Thursday, July 23, 2009

California, WTF? Redux



I have been noodling the consequences that attend a self-destructed California, and that led me to do some numerical analysis. Much has been made about the fact that California is the eighth largest economy on the planet. My partner asked me about other states; I became intrigued, so I did the research. Here is a table that lays out the Gross State Product for all 50, plus the District of Columbia (these are 2008 figures (in millions) according to Wikipedia):

1 California 1,846,757
2 Texas 1,223,511
3 New York 1,144,481
4 Florida 744,120
5 Illinois 633,697
6 Pennsylvania 553,301
7 New Jersey 474,936
8 Ohio 471,508
9 NC 400,192
10 Georgia 397,756
11 Virginia 382,964
12 Michigan 381,963
13 Mass 351,514
14 Washington 311,270
15 Maryland 268,685
16 Minnesota 254,970
17 Arizona 247,028
18 Indiana 246,439
19 Tennessee 243,869
20 Colorado 236,324
21 Wisconsin 232,293
22 Missouri 229,470
23 Connecticut 216,266
24 Louisiana 216,146
25 Alabama 165,796
26 Oregon 158,223
27 Kentucky 154,184
28 South Car 152,830
29 Oklahoma 139,323
30 Iowa 129,026
31 Nevada 127,213
32 Kansas 117,305
33 Utah 105,658
34 Arkansas 95,371
DC 93,819
35 Mississippi 88,546
36 Nebraska 80,093
37 New Mexico 76,178
38 Hawaii 61,532
39 Delaware 60,118
40 West V 57,711
41 New Hamp 57,341
42 Idaho 51,149
43 Maine 48,108
44 Rhode Island 46,900
45 Alaska 44,517
46 Montana 34,253
47 South Dakota 33,934
48 Wyoming 31,514
49 North Dakota 27,725
50 Vermont 24,543

Thanks to Wiki, I can also detail the international GDP by country:

1 United States 14,264,600
2 Japan 4,923,761
3 PR China 4,401,614
4 Germany 3,667,513
5 France 2,865,737
6 United Kingdom 2,674,085
7 Italy 2,313,893
8 Russia 1,676,586
9 Spain 1,611,767
10 Brazil 1,572,839
11 Canada 1,510,957
12 India 1,209,686
13 Mexico 1,088,128
14 Australia 1,010,699
15 South Korea 947,010
16 Netherlands 868,940

Playing around, here are some fun facts that one can deduce from the above data.

California has 13.22% of GDP in the United States, and its output is larger than all states and every country starting with Russia and below. It is 37% of Japan's economy, 42% of China's, 50% of Germany's, 64% of France's, 69% of Britain's, 80% of Italy's and 110% of Russia's.

California, Texas and (an increasingly diminished) New York account for 30% of the US economy. The bottom 23 states (plus DC) nearly equal California's output. In other words, California, Texas and New York combined are slightly below China in world economic rankings. Just for laughs, let's throw in New Jersey and Pennsylvania and you now have the world's second largest economy. But California is certainly the linchpin here; without it I would have to add several more states to reach second place in the world.

So here's a frightening thought. What would happen to the world's economy if China collapsed? Or for that matter, if Japan went under? Of course, neither situation is presently plausible. Yet, the world's eighth largest economy is already reeling, with no permanent solution in sight. Every politician and commentator around thinks that the recent (almost passed) budget legislation is merely a band-aid for a wound that will fester long into the future. So I think it is safe to say that California (and maybe soon Texas, New York et al will follow in her footsteps) is toast. Jobs there are evaporating faster than a puddle on a hot summer day. People are exiting the state in alarming and increasing numbers. A public primary school system that was already bad is about to get worse. Higher education, once considered the best in the nation is taking it in the chops. Real estate is depressed and foreclosures are continuing on a torrid pace. As I have said in the past, you can bail out Citigroup once, and hope for the best...but what can you do about a state that has ongoing systemic problems? Is California too big to fail?

I think the answer to the last question is yes. As much as I hate to say it, if the government really wants to stimulate a national economic recovery, they had better move "saving California" to the top of the list. Instead of building "bridges to nowhere" and their ilk in areas like Alaska, Montana and Wyoming, why not devote ALL the stimulus money to states like California, that, from an economic standpoint, really matter.

Of course, politics being what it is, my suggestion will never be implemented. This means that we are, from my perspective, doomed to have a stagnated economy for decades to come.

California WTF? Ouch!?

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