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The Powers That Will Be

Joel Kotkin, a contributing editor to Opinion, is a senior fellow at the Pepperdine Institute for Public Policy. He is working on a study of urban leadership in conjunction with the La Jolla Institute

The recent announcement of a $25-million challenge grant by the Walt Disney Co. to downtown’s Disney Hall project could be a major turning point not only for that long-struggling concert-hall project, but for the city’s long-divided and famously ineffective civic leadership. For the first time since the building of the Music Center in the early 1960s, a major Hollywood power has joined forces with the downtown-centered corporate elite to build a monument to Los Angeles’ civic rebirth.

Yet, L.A.'s civic-leadership deficit remains very much a problem. Something more difficult than raising money and building cultural monuments will be needed to eliminate it: the reconstruction of a broad-based, self-confident business leadership that encompasses the abundant diversity and complexity of the region’s rapidly changing economy.

In many ways, the challenge that today’s business leaders face is every bit as daunting as the one met by an earlier, more cohesive elite, who transformed a farm community on the Pacific into North America’s second-largest urban center. Frequently ruthless and, by today’s standards, environmentally oblivious and ethnically callous, L.A.'s turn-of-the-century leaders boasted a civic ambition rarely detectable among the city’s contemporary establishment.

Business leaders such as Henry Huntington immodestly envisioned the creation of a great metropolis that would rival the then-dominant Atlantic basin cities of New York, Paris and London. He imagined a far-flung city connected by a transit system and, eventually, his Pacific Electric passenger cars numbered more than the system’s five largest competitors combined. He and his cohorts also created a water system drawn--or, if you will, “stolen"--from the Owens Valley and, in conjunction with the man-made harbor at San Pedro, foresaw a commercial and industrial empire that most contemporaries regarded as pure fantasy.

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The old corporate elite enjoyed certain advantages. Virtually all male, white and Protestant and largely linked to oil, banking, insurance and, later, aerospace, they ran City Hall as if it were a subsidiary of their companies. Under various groupings, including the Committee of 25 under Pacific Mutual CEO Asa V. Call, these entrepreneurs were free, as today’s executives seldom are, to identify themselves with their city.

“There was a leadership that could make things happen,” recalled Stephen D. Gavin, an aide to Call and a longtime pillar of the civic establishment, shortly before his death in September 1995. “The Central City Assn., then the downtown Businessmen’s Assn., the bankers, the California Club, these were all the same people. What was important to them was to make Los Angeles a world-class city.”

Starting in the 1920s, another elite arose in Los Angeles, one spawned by entertainment, real estate development and the fashion industry. Unlike the downtown crowd, this group was mostly Jewish and its activities, with the exception of the garment industry, were concentrated on the Westside and in the San Fernando Valley, where they built their own golden shtetl of houses, neighborhoods and country clubs.

For most of this century, the two business cultures have remained separate. Although much has been made of the alliance, forged by Dorothy Chandler and MCA’s Lew Wasserman, to raise money for the Music Center in the late ‘50s and early ‘60s, it proved to be only a temporary arrangement. “It was a relationship like ‘You go your way, and I’ll go mine,’ ” recalls former Lockheed Chairman and CEO Roy A. Anderson, a powerful figure in the old WASP-oriented downtown establishment. “Socially, we never got together even after the Music Center.”

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This relationship of benign distance has suited the Westside-Hollywood elite as well as the WASP establishment. Major civic responsibilities have been left in the hands of the old-line leaders, relieving the Westside-oriented Hollywood and Jewish elites of any role in the fate of downtown or even the region. Indeed, after the recession and riots of the early 1990s, some Hollywood figures glibly expressed their contempt for the city, preferring Manhattan, Miami or Montana.

“It’s become fashionable to disdain your L.A. genesis and presence,” says Peter Guber, former Sony Picture’s CEO and now head of Mandalay Productions. “It’s like you don’t want to be part of a club you don’t want to be seen at.”

In the past, such sentiments might have been dismissed by the downtown establishment as predictable Hollywood self-absorption or even Jewish clannishness. But in the 1990s, Hollywood’s disdain for the city has become a civic liability. Because of the growth of entertainment, multimedia and business services, the Westside is now Los Angeles’ premier corporate location, with one-third more office space than downtown, boasting both the city’s priciest office towers and most affluent neighborhoods.

