As the economy has come back to life, there has been a growing sentiment both outside and within the region that Southern California may well be destined to play a critical role in the evolving high-tech economy of the future. For the first time in a decade, positive stories about the region’s technology, including those in the prestigious Wall Street Journal and the San Jose Mercury News, have begun to appear. Once off the digital map, Southern California appears to be climbing back on.
Yet there remain many major problems that threaten to brake the emergence of the Tech Coast. These range from the relatively poor coordination among the various regions and political institutions, to a troubled educational system, the challenges posed by increasing ethnic diversity and concerns about quality of life.
To a large extent, the plethora of high-tech concentrations also helps to offer a wide array of lifestyle choices. Singles and under-30s have shown a marked preference for the coastal strip and Hollywood, which appeals to contemporary lifestyles. More conventional scientists and engineers, particularly those with families, have tended to gravitate to the various “nerdistans,” such as Irvine, the Thousands Oaks/Valencia area and north San Diego, which generally offer excellent schools and a more family-friendly lifestyle. These areas have enjoyed considerable growth in recent years.
Paying attention to quality of life is a critical issue in the information age. As today’s technology allows work to be distributed anywhere, locational choice becomes more elastic. Investors, engineers, systems analysts, scientists and creative workers are increasingly what one analyst has called “very sophisticated consumers of place.”
Theodore Wait, for example, chose to move Gateway Computers from North Sioux City, S. D., to San Diego not because it was cheaper or more business-friendly from a regulatory standpoint. It was a matter of finding a place that appealed to his tastes and those of the kind of skilled workers he needs for his company. “It really came down to this being a great place to recruit people to,” the 37-year old entrepreneur explained.
Surveys of high-technology firms find a quality of life attractive to skilled workers far more important than any of the traditional factors such as taxes, regulation or land costs.
To be successful in this century, the Tech Coast needs to continue offering a broad array of lifestyle options, along with the perennial advantages of its climate and topography.
Perhaps the greatest obstacle facing Southern California’s information age industries lies in marshaling the proper human resources. The new industries most likely to spur economic growth,multimedia, computer software, biotechnology, special effects, animation,require high degrees of education and training.
In this respect, the prospects for Southern California are decidedly mixed. Greater Los Angeles contains some of the Western United States’ most well-educated regions, such as Orange County and West Los Angeles, as well as some of the least, such as the Inland Empire and south L.A.
For the most part, Southern California excels at the higher levels of education. Beyond elite institutions, however, there are significant regional problems. Southern California’s primary education system continues to lag well behind national norms, with the Los Angeles area ranking considerably below the Bay Area in critical areas such as math, reading and writing. Although the Los Angeles area has an above-average percentage of people with four-year college degrees, it also has the second highest percentage,after New York,among the major urban areas in the percentage of residents with less than a high school education.
To some extent, these discouraging numbers can be traced in Southern California to the relatively low levels of education among many new immigrants. The newcomers bring in an enormous set of assets,work ethic, family values, entrepreneurial flair,but, to a large extent, include many people who have not been well educated. In the long term, the region must do more to train these people,and, more crucially, their children,for jobs connected to the information age economy.
Yet the new ethnic base of the Tech Coast also means that the population is younger and, in general, is more optimistic about the future than the general U.S. population. And despite the prevalence of poverty, they tend to be more likely to be entrepreneurs than their counterparts in competitive regions such as Chicago, New York or Dallas.
Addressing these challenges will require two things that, for the better part of the past decade, have been sadly missing from Southern California. One has been a determined and enlightened leadership,both political and business,that seeks both to promote the region and solve its problems. The second lies in shaping a compelling vision about what this region should and can become.
Historically, Southern California was shaped by strong leaders, often ruthless and unpleasant, but thoroughly dedicated to making this a powerful and highly respected place. This can be seen in the building of aqueducts, the ports, the freeway system and the university campuses that now constitute the Tech Coast.
More recently, this sense of leadership and destiny has eroded seriously. During the early 1990s, this was evident at the top, where Southern California suffered a decimation or exit of many of its largest companies. Today, Los Angeles boasts only three Fortune 500 companies, less than one-tenth the number for New York and half those based in such smaller places as Dallas and Atlanta. Even companies and entrepreneurs who have been flourishing here generally seem to be nonchalant about promoting the region.
By its very nature,its size, scope and ethnic and industrial diversity,the Tech Coast is not like anyplace else. It must become its own thing, its own defined space. This requires, more than anything, a vision about the future that, to date, has been missing.
As Broadcom Corp.’s Henry Samueli puts it: “We should be creating our image around our core competencies we have rather than try to copy a Silicon Valley. You’ve got the entertainment industry and the music and film industry primarily based in Los Angeles. And the communications industry, which ranges all the way from San Diego up through Los Angeles, and then biotech is a very strong component. I think the three will benefit very much so from the Tech Coast branding and image.”
Given the realities of the information age, it will be largely up to the makers of the Tech Coast,the entrepreneurs, investors, service providers,to shape that vision.
As high technology, entertainment and information converge, Southern California seems destined to create new entrepreneurial figures and companies capable of leading the region. What will be required is to identify that leadership and get them to get beyond “who cares?” to “what can I do?”
Kotkin is a senior fellow with the Pepperdine Institute for Public Policy and a research fellow at the Reason Public Policy Institute. This article is derived from a report, “Southern California’s Tech Coast: Challenges and Opportunities,” which he wrote for the Irvine-based TechCoast.com.
