As I see it, California has 4 major problems:
1) We made ridiculous pension deals with prison guards, government workers, and so on. We're paying out the nose for people who are in some cases getting more than they ever made in actual salary, or cheated the system to boost their pension.
2) The way California makes laws and approves projects is stupid. Every 2-4 years there's a plethora of laws for voters to pass with lofty goals, unclear explanations, and no way to pay for them. Hanson touched on this in his article. Morons around here love to pass things because they think it sounds cool or whatever, but don't actually think about the costs and effects of enacting these laws/projects.
3) Our state legislature sets new highs (or low) in incompetence. They're big fans of expensive stop-gap measures to pay for the previously mentioned ridiculous laws and pensions, so we've been borrowing heavily for the past 15 years or so to cover our debts. Which makes the debts bigger.... and bigger... and bigger... (etc). Imagine someone goes to a loan shark to pay off a bank debt, and when he can't pay back the loan shark he goes to another loan shark across town. What's happening now in Cali is what happens when word spreads to all the loan sharks, and no one wants to help anymore.
The best example is something that just happened: The state legislature approved the sale of 11 government buildings, including the one currently being used by the State Supreme Court, and planned to immediately lease the space. So we would sell buildings we need, only to rent them from the new owners. This would get the state 1.2 billion in cash right now and cost billions in the long run (a study compared it to borrowing at 10.5% for the next 35 years). The legislature's response was basically, "Yeah? That's someone else's problem." Thankfully this boneheaded move got blocked by courts until our new governor called a halt.
4) We throw money at education, but it's going to the wrong places. A recent study suggested that less than half of education funds goes towards the classroom. More than half is estimated to go to administrative salaries, food services and facilities, "consultants", professional development for administrators and non-teachers, and so on. What they found was that the amount of money per student does not relate to student performance, but the percentage that goes to the classroom does.
(By the way, when Hanson writes about how California teachers are some of the highest paid in the country, he's forgetting to account for the cost-of-living in Cali. We actually don't make much for the area. If I had my same salary but lived in Kansas I would be doing quite well, but around here it's pretty weak.)
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Every thing else is horseshit being spewed from people who think they know better despite not living here. Picking on Californians for their "philosophy" is low-hanging fruit for conservatives. It's a cheap and easy shot to take against a state full of people who disagree with them (while ignoring the vast numbers of conservatives in the state at the same time).
Oh, and nothing serves as a better boogeyman than the evil Mexicans, so of course we can blame them too.