entertainment

PUBLISHERS WEEKLY BEST-SELLERS

By The Associated Press | From Page: A10

 
More copies of Laura Ingalls Wilder memoir being printed

By The Associated Press | From Page: A10

Amber Tamblyn writes book of poetry about dead actresses

By The Associated Press | From Page: A10 | Gallery

 
TVGrid

By Daily Republic Syndicated Content | From Page: B11

.

Sports

Giants beat Rockies 5-4 in 11 innings

By The Associated Press | From Page: B1

 
Warriors complete sweep with 109-98 win over Pelicans

By The Associated Press | From Page: B1 | Gallery

Athletics drop 3rd straight game, 9-3 to Astros

By The Associated Press | From Page: B1 | Gallery

 
Rain postpones NASCAR race at Richmond until Sunday

By The Associated Press | From Page: B1 | Gallery

 
Compton, Day top leaderboard in rain-plagued Zurich Classic

By The Associated Press | From Page: B2

Suzuki breaks Oh’s record for runs by a Japanese player

By The Associated Press | From Page: B2

 
Bulldogs get 10-0 baseball win over Panthers

By Daily Republic staff | From Page: B2

Canadian teen Henderson has 1-shot lead in LPGA Tour event

By The Associated Press | From Page: B2 | Gallery

 
Klitschko outpoints Jennings to defend heavyweight titles

By The Associated Press | From Page: B2

Michael Schumacher’s son makes strong Formula 4 debut

By The Associated Press | From Page: B2

 
US routs Canada 7-2 in semifinal at under-18 hockey worlds

By The Associated Press | From Page: B2

Watford back in Premier League after 8-year absence

By The Associated Press | From Page: B2

 
Several Kentucky Derby hopefuls get workouts in before rain

By The Associated Press | From Page: B2

Levy falters at Volvo China Open; 4 tied for lead

By The Associated Press | From Page: B2

 
Former Expos executive Jim Fanning dies at 87

By The Associated Press | From Page: B2

Sandy Lyle, Ian Woosnam team to lead Legends of Golf

By The Associated Press | From Page: B2

 
7 players from Royals, White Sox punished by MLB for brawl

By The Associated Press | From Page: B3 | Gallery

A’s place Ben Zobrist on disabled list with knee injury

By The Associated Press | From Page: B3

 
Grizzlies hold off a late Trail Blazers rally to go up 3-0

By The Associated Press | From Page: B4

Hometown report: Bicycle racing, youth track

By Daily Republic staff | From Page: B4

 
Bowling report for April 26, 2015

By Daily Republic staff | From Page: B4

Bayless’ layup at buzzer gives Bucks 92-90 win over Bulls

By The Associated Press | From Page: B4 | Gallery

 
Nets beat Hawks 91-83, pull within 2-1 in series

By The Associated Press | From Page: B4 | Gallery

Sports on TV for Sunday, April 26, 2015

By Paul Farmer | From Page: B5

 
This date in sports history for April 26

By The Associated Press | From Page: B5

.

Business

Veggies take center plate as healthy fast food chains expand

By The Associated Press | From Page: B7, 3 Comments | Gallery

 
What’s in a hotel name? Guests try to decipher the mystery

By The Associated Press | From Page: B7 | Gallery

Is ice cream safe? Federal health officials say yes

By The Associated Press | From Page: B8

 
 
Don’t panic, college seniors: Jobs for grads likely to grow

By The Associated Press | From Page: B9 | Gallery

.

Obituaries

Nicole Herdia Spann

By Susan Hiland | From Page: A4

 
Reginald Morris Davis

By Susan Hiland | From Page: A4

.

Comics