Pensions killing NY

ok I see it, you don't want financeguy responding to me, maybe he should make up his own mind. If he can back up what he says, let him.

As for you, if you have nothing to contribute, why bother posting?

what have you ever contributed?

fyi..the reference was to normal conventional leases (not leases that are indeed equivalent to ownership)...

yep.

nothing.

You were the guy defending the city on the Verizon building scam. That was laughable. I get it, you were embarassed and this is how you lash out.

hfscomm1.

If you have nothing to contribute, why bother posting?

hfscomm1

Are you referring to me? I post lots of interesting news articles, and other things.

hfscomm1

NO I wasn't referring to you.

But back to topic.

financeguy, socialist and riversider had some positions to support.

hfscomm1

LICC, Government workers get pensions because they WORK for them. Your proposal to steal from the middle class to fund the rich is repulsive.

BB,LICC, I assure you that every business in America depends on the basic similarity between leasing and secured finance such as mortgages; it is one of the first things taught in the basic MBA finance class and the basic law school property class. If you don't understand it, there is no possibility you will be able to make sense of any company balance sheet, let alone understand why your tax evasion shelters work or might get you in trouble. It's why leasing a car and buying it on payments are always closely competitive alternatives. And it drives a significant part of the deal making on Wall Street.

HB: We are so far from fair taxation that it hardly makes sense to quantify. But given 30 years of increasing inequality resulting from the wholesale destruction of the regulations limiting finance abuses, the increase in anti-capitalist patent and copyright monopoly grants, the manipulation of the foreign exchange rate to export working class jobs and finish the Reaganite destruction of the private sector unions, the massive handouts to the banks and mortgaged borrowers through low interest rates, a minimum wage that is half what it was a generation ago in real terms, the massive diversion of social security taxes to fund cuts in the top income tax rates, the shift in general government spending from middle class higher education to prisons, and a generation of destruction of the moral norms that somewhat restrained CEO and financial market rapaciousness in the post-war period, I'd say that (1) the Eisenhower income and estate tax rates, together with (2) an effective corporate income tax, (3) a 1 cent per share/bond (or notional share/bond) financial transactions tax on stocks, bonds, and similar securities and derivatives based on them, (4) a carbon tax approximating the expected damage done but at least doubling the current prices, and (5) a 20% VAT half rebated to the states, would be a good starting point for discussion.

Financeguy: I am well aware of leasing / secured finance similarity. I was referring to your statement the other day which made no sense:

""CondoPres calls condos more "efficient" than coops, but that makes little sense. In each case a group of occupants pay the same management company to run the building. So economically, they are pretty similar -- in both cases, the owner/occupants replicate a landlord-tenant relationship while eliminating some of the more predatory and free riding incentives of for-profit landlords, ending up with something a lot like Rent-Stabilization-with-tenant-rights-to-transfer. "

I don't care to engage you. Your posts are too lengthy. I just get tired of your dead certainty on such things as rent control, market direction. It seems kooky.

Whoa..., I just read the rest of financeguy's comment to HB and LICC. I agree with some of the points --- a massive carbon tax makes a lot more sense than cap/trade lobbying pigout -- but as usual it's such a blizzard of seat of the pants bs that it would take an hour to respond. But given fg's agenda, it's ridiculous to keep couching every point as if it agreed upon basic economics. obviously true, etc. To take one simple example -- obviously a transactions tax would risk pushing some transaction volume to another jurisdiction, or cause some transactions to be morphed into other types of non-taxed transactions.

Here's something I did not know existed: a 401k debit card. I'm not making it up. What a great idea. Now Joe Sixpack can withdraw money from his 401k to buy a new flat screen tv. Just take out the card and swipe. Of course, now Mr. Sixpack will be working until he is 85.

http://www.sec.gov/answers/401(k)debitcards.htm

401k debit cards are perhaps the worst thing ever to be invented... even worse than subprime loans.

In the interest of fairness those not yet retired in defined benefit plans should also get debit cards.....

The debit card is for everyone, not just retirees. That's the problem with it. It makes it super easy to spend your retirement savings BEFORE you retire.

