California Dreaming in the Worst Way

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There’s a scene in the movie “Inception” that vividly reminded me of a recent conversation I had about how to get out of our current economic crisis. At the beginning of the movie – which is all about dreams and alternate realities – the main characters are sitting in what looks like an outdoor café in Paris when all of a sudden, the buildings start crashing down. Cobb, the character played by Leonardo DiCaprio, turns to his companion and asks her if she remembers how they got there. When she admits that she can’t, Cobb reminds her that they are actually in the middle of a dream. 

Flash-back to a meeting a few months before of the city’s Community Redevelopment Agency, on whose governing board I serve. It’s 2010 and we’re in the middle of the worst economic crisis since the Great Depression and we’re trying to figure out what to do. Agency staff proposes that we give away millions of taxpayer dollars to help an existing garment factory move from Southgate to an area in South Los Angeles to help revive the failing economy. When I suggest that it might be better to have a competitive process to get the greatest bang for the taxpayer buck – to make sure we invest in the creation of good new jobs in growing industries – the horrified reaction leaves me feeling disoriented.

Am I crazy? Don’t we really just need to direct money to any business that’s ready, willing and able to get things going?

Well, no. What we really needed at that moment was DiCaprio’s voice coming out of the loudspeaker and reminding people, “Remember how we got here, folks.” Here in Los Angeles and across the country, we need to awaken from dream state economics, to take a conversation divorced from history and bring it back to reality.

The U.S. Census Bureau recently released a report that should be the beginning of this wake-up call. According to new census data, there are more poor people now than ever before in our history, and most of those poor people have jobs.

Think about garment factory jobs, which generally pay minimum wage – $8 an hour or about $1,390 per month gross for full-time work. Without benefits, of course. A garment worker – who might take home $1,100 or $1,200 per month – can’t afford to own a home, buy a car or any other consumer goods.  Many garment workers are only able to survive by getting government benefits such as food stamps. Plus, if this garment worker tries to form a union and make his or her job better, that factory is going to close down faster than Meg Whitman can spend $1 million.

The garment factory’s move was approved by the CRA and later the City Council. So how are these garment workers going to get us out of the biggest recession since the Great Depression? They aren’t.

Unfortunately, many business and political leaders in California seem to be saying the same thing as the proponents of the garment factory deal. When you read the websites of groups like the Los Angeles Area Chamber of Commerce, and politicians like Whitman, the emphasis is on giving tax breaks and subsidies to business, deregulating industry and lifting “barriers” or “strings.” There’s no mention of strategically investing public money to create good new jobs.

Economic implosion

All of this flies in the face of research showing that the scarcity of good jobs, and the resulting rise in income inequality, were major factors in the economic implosion of the last few years. Harvard business school economist David A. Moss recently published a study showing that the historical points of greatest income inequality from the last century were just before the crash of 1929 and just before the crash of 2008. This suggests at a minimum that there were way too many people in 2008 earning so little that they couldn’t afford to pay their mortgages.

L.A. County has been emblematic of this national trend. According to the Census Bureau’s 2008 American Community Survey, nearly 30 percent of the county’s full-time workers earned less than $25,000 a year. Take a minute to imagine what it would be like to try to live on that in Los Angeles. And that’s before the recession really took hold. On Sept. 28, the Census Bureau will release the 2009 American Community Survey. Many analysts expect that report to identify Los Angeles as one of America’s leading cities in both the number of working poor and unemployed.

Fortunately, there is a better way. Unlike what most conservative commentators claim, government – in partnership with the private sector – does have a very important role to play in helping to revive the economy. The CRA alone has close to a $500 million annual budget, plus there are billions of dollars in recovery money coming through local and state governments. The best way to invest that money is to strategically target growing business sectors that agree in writing – to create good jobs that will lift people out of poverty and get us out of this crisis.

It’s been said that those who ignore history are bound to repeat it. If that’s true, then we need to rouse ourselves from dream state economics and start figuring out real ways to revive our shell-shocked economy.

Madeline Janis, an attorney, is vice chairwoman of the Los Angeles Community Redevelopment Agency and executive director of the Los Angeles Alliance for a New Economy, a non-profit organization dedicated to building a new economy for all.

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