VIEWPOINTS : In Public-Private Alliances, Both Sides Win

The United States has undergone a sweeping revolution in business, and the winner is the entrepreneur. The evidence of this victory is everywhere: In the last decade, while Fortune 500 companies were losing more than 1 million jobs, small businesses added 2 million.

That has meant more small factories, innovative start-ups and, most of all, tremendous growth in new service-oriented industries. At the same time, expansion of giant corporations has slowed considerably. There is little reason to believe that these new patterns will change much in the foreseeable future.

The new entrepreneurial spirit is influencing the way local and regional public policy decisions are made, as new quasi-governmental entities link local government with the business community, giving public leadership an infusion of private-sector management style.

This linkage has developed locally through the Southern California Assn. of Governments (SCAG), which coordinates long-range strategy in common problem areas such as housing, transportation economic development. A few years ago, seeing the need for public-private cooperation, SCAG established the Regional Institute of Southern California, or RISC--an independent, nonprofit group of public officials and private entrepreneurs. RISC’s charge was to identify key regional problems and opportunities and develop innovative ways of dealing with them.

RISC championed the concept of “city economic regions”--groups of interacting cities that develop their own regional economies, much like small, independent countries. The economy of Southern California easily qualifies as such a region--the value of local products and services exceeds the economies of all but 15 countries in the world.

One of the first problems that RISC addressed was that of hazardous wastes. Following a strategy of relying on the private sector to develop disposal sites, RISC formed a coalition of producers, handlers and dischargers of hazardous materials. The coalition is developing siting proposals and compensation guidelines, as well as exploring sources of financing and liability insurance for waste-treatment operations.

Failure to solve this problem would threaten the high-technology industrial base that is the backbone of our economy. Solving it will create new entrepreneurial opportunities, both for businesses that produce such wastes and for other businesses established to dispose of them.

Thus both private and public good can arise from the encouragement of entrepreneurship. Elected officials can make best use of scarce public resources by leveraging private resources in urban development, by becoming deal-makers and facilitators.

They must also encourage banks and other financial institutions to back the entrepreneur. It’s good for the community, the country and the financial institutions themselves.

RISC and SCAG are also working to simplify the fragmented and conflicting web of government regulations that discourage location filming in Southern California. Filming can involve getting permits from a county, several cities and perhaps a special district. RISC and SCAG’s plans call for a “one-stop” system, saving movie producers the costs and delay of dealing with each jurisdiction individually.

The film industry, directly or indirectly, creates 8.8% of the jobs in Los Angeles County. It is a key element of the region’s economy, and makes a significant contribution to the tax base of local governments. Making it easier for film makers to carry on their business is good public policy. And here, too, in an industry that includes many independents and smaller producers, an environment is being created in which entrepreneurship can flourish.

Another example of the entrepreneurial energy that arises from public-private associations began with the 1984 Los Angeles Olympics Games.

To link the Games’ widely scattered venues, Pacific Telesis and GTE installed an extensive fiber-optic network. Now, at the suggestion of a RISC telecommunications task force, the network is becoming, in effect, part of an electronic “freeway” system to move data and information.

By having employees work at home, or at neighborhood computer centers, businesses can have inexpensive shops in widely scattered sites, yet be linked electronically in a single communications web. This serves various private and public purposes. It cuts company costs, shortens workers’ commutes, reduces the need for new transportation facilities and eases air pollution. The system also develops new uses for the products of the rapidly growing telecommunications industry.

The RISC group, using funds from both Caltrans and private corporations, is studying how to use telecommunications to overcome the need for highly centralized facilities. It is passing along its findings to companies interested in expanding their activities--and to others who are interested in setting up new businesses here.

By encouraging entrepreneurs and harnessing the power inherent in our city economic regions, we can take charge of our own economic destinies. We can solve public problems such as hazardous waste management, traffic congestion and air pollution in ways that won’t drive industry into bankruptcy. We can help make high technology into something everyone can benefit from.

This does not amount to “industrial planning.” Target industries, or target investments, should not be established for entrepreneurs, but rather by them. It is taking risks that makes being an entrepreneur so exciting and potentially profitable.

Risk decisions will be less risky because of programs created by SCAG, RISC and other local coalitions. These groups have access to the latest information on growth, research and development, immigration, labor-force characteristics and trade futures. SCAG and RISC have created a data center to market this kind of information to those interested in setting up shop here.

In the future, we will need to work even more closely with elected officials to form new networks and create an institutional fabric that supports independent action and encourages profit-making ventures. That’s both good private and public policy. We must also continue the progress made in recent years to encourage more women, minority and handicapped entrepreneurs.

The city economic region movement is a new and barely recognized American phenomenon. In cooperation with government, we can create a pro-enterprise ecology and lift everyone’s standard of living.