..gotcha...but if you have a pension, then you don't have a 401k ( i think)..so you should get to debit your employer's pension fund...it makes so much sense...uh, i think

anyone eligible for soc sec should get a debit card today....just to complete the circle

financeguy consistently posts ludicrous ideas. Now he wants to tax this country into the way of the USSR.

Or just restore the past tax rates of the United States...

>HB: We are so far from fair taxation that it hardly makes sense to quantify.

But don't you have to quantify? Otherwise it's just rhetoric.

>But given 30 years of increasing inequality resulting from the wholesale destruction of the regulations limiting finance abuses, the increase in anti-capitalist patent and copyright monopoly grants, the manipulation of the foreign exchange rate to export working class jobs and finish the Reaganite destruction of the private sector unions, the massive handouts to the banks and mortgaged borrowers through low interest rates, a minimum wage that is half what it was a generation ago in real terms, the massive diversion of social security taxes to fund cuts in the top income tax rates, the shift in general government spending from middle class higher education to prisons, and a generation of destruction of the moral norms that somewhat restrained CEO and financial market rapaciousness in the post-war period,

My bad, you got the rhetoric down well.

>I'd say that (1) the Eisenhower income and estate tax rates, together

91% top rate, ok see there you go, you were able to quantify some of this after all.

>with (2) an effective corporate income tax,

crap, I spoke too soon, I'm not sure what number or percentage is "effective"

> (3) a 1 cent per share/bond (or notional share/bond) financial transactions tax on stocks, bonds, and similar securities and derivatives based on them,

So you are willing to have all of these transactions move to foreign markets, right? (That's me being silly, of course you are willing to have all of this activity move out of the U.S. because you already told us you wanted a 91% top marginal tax rate)

> (4) a carbon tax approximating the expected damage done but at least doubling the current prices, and

Whew! At least this one doesn't hit NYC.

(5) a 20% VAT half rebated to the states, would be a good starting point for discussion.

There you go again, soaking the rich.
Oops, I meant, soaking the poor.

I doubt that much of the most destructive finance can flee. It is too dependent on implicit US government guarantees that lenders and counterparties won't be on the line for their worst bets. However, if the Irish or the Germans want to take over the guarantor role, that's their problem, not ours.

We'd be far better off without the bulk of the hedge funds, the CDO2, virtually all of the derivatives trades, even most of the collateralized debt markets, the automated trading. Banks half their current size, no hedge funds, and plain vanilla finance could easily provide all the useful parts of finance with far less looting and instability.

I prefer the hedge funds over the banks. Unlike the banks the hedge funds do not operate with an implicit government guarantee. The Funds have significant personal equity at stake and operate closer to the pre 80's investment banking model of parternships.

Banks are the risk! The top five banks control a disproprtionate share of our nations financial assets, and this only got worse since the 2008 credit crisis. Hedge Funds bring valuable pricing information to the world markets. Think David Einhorn and Hugh Hendry who showed us the emperor has no clothes(MBIA,Lehman,Citi).

The protected banks are the antithesis of capitalism who prevent transparency and price discovery in our financial markets and operate with government subsidies and benefit from too big to fail status.

High tax, high service countries (and cities) are more decent and pleasanter places to live than low tax, low service ones, just as high wage, high price places are more successful than the opposite.

THis is insane: stagehands at Carnegie Hall making hundreds of thousands of dollars a year ....

http://www.northjersey.com/news/opinions/68164552.html?page=all

Avery Fisher Hall & Carnegie Hall? Aren't they non-profits? And if so,(and i think think this likely) , they are being generous with other people's money(i.e. donations/grants).

Stagehands at Carnegie Hall are paid by private employers.

Bringing them into a discussion about public employees is absurd.

"Avery Fisher Hall & Carnegie Hall? Aren't they non-profits? And if so,(and i think think this likely) , they are being generous with other people's money(i.e. donations/grants)."

Newsflash: Working for a non-profit doesn't mean you have to take a vow of poverty.

Quite the contrary. Some of the lucrative jobs are in the world of nonprofits.

