California was officially made a state in 1850, and in the first 150 years of its existence, there were
27 serious propositions
to leave the United States. So what would happen if California seceded
from America (the Union)? What’s happens if Calexit were to happen?
Before we get started, we want to point out two things. First is that
a state leaving the Union would be an incredibly complex legal issue,
and who knows what people and companies will do if a Caliexit happens.
So to simplify the scenario, this is looking at what would happen if
nothing changed in California. The only difference is that California is
now its own separate country.
The second thing we want to mention is that we also believe that if
California left the United States, the US government may put tariffs in
place in retaliation, or they are following vows that they made when
trying to threaten California into staying with the union.
10. Cost of Fruits, Vegetables, and Nuts
California
is responsible for about 16.5 percent of all of America’s fruit,
vegetable, and nut productions. They are the leading producer of
81 crops,
this includes producing 99% of all the artichokes, grapes and raisins,
kiwifruit, olives, peaches, and plums. They also produced 99% of
walnuts, almonds, and pistachios. California is also the leading
producer of such everyday staples as garlic, onions, carrots, avocados,
and spinach.
If
California were to leave the Union these fruits and vegetables would at
least go up in cost, simply because shipping it will be more difficult.
Instead of just crossing state lines, it will now all become
international shipments. That could raise the prices of a lot of
everyday food. And that’s without the tariffs. If you tack those on,
then expect prices of fruits, vegetables, and nuts to skyrocket.
9. Wine Will Cost More
While there are
wine vineyards found in every state,
the majority of wine
in the United States is produced in California. In fact, out of all the
wine produced, 88.5 percent of it comes from California. Many of the
grapes used for wine are grown in the world famous Napa Valley.
Of course, if California did leave the union, the rest of the states
would be able to get California wine. However, there could be heavy
tariffs on it. Since wine is produced in every state, the tariffs could
be massive to encourage people to buy American wine and help that
industry grow.
8. Loss of Major Companies
As
we said in the introduction, this is just what would happen if the
secession happened tomorrow and nothing changed. If a real secession did
happen, it’s hard to tell which California-based businesses will stay
in California, and which will relocate to another state. If nothing
changed, the United States would lose major companies like Apple,
Google, Facebook, Disney, and Cisco, which are five of the
Forbes 15 most valuable brands. This will have an economic impact on the country, and the United States would lose some of its
most innovative tech companies.
Another industry that is strongly linked to California is Hollywood.
It’s tough to say what would happen if America lost the film industry
because it’s already an international business. Actors, directors,
screenwriters, and many other people involved in movies and TV come from
all over the world. Shooting locations are also often done
internationally. It’s amazing to see how many movies are made in Canada.
One was
Harold and Kumar Go to White Castle, which is crazy, because
Canada doesn’t have any White Castles.
The global market can actually be
more lucrative than the domestic market,
too. So, Americans may see the price of movie tickets go up if there
are tariffs, which might lead to more piracy, and less people
going to the movies. But ultimately America would still get Hollywood movies, just like
many other countries around the world do now.
However, if California did secede, America would lose a significant
part of its culture. Movies are arguably America’s biggest and most
defining cultural export. What most of the world knows about America
comes from Hollywood. Losing that would mean that America would lose a
significant piece of its national identity.
7. Dairy Prices Will Go Up
Something that will definitely go up in price across America should
California secede is milk and dairy products. Since 1993, California has
been
the biggest producer
of milk, butter, ice cream, nonfat dry milk, and whey protein
concentrate. In terms of cheese production, California is second only to
the Cheesehead nation itself, Wisconsin. That means if California left
the Union, and milk had to be shipped in with tariffs, then many beloved
dairy products would be more expensive.
If the United States decides to just start up more dairy farms, they will run into a problem. The biggest producer of
alfalfa hay, which is what dairy cows eat, is
California.
