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Sunday, Jun 4, 2023


The New Medicis

This year’s list of richest Angelenos puts into perspective a major shift in the nature of L.A. elites. In contrast to the ruling structures of the ’70s and ’80s, which were dominated by corporate chieftains, the new power in town is more personal than institutional.

A remarkably few at the top of the list actually own and run public companies. Eli Broad, for example, recently sold SunAmerica. The leading entertainment figures Steven Spielberg and David Geffen are creative types whose company, DreamWorks SKG, remains privately held. Most of the others, such as Gary Winnick, Jerry Perenchio and Ron Burkle, are better known as savvy investors than company builders.

This suggests a change from the days when L.A.’s big money was associated with corporate entities like Pacific Mutual Life Insurance, Getty Oil, Lockheed, Security Pacific or First Interstate (formerly known as United California Bank). These leaders, epitomized by the late Thornton Bradshaw, represented not just money, but corporate power. When they spoke it was not only as men, but as institutions.

“There was a leadership that could make things happen,” recalled Steve Gavin, a former aide to former Mayor Norris Poulson, shortly before his death in 1995. “The Central City Association, then the downtown Businessman’s Association, the bankers, the California Club these were all the same people. What was important to them was to make Los Angeles a world-class city.”

Today’s elite represents a very different breed. As Eli Broad has recently noted, even the most dedicated L.A. booster can no longer easily persuade investors that it is in their companies’ interest to be involved on the civic level. The “updated business lexicon,” as Broad suggests, really reduces the corporate world view into one more akin to Thomas Hobbes than Arthur P. Sloan that is, nasty, brutish and short.

Globalization of companies and the rapid merging of giant firms have all but dissipated the traditional tie between the corporate titan and his community. Even the most civic-minded executives have been forced to curb their local interests. “Globalization has changed people’s loyalties,” says Mike Bowlin, chief executive of Atlantic Richfield Co. (which is in the process of being acquired by BP Amoco). “Twenty years ago, Arco had Los Angeles in its heart and we were more of a regional company. Today our operations are all over the country and the world. So the shareholders have to ask, ‘Why is Los Angeles more important to you than Singapore?’ ”

With Arco the latest L.A. giant to be devoured, we should expect even less from corporate Los Angeles in terms of civic involvement. The new corporate type is typically a short-termer more likely to see civic concerns as just another nuisance, to be handled by smooth-talking public or government relations types.

There’s clearly a danger in relying on such people. When things went bad in the early ’90s, the new breed of corporate leaders failed us. “As things were changing, and getting worse, the CEOs in L.A. lost their power and their commitment,” observes Mayor Richard Riordan, himself really not part of the old-line leadership. “When the older guys gave up, there was no leadership, no strong group who considered commitment to the city and philanthropy important.”

So where will elite power come from? From people like Riordan and Broad people whose commitment to Los Angeles is more like that of the Medicis. It will be people whose personal interests be it in the arts, AIDS or education drive their agenda. Sometimes, as in the case of Disney Hall, members of the Medici-like elite can be mobilized into action on a particular project, but often we can expect a host of individual agendas.

This is hardly a perfect solution. It would probably be good for the city to have a coherent 1950s-style real estate, corporate and professional elite class whose interests in basic infrastructure are institutionally driven, long-term and broad-ranging. But those days are gone, and we will have to live now in an elite world driven by the peculiar personal agendas of the ridiculously rich.

Yet this is really not new to Los Angeles. In its early evolution as a world city, L.A. has been largely shaped by the passions of rich and often eccentric individuals. It was the likes of empire builders such as Harrison Gray Otis, Henry Huntington, Louis B. Mayer, Jack Warner, Donald Douglas and, most particularly, Howard Hughes none of them easily mistaken for corporate bureaucrats who drove the city’s industrial development.

These men, and they were all men, were more of the swashbuckling type of leaders, often arrogant, ruthless but also risk-takers willing to bet their fortunes on an upstart, water-short city along the Pacific shore. They all believed in L.A.’s manifest destiny. Finding people with a similar commitment will pose the central challenge of the emerging L.A. elite in the decades to come.

Business Journal columnist Joel Kotkin is a senior fellow with the Pepperdine Institute for Public Policy and a research fellow at the Reason Public Policy Institute.

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