Americans will face economic shocks and challenges to their civil liberties as the nation copes with the fallout from Sept. 11’s terrorist attacks.
That’s the stark consensus of more than a dozen Orange County business, academic and community leaders who were invited by the Business Journal to predict how the country and world will adjust to the present turmoil.
“The financial and economic effects of Sept. 11 will be long-term and far-reaching,” said Newport Beach corporate lawyer Nick Yocca.
Predicted Michael Danzi, chief executive of Irvine medical testing company US Labs: “Our expectations of privacy will be reduced and our government will become comfortable monitoring citizens to an unprecedented extent.”
Some local voices fear that global conflict and heightened domestic security will result in inflation, less travel (a particular blow to OC), reduced commerce and less entrepreneurial risk-taking. The bottom line: a reduced standard of living, they contend.
But this scenario was not unanimous. Others saw the onslaught as temporary.
“The fundamentals of a free enterprise economy of our size and diversification are too strong to be permanently damaged by one event,” said Newport Beach venture capitalist Murray Rudin.
Some expressed a backlash if officials go too far in meeting the need for added security.
All of these leaders expressed confidence that the nation would endure, with Americans rallying together to meet new challenges. Most expressed confidence in the ability of the U.S. to carry out strategic objectives, whatever those may prove to be.
There was less agreement on how the world might change, with some fearing more hostilities. But others expressed optimism that cooperation would increase among freedom-loving people.
Reflecting dogged confidence in a deteriorating economy, developer Bob Olson urged decisive action to make planes safer so OC, and the rest of the country, could quickly get moving again.
Here are summaries of what these local leaders had to say (the comments of Danzi and county treasurer John Moorlach are on page 67):
Nick Yocca
President, Stradling Yocca Carlson & Rauth
The events of Sept. 11 will live in all of our minds and hearts forever. No event since Pearl Harbor has galvanized the American spirit and touched so many people so deeply, worldwide. This event has strengthened the American resolve to preserve and defend what is best about our country. If there is a silver lining in the tragic events, I believe it is that we have had our eyes “opened” to the blessings of our precious freedoms, of speech, of religion, of commerce. We have solidified our resolve to succeed and lead the rest of the world to freedoms.
The financial and economic effects of Sept. 11 will be long-term and far-reaching. We are already hearing about the impacts on the travel and financial industries. For many years to come the corporate decision-makers may lack the confidence to undertake any new projects or relationships. Our general business clients will abandon smaller and less secure transactions. Investments in new ventures will diminish. Investment successes will be more difficult to achieve.
Nevertheless, I believe that the resolve we have gained in the last two weeks will ultimately see us through the economic and political storms that lie ahead. As our military power picks up and travel surroundings become more secure, commerce and travel will gradually resume and new employees, equipment and technology will replace the old. The resulting bubble of higher taxes, expense and inflation will have to be subsidized by each of us, as well as by our industries and the government, leading to a plateau well above where we are today.
I have seen a number of economic ups and downs in Orange County and this national crisis will no doubt financially and emotionally impact our local business climate which has become international in scope. However, I can’t think of anyone I know who is not more determined than ever to accomplish their business and professional goals. This determination will see us through, and the sooner we turn our focus from mourning and anger to rebuilding and solidarity, the sooner we will recover on all levels.
Jim Rosse
Retired chief executive,
Freedom Communications Inc.,
Former provost, Stanford University
There have been a small number of “defining events” in America within my memory,Pearl Harbor, the death of FDR, the assassination of JFK, the moon walk, the fall of Saigon, the Iranian hostage crisis come to mind. The terrorist attack on Sept. 11 will take its place among them.
Events of this magnitude change the way Americans think of themselves and their country. As a result of the attacks, we will become more conscious of our position in the world, less confident of our invulnerability, and more vigilant of our safety. We will find ourselves hard-pressed to win a war that is unwinable in military terms.
We might look to England to teach us what to expect. London and other English cities were subject to attacks from Irish terrorists for many years (and may be again). Although these were never on the scale of the World Trade Center and Pentagon disasters, they were nevertheless serious, damaging and fatal attacks.
I’m not a student of English civilization but, from a distance, it looks as though the English adjusted themselves to the threat, protected themselves as best they could, accepted the losses when they couldn’t and sought to solve the problem at its source in Northern Ireland. They have not been wholly successful, and neither will we be. This may be a model for what our future looks like.
Bob Olson
Chief executive, RD Olson Construction
President, RD Olson Development
My concern is that we get the U.S. citizens back in the air traveling, both business and leisure. The only way to do that is to make everyone feel safe, and feel that we do have control over our airplanes. I think people are willing to put up with delays (which by the way aren’t happening yet) as long as they know it’s safe. In Israel they have locked-down cockpits, on-board security and on-board weapons. They are the most hated nation in the Arab world, yet hijacking is not an issue.
We need our political leaders, specifically our president, to give us the confidence that things are going to be OK. I’m concerned when I hear, “This is going to be a long fought war, this will be a difficult battle.” I know he wants to put fear into our enemy and prepare us for the worst, but it’s a fine line he’s walking.
The cutback in air travel is having an incredibly negative effect on OC because of our reliance on travel and tourism. When orders for Boeing are cancelled, it affects parts makers in OC.
I am optimistic that everyone will get back to business once we see the changes that need to be made for flying.
Judy B. Rosener
Business and government professor, University of California, Irvine
Being an optimist, I see a silver lining in the tragedy of Sept. 11. It has awakened Americans to the increasing interdependence, not only of business and government in the U.S., but of countries around the world, large and small, rich and poor, developed and underdeveloped. We can no longer “go it alone” merely because we are powerful, and a large island with advanced technology. We will increasingly need to develop political, economic, and intelligence networks and alliances which will require a new level of understanding and appreciation of cultures other than our own. Who knows, this just might lead to a more peaceful world.
