SAG Sinks After Split
When you sit down to negotiate – whether it’s over a union contract, a business transaction or a marriage proposal – you must have leverage.
It can be the threat of a strike, the promise to pay more money, or a plausible bluff. Regardless, if you don’t have some leverage – some weapon sitting beside you on the table – you’re gonna get rolled.
I bring this up because of the perplexing way the Screen Actors Guild gave away its leverage over the last year or so, but kept acting as if it had plenty.
Sure enough, the actors union got rolled. The proof came out about a week ago when the guild’s divided board voted 53 percent to 47 percent to recommend basically the same contract that the board turned down last year.
Prime Time for Private Push
It’s spring-cleaning time, and this would be a fine moment for the city of Los Angeles to drag all of its old items outside and hold a big garage sale.
Indeed, if the city were to follow through on Mayor Antonio Villaraigosa’s notion of selling the Los Angeles Convention Center and Los Angeles Zoo, or at least selling the operating rights, we’d get a two-fer: an improved city budget and a spark of business activity.
Look at what Chicago is doing. A company gave the Windy City $1.2 billion to take over management of the city’s parking meters. A consortium last year agreed to give Chicago $2.5 billion to take over Midway Airport.
With numbers like that, L.A.’s expected budget deficit of $500 million or so next year suddenly looks manageable.
Improved State of Competition
Top executives like having their headquarters in Los Angeles. They say they enjoy the fine weather and the celebrity glam. But expansions? New plants? They say put ’em in Nevada or someplace else where taxes are lower and regulations are lighter.
That’s why the single-sales factor of taxation that the state Legislature recently passed is important. It kills a lot of the incentive for businesses to site their expansions and new plants in other states.
As reported in the Business Journal last week, the current formula makes each company pay state taxes based not only on the amount of sales the company makes in California, but also on the payroll and the value of the property in the state. The new formula eventually eliminates the tax on the payroll and the property, relying instead on in-state sales. That means a company could add a string of plants and double its employee count in California and theoretically pay no additional state tax.
In short, the Legislature told businesses to come on in, the water’s fine.
Has L.A. Finally Had Its Fill
Throughout its economic history, Los Angeles has been able to count on one thing above all else: growth. People have always come here for the fine weather and laid-back lifestyle. Businesses and jobs followed.
Recessions caused no long-term downturn because more people eventually flooded in. No one cared greatly if businesses left. That’s because plenty more businesses popped up to serve all the people.
But have we hit the outer limit of all that growth? Has our capacity been filled? Have we hit the wall?
The Washington Post’s Steven Pearlstein came to Los Angeles a few weeks ago and, with the sharp eye of an outsider, seemed to spot something that residents may not have noticed.
Give Port Truckers a Break Already
Why do the Port of Los Angeles and Mayor Antonio Villaraigosa so hate small, independent trucking firms?
The city-owned port and the mayor have been on a long campaign to eradicate the thousand or more companies whose trucks haul cargo in and out of the port. And they have cynically tried to use the Clean Truck Program as a club to knock the life out of the small companies, as if they were so many baby seals huddled around the port.
Of course, the answer is simple: They hate the little companies because they’re not unionized. The port could have written its Clean Truck Program merely to create a fair and just system in which new clean-burning trucks could be purchased by the small trucking firms at subsidized rates. Instead, its program mandates that new trucks be driven by employees of a few big companies – big companies whose employees can be organized easily by the Teamsters.
Curbing Rush to Punishment
The virulent backlash against companies that have accepted money from the government is understandable – to a point. The question is, have we sped past that point?
It’s reasonable to inveigh against AIG-style bonuses to executives who helped steer their companies into the ditch. It’s understandable to rail against companies for lavish perks, especially if those companies are getting taxpayer money.
But is the pitchfork-and-torch routine being employed a little too reflexively and too often?
A good example is the pillorying of Northern Trust Corp. for its sponsorship of a golf tournament last month at the Riviera Country Club in Pacific Palisades.
Business Bruised at Ballot Box
You hear people say it all the time: Los Angeles is a business-friendly town.
C’mon, now. Isn’t that a teensy bit hard to believe? I mean, I’d believe Frank McCourt will invite Scott Boras to a weekend fishing trip before I’d accept the notion that Los Angeles loves businesses.
I’ve railed in the past about how local and state governments here routinely rough up businesses. And now it seems a majority of people here aren’t real fond of them, either.
Want evidence? Let’s look at Tuesday’s election.
In the Fifth District City Council race, you have a candidate whom the business community rallied behind in Adeena Bleich. She won the endorsement of the Los Angeles Area Chamber of Commerce and former Mayor Richard Riordan. But she lost the election.
Mayor and Business a Poor Union
Antonio Villaraigosa’s re-election Tuesday is OK. After all, he is a pretty good mayor.
My only complaint: He’s no friend to business.
That’s always seemed evident but it became even more clear last week when, in a late campaign swing, he stopped by the Los Angeles Business Journal offices to meet with reporters and editors. Our first question: Since businesses here are stuck with unusually high costs and high tax rates – and soon will face among the country’s highest sales tax rates – is his administration doing anything to help L.A.’s businesses combat those disadvantages?
Instead of talking about what he plans to do, he talked about the past. He said that when the city was facing a big budget deficit, he refused to suspend the third year of a scheduled tax cut for businesses.
Shocking Cost of Green Energy
Imagine taking a nice Sunday excursion into the desert a few years from now. Maybe you’ll pass some Joshua trees and some spectacular geologic formations. But chances are, the feature you’ll see most will be miles and miles of high-voltage transmission lines.
Yes, massive transmission lines will soon dominate the desert scenery around Los Angeles. That’s thanks to the quest to boost alternative electrical power. Utilities in California are required to get one-third of their electricity from renewable sources by 2020.
Up till now, transmission lines that stretched across the hinterlands haven’t been particularly common because electricity-generating plants have been close to most cities.
Depression Talk Falls Flat
Is this really the worst economy since the Great Depression?
We’ve heard that phrase endlessly in recent months, but it’s idiotic just to put today’s economy in the same sentence as the Great Depression. Unemployment hit 25 percent in the depression, the stock market lost 90 percent of its value and the gross domestic product fell by one-third. We’re nowhere near those numbers. You couldn’t drive a Model A from those numbers to today’s.
OK, OK. The phrase is this is the worst economy since the Great Depression. But even that’s hard to swallow.
I can’t help but remember years ago when my aunt died and her property was put up for sale. I wanted to buy it – keep it in the family and all. The price was fine, but I decided I couldn’t buy it for one reason: Mortgage interest rates were 18 percent.