Meanwhile, many of the pillars of the downtown WASP elite have crumbled. Prominent companies like Broadway Department Stores, First Interstate Bank and Security Pacific have disappeared through mergers. Others, such as Unocal, simply decamped for greener pastures on the Westside, Orange County or outside the region. Even worse, the old downtown-oriented leadership has lost much of its historic sense of civic mission. In other large cities facing similarly difficult times--New York, Chicago, Dallas and Houston, for example--the established banking, industrial and media establishment possessed enough enlightened self-interest to work together to improve their city’s public image and business prospects. By sharp contrast, much of L.A.'s old guard acted more like the Italian potentates lampooned in Machiavelli’s “The Prince”: “When adverse times came, they only thought of fleeing, instead of defending themselves.”

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Seen from this light, the drawn-out fund-raising to build Disney Hall has mirrored something far deeper than disputes over architecture and costs: the collapse of local business leadership. Short of a revival of civic spirit and a rapprochement between the burgeoning Westside and the struggling downtown, Los Angeles’ prospects to emerge as a city of global importance will rest largely on outside investors, particularly from increasingly hard-pressed Asia, a generally hostile Eastern-oriented media and the fickle entertainment establishment.

The Disney investment in Disney Hall, in addition to a spate of other large commitments from ARCO, Times Mirror, Food 4 Less, Bank of America as well as Mayor Richard Riordan, represents something of a civic counter-coup. Equally important, Sun America’s Eli Broad and Arco’s Mike Bowlin, two of the corporate executives critical in saving Disney Hall, have taken steps to revive local business leadership through the establishment of the Los Angeles Business Advisors (LABA), which includes such prominent Westside figures as Ronald W. Burkle, chairman of Yucaipa Cos., which owns Food 4 Less and Ralphs, and stalwarts Robert F. Maguire of Maguire Thomas and Anderson.

But Broad, arguably the city’s top business spokesperson, admits that LABA cannot reprise the oligarchic role of a Huntington or the Committee of 25. For one thing, its membership does not list a single prominent figure from the sectors--toys, entertainment, communications and fashion--driving the region’s economic recovery. Lacking such prominent figures as Fox’s Rupert Murdoch, MCA’s Edgar Bronfman Jr., Telemundo’s Daniel D. Villanueva Sr., Mattel’s Jill E. Barad and Disney’s Michael Eisner, LABA cannot honestly claim to speak for the region’s top business leadership.

But even if such business luminaries were added to the group, the L.A. economy is now so dominated by small businesses--more than 70% of all jobs are in companies with under 500 employees--that no collection of corporate bigwigs can accurately be said to set the business agenda. To truly change the economic and political climate across the region, the remaining large corporations must make common cause with the upstart companies that collectively represent the future of this region.

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Given the time and resource constraints faced by most small entrepreneurs, this will necessitate new kinds of business linkages. One potential link is organizations representing minority- and women-owned businesses, which now represent roughly half of all L.A. businesses. The days of an exclusively white, male business leadership have passed not because it’s politically incorrect, but because minorities and women provide the economy’s vital force.

More important, the new business leadership will have to link with key industries--ranging from multimedia and biomedicine to garments, toys, food processing and furniture--predominately made up of small companies. Multimedia represents upward of 130,000 jobs even though most companies in the business have well under 100 employees; in the garment industry, which employs roughly 150,000 workers, only 11 of more than 4,000 companies have payrolls exceeding 500 employees. Similar patterns of de-concentration can be found in furniture and toys.

Fortunately, the economic crisis of the early ‘90s forced many of these industries to form their own organizations. Among them are: the California Fashion Assn.; the Toy Industry Assn. of Southern California; the Food Industry Business Roundtable; the Biomedical Council of Southern California, and LawNMoweR, the region’s 500-company-strong multimedia networking group. Collectively, these associations could form the foundation of a “network of networks.” Conceivably, some private-sector trade unions could join in this expanding linkage of economic interests.

Building such a broad-based economic alliance will contribute far more to the future of this region than a completed Disney Hall, the Getty Center or any other imaginable collection of forms and cladding. Today, most of the parts of this new business leadership are thriving again; if they can agree on a common vision, Los Angeles may yet achieve the greatness so brashly envisioned nearly a century ago.

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