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Five Years Later: A Boom in Latino and Asian Businesses Shapes the City

By Joel Kotkin
Sunday, April 20, 1997; Page C01

The burning of Los Angeles five years ago ignited what seemed to be a new wave of concern about our inner cities. Politicians from then-President George Bush to the upstart presidential candidate, Bill Clinton, called for major new federal initiatives to address the smoldering urban crisis. Corporate America also was asked to put its broad shoulders to the wheel. "We've got to try something new," said Bush, as he outlined a series of elaborate proposals a week after the riots, which had been sparked by the acquittal of white police officers accused of beating black motorist Rodney King during an arrest.

Today, few cities expect much help either from the federal government or from major corporations. Instead of demanding outside intervention, cities as diverse as Los Angeles, New York, Houston and Chicago now look increasingly at ways of harnessing their own entrepreneurial resources, often tied to the energies of immigrant communities, as the best hope for economic salvation.

"The liberal policy elite and the media thought after L.A. the nation would have to pay attention to the cities," says Cooper Union historian Fred Siegel, author of a forthcoming book on urban America. "What happened instead is that it produced a new realism. Now it's back to basics -- jobs, safety and public services."

Nowhere has this dramatic change been more evident than in Los Angeles itself. After the riots, which began the night of April 29, 1992, the most persistent voices belonged to African American leaders such as south L.A.'s fiery Democratic Rep. Maxine Waters, who called for massive government aid. Also getting big-time exposure were L.A. gangsters such as L'il Monster and Bone, who became honored guests on "Nightline," "Donahue" and other supposedly serious talk shows by sharing their notion that the riots -- what they called "the rebellion" -- reflected nothing less than a rational response to the realities of life in "the 'hood."

Such views were widely accepted by the region's academic, media and literary elite, who enthusiastically embraced gangster chic and the notion of L.A. as a permanently cursed urban dystopia that could be salvaged only through massive federal aid. Michael Dear, who heads the University of Southern California's center for regional studies, described the city shortly after the riots as "a superficial gloss of striking beauty, glowing light and pastel hues, which together conspire to conceal a hideous culture of malice, mistrust and mutiny."

Today, these bleak visions have been eclipsed by a more optimistic and pragmatic reality for the city itself -- and an unexpected rebirth of some of the riot-torn areas. The riot has rearranged the economic and political landscape of the city in ways that few would have predicted as they surveyed the cinders.

Less than two weeks ago, Angelenos overwhelmingly re-elected Mayor Richard Riordan. A famously inarticulate multimillionaire Republican running on a pro-business, pro-police platform, Riordan pummeled graying '60s icon Tom Hayden even among usually liberal Jewish voters as well as Latinos and Asians. Indeed, of the city's diverse communities, only African Americans, who comprise 12 percent of the city's population, strongly responded to Hayden's L.A.-as-dystopia message.

"Black leadership is fighting for its life," says Joe Hicks, a native of South Central and former executive director of the regional Southern Christian Leadership Conference. "The community feels beleaguered and the leadership is trapped in its strident rhetoric that does nothing about it. We used to have leaders who could talk to other communities, but we have not adjusted to the new reality."

That new political reality in Los Angeles is part of a decisive national trend. Republican Rudy Giuliani unseated New York mayor David Dinkins four years ago with a similar coalition of Latinos, Asians, Jews and other white ethnics. Even among Democrats, a new pragmatism seems to be taking hold. Witness the pro-business approaches of Chicago's Richard Daley, Milwaukee's John Norquist and Philadelphia's Ed Rendell, and, among African American mayors, Cleveland's Mike White and Detroit's Dennis Archer.

For blacks, the L.A. riots have done much lasting damage. Even as Peter Ueberroth, who headed the initial rebuilding effort, was announcing plans to lure more than 57,000 jobs into riot-ravaged parts of the city from corporations, a larger, quieter exodus began to take place not only from South Central itself, but from those areas -- Hollywood, downtown L.A. and the once fashionable Wilshire district -- that were superficially assaulted during the disorder.

"The riots scared people into safe havens -- places like Burbank, Glendale, West L.A. or even Orange County," says real estate consultant Dennis Macheski. The riots shifted the epicenter of corporate Los Angeles away from downtown and the adjacent Wilshire district toward overwhelmingly white West Los Angeles and parts of the San Fernando Valley. L.A.'s booming multimedia industry, by far the nation's largest, has settled itself largely in the predominately white, seaside communities of Santa Monica, Venice and Marina Del Rey as well as Orange County. Today vacancy rates in these "havens" are roughly half those downtown, while rents often are more than twice as high.

Which is not to say that the riot areas have remained scorched. More than 90 percent of the damage from the riots in such ethnic enclaves as Koreatown, the predominately Latino Pico-Union district as well as Hollywood has now been rebuilt, according to statistics compiled by Rebuild Los Angeles (RLA). A revival is also beginning to be felt closer to the riot's center in more heavily black South Central.

