Sunday, March 1, 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

Peace and patience: Quilters gear up for show

By Amy Maginnis-Honey | From Page: C1Comments are off for this post

 
School bands compete in Pageantry on Parade

By Susan Hiland | From Page: A1 | Gallery

 
Calling someone a ‘smoker’ is hilarious

By Brad Stanhope | From Page: A2

Police seek suspect in armed robbery

By Bill Hicks | From Page: A3

 
4-H Presentation Day brings fun, education to Fairfield

By Susan Hiland | From Page: A3 | Gallery

 
Conservancy plans next Quail Ridge Reserve walk

By Susan Hiland | From Page: A3

 
What you eat can affect your medications

By Marilyn Ranson | From Page: C4

 
Tri-City NAACP honors community members at gala event

By Bill Hicks | From Page: A5 | Gallery

 
CAASC 18th Annual Chinese New Year and Scholarship Celebration

By Steve Reczkowski | From Page: A5 | Gallery

Rollover in Suisun City

By Aaron Rosenblatt | From Page: A5, 1 Comment | Gallery

 
State schedules ramp closure at freeway project site

By Kevin W. Green | From Page: A5

Vigil doesn’t pan out amid concerns

By Bill Hicks | From Page: A5

 
Appointments on tap for Board of Supervisors meet

By Kevin W. Green | From Page: A5

Parker Road restaurant does brisk business

By Susan Hiland | From Page: B7

 
NY, SF town house prices through the roof

By Bud Stevenson | From Page: B7

 
Fairfield police log: Feb. 27, 2015

By Susan Hiland | From Page: A9

Suisun City police log: Feb. 27, 2015

By Susan Hiland | From Page: A9

 
Airmen with local ties finish basic training

By Nick DeCicco | From Page: B10

Force draws many from South, middle class

By Tom Philpott | From Page: B10

 
.

US / World

Christie to Calif. Republicans: No rush to pick 2016 nominee

By The Associated Press | From Page: A1

 
US missionary abducted in Nigeria is courageous, friends say

By The Associated Press | From Page: C3

Dress that ‘greatly resembles’ stolen Nyong’o gown found

By The Associated Press | From Page: A5

 
Weekend storm drops snow, rain, hail in California

By The Associated Press | From Page: A5

Churches, synagogues, mosques bear tough New England winter

By The Associated Press | From Page: A6

 
Mother charged in death of infant found in California swamp

By The Associated Press | From Page: A6

Blind dog rescued after being lost for 2 weeks in the cold

By The Associated Press | From Page: A10

 
Details about proposed national monuments in California

By The Associated Press | From Page: A10

National monument supporters in California get antsy

By The Associated Press | From Page: A10

 
Hyundai recalls 263,000 cars due to power-steering problem

By The Associated Press | From Page: A10

US drone strike in Yemen kills 3 suspected al-Qaida fighters

By The Associated Press | From Page: A11

 
Greece will not seek another bailout, prime minister says

By The Associated Press | From Page: A11

Attacks kill 37 people in and north of Iraq’s capital

By The Associated Press | From Page: A11

 
Nemtsov a possible ‘sacrificial victim,’ investigators say

By The Associated Press | From Page: A12

.

Opinion

Even Gruber deserves a break sometimes

By Megan Mcardle | From Page: A8

 
I might just vote for a Democrat next time around

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

Aging Fairfield housing agency faltering

By Letter to the Editor | From Page: A8

 
Editorial Cartoon: March 1, 2015

By Daily Republic Syndicated Content | From Page: A8

Sound off for March 1, 2015

By Daily Republic | From Page: A8

 
New school funding plan remains on bumpy path

By Dan Walters | From Page: A8

 
.

