The Milken Institute staged its regular California Summit earlier in the week and amid some dazzling lunchtime presentations on the automated future of driverless cars, hyperloop, and JPL wonders was a series of discussions on important issues to the state. Some thoughts shared at the Summit:

Small Business and Trade

California slipped behind Texas in 2001 as the largest exporter. However, according to Fred Hochberg of the Import-Export Bank, California is well-positioned as an exporter because the state is leading in areas such as tech, aerospace, agriculture, renewable energy, and, he predicted, in ten years, battery technology.

Small and midsize businesses can have a large role in the export business. Los Angeles is the largest small business area in the United States. Small Business Administration head Maria Contreras Sweet said the U.S. wants small business to export and have ways to help, including having SBA guaranteeing up to 90% of loans. She said that corporations are looking for small businesses to be part of their supply chains.

Caroline Brown of the Bank of America/Merrill Lynch said California businesses should know that their products are attractive to world purchasers but that California products are more expensive, so business leaders should make proper adjustments in their strategies.

Given that two members of this panel (Sweet and Hochberg) were appointees of President Obama it was not surprising to hear a pitch for the Trans Pacific Partnership. Hochberg said there are 600 free trade agreements around the world, up from 12 when NAFTA passed in the 1990s, and that China would be happy to see the U.S. walk away from TPP, which would weaken the U.S. position around the world.

Living Wage; Minimum Wage

Ross DeVol, chief economist for the Milken Institute said there has been hyperbole on the effects of the California minimum wage increase but that doesn’t mean that consequences will result from the action. He said California’s one-size fits all approach didn’t fit the state because of the costs variations in different regions. DeVol suggested that wage increases should be set by county or in metro areas.

Rusty Hicks, head of the Los Angeles County Federation of Labor said he thought implementation of the new minimum wage law was thoughtful because it raises the wage slowly not completely kicking in for small businesses until 2023.

While DeVol dismissed the argument that the wage laws would cause businesses to pack up and leave, he said the real effect could cause businesses to expand outside California and add to the perception that California was not friendly to business.


Bruce Upbin of Hyperloop One said the first hyperloop events will happen soon, in a few years and the focus is on moving cargo. He presented a proposal for developing a hyperloop pipe along the Alameda Corridor from the Long Beach port to speed cargo deliver and free the highways of trucks.

One interesting note: He said forget about a hyperloop track to carry passengers from Los Angeles to San Francisco. When Elon Musk proposed the hyperloop, it was suggested the fast moving vehicle could put the high-speed rail out of business. Upbin said there was too much politics involved to consider that route.

Do you suppose that the governor, who considers the high speed rail a major legacy project, might have reminded Elon Musk of the generous state subsidies for some of Musk’s other California endeavors?