California Economy

It was the tech IPO to end all tech IPOs: Facebook. But the disappointing results of the social media company's stock market debut may have put a chill on tech IPOs, which were already falling victim to investor concerns about the global economy. The environment has warmed a bit since then - a very good thing for California. Technology firms and the capital that supports them are the lifeblood of the state economy. Will tech IPOs rebound, or will the Facebook episode continue to undermine investors' confidence in the capital-raising process for tech companies? The answer will have a major impact on the state: As the technology industry goes, so goes California. What will happen to the many California-based startups that are ready to grow much bigger? What is the state of tech IPOs? Was Facebook the exception? Are investors still hot on this sector? Is technology spending still strong? Which California companies are poised to become the next big thing?

As home to some of the busiest container ports and freight airports in the world, trade is a driving force in the state economy. California's trade infrastructure has undergone improvements, including the Long Beach Naval Shipyard conversion, the Alameda Corridor and new structures at San Francisco International Airport. But maintaining efficiency and capacity remain an issue. Significant portions of the state still need improvements to rail infrastructure, LAX is years behind on its modernization, and port efficiency pales compared to similar facilities in Asia. Meanwhile, the expansion of the Panama Canal and improvements to East Coast ports only increase the competition. How can California bring its freight infrastructure up to 21st century standards while keeping local residents and laborers happy? With state and local budgets so constrained, how will we finance this great endeavor? This panel will look at not only the physical concerns and solutions but financial ones as well.

With a mandate for state energy providers to generate a third of their power from renewable sources by 2020, the impending implementation of AB 32 and an increasing push for the latest electric, plug-in hybrid and fuel cell vehicles, California has positioned itself at the forefront of renewable-energy generation. The state has taken the lead in the construction of solar farms, wind farms and even biomass plants, ordered fleets of hybrid buses, and installed electric vehicle charging stations around the state. With this push for clean fuels, new "clean" generating capacity and new vehicles, how does California capture the economic value from the research and manufacturing of these new facilities and products? Is the state's energy infrastructure ready to handle these new demands? What will the cost be to the state government, businesses and consumers? And what can California do to compete with countries such as China and Germany that are investing heavily in green energy?

The recession ravaged California. The state's budget deficit reached $23 billion. In unprecedented moves, Sacramento eliminated redevelopment agencies, cut services across the board and reduced funding for school and social programs. The single-family homebuilding industry stalled, leaving massive amounts of entitled land undeveloped, and banks foreclosed on underwater homeowners. Declines in local sales and property taxes decimated municipal coffers. Yet, California did not stagnate in all areas. Four years later, the homebuilding industry is showing signs of life. Cap rates for multi-family projects have reached historical lows, and industrial property continues to be an attractive asset class. Despite a sluggish economy, California's real estate industry is growing again. In this session, stakeholders will share how they climbed out of the economic valley - and offer their perspective on whether true growth is on the horizon or if another reversal lies ahead.

California has long been a leader in developing technologies that allow people to soar through the air, orbit the Earth and use satellites to communicate around the world instantaneously. However, since the early 1990s "peace dividend" was apparently paid off at California's expense, the public has had less interest in the industry that brought us the DC-3, the space shuttle and DirecTV. However, California continues to lead and innovate in many of the most cutting-edge aircraft and space technologies, thanks to the presence of the Jet Propulsion Laboratory, the Los Angeles Air Force Base, NASA's Ames Research Center and SpaceX, as well as the research presence of Boeing, Lockheed Martin, Northrop Grumman and others. This panel will examine not only what drives aerospace innovation in California but also what can be done to keep it here and help it to grow.

As California powers its way out of the recession, leadership is more important than ever. California is still the nation's biggest innovator - the state that gave us Hollywood, iTunes, biotechnology and renewable energy. But as California grows more complex, the unique demands it presents require leaders who can navigate the unprecedented challenges, radically different and often restrictive business environments, and diverse geographic and demographic factors. The leaders on this panel represent key organizations, corporations and institutions that have not only chosen to remain in the state but are also committed to its success. Where are the opportunities for growth, and can the state's assets be leveraged to support them? How do we develop the skilled workforce necessary to support our innovative industries and jump-start new ones? And how can state policymakers facilitate solutions rather than hinder them?

