California is not Greece

In The Atlantic article 5 Graphs That Show How Crazy It Is to Compare California to Greece, Jordan Weissmann drew on work by Standard & Poor’s analyst Gabriel Petek to debunk the latest Romney campaign through away laugh line “that at some point America is going to become like Greece or like Spain or Italy, or like California”

Even though the charts used do not comprise a perfect apples-to-apples comparison—they omit some important factors such as local government debt and public employee pension obligations—they do show that the comparison is basically facetious.

“If California were a country, it’s $1.958 trillion economy would be the world’s tenth largest, at least when measured by purchasing power parity.”

“And by last year, it [California] managed nearly 2 percent growth, … far outdistancing Italy, Spain, or painfully contracting Greece.”

“California’s 10.7 percent unemployment is in fact about on-par with Italy’s. But it’s far superior to the desolate labor markets in Spain and Greece.”

“But what about California’s famed budget messes? … California is, in the end, constitutionally required to balance its budget. It does issue bonds to pay for infrastructure projects, which has left it with about $90 billion of outstanding debts, equivalent to a little less than 5 percent of its GDP.”

“California has run some relatively small budget deficits in the past, … In 2011, though, Petek calculates that California’s general fund actually finished with a slight surplus.”

(Read the article)

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2 Comments

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2 responses to “California is not Greece

  1. Greece and California (the US as a whole, for that matter) do share one feature, and it’s widespread tax evasion among the rich. I think it was Dean Baker (CEPR) who described such tax evasion as a “national pastime” in Greece.

    And Spain’s crisis had nothing to do with government spending. Spain’s problem was that it agreed to take over the bad loans of the Spanish banks. Hmm, I guess the Spanish crisis is similar to our own, too, in its own special way.

  2. Macbaldy

    A facet of the profound contrast between California and Greece is the next-to-last chart in this article, the Debt vs. GDP depiction. California’s percentages (combined state & local debt/GDP) among US states aren’t in the top ten in 2012. As the most populous state (easily), it’s an easy target but hardly the most deserving.

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