In Praise of California

Source: Krugman wonks out

By Paul KrugmanJanuary 13, 2025

Before I get there: Yes, California has problems, some of them big. There are pockets of social disorder, although the fact that so many luxury homes are burning tells us that many people who could live anywhere find greater Los Angeles a highly desirable place to be. More important, California suffers terribly from NIMBYism, which has led to grossly inadequate home construction, crippling housing costs and a lot of homelessness.

But California is nonetheless an economic and technological powerhouse; without it America would be a lot poorer and weaker than it is.

Most narrowly, at a time when Donald Trump is making nonsensical claims that America is subsidizing Canada via our bilateral trade deficit, California is literally subsidizing the rest of the United States, red states in particular, through the federal budget.

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