Advertisement

WITH GOV. ARNOLD Schwarzenegger heading to China this...

November 13, 2005|Jock O'Connell | Jock O'Connell is an international business consultant.

WITH GOV. ARNOLD Schwarzenegger heading to China this week with a handpicked posse of corporate executives, business lobbyists and administration officials, it's pertinent to ask an impertinent question: What, apart from self-promotion, is achieved when California's governors globetrot?

The answer is: Not a lot.

Steve Maviglio, Gov. Gray Davis' former press secretary, conceded as much to a Times reporter in March: "If you look at the tangible results," Maviglio said, "not much comes out of a gubernatorial visit."

A 2003 report published by the Federal Reserve Bank of Minneapolis observed: "State-led trade missions tend to generate more heat and light than fire -- more media attention and photo ops than actual increases in exports that create new jobs."

Why the paucity of bankable deals?

For starters, having the state's chief executive along for the ride fundamentally tilts a trade mission away from commercial objectives. Such trade missions are crafted to show the state's governor in a flattering light while performing on an exotic stage. Serious businesspeople are advised not to get in the way of the photographers.

Then there's the fact -- always disconcerting to those on the receiving end of such missions -- that a governor's entourage is usually infested with political cronies and other opportunists who are probably more interested in pending legislative business back home than in developing real business opportunities abroad. With so many folks along mainly for an extended schmooze with the governor, is it any wonder that foreign government officials and business leaders don't expect much from these visits?

Gubernatorial trade missions, in short, are primarily about the governor and only incidentally about commerce. That's precisely why no California governor has ever dared stick taxpayers with their entire tab.

Heading up a trade mission emerged as a more or less obligatory gubernatorial function during the mid-1980s, when a U.S. trade deficit (modest by today's standards) became a political issue for the first time in the post-World War II era. The deficit spawned doubts about the ability of U.S. industry to compete internationally, especially against government-subsidized companies in Asia and Europe. So unnerved was public opinion that politicians sought out roles to play.

States across the country adopted "Buy America" procurement practices, opened dozens of trade-promotion offices around the world and began dispatching their leading politicians like so many Commodore Perrys on missions to pry open markets overseas. Even conservatives -- including California Gov. George Deukmejian, who overcame his laissez-faire instincts -- joined the cavalcade of junketers.

Since then, California governors have periodically journeyed abroad without much evidence of accomplishment. Arguably, the most successful gubernatorial trip outside the country was the symbolic call that Gray Davis paid on Mexican President Ernesto Zedillo after Davis' inauguration in 1999. The trip restored a measure of civility and respect to a bilateral relationship frayed by Gov. Pete Wilson's embrace of the anti-immigrant Proposition 187 in 1994.

Even if they gave it their best effort, big-state governors don't make any appreciable difference by personally promoting exports or soliciting foreign investment dollars.

Consider the context. The oft-repeated claim that California ranks among the world's half-dozen or so largest economies scarcely does justice to the reality of a complex industrial dynamo that generates more than $1.6 trillion a year in economic activity. On an average day, the estimated 55,000 California companies involved in exporting ship $315 million in merchandise abroad. In addition, the state's service exports average between $140 million and $150 million a day. Against this backdrop of private-sector heavy lifting, whatever "deals" a governor typically announces after a trade mission tend to be underwhelming.

As for soliciting foreign direct investment -- the type that builds manufacturing plants or otherwise employs American workers -- California governors are doubly handicapped. This state has historically refused to cough up the often grotesquely lavish financial inducements, tax breaks and anti-union laws other states use to lure foreign investment dollars. And business lobbying groups, such as the California Chamber of Commerce, have for years squawked so loudly about the state's reputedly inhospitable business climate that they have probably persuaded much of the world not to invest in the Golden State.

Schwarzenegger's aides insist that the governor's celebrity status will open doors for California businesses. Yet, his star power abroad cuts two ways. The neo-Wagnerian theatricality of a Schwarzenegger appearance can be off-putting, especially where business relationships are customarily -- and patiently -- nurtured in private.

Advertisement
Los Angeles Times Articles
|
|
|