View our whole album of the event on Flickr.
By Carolyn Gray Anderson
UCLA Anderson Forecast’s final quarterly report of 2014 delivers the good news that the U.S. economy likely will grow during the next two years (at a rate of 3.0%), as lower oil prices and higher wages bolster consumer spending, with the unemployment rate falling to 5.0% by the end of 2016. Aggressive corporate spending in equipment and software will fuel this growth.
In California, steady gains in employment are anticipated through 2016, as the increase in national growth from construction, automobiles and business investment, along with higher consumer demand, continues to power the state’s economy. California’s unemployment rate hovers above 7.0% but it is expected to drop to 5.3% by the end of 2016, reflecting the national average.
An additional report in the December publication examines the state of infrastructure and residential investment in Los Angeles, confirming that Los Angeles is the most congested city in the nation, with a dire need for greater investment in public transportation and integrated infrastructure — sometimes called “green infrastructure.”
Today, the December UCLA Anderson Forecast conference addressed the critical infrastructure investments essential to California’s future. Under the ominous title of Parched Lawns, Severe Congestion, and Flickering Lights: Rebuilding, Reinventing, and Reimagining California’s Infrastructure, two panels of experts from UCLA, local nonprofits, industry, and state and city public offices discussed the critical investments and resource preservation that California requires for a prosperous future.
Led by Forecast Director Edward Leamer, the panelists agreed that serious infrastructural problems plague the region. In a dense metropolis, higher demand for multi-unit construction lowers the demand for labor, as individual dwellings require more people to build them. Big companies automate manufacturing, which means fewer jobs are created relative to the size of the enterprise. And everyone concurred that we can’t take for granted that the drought will end anytime soon: Weather will become more erratic, with storms shorter and less frequent but much more intense.
But the tenor wasn’t completely downbeat. Again, this quarter’s Forecast shows California unemployment going steadily down. UCLA Anderson economist William Yu observes a positive shift away from what he calls the “suburb syndrome” as younger Angelenos adapt to high-density living and choose to reside close to work and access to public transportation. And, as UCLA Luskin School of Public Affairs Professor Matthew Kahn said, “Cities with a great quality of life have a bright future.”
Keynote speaker Ron Galperin, Los Angeles’ city controller since July, is particularly upbeat about the possibilities for improved infrastructure as the city’s finances become more transparent. Galperin campaigned on a platform of sharing the kind of data that residents were demanding in order to feel more informed about the city’s spending. He and his staff, working with outside vendors, established L.A.’s first public online database, migrating static documents (with thousands more to go) into an interactive, searchable “control panel” — complete with a city checkbook, budget statistics and salary disclosures, all in one place. The goal is greater accountability, especially for special funds projects. Partnering with Hub L.A., a downtown shared workspace, to accommodate volunteers who want to work with and analyze the available data, the city is offering to fund an accelerator (primarily through private sources, which makes it more flexible) for great ideas that ordinary citizens come up with to put all the data to practical use. Galperin believes procurement reform will follow quickly.
Across the panel there seemed to be great hope for new technologies that would transfer the power to measure, monitor and make decisions about energy consumption into the hands of individual consumers. This greater access to information and the ability to be active in one’s participation has made significant and permanent differences in people behavior in Australia, according to Andy Lipkis, founder and president of the local nonprofit TreePeople.
In Australia, Lipkis said, restrictions and penalties were applied to enforce limits on water consumption. But what really worked to curb overconsumption were strong incentives to develop technology for rainwater harvesting, including at the individual homeowner level, with smart cisterns available to install right on an individual’s property. Australia — which has implemented sophisticated “purple pipe” delivery of greywater for flushing toilets, for instance — deeply engages the public with new technology in both billing and measuring ones’ own use. The city of Brisbane went from consuming 80 gallons of water per person per day to consuming only 33, and the behavior is now locked in. Lipkis believes L.A. needs an integrated, electronically networked integrated system. “We all need to engage, he says. “We’re the new managers of our energy: you cannot cut out the consumer from the process.”
J.R. DeShazo of the UCLA Luskin Center for Innovation said that the state’s commitment to slowing climate change and embracing renewable energy have forced utilities companies to accommodate new business models. He pointed out that generating power is not a problem we’re up against; better communication and control technologies are needed. “Grid modernization is what’s in front of us,” he said.
Several panelists alluded to jobs being created through integrated infrastructure. But it’s fair to say that when Tesla, say, opens a plant powered primarily by robots, the solutions appear to be in automation. Emphasis on easier, multivalent technologies like smarter thermostats and cistern monitors may mean that certain trades will continue to disappear and the main job growth will be in the tech sector. However, there’s hope that, despite lower demand for new construction of single-family residences, if emphasis is placed on retrofitting rather than building from scratch, skilled tradespeople will see greater demand for their work. As Lipkis pointed out, plumbers unions are now supporting measures that would legalize urban cisterns because there’s enormous potential there for construction and maintenance.
Most panelists made overt statements to support making significant changes. Roger Johnson of Los Angeles World Airports said that LAX is competing for the first time with non-Pacific Rim hubs like Dallas and Chicago and Johnson stressed that it’s vital to the airport’s survival that we get runways up to FAA standards and continue with the 29 active projects at LAX (totaling $3.4 billion). “One daily nonstop flight from overseas generates $600 million per day,” said Johnson. Losing that to Denver is crushing. Jeffrey Kightinger, GM at the Metropolitan Water District, the wholesaler that provides 50-70% of Southern California’s imported water, said, “Our ability to import water is realistically capped at where we are right now.” Despite the strength of MWD’s systems, he said, conservation efforts that include water recycling and other alternatives will have to go into effect as California grows.
Water, Lipkis maintained, is the thread flowing through all the infrastructure challenges. “Last year we threw away 13.5 billion gallons of rainwater,” he said. We don’t live in a desert, he reminded the audience, but rather in a Mediterranean climate that gets 13-15 inches of rainfall per year. And the other Forecast conference participants seemed to agree that L.A. needs to apply technologies for sinking and harvesting water and make strategic investments in technology to conserve water.
The panels were light on specific collaborations planned by participating agencies. Otis Cliatt, president of Pacific Harbor Line, which provides rail service to the ports of Los Angeles and Long Beach, says his company is a true “green port partner” and has won environmental awards for its strides in reducing CO2 emissions. But he is adamant that the freight business and the passenger business must be run completely differently. Johnson laments that most of LAX’s surfaces are impermeable, generating huge amounts of storm water runoff, but that cisterns are impractical at the airport because of the enormous size they would have to be. So with necessary constraints on the extent to which each agency can adopt the others’ strategies, greater communication across services may not achieve true integration.
The Forecast's David Shulman said money is not the problem: “There’s so much money around,” he says, “you could finance almost any infrastructure project.” It’s permitting that’s the main obstacle, and other panelists agreed that CEQA requirements tend to retard the pace of improvements.
Leamer distinguished between extensive and intensive margins, contrasting models with finite range or literal “borders” on their growth, like a farm, with the amount of use extracted from the farm, irrespective of its size. Panelists agreed that it’s the intensive margin that counts if all of Los Angeles is going to thrive despite more and more unattainable housing costs. Real growth, said Leamer, is coming from intellectual capital, not manufacturing.
UCLA Anderson Forecast members are entitled to a copy of the quarterly economic forecast report.
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