It takes a streak of steely determination to challenge the status quo - and no one knows that better than Connie Rice, one of America's most renowned civil rights attorneys. Her new book, "Power Concedes Nothing: One Woman's Quest for Social Justice in America, from the Courtoom to the Kill Zones," reveals the inspiring life of an indomitable woman. (Click here for the L.A. Times review.) Rice's race for excellence began at home: Her father broke racial barriers as a U.S. Air Force major, and her mother imbued her with a passion for learning and culture. Her worldview was shaped by moving to 17 different homes during her childhood, including periods in England and Japan. After college at Harvard and law school at NYU, where she spent summers working on high-profile death penalty litigation for the NAACP Legal Defense and Education Fund, Rice began the work that would win her national acclaim for her stirring defense of civil rights. Over the course of her career, the "Lady Lawyer" (as Rice would come to be known to the Los Angeles gang members with whom she struck a pioneering partnership) would take on racism and sexism in the LAPD, a transit system that tried to ignore its poorest users, and a public school system that Rice and her cohorts deemed inadequate. But she is perhaps best known for the report she co-wrote that has revolutionized the city's law enforcement policies and outreach to gangs. Her constant involvement with the LAPD ultimately yielded the consummate reward: her very own parking space at headquarters. LAPD Chief Charlie Beck calls Rice "the conscience of the city." Rice was interviewed about her book and her stories of life in the trenches of civil rights law by Joel Fox, who has been an opinion-maker and a unique voice in California politics for decades. CONNIE RICE has received more than 50 major awards for her leadership and her non-traditional approaches to litigating major cases involving police misconduct, employment discrimination and fair public resource allocation. JOEL FOX operates Joel Fox Consulting, a public affairs/political consulting firm, and is an adjunct professor at Pepperdine University's Graduate School of Public Policy and president of the Small Business Action Committee. He worked for the Howard Jarvis Taxpayers Association for 19 years, serving as its president from 1986 to 1998. A co-publisher and editor-in-chief of www.foxandhoundsdaily.com, he has written hundreds of opinion pieces as well as fiction and nonfiction books, and has served on a number of high-profile state commissions.

California has long been America's produce section, turning out almost 12 percent of U.S. crops in 2010 with just 3.7 percent of the nation's farms. But getting there took great innovation on the part of California agribusiness. This vitally important sector has led the way in irrigation technology, chemical fertilizers and food processing. Due to rising global food prices and recurring water shortages, California's $37.5 billion agriculture sector is at the forefront of developing new agriculture-related technologies. It is also testing technologies from beyond its boundaries in areas such as water efficiency and biomass energy. This panel will examine the significant role of innovation in California agribusiness, and how research and technology affect the state's economy as a whole.

California is home to some of the most successful and admired companies - from Facebook and Apple to Disney and Genentech - and its research universities and entrepreneurial culture are still the envy of the world. Yet despite these successes, the state's health is shaky: an underperforming economy, high unemployment, ongoing budget deficits, pension-plan funding shortfalls and declining bond ratings. Many have suggested bold reforms - from revamping the state's tax structure to dramatically changing inefficient state programs - but most have gone nowhere in Sacramento, even as cities such as San Jose and San Diego have started to act. This panel gathers some of California's leading experts to discuss concrete, realistic solutions that can put the state on firmer footing, help it once again become a national model for governing and restore confidence among the state's citizens, investors and business people in the process.

More Californians are on Facebook than voted in the general election. If the government could tap into that social engagement, governing could grow more collaborative, open, accountable and transparent. Creating a digital town square is the concept behind "Citizenville," a new book by California Lt. Gov. Gavin Newsom. At this Milken Institute Forum, Moderated by Kara Swisher, co-executive editor of AllThingsD, Newsom will discuss how to draw on this digital revolution to make government more user-friendly. Named the "Most Social Mayor in America," Newsom knows what he's talking about. He has more than 1 million followers on Twitter and 108,000 Facebook friends, and is active on Pinterest, YouTube and Flickr. For the book, he interviewed dozens of innovators, including Yelp co-founder Jeremy Stoppelman, new-media expert Arianna Huffington and Twitter co-founder Evan Williams. Newsom's fan base extends beyond the digirati. President Clinton said, "'Citizenville' makes a fascinating case for a more engaged government, transformed to meet the challenges and possibilities of the 21st century, and where technology brings the critical tools of our democracy closer to its citizens than ever before."

Setting the tone for the day, the governor will discuss the condition of the California economy and reflect on the steps his administration is taking to address the issues facing the state today and those likely to concern us tomorrow.

The Golden State's luster dimmed during the Great Recession, but much of that shine has returned. Housing was slammed, but the sector has snapped back smartly. State finances were in dire condition, but we've found a way to make the ends meet. Jobs were lost en masse, but now they.... well, we're working on it. Nevertheless, even after this trying time, California retains its undisputed leadership in high technology, entertainment, agriculture, biotech and other fields that contribute so much to our world. Yet the state's flawed and burdened education system is failing to prepare many young people for the future. Costs are high for those inspired to build a business here. And with 38 million residents, we are straining our resources, including the most vital: water. At this luncheon session, some of the state's most accomplished leaders will address these challenges and offer their ideas on laying the groundwork for long-term prosperity. Speakers: Bobby Kotick, President and CEO, Activision Blizzard Scott Minerd, Managing Partner and Global Chief Investment Officer, Guggenheim Partners Lynda Resnick, Vice Chairman, Roll Global Lyndon Rive, CEO, SolarCity Moderator: Michael Milken, Chairman, Milken Institute The Golden State's luster dimmed during the Great Recession, but much of that shine has returned. Housing was slammed, but the sector has snapped back smartly. State finances were in dire condition, but we've found a way to make the ends meet. Jobs were lost en masse, but now they.... well, we're working on it. Nevertheless, even after this trying time, California retains its undisputed leadership in high technology, entertainment, agriculture, biotech and other fields that contribute so much to our world. Yet the state's flawed and burdened education system is failing to prepare many young people for the future. Costs are high for those inspired to build a business here. And with 38 million residents, we are straining our resources, including the most vital: water. At this luncheon session, some of the state's most accomplished leaders will address these challenges and offer their ideas on laying the groundwork for long-term prosperity.

