California zooms past Russia, Italy, and soon Brazil in GDP

[Citizen Hats]

California's woes are always blown out of proportion by it's own constitution.  The state cannot run an operating deficit. It can only borrow funds for capital expenditures. The state's tax system is highly volatile, and the variation year-to-year of revenues can bee on the order of hundreds of billions of dollars. While Brown's rainy-day fund will go considerably towards ameliorating that problem, it still comes down to the fact that California's budget is overly subject to short economic fluctuations to carry out a lot of reasonable services. 

California is well equipped for the knowledge economy. It's home to two enormous cities and the comingling of energies that that brings. It's howme to the only great pre-car City outside the Northeast and Midwest, leading to further potential.  It hosts many great universities, including the largest employer of Nobel Prize Winners on the face of the earth at UC.  With that, the high margin expanding industries that support a productive, highly capitalized economy economy.

BUT, California, for all it's advantages, makes business at lower levels of capitalization more difficult than it should.  It's land use and urban planning policies simply push out low-productivity workers and force high housing costs on the population.  It's regulatory policies are overly cumbersome, and perhaps over extended. I don't mean to say that we should be more like Texas, merely that our approach to the market could be a bit less populist.  Our tax structure could be more rationalized, and we could take a more laizes-faire approach to urban land use to allow the housing market in desireable locations to clear. 

The state could use to re-orient it's transportation more away from freeways and more towards user-pay transportation systems, to help reduce the enormous suburban infrastructure burden on the state and local governments, and also to encourage smarter infill development of existing sprawl