Mayoral Candidates’ Visions Miss the Big Picture

As Mayor Richard Riordan and challenger Tom Hayden entered their last days of campaigning, they both set forth economic agendas for the city--but both plans share a common flaw.

On one hand, Mayor Riordan views Los Angeles’ economy as on an upward swing, particularly compared with the last recession. The mayor’s agenda for making Los Angeles the “Capital City of the Future” entails investing $1 million to expand the city’s existing fiber-optic cable network, which he believes will provide the necessary infrastructure to cement Los Angeles’ position as the capital for multimedia and high technology.

The mayor also advocates a tax-free zone in the city’s most economically disadvantaged communities--those located within a proposed federally designated empowerment zone. The proposal calls for no city business taxes for five years for new companies choosing to locate within the zone and a tax freeze on business growth experienced by companies already there.

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To overcome the problem of a low-skilled labor force, the mayor seeks to improve the public school system and provide summer youth employment, and he encourages the Private Industry Council to work with community colleges, Workforce L.A. and the city’s cultural affairs department to create workers for the growing multimedia industry.

Meanwhile, Hayden’s economic vision involves the lowering of taxes for small businesses while stepping up audits to seek payment from the 40% of companies whose taxes are delinquent. He wants to eliminate permit fees for start-up firms and the second-year fees for those that fail to make a profit. He also wants the newly formed Community Development Bank to increase the number of loans it makes, and he would like to see RLA, which is scheduled to go out of business by June 30, to continue to operate. Hayden proposes floating a $250-million bond measure for multimedia learning centers in public schools and speeding up spending of the $300 million to $400 million in park bond money intended to create environmental restoration jobs for at-risk youths.

The challenger also proposes to create a task force on education and a partnership with community colleges as well as a “research triangle” around universities (something USC is doing). He wants to increase incentives for telecommuting and expand Internet access to government information. Hayden also wants to control price increases for utilities and health care and would refuse to lower taxes for health maintenance organizations unless they would commit to health-care reforms.

But these disparate economic visions for the future of Los Angeles do not link the city to the broader Southern California economy. In the mayor’s case, he assumes that providing incentives to key industries will facilitate their growth and that they, in turn, will hire a large number of individuals currently unemployed or underemployed. Most empirical studies refute this contention.

In Hayden’s case, he assumes that the interests of the unemployed or underemployed can be protected without at the same time stimulating growth in the city’s economy. No significant empirical evidence can be found to support this position, either. However, there is a growing body of evidence that suggests that larger regions can grow economically and reduce poverty. The areas doing this best seek deliberate links of regional economic growth strategies to local or neighborhood economic development strategies--something neither the mayor nor Hayden has proposed.

A soon-to-be-released report, sponsored by the Haynes Foundation and conducted by researchers at Occidental College and UCLA, will show that between 1980 and 1990, 10 major metropolitan regions in the United States were able to demonstrate economic growth and at the same time reduce the rate of poverty growth. Los Angeles turns out to be the worst of the best in this regard. Boston, Charlotte, N.C., and San Jose were among the best.

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What did these best performers have in common? For one, there is a recognition on the part of civic and government leaders that decision making on a regional scale is central to this progress, particularly when it involves infrastructure investment decisions. Second, there is the strongly held belief that persistent pockets of poverty are detrimental to the overall economic health of the region, thus strategies for economic growth need to be tied directly to efforts designed to reduce poverty. Third was the realization that local or community-based efforts designed to reduce poverty and improve economic conditions in low-income neighborhoods are most successful when linked to broader regional economic development initiatives.

It is true that Los Angeles’ economy is improving. One can only wonder how much better off the city and region would be if those framing the economic vision for the future would take a little more time to benefit from other successful areas in the country that have done it more effectively.