Will California Fail?

Megan McArdle has an article about California and if it should be allowed to fail. Here are some excerpts (I suggest you read the entire article):

 There is a surprisingly sizeable blogger contingent arguing that we have to bail them out because however regrettable the events that lead here, we now have no choice.  But actually, we do have a choice:  we could let them go bankrupt.  And we probably should.

On the other hand, I don’t really see another way out of it.  If Uncle Sugar bails out California, California will not fix its problems.  Perhaps you want Obama to make it fix the problems, using the same competence, power, and can-do spirit with which he has repaired all the holes in the banking and auto manufacturing sectors.  But Obma is not in a good position to do this.  California Democrats are a huge part of his governing coalition.  All Obama can do is shovel money into the bottomless pit of California’s political system.

California will go bankrupt, muni and state debt will spike, the federal government will backstop humanitarian programs and very possibly all state and local debt, and eventually, California will figure out whether it wants higher taxes or lower spending.  But we will not actually make the world a better place by enabling the lunatics in Sacramento to pretend they can have both.

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12 Responses to “Will California Fail?”


  1. 1 Debbie May 20, 2009 at 1:49 PM

    I found the article to be interesting, and I somewhat agree to a certain point. It seems that we are consistently bailing cities, government, or states out of their problems. When will they learn to “keep within the lines?” I don’t know that allowing California to “fail” as it is put, would benefit anyone, yet I understand the frustration of having to help out.
    I think that there should be a compromise and all the parties involved need to come to an agreement as to what needs to be done and how/who/when it will be done. Only time will tell what is to happen in California.

  2. 2 Leonardo Sanchez Econ 101 May 20, 2009 at 4:00 PM

    Yes i must say bailing out cities or states let alone car industry’s and banks may help our economy in the long run than

    in the short run. One must say that we as a nation dont help our
    fallen citites or companies then who who? Certainly not

    communism Cuba so we have to do out part to help them out but with limitations! Few limitaions maybe regulating where the

    money may go or not go. Or simply keeping an eye of why a company or city is going down with the economy. Our mistakes can

    be our triuphs in the future.

  3. 3 Alyssa McKinney May 20, 2009 at 7:48 PM

    To say that the United States should let California fall apart is possibly the equivalent of saying that the United States would let Texas succeed – they have too much at stake to let California fall. Yes, it is extremely true that policymakers in California need to realize that they can no longer expect to get the benefits of a bailout without changing their basic structure.

  4. 4 Michael DeBoer St. Mary's May 21, 2009 at 12:49 AM

    California will never fail. We have too many important exports that come out of this state, such as Marijuana, Grapes, Produce, Computers and a lot more technology than most other states. If California was a Country, it would be the 5th largest country in the world. Sure we have problems, but who doesn’t? California will be the first to figure their problems out and become a leading state within this nation once again.

  5. 5 Andrew Curry May 25, 2009 at 6:50 PM

    I dont thik that it is ever a good idea to let a state or even small company go bankrupt. I see it as a cowardly way to back out and pretend that the issue at hand isnt real. i hope clifornia does not go bankrput and that no one encourages it. i dont see it happening either to be honest. California has one of the largest economys in the world, lets put it to some use

  6. 6 Claudio Ramirez May 26, 2009 at 12:01 AM

    California will not fail. Just thought i would say that first. I think this blogger is speaking hypothetically toward the actions and issues that await California and at the same time I believe it wouldnt be convient at all not let California fail because of its importance to the US GOP. Of course change is needed by all classes of Californians but government assistance, I dont care what anyone says is crucial and needed.

  7. 7 quique May 26, 2009 at 8:29 PM

    let me start off by saying that I think this blogger is upset with what obama is doing with our financial situations. I feel like I am getting a hostel vibe from him. I dont think that california will fail. at least i would hope that it wouldnt.i just think that it is interesting to see that that is what would happen if the president tried to bail us out.

  8. 8 quique May 26, 2009 at 8:29 PM

    let me start off by saying that I think this blogger is upset with what obama is doing with our financial situations. I feel like I am getting a hostel vibe from him. I dont think that california will fail. at least i would hope that it wouldnt.i just think that it is interesting to see that that is what would happen if the president tried to bail us out.

  9. 9 quique May 26, 2009 at 8:34 PM

    let me first start off by saying that i feel some very hostel vibes from this blooger in regards to the whole financial situation that the president is putting us in. this is very surprising to hear that all of this would occur if the president does in fact do what he has done for evry other situation. but i dont think california will fail, i think it will come down to us as citizens to ensure that california gets better.

  10. 10 wongt August 5, 2009 at 11:45 AM

    Its gotten this bad that I feel the folks in Sacramento cannot be so stupid to see the bigger picture. They should start cutting spending and actually balance the budget. Being an employee of the State of California, I am beginning to really worry.

  11. 11 Kit t Kat August 6, 2009 at 8:50 PM

    California should be responsible for it spending. If it has to go bankrupt for the people in charge and consumers to learn, that is what has to be done. Tough love hurts but it is a learning experience that suppose to improve people.

  12. 12 Luke Napier December 7, 2009 at 11:16 AM

    This is just an absurd question to raise. Although we are currently 1.2 billion dollars in debt it is ridiculous to assume that the state of California will fail. With the 8th largest economy in the world how could this even be imagined. With new people entering our state not only from the rest of the nation, but the entire world, California has nothing to worry in my opinion. As long as people are willing to spend money and do their part to further the prosperity of this state we will have no problems and will get out of this current situation thru hard work and determination.


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