Can L.A. Answer Cry for Economic Equality?
The economic and business damage that Los Angeles will suffer from the present chaos is incalculable. Whatever the total cost of burned buildings, stores and homes turns out to be, it will only be superficial.
The real losses could be in investment. Across the nation and the world, television viewers are seeing looters laughing and stealing, with no police protection for store owners, and may be concluding that L.A. is no place to do business. And that means all of Los Angeles, not just South-Central, the black and Latino neighborhood where violence began in reaction to the verdict acquitting white policemen of beating a black man.
The verdict was the spark, but the flame was out of all proportion because racial enmity is only a symptom of L.A.’s more fundamental problem, which is economic stratification. A city built on good wages has divided into an explosive patchwork of sub-minimum and high incomes.
We should remember that Los Angeles grew, in just the last 40 years, to be the nation’s second-largest city on the strength of aerospace-defense. That’s a government-supported industry of good-wage jobs. Defense contracts spawned a tremendous complex of small and large manufacturing and scientific companies in Southern California. And the economy blossomed as good wages allowed employees to buy good cars and good houses. The region became the symbol of a new, more prosperous American standard of living.
But it grew careless. In the 1980s California failed repeatedly in competition with other states for new federal research institutes. The area developed a fondness for anti-growth initiatives to protect the environment or property values or “quality of life.”
Many warned that L.A. was driving away industry. Two years ago, Dan Garcia, an attorney prominent in city affairs, cautioned, “The lack of a policy to create jobs is shortchanging millions of poorer people.” But few listened.
Instead, many argued that Los Angeles should shed its old industrial skin, to emerge an information and finance-based gateway to expanding Asia.
Change, when it came in the latter ‘80s, was less grand. Employment in better paying metal fabrication industries fell 22%. Unemployment among young black males grew to 50% in some areas.
But employment rose an equal amount in the lower paying apparel trades. New immigrants from Central America made minimum wage labor plentiful.
The lawns in Los Angeles’ better-off neighborhoods--where real estate prices almost doubled from 1987 to 1990--are well tended by armies of immigrant yardmen.
Elsewhere, though, outsiders noticed fraying fabric. “Asian businessmen now spend more of their time in Seattle,” reports Richard Riordan, a lawyer and businessman who intends to run for mayor. “They cite safety questions in staying away from L.A.”
Meanwhile, home prices have been declining--and will fall further in the wake of the riots. Stratified economies reduce purchasing power, and breakdowns of civilization discourage buyers. What L.A. forgot in recent years is that when the poor get poorer, the rich also pay a price.
“It is one of the simplest axioms of economic thought that the whole of society suffers when any important group within it suffers from inadequate use of its intelligence or wasteful organization of its labor,” wrote C. W. de Kiewit, an economic historian who taught at Cornell and the University of Indiana. De Kiewit was writing about South Africa, but the thought applies to all societies.
Los Angeles right now has no time for hand-wringing. Those thrown out of work by the fires and looting are society’s less fortunate--clerks and shop assistants in small businesses. Welfare rolls are about to explode.
Unless businesses show visible efforts to rebuild fast, the impression will congeal of a city that, like Detroit and many sections of New York, may never see good days again.
Fortunately, there are signs of spirit. Broadway Federal Savings & Loan, the largest black-owned S&L; in Los Angeles, said immediately that it will rebuild its main office. Some of the 40 supermarkets that burned will be rebuilt--although probably not all. Predictably, there are plans to convene a summit meeting of business and community leaders, with all pledging now to work more closely with the “inner city.”
More will be needed. Los Angeles will have to find ways to train its work force. If the future is to be as a financial center, train for finance and for information services. Train a work force for what employers need, as poorer areas have done.
At a recent gathering of California business leaders, more than one spoke of the reception they received when expanding their business in North or South Carolina. And therein lies a moral.
The Carolinas, North and South, were poor after World War II--when California was blossoming. So they put money into training. Bistate agencies, like the Piedmont Development Administration, trained rural young people, white and black. And that improved work force is what those Southern states offered as an incentive to persuade industry to invest. Today, the Carolinas are not rich, but they enjoy rising living standards.
And Los Angeles does not. It might be humbling for L.A. and proud California to seek lessons from places like the Carolinas. But the alternative could be a future as a fading and sadder city and state, a New York with palm trees.
The riots have rung a bell, and Los Angeles can hear it as a tolling knell or as a call to arms to build a better city. “Never send to know for whom the bell tolls,” wrote John Donne in 1625. “It tolls for thee.”
