CA Economic Summit Says Answers Won’t Come from Sacramento

Joel Fox
Editor of Fox & Hounds and President of the Small Business Action Committee

The first annual California Economic Summit sponsored by California Forward and the Think Long Committee saw the answers to California’s economic and political problems rising from the regions of California. At the same time, there was a strong indictment against Sacramento leadership in its efforts to improve economic and governance matters.

Former United States Secretary of State, George Schultz, conference co-chair, said that not only should the conference attendees expect no help from Sacramento, “If Sacramento people find out we’re solving problems, they’ll come in and stop us.”

Carl Guardino, President of the Silicon Valley Leadership Group, pointed out that all 120 members of the legislature were repeatedly invited to attend the conference. However, only three were in attendance: Assembly Members Connie Conway and Kristin Olsen and Senator Michael Rubio.

Lt. Governor Gavin Newsom also attended, interviewing New York Times columnist Thomas Friedman, and participating in the breakout sessions as participants gathered around separate tables representing fourteen different regions of the state to discuss solutions. Newsom reported that 800 different ideas were floated over a two-hour period and said that the varying solutions from the different regions proves that “one-size fits all” proposals are not the way to go.

Regional leaders put committee reports forward on regulations, infrastructure, workforce, innovation and capital formation. The ideas were collected in a Summit Playbook, which can be found here.

Schultz argued that people in the local community know what programs and institutions work and don’t work. He emphasized that a cultural change is needed to make change through the regions.

Schultz stated that it was “blindingly obvious” that education was the key to turning the state around. He said the current education system was hurting students and he called for a more decentralized education system that would reduce bureaucracy and increase choice and competition. He gave an example of an Oakland mayor who had to fight the education bureaucracy that attempted to strangle the mayor’s school reform program before he finally succeeded. The mayor was Jerry Brown.

Thomas Friedman also cited education as one of the five pieces of a formula for success to turn around a struggling economy. He included infrastructure, a more open immigration policy, incentives for risk taking but regulations to prevent excesses, and government funded research. Friedman said a hybrid policy of cuts and tax increases were necessary to accomplish the goal. He said a third party is probably necessary to produce hybrid solutions.

Schultz hit a theme presented often on this site—the need for a business friendly state. While regulations are needed, he said, business people need an easier path to get through the regulations so that they don’t have “to go to Texas to build their plant.”

The legislators who took part in a panel moderated by former Speaker Bob Hertzberg confirmed the earlier sentiment expressed at the conference that no solutions are likely to come from the legislature this year. Senator Rubio said too much focus is put on what the media sheds its light on instead of dealing with core issues. Assembly member Conway argued there should be a limit of five bills per legislator per session.

Michael Rossi, the Governor’s Senior Advisor for Jobs and Business Development, represented the Brown administration. Rossi said the construction industry hurt woefully by the Great Recession is making a comeback, with 2011 its best year in six years. He pushed back against the recent CEO magazine survey that said California was the worst place to do business. Rossi argued that the states that did well in the survey where not comparable to California.

A few observations from the Summit:

Over and over we were told California was the ninth largest economy in the world. The standing was expressed proudly. Yet, I remember when California was tagged the seventh largest economy in the world a decade or so back. Slipping in the rankings doesn’t seem to be something we should be proud of.

The conversation dealing with the legislature indicated that bi-partisan working relationships on big issues are often scrambled by outside interests and the pressure they bring to bear. Perhaps the Stop Special Interest Money initiative on the November ballot can take a step in improving that situation.

Michael Rossi promoted the administration’s support for the High Speed Rail. He said the new estimates on the rail program were “bluntly honest” and that positive changes have been made in the scope of the project. But if the project has changed, and the original estimates presented to the voters were not so up-front when the bond measure was on the ballot, shouldn’t the people have another vote on whether they still want to proceed?

On a future date, I hope to post other articles from participants to the conference.

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