The Myth That Threatens to Eat California’s Future
The economic foundations of California are slowly eroding because of the unchallenged dominance of an economic theory--the technocratic myth--that shakes self-confidence and distracts attention from the imperatives necessary for success in the new world economy. Its main premise is that anything of value in California only derives from a few high-tech industries--large aerospace and publicly held computer companies. Since these industries face stiff global competition or are declining with federal budget cuts, California is doomed to a low-tech, low-wage service or menial assembly economy.
Relentlessly promoted by the media and the bureaucratic entities that would benefit the most from its policies, the technocratic myth dominates the state’s economic-development debate. A recent article in The Times, for example, report- ed that, since large defense companies are the wellsprings of Southern California’s technological and “quality” jobs base, and since these firms aren’t successfully converting to commercial markets, the region’s vitality will inevitably decline. The myth is reinforced when high-profile politicians equate California’s future with the rise and fall of the defense budget, even though nearly 95% of the state’s economy is not defense-related.
The most basic problem with the technocratic myth is the violence it does to the state’s economic confidence. In the rare instances when the real structure of the California economy is examined, the unparalleled vitality and opportunity that still exist--even in areas hit hard by defense cutbacks like Los Angeles County--becomes immediately apparent.
According to a continuing study--dubbed the “New Economy Project”--of the Los Angeles economy, the county is home to more than 3,500 computer hardware and software, biomedical, industrial instrument, and commercial R&D; companies. Collectively, they generate $33 billion in direct revenues and employ more than 250,000 people. Much of this industrial base is growing; preliminary survey results show that the rate of growth for the region’s biomedical companies alone increased during the recession from about 7%, in 1989-90, to 20% in 1991-92.
Another 90,000 Angelenos work in roughly 3,400 firms in the entertainment-crafts industry, which earns approximately $9 billion a year. Highly skilled engineers and technologists in the fields of water- and air-pollution instruments and engineering--a small slice of California’s $20-billion environmental sector--have built a $3-billion industry that employs 20,000 people at almost 300 firms.
These figures, though reflecting only a fraction of the county’s commerce, reveal a high-tech industrial base that employs more people than the total population of Idaho, generates more revenues than most states and exhibits a vitality that deindustrialized cities like New York, Atlanta or Houston can only dream about. That’s one reason why--despite defense layoffs, regressive and anti-California federal tax laws, relentlessly negative global publicity and a string of disasters--the jobless rate in Los Angeles County remains close to the levels experienced by most major industrial regions. Orange County has recouped all its job losses during the last four years and now has an unemployment rate more than a full point below the national average.
But these economic realities remain almost completely outside the public debate, because the privately held firms that make up the backbone of the California economy don’t have time to court the media and don’t want the heavy-handed government “support” implicit in the technocratic agenda.
The technocratic myth is also staggeringly elitist. Despite its close association with the Democratic Party, its largely white proponents, sporting fancy degrees from big-name universities, systematically deprecate the value of work in such major manufacturing sectors as apparel or consumer electronics, let alone the state’s myriad, high-quality service and retail industries. They do this in the curious belief that such enterprises don’t create wealth, while big, rapidly downsizing firms and rigidly hierarchical research facilities dependent on tax dollars do.
In fact, big-ticket R&D; and federal-procurement projects, managed by alphabet-soup bureaucracies, are becoming increasingly irrelevant to job and industrial development. In the last five years, it is people like Charles Woo, president of L.A.-based Megatoys, who have helped generate, from scratch, a billion-dollar toy retail and manufacturing industry employing thousands of workers in the heart of the city. In the last decade, the growth of more than 421 textile mills has made Los Angeles one of the world’s most sophisticated knitted-goods weaving and printing centers, employing 20,000 workers and earning at least $3.2 billion a year, mostly in the areas bordering Downtown.
But the most damaging effect of the technocratic myth is that it stimulates a perverse impulse not to learn about and assist the myriad industries that can and do create jobs, careers and wealth, instead diverting public energy and money to a fantasy world made up of subsidized programs tied to the least competitive institutions in the state.
An example is a remarkably wrongheaded proposal for a state and federal manufacturing-assistance policy contained in a report titled “California Economic Strategies: Partnerships for State Revitalization.” Released last week with the participation, among other entities, of the state Assembly Speaker’s office, the report asserts that “outmoded, labor-intensive industries (such as apparel, shoe and furniture manufacture) can again become competitive through redesign and retrofit of obsolete equipment. Computer-assisted design projects by CALSTART and the Jet Propulsion Laboratory in the apparel and furniture manufacturing industries, as well as the Manufacturing Technology Initiative (MTI), show that this is feasible.”
CALSTART, however, has yet to achieve compelling success in the electric-car field that is its primary purpose, let alone make “competitive” wholly unrelated industries. MTI, an effort loosely organized around the transfer of auto-body manufacturing technology to Los Angeles, has yet to name a management team or receive operational funding. To claim that either program “shows” that publicly supported consortia can “revitalize” industries currently employing hundreds of thousands of workers and generating billions in revenues provides sobering evidence of the almost complete disjuncture between the people who actually live and work in California’s economy, and the technocrats who hunger to govern it.
Amid signs of recovery--California generated 120,000 new jobs last year--it is time for the state’s political and media leaders to abandon the premises of the technocratic myth. Even now, California sustains a non-defense economy that successfully competes in every major industrial and service sector in the world. In this election year, there is no more important issue than finding the leaders willing to represent and make government responsive to this new economy, rather than be seduced by technocratic fantasies to try and recreate the industrial system of the past.*
