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Article posted Apr 30 2012, 10:14 AM Category: Economy Source: The American Dream Print

What Do California And Detroit Have In Common?

by Michael Snyder

When most people think of the economic decline that is happening in America, most of them think of states like California and cities like Detroit.  In both cases, unemployment is rampant, government finances are a mess, and businesses and families are both leaving in droves.  So what is causing this?  What do California and Detroit have in common?  Well, for one thing, both the state of California and the city of Detroit have been run by anti-business socialist control freaks for decades.  Once upon a time millions of young Americans that dreamed of a better life flocked to California and Detroit was one of the most vibrant manufacturing cities in the history of the world.  But now both of them are in an advanced state of decline, and a lot of the blame can be placed at the feet of the politicians in both cases.  Both California and Detroit have become very unfriendly places to businesses and families, so businesses and families have been leaving both California and Detroit in very large numbers.  At the same time, the socialist welfare policies in both places have caused them to become magnets for those that enjoy being dependent on the government.   Welfare recipients are not likely to pack up and move down to Texas because they know that their benefits would not be nearly as good down there.  So both California and Detroit will continue to attract those that want to live under socialist control freaks and it will continue to drive away those that do not want to live under socialist control freaks.

It is so sad to see what has happened to Detroit.

At one point, Detroit was one of the greatest cities in the world.

But today, 53.6 percent of all children in Detroit are living in poverty and 47 percent of all people living in the city of Detroit are functionally illiterate.

How does something like that happen?

Over the past 50 years, the population of Detroit has lost more than a million people as businesses and families have left in droves.  The following is from a recent Economy In Crisis article....

Once the wealthiest city in America, known as the "arsenal of democracy," Detroit was the fourth largest city in the U.S. in the 1960s with a population of two million. Now a microcosm of everything that is wrong with the American economy, Detroit has become nothing more than a devastated landscape of urban decay with a current population of 713,000.

Visiting Detroit is the closest Americans can come to viewing what appears to be a war torn city without leaving the U.S. This former powerhouse is a barren stretch of land, devastated by looters and and full of run-down, vacant houses. Rows upon rows of dilapidated structures line the streets; empty apartment buildings and factories consume the landscape. Almost a third of Detroit has been abandoned.

Third world conditions prevail in many areas of Detroit today.  There are many areas of the city that you simply would not want to ever visit at night.  The following is what one enterprising British reporter found during his visit to Detroit....

Much of Detroit is horribly dangerous for its own residents, who in many cases only stay because they have nowhere else to go. Property crime is double the American average, violent crime triple. The isolated, peeling homes, the flooded roads, the clunky, rusted old cars and the neglected front yards amid trees and groin-high grassland make you think you are in rural Alabama, not in one of the greatest industrial cities that ever existed.

In Detroit today there are large numbers of three and four bedroom homes that you can buy for next to nothing.  Most of them are boarded up and abandoned.  Nobody wants to live in them anymore.

The graduation rate in Detroit is down to about 25 percent, and the city has become a breeding ground for crime and gangs.

The jobs that have left Detroit are not coming back.  A lot of this can be blamed on the foolish "free trade" economic agenda being pushed by both major political parties.  For example, auto parts exports from China have increased by more than 900 percent since the year 2000.

But not all the jobs that have left Detroit have gone overseas.

A lot of businesses have simply moved their manufacturing facilities to more business-friendly areas over the past several decades.  When politicians just keep pushing the business community over and over, eventually many businesses will start to leave for greener pastures.

Today, there are hordes of formerly great cities all over the "rust belt" that have lost their economic infrastructure.  But instead of changing strategies, many of them just keep on doing the same old things and hope that somehow things will turn around.

It is also very depressing to watch what is happening to the entire state of California.

Over the past 20 years, the state has experienced a net loss of approximately four million residents to other states.

As I wrote about recently, there are a whole host of good reasons to move away from California, but certainly the twisted control freak socialists running the state are one of the primary reasons why so many families are hightailing it out of there.