Most of the new construction and new jobs have little to do with federal programs such as the much ballyhooed Community Development Bank or the kind of corporate investment sought by Ueberroth and promoted by government leaders. "The money never really came and it never will," says Linda Griego, who took over RLA after the largely disappointing Ueberroth regime. "A lot of it was smoke and mirrors, a lot of good intentions and good ideas that never got implemented."

Instead, Griego traces much of the improvement to a steady expansion of smaller industrial, commercial and other enterprises based within or adjacent to the inner city. To some extent, this supports the approach taken by Griego to assist firms already existing within the inner city.

Contrary to the assertions of Ueberroth and others, Griego's researchers found a large and largely ignored industrial economy in South Central and other "neglected areas." Taken together, these firms -- in fields as diverse as biomedical devices, textiles, food processing, furniture, toys and garments -- are responsible for $54 billion in sales and employ more than 300,000 workers, more than the manufacturing employment of 30 states.

Many of these businesses are owned by immigrants, including newcomers from Mexico, Taiwan, Lebanon, Iran, North Africa, Israel, Korea and Hong Kong. Since the early 1980s, the number of Hispanic and Asian-owned firms in Los Angeles County has grown threefold from 70,000 to 220,000. During the same period, black-owned businesses have remained static at about 20,000. (Similar patterns can be seen in parts of New York's Queens County, where large areas have been revived by the entrepreneurial efforts of immigrants from Jamaica, Korea, Taiwan and India. Houston, as well, has developed a burgeoning immigrant-based economy, largely Asian and Hispanic, that has helped revive large parts of that city's "inner loop.")

Entrepreneurs explain that they based their decision to expand on a combination of factors such as access to ports and airports, as well as to tap the city's immigrant work force, including not only operatives, but managers, designers and skilled craftsmen. Some, like textile manufacturer Chris Stone, have returned to L.A. from places like North Carolina. "I learned a lesson when I left L.A.," says Stone, who employs 200 workers at his plant in Vernon, an industrial city south of downtown. "People on the outside are not necessarily as efficient and hard-working as the people here."

Unfortunately, this surprisingly robust industrial economy has had precious little to do with blacks from the area. Once a major presence in L.A.'s vast industrial economy, blacks in recent decades have tended to gravitate more toward service, corporate and, particularly, government employment, where their local presence is more than three times their percentage in the overall population. Latinos are now the majority of the region's industrial work force.

Blacks also lost ground in the small-business sector. Before the riots, African Americans controlled numerous businesses along Central Avenue and Broadway. Now they are increasingly bystanders as new businesses proliferate. The famous rib joints and creole restaurants of south Los Angeles, which has not thrived since the '60s, have given way to busy tacquerias and bodegas selling tropical produce.

The reasons for this lag in black business ownership -- a problem not confined to Los Angeles -- have bedeviled activists, sociologists and business analysts for years. Among the most commonly stated theories are the post-1960 collapse of black-owned businesses after civil rights laws were enacted; problems accessing capital; the decline of family ties, particularly in the inner city, and the tendency of black professionals to seek employment in government or corporate bureaucracies.

"I'm distressed that there are not more black businesses," says Barry Baszile, the African American owner of a small South Central metals business. "I would like to see more blacks go into the laundromat businesses, corner stores, restaurants, all those business that, as far as I can see, are controlled by Latinos and people from the Pacific Rim."

Yet, to some extent, this economic transformation reflects massive demographic shifts that were only accelerated by the riots. South Central, which three decades ago was more than 70 percent African American, is now majority Latino. Just since 1990, according to RLA's Griego, South Central has gone from 50 percent Hispanic to more than 60 percent. Some areas, such as Watts, locale of the devastating 1965 riots, may now be as much as 70 percent Latino, up from just 40 percent in 1990.

Both for multi-ethnic cities like Los Angeles and for the leadership of the African American community, these changes present opportunities as well as challenges. Certainly, the rise of immigrant-based industries offers a viable economic counterweight to the pattern of corporate migration. And for African Americans still resident in the inner cities, particularly those who own businesses and property, the resulting economic upsurge could provide new growth opportunities.

But in the end, says Hicks, this will require a willingness inside the African American community to eschew the racial rhetoric and demands for government assistance that so dominated the post-riot period. If anything has become clear since 1992, it is that inner-city residents, if they wish to prosper, must embrace the model of entrepreneurial development so evident among the immigrant newcomers.

"We need leaders who can look at the other communities not as competitors but as partners more important than the government," observes Hicks, who now devotes himself to building interracial coalitions. "We need to find ways to create jobs from inside our own community. You have to learn to do that which is doable."

Joel Kotkin is the John M. Olin fellow at the Pepperdine Institute for Public Policy and senior fellow in urban studies at the Pacific Research Institute.

© Copyright 1997 The Washington Post Company

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