6. Imported Goods Will Cost More
California’s location at the western edge of the country makes it an ideal place for an international port. In fact,
37 percent
of all goods that come into the US enter the Port of Los Angeles, and
is then transported across the country. The major trading partners of
the Port are China, Hong Kong, Japan, South Korea, Taiwan, and Vietnam.
That means a lot of clothing and electronics come in through California
before going out to the rest of the country.
Although, in recent years, other ports throughout America have developed their coastline to accept more ships. Plus
the Panama Canal
is expected to open its expansion later this year, which will siphon
off business from the Port of Los Angeles. Despite these changes, the
Port of Los Angeles will still be the biggest port in the country.
This will leave America with two options. They could pay California
to use the port, or they could get the imports themselves. However, this
will take a huge investment in port infrastructure. Also, companies may
have to make two stops. One in California, and one somewhere else in
America. This will also raise the cost, because more travel time means
more fuel and manpower.
5. The Cost of Water Will Go Up
Many of the entries on this list look at what America will lose out
on if California leaves. That’s because California is a diverse state
with many natural resources. However, there is one thing that California
doesn’t have a lot of access to, and that’s water. California often has
dry seasons, and when they have a drought, they take more water from
the Colorado River. The Colorado River isn’t just a water source for
California. It runs through six other states: Arizona, Wyoming, New
Mexico, Utah, Nevada, and Colorado. Altogether, it provides water for 40
million people.
How the water from the Colorado River is dispersed was
decided in 1922.
The problem is that, in that year, the area, which is normally the
driest in the country, was going through a wet period. What’s
interesting is that states will take their amount, even if there isn’t
enough water. Then California will take more, because they’re suffering
from a drought.
If California were to leave the union, new water agreements over the
Colorado River would have to be drawn up. This would mean a limitation
on the amount of water that both California and the rest of the area
will get. And that means water prices in the region will go up.
4. California Tourism Will Be Hurt
California is
the most visited state
in the United States. A lot of this is because of the diversity of the
state. It has beautiful national parks, world renowned beaches,
famous theme parks,
and tourist attractions like the Golden Gate Bridge and Napa Valley.
Then there are iconic cities like San Francisco and Los Angeles. Add in
the fact that they often have great weather year round, and it’s
understandable why millions of people visit there every year. In 2015,
tourism alone brought in
$122.5 billion and created over a million jobs.
While 78 percent of the tourism done by Americans is Californians
visiting other parts of California, the other 22 percent came from other
states. That number may plummet after the Caliexit for two reasons. The
first is that it will be more difficult for Americans to get into
California, because you’ll have to cross an international border.
Chances are, you’ll need a passport and you couldn’t have a criminal
record. The other reason tourism may take a beating in California is
that Americans may be mad at California for leaving, and will boycott
the former state.
3. Rise in Taxes
The rest of the states will probably miss California the most at tax
time, because if a Caliexit were to happen, Americans will have to pay
higher federal taxes. In the United States, not all states contribute
equally. In fact, some states get more than
they put in. This includes New Mexico, West Virginia, DC, and Hawaii. However, California is the biggest contributor to
federal taxes,
contributing 13.3 percent of all federal taxes collected. Now, imagine
if you lost 13.3 percent of your income. Many of us would be scrambling.
In the short term, taxes will have to go up to cover the costs. And
yes, California does get some money back from
the federal government,
but they are one of the least dependent on the federal government. So
California leaving America won’t save much; definitely not compared to
what they put in.
Yes, tariffs will cover some of the costs, but not all of them. The
first reason is that California may not trade in the same quantity, and
may choose to find countries that have fewer tariffs. The second is that
administrative costs of shipping between California and America will
also rise, so those costs have to be accounted for.
Essentially, California wouldn’t be paying the same amount to the
United States if they left the country, because then what would have
been the point of leaving?