California just keeps implementing more ridiculous anti-business and anti-family regulations.  The following is a brief excerpt from a recent Wall Street Journal article....

And things will only get worse in the coming years as Democratic Gov. Jerry Brown and his green cadre implement their "smart growth" plans to cram the proletariat into high-density housing. "What I find reprehensible beyond belief is that the people pushing [high-density housing] themselves live in single-family homes and often drive very fancy cars, but want everyone else to live like my grandmother did in Brownsville in Brooklyn in the 1920s," Mr. Kotkin declares.

"The new regime"--his name for progressive apparatchiks who run California's government--"wants to destroy the essential reason why people move to California in order to protect their own lifestyles."

Housing is merely one front of what he calls the "progressive war on the middle class." Another is the cap-and-trade law AB32, which will raise the cost of energy and drive out manufacturing jobs without making even a dent in global carbon emissions. Then there are the renewable portfolio standards, which mandate that a third of the state's energy come from renewable sources like wind and the sun by 2020. California's electricity prices are already 50% higher than the national average.

The funny thing is that Barack Obama likes to point to California as an example of where he wants to take the entire nation.  But a recent Daily Beast article noted how foolish it would be to follow the path that California has chosen....

Obama regularly asserts that green jobs will play a crucial role in the future of the American economy, but California, a trend-setter in the field, has yet to reap such benefits. Green jobs, broadly defined, make up only about 2 percent of jobs in the state--about the same proportion as in Texas. In Silicon Valley, the number of green jobs actually declined between 2003 and 2010. Meanwhile, California's unemployment rate of 10.9 percent is the nation's third highest, behind only Nevada and Rhode Island.

When Governor Jerry Brown predicted a half-million green jobs by the end of the decade, even The New York Times deemed it "a pipe dream."

Obama's push to nationalize many of California's economy-stifling green policies has been slowed down, first by the Republican resurgence in 2010 and then by his reelection considerations. But California's politicians, living in what's become essentially a one-party state, have doubled down on green orthodoxy. As the president at least tries to cover his flank by claiming to support an "all-in" energy policy, California has simply refused to exploit much of its massive oil and gas resources.

The funny thing is that California is one of the least "green" places in America.  According to a recent article by Les Christie, the five most polluted cities in America are all in California.

So perhaps that should clean up their own act before trying to export their philosophies to the rest of the nation.

As businesses and families leave California in waves, the state is finding itself in a lot of financial trouble.

Once again, the state is facing a much larger than anticipated financial hole in 2012.  So far this year tax receipts are way, way down as a recent Bloomberg article noted....

California personal-income-tax collections in April are falling short of Governor Jerry Brown's projection by more than $2 billion, data from Controller John Chiang show. The state is already facing a $9.2 billion deficit through June 2013.

With two days to be counted, the state has taken in $6.74 billion since April 1, according to a daily tally on Chiang's website. Brown's projection for the month was $9.13 billion.

But as mentioned above, Barack Obama wants the rest of the country to become much more like California.

With each passing day, the United States is becoming even more socialist, and both major political parties are facilitating this transition.

For example, back in the year 2000 social welfare benefits made up approximately 21 percent of all salaries and wages in the United States.

In 2012, social welfare benefits make up approximately 35 percent of all salaries and wages in the United States.

That is a mind blowing shift in just 12 years.

It would be easy to blame Obama for that, but the Republicans actually had control of the White House for most of that time period.

The truth is that both George W. Bush and Barack Obama have steadily moved America in the direction of big government and socialism.

And at the White House Correspondents' Dinner the other night, Obama joked about "the European-style socialism that he has planned" for his second term.  He joked that it will include "more government handouts, a life of government dependencies, indoctrinating our children, a left wing social agenda" among other things.

Is it really a laughing matter that the entire country is going down the same path that California and Detroit have gone?

Hasn't enough damage already been done to our economy?

According to a recent Gallup poll, only 60 percent of all Americans say that they have enough money to live comfortably.  That was the lowest level Gallup has ever recorded.

How much worse do things have to get before the American people decide that it is time for a fundamental change of direction?

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