California: The American Greece

What do Europe's most bankrupt nation-state and America's most bankrupt united state have in common, aside from being bankrupt?

In what is undoubtedly a coincidence noticed only by free-market fundamentalists, it turns out that Greece, that sun-drenched paradise on the Aegean, and California, that sun-warmed El Dorado on the Pacific, are the worst places to do business in their respective economic zones.

Greece manages to drive out business activity with a vengeance rarely seen in Europe. In the World Bank's Doing Business 2010 [pdf] survey, Greece came in 109th place worldwide, sandwiched between countries on the go Lebanon and Guatemala. That lands the cradle of democracy dead last in the European Union for business friendliness. Only Kosovo and Bosnia-Herzegovina rank lower on the European continent. Says the Wall Street Journal:

In terms of overall ease of doing business, Greece comes in 109 out of 183 countries around the world. It is dead last among the 27 members of the European Union as well as the advanced economies in the OECD. You have to go up 30 slots to find the next worst EU performer, Italy. The U.S. ranks fourth and Singapore is first.

At 109, Greece ranks below such models of transparency and free enterprise as Egypt (106), Zambia (90), Rwanda (67) and Kazakhstan (63). A country has to work hard to do this poorly.

If so, that's the only hard work being done in Greece. In Doing Business' country profile, Greece is actually much lower -- at 147 -- in the "Employing Workers" category, which is also the area where the country has deteriorated most seriously from 2009 to 2010 (having dropped 12 places over the year).

Lest anti-Greek bias rear its ugly head, note that you can get a subpar workforce right here in these United States. In Chief Executive magazine's annual survey of "Best and Worst States for Business," California workers scored a gentleman's B-, helping the Golden State come in 51st place out of the 50 states. (District of Columbia is included in the rankings.)

Chief Executive's survey of business owners tabulates the tax and regulatory environment, the quality of the workforce and the state's living environment. There are actually quite a few states with less appealing workers than California's, but the state's high taxes and heavy regulation give it the only F on the list. The Orange County Register explains:

It doesn't take a national survey to reveal California's failing business climate. Seven California metro areas were among the 15 national leaders in commercial bankruptcy filings in 2009, according to Equifax Inc. Not coincidentally, California had twice as many personal bankruptcies as any other state in 2009 when it ranked 11th in bankruptcies per capita.

It also doesn't take a CEO to notice the differences between California and top-rated Texas. Texas, with nearly as many residents and the world's 12th largest economy, "is where 70 percent of all new U.S. jobs have been created since 2008," the magazine reported. Also unsurprisingly, Texas gained more than 848,000 net residents based on migration in and out of the state in the past decade, while California lost 1.5 million, according to the Census.

California's longterm population-loss trend has reportedly turned around slightly in the last few months, and Greece will no doubt bring in a new haul of tourists this summer, proving the claim that self-satisfied Californians love to make whenever their state is compared unfavorably with Texas: The weather is really nice. And people still haven't managed to screw up the weather.

But every suntan eventually turns into parched, leathery skin. The insidious thing about an unfriendly business climate is that it takes a long time for the effects to show up in the government's inability to pay its bills. So long, in fact, that when the sovereign bankruptcy comes, it's easy to draw the conclusion that tax rates are too low. Both California and Greece are going through a variety of this type of denial right now. But with the governor of California and the prime minister of Greece both promising to turn over a new leaf, this is a good time to remember that you can't take people's money if you prevent them from making money in the first place.

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  • ||

    Greece is going to be fine. I hear they've found 17,000 swimming pools that were not reported when built. The taxes on that alone will...not do much, but next it's on to finding all the flat screen TVs over 50" 18". No problem!

  • ||

    According to an AP article, the link to which the Reason spam filter prevents me from posting, "...The Federal Reserve on Sunday opened a program to ship U.S. dollars to Europe in a move to head off a broader financial crisis on the continent...."
    I'm sure MNG will correct me here, but I thought foreign aid was a function of Congress.

  • ||

    I think, and maybe wrong as well, that the reserve is not technically under the purview of the government. It is essentially an autonomous organization with no oversight or constitutional restrictions.

  • ||

    Yes, its something of a banker's organization that has affiliation with the government.

    It was born out of the Public-Private partnership ideas of the badly named "progressive era."

