Saturday, July 25, 2009

Leaving LA

"If New Yorkers fantasize that doing business here in Los Angeles would be less of a headache, forget about it. This city is fast becoming a job-killing machine. It is no accident the unemployment rate is a frightening 11.4% and climbing. ... The city's bureaucrats rival Stalin's apparatchiks in issuing decrees, rescinding them, and then punishing citizens for having followed them in the first place. ... Everything was going fine until the city started running out of money in 2007. Suddenly, the city announced that it was going to ignore its own ruling and reclassify us in the higher tax category. Even more incredible is the fact that the new classification was to be imposed retroactively to 2004 with interest and penalties. ... As long as City Hall operates like a banana republic, why is anyone surprised that jobs have left the city in droves and Los Angeles in teetering on the brink of bankruptcy?", Rick Newcombe at the WSJ, 10 July 2009, link:

Rick, obey Lenin. Vote with your feet. Now. Welcome to: Houston, Dallas, Las Vegas, anywhere with no income tax. If Mayor "Reconquista" wants money let him go to the Mexican consulate and see if he can get some foreign aid.


Anonymous said...

It's hard medicine but the cities need to shrink down and empty out some. They are unsustainable in their present configuration and level of social service commitments.

Foreign aid for LA? That could be a good new revenue source.

Anonymous said...

Skeptical CPA:

I have read several of your California posts. I recently graduated from a UC school, and have lived in CA all my life. In September I will start as a tax accountant (currently studying for the FARS section of CPA exam!), and know a fair bit about CA's situation and myriad problems. I believe I am qualified to criticize your analysis.

It is my understanding that you believe the many illegal immigrants are a very important cause, and possibly even the root cause, of California's banana republic status and disfunction. This is not true in the least. Illegal immigrants do consume a disproportionate amount of social services and welfare. However, this is mitigated by the fact that they 1 provide cheap labor, and 2 provide labor devoid of state regulation.

This is the tab (State AND Local) for illegal immigrants:

Prison: Net of $859M
Schools: About $4B
Welfare for their kids: $500M
Health: about $600M

Data is reprinted in the LA Times, taken from Public Policy Institute and Legislative Analyst office. I consider both fairly reliable.

Total: Approximately $6 Billion, give or take, for state and local government in CA. So if you figure the budget deficit was $42 billion at the state level, illegal immigrants are definitely not the main problem (although they shouldn't be here at all, I'm aware. No argument there. If the federal government actually fulfilled its responsibilities, we would be better off in CA. Thanks other 49 states.)

Our real problems are cause by our messed up political system.

1. Gerrymandering gives us the most radical politicians from each party. There can be no progress without an end to that, which Arnold's amendment should help.

2. The initiative process is completely out of control.

3. The 2/3 requirement helps out with taxes, but in the long run only prolongs our misery by not giving ultimate responsibility to one political party, which would then be promptly voted out.

4.Term limits sound good on paper, but they only result in short-sighted legislators who only care about lobbying afterwards and one or two pet projects, all of which cost more money and are not in our long-term interests.

5.Proposition 13 has led to a hyper-progressive tax system that is either feast or famine; moreover, the rich pay most taxes, so everybody else is in favor of more government spending.

6. Public employee unions have hijacked state and local government. They have enormous clout because they can dip into their members union contributions. The CTA and prison guards own the Democratic Party in California, and the situation with local unions is almost as bad. They have been a pox on this state, causing too much spending, inflated wages, higher taxes, bogus propositions, and an unfunded pension system that is truly extortionate.

This state is a banana republic, but it is not a banana republic because of illegal immigrants.

Thank you.


Independent Accountant said...

You are entitled to your opinion. I lived in LA from 1985-2006. My estimate is that California's minimum net tax cost arising from illegal aliens and their progeny is $17 billion a year.
By the way, I was aware of numbers you cited. I don't believe them. The time will come when you will take all government generated numbers with a grain of salt. You analysis is virtually identical with that of the Economist and the Financial Times. These publications have cited your points, 1, 2, 3, 4, 5 and 6! I don't buy them. That illegal immigrants provide cheap labor is irrelevant. Why? The cheap labor has private benefits. I refer to the external costs. The net benefit of illegals cheap labor is minimal in my opinion. Why? In the absence of their labor, American industry would be more highly mechanised.
My bottom line: you and I disagree. Question: are you citing what one or more or your professors taught you? As the ethnic composition of California more closely approximates that of Mexico, so will its: politics and the living standards of its residents. As the Mexican government has stated, "Wherever there is a Mexican, there is Mexico". I agree. Look at California.

Anonymous said...


Can't remember any of my teachers talking much about illegal immigration, I didn't really study that. These are my opinions from living here my whole life. I do agree with your point about political shifts because of Mexican immigration, and think that we should crack down on illegal immigration. I simply don't believe the state's budget deficit is because of illegal immigrants. It's because the state is too liberal and fiscally irresponsible to function, something which has little to do with illegal immigrants.

FAIR, an anti-illegal immigration group, estimates costs to CA in 2005 of $8.8B ( How do you get $17?

And what do you think of all the things I cited? Do you really believe that none of it has a significant impact on the state's finances? Lots of other states, such as Texas, have significant numbers of illegal immigrants. But they are able to deal with the expense. Why is CA the worst off? Our political climate. If we had a functioning and rational political system, we could find ways to deal with the expense of illegal immigrants.