A Reviewers Notebook: California, Inc.

California, Inc., by Joel Kotkin and Paul Grabowicz (Rawson, Wade Publishers, Inc., 630 Third Ave., New York, N.Y. 10017, 312 pp., $13.95), is written by two authors who have had leftist literary connections, but, curiously enough, it ends up as quite a paean to the entrepreneurial spirit. The book is dedicated to the late Carey McWilliams, who knew his California but was never, in his career as a journalist, interested in capitalist solutions.

Kotkin and Grabowicz seem to be unaware of some of their own contradictions, which involve them in condemning Ronald Reagan for favoring businessmen during his term as governor and then, in a subsequent chapter, praising Governor Jerry Brown for going Reagan one better in putting entrepreneurs in his kitchen cabinet. The authors evidently continue to hold an ancient antipathy to Ronald Reagan for his “coziness with the blacklisters” in the days of the Hollywood Communist scandals. But when Jerry Brown switches gears to take over the California tax revolt of Howard Jarvis, thus jettisoning the “radical dreamers of the Tom Hayden camp,” Kotkin and Grabowicz are quite complacent about it.

Brown, they say, “may yet emerge as the spokesman of an ascendant ‘new class,’ rich and powerful enough to sustain a long-term serious bid for national office.” He has “finally stumbled on the secret of California’s ‘manifest destiny.’”

Whether Jerry Brown can maintain any consistency over the years still remains to be proved. But the “new class,” as Kotkin and Grabowicz see it, is here to stay in California.

Men of Action

The Golden State was always hospitable to new technologies. Kotkin and Grabowicz spend very little time on California’s famed kooks. They prefer to concentrate on the “doers,” such as the men who brought water from the mountains to make deserts bloom. There was William Mulhol-land, the outspoken chief engineer of Los Angeles who raised the money in 1913 to build the aqueduct that has made modern Los Angeles possible. There were the oil men, John Paul Getty and Henry Salvatori. There were—and are—the great engineering firms of Fluor and Bechtel, who now build all over the world. And there was Henry Kaiser, who formed the “six companies” that created the sixty-stories-high Hoover Dam, which was completed two years ahead of schedule in 1936.

The son of Italian immigrants, Amadeo Giannini, ran his California bank with the “homespun guile learned in the produce trade,” making loans to working-class people who would not have qualified for money back East. With knowledgeable branch banks all over the state, Giannini had the information at his finger tips to enable him to shift funds to match the seasonal needs of different crops and different farmers. When he retired he let his bank be controlled by an Easterner. He was quickly disillusioned by the Easterner’s antipathy to innovative methods. To save the bank from collapse Giannini had to return from an overseas convalescence to take charge again. By 1945 the Giannini Bank of America had become the nation’s largest bank.

Hollywood to Silicon Valley

Kotkin and Grabowicz take the movie men, William Selig, Sam Goldwyn and Adolph Zukor, for what they were, great entrepreneurs who understood the world’s “desperate need for fantasy.” Howard Hughes, who had gone West to make his name as a film maker, was a believer in the sales value of fantasy, too. But he was also interested in airplanes. His Hughes Aircraft Company, originally started as a lark, was ready for World War II., By the late Nineteen Forties Hughes, Northrup, Douglas, Lockheed and North American Aviation were all reaping the benefits of military contracts, as Hughes had predicted.

Litton Industries was the creation of “Tex” Thornton, a Hughes man who was one of the first to see the future in terms of data processing, guidance systems, digital computers and other advanced electronic devices. The California universities, notably Stanford, have fed industry in novel ways; Stanford engineering students, working out of their garages, have created billion- dollar companies. And “Silicon Valley,” that stretch of coast south of San Francisco near Palo Alto, has become a synonym for what is colloquially known as high-tech. The silicon chip, which can store thousands of memory bits within the space of a dime, has made the modern low-cost computer age possible.

Japanese Influence

All of which brings Kotkin and Grabowicz to the Japanese, who are so good at taking over American innovations and improving on them. California does not see the Japanese as any great menace. As the ultimate assembly point for imports from Asia, California’s location on the “Pacific rim” has helped produce more than a million jobs. California looks forward to becoming the financial center of “the Asian community.” California agribusinessmen have built fortunes through serving as Japan’s leading supplier of fruits and its second-largest source of cotton.

Governor Jerry Brown’s advisers have counseled him to take the lead in making California a “Pacific rim” power, quite as if the state were a nation all by itself. Andy Safir, the director of the California Office of Economic Policy, puts the Brown Administration view in perspective. “There is a tendency,” he says, “to look to imports for our industrial goods that used to come from the East Coast . . . now we look to Japan . . . for us the Japanese are a close market . . . you have in Japan an economy that can respond to specialized demands of a place like California while you have no such ability in the East.”

The admiration for Japan has led to the adoption of Japanese-style management techniques by large numbers of California corporations. In the high-tech firms of Silicon Valley, tennis courts, swimming pools and running paths are supplied to employees, quite in the Japanese style. At the new San Francisco high-rise headquarters of the Shaklee Corporation one whole floor has been reserved as a sports and recreation center, all encircled by an indoor jogging path. “The purpose of the future revolution in the West,” says Action Instrument’s founder Jim Pinto, “is to eliminate the difference between workers, managers, and the owners by making all the same. If you are part of the place, you can do everything you can to increase efficiency and productivity. In many ways Action Instruments is very Japanese.”

Despite their personal antipathy to Ronald Reagan and their partiality to Jerry Brown, Kotkin and Gra-bowicz see “Reaganism” as a continuing wave of the future. The California style, they say, is taking over the whole United States. High-tech enterprise will continue to keep the California spirit of entrepreneurship going strong. The odd thing is that Kotkin was born in West Germany and Grabowicz in Springfield, Massachusetts. But they are Californians now.

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