  • SIV||

    It's not real green folding money anyways. They "print" it with a keystroke.Try not to worry. In the short-term there is nothing we can do about it. As for this collective we call the United States of America, take heart in Machiavelli's adage:
    "Gold cannot always get you good soldiers, but good soldiers can always get you gold"

    We've got the best in the world, God bless 'em.

  • ||

    That may be, but the supplies and equipment they need aren't free or even cheap. Needless to say, the logistics of militarism have changed a bit since Machiavelli.

  • Al Sharpton||

    I could use some foldin' money...

  • ||

    The Iron Man thread gets a review of meh. "Pop Culture Round-up" with monsieur Suderman was late two days. Maybe he had a hot weekend with Leeza Gibbons or something.

    The Napolitano(sp?) thread is starting to look like the comments on a Washington Post editorial, or a Youtube video.

    Now we have a California/Greece story, a lot to talk about here.
    Okay, a new thread. Let's get this thing going.

  • ||

    +1 for the Leeza Gibbons reference.

  • Ghost of Schrödinger's cat||

    "California Uber Alles"

    I am Governor Jerry Brown
    My aura smiles
    And never frowns
    Soon I will be president...

    Carter Power will soon go away
    I will be Fuhrer one day
    I will command all of you
    Your kids will meditate in school
    Your kids will meditate in school!

    [Chorus:]
    California Uber Alles
    California Uber Alles
    Uber Alles California
    Uber Alles California

    Zen fascists will control you
    100% natural
    You will jog for the master race
    And always wear the happy face

    Close your eyes, can't happen here
    Big Bro' on white horse is near
    The hippies won't come back you say
    Mellow out or you will pay
    Mellow out or you will pay!

    [Chorus]

    Now it is 1984
    Knock-knock at your front door
    It's the suede/denim secret police
    They have come for your uncool niece

    Come quietly to the camp
    You'd look nice as a drawstring lamp
    Don't you worry, it's only a shower
    For your clothes here's a pretty flower.

    DIE on organic poison gas
    Serpent's egg's already hatched
    You will croak, you little clown
    When you mess with President Brown
    When you mess with President Brown

    [Chorus]

  • ||

    One other scary thing about CA (I live there) is that it it is one of the top places in the Country (along with NY and DC) for people who don't work or make money, and feel that they are entitled to someone else's money.

    One of the female gov. candidates ( I get Meg Whitman and Carly Fiorina mixed up!!) mentioned that a huge portion of the total welfare cases in the entire country are in CA.

    There are so many powerful groups here that all feel they are entitled.

    Hard place to make money + lots of entitle-ists, a very bad combination.

  • Jeffersonian||

    And, as with Greece, they are finding out what that combination means as they begin to run out of other people's money. I expect riots in CA in the coming years.

  • ||

    Rioting is one of the few things that gets them off the couch. It's a party with a purpose.

  • Californian Rioter||

    If the Lakers win again this year, we'll get an extra practice in before the government collapse.

  • Jeffersonian||

    Whenever I watch that musclebound moron and his botoxed wife grinning on the boobtube, imploring businesses to set root in Kollivornia, what I really see is a raincoated pervert trying to get little girls to follow him into a dark alley.

  • ||

    It is kinda creepy how they try to lure you in with the weather/surfing/chicks and then rape the shit out of you when you get there.

    Of course, weather/surfing/chicks = the candy tucked in the pederast's trench coat...under which he wears nothing.

  • ||

    The girls are prettier in TX.

  • Guess Who||

    you can't take people's money if you prevent them from making money in the first place.

    You lie!

  • ||

    HEY TIM,
    Fix the link on this:
    And people still haven't managed to screw up the weather.

  • ||

    You're welcome

  • ||

    Here's a fun fact people always miss: the politicians do not fuck things up because they are stupid or ignorant, they fuck things up because they don't care. Unemployment could hit 98% in California and the shitbags in the legislature would not give a gnat's fart. You don't think they all have their bolt holes to escape when it all finally collapses?

    They're working on a law that might make it impossible for cities to declare bankruptcy and dissolve the taxpayer raping union agreements. Read that again. They literally want to solve the bankruptcy problem by outlawing bankruptcy. Hey, that could solve the health care problem! I hereby outlaw disease and aging! Yay!