But it does mean the trustees have a responsibility to the benefactors.

And I have no doubt some of the most lucrative positions are with the non-profits...

What we need is a good old fashioned strike. You can hate public employees all you want, but let's see how long you can last without them. No subway. No sanitation. No teachers. No mail. I give everyone 2 days.

@financeguy
>High tax, high service countries (and cities) are more decent and pleasanter places to live than low tax, low service ones, just as high wage, high price places are more successful than the opposite.

Financeguy, where is your preferred place to live than in NYC in the USA?

>What we need is a good old fashioned strike. You can hate public employees all you want, but let's see how long you can last without them. No subway. No sanitation. No teachers. No mail. I give everyone 2 days.

Nobody hates public employees.

i hate you.

I don't know about that. Some of the rhetoric coming from LICC & Co. is definitely not very favorable.

"What we need is a good old fashioned strike. You can hate public employees all you want, but let's see how long you can last without them. No subway. No sanitation. No teachers. No mail. I give everyone 2 days. "

Hey, as long as we can fire them and get more competent ones, I'm in! I'll take a few day break for getting rid of some of the folks who shouldn't have the jobs in the first place.

It takes fare more than a few days to train somone to do a job. You would be without services for several months. You'll be begging all the union workers to go back to work and you will have no problem with them all making $100k.

> It takes fare more than a few days to train somone to do a job.

Yes, at least a week to teach them how do drive the train and send text messages at the same time.

You must be joking.

Seriously, you don't even need the driver, the trains can be run by computer, union is the only thing in the way. So you can take care of that in seconds.

If you really need someone to push a pedal (overridden by the computer), that will take, what, an hour?
Token clerks. What will that take, two hours?

Months, hillarious.

Your such a fool. It takes far more than that to run the system. Most workers you never see: dispatchers, towermen, mechanics, trackman, etc. So sure, go ahead and teach somone to fix a train in 3 hours. Teach somone to fix a track in 4 hours.

Socialist makes another pointless argument. Maybe everyone who runs business in this country should go on strike. No more supermarkets. No more computers. No more internet. No more heat, electricity, gas. No more phones, no more cars.

What would happen if the whole world went on strike is irrelevant to whether certain workers get excessive, unaffordable benefits.

> Your [sic] such a fool

lol. thanks for the laugh.

The 4/5 line today had a lost 12 year old child. The motorman helped out the father, and the train experienced probably no more than 2 minutes delay with all being resolved for the family.

If we cut the train to 1 live operator, was it the motorman or the conductor who should be eliminated?

decent point ...I guess then that I am saying the lingering effect will be nominally flat, down a little...unless you're saying the lingering effect will be a steeper increase....

Former House Speaker and possible GOP presidential contender Newt Gingrich is pushing for federal legislation giving financially strapped states the right to file for bankruptcy and renege on pension and other benefit promises made to state employees.

Proponents of the measure — which include Americans for Tax Reform, a Washington lobby group that fights tax increases — said the legislation is desperately needed to clear the way for struggling states to slash costs before they go belly up, and should be regarded as a preemptive move that could preclude the need for massive federal bailouts.

Read more: http://www.pionline.com/article/20110110/PRINTSUB/301109976#ixzz1AeLYRZH4

Allowing states to file for bankruptcy is nothing more than a way to bust unions. Maybe Newt Gingrich should go back to his mistress...

"the legislation is desperately needed to clear the way for struggling states to slash costs before they go belly up"

Am i reading this right... having them file bankruptcy... to avoid bankruptcy?

"Allowing states to file for bankruptcy is nothing more than a way to bust unions."

Exactly the intended benefit.

Allowing states to file for bankruptcy is nothing more than a way to bust unions. Maybe Newt Gingrich should go back to his mistress...

It's a silly comment. Corporations and individuals can use bankruptcy courts , why not states?
I think the better question is why stop at union contracts and not extend the concept to expensive interest rate swaps on municipal debt, and so on .....

maybe because bankruptcy court is federal? can you say constitutional issues? i'm sure those pesky little details don't bother newt, and clearly you haven't thought of them either.

