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The Big Shakedown : ECONOMIC RECOVERY : The Spirit of Heroic Overcoming

January 23, 1994|Joel Kotkin | Joel Kotkin, a contributing editor to Opinion, is a senior fellow with the Center for the New West and international fellow at the Pepperdine University School of Business in Los Angeles. He is also business-trends analyst for Fox TV.

California has made a remarkable transition from Golden State to all-purpose "victim state." Yet, in the long run, its recent problems may have less to do with disasters, man-made and natural, than with its gradual loss of the sense of heroic overcoming that defined its past. "Bring me men to match my mountains" are the bold words inscribed on the facade of the state Capitol. Today, that imperative, and the ethic it embodies, seem quixotic.

Disasters, like the Northridge earthquake, certainly create an ideal climate for depressing prognostications. So it was, as well, in San Francisco on April 20, 1906. One-third of the city's built-up area lay in ruins; 500 were dead. The local business Establishment was a "thoroughly dispirited group of men."

But not the owner of the Bank of Italy. Although his building had also been demolished by the quake, Amadeo Giannini walked from his home to set up operations at the waterfront to serve his customers, mostly Italian immigrants. Unlike the old leadership, Giannini, the founder of the Bank of America, never lost his confidence in San Francisco's long-term prospects.

Giannini's success also pointedly challenges the pervasive nativism that often commingles with today's pessimism about California and, especially, Los Angeles. Like today's Asian and Latino immigrants, Giannini's Italian customers were seen as threats to an economic future; ridiculed as "the Chinese of Europe," they were widely portrayed as lazy, uneducated and immoral. Yet, the first section of 1906 San Francisco to spring back to life was then heavily Italian North Beach.

As Los Angeles begins to rebuild, and the state struggles to regain its economic balance, Californians, as did Giannini, must tap their capacity to serve, in Carey McWilliams' phrase, as the world's "great laboratory for experimentation." This is the California legacy. Consider:

In the Gold Rush, an unprecedented "medley of races and nationalities," as historian Hubert Howe Bancroft described it, risked all and lost much but ultimately transformed the state from a wild, overgrown mining camp into the largest capitalist outpost on the Pacific. Many Asians overcame an atmosphere of deep-seated prejudice and risked meager savings--even their lives--to set up the vegetable and fruit farms that put California on a course toward the world's richest agricultural region. They and other newcomers--Yugoslav and Italian immigrants, for example--also developed the fisheries, the craft industries and small stores that expanded the new commercial order.

Equally important, the state's white elite shared a vision of California's "manifest destiny" that transcended short-term profits. Nothing else explains the relentless, sometimes fanciful campaigns behind such undertakings as the Los Angeles Aqueduct, the state Water Project, the freeway system and the Master Plan. These efforts, too, suffered setbacks, man-made and natural. Yet, in California, these grandiose dreams became a reality.

Californians have suffered through other desperate times--only to emerge economically stronger because of their drive to overcome. For example, as the Vietnam War wound down, the state's aerospace industry lost one-quarter of its employment, with Los Angeles County taking the biggest hit. The Sylmar quake, in 1971, deepened and expanded the economic distress.

Yet, other Californians were starting new businesses at a pace 2 1/2 times the national rate. Among them were unemployed technologists and defense workers who had moved into commercial fields, notably computers, peripherals and semiconductors. As a result of their efforts, several areas of the state--notably the Santa Clara Valley, Orange County, the west end of San Fernando Valley--spawned a crop of soon-to-be high-tech giants, among them Intel, National Semiconductor and, later, Apple Computer.

In explaining this remarkable transition, Don Valentine, venture capitalist and a founder of Apple, credited a combination of defense downsizing, which freed up enormous human and technical resources, and a lowering of capital-gains tax rates. Most critical of all, however, was the heroic spirit of the place. "This (California) is still the frontier," Valentine said. "It's like Frederick Jackson Turner revisited. Substitute computers for land."

Today, after drought, riot, flood, fire and quake, California's obituary writers are again eager to bury the state. Yet, they continue, as always, to ignore the evidence that California's heroic spirit--the energy and commitment that moved Giannini to take his five-mile walk--has survived. Indeed, even before the Northridge quake, Southern California's industry was convulsing toward new and radically different forms.

Of course, help from Washington and Sacramento will be indispensable in rebuilding the economic arteries of Los Angeles. But even more important will be recovering that sense of heroic overcoming that makes us Californians. Only by so doing can we live up to their historic obligation to match the grandeur of our mountains.

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