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California Might be 7th Largest Economy, But is 1st in Poverty

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Governor Jerry Brown, in his State of the State address on January 24, can credit California with overtaking Brazil, Russia and Italy as the world’s seventh-largest economy. He might try to claim credit for rising employment, home values and personal and corporate income. But California’s growth has been due partly to the importation of impoverished foreign immigrants, driving the state’s highest annual population growth rate in nearly a decade, according to the state’s finance department.

“It’s the diversity of the California business environment, from movies to the Internet to agriculture–the incredible array of businesses that make up the state,” Brown told Bloomberg News from an office in Oakland, where he was mayor for eight years in the 1990s. “Certainly getting our finances in line as a state is also helpful: the new investments in our schools; solid universities; investments in water and energy. All this gives security and keeps California very much in the forefront of investment, change, cultural adaptation and leadership.”

But what Brown’s program for diversity created in 2013 was 102,972 California residents leaving for other states, and only 66,294 individuals from other states moving to California. The reason that the Golden State achieved a net population gain was 169,266 mostly illegal/undocumented immigrants that moved into California.

Brown’s rising diversity allowed the City of Los Angeles to achieve the crown as America’s Poorest Big City, according to an analysis by the American Community Survey-based Census Bureau data. Of the 25 major metropolitan areas in 2013, Los Angeles-Long Beach-Anaheim took the booby prize for having the highest poverty rate at 17.6%. California’s overall rate of poverty was also the top contender at 16.8%.

Given that the next closet big city poverty rate was New York-Newark-Jersey City at 14.6%, Governor Brown’s seems destined to be able to retain the title as poverty queen for his next four years of his Administration.

Brown crowed in his January 5 inaugural speech that California is home to more companies on the S&P 500 than any other state. It is true that the state has produced high wage jobs for the executives and highly skilled technology workers.

Brown can legitimately claim that his so-called job creation spike has allowed California to streak past Mississippi to now tie for the second worst unemployment rate in the United States with Georgia at a 7.2% rate.

Brown rebuffs criticisms that his tax and regulatory structure make California a hostile place to do business.  He recently told Bloomberg an anecdote about a Silicon Valley investor he met at a cocktail party, who started and sold three technology-related businesses, that told him he’s in California because the state has “more smart people with money and more people who know how to spend that money by way of tech companies and ventures that are constantly sprouting up.”

But Brown’s entrepreneur story probably will not mean much in the future to the average California middle class family. Almost all Silicon Valley start-ups quickly outsource manufacturing and distribution jobs to other states or overseas to avoid California’s tax and regulatory structure, which Brown seems so proud to have achieved.

Brown’s latest spending proposal did set an all-American record at $165 billion. Powered by what Brown calls his “temporary sales and income tax increases” that he championed in 2012, his latest budget claims a $5 billion surplus.

But that surplus only exists until California starts to eat its portion of Obamacare’s Medi-Cal enrollment expansion. Although the Brown Administration predicted Medi-Cal enrollment would only grow from 8 million in 2013 to 9.5 million in 2019, the program has already jumped to 12 million and now covers one third of all Californians.

Governor Brown’s “diversity” has imported many foreigners that are so poor they qualify for Medi-Cal. At least the Brown Administration is #1 at something.

If you are interested in the Obama Administration’s idea of law enforcement, please click on Holder ‘De-Incentivizes’ Cops on Drug War Seizures


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