kotkin/dec28/mark1st

The best thing about 1999: It’s the last year in a generally horrific decade for Los Angeles. After nearly a century of gradually building momentum, Los Angeles finally had a really bad decade, losing more than it gained.

Of course, now, at decade’s end, the economy is in much better shape. Most of the lost jobs have been recovered and unemployment is down. Given this, perhaps it’s tempting to bury the recent past and place all hopes in the new millennium. But rather than simply celebrate better times, we should recognize the bitter lessons from the disastrous ’90s. We may need to employ them sooner than later, particularly if the economy begins to slow significantly next year.

The most important of these would be to maintain vigilance and remain humble, even in relatively good times. Los Angeles exited the ’80s on a high its economy was humming even as the rest of the nation was beginning to slow. New buildings were creating an eye-catching skyline both downtown and on the Westside. Rents and housing prices soared.

Fulfilling predictions of early visionaries and empire-builders, the port complex of Los Angeles-Long Beach finally passed New York as the nation’s largest. The long-awaited Pacific Century, with Los Angeles as the fulcrum, seemed upon us.

Even normally dismissive Easterners were ready to accept that, as Atlantic magazine suggested, Los Angeles had “come of age.” Top urbanists, like Susan Fainstein and Saskia Sassen, began to add Los Angeles to the elite ranks of “world cities” including New York and Tokyo that would dominate the “command and control” functions for the global economy. L.A.’s business elite, led by First Interstate and Security Pacific Bank, seemed anxious to seize the day.

Then everything collapsed. First the Cold War ended, leading to a massive reduction in military expenditures. At least 150,000 jobs were lost in Los Angeles County alone many of them high-paying, blue-collar positions never again to be replaced. Second, the once seemingly invulnerable Japanese economy burst, taking much of the hot air out of our own property market. Big property owners took the biggest hit, but so did scores of local speculators, developers and lenders.

Amid an already depressing economic scene, a combination of political bumbling, police brutality and racial posturing helped produce the worst catastrophe in L.A. history, the 1992 riots. In three days the city’s carefully crafted image as the multiethnic cosmopolis of the future disintegrated. Los Angeles to the delight of many local intellectuals, media types and academics, as well as most of the national press corps suddenly morphed into the equivalent of Bosnia in North America.

Faced with the greatest crisis of this century, L.A.’s political and business elites, rather than rouse the populace, instead could only bleat like sheep being led to slaughter. As business conditions worsened, our local economic leadership, such as the Economic Development Corp. and L.A. Area Chamber of Commerce, whined and pleaded, hoping someone, the federal government in particular, would come to our rescue. Much of the business elite simply packed up and moved to Orange County, Utah or some other such Valhalla.

The elites had plenty of company. By the mid-1990s, Los Angeles and its environs had lost a million people roughly two-thirds of all movers out of California to other parts of the country. Whites were particularly susceptible, with net out-migration from Los Angeles County averaging 80,000 Anglos per year between 1991 and 1995. Among the country’s major regions, only New York lost that kind of largely middle-class populace during this period.

To these demographic and economic disasters, God also saw fit to add some natural ones. The fires and the great 1994 Northridge earthquake seemed a divine sign that a city that once epitomized the future now had none. California, intoned the voice of Eastern establishmentarianism, Time, had become “a state of disaster.”

Then, at the absolute worst of times, ordinary Angelenos showed extraordinary perseverance. Almost by default, a new, less fearful and backward-looking leadership emerged. It came largely from the bottom up, courtesy of small business, producing 70 percent of our new jobs since 1994.

Not only small, it was also multiethnic, including Charlie Woo, the architect of Toytown, and developer Jose de Jesus Legaspi, who spent the decade reclaiming parts of the city that had long been deemed beyond repair. Although many in the entertainment industry either fled to their individual Valhallas or pined loudly for New York, Hollywood also played a key role, as its worker bees continued to churn out product, adding good-paying jobs for tens of thousands.

