I'm guessing you haven't ever started a business and certainly never one in the energy industry (I've done both, although I'm in electricity with a nexus to fossil fuels). First off, you don't make money on the crack spread or a pipeline, you make it on the stuff you get out of the ground. That's pretty fundamental and basic. Second, you site refineries next to the source, the demand, or the transshipment point. Which fundamentally makes some places better than others, not a lot of refineries in Arkansas or Tennessee and they get jack from the gas lines that run through their states, is it the leftist politics there? I feel like the fact I even have to point out something this basic means we're not having an honest discussion. How did the GDP growth of WA compare to Kentucky in 2017 (4.4% vice 1.8%)? How about Texas to taxachusetts (2.6% for both, btw). This is a fun game but not sure of your point. You seem to be quite forcefully ignoring mine, that if you're Chicago then creating an ecosystem that supports the high end of the business world has worked out pretty damn well for them while in Texas creating an ecosystem based on extraction and more recently lot's of buildable land has worked pretty damn well for them. In a way I agree with you, building an ecosystem is an inertia effect, it's called increasing returns to adoption and we spend a good deal of time in the business world looking to create that and capture its value, it's kind of a holy grail. And BTW, Chicago is still the 3rd biggest city in the U.S. Back to the experience starting a business discussion, how many times have you pitched a VC? For a business in MS, KS or LA (the state not the city)? If you succeed you'll be the unicorn in the leprechaun forest for sure! Try a PE backed roll-up strategy in one of those places, maybe slightly better luck, certainly if you're in oil and gas, but still, tough going by comparison to a business center. If you want to get an SBA loan for your body shop, sure, you can do that in KS just as well as anywhere else. Those aren't the kind of companies that have driven GDP growth over the past several decades in this country. And yes, infrastructure in MS and KS and LA sucks. How many full stack coders can I hire in Jackson, MS, probably 50 in the whole city, ever? How many world class universities are pumping out more? How many labs are there generating new ideas? How many direct flights to population centers around the country? How many symphonies and museums and cool restaurants and the other things that attract the kind of people who have created most of our GDP growth over the past several decades? If they did start to attract those things, do they have mass transit or does everyone end up living in spreading suburbs? Again, I feel like you're not interested in an honest discussion if you're claiming you really think the stuff paid for by socialized costs in Jackson, MS is just as suitable to GDP production as that in Seattle. That's an absurd claim on its face. GS has VP jobs everywhere in the world and always has, the vast majority of them are still in the world financial centers and are never moving to Texas. GS and JP Morgan are in no way shape or form "moving out of NYC" because they open an office in Dallas, again arguing that is almost absurdist! And which Fortune 500 companies that were founded in the last 30 years came out of a red state/city again? Key my point, again ignored, that dense infrastructure and ecosystem places breed innovation and new companies and as they grow they farm out the work to cheaper places, B-school 101. On the topic of honest discussion, do a quick google on the "Kansas Experiment", it will be highly instructive to you and it's highly instructive to me that in your bubble it apparently never happened? TLDR, Kansas dramatically cut it's tax rates in 2012 under Governor Brownback and a supermajority Republican legislature because we all know that is the driver of growth right, and the increase in growth will more than make up for the lower rate, it's your orthodoxy isn't it? Fast forward 5 years and Kansas in not only lagging all it's neighbors significantly in growth but they've cut their revenues so much that they're forced to decimate state services to the point of going go to 4 day public school weeks, how's that for the kind of workforce development that drives GDP! Bottom line, utter and complete failure, by 2017 it's repealed, Brownback quits as Governor, and now Kansas, of all freaking places, has a Democrat for governor largely because of that debacle. Seriously, you never heard of this thing? It's kind of a big deal among anyone who is a student of economics or politics, you'd have to be almost willfully blinding yourself to it not to know about it, or just not really be interested in economics in which case we probably should stop conversing.
