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Why California's Economy Should Never Go Nativist : Politics: Calls to limit, or eradicate, foreign influences are heard throughout the state. But what would happen if the Asians picked up and left?

March 08, 1992|Joel Kotkin | Joel Kotkin, a contributing editor to Opinion, is a senior fellow at the Center for the New West and an international fellow at Pepperdine University School of Business and Management

After decades of ever-increasing cosmopolitanism, economic distress, mixed with changing demographics, have reinvigorated one of California's most venerable, and deplorable, political traditions--nativism.

As in previous eras, increasing immigration from Asia, as well as the emergence of Japan as an economic power, have sparked the latest calls to limit Asian influence. Although opposition to Chinese emigration set the tone, the cry "the Japs must go!" was first raised in 1887, before there were more than 400 Japanese in the state. Roughly 20 years later, Japan, fresh from its military victory over Russia, was the villain in "The Valor of Ignorance." Written by a young American military officer, the book warned of the ultimate conquest of California by better organized and racially homogeneous Japanese.

The nativists' demands to restrict the rights and business opportunities of Asians vexed diplomatic relations between Washington and Asia. Frustrated by the Asian-baiting in California, President Theodore Roosevelt complained that the state was too small to be a country and too large to be an insane asylum.

Today's nativism, as yesterday's, draws on a diverse combination of interests. At the fringes are the openly racist groups. Toward the middle are such mainstream organizations as labor unions, which fear increasingly aggressive and often anti-union Asian firms locating in the state. Some of the most vociferous voices of the new nativism are self-described "progressives" who worry about Taiwanese investing in McDonnell-Douglas, while others want to change local laws to put foreign companies at a competitive disadvantage. Leading African-American activists also have tapped nativist sentiment in criticizing the practices of Korean merchants.

Whether nativism remains an option in California's political debate rests largely on public perceptions of the relative benefits of the region's deep involvement with foreigners, most particularly the Japanese, who have sunk an estimated $200 billion into the state over the past decade. To be sure, it's easy to catalogue the shortcomings of foreign-owned businesses in the state--their tendency to exclude local employees, their reluctance to transfer important technologies and skills to the local economy. But what would be the effects of a phased withdrawal of foreign interests from our region, other than to turn nativist scowls into smiles?

Largely because of increased trade with Asia, California's overseas commerce almost quadrupled during the 1980s, with the state's share of total U.S. trade jumping from 12% to more than 18%. At the Port of Los Angeles-Long Beach, now the nation's largest port of ocean-going commerce, Asian countries account for eight of the 10 largest trading partners, led by Japan and Taiwan.

The positive effects of such trade are not hard to come by. Among the fastest-growing categories of jobs in Los Angeles are warehousemen, truckers and other trade-related workers. The export component of this trade has been growing and, by 1989, surpassed $58 billion, the bulk of it in high-technology manufactured goods. The most frequent destination for exports shipped out of Los Angeles? Japan, Taiwan and South Korea.

The critical nature of its foreign connection is evident in California's three largest industries--agriculture, aerospace/high-tech and tourism. Asia remains by far the state's largest agricultural market. Shipments from the giant California-based Sunkist co-operative account for two-thirds of all citrus imports to Japan, with Japanese orange imports increasing fourfold during the 1980s.

Aerospace and high-technology, too, would be severely hurt by an Asian withdrawal from California. For example, Japan is the largest customer of Boeing Corp.'s aircraft business, which, in turn, subcontracts billions of dollars annually from California companies. McDonnell-Douglas' survival has been linked to its ability to sell stakes--and potentially aircraft--to Asians, most notably Taiwanese and Chinese.

Much the same pattern persists in other electronics industries. Indeed, while California companies have cut back or threatened to move to other states, Japanese, Chinese and Korean firms have continued to invest in manufacturing, research and development. Asians, who account for roughly 40% of the entering class at three UC campuses, already constitute upward of one-third of the state's engineering and technical talent, particularly in the high-tech electronics sector. They also are emerging as creators of our most competitive high-tech companies, such as San Jose's Solectron Corp., winner of the Commerce Department's Baldridge Award for manufacturing excellence.

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