Gingrich stands as much chance of becoming president as my cats do.

his contract has expired, thankfully.

and RS, look at the terms newt seeks. he seeks to circumvent the ability of the bankruptcy judges to determine how restructurings/payments are determined, and to make it illegal for taxes to be increased to increase revenues to assist in repayment of obligations. hello, insane much?

Republicans want to balance the budget, YET:

1. They want to cut taxes
2. Defense and Homeland Security cuts are off the table
3. They want to eliminate the estate tax
4. You can't cut entitlements
5. You can't cut farm subsidies

Basically, your hands are tied behind your back...

Workers should be in a position to maximize their pay in exchange for their productivity within profit making enterprises, just as for-profit employers should be able to maximize their productivity and minimize their costs. Nothing wrong with unions in these circumstances with for profit companies.

For government, municipalities, there is no profit component. In addition, unions trade favorable economic contracts for voting blocks. There's also tenure in certain sectors which means that the worker faces more limited risk. And because of the workers' involvement in critical services, they can hold up the public with strikes (MTA) or slowdowns (Sanitation). Lastly, there is limited bankruptcy option in the public sector and none at the federal level, and therefore no opportunity to correct long-term imbalances.

Anyone notice how quickly the snow crews were out this time around?

more importantly, you and your other you posted immediately.

Bloomberg targeting cost of union pensions
- Mayor proposes a series of policy changes in his attempt to tackle the city's looming $2.4 billion deficit, but many observers have a sense of d�j� vu.
:: http://www.crainsnewyork.com/article/20110119/FREE/110119832

4. You can't cut entitlements
5. You can't cut farm subsidies

they can't but they will have to. imho the spending cuts will be done by bond vigilantes, not through the political process... thanks to the 3rd rail and all that.

So Bloomberg wants to save on pension costs at the same time he wastes millions of dollars on "green" jobs. And what's with this whole "streamlining" city services nonsense? Is this code word for privatization. In the history of NYC, if not the country, privatization has never saved a single penny.

> The mayor wants to be able to retain new teachers by altering a law requiring the latest hires to be the first laid off.

this is excellent. worse thing for society is to lose good young employees with all their future productivity ahead of them. is funny when old people complain about age discrimination if they are not hired cause of being old, but don't say anything when "first hired, first fired" is used against the young.

“You have tenure, sit wherever you want.”

“Ten years? Ricky’s been playing at least 16, 17 years.”

total nonses. Bloomberg wants to dump older teachers because they cost more. Tons of younger teachers end up leaving the profession anyway.

> In the history of NYC, if not the country, privatization has never saved a single penny.

Uh, commercial garbage pickup, just to name 1...

"A Syracuse
University/Maxwell School study found that the average cost to residents for
refuse collection services provided by municipal employees and equipment
was close to the average cost of local governments contracting with private
haulers on behalf of residents, and it is likely to cost substantially less than
individual households seeking their own service provider."

http://www.osc.state.ny.us/localgov/costsavings/waste.pdf

Report: Privatizing trash pickup wouldn't save Scottsdale much

As Scottsdale searches for more ways to privatize services, a recent study suggests that outsourcing the city's trash-and-recycling service might not save money.

http://www.azcentral.com/community/scottsdale/articles/2010/08/27/20100827scottsdale-council-trash-privatization.html

Most privatization contracts usually end up with someone going to jail and millions of dollars flushed down the toilet... kind of like this:

Authorities have seized $27M in CityTime scam - money laundering, fake companies hid funds

The tally of money recovered from bank accounts linked to the accused CityTime scammers has hit a mind-boggling $27 million.

The city Department of Investigation and federal prosecutors have seized $26 million from dozens of bank accounts connected to six defendants who were arrested Dec. 15 and accused of a complex money-laundering and kickback scheme.

The six - including four former top consultants on the city's payroll and timekeeping project - bilked taxpayers out of more than $80 million, prosecutors say.

They did so by sharply inflating the rates they charged the city for consulting work, approving false time sheets and laundering cash through banks in Latvia and the Far East before depositing the money in the U.S. bank accounts of a series of dummy companies.