So what exactly are quite profitable refineries such as PSX, VLO, or MPC pulling out of the ground? I agree with you that the location matters, but the fact is you have refineries in 32 out of 50 states. (https://en.wikipedia.org/wiki/List_of_oil_refineries#United_States) If it wasn't economically viable to have refineries in those areas, they simply would not be there. And can oil be transported by pipeline to just about anywhere in the country? Which political side opposes the pipelines even though they would create less CO2 in transporting oil compared to truck or more likely rail car? You mean the blue state with no state income tax compared to red state Kentucky with 5% state income tax? Wasn't your original claim that blue states have higher GDP than red states? So how does citing a solid blue state matching the GDP growth rate of a solid red state support your claim? To prove your point, you need to find evidence that supports your claim, not evidence that goes against it. By the way, you never answered my question regarding how California GDP growth rate compares to Texas. I'll answer it for you. Texas blows California GDP growth out of the water. California has all those socialized policies going for it and admittedly even a better education system than Texas, probably the best college education system in the US. I'm sure it's doing a lot of good, but doesn't give it a GDP growth advantage. Here's another article: https://www.forbes.com/sites/chuckd...ia-in-job-and-population-growth/#63d614873f39 If there's so much better opportunity there for economic growth, then where is the job growth? Those are facts. I'm not making that up. You have higher job growth and net migration away from the high tax states to the low tax states. Again, if there's so much more opportunity in the high tax states, then why are people leaving? Those people are not all leaving for the lower cost of living and becoming envelope stuffers. For some businesses, I can buy the ecosystem argument. If you're a modeling agency or involved in the fashion industry, then you probably want to be in New York. If you make films, you probably want to be in LA. If you do advertising and media marketing, probably LA or New York. If you are a really ambitious software engineer, you probably want to be in San Jose or maybe Seattle. Not so much for the ecosystem, but because it's really easy to change jobs and that's where the action is in the software world. As you were saying, a lot of software companies will start up in San Jose or Seattle because that's where the talent is. Doesn't really have to do with the ecosystem (which you seem to be attempting to conflate with the politics of the local government). It's simply more difficult to get talent to move to Boise, Idaho, vs Seattle, Washington because the talent also wants to be around other employers found in large cities. I'll ignore the ad-hominem-related questions, but if the business idea is really solid and well-researched and the firm concludes that the business has a very high probability of success, then why would a firm reject it based on where the company is located? As previously mentioned, I agree with you that it would be more difficult to hire good software engineers in Jackson, MS or Fairbanks, AK vs. Seattle. But that has absolutely nothing to do with tax system or mass transit system of a city. That goes back to the chicken and egg problem and admittedly preference that I mentioned above. Yes, people like things that big cities offer. Or maybe people right out of college just go to big cities due to better dating opportunities. For young people just out of college, that's probably a bigger factor than how many symphonies or museums a city has. Point is that people are attracted to opportunity. But the opportunity doesn't necessarily require your vaguely defined "socialized costs" or high taxes. I've heard pollution referred to as a socialized cost, but not sure how you define it in this context. In a couple posts above, you accused me of confusing correlation with causation, but you're actually doing the same. You are speculating. You cannot promise what a Fortune 500 company will do in the future. Give AOC and the socialists some more time...they are still working on driving all wealth out of the state. You can Google that information, but the top Fortune 500 company by revenue was Walmart which came out of Arkansas, a red state if I remember correctly. Behind that, Exxon Mobile, another red state, but that's an oil company so I guess that doesn't count as it doesn't produce genuine or authentic GDP. Again, if you're going to bring up a question, maybe check first to ensure that it doesn't disprove your argument. Regarding Kansas, I honestly had not heard about it. Did not realize it was a criminal offense for not knowing about it. But I feel at least a little better knowing that I can understand the simple concept of job opportunity offered by large cities (simply because they have a lot of jobs) and not try to come up with baseless speculative arguments for why they must also bear my personal preferences in regards to characteristics of local government.