Living

Today in History: March 1, 2015

By The Associated Press | From Page: A2

 
Community Calendar: March 1, 2015

By Susan Hiland | From Page: A2

With numbers falling, Houston-area nuns’ future uncertain

By The Associated Press | From Page: C3

 
Horoscopes: March 1, 2015

By Holiday Mathis | From Page: C4

Kidney Walk participation helped give me a positive outlook on life

By Kathy Mitchell and Marcy Sugar | From Page: C4

 
.

Entertainment

PUBLISHERS WEEKLY BEST-SELLERS

By The Associated Press | From Page: C2

 
Review: ‘The Girl on the Train’ has realistic plot

By The Associated Press | From Page: C2Comments are off for this post

Take a look – Dr. Seuss has a new book

By The Associated Press | From Page: C2

 
Publisher launches line of Warhol e-books

By The Associated Press | From Page: C2

Q&A: Opera star Deborah Voigt writes of turbulent life

By The Associated Press | From Page: C2Comments are off for this post

 
TVGrid

By Daily Republic Syndicated Content | From Page: B11

.

Sports

Vikings girls looking for first section title

By Paul Farmer | From Page: B1 | Gallery

 
Local Report: Vaca’s Aquino wins Masters wrestling title

By Daily Republic staff | From Page: B1

Phegley hopes his style will catch on in Oakland

By The Associated Press | From Page: B1

 
A year after meeting Tiger, Indian golfer on the rise

By The Associated Press | From Page: B1

Jeff Gordon takes a final spin at track that meant so much

By The Associated Press | From Page: B1

 
Anthony Mason, rugged forward of 1990s Knicks, dies at 48

By The Associated Press | From Page: B2

Warriors center Festus Ezeli suspended for a game

By The Associated Press | From Page: B2

 
Reichelt leads Austrian World Cup downhill sweep

By The Associated Press | From Page: B2

Players’ union head: future spring games in Cuba possible

By The Associated Press | From Page: B2

 
Harrington takes 36-hole lead, then more rain in Florida

By The Associated Press | From Page: B2

Defending champ Federer beats Djokovic to retain Dubai title

By The Associated Press | From Page: B2

 
Safarova beats Azarenka to win the Qatar Open

By The Associated Press | From Page: B2

Environmental activists disrupt meeting by Olympic officials

By The Associated Press | From Page: B2

 
Hamilton hones Mercedes with fastest time at F1 testing

By The Associated Press | From Page: B2

Thunder’s Russell Westbrook has surgery on cheekbone

By The Associated Press | From Page: B2

 
Harvick wins Xfinity race at Atlanta for 3rd year in a row

By The Associated Press | From Page: B4

Stolen No. 44 NASCAR race car found in suburban Atlanta

By The Associated Press | From Page: B4

 
.

Business

Fruits and vegetables get a star-studded marketing push

By The Associated Press | From Page: B7

 
For many in US, cash saved at gas pump is staying in pockets

By The Associated Press | From Page: B7

Historic snows causing headaches for real estate industry

By The Associated Press | From Page: B8

 
Nevada casinos keep $953.7 million in winnings in January

By The Associated Press | From Page: B8

Boy, 13, builds Braille printer with Legos, starts company

By The Associated Press | From Page: B9Comments are off for this post

 
Recalls this week: hand trucks, ceiling fans

By The Associated Press | From Page: B9

Review: Freedom! These smartwatches leave the phone behind

By The Associated Press | From Page: B9

 
Greek prime minister rules out third bailout

By The Associated Press | From Page: B9

AP Exclusive: Fuel-hauling trains could derail at 10 a year

By The Associated Press | From Page: B12 | Gallery

 
.

Obituaries

Leah E. Hoffman

By Nancy Green | From Page: A4

 
Thomas Browning

By Nancy Green | From Page: A4, 1 Comment

Jacqueline Mendes

By Nancy Green | From Page: A4

 
John W. Van Wart

By Nancy Green | From Page: A4

Lester Singer

By Nancy Green | From Page: A4

 
Virgil Albert Hanson

By Susan Hiland | From Page: A4

.

Comics