What's so "progressive" about a low standard of living?

City Journal on the real election that occurs when governments become liberal; the flight of people and money.

Several key economic indicators point to grim news for the Golden State in the aftermath of the Wall Street meltdown. The state’s unemployment rate has jumped to 7.7 percent, its highest rate in 12 years and the third-worst in the United States. In Riverside County, 40 percent of homes sold in the past year are in foreclosure. Unfortunately, California’s government doesn’t seem interested in solving the state’s economic problems.

California continues to be burdened with high taxes, punitive regulations, huge wealth-transfer programs, out-of-control spending, and lawsuit abuse. And there’s no end in sight to the state’s fiscal madness. The “balanced budget” signed only a few weeks ago by Governor Arnold Schwarzenegger already runs a deficit of as much as $5.5 billion. Last week, to cover state expenditures for the rest of the fiscal year, the state sold $5 billion in short-term notes. Schwarzenegger bought $100,000 worth himself.

Analysts already project that next fiscal year’s budget will be billions in the red. State spending has increased at a faster rate under Schwarzenegger than under his predecessor, Gray Davis. Every year, California puts taxpayers on the hook for yet more spending without any reform of the government’s boneheaded economic policies. It’s not surprising, then, that California ranks fourth-to-last in the Pacific Research Institute’s 2008 U.S. Economic Freedom Index, published in association with Forbes. The Index measures how friendly or unfriendly each state’s government policies are toward free enterprise and consumer choice. Its rankings derive from a comprehensive evaluation of fiscal, judicial, and regulatory indicators such as tax rates, state spending, occupational licensing, environmental rules, income redistribution, tort reform, and prevailing-wage laws.

When he arrived in Sacramento, Schwarzenegger promised to end government overreach. He pledged to “blow up” boxes in the state’s organizational chart, “tear up the credit card” for state legislators, and curtail taxes. Thus far, though, any “Schwarzenegger effect” on state governance has been difficult to discern. Since 2004—Schwarzenegger’s first full year in office—California’s economic-freedom ranking in the PRI index improved only two places, from an abysmal 49 to 47. And $5 billion of new debt will do nothing to bolster the Governator’s self-proclaimed reputation as a fiscal hawk.

By contrast, Nevada, California’s neighbor to the east, boasts a much more favorable economic environment. Nevada ranked sixth among the states in economic freedom, an improvement from 2004, when it placed twelfth. But the model of economic freedom among the states is slightly further east—South Dakota. The Mount Rushmore State imposes no corporate-income tax, no personal-income tax, no personal-property tax, no business-inventory tax, and no inheritance tax. States in the Great Plains and Rocky Mountains tend to be the most economically free. States in the Northeast tend to be the least free. (New York has ranked dead last since 1999.)

But it's alright California, if the Axis of Taxes take over the country, the rest of the US will be just as miserable as you are.

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