    They do not do this because they are stupid. they do this because the unions are paying them with money and whores to do it. They will ass rape this economy until it is completely dead and there is blood and anarchy in the streets, and then flee to greener pastures.

    They *laugh* at sites like this with it's admonishments about how politicians must learn fiscal responsibility and blah blah blah.

    They know all they stuff. They just don't give a shit.

    But you keep debating your little policy points. Whatever opiate keeps you busy, man.

  • ||

    But you keep debating your little policy points. Whatever opiate keeps you busy, man

    Well, what the fuck is your solution? You act as if politicians act in a vacuum, they are elected with a majority vote. Meaning that most people want this vile shit. Until the populace starts thinking differently about these things nothing will change.

  • ||

    But you keep debating your little policy points. Whatever opiate keeps you busy, man

    Well, what the fuck is your solution? You act as if politicians act in a vacuum, they are elected with a majority vote. Meaning that most people want this vile shit. Until the populace starts thinking differently about these things nothing will change.

  • ||

    Fucking hell.

  • ||

    Well, you can't vote for the guy that's not promising you free shit. And the other guy is usually a racist anyway.

  • ||

    Well, you can't vote for the guy that's not promising you free shit.

    Exactly.

  • ||

    You don't seriously think the CA electorate is influenced by anything on Reason Online, do you?

    Reality is, this thread is going to influence California politics roughly as much as the debate on ESPN's Yankees-Red Sox game thread influences the outcome of that game.

  • ||

    Depends on which mob boss is watching...

  • ||

    In California, the voters screw things up even without the intermediaries of politicians.
    California fiscal crisis mostly caused by irresponsible voter referendums.

  • ||

    What an absolute load of hooey!

    SPENDING is the cause of this disaster. California's budget has increased from just under $100bn to just under $150bn in ten years- fifty percent! Had the state merely kept spending per capita at inflation-adjusted 2005 levels, they'd be $15bn in surplus, not $28bn in the hole.

    You think California's problem is LOW taxes? You really think employers and skilled workers are running for the exits because they aren't taxed enough?

  • ||

    I don't think he said the problem was low taxes, did he?

    What he said is correct. Who the hell you think voted for all that spending in proposition after proposition?

  • ||

    Philip K Dick was right.

  • Rice Bingham||

    Breaking!
    Euro rescues Euro by printing 650 billion euros. Dan T approves because.. "grown-up's pay their bills"

    Details at 11:00

  • Chad||

    And the problem here is...?

  • Bob Mugabe||

    Not a damn thing as I see it. Look how well that money printin's doing my little corner of Heaven.

  • California||

    At least our women don't have mustaches!

  • ||

    You need to get out more often.

  • Berkley Feminist Club||

    +1

  • Mike Farmer||

    and remember, California is always ahead of the rest of the nation -- they had bungee jumping like 5 years, I think, before it got to the east coast. I might be wrong on that, but I'm almost positive it's true about certain forms of sex.

  • Ernie the Bear||

    "Come to California! We'll do your business, Greek-style."

  • Xmas||

    California is fluent is Greek, French, Russian and English...

    You know, I find it surprising that "Spanish" isn't a code word for some sort of kinky sex.

  • monolith||

    It can be a lot easier to do business in Greece than the article suggests.
    pay a bribe or "knowing the right person" will get the job done. They have a huge black economy.

    i do love the way that greeks can retire at 53 and the germans who pay for it all are looking at 67 being the retirement age.

    Its amazing how much EU money the greeks and portuguese have wasted. The Baltic states, ireland and former warsaw pack countries did far more with it.

  • Harvard||

    California workers scored a gentleman's B-, helping the Golden State come in 51st place out of the 50 states.

    Wow, even we're embarrassed to see grade inflation like that.

  • ||

    How can we STOP the Marxist in the White House from raping tax payers from other states to bail out California? We can't and its going to be another 6 months before we can kick the Socialit/Marxist Democrat scum out of Congress.

  • ||

    And replace them with socialist/marxist republican scum?

  • ||

    Stock market up 350. Because EU is propping up the failing PIIGS so they can avoid austerity measures necessary for long term viability within the EU. Many very smart analysts feel that the EU is doomed. But apparently you can make a lot of money betting on the stupid line.

