Monday, September 1, 2014
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 tdelias@aol.com.

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

 
Highway 12 project nears completion

By Barry Eberling | From Page: A1, 3 Comments | Gallery

‘Snail mail’ still kinda cool

By Tony Wade | From Page: A2

 
Senior center schedules discussion on senior travel

By Susan Hiland | From Page: A3

Local government schedule meetings

By Susan Hiland | From Page: A3

 
 
Car club raises funds, supplies for SPCA

By Ian Thompson | From Page: A3

 
Democrats plan candidates meet, greet

By Glen Faison | From Page: A3, 1 Comment

 
Stand Up 2 Cancer Viewing party set in Vacaville

By Susan Hiland | From Page: A3

Goodwill opens Outlet Store in Fairfield

By Barry Eberling | From Page: A7, 2 Comments | Gallery

 
Premier post details of new lease

By Barry Eberling | From Page: A7

 
Il Fiorello to host jazz event

By Barry Eberling | From Page: A7, 1 Comment

 
New doctors join NorthBay

By Barry Eberling | From Page: A7

Small earthquakes shake Solano

By Glen Faison | From Page: A9

 
.

Opinion

Is social media enlarging or stifling democracy?

By Cynthia M. Allen | From Page: A8

 
Compromise on Cordelia Road rail crossing costs

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

Justice for all

By Letter to the Editor | From Page: A8, 9 Comments

 
Good job, Susan Winlow

By Letter to the Editor | From Page: A8, 2 Comments

Editorial Cartoon: Sept. 1, 2014

By Daily Republic Syndicated Content | From Page: A8

 
 
Whopper of a tax dodge for Burger King

By Mike Kirchubel | From Page: A8, 26 Comments

.

Living

Community Calendar: Sept. 1, 2014

By Susan Hiland | From Page: A2

 
Today in History: Sept. 1, 2014

By The Associated Press | From Page: A2

Horoscopes: Sept. 1, 2014

By Holiday Mathis | From Page: B5

 
Is my husband right when he says men aren’t made for monogamy?

By Kathy Mitchell and Marcy Sugar | From Page: B5

 
Horoscopes: Sept. 2, 2014

By Holiday Mathis | From Page: B7

.

Entertainment

TVGrid

By Daily Republic Syndicated Content | From Page: A5

 
5 takeaways from a punch-less summer box office

By Jake Coyle | From Page: A11

Joan Rivers’ daughter: I’m keeping fingers crossed

By The Associated Press | From Page: A11

 
TVGrid

By Daily Republic Syndicated Content | From Page: A11

.

Sports

Kahne holds off Kenseth to win Atlanta shootout

By The Associated Press | From Page: B1

 
Wozniacki outlasts Sharapova, in US Open quarters

By The Associated Press | From Page: B1 | Gallery

Falcons looking to be defensive

By Paul Farmer | From Page: B1 | Gallery

 
Source: 49ers OL Boone agrees to new 2-yr deal

By The Associated Press | From Page: B1

 
49er Ray McDonald accused of domestic violence

By The Associated Press | From Page: B1, 1 Comment | Gallery

Sam clears waivers, meets with Fisher

By The Associated Press | From Page: B2

 
FC Kansas City wins NWSL title over Seattle, 2-1

By The Associated Press | From Page: B2

Raiders claim DE Mayowa off waivers

By The Associated Press | From Page: B2

 
Jensen waived after Jaguars awarded TE Shuler

By The Associated Press | From Page: B2

Otto wins Italian Open; Gallacher comes up short

By The Associated Press | From Page: B2

 
Weather for Monday, Sept. 1, 2014

By Daily Republic staff | From Page: B2

Henley takes a 1-shot lead at Deutsche Bank

By The Associated Press | From Page: B2

 
Dunn dealt to A’s, could be his last shot playoffs

By The Associated Press | From Page: B2

Fred Couples wins Champions Tour event

By The Associated Press | From Page: B2

 
A’s frustrated after 8-1 loss caps sweep by Angels

By The Associated Press | From Page: B2 | Gallery

Ernst wins LPGA’s Portland Classic in playoff

By The Associated Press | From Page: B2

 
Giants power past Brewers 15-5 for 3-game sweep

By The Associated Press | From Page: B2 | Gallery

Down at half, US beats Turkey in basketball worlds

By The Associated Press | From Page: B2

 
Source: Chiefs’ Smith agrees to 4-yr extension

By The Associated Press | From Page: B2

Tony Stewart’s return to race track ends early

By The Associated Press | From Page: B2

 
This date in sports history for Monday, Sept. 1, 2014

By The Associated Press | From Page: B3

 
.

