Land of Opportunity and Challenges
It is hard to believe as the new decade dawns--not to mention the new millennium--that the outlook for Southern California’s economy can be so bright.
Ten years ago this region was entering its worst recession. From 1990 through 1993, half a million jobs disappeared in Southern California as the aerospace and defense industries shrank.
B The gloom was thickened by smoke from brush fires and riots. Gloating by investment analysts and authors on the East Coast was incessant. “California will never duplicate those high-paying aerospace jobs,” said one Wall Streeter with typical foresight.
So California hasn’t duplicated the old jobs--it has gone beyond them. It has invented a new economy based on technology, foreign trade, entertainment and business services ranging from software to finance.
It is an economy based on small companies. Los Angeles County alone leads the United States with 667,300 business establishments.
And it is an economy poised for unprecedented advances in the decade ahead--if it can avoid some serious pitfalls.
As the century begins, the region is well-placed. Many of its firms are in high tech, whether biotech in La Jolla, medical instruments in Irvine, multimedia in Venice or computer networking in Calabasas.
The beauty of high tech is that it contains multipliers. High-tech companies spark demand for professional services, explains economist Ross DeVol of Santa Monica’s Milken Institute--”legal, financial, accounting, engineering and testing services along with management consulting grow in the local economy,” DeVol says.
Southern California has many other multipliers. Take food. This region does not produce, nor eat, a bland diet. Rather, the landscape is filled with producers of specialties of Latin America, Asia, Africa, the Middle East--and that’s not to mention the nation’s largest cheese-producing company, Dairy Farms of America in Corona.
Our geography has multipliers. Ten years ago, the focus of the region was on Los Angeles County. But the ‘90s saw Orange County and San Diego become lodestars of technology and trade. In San Bernardino and Riverside counties, job growth continued through the decade. The west San Fernando Valley rose to economic prominence; now the Ontario airport area is booming.
This is an international economy, with the largest U.S. seaports in Los Angeles and Long Beach and the second-largest cargo airport--Los Angeles International (second to Memphis, the hub of Federal Express). And the region practically invented the logistics industry--a modern version of freight forwarding, warehousing and financing that spells new opportunity for small business.
Commerce with Europe and Latin America grew in the ‘90s. The rise of Asia’s economies fed Southern California’s prosperity, but the Asian recession did not halt it. Now with Asia recovering, further development of the international economy is assured. The new century will see closer ties with other countries and a changed consciousness because this region’s economy will be more in tune with foreign lands than with eastern U.S. cities.
But it is important that this region remain the entertainment capital, organizer of attractions and storyteller to the world. To be the headquarters of The Industry is valuable for the global cachet of it--and the enormous global business of it.
What dangers confront Southern California? Threats to the quality of life from congestion, crime, scarce housing and poor schools could make this a hard place to live and therefore an unfavorable place to do business.
Happily, the racial and ethnic divisiveness that burned bitterly early in the ‘90s has diminished. The emerging reality of Southern California’s many peoples working together, building this region anew, could well set a national and global example in the new century.
But vision is needed. Southern California needs leading citizens to step forward and declare that in unity is our strength.
Geographic separation threatens the region, whether secession of the San Fernando Valley and other communities from the city of Los Angeles or the more subtle isolation of entrepreneurs in one area, where they are unable to benefit from connections to money and counsel in other areas.
The secession issue is complex. Frustration with the taxes and special expenses of doing business in Los Angeles are behind the push in the Valley and Wilmington to break away.
This is not the best solution to the problem. If the Valley and other areas call it quits, the region will waste money, time and effort wrangling in the early years of the century as opportunity goes elsewhere.
Cooperation among counties and cities on building and using airport and road capacity would be more profitable in every sense of the word.
Vision is needed to see the great assets of this region, from its many universities serving as engines for the modern economy to its energetic people building better lives.
Others have seen from afar what is going on here. Fernand Braudel, the great French scholar who in three volumes of “Civilization and Capitalism” recorded the movement of economic leadership across Europe from Venice to the Netherlands to Britain, was asked in 1981 where the center of the world economy resided now.
Without hesitation, Braudel pointed on a world map to Los Angeles and the great surrounding area of Southern California.