The Kansas Experiment epitomizes this entire discussion. Not knowing about it certainly isn't criminal, however if you want to believe you can engage in a serious discussion about macro, not knowing that one of the most interesting and directly relevant topics in macro from recent times even happened belies your seriousness and level of knowledge on the subject. As best I can tell your argument is that every state could have Texas' economy if they lowered/ended their taxes (Always Texas, interestingly). The hard thing about economics is that it's difficult to apply the scientific method of developing a hypothesis, then running an experiment to test it with suitable controls. The Kansas experiment was probably as close to that type of experiment as we'll ever get in macro. The state dramatically lowered taxes while all the surrounding states did not. The surrounding states all had very similar geographies, natural resources, and economy types and it happened at the same time so they were all exposed to the same national and international economic environment. The hypothesis was that lowering taxes leads to prosperity and the increase in prosperity more than makes up for the lower tax rate. The experiment ran and the result was unequivocal, it was an utter disaster, economic growth actually lagged all the controls and the local governments were decimated to the point they couldn't even provide the most basic services that even the most conservative folks in Kansas thought were necessary. We can cherry pick different geographies, natural resources, and the like all day. And that's exactly my point. A low tax regime makes sense for Texas. It doesn't make sense for most of the places that have a high tax regime, a high tax regime does. The fact that 2/3 of our country's GDP and all of the major growth companies that were started in the last 30 years (actually probably 50 years) came from those types of regimes makes it pretty silly for anyone to argue that they're a failure. They're what work for the people and location where they're implemented. That's why we have a federated system of government here in the United States. You'll notice I've not once argued that Texas should institute an income tax and switch to an information based high infrastructure economy, I've said exactly the opposite. As best I can tell you've advocated for San Francisco replacing the GooglePlex with a refinery and CA ending taxes? Obviously you didn't say that, but what exactly is your point? What should CA do in your "king for a day" world? BTW, pointing out that your argument belies a lack of real world experience in the topic of discussion is in no way an ad hominem attack, let's just be clear on that. If you try to tell me as an electrical engineer that cell towers cause cancer I'm sure as hell going to point out you've neither seriously studied the subject nor ever measured signal levels while I have, so it will be difficult for us to have an intelligent discussion. That's essentially the case when you try to tell me that it's just as easy to get a firm funded in Little Rock as San Jose (short answer, early stage funders very much discriminate to only investing in firms they can easily drive to meet with because they plan to do so often. There aren't many early stage investment firms in Little Rock). You just don't even begin to know what you don't know about that based on your comments, so it will not be possible for us to have an intelligent discussion as long as you insist that your naive uninformed opinion in the area should be treated as just as valid as my extensive experience actually doing it.
That's your opinion. I try to keep up with the news, but there's many things that I'm going to miss because I'm a software engineer, not an economist. It's just not my focus, but I can have an honest discussion and back my arguments with facts and logic as I have done here. As you pointed out, there are many variables leading to economic growth or decline. There's no way to say that the decline was directly a result of the change in tax policy. Maybe it was, but hard to say. Kansas is a state of 3 million people with stagnant population growth. It's been that way for a long time and it's doubtful to say that people would suddenly flock to Kansas over lower taxes. At least Kansas did the right thing and changed leadership. You'll never see that happen in Chicago or Detroit regardless of the results. The elected officials there could hold a press conference and throw puppies into a woodchipper the day before election and still get elected. Texas is the second highest state in the union in GDP as well as population. I wouldn't call that cherry-picking. I never stated here that all states should lower taxes. And stop trying to misrepresent what I have been saying with your statement, "As best I can tell you've advocated for San Francisco replacing the GooglePlex with a refinery and CA ending taxes?" My argument here is that people go to large cities because that's where the opportunity is, not because of the politics or taxation policies of the local government. If you want to accuse me of cherry-picking, then you need to explain why even more "socialized" *countries* can't produce the GDP of Texas. To your argument that nothing great has come out of a red state in the past 30 years...so what great technology companies are coming out of Paris? Where is the Facebook, Netflix, Amazon, or Google from the EU? The EU has socialized healthcare, higher taxes, mass transit, carbon taxes, regulation...all that stuff that you probably love. But where's the results? The fact is that many ambitious people living in France come to silicon valley simply because that's where the jobs are. Do you really believe that my Indian friends who have been living here for the past 10 years, a few still waiting on their green cards, came to a large US city simply because they wanted Obamacare, better mass transit, and museums? Of course not. I can assure you that they would much rather be living back in India with their families and friends. Not sure how this is relevant to the conversation, but for starters, they should change their property taxation system as I mentioned earlier in this thread so that new home buyers don't end up subsidizing the people who have simply lived there for a while / stop creating an artificial subsidy for landlords. Instead of basing my arguments on anecdotal and subjective personal experience (which of course, anyone can make up a story on the internet so ultimately no one has any credibility in that area anyway) I base them on logic backed by fact. More importantly, I avoid submitting baseless speculation in an attempt to attribute a cause supporting my political philosophy when a much simpler answer makes sense. The problem with doing that is you end up having to accept all the bad as well as the good. For example, if you want to attribute great GDP growth to liberal policies, then what about homelessness? Large cities have a disproportionate and rapidly growing amount of homeless people (San Francisco, Seattle). So did those same liberal policies cause that too? See, that's not my argument. I'll give you the exact same argument that I gave you regarding jobs and opportunity. Homeless people migrate to large cities because that's where the opportunity is! Larger cities, especially west coast cities, have more resources for homeless. Try panhandling in a town of 300 people. No shopping cars to steal, no public transportation or Starbucks to use as a bathroom. It's harder. Although, I think some liberal policies do make the situation worse: https://www.nytimes.com/2018/05/03/nyregion/nyc-safe-injection-sites-heroin.html Your tax dollars going to fund "safe" government-sponsored drug use sites in Seattle and other cities. Such a stupid idea... Anyhow, I think you could have made a stronger argument if you tried to argue that the large blue cities you referenced tend to have better college education systems than found in the red states. That research keeps talent coming to the areas and continues to promote job growth based on new research and fresh ideas. That would make sense. But to continue to insert personal political beliefs as the cause for the high GDP growth won't work when there are just too many counter-examples. My much simpler response that people simply go to where the jobs and opportunity is makes a lot more sense.
