The investments in question could be anything from home ownership (you should buy in Texas, but rent in California) to building a business to buying their bonds. Nothing in the article is very surprising: States with more takers than makers are considered risky, and the worst of those are in economic “death spirals,” and most of those are blue states. California and Illinois are both on the list, though not on the top of it.
It’s easy to see how California got on our list. It has pampered a large army of civil servants while using every imaginable trick to chase private-sector jobs away, the latest being a quixotic scheme to reduce the globe’s atmospheric carbon. A City Journal essay by Victor Davis Hanson notes that the state spends $10 billion a year on entitlements for illegal aliens.
Illinois is especially known for its dishonesty, whether among officeholders (future license plate motto: Land of Corruption) or in the habit of under-accounting for promises to government employees. The Rauh study counted $66 billion in the till to cover pension obligations of $233 billion.
The full list of “death spiral” states includes NM, MS, CA, AL, ME, NY, SC, KY, IL, HI and OH, in order of taker to maker ratio. Ohio may not be as swingy in the future as it has been in the past.
None of these states has a plan to deal with their financial problems. California just passed Prop 30, which amounts to a plunder tax and is likely to chase even more makers out of the Golden State. Illinois will keep on jailing former governors. New York will keep electing Cuomos.
That’s a nasty list, with red states on it.
Well, yes. Red-blooded American states on the death spiral list is a bad thing. GOP governors and state legistlators need to man up and address the problem NOW NOW NOW NOW NOW! Those of us in the other death spiral states need as many relocation options as possible.
If you consider the fact that Congress and the Obama administration WILL continue spending and printing until the US dollar is Zimbucks ALL of the states should be regarded as future Argentina’s. Only the timing changes.
MI is a Red State?
Should’ve been MS. My mistake.
– in the Jerry Brown train to nowhere.
Interesting that Alabama is on that list. Still, it kind of makes sense. A lot of municipalities have bloated governments. Some of those places have buckled under the strain in the last few years but the governments resist cutting back. Then there is the whole bad joke of Birmingham. At the same time, EPA mandates, high fuel prices and various green groups and government agencies are snapping up productive land left and right and putting it out of production. For a state that is dependent on agricultural and forestry, tens of thousands of acres being put off limits is a hard hit. And no: tourism doesn’t make up the lost revenue, not even close. Then let’s not forget the air tanker fiasco between Boeing and McDonell-Douglass. Boeing lost to the Alabama based company and ran crying to CONgress cash in hand and got the contract revoked. That didn’t help the economy much.
Mostly though there are a lot of welfare recipients in the state. The state along probably couldn’t support them so takes a lot of federal money. Federal money means more bureaucrats.
So there it is.
Help! Why did SC make the list?
It’s not the death spiral states I’m worried about. Nothing would make me happier than for them to burn in hell. It’s the death spiral country that’s the problem.
And somehow I have this wild hunch that the “bailout” of the death spiral states is on the schedule for the next 4 years. I wonder who will pay for that?
My understanding when I read the Forbes article was that they also factored in the state’s debt load, and public employee pension obligations. It was not enough detail.
As a former “maker” who got de-industrialized, and now taking the promised Social Security that I paid taxes for because it is an Insurance program, not a “gimme”, I strongly suggest that this new “makers and takers” meme be rethought.
And, as a New York voter (trying to escape), while I do assign tremendous blame on New York’s mountains of debt funded by the revenue streams of all those bridges and tunnels on former Governor Mario Cuomo, I would like to remind anyone that former Governor George Pataki had twelve years to DO SOMETHING, especially as the Medicaid expansion became so outrageous that the NYT ran an excellent expose. What did Pataki do? He privatized NY Blue Cross/Blue Shield, which had still been a successful non-profit insurance carrier, solely to partly fill a one year budget deficit. My monthly premiums doubled, for less coverage.
And, if the NY GOP had a brain, they would have given Steve King a shot in 2010.
Just don’t blame it all on the Cuomos. You can blame LIPA on the Cuomos, but not New York being on Forbes’ list.
Forbes needs to reveal their methodology.
correction: the NY GOP should have given former Suffolk County Executive, Steve Levy, a shot at Cuomo in 2010.
I do know Steve King lives in Iowa. Good pheasant hunter – should have endorsed Rick Perry at that Col Bud Day pheasant shoot…