California is expected to be world 4th largest economy by Q4 2023 (loan, home)

[NYSD1995]

All you need to have an economy is demand for exports which creates the jobs and housing. Population will generate a certain level of activity to clothe, feed, house themselves. But if the economy can only produce enough revenues to sell products to its own residents, it will be poor. The state economy needs to be exporting globally, or at least a major internal exporter for goods and services.

California is one of the richest places in the world and highly productive. Less than 20% of state revenues are funded from the USA.

The argument is obviously that the state of CA benefits from being in the US market with US security, market rules, but so does every other state. So ultimately, CA is rich because it always has produced a lot of goods and services which are sold globally. Like gold, minerals, forestry, defense, Apple, Tesla etc. That is the engine that drives a large population's local economy. CA is declining because nothing can grow forever and it has become too big, too expensive, too cumbersome and complicated to grow quickly anymore. Many of the other rich states (NY) have that problem too, some for longer than others (MI,PA).

[TacoSoup]

Originally Posted by NYSD1995

All you need to have an economy is demand for exports which creates the jobs and housing. Population will generate a certain level of activity to clothe, feed, house themselves. But if the economy can only produce enough revenues to sell products to its own residents, it will be poor. The state economy needs to be exporting globally, or at least a major internal exporter for goods and services.

California is one of the richest places in the world and highly productive. Less than 20% of state revenues are funded from the USA.

The argument is obviously that the state of CA benefits from being in the US market with US security, market rules, but so does every other state. So ultimately, CA is rich because it always has produced a lot of goods and services which are sold globally. Like gold, minerals, forestry, defense, Apple, Tesla etc. That is the engine that drives a large population's local economy. CA is declining because nothing can grow forever and it has become too big, too expensive, too cumbersome and complicated to grow quickly anymore. Many of the other rich states (NY) have that problem too, some for longer than others (MI,PA).

This is all true, but shouldn’t it be greater than pretty much equal to its population and the US GDP? New York, Washington, and Massachusetts, are all greater.

Now if California accounted for 20% of the US GDP while having 11% of the population that would be something to brag about? But when they’re both 11% it tells me it’s not underperforming?

I always knew it benefited from being in the US so the whole 5th, 6th, largest economy in the world was kinda weak, but when I took the time to see that it was equally proportional to the population it became cringe worthy that anyone would brag about it?

[urbancuriosity]

California has a economy. The government of California is doing far worse, from having a $97B budget surplus to a projected $24B debt.

https://www.capradio.org/articles/20...udget-deficit/

[moguldreamer]

Great.

The more we can tax California to transfer money to the rest of the nation.

[OyCrumbler]

Originally Posted by urbancuriosity

California has a economy. The government of California is doing far worse, from having a $97B budget surplus to a projected $24B debt.

https://www.capradio.org/articles/20...udget-deficit/

This is not necessarily a California-specific issue though the large presence of tech companies and very high earners to some degree exacerbates it for California.

The government under Jerry Brown set up a rainy day fund in boom years specifically in case there were lean years and the amount saved up is significantly more than the projected deficit. There was also significant paying down of debt, especially targeting debt that had less ideal terms. It should be noted that since that time, the projected deficit has come down a little bit to $22B which is still lower than what the state has in its rainy day savings, though ideally they'd draw down on it as little as possible in case the next year is even worse.

[apple92680]

Originally Posted by moguldreamer

Great.

The more we can tax California to transfer money to the rest of the nation.

You already do.

You're welcome!

[OyCrumbler]

Originally Posted by apple92680

You already do.

You're welcome!

Yea, California can take pride in being a provider state to so many less fortunate ones while still being a strong and innovative component of the US economy. There are people who don't just dream of being moguls, but also become moguls and are driven to help the less fortunate. There's certainly something admirable about that.

[shelato]

Two things, first the true size of the California economy is likely larger than what is shown in the official statistics. There is a lot of money that is made in Europe by California based firms like Apple and Alphabet that is recognized in Ireland because they have a really low capital gains tax. This likely overstates the Irish GDP and underestimates the California GDP. So I wouldn't be surprised if we already passed Germany. A lot of the Irish economic numbers are really the consequence of California firms playing accounting transfer price games on their taxes.

The second thing to realize is that the California economy isn't doing that well right now, we might be on the brink of a recession because of the fed tightening. The bigger story though is that the German economy right now is really screwed up. The German economic model used to be import cheap hydrocarbons from Russia, use that to make chemicals and build stuff in Germany and then to export higher value goods based on a lot of the raw materials they got from Russian. But the war in Ukraine has really screwed up Germany. It not that California is doing well right now as much as Germany is just doing awful.

The German problems don't seem to have an easy fix. The sanctions against Russia probably are permanent. Who knows what is going to happen to the German chemical industry at this point. The Germans used to be known for their cars. But their is regulatory pressure to move to electric cars, and its not clear that the auto industry will continue to be ran by the same companies in the future that it has been in the past. Being excellent at building internal conbustion engines and transmissions might not continue to be a huge value added skilll in a world of electric cars. The Chinese seem to have really cheap batteries and these batteries seem to be where most of the value will be added in the auto industry. Germans banned nukes and bet big on renewables. But solar works best where its sunny and wind works best where its windy and Germany isn't real sunny nor windy so Germany might have real expensive energy costs, plus real high labor costs plus big economic headwinds. But this model of Gemany leading on renewables might not to be working that great for Germany.

What I am saying is that California likely has already or will shortly overtake Germany, but that is mostly because Germany is really screwed up right now, rather than because California is doing a great job which seems to be the thrust of this thread.

[NYSD1995]

Originally Posted by TacoSoup

This is all true, but shouldn’t it be greater than pretty much equal to its population and the US GDP? New York, Washington, and Massachusetts, are all greater.

Now if California accounted for 20% of the US GDP while having 11% of the population that would be something to brag about? But when they’re both 11% it tells me it’s not underperforming?

I always knew it benefited from being in the US so the whole 5th, 6th, largest economy in the world was kinda weak, but when I took the time to see that it was equally proportional to the population it became cringe worthy that anyone would brag about it?

If you take away NYC from NY, it would be very poor. New York State is essentially the economy of MI or PA. NYC funds a welfare state for the rest of the population. CA has multiple major cities each with separate global industries. NYC is basically just finance and media and whats left of trade. CA is dragged down by its large agriculture economy which is a low-paying, labor-intensive industry. But we still have tech, media, ag, industrial sectors larger than anything in NY or MA.

[moguldreamer]

Originally Posted by OyCrumbler

Yea, California can take pride in being a provider state to so many less fortunate ones while still being a strong and innovative component of the US economy. There are people who don't just dream of being moguls, but also become moguls and are driven to help the less fortunate. There's certainly something admirable about that.

Wrong mogul dreaming.