Read more: http://www.nydailynews.com/ny_local/2011/01/12/2011-01-12_authorities_have_seized_27m_in_citytime_scam__money_laundering_fake_companies_hi.html#ixzz1BWMqAilt

Why don't you guys watch Tosh.0 or something.
Anything beats spending hours making political arguments of ehich neither side will convert the other.
Once again, Tosh.0 on comedy central. I promise,you'll laugh.

I once got Riversider to admit that govt. workers don't make more than private sector workers so there is hope...

Funny, Socialist asks for a NY example, I give a NY example, and he comes back with... Arizona.

Arizona unions do not have the power of NY unions. That fact is what makes privatization in NYC such a financial benefit.

The first link comes directly from the official website of NY State.

"Arizona unions do not have the power of NY unions. That fact is what makes privatization in NYC such a financial benefit."

So then how do you explain the mess Texas is in? They also have no unions, but they do have a $27 billion deficit.

The main purpose of privatization is to reward campaign donors, not to save money. Contracts are often awarded through a no bid process to donors so there is no competititon. So what often happens is that years later, somebody goes to jail.... Blagojevich, Ted Stevens, Jon Roland... the list of corrupt officials goes on and on.

When it says

"the average cost to residents for
refuse collection services provided by municipal employees and equipment
was close to the average cost of local governments contracting with private
haulers on behalf of residents"

Does close mean slightly more or slightly less?

> Does close mean slightly more or slightly less?

imho substantially higher than private thanks to the real costs of benefits during retirement (totally underestimated).

How does privatiztion save money when the comapny that provides the services has to inflate their costs to make a profit? How do you go from a not for profit system to a for profit system AND save money?

> How does privatiztion save money when the comapny that provides the services has to inflate their costs to make a profit? How do you go from a not for profit system to a for profit system AND save money?

cause the so called non-profit is being run for the profit of the unionized workers, not the taxpayers. also a profit motive gives incentives for efficiencies.

Union pensions are out of line. When one examines the total life time comp of a Gov't contracted union employee employee vs one that works for the private sector you can't help but realize something is wrong. It's not the salaries but the benefits. The facts cannot be supported by value added. The only explanation is the crazy system of negotiating benefit increases.

"also a profit motive gives incentives for efficiencies."

Doesn't that usually result in lower quality service and corners being cut?

> The first link comes directly from the official website of NY State.

And, once again, isn't talking about NYC. But, hey, keep trying.

> So then how do you explain the mess Texas is in? They also have no unions, but they do have a $27
> billion deficit.

Did anyone say that unions are the only way to be stupid with money?

Would burning money be ok because someone else is eating it?

"imho substantially higher than private thanks to the real costs of benefits during retirement (totally underestimated)."

Bingo.

The for profit system is run for the profit of the shareholders, NOT the taxpayers.

"The main purpose of privatization is to reward campaign donors, not to save money. Contracts are often awarded through a no bid process to donors so there is no competititon. So what often happens is that years later, somebody goes to jail.... Blagojevich, Ted Stevens, Jon Roland... the list of corrupt officials goes on and on."

Of course, with union contract corruption, instead of jail, they get reelected with union help.

>The for profit system is run for the profit of the shareholders, NOT the taxpayers.

Would you prefer something different?

i would prefer that you stop.

>total nonses. Bloomberg wants to dump older teachers because they cost more. Tons of younger teachers end up leaving the profession anyway.

Another problem that could be solved with a little birth control.

hfscomm1

>How does privatiztion save money when the comapny that provides the services has to inflate their costs to make a profit? How do you go from a not for profit system to a for profit system AND save money?

Higher productivity per employee.

go

"Higher productivity per employee."

So private sector workers never slack off? Not a single private sector worker ever looks at porn while at work?

When was the last time in recent history that a government service in the US was privatized and money was saved as a direct result?

when was the last time that a teacher that sucks got fired cause of not doing the job well? same with the MTA?

it's not that everybody that works for gov are worse than those in the private sector. it's just that those that are very bad in the private sector don't last, while in the public sector they get promoted and protected if they have enough seniority. if unions wouldn't be able to use seniority and would have to use merit instead, their performance would be a different story.

