Now that California is issuing IOU's, a good question to ask, is "Who Can Possibly Govern California?"
Analysis
To be sure, California remains a beacon of economic growth and innovation. Here's a video on the secret history of Silicon Valley.
But, chronic problems (i.e. wildfires, earthquakes, recessions. battles with labor unions) and a very high cost of living are huge drawbacks to the allure of the state. To quote from a recent Forbes article on business climate...
"Bringing up the rear of our rankings are the troubled spots in California. The Golden State had its worst showing ever in our tally. It is home to six of the seven lowest-rated spots, and Riverside was the only one of its 21 metro areas (among the country's 200 biggest) that cracked the top 100. Most California metros are burdened with sky-high living and business costs, and the job outlook is week. The unemployment rate in 199th-ranked Merced, Calif., is expected to hit 21% in 2010."
If you read the above link in full you'll read that Forbes can't drool enough over the business climate in Texas. Yet, Texas has many of its own problems too, so a good business climate cannot lead to a de facto claim of superiority. For instance, it's embarrassing the focus in Texas schools is on creationism and not science.
Meanwhile, California's system of higher education is the envy of nearly state - and ultimately this is what drives innovation. Remember, California didn't become expensive by accident, its cost-of-living is so high because 1 in 8 Americans are drawn to the state by its good climate and lots and lots of jobs.
California will recover from this recession. The only question is when.
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