2. Devaluing of the American Dollar
America has a reliably strong dollar. In many cases, it’s used as
a measuring stick
for the world market. However, any time there’s instability in the
country, like with talk of a secession, the dollar weakens. We saw this
with the United Kingdom and
the Brexit. Even during the lead up to
the vote, the pound was shaky. Then after the vote, its value dropped to a
31-year low. Brexit was so bad for the economy that Britain dropped from the fifth to the
sixth biggest economy.
This also happened in 1995, when Quebec had a referendum to leave
Canada. The value of their dollar, called the Loonie, dropped by
30 points.
However, what’s interesting about California leaving as opposed to
the UK and Quebec, is that California is the biggest economy in the
union and contributes the most to the federal budget. In Quebec, that’s
Ontario in both cases. In the European Union, Germany is the biggest
economy and Italy, Germany, and France all
give more to the EU than the UK.
If the biggest economy, and the biggest contributor to federal taxes
left, it may be more devastating to the American dollar than Brexit.
1. World Wide Recession
One reason why people from around the world care about the United
States and what’s going on there is because they are one of the
cornerstones of the world’s economy. The United States has the highest
nominal GDP in the world, which is about
a quarter of the world’s GDP. However, if the American dollar, which is considered
the safest currency in the world, were to plummet, then the world’s economy is going to
be dragged down along with it.
We already saw this in 2008 when the market crashed. It was the
greatest financial crises since the Great Depression and it happened
because of bad and ill-conceived subprime mortgages, which caused the
housing market to collapse. This collapse had
a domino effect
on the world’s economy and GDPs around the world declined. With
something as big as the state that contributes the most to federal
taxes, and with the biggest GDP (and
the sixth largest economy in the world on its own), then it could have even more profound effects on the world’s economy.
Robert Grimminck is a Canadian freelance writer. You can friend him on Facebook, follow him on Twitter, follow him on Pinterest or visit his website,
or his true crime YouTube channel.
And it makes it sound like Ontario is in Quebec!
And then I see the author is Canadian… Come on buddy! ?
I believe the greater U.S. will accommodate Cali’s exit while hardly feeling a bump in the road. Speaking of roads ….. Hey California – Hit it! And start investing in desalinization plants. That, or dry up into the desert you came from. Get your Cali taxpayers to fund that!
You say Cali pays a large percentage of the federal tax. You fail to mention that they draw more from the government than any other state as well.
To be perfectly frank, California doesn’t produce anything we would miss much. Do you have any idea how much farm land goes unplanted each year in the rest of the nation? If they pushed this, central California will soon be the desert it was when only native Americans knew it existed, and we would still have produce in our stores.
The state is broke…and you can count on the business there, knowing it. There would be a mass exodus to US soil.
Hollywood? Good riddance.
There’s plenty of actual talent in other places on the earth, many of whom would be delighted to prove it.
So…realistically, the only actual loss I see, are ports and wine. I wouldn’t count the redwoods, as with the loss of federal support, one good wildfire, and the overtaxed California government wouldn’t be able to save them…and of course without water….well, I bet you see the point.
Some of what you mention would be sad to lose, but you give the state far too much credit as far as to the welfare of the rest of the country goes.
Do I believe they would secede?
First they can’t. That’s precedent.
Second, the vote would come from LA, the bay/sac area, and perhaps San Diego. The remainder of the state is mostly sane.
No, it won’t happen. The noise you hear is sword rattling.
The biggest problem is mentioned above, though. And that’s water. If California could not work out deals on the importation of water, their agricultural prowess would disappear.
It’s hard to imagine that major corporations that are based in California would stay. And as far as California culture goes. How needs it? The rest of the US (not to mention the world) would be much better off with less of Hollywood’s bilge. And regarding California’s wines, the good stuff is grossly overpriced. I live in the eastern US and routinely drink wines from Italy, Spain, and South America that are (except for the very best California has to offer) superior.
I wold *love* to see California out of the US. Unfortunately, it is unlikely to happen.