Walter Driver, Susan Feldman and Michael Jones. Moderated by Dana Settle. The City of Angels is suddenly the city of startups. After spending years in the shadow of Silicon Valley - and Boston and New York - Los Angeles finally has real tech cred. Say goodbye to startup envy and hello to the new entrepreneurs. The local tech community saw a flurry of activity in 2012: More than 220 startups launched in greater Los Angeles, 43 L.A.-based companies were acquired, and more than $870 million was raised from venture capital and angel investors. Overall, entrepreneurs in Southern California attracted more investment than any other region outside of Silicon Valley. At this Milken Institute Forum, several of these pioneering innovators talked tech and gave their take on why Los Angeles has come into its own as a popular place for startups.

Speakers: Darren Jamison, President and CEO, Capstone Turbine. Joe Kiani, CEO and Chairman, Masimo. Gavin Newsom, Lt. Governor, State of California. Peter Platzer, CEO, NanoSatisfi. Kim Polese, Chairman, ClearStreet, Inc.. Moderator: Kevin Klowden, Director, California Center, and Managing Economist, Milken Institute. California's position as a global leader in innovation derives from not only the ideas generated by the people who live and work in the state, but its partnerships with global innovators based in Europe, Asia and elsewhere. Numerous international firms have located large-scale research and development operations in the state or acquired companies that do so, in fields ranging from pharmaceuticals and vehicles to cell phones and software. What advantages have led companies and inventive individuals to collaborate with California? What advantages can California firms boast when collaborating overseas? What can be done to extend these strengths, and what does the state still need to work on?

In November 2012, the Milken Institute California Center launched its first annual California Summit, bringing together more than 400 prominent thinkers and executives to tackle the most serious obstacles facing the state. Among them, the widening wealth disparity that is dividing the state into coastal haves and inland have-nots; the rigorous environmental regulations and generous public pensions that create the perception of an unfriendly environment for business; and the crisis in education that raises the prospect that future generations will be less prepared to enter the workforce than previous ones. These challenges and their proposed solutions were aired during the Summit, with the discussion focused on five themes: state finances, business climate, workforce development, state and local leadership, and innovation. Mindful of California's enduring strengths, from its culture of entrepreneurship to the agriculture industry's ability to feed the world, a diverse group of participants put forth an imaginative slate of recommendations aimed at ensuring that the Golden State remains a destination for ideas, talent, and investment well into the future. How to finance the renovation of California's aging infrastructure? Nurture biotechnology and other promising, 21st century industries? Encourage STEM education and streamline state spending? The takeaways from those and other exchanges at the event are gathered in "An Agenda for Progress: After the California Summit.

California's Central Valley is arguably the most productive agricultural region in the world. However, despite the region's significant advantages in agriculture and comparative advantages over coastal California in terms of real estate costs, cost of living, and wages, it has routinely been passed over by private equity and venture capital investors, as well as by policy makers who have focused instead on regions with larger populations and more industry. This report examines the history and impact of both public investment and publicly documented private equity investment in the Central Valley. It includes recommendations for strengthening economic development by leveraging current investment and driving future investment in the region. We focus on two areas that are essential to bolstering the region's economy. The first focus area is workforce development and human capital, which refers not only to levels of educational attainment in the region's workforce, but also to the ability to match education and training with the actual needs of both current and potential employers. The second area is public and private investment in the region that is specifically targeted to growing businesses and the regional economy.

Introduction By: Paul Irving, Senior Managing Director and Chief Operating Officer, Milken Institute. Scott Minerd, Chief Investment Officer, Guggenheim Partners. Speakers: Gray Davis, Former Governor, California. Susan Desmond-Hellmann, Chancellor, University of California, San Francisco. Peter V. Ueberroth, Chairman, Contrarian Group. Antonio Villaraigosa, Mayor of Los Angeles. Moderator: Michael Milken, Chairman, Milken Institute. The Hollywood sign, the Golden Gate Bridge, Napa Valley's wine country and Big Sur. California is known around the world for not only its breathtaking landmarks but also the incredible people who represent