L.A. Needs Competitive Edge : Taking Care of Business Now Will Enhance Pacific Rim Future
The Pacific Rim is an economic powerhouse growing at the rate of $3 billion a week. Today, U.S. trade with the 27 other nations on the Pacific Rim is 30% greater than with the Atlantic Basin. And 60% of this trade comes through Los Angeles.
But let’s not break out the champagne yet when we think about Los Angeles’ future as the business center for the entire Pacific region. Instead, let’s consider what needs to be done in order to ensure that Los Angeles fulfills its promise.
Los Angeles’ municipal government welcomes foreign trade and investment. Yet all our civic and political leaders must devise--and implement--steps to give Los Angeles even more of the necessary competitive edge if our city is going to maintain its current momentum. Tokyo, Hong Kong and Singapore are not going to watch Los Angeles become the hub of the Pacific Rim without putting up a struggle.
As part of this effort, we must strengthen our position in trade and business. Mayor Tom Bradley is proposing to do just that with his “California 2000” plan, which seeks to identify both the region’s and the state’s needs at the beginning of the next century. The soon-to-be constructed World Trade Center in downtown Long Beach is a crucial step in this direction, because the $550-million complex will become a central location for international business firms and related government offices that now are scattered throughout the metropolitan region.
Similarly, our port’s “2020 Plan” is vital to the region’s prosperity because it will double the shipping capacity in the ports of Los Angeles and Long Beach by that year. Already our port is the world’s fastest-growing cargo center, with total shipments soaring from $35 billion in 1983 to $43 billion in 1984--a 22% increase in one year.
An efficient Los Angeles International Airport must be another component in the city’s business future. The airport is already the world’s third-busiest in terms of passengers, and most of them come here for business or pleasure--not just to change planes and fly somewhere else. And LAX is the world’s second-busiest air-cargo handler. To guard against costly flight delays, we should encourage the growth of outlying airports--such as Ontario--which would prevent LAX from getting overcrowded and would bring passengers and cargo closer to their ultimate destination in the metropolitan region.
To spur American exports, we must make entry into the Pacific Rim market easier for small to mid-size manufacturers and firms. The recently created State Export Finance Office is a step in the right direction because it provides loan guarantees, insurance and technical assistance to these businesses.
Finally, American businessman must acquire a global perspective and, like their Japanese competitors, study the economies and languages of their trading partners. Our high-school and university courses should place greater emphasis on Asian--not just American and European--history, languages and art. An excellent example is the recently founded Graduate School of International Relations and Pacific Studies at UC San Diego, the first school to focus primarily on Pacific Rim nations.
While taking these steps to encourage more Pacific Rim-related businesses and trade in Los Angeles, our civic and political leaders must also watch for laws and attitudes that weaken our competitive position. Let’s start by repealing the unitary tax, which discourages multinational corporations from investing in California because it subjects their worldwide--not just statewide--earnings to California taxation.
On the local level, something must be done about the lack of affordable housing in greater Los Angeles. Creating reasonably priced houses and apartments through less restrictive residential zoning, updated building codes for plumbing and electrical systems and appropriate governmental assistance programs like revenue bond financing and rent vouchers would allow more economic growth. If nothing is done about our affordable-housing problem, it will stifle our local economy.
On the real-estate front, we must also rationalize--and encourage--the development process for commercial as well as residential properties. The City of Los Angeles places enormous burdens on developers with dedication of land and street improvements, which add unnecessary costs to all construction. Furthermore, the on-again, off-again building moratoriums --the latest is the anti-growth initiative being promoted by Councilmen Zev Yaroslavsky and Marvin Braude--are turning Los Angeles into a “banana republic” when it comes to land use and development, bringing even greater uncertainty to an already-uncertain business.
This does not mean that we should give up our diligence in preserving and enhancing the quality of life that has attracted some of the world’s most gifted and creative individuals to our city. Yet we must remember that the first step toward quality of life is a good job.
Implementing all these recommendations will be difficult--but not beyond our capabilities. Los Angeles enjoys a tradition of successfully meeting challenges. In the past we have found our water supply hundreds of miles away, created the extensive Red Car metropolitan transit system and built the world’s largest urban freeway system. More recently we have revived our long-dormant downtown, rebuilt our international airport on schedule and within its budget and staged the enormously successful 1984 Olympic Games.
What are we waiting for? As leading bankers like William C. Butcher of Chase Manhattan Bank have told us, the prize for strengthening our competitive position economically is the chance for Los Angeles to become the financial center of the booming Pacific Rim, if not the world.