Plenty of awful executives have lasted in the private sector. After Calry Fiorina ran Lucent into the ground, she got hired by HP, whcih she then ran into the ground.

I still would like an answer to my question. All of the privatization advocates should be able to cite plenty of examples. If I made a list of privatization gone wrong, it would be as thick as the phone book.

>After Calry Fiorina ran Lucent into the ground, she got hired by HP, whcih she then ran into the ground.

Untrue and untrue.

>"Higher productivity per employee."
>So private sector workers never slack off? Not a single private sector worker ever looks at porn while at work?

They get fired.
Unless of course covered by a union contract.

socialist never lets facts get in the way of his theories.

Carly Fiorina's troubling telecom past

Before she became the controversial CEO of HP, Senate candidate Carly Fiorina was a star at Lucent. What does her time at the telecom disaster say about her?

Lucent and its major competitors all started goosing sales by lending money to their customers. In a neat bit of accounting magic, money from the loans began to appear on Lucent's income statement as new revenue while the dicey debt got stashed on its balance sheet as an allegedly solid asset. It was nothing of the sort. Lucent said in its SEC filings that it had little choice to play the so-called vendor financing game, because all its competitors were too.

In the giant PathNet deal that Fiorina oversaw, Lucent agreed to fund more than 100% of the company's equipment purchases, meaning the small company would get both Lucent gear at no money down and extra cash to boot. Yet how could such a loan to PathNet make sense for Lucent, even based on the world as it appeared in the heady days of 1999? The smaller company had barely $100 million in equity (and that's based on generous accounting assumptions) on top of which it had already balanced $350 million in junk bonds paying 12.25% interest. Adding $440 million in loans from Lucent to this already debt-heavy capital structure would jack the company's leverage up to 8 to 1, and potentially even higher as they drew more of the loan.

Fiorina says in her autobiography that she pushed back against the pressure for short-term growth at any cost, and two former Lucent collegues with whom she remains friendly back her up. On the other hand, this 2001 Fortune story, which described Lucent's irresponsible growth habits, cites sources saying Fiorina made it known that Wall Street would generously reward companies that emphasized and delivered robust revenue growth. And an executive who sat across the table from Fiorina in a big vendor financing negotiation, when asked this week about what he remembers of the bargaining, described Fiorina as being dead set on chalking up a huge sale. He adds: "The press release was always very important to her."

Whatever the exact extent of Fiorina's role, Lucent was soon sucked in deep, making big loans to sketchy customers. In an SEC document filed just after Fiorina's departure, the company revealed that it had $7 billion in loan commitments to customers -- many of them financially unstable start-ups building all manner of new networks -- of which Lucent had dispensed $1.6 billion.

That's what happened to most Lucent investors. Soon after Fiorina left, the company began to collapse. Eventually its shares crashed to less than $1 and in 2006 the company merged with Alcatel (ALU).

http://tech.fortune.cnn.com/2010/10/15/carly-fiorinas-troubling-telecom-past/

HP stock prices also fell by 45% while Fiorina was CEO, depsite the fact that the overall Nasdaq only delined by 22%.

http://standingpat.wordpress.com/2010/05/12/carly-fiorina-slammed-for-drop-in-hp-stock-prices-under-her-tenure/

http://www.nytimes.com/2011/01/21/business/economy/21bankruptcy.html?pagewanted=2&_r=1&hp

Beyond their short-term budget gaps, some states have deep structural problems, like insolvent pension funds, that are diverting money from essential public services like education and health care. Some members of Congress fear that it is just a matter of time before a state seeks a bailout, say bankruptcy lawyers who have been consulted by Congressional aides.

“We just have to be honest and clear about this, and I also hope the House Republicans are going to move a bill in the first month or so of their tenure to create a venue for state bankruptcy,” he said.

A few weeks later, David A. Skeel, a law professor at the University of Pennsylvania, published an article, “Give States a Way to Go Bankrupt,” in The Weekly Standard. It said thorny constitutional questions were “easily addressed” by making sure states could not be forced into bankruptcy or that federal judges could usurp states’ lawmaking powers.

