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Los Angeles today is a city in secular decline. Its current political leadership seems determined to turn the sprawling capitalist dynamo into a faux New York. But they are more likely to leave behind a dense, government-dominated, bankrupt, dysfunctional, Athens by the Pacific.
The greatness of Los Angeles stemmed from its willingness to be different. Unlike Chicago or Denver or New York, the Los Angeles metro area was designed not around a central core but on a series of centers, connected first by railcars and later by the freeways. The result was a dispersed metropolis where most people occupied single-family houses in middle-class neighborhoods.
Lured by the pleasant climate and a business-dominated political economy, industries and entrepreneurs flocked to the region. Initially, the growth came largely from oil and agriculture, followed by the movie industry. Defense and aerospace during World War II and the postwar era fostered a vast industrial base, and by the 1980s Los Angeles had surpassed New York as the nation's largest port, and Chicago as the nation's leading industrial center.
The region hit a rough spot as the end of the Cold War led to massive federal cutbacks in aerospace. Los Angeles County lost nearly 500,000 jobs between 1990 and 1993. But it bounced back, adding nearly 400,000 jobs between 1993 and 1999. Aerospace never fully recovered, but other parts of the industrial belt—including the port and the apparel and entertainment industries—grew. An entrepreneurial class of immigrants—Middle Eastern, Korean, Chinese, Latino—launched new businesses in everything from textiles and ethnic food to computers. The pro-business mayoralty of Richard Riordan and the governorship of Pete Wilson restored confidence among the city's beleaguered companies.
Then progress stalled. Employment stayed relatively flat from 2001 until 2005, when Mayor Antonio Villaraigosa was elected, and then started to drop. As of this March, over the entire L.A. metropolitan area, which includes adjacent Orange County, unemployment was 11.4%—the third-highest unemployment rate of the nation's 20 largest metro areas.
Why has Los Angeles lost its mojo? A big reason is a decline in the power and mettle of the city's once-vibrant business community. Between the late 1980s and the end of the millennium, many of L.A.'s largest and most influential firms—ARCO, Security Pacific, First Interstate, Union Oil, Sun America—disappeared in a host of mergers that saw their management shift to cities like London, New York and San Francisco. Meanwhile, says David Abel, a Democratic Party activist and publisher of the influential Planning Report, once-powerful groups like the Los Angeles Chamber of Commerce and the Los Angeles County Economic Development Corporation lost influence.
The machine that now controls Los Angeles by default consists of an alliance between labor and the political leadership of the Latino community, the area's largest ethnic population. But since politicians serve at the whim of labor interests, they seldom speak up for homeowners and small businesses.
Mayor Villaraigosa, a former labor organizer, has little understanding of private-sector economic development beyond well-connected real-estate interests whom he has courted and which have supported him. He has been a strong backer of L.A. Live, a downtown ports and entertainment complex, and other projects that have benefited from favorable tax treatment and major public infrastructure investments. He's currently supporting a push to build a new downtown football stadium, though L.A. has no professional football team. His biggest priority is to build the so-called subway to the sea, a $40 billion train line to connect downtown with the Pacific.
But L.A.'s downtown employs a mere 2.5% of the region's work force; New York's central business districts, by contrast, employ roughly 20%. "To put the entire focus of development on downtown L.A.," says Ali Modarres, chairman of the geography department at Cal State Los Angeles, "is to ignore the historical, cultural, economic [and] social forces that have shaped the larger geography of this metropolitan area."
Moreover, the mayor's accent downtown is on housing, not manufacturing. And as Cecilia Estolano, former head of the Community Redevelopment Agency, points out, "downtown housing simply doesn't create the jobs that small manufacturers do."
Meantime, business-strangling regulations proliferate, often with support from a powerful and well-heeled environmental movement, which Mr. Villaraigosa counts on for political support and media validation. There are draconian moves to control emissions at the port from ships and trucks. Also harmful are the city's efforts to expand the unions' presence from the docks to the entire network of trucks serving the port—essentially forcing out independent carriers, many of them Latino entrepreneurs, in favor of larger firms using Teamster drivers.
Such policies could backfire, says economist John Husing, leading shippers to transfer their business to cheaper and less heavily regulated ports such as Charleston, Houston, Savannah and other growth-oriented southern cities. This is particularly dangerous given the planned 2014 widening of the Panama Canal, which will make Southeastern ports far more competitive for Asia-based trade. Mr. Husing notes that L.A.'s port is the largest generator of blue-collar employment in the region.
