COMMENTARY ON ORANGE COUNTY AND THE LOS ANGELES RIOTS : Economic Impacts--Mostly Negative--Will Severely Test Us : The ‘Los Angeles problem’ has suddenly become Orange County’s problem. It is now vulnerable to a drop in investment and tourism and a host of other problems.

Orange County has always tried to be distinct from Los Angeles. For the past decade, opinion polls we have conducted in Orange County have found residents increasingly divorcing themselves from work, shopping and leisure activities in our neighboring city. In describing Los Angeles, locals use a string of negative, urban stereotypes: crime-ridden, run-down, crowded.

And in recent days, the perceived gulf between the two areas widened. While Los Angeles burned, Orange County was busy putting distance between itself and the tragedy on our northern border.

Naturally, Orange County residents feel relief at being spared the violence that seared Los Angeles. They feel justified sorrow and revulsion at what happened there.

But smugness, complacency and denial have also set in locally as the recent tragedy became defined as a “Los Angeles problem.” And now, some troublesome myths about the two areas are resurfacing.

Myth Number 1 is that events in Los Angeles have no effect on life in Orange County. This belief is creating a false sense of security which prevents us from taking action to limit the short-term damage and plan for the long-term consequences.

First, we need to recognize that last week’s events will affect not just Los Angeles, but the entire state. In the aftermath of fires that destroyed thousands of businesses and countless jobs, state tax revenues will fall and budget deficits will soar. The cost of rebuilding Los Angeles will be enormous. Meanwhile, demands for public services will swell. Even before the riots, the state budget was in a severe deficit. Now, an even smaller pool of funds will be available for a vastly expanded need.

Next, foreign investment funds are less likely to flow here. Many will be nervous about doing business in Southern California. Tokyo and London bankers see no difference between Los Angeles and Orange County. They could put their plans for investing in our local economy on hold, or cancel them altogether.

Third, the fires in Los Angeles have victimized local tourism. Vacationers from other states and abroad will not distinguish the events in Los Angeles from places in Orange County. Our local beach cities, amusement parks, resort hotels and other tourist spots could suffer this summer.

Local businesses and employees have also experienced setbacks. Many major employers in Orange County are headquartered or have plants and offices in Los Angeles. One in six employed Orange County residents works in Los Angeles County. So the physical damage and the disruption will affect many who live and work here.

All of these issues speak to the fact that the destinies of Los Angeles and Orange County are thoroughly intertwined. It is in the local interest, as well as the humanitarian thing to do, to ensure that the rebuilding of Los Angeles begins soon. Also, we need to quickly get the message out to the world that things in Southern California are back to normal.

As for the 1992 elections, expect local voters to be in a nasty mood. Recent events had something to anger everyone: scenes of police officers beating and kicking a black man; a seemingly absurd verdict by our judicial system; local police appearing inadequate during the riots; and a delayed response by state and national officials.

These events came at a time when voter cynicism was already high. The Rodney G. King verdict and ensuing riots will only add to voters’ growing distrust in government and eagerness to vote for sweeping changes.

Orange County also needs to get ready for a tide of migrants from Los Angeles. Just as with the Watts riots, the unrest will fuel considerable urban flight to Orange County.

But this time, rather than being largely “white flight,” the exodus will include the middle-class of all races. The influx could have a positive impact on the local real estate market and economy. It also will put increased demand on county schools, roads and other services. The need for intercounty commuter rail links to Los Angeles and other transportation projects could also become especially acute.

Another prevalent myth is that what happened in Los Angeles could never happen here. This local prejudice could blind us from examining the facts.

We need to look at the parallels and take steps now to avoid future disasters. County residents and local officials should be asking the following questions:

* Are we sure that our local law enforcement will never use excessive force, as alleged in the King beating? What can we do to make certain that our police are sufficiently trained and supervised to avoid such incidents?

* Are we doing enough to prevent hate crimes and promote racial harmony in our increasingly multiethnic county? What racial tensions do we have, and how do we avoid the racial hatred that was evident last week?

* Is our local economy providing decent jobs and economic opportunities for low-income residents? How can we avoid the cycle of poverty, despair and violence that erupted last week in Los Angeles?

* Do we know the real impact and potential for the spread of gang activities in Orange County? Do our schools and communities have sufficient programs to stop gang violence?

* Are we sure that if emergencies occur--be they riots, floods or earthquakes--our public agencies are ready? How quickly can our law enforcement and public servants act to protect lives and property?

Instead of dismissing recent events as something that happened in faraway Los Angeles, let’s do what is necessary to make sure they won’t happen here.

We need the immediate formation of a blue-ribbon commission--involving local government, business, education, charities and minority leaders--to evaluate the impacts of the Los Angeles riots on Orange County, and recommend current and long-term plans.

Action today could do much to raise our hopes for the future.