For the most part, the public sector was hardly heroic in this process, simply adding their wails to the ranks of the whiners. But several officials never gave up. Among the notable contributors were Cody Cluff, head of the Entertainment Industry Development Corp., RLA’s Linda Griego, and Rohit Shukla, head of the Los Angeles Technology Alliance.

Together with a handful of elected officials including Mayor Richard Riordan they began to make Los Angeles a respectable, and profitable, place to do business.

As the decade’s end approaches, L.A. appears to have stabilized. The seemingly relentless “white flight” has slowed significantly to less than half the mid-’90s level. Job creation since 1994 has been far faster than in ultra-hyped New York by 50,000 jobs, according to economist David Friedman. Los Angeles, reports the Wall Street Journal, is again a “hot” location for ambitious young executives. Construction, ranging from the modest industrial or residential projects to the grandiose projects downtown and in Hollywood, has made a modest revival. Housing prices have also spiked, although still a third below their Reagan-era peak.

Meanwhile the newcomers, to paraphrase Pete Wilson, “keep on coming,” but they are proving more a part of the city’s revival than its destruction. As my Pepperdine colleague Gregory Rodriguez has pointed out, more and more are joining the mall-shopping middle classes; blame them not for L.A.’s decline but for the lines at Macy’s.

This remarkable comeback story should be a source of pride for all Angelenos, even if it has only barely been told. Fortunately, the whole saga will be revealed next year in historian Kevin Starr’s forthcoming book about California in the ’90s. But one doesn’t have to wait for Starr’s book to sense that Los Angeles is no longer totally committed to civic-immolation and self-hatred.

There even are good signs on the media front. For one thing, the diffident patrician Shelby Coffey is finally gone from the Los Angeles Times, replaced by managers with some sense that as goes L.A., so goes our most important news media institution.

Author Mike Davis, the literary/academic elite’s favored apostle of L.A. Apocalypse, finally has been unmasked largely due to the unpaid efforts of Brady Westwater, a Malibu Realtor as an exaggerator and chronic dissembler by a host of publications, including London’s Economist and the normally left-leaning Webzine Salon.

Such favorable signs, however, do not mean it’s time to break out the champagne. We tried that once in the ’80s and ended up with a wicked hangover. Although no longer demonstrably at the brink of catastrophe, Los Angeles must still face up to massive problems, both virtual and real.

Like most American cities, L.A. suffers a widening gap of rich and poor that could fuel the flames of future disorders. And the transformation toward a knowledge-based economy threatens to leave our increasingly ill-educated working class even further behind.

Asia, our most important global link, will continue to haunt us, particularly in the key aerospace, tourism and entertainment industries. And although their growth is slowing, the various competitors of our region, most notably the low-cost states of the Intermountain West, are still keen on seizing L.A.’s crown jewels, from international trade to the under-appreciated garment industry.

Nor, despite the departure of Coffey and the exposing of Davis, has Los Angeles come close to solving its still-huge image problems. A recent imbecilic essay in U.S. News and World Report called “Fortress Hollywood” raves about how L.A. has “gone paranoid,” despite the rapid decline in crime and the upsurge in the famed film district. Even our hold on entertainment is being challenged; an article in the New York Times sought to make the real L.A. superfluous by claiming that the “New Los Angeles,” complete with glitter and stars, could now be found along the Hudson.

Given these challenges, it’s clear Los Angeles still has a lot of uphill climbing to do. Dealing with the rising class conflicts requires the attention of all Angelenos, particularly a business community that still lacks strong, decisive leadership. A newly powerful labor movement must decide it’s part of a wealth-creation coalition, or it could wage destructive actions, such as a port strike, that could further undermine our recovery.

Not that L.A.’s prospects in the year and decade ahead are dismal. Cities rise, and fall, due to the character of their people and, most especially their leaders. In the 1990s, our lack of such character almost doomed us. Let’s hope we can avoid a repeat performance this time around.

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