Business

.

Obituaries

Laurie Danielson Bailey

By Nancy Green | From Page: A4, 2 Comments

 
Hazel Gertrude Wamsley

By Nancy Green | From Page: A4

Jerry Lee Trammell

By Nancy Green | From Page: A4, 6 Comments

 
.

Comics

B.C. Sept 1

By Daily Republic Syndicated Content | From Page: B4

 
Get Fuzzy Sept 1

By Daily Republic Syndicated Content | From Page: B4

Frank and Ernest Sept 1

By Daily Republic Syndicated Content | From Page: B4

 
Dilbert Sept 1

By Daily Republic Syndicated Content | From Page: B4

Zits Sept 1

By Daily Republic Syndicated Content | From Page: B4

 
Pickles Sept 1

By Daily Republic Syndicated Content | From Page: B4

Wizard of Id Sept 1

By Daily Republic Syndicated Content | From Page: B4

 
Garfield Sept 1

By Daily Republic Syndicated Content | From Page: B4, 1 Comment

Sally Forth Sept 1

By Daily Republic Syndicated Content | From Page: B4

 
For Better or Worse Sept 1

By Daily Republic Syndicated Content | From Page: B4

Baby Blues Sept 1

By Daily Republic Syndicated Content | From Page: B4

 
Peanuts Sept 1

By Daily Republic Syndicated Content | From Page: B4

Blondie Sept 1

By Daily Republic Syndicated Content | From Page: B4

 
Rose is Rose Sept 1

By Daily Republic Syndicated Content | From Page: B4

Baldo Sept 1

By Daily Republic Syndicated Content | From Page: B4

 
Beetle Bailey Sept 1

By Daily Republic Syndicated Content | From Page: B4

Cryptoquote Sept 1

By Daily Republic Syndicated Content | From Page: B5

 
Word Sleuth Sept 1

By Daily Republic Syndicated Content | From Page: B5

Sudoku Sept 1

By Daily Republic Syndicated Content | From Page: B5

 
Crossword Sept 1

By Daily Republic Syndicated Content | From Page: B5

Dilbert Sept 2

By Daily Republic Syndicated Content | From Page: B6

 
Wizard of Id Sept 2

By Daily Republic Syndicated Content | From Page: B6

For Better or Worse Sept 2

By Daily Republic Syndicated Content | From Page: B6

 
Sally Forth Sept 2

By Daily Republic Syndicated Content | From Page: B6

Peanuts Sept 2

By Daily Republic Syndicated Content | From Page: B6

 
Blondie Sept 2

By Daily Republic Syndicated Content | From Page: B6

Rose is Rose Sept 2

By Daily Republic Syndicated Content | From Page: B6

 
Get Fuzzy Sept 2

By Daily Republic Syndicated Content | From Page: B6

B.C. Sept 2

By Daily Republic Syndicated Content | From Page: B6

 
Baldo Sept 2

By Daily Republic Syndicated Content | From Page: B6

Garfield Sept 2

By Daily Republic Syndicated Content | From Page: B6

 
Frank and Ernest Sept 2

By Daily Republic Syndicated Content | From Page: B6

Zits Sept 2

By Daily Republic Syndicated Content | From Page: B6

 
Crossword Sept 2

By Daily Republic Syndicated Content | From Page: B7

Cryptoquote Sept 2

By Daily Republic Syndicated Content | From Page: B7

 
Sudoku Sept 2

By Daily Republic Syndicated Content | From Page: B7

Bridge Sept 2

By Daily Republic Syndicated Content | From Page: B7

 
Word Sleuth Sept 2

By Daily Republic Syndicated Content | From Page: B7