Back in the malaise years of the 1970s, the United Kingdom was commonly referred to as “the sick man of Europe,” a mantle the Brits inherited from the Turks of some 100 years before. Most people tend to forget now after Margaret Thatcher’s revolutionary reforms just how poor Britain’s economic performance was relative to Europe and the United States. Every period in economic history has different variables but it can be helpful to look back to previous eras in order to make educated decisions about the current events.
In the post World War II era, California was the driving force behind much of America’s economic dynamism. This spans from production agriculture to technology across every key industry in the global economy. California was the major contributor to our defense technology superiority in aerospace; our technological advances in financial services (some of which likely prevented gas lines in recent years), our cutting edge advances in microchips and computing, and the revolution in consumption of entertainment. Silicon Valley and Hollywood alone accounted for a huge share in our trade ledgers with major trading partners from around the world. In the past 25 years, California’s wealth would have allowed it to be in the largest 8 to 10 economies in the world, if it were an independent nation.
The economic woes of California have been well documented on the Hayride and news sources domestically and abroad. Its unemployment levels are around 13%, its annual fiscal deficits are at nightmarish levels, and its unfunded pension liabilities are such that any educated observer has to seriously contemplate how even the US taxpayer can absorb these without causing even greater harm to our capital markets. For many years, I scratched my head at the policy decisions coming out of Sacramento but just shrugged my shoulders. I presumed that was the problem of the electorate in California and they would reap what they had sown.
However, one need not be an accomplished economist to extrapolate that as long as California is the “Sick Man of America,” can the US economy really grow again? How can anyone foresee robust economic growth for the United States if California is on its back and the Obama Administration continues to push measures like Cap and Trade and Card check, among others?
This week, foreign capital has been moving towards the US, as the EU implodes, the UK is on fumes, and China begins to come off its rails. If the US is considered a safe harbour for investment funds, what does that say about everyplace else and what does it say for the next 5 or so years of the US economy? No matter what happens in the November elections, the current Administration clearly wants to do more of what got us into our current economic woes. Additionally, California does not appear to be equipped to tackle its dire situation. The opportunity seems ripe for an authentic revolution even more necessary than the last generation that gave us Ronald Reagan and Margaret Thatcher. People in California, the United States and the world desperately need bold leaders, who will step into this vacuum?