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The Country of California: The American Greek Tragedy

Updated on March 21, 2012

It really does have the economic strength of many small countries in the world, yet, it is US State. It is often referred to as the "Golden State" where much of the world's innovation originates (think Silicon Valley in San Jose), fashion trends start here then spread across the US and to the world. On most days, when the sun glistens, it IS golden, with its wide variety of climate and geography from sub-tropical to Alpen-like and Italy in between.

Its golden period was from 1980-2005. During that time, the state grew by 10 million, Medicaid grew by seven million while the number of taxpayers only grew by 150,000. Oh, the prison population grew to 115,000 (per inmate, the state pays around 40,000 in costs).

Since 2005, the golden state is quite tarnished. Unemployment hovers around 11%, higher than America's 48 other states. Its population is 12% of the US total and 33% of the nation's welfare recipients. Many of its K-12 schools are ranked low compared to others and to its own past. It has the highest sales tax at 7.25%. Its population composition reflects what some say is an invasion of Hispanics-37%, Asian -13%. What is quite astonishing is that nearly half of all its citizens do NOT pay state income tax!

No, I'm not done yet.

California has at least two cities on the brink of bankruptcy (Vallejo & Stockton). The state economy no longer out performs much the US or world, it now suffers from a Greek-like problem. It was built on a welfare state, high tax rates and over regulated business regulations that have businesses leaving the state in large numbers and not coming back. Like Greece, California spent too much on a variety of social programs for years and taxed too little. For instance, California's Calpers, which is a pension fund for state workers comes to $250 billion! For the past nine years, the state has ran on a deficit budget and sent out IOUs when money ran out.

In 2011, California ended with a $5 billion deficit, this year, the state will spend $7 billion. The government wants to increase the income tax rate to 12.3% and increase the the sales tax to 7.75%. The result is that many are leaving the state to live elsewhere, businesses leave for Austin, TX, where everything is less expensive and wages are similar. Paying high-taxes to pay for the Calpers pension following in the footsteps of Greece.

The cost of living is generally higher for many items. Gas is the most evident because the state requires a special refining to meet pollution standards, which are strict. There are only a few refineries that make this. The net result is the highest price on the mainland-now (as of March 2012) is $4.60 for diesel and $4.25-5.50 a gallon for gas on average.

The issue of the influx of Hispanics is tipping the economic boat even more. Many are illegal and avoid taxes yet receive a wide variety of services that taxpayers do because it is the humane thing to do. For instance, those with no medical insurance can simply get their needs met by walking into a hospital or clinic. They will not be turned away because the state funds them. Even in courtrooms, the simple need of many translators has increased costs by 50% because a large number do no speak English yet commit crimes. Additional costs to school districts occur for similar reasons because many school age kids enter without knowing sufficient English and they must be tutored.

Because of the serious health of California's economics, all counties in the state have serious budget issues at the local level. Cuts in schools, services, pensions, and more are making California more like Greece.


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    • MurciélagoHeart profile image

      MurciĆ©lagoHeart 5 years ago from San Francisco

      I consider moving to another state more and more often. A good read.

    • one2get2no profile image

      Philip Cooper 5 years ago from Olney

      Really good hub and a great comparison to what is happening in Greece too. Thanks for the hub.

    • perrya profile image

      perrya 5 years ago

      Gotta love the beaches!

    • Cassie Smith profile image

      Cassie Smith 5 years ago from U.S.

      I have no sympathy for California, they ruined a good thing. Half of the people are probably illegal aliens which is why half don't pay any taxes.

    • teaches12345 profile image

      Dianna Mendez 5 years ago

      California is almost a country to itself and here is the information to prove it. I do hope that they can pull together to solve issues such as the high cost of living. Insightful hub topic.