UCLA Anderson Senior Economist Jerry Nickelsburg has scaled Kilimingaro and gone cave diving in Africa. He does not shrink from a challenge. To test this theory, we asked him to tell us something we don't know about the California economy as the state battles high unemployment and slowly recovers from the recent recession. Like a man about to plunge into dark water and traverse an underwater cavern, Nickelsburg first takes a deep breath and ponders before answering.
"I think that the one thing that is overlooked in the midst of this recession in California is that California is actually very well poised for rapid economic growth. Since the 1980s, California has been undergoing a transformation in the kind of work that is done here because land is now expensive in California, because labor is now expensive and traditional kinds of repetitive manufacturing is being done elsewhere.
"But California’s knowledge communities and design communities have nurtured whole new industries, industries that are going to lead the United States out of the recession, industries that play to California's advantages sitting on the edge of the Pacific Rim. There are tremendous advantages for California and we tend to lose sight of that because this recession hit California so hard. But why it hit California so hard is because we had a very acute housing bubble and that masked or obscured the fundamental changes that are happening in California. The housing bubble created a lot of jobs in producing houses and created a lot of lost jobs in the subsequent implosion. That’s a big splash and that big splash obscured our vision and the true transformations that are happening in California.
With Nickelsburg on a roll, we simply asked him what else we need to ask him. Not the best line of questioning, but Nickelsburg managed to interview himself and come away with some advice for California's new governor:
"That’s sounds really optimistic, Jerry, California has a high unemployment rate and it looks like jobs are not being created in California and going elsewhere, what would you tell Gov Brown that he should be doing?
"The answer to that question is that you need to play to California’s strengths. We should not be obsessed with trying to keep every business from leaving California for a state that might have lower taxes, or other things that that business is looking for. California can not compete with other states for inexpensive land and inexpensive labor.
"Nevertheless there are things that Governot Brown can do. California is the state where innovation and entrepreneurship are important components of the dynamics of the state economy. And so looking for how to foster growth and more rapid economic progress really means looking at California’s strengths and seeing how government can make it easier for innovators and entrepreneurs to create jobs."
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