Well this just epitomizes this entire conversation! CA's property tax is the result of a state constitutional amendment resulting from Prop 13 pushed by anti-tax Republicans back when they had power in CA. It's one of the reasons they don't have power any more, that and the whole anti-brown skin people thing. Pretty much every Democrat in the state hate's it (as do I having lived there twice) and would get rid of it in a heartbeat if they could. It's singlehandedly responsible for most of the budget issues the state has had since, has a huge impact on schools, and as you mentioned has a bunch of unintended consequences that warp housing markets. Congratulations, the one thing you would fix if you could turns out to be something that the vast majority of liberals in CA hate as well!
Again, your argument makes no sense and fails a basic logic test. Here's a quote from Wikipedia on Prop 13: So today 64% of Californians like Prop 13 including 55% of all Democrats. So how could Republicans lose power (as you claim above) over something that most Democrats support? Doesn't make sense! So your claim about unpopularity among the Democratic majority is just factually wrong. But I don't even need to quote another source to point out a more obvious and major logical flaw in your argument. Think about it. The Dems hold all the power in California. If Prop 13 is so unpopular, then why haven't they repealed it? This is just like my previous obvious questions that you have avoided answering. Still waiting on an explanation for the lack of Google's, Facebooks, and Amazons coming out of Paris and Europe in general. Still waiting on an answer for why there is a disproportionate amount of homeless people in large liberal cities -- do homeless people go there for what the city offers to them or do the policies that those cities offer create more homeless people. I've already given you my view. If you can't answer those basic questions, don't even bother replying because it's not a discussion. I answered your questions, but you have avoided most of mine. The Prop 13 comment is a very small, tangential part of my last response. You ignored everything else because you can't refute my arguments. Although I may have been wrong about part of my argument given earlier -- soup kitchens and shelters are kind of examples of "infrastructure" provided by the city rather than opportunities that the city just happens to offer similar to jobs. However, the other part of my homeless argument is still valid.
Dude, WTF is your point? As best I can tell, it's to simply disagree with every point I make, even when my point is to say that I agree with you! My point is that infrastructure heavy which by necessity turn into tax heavy economies work well for places without a large extractive or other natural resource. And may not be a good choice for places that do have a large extractive or other natural resource. I don't advocate for places like Texas to implement an income tax; when asked the only concrete thing you could advocate for was for CA to do something that I agreed with you on, and you had to argue with my agreement! As best I can tell your entire point is to simply be disagreeable, so since I have zero chance of learning anything new from that I'll let you "declare victory" in what you clearly see as some kind of battle in your mind and I'll move on to more useful discussions. Good day.
Sorry, but if you are going to make factually incorrect statements while attempting to label all people of a more conservative political persuasion (or at least Republicans) as a bunch of racists, I'm going to call you out on it. And all the criticism you just threw at me applies to you as well. At least I responded to your questions. When you accused me of cherry-picking, you couldn't address the very broad counter-examples that I threw back at you. And yes, I agree with you that the CA prop tax system should be changed. I explained the reasons why before your previous post. I just disagreed with you that Republicans are still responsible for it's existence today and I pointed out that idea violates obvious logic given that the state has gone solidly left today. Anyhow, I have nothing else to say on this matter. We've both presented our views. Let's let others make up their own minds.
C'mon, a guy claims he made millions in IL in one post, a ton of money there in another, and couldn't afford a house in Bay Area in yet another post. And he is an Elite Trader on top of that. My hat is off!
I lived in the Bay Area as a mid-grade officer in the military. I've subsequently retired and am on my second startup. The take-home in those two professions is....mildly different to put it lightly. And again, if you've started a rapidly growing business you know one usually prefers to reinvest their profits in their business rather than a house, so if I lived there now I'd still prefer not to sink a big chunk of money into housing. Perhaps your experience is different? If you want to PM me I'm happy to share war stories about all this, until then then maybe refrain from calling someone a liar when you know fuck-all about them? Welcome to ET, look forward to more intelligent discussions going forward.