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rdappa
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rdappa asked in Social ScienceEconomics · 1 decade ago

Subtracting its debt obligations, is California really the 10th biggest economy in the world?

If we define debt as a type of artificial economy, then what does California actually produce and where would it then rank on the "biggest in the world" without its debt? I understand that debt is part of an economy, but at some point, which Cali has found, debt slows growth instead of bolstering it.

An example would be someone living with credit card debt and then trying to live without them due to either maxing them out or getting mad and living within their means. Their own personal real economy would have been "artificially inflated" because of the credit card.

Update:

Ok, I did. http://www.sco.ca.gov/Press-Releases/2010/02-10sum...

Payments on debt has nothing to do with how much debt there actually is. Your whole debt has funded a part of your GDP. Keynesian theory economics, right? I know it would be impossible, but if for example in 1980, Cali didn't go into debt to "bolster" the economy, what would be today's outcome? Then you factor in debt in year 1981 and so on. This would give you a clear picture of what debt does to bolster but also at some point, debt servicing will consume more of the budget than revenue. This is a path of unsustainability. For this reason, Keynesian economics is only a short term solution. The greatest problem with government today is that they use a growth theory of economy when they should be using a mixture of endo and exo, with emphasis on the endogenous.

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  • Anonymous
    1 decade ago
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    you can go to CA government website, find "debt service" in its budget, and subtract it from CA's GDP. that will not change it much though.

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