Taxes are high, but cutting taxes won’t result in a corresponding cut in the cost of living.

The cost of living in California is high not only because of supply and demand, but also because of the expectation of supply and demand. Costs will remain high in California because the state is expected to continue to grow economically and demographically.

Has the sun finally set on the Golden State? We only know if the few bad years of California are going to be like the decades of stagnation in the Rust Belt.

The reason why California has remained resilient despite cost arbitrage of states in the South and the Southwest have to do with the state being able to leverage its natural and social capital.

California’s natural advantages include pleasant weather, beautiful scenery and tremendously productive agriculture. California also has very busy Pacific ports in the Bay Area and Southern California, as well as a minor but still vital inland river port in Sacramento.

California’s social capital comes from attracting people not only from other parts of the country, but also the world. We have a lot of problems with immigration, but it also does confer strong economic bonds between the home countries and California. If California’s economy suffers, so will the economies of Mexico, Central America, and much of Asia.

California also has a diversified economy, so our population is not dependent on a single industry or locked into an economic strategy. Arizona and Nevada, both of the places that were supposed to bleed California dry, have long been dependent on momentum growth. It worked to the extent that people could be counted on to keep coming, yet the lack of an economic bedrock and locational disadvantages leave them in far direr straits.

And though we don’t have a vandalism (or hate) problem in the United States, we still have a problem about encouraging (marketing to) people to ride bikes for more activity types (including trips).