Larry Higby
President, Apria Healthcare Group Inc.
I do not believe that the despicable acts that were perpetrated in New York and Washington, D.C., will have a long-term effect upon the economy. The U.S. is too diverse and communications and data storage systems are too sophisticated to have a long-term effect on day-to-day commerce. Short-term the markets will react but things will level out.
From a political perspective the effects will be far different. It is often said that democracy works best in times of crisis and it will in this case. As with other major political crises, these terrorist attacks will thrust the president into a leadership position that will allow him to take both short- and long-term actions that will deal with the participants and sponsors of these actions. It will also allow him to develop longer-term solutions that after some discussion will be generously funded by Congress whether for defense, anti-terrorist or intelligence activities.
The American psyche won’t be the same for a long time. We always have thought of ourselves as being invulnerable and with these despicable deeds we suddenly realize we no longer are. We’ll never feel quite the same again.
Dwight Decker
Chairman, chief executive, Conexant Systems Inc.
The short-term impact to business is negative across the board. This event arrived at a very fragile time for the U.S. economy, as many analysts were just beginning to predict the bottom was near (at least in the technology industry) and were looking hopefully for early signs this fall of the start of a recovery.
All of this is now off the table and the question now becomes how large is the impact. The largest determinant of this will be the level of consumer confidence as reflected in consumer spending over the next few months. It seems the government has a delicate balancing act between communicating how serious the situation is, to generate support at home and abroad for the programs it contemplates, and reassuring the public that all will be well, so the economy doesn’t significantly weaken.
With confidence already fragile, this is a difficult task and it is likely that the economy, for at least the next two quarters, will be worse than many are even now predicting.
Jack Peltason
President emeritus,
University of California, Irvine,
Former president, University of California
Our constitutional democracy has served us well for more than two centuries, during times of prosperity and times of crisis. It has secured our liberties as well as our safety.
Our Constitution gives our national government the power to do whatever Congress and the president decide is necessary and proper to protect us from foreign and domestic threats. Yet the Bill of Rights is not suspended during times of crisis. Not all measures that might be taken to make us safer are necessary to protect our lives and certainly not all of them are proper ways to protect our liberties.
Murray Rudin
Partner, Riordan, Lewis & Haden
We as a nation are continually striving to reach an optimal balance between liberty and safety. These events have caused most Americans to recognize that we need to aim for a point somewhat closer to the safety end of the spectrum, even if it means some small sacrifices of liberty. The financial costs of safety, while large in absolute dollars, are tiny to a multitrillion-dollar economy. Being natural procrastinators, we as a nation tend to defer facing such costs until a crisis forces them on us.
While there will be a negative economic impact in the near-term, the fundamentals of a free enterprise economy of our size and diversification are too strong to be permanently damaged by one event, even one of this tragic magnitude. The American economic engine will chug along, albeit at a slower pace for a while.
William R. Mitchell
Lawyer, political commentator
I have been astonished by the connection almost everyone has with someone directly or indirectly involved with this tragedy, which speaks to the intertwined nature of our plugged-in society. More important, I have experienced and observed that most Americans have suffered a profound wound, one that may heal over time, but never be forgotten. This scar will make us more tolerant of each other and less tolerant of others. Given the circumstances, I cannot say that this is wrong.
A needed result of this crisis is a fundamental analysis of this country’s Middle East policy and a deep understanding of the motivations of those who perpetrated this attack and their supporters. To simply say “they hate us” is to avoid the issue and perpetuate the problem.
David Paine
President, Paine PR
Most of the people of my generation and younger have come to take freedom, liberty and security as a birthright, as if they were guaranteed on a day-in, day-out basis. This is a wakeup call that the world is a scary place.
I’ve got to believe that the government is going to be looking at some response not limited to revenge. I think they are going to be responding to a far greater threat of what terrorism will be 10 or 20 years from now if left unchecked. What will terrorists be able to do in even five years? They will have a weapon of mass destruction, biological, chemical or nuclear.
Short-term the economy is going to take a hit. We were on the brink of a recession anyway and now we’re pushed into one. Longer term, I think it will mean an increasing consolidation of businesses. With less capital, less consumer confidence, too many risks, businesses will be more likely to sell or merge, looking for deeper pockets and more security. I wouldn’t be surprised if there is a negative impact on entrepreneurship.
Right now there is a surge of patriotism that would support what any sitting president would do. People want to regain their sense of security and that will drive some of the actions.
However, it won’t be long before questions are raised about civil liberties. And already I’m reading from some college campuses that students are urging not to take military options. Some will ask, “Why did they get so mad at us in the first place?” and wonder whether strong military action doesn’t put as at even greater risk.
It’s an incredibly challenging time.
Byron Roth
Chairman, chief executive, Roth Capital Partners LLC
The events of Sept. 11 serve as a humbling warning that we are not as safe as we previously thought. We must look to our friends for help in dealing with the aftermath. How have the citizens of Israel learned to cope with repeated bombing incidents in their streets? How have the residents of Northern Ireland survived the many years of violence in their homeland? We don’t have all the answers, but we must have the courage and the resolve that we will not allow these people to change our way of life,after all, that is their intention.
The global economy is experiencing little or no growth. These events will not help improve it. However, the increased attention to fighting terrorism wherever it may exist will promote our working together as a global community, which may accelerate economic recovery in the future.
