Russ Steele
Our local middle of the road blogger has declared that he is investing in California by buying state bonds here. Then he justifies his economic enthusiasm based on an article by Brett Arends' sustained defense of California economic stability in MarketWatch. After reading the column my BS alarm went off with a loud resounding clang!
Low and behold other have issues with the column. Reason's Tim Cavanaugh thinks that any column that gets a thumbs up by both Arnold Schwarzenegger and Jerry Brown is cause for deep suspicion, especially this MarketWatch column by Brett Arends. Cavanaugh writes:
Arends' thesis is that a cabal of rightwing pundits are manufacturing the story of the Golden State's economic troubles. He makes some points that are true: California pays out more than it receives in federal funding; the state's $2 trillion economy is the eighth largest in the world; and housing is way too expensive. (Arends conspicuously avoids looking at some of the reasons behind that last problem.)
Does this mean all the grim forecasts you hear about the Golden State (most emphatically from Gov.-elect Brown, though Arends says critics of Californianomics are motivated by animus toward the incoming third-termer) are bogus? Only if you're really willing to cherry pick your data.
Here's how Arends spreads the good news about California's investment climate (warning: heavy sarcasm ahead):
Back in the Silicon Valley glory days, in the late 1990s, California attracted an incredible 42 cents of every venture capital dollar invested in America. Ah, those were the days — when the private sector was still willing to back California with its own money. As any conservative will tell you, that’s the real voting in the economy.
How far has California fallen from those giddy days?
According to the latest data from PricewaterhouseCoopers and the National Venture Capital Association, in 2010 California just got a miserable, er, 50 cents of every venture capital dollar invested in America.
So, how much, according to NCVA and PWC, does that actually come to? About one-third as much as in 1999, when VCs put up more than $51 billion in funding, and less than a fifth as much as in 2000, when they put up more than $100 billion. Nationwide, VCs spent an anemic $17 billion in 2009. It's true that California attracts a slightly larger piece of the venture capital pie than it did 11 years ago, but the pie is geometrically smaller than it was then. If you think venture capital is going to lift the Golden State out of the dumps, you're wrong.
You can read the rest of the Reason article here. Tim Cavanaugh concludes:
Fiscal conservatives aren't against California. Reality is. The state has lost a third of its manufacturing base in a decade, its budget is structurally unbalanced, and its political leaders believe you can get out of bankruptcy by fining jaywalkers. You don't need to be a Republican or a Democrat to understand that these problems are real.
I guess it helps you understand if your are not one of our local left leaning bloggers and those who support AB32 in opposition to Prop 23.