Even some liberal Democrats are beginning to realize that the current system isn't sustainable. Writing recently in the Los Angeles Business Journal, Roderick Wright, a Democratic state senator from south Los Angeles, compared the state and local governments with the Mafia. The "vig" that government takes from local businesses, Mr. Wright argued—both in taxes and in the cost of regulation—has undermined job creation, particularly in working-class districts like his. He also warned that renewable-energy mandates recently imposed by the state would boost the cost of energy in the region, already 53% above the national average, by an additional 20% to 25%.
Who will challenge the machine and its ruinous economic policy? It's not likely to be the city's enervated business sector. But the city's working and middle classes might, says Ron Kaye, former editor of the San Fernando Valley–based Daily News. He points to the city's remaining middle-class homeowners, who are concentrated in the San Fernando Valley but also occupy a number of diverse neighborhoods. "These are the places that reflect the whole idea of L.A., as opposed to the Villaraigosa vision of a city of apartment dwellers," Mr. Kaye says.
It is uncertain if Los Angeles will experience the Sunshine Revolution it so desperately needs. What is certain is that only when the machine and its masters no longer dictate L.A.'s fate can this diverse and dynamic region resume its ascent toward greatness.
This piece originally appeared in the Wall Street Journal and is adapted from the Summer 2011 edition of The City Journal.
Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and an adjunct fellow of the Legatum Institute in London. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050
, released in February, 2010.
Photo by pinchof
The City of LA is not the same as the region by a long shot.
The biggest part of the port for example is in Long Beach. From Santa Monica South is independent cities or parts of LA county, and from Pasadena down the same thing on the West. Orange is yet another county to LA county. Since the issues apply region wide its due to more than the city government, likely the state government and the various region wide regulatory agencies. LA City is a part of the port, a narrow strip that widens near USC and LAX (contracts around Santa Monica) and then covers out to UCLA and north to the Valley excluding Beverly Hills and West Hollywood. Of course you have cities like Bell here where the city fathers believed the city existed to get them rich and Vernon and Industry where no one lives except city employees. So to talk about the region what percent of the regional employment base is in the City? Note that the current NFL team and one of the MLB teams are in Anaheim (where Disneyland is) which is in Orange County. Anyway LA is like every city the real estate types believe the city exists to make them money and that the taxpayers need to build statiums so that the pro teams can be used to entertain their buddies (I used to live in Houston, voted no on all the stadium votes but the passed every time due to the propaganda machine)
Lyle wrote: The biggest part
Lyle wrote:
The biggest part of the port for example is in Long Beach.
In terms of TEUs (Twenty-Foot Equilvalent Units), in 2010, the Port of Long Beach handled 6,263,499; and the Port of Los Angeles handled 7,831,902.
From Santa Monica South is independent cities or parts of LA county, and from Pasadena down the same thing on the West.
LAX and the nearby areas of Westchester are inside the corporate limits of the City of Los Angeles. As are San Pedro and the Port of L.A.
Orange is yet another county to LA county. Since the issues apply region wide its due to more than the city government, likely the state government and the various region wide regulatory agencies. LA City is a part of the port, a narrow strip that widens near USC and LAX (contracts around Santa Monica) and then covers out to UCLA and north to the Valley excluding Beverly Hills and West Hollywood.
Orange County has built a network of new toll roads (Ca. 73, Ca. 241 and so forth), and improved the existing freeway network, while Los Angeles County has been obsessively expanding rail transit. The contrast between the two counties is remarkable on I-5 (Santa Ana Freeway).
But the City of Los Angeles and Los Angeles County are still the "biggest dogs" in the L.A. region, and if they persist in bad policies as described by Joel, then that will rub off on the rest of the counties.
Of course you have cities like Bell here where the city fathers believed the city existed to get them rich and Vernon and Industry where no one lives except city employees.
The people involved in the municipal corruption in Bell are (apparently) going to prison, and the California legislature wants (properly, in my opinion) to dissolve Vernon as a municipality.
So to talk about the region what percent of the regional employment base is in the City?
That's the correct metric, in my opinion.
Note that the current NFL team and one of the MLB teams are in Anaheim (where Disneyland is) which is in Orange County.
There's no NFL team in Orange County!
Anyway LA is like every city the real estate types believe the city exists to make them money and that the taxpayers need to build statiums so that the pro teams can be used to entertain their buddies (I used to live in Houston, voted no on all the stadium votes but the passed every time due to the propaganda machine)
I don't dispute that. If the economy is healthy, then the real estate market will also be healthy. Compared to Detroit, Los Angeles is doing fine (not that it's saying much).