February 7, 2011 - From the Dec/Jan, 2011 issue

Joel Kotkin Opines On City of L.A.'s Decade of Decline

Author, internationally-recognized authority on global, economic, political and social trends, and a frequent TPR contributor, Joel Kotkin has recently been studying the economic recovery of regions and cities. What he has found may surprise the most ardent city of Los Angeles apologist: the West Coast's largest city has been outperformed during the recession and over the past decade in the U.S. in almost every possible category of prosperity. In the following TPR interview, Kotkin details L.A.'s decade of secular decline, while also noting that, with adult leadership, a path to economic competitiveness is still open.

Joel Kotkin

You have been speaking and writing about regions and metropolitan areas for some time. You have focused recently on L.A.'s position vis-à-vis other regions around the globe and in the United States. How well is L.A. doing?

L.A. is in the midst of a secular decline, which can be reversed, but before we reverse a decline, we have to know what the problems are and where we stand. You can read accounts by organizations like the LAEDC-the last effective business group in town-and have no sense that time is running out. There is very little public discussion or recognition of what's going on. Not that we were unique in suffering from the recession, but we have actually underperformed compared with both our old rivals and some new ones over the past decade.

What do the numbers you're collecting say about Los Angeles?

In virtually every critical sector, L.A. has declined more rapidly than many of its major competitors. In finance and business sectors, L.A. has done much worse than Houston, New York, Dallas, and many of the other regions it competes with. In manufacturing, we've done much worse than Texas and other newer competitors. We're losing in warehousing, and we're about to lose out a lot more with the completion of the Panama Canal. The only sector where we seem to be holding our own is entertainment; there we're still relatively strong. For virtually everything else, we're in trouble.

Looking at migration, L.A. is now at national-level population growth. We are not growing faster than the country for the first time, probably since the 1860s. Our migration of domestic migrants, in other words, people leaving here to go somewhere else, is now, percentage-wise, worse than Detroit.

We struggle with New York for the bottom of the list. Looking at migration of the educated, meaning people with college degrees, over the last three years, our growth is roughly about half of New York's, and trail even further behind most big Texas cities, the San Francisco Bay Area, San Diego, Seattle, Austin, as well as places like Nashville and Kansas City. We rank 40th out of the nation's 55 largest metropolitan areas. We assume many of the educated people moving are young because young people move and older people don't. Demographically, we're falling behind. Economically, we're falling behind. In industry, we're falling behind.

Something much less solid, or tangible, but also important: the idea of Los Angeles as a model, as a city of the future, as a city that people around the world are thinking and talking about-that's gone. L.A., as a great metropolis, which we all were hoping it would become, that concept has faded. When people look at American cities, they look at New York as the great global city, they look at Boston, the Bay Area, Austin and Seattle as cutting-edge technology cities, and they look at Dallas, Houston, and a whole bunch of cities in the middle of the country as robust, fast-growing cities on the upward trajectory. Los Angeles neither has the charm and sophistication of the great coastal metropolises of the Northwest or the Northeast nor the elemental, entrepreneurial sensibilities of places like Houston or Dallas. We're in nowhere land. We're back to being Tinsel Town but with a much larger and poorer population, and it's not going to lead to a very good scenario.

I'm sure you've thought about what might contribute to this decline, because we both saw Los Angeles in the 80s and the 90s as a great and rising global metropolis. What are the explanations, in your opinion?

One big problem has been the loss of business leadership. I agree very much that public employee unions have a perfect right to fight for their constituents. The problem is that's supposed to be in a system in which other people are fighting for their interests, whether they're neighborhoods, small businesses, big businesses-but now it's not only a one-party system, it's actually a one part of a one-party system. The business Democrats, a la Bob Hertzberg, are basically gone. There's no real sensible debate about where the city is going. Under these circumstances, business seems to me to be more interested in accommodating the political power structure as opposed to challenging it.

We've gone into a period of intellectual lethargy about where this region is going; people are not thinking about their responsibilities. This is reflected in the media. We don't have first-class media in Los Angeles anymore. We once had a great newspaper. We once had a very feisty second newspaper in The Daily News and, before that, The Herald-Examiner. Neither of them is much more than a shadow of what they were. Right now, the go-to places for information are websites like LA Observed or Fox and Hounds and I am sure many others.

Fundamentally, as a media center outside of entertainment, Los Angeles is a shadow of what it was. I've been living in Los Angeles since 1975; I came here with the notion that this was going to be the great city of the future. It's very hard to make that case now.

What metropolises and regions are performing better?

It varies by region. I do a lot of work in London. They have a very articulate, intelligent mayor in Boris Johnson who makes the case for London in a very effective way. There is very good leadership in cities like New Delhi. Singapore is very well run, always questioning what the next step should be. Similarly, in Houston and Dallas-these cities are looking at themselves and saying, "OK, what are we doing right? What are we doing wrong? What are the next steps? How do we compare with other areas? What are our long-term strategic advantages?" I don't see anyone doing that in Los Angeles. I sometimes see more concerted intelligence meeting at the Mobile, Alabama, Chamber of Commerce than in Los Angeles. Business in other areas seems to have a greater affinity and identity with their region. This just seems absent in L.A. For a region to come up with a good strategy, it has to have at some level of affinity among its leadership. We don't have any of that.


What is the prescription?

One, we have to really look very seriously on how we can keep the port competitive. The port is the prime blue-collar engine of this region-it's key to our manufacturing and business service sectors as well. Without a blue-collar regional engine, we become a bifurcated society with very little upward mobility. We have to say, what is it that we need to do to maintain L.A. as a primary connection with Asia? That's one of our great trump cards. Second, we have to figure out how we maintain and grow our advantage in the media. That is a natural advantage of this region. How do we make sure that we don't see more production going elsewhere? How do we make it easier for people to produce here in L.A.?

A third very critical thing is that we have to create a political culture that allows for more than just the public employee unions to play a role. We have to figure out how we get the citizenry in the neighborhoods and the business community more involved. We have to understand that our industrial base should not be in competition or opposition to any conceivable green industry, but as part of that green industry. If L.A. is going to be a major part of the green economy, one advantage needs to be that, unlike many of the "green cities," we still have an industrial base. L.A. still makes things. We have to figure out how to make those things cleanly. That could be a great potential industry for L.A.

More than anything else, there needs to be a strategic reassessment of where we're going, and that is not happening. When I read the charts, I feel like a doctor looking at a patient and saying, maybe you should lose some weight, maybe you should stop smoking, maybe you ought to exercise, because you're going downhill. L.A. is, not dramatically, but gradually, slowly fading from world prominence. The question I have is, do we want to fix it, and does anyone care?

Who should care?

People who run businesses in L.A. should care. People who want to send their kids to L.A. schools and want to ensure funding for schools should care. Immigrants should care because they've chosen to come here and they want to have a better life for their kids. Anybody who owns property should care. Right now everything is built around the idea of a quick profit-turn around, go in, get out, get a little bit of government help along the way-instead of saying, "How do I build an asset that's going to be worth more over time?" That long-range thinking is not there. There aren't many business leaders who have employees here, have a long-term stake here, and are trying to say, "How do we make this work best?" But it should matter. It should matter to the Chinese businesses coming here. It should matter to the Mexican entrepreneurs. It should matter to green businesses. It should matter to Hollywood. Right now it doesn't seem to matter to anybody.

Given the paucity of discussion that you referenced, where did you get your data? Where did you get your information on L.A.? As knowledgeable as you are about L.A., how do you keep informed?

I am very fortunate because I do research all over the world. I found some very interesting statistics. For instance, we were tracing the growth of air traffic and found out that L.A. had actually had some of the biggest drops in air traffic of any major airport in the world. We did some work through the forecasting project at Cal Lutheran, tracing industry by industry and comparing them to other regions. Then I was doing some work for Forbes on where educated people are migrating. To my astonishment, L.A. was near the bottom of the list. These numbers came, in many cases from research centered on L.A., but some of it was just making comparisons with other regions and, in some cases, other regions around the world. L.A.'s position was pretty dismal in almost every case.

If we speak a year from now, how different will the dialogue be?

Well, the cynic in me says the only thing that will get serious discussion is when we start to see the reduction in the quality of life and services. We've been, in a funny way, like our fellow Mediterranean metropolises, like Rome, Barcelona, and Athens-living way over our means and maybe some signs of that decline will start to make us act decisively. That may be the only hope. Governor Brown's decision to go after the CRA may be a sort of wake-up call to the L.A. business community and the real estate community: The gravy train's gone, and if you want to build in L.A., you have to figure out how you do it with real value, making products that people want and that can be afforded by a population that's actually engaged. I'm hoping that realism will be re-gained. Now that we're thankfully headed to the end of our Villaraigosa era, perhaps we've had our obligatory genuflection to symbolic multicultural politics. Maybe we may start to realize that the best multicultural politics are the politics of prosperity, and refocus on that. That would be my only hope.

Am I hopeful about that hope? No, not so much. But we need to make the case and understand our problems. L.A. is not the next Detroit. L.A. has lots going for it, it has a great bone structure, tremendous climate, and still a huge reservoir of entrepreneurial capital-there are lots of thing that can help L.A. come back. We saw that in the 90s; we can do it again. But we need very different leadership, a greater sense of urgency and a very unique vision that fits our unique DNA.


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