Sunday, September 12, 2010

Governing America based on California/New York or Texas/Utah Models

With the rapidly approaching mid-term elections less than two months away, we have reached a crossroads where there will finally be a referendum in our country on how we the people wish to govern our nation.  We can either take the socialistic big-government-is-always-the-solution approach like what has been done in California and New York, or we can take a more limited government, business-friendly approach such has been done in Texas and Utah as our models.


Let's start by looking at California.  California has long been governed with an eye towards progressive policies where the state government was the place that most people looked to for answers to all of their problems.  The results of this have been utterly devastating.  Indeed if California were a country, it would be the equivalent of either Greece or Iceland.  It is effectively bankrupt.  The state has long been over-governed, over-taxed, over-regulated, and over-unionized, with incredibly excessive spending and entitlement commitments that it will never be able to meet.  If current trends continue in California, the rest of the country will have to rescue it from the deep abyss of debt that the unsustainable spending and governing of this state has wrought.  Currently and most disturbingly, it would seem that our federal government is using California as its model on how to govern the country. 


New York, largely due to the huge population center of New York City, is the east coast sister of California.  Seemingly there is no problem that occurs that the people of New York don't look to the government to solve for them.  The result of this reliance upon government has created a climate where New York is the 49th worst state for business in the entire country.  It is directly preceded by California at the 48th spot.
















Chief Executive magazine recently conducted a survey of CEOs who rated California as the worst state in the country for doing business. It was awarded a grade of “F” in the category of “Taxation and Regulation” and was the only state to receive this grade.


New York is seemingly trying to follow suit where the taxation and regulatory burden for businesses has surpassed absurd proportions.  In New York City, it is now even against the law for restaurants to sell any food containing trans fats.  Yep, big brother is looking out for everyone there!


In contrast, the CEO's in that same survey rated Texas as the number one state in the nation for doing business. Comparatively to California, it is a low tax, low regulation, right-to-work state, where unemployment is is several points below the national average.


So where does Utah fall in this equation?  Utah is arguably one of the most conservative states in the union both politically and economically in the way it has been governed historically. It has indeed trended towards more progressive governance in recent years from its past where in 1992 Bill Clinton came in 3rd place behind George H.W. Bush, and Ross Perot in presidential balloting, but overall it still has strong bonafide conservative principles.


That conservative governance has resulted in the 6th best corporate tax index rank in the country, the 2nd best property tax index rank, and the tenth best in overall tax burden for its citizens compared to eleventh place for Texas, and again as opposed to 48th for California and 49th for New York.  Furthermore Utah is predicting having a balanced budget in fiscal year 2011, whereas California has a shortfall as a percentage of the state budget of 53% this year and 26% in 2011.  New York projects a nearly 39% shortfall this year and a 27% shortfall for 2011.












The bottom line is quite apparent.  When a state government over-extends itself to regulate and govern all aspects of life for its citizens other than just the basic functions that private companies or citizens cannot feasibly do upon their own (utilities oversight, state roads etc) then the burden of having such a hyper-intrusive government becomes so costly that the ultimate destination for these transgressions will necessarily result in insolvency of the state government.  Bankruptcy.  California is already on the precipice of this problem.  New York is not far behind.


In contrast, while Texas and Utah do have their own distinct problems as related to state governance, overall, the more business friendly climate and the overall lower taxation and lesser regulatory burden on the people there have created states where businesses have not fled in droves, thereby keeping unemployment numbers decidedly better than the nation as a whole and far better than California in particular.


So the question now remains, are we as a nation going to continue to vote for politicians and policies to govern our country in the models of New York and California, as we have been doing particularly under the Obama administration, or are we going to reject these obviously failed policies for those that have been fruitful in states such as Texas and Utah? 


Early sentiments seem to suggest that a large majority of the population has awoken and realizes that absolutely when it comes to government, less is more.  I have to assume that the good people of this country have indeed reached this conclusion, because the California/New York model is unsustainable and the results are apparent for anyone looking to see this fact.  It has now become crucial that we adopt the Texas/Utah model if we are to restore our country and undo the massive damage already done by the tax & spend & regulate crowd that is reflected in the California/New York model.  We will hear from the people on this matter very soon!


sources: taxfoundation.org and statehealthfacts.org

2 comments:

Dave Splash said...

You can have Texas and Utah. No problem. There is a reason people want to live in New York and California, and why tens of thousands of new people move there from across the country (from places like Texas and Utah) every year. There is an intangible quality to life there, and a state cannot be summed up solely by its corporate tax rate. There is certainly more to life than corporate tax rates.

I don't see people flooding to Utah in the foreseeable future, no matter what their tax rates are. And Texas is able to live so well since they take in more federal money than they pay out. They are living off the rest of us (while whining about it to boot).

I'll take NYC over Salt Lake City any day of the week, month or year. No hesitation.

T. Paine said...

Dave, I would agree that there is far more to a state then its tax rate.

I wonder though, what the net population of places like New York and California are in the last ten years. I wouldn't be a bit surprised to learn that they have indeed lost people. (A LOT of people!)

I KNOW that we have thousands and thousands of Californina transplants here in Utah. Many are great people that simply wanted to get away from the burgeoning California government and poor job market that has been created there.

While there are plenty of beautiful places in California, you could not pay me enough to EVER move back there.

Frankly, I'll gladly leave NYC and LA and the likes to you Splash. I'll take San Antonio and Salt Lake. :)