Mr. Skeel said it was possible to envision how bankruptcy for states might work by looking at the existing law for local governments. Called Chapter 9, it gives distressed municipalities a period of debt-collection relief, which they can use to restructure their obligations with the help of a bankruptcy judge.

Unfunded pensions become unsecured debts in municipal bankruptcy and may be reduced. And the law makes it easier for a bankrupt city to tear up its labor contracts than for a bankrupt company, said James E. Spiotto, head of the bankruptcy practice at Chapman & Cutler in Chicago.

Socialist, how about we say you are correct on Carly Fiorina. Now what does that have to do with anything? You are saying that some private company CEO having a bad track record impugns all others? After all, Carly's company HP went down by 45% and the bulk of NASDAQ companies outperformed.

How about states be allowed to declare bankruptcy and take all the privately held debt off the books, thinking that just punishing employees will somehow save the states is comical. Maybe we can just wipe out civil service laws completely in NY State and just return to the days when every government job was held by those who gathered the most votes for the democratic party, that would certainly save the state.

In Chief Executive’s annual survey of best and worst states for business, conducted in late January of this year, 651 CEOs across the U.S. again gave Texas top honors, closely followed by North Carolina, Tennessee and Virginia. They gave the booby prize for worst state to California, with New York, Michigan, New Jersey and Massachusetts filling out the bottom five-a line-up virtually unchanged from last year. Florida and Georgia each dropped three places in the ranking, but remain in the top 10. Utah jumped six positions this year to sneak into the top 10 at No. 9.

The business leaders were asked to draw upon their direct experience to rate each state in three general categories: taxation and regulation, quality of workforce and living environment. Within each category respondents graded states in five subcategories, as well as ranking each in terms of its importance to the respondent and how individual states measure up . . .

“The leadership of California has done everything in its power to kill manufacturing jobs in this state,” observed another CEO. “As I stated at our annual meeting, if we could grow our crops in Reno, we’d move our plants tomorrow.”

How is it that the nation’s most populous state at 37 million, one that is the world’s eighth-largest economy and the country’s richest and most diverse agricultural producer, a state that had the fastest growth rate in the 1950s and 1960s during the tenures of Democratic Governor Pat Brown and Republican Governors Earl Warren and Ronald Reagan, should become the Venezuela of North America?

Californians pay among the highest income and sales taxes in the nation, the former exceeding 10 percent in the top brackets. Unemployment statewide is over 12.2 percent, higher than the national average. State politics seems consumed with how to divide a shrinking pie rather than how to expand it. Against national trend, union density is climbing from 16.1 percent of workers in 1998 to 17.8 percent in 2002. Organized labor has more political influence in California than in most other states. In addition, unfunded pension and health care liabilities for state workers top $500 billion and the annual pension contribution has climbed from $320 million to $7.3 billion in less than a decade. When state employees reach critical mass, they tend to become a permanent lobby for continual growth in government.

Bill Dormandy, CEO of San Francisco medical device maker ITC, summed it up: “California has a good living environment but is unfavorable to business and the state taxes are not survivable. Nevada and Virginia are encouraging business to move to their states with lower tax rates and less regulatory demands.” . . .

Little wonder then that while Texas gained over 848,000 net new residents in the last 10 years, according to the Census Bureau, California lost 1.5 million. New York State’s net loss exceeded 1.6 million - the highest of any state. High-tax, big- government New Jersey ranked fourth, with a net loss of almost 460,000, enough to drop it from 10th to 11th place in population.

“The New York state legislature is the most dysfunctional in the land and one of the reasons why New York is the worst,” one exasperated New York City business leader volunteered. The political elites in the states that dismiss out-migration trends overlook the radical demographic adjustment underway. As higher-income earners leave, they are more often replaced by those with lower incomes and lower skills, many needing public assistance. Gone too are the entrepreneurs and risk-takers, off seeking regions where their job creating abilities are rewarded.

-chiefexecutive.net