Defense spending in the 1980s, high-tech startups in the 1990s and housing-fueled consumer spending in the 1990s – all were California economic bubbles that burst spectacularly, leaving recession and government deficits in their wake.
What, if anything, will come next to pull us out of recession and return California to prosperity? Some think it will be biotechnology, services to baby boomer retirees or solving global warming.
Lurking in the background, however, is a nagging worry that there won't be anything, that the state's endemically high costs, political dysfunction and long list of unresolved dilemmas, from transportation to water to education, have made us uncompetitive in a global economy. Just last week, a new federal survey found that California has the nation's highest adult illiteracy rate.
We have tended to take the future for granted. No matter how moribund the economy may be at the moment, we think, we have the weather, the entrepreneurial spirit and the strategic location to regroup and prosper.
We may have. But then again, maybe we aren't so special. Maybe we're not immune to the societal afflictions that have beset other states. Maybe we are a rust-belt-to-be on the left coast, a Michigan with winter sunshine.
A clue to potential decline may be found in what had been one of the state's stellar sectors in recent years, international trade. California's airports and seaports, especially the latter, became the portal for rapidly expanding trade with Asia. The ports of Los Angeles and Long Beach became the nation's busiest with Oakland just a few notches down the list.
At its high point, a quarter of the nation's international cargo, imports and exports, was passing through California, including 40 percent of container traffic, despite high costs, traffic congestion and relatively inefficient cargo-handling systems.
The global recession cut into that traffic sharply, as one might expect, but California port officials are forecasting big increases when the economy improves and are planning expensive facility upgrades.
"The forecasts are hogwash," says Jack O'Connell, an international trade expert with the University of California. He doubts whether consumer demand for Asian goods will return to former levels because of new wariness about personal debt, and he believes that competition will compel shippers to seek cheaper avenues.
Last fall, as Californians were waiting to vote for a new president and fill other offices, an election was held several thousand miles to the south, in Panama. Panamanians approved a multibillion-dollar expansion of the Panama Canal that by the middle of the next decade will allow the biggest container ships – those that have been forced to offload in California – to sail all the way to American ports on the Gulf of Mexico and Atlantic Ocean.
What has been an economic strength for California, in other words, may join a growing list of weaknesses.
Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters.
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