  • ||

    It's interesting how far the interests of investors are diverging from the policies of the Republican party, which historically has been very closely tuned to business interests. Sure, Republicans still like capital gains and estate tax cuts, but Democrats are much more supportive of bold fiscal moves to restore economic confidence.
    Reagan bailed out the S&Ls; without a whole lot of fuss, but recently Republicans have gone full bore populist, much like this comment thread...

  • melman||

    "Democrats are much more supportive of bold fiscal moves to restore economic confidence"

    like blowing a trillion dollars on a "stimulus" package which is actually a payoff to their supporters?

    like creating a massive new entitlement scheme when there is no way we can pay for the ones we already have?

    are you talking about the Democrats in the US, or some other country?

  • CrackertyAssCracker||

    "Anti-Theft" != "full bore populism".

    There can, at times, be agreement between the Anti-Theft position and the full bore populism position, but they are two different things.

  • Nom-de-assume||

    They keep throwing the ahistorical smear 'free-market fundamentalists' around, I do not know why we politely hold our tongues and don't refer to them by the more accurate designation, 'communist' instead of the words 'liberal' which they are not, or 'progressive' which unduly flatters them. They are clearly to the left of those Romantic era poets and freethinkers who created voluntary communities and who were the original communist.

  • Shannon Love||

    philogratis,

    ...but Democrats are much more supportive of bold fiscal moves to restore economic confidence.

    Doesn't seem to have worked. At best the intervention of the last two years were emergency room like actions intended to offset the short-term and intense consequences of decades of government distortion of financial markets. Few people who work in finance see any benefit from protracted and extended state intervention in a system they screwed up in the first place.

    Reagan bailed out the S&Ls; without a whole lot of fuss

    Oh, there was fuss, its just that nearly 30 years of time have dulled people's memories. I was in college back then and a political junky and there was a lot of fuss. Moreover, it wasn't Reagan that started the whole S&L bailout but Democrats (who controlled the house back then) who wanted to save their little pet project of socialized banking.

    More importantly, it is not the quality of an action that sets people off but rather the scale in both money and time. People make calculation on how to spend their political capital and they don't take to the streets for relatively minor actions that offend their sensibilities. They'll just shrug and go on accepting it as a cost of living with a consensus form of government.

    At some point, however, the massive scale of the interventions passes a threshold they can no longer ignore and political resistance seems to explode out of nowhere from the perspective of those who haven't been paying attention.

    You also seem to forget that 30 years is an entire generation and a half. People and parties change. Back then, Reagan's idea of minimalist government was fairly radical even for Republicans. The previous 40 years had been one of increasing centralization and expansion of government even among Republicans. Reagan changed that. A big chunk of the Republicans and indeed most non-leftist have come of age in the new era of skeptism about government. You can't really compare the political orientation now with the orientations back then.

  • ||

    California's longterm population-loss trend has reportedly turned around slightly in the last few months,

    Of course. Homeowners contemplating fleeing the People's Republic don't want to take a beating on selling their houses, and are awaiting any bounce - even a dead cat bounce - before doing so.

  • ||

    Greece and Spain won't pay back. This was a calculated Risk, and a Lesson for the Banking System. The only thing Germans can do is:
    REPOSSESS 170 Leopard 2AEX Battle Tanks from Greece, and 190 Leopard 2A6E Battle Tanks from Spain.
    U.S.A must REPOSSESS 170 F-16 Jet Fighters from Greece, … the rest is gone with the wind …forever …
    Greece must stop paying lucrative pensions with borrowed money, reform the free health care system, and cut down, 4 times the military budged.
    Greece’s problem is too much debt. Greece has a budget deficit of 12.7% of GDP – meaning that the country is spending 12.7% more than the value of one year’s economic output.
    Greece is no different to a serial credit card borrower who can’t pay back his loans. But just like a serial credit card borrower, as long as Greece keeps relying on borrowed money to fund itself, the problem won’t go away. It will just get worse.
    http://www.defenseindustrydail.....der-05801/
    But don't worry; the ECB, the Fed or both will print the money.
    And all of us will share the pain, with our hard-earned money.
    Bad is never good until worse happens.

  • Doing Business in Kuwait||

    I do love the way that greeks can retire at 53 and the germans who pay for it all are looking at 67 being the retirement age. Its amazing how much EU money the greeks and portuguese have wasted. The Baltic states, ireland and former warsaw pack countries did far more with it.

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