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California Glory Days Are Over for Business, and Boosterism Isn't Going to Revive Them

October 21, 1990

The Oct. 7 Business section did something worthwhile for California by countering with facts the usual hype dispensed by the California Chamber of Commerce. James Flanigan also picked up on the subject and wrote one of his more cogent columns, "Hardly Lean, We Are No Longer Hungry."

California has had it good for so long that it is only natural for chamber of commerce types to believe that the future will simply be more of the same. However, it should be observed that the federal government's willingness to spend a disproportionate amount of its budget in California accounted for much of the state's luster over the years. With the prospect of an eventual cutback in defense procurement and the continuing deficit crisis at the federal level constraining other spending, a new era may be beginning for California, one in which the state must fend for itself.

Unfortunately, because of severe tax collection and spending limitation propositions passed by the electorate, the state is in a fiscal bind that threatens the collapse of the infrastructure needed for the growth of efficient, globally competitive businesses. It is no accident that the only new companies to succeed in highly competitive consumer markets over the past 20 years are headquartered overseas.

Even though the great consumer-electronics business prospect for the 21st Century is high-definition television, there are no American-based consumer companies left to compete in this huge market for hardware.

Just as we let our consumer electronics hardware companies collapse and be sold off, we are now permitting the sale of our entertainment software industry. While Matsushita and Sony are positioning themselves to be the giants of the electronics industry in the 21st Century, our government does nothing and hides behind ideological quips such as "the market is the best judge of what we should sell and buy--not government regulators." I guess they feel Japan's Ministry of International Trade and Industry is more qualified to make such judgements.

As to the reasons for businesses to depart California, you listed the most pertinent, with the exception of the crucial one-- perceived personal safety. What was the body count last weekend? The deterioration of public safety in Southern California has a long-term effect, particularly when added to the already negative effects of traffic, air quality and crowding.


Santa Barbara

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