Is California the next Greece?

The Golden State used to be at the vanguard of the U.S. economy. Now, not so much

A broken window at an empty storefront in downtown Vallejo, Calif., a city that filed for bankruptcy protection in 2008.
(Image credit: Kim Kulish/Corbis)

"California is no longer the economic miracle it once was," says Bradley R. Schiller at the Los Angeles Times. Americans used to flock to the Golden State for its peerless standard of living and great schools. But now many businesses are packing up and moving out. California's unemployment rate, at 10.9 percent, is the third-highest in the country. Many of its cities are declaring bankruptcy. And the state budget, for the ninth time in 10 years, is billions of dollars in the red. "Many Americans fear the federal fiscal train wreck will turn us into Greece," say Michael J. Boskin and John F. Cogan at The Wall Street Journal. But "they need look no further than California to see what this future portends." Why is California on the ropes? Here, four theories:

1. Its taxes are too high

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