The idea that cities are in position to lead the country out of recession by focusing on a global economy was the theme of a conference on the Global Cities Initiative at the University of Southern California yesterday. Los Angeles is highlighted in the group’s work as a city primed to take advantage of the global economy.
The Global Cities Initiative, sponsored by JPMorgan Chase and the Brookings Institution, is designed as a five-year plan to provide the tools for regional economies to develop as global trading partners.
Exports from Los Angeles area run in the $80-billion range, equivalent to the New York region. Much of the exports are in the service area, highlighted by the world famous entertainment industry that calls Los Angeles home. However, as the Brookings Institution, Bruce Katz, noted, 60-percent of LA’s exports are from manufacturing, a segment of the economy that has been reduced but not wiped out as, Katz says, some believe. (An interview with Katz by Planning Report publisher, David Abel, also appears in F&H today.)
Professor Richard Drobnick of the USC Marshall School of Business suggested that small business should be informed and schooled in the possibility of exporting their goods and services.
Panelists said one reason for the direction of cities becoming an economic force is because state and federal government have not responded quickly to economic changes. Another reason is that the world is becoming a more urbanized place. For the first time in history more people live in metropolitan areas than rural areas. Katz said that while urban areas occupy 12% of the world’s landmass, they make up more than 50% of the population and produce two-thirds of the world’s gross product.
Matthew Rose, CEO of BNSF Railway, argued that the federal approach to the economy is command and control from the top down. He said the federal government should just help fund good planning and infrastructure that was conceived by local authorities.
Former California Assembly Speaker, Bob Hertzberg, agreed that local government was more accountable, saying that people believe that by sending money to Sacramento they may as well send it to the moon. However, Hertzberg also warned of the disjointed governance at the local level.
While Los Angeles is a regional powerhouse, Hertzberg pointed out that the mayor of Los Angeles is not the mayor of the whole county. Hertzberg said he counted 487 government subdivisions in Los Angeles County and that each believes they are important and necessary.
Hertzberg argued for restructuring of local government and to make the area more business friendly. He related the story of opening his solar business in South Los Angeles and being suffocated by burdensome paperwork.
Yet, he also sounded an optimistic note that business leaders and political leaders could harness the energy of the Los Angeles’ dynamic economic power.
Katz suggested recent actions in New York State could be a model for California to follow. He said Governor Andrew Cuomo set up ten regional councils of local area leaders in business, labor and politics and asked for an economic vision using the strengths of their regions. If the metropolitan areas take the lead, the state can come in with support.
While Los Angeles and California are a dynamic economic areas, no longer an outpost in the Wild West but a gateway to the world, as USC president Max Nikias said, it’s clear the state and Southern California region still have to overcome governance roadblocks and anti-business practices to flex their economic muscle.