Business Networking Key to Boosting Bay Area over LA

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

The “Beat LA” chant that occurs at many San Francisco sporting events featuring teams from the two regions of the state may reflect more than the athletic contest on the field. The San Francisco Bay Area’s economy has surged ahead of Los Angeles’s economic growth over the past 40 years.

Professor Michael Storper of UCLA told a Town Hall Los Angeles audience Wednesday that the Bay Area managed the transition to the modern economy better than the Los Angeles region. Former Los Angeles city councilman and county supervisor Zev Yaroslavsky agreed that while San Francisco looked ahead at the blossoming high tech business, Los Angeles business leaders and politicians were looking back, working to preserve traditional industries.

Storper, co-author of the book, The Rise and Fall of Urban Economies: Lessons from San Francisco and Los Angeles argued that the Bay Area’s success was due to San Francisco’s old downtown business community realizing that it needed a regional approach. In the 1980s, the Bay Area Council, which represented traditional San Francisco businesses, understood that the economy was changing. To capture the future of high tech, high-income economy, the Bay Area Council reached out to the Silicon Valley.

Networking effectively was the key, said Storper. Business leaders from different industries worked with those outside their usual business environments. The same thing did not occur in Los Angeles.

Southern California lost high wage jobs during that period when the aerospace and defense industries cut back with the end of the Cold War. Corporate headquarters abandoned Los Angeles. These reverses stopped the dynamic growth that Los Angeles experienced for most of the 20th-century.

According to Storper’s research, while San Francisco’s Income Rank nationally remained first from 1970 to 2009, Los Angeles went from fourth in 1970 to 25th in 2009.

The Income Rank is significant when funding for government services is calculated. Storper said that the Bay Area’s higher income and tax take translates in San Francisco spending $23,000 per person on government services compared to Los Angeles spending $18,000 per person for the same services.

The Bay Area and Los Angeles are both anchored by “glamor” industries—high tech up north, Hollywood down south. However, Storper argued that Hollywood’s affect on the LA economy was only one-fourth what high tech means to the Bay Area economy.

Zev Yaroslavsky took the comparison further, suggesting that Hollywood historically did not engage in local civic activity, although he said he sees signs that is changing.

The former LA city councilman and county supervisor said that during Los Angeles’ good years both city business and political leadership were running on auto pilot, not understanding that Los Angeles was in competition with other metropolitan areas. As an example he offered the fact that the Bay Area Rapid Transit system began construction in 1970, LA didn’t open the first leg of its rail line until 1993.

Yaroslavsky argued that business political muscle to change the landscape began waning around 1984—about the same time that Professor Storper gave credit to the Bay Area Council for creating business networking and a long-term vision in San Francisco.

But it wasn’t only political muscle from business that seemed to favor the northern part of the state. Yaroslavsky pointed out that long serving United State Senators Alan Cranston, Dianne Feinstein and Barbara Boxer all were from northern California. At the same time powerful assembly speakers Leo McCarthy and Willie Brown were from San Francisco. While stating that the politicians were not necessarily biased to the north, Yaroslavsky said that the Bay Area was more prepared for using the funds that were then shoveled its way.

Now its catch-up time for Los Angeles. Yaroslavsky says he sees evidence of good things happening in LA, especially with the passage of measures to improve local infrastructure. Storper advised that Los Angeles and Orange County act as regional economic power, much like Silicon Valley and San Francisco did in the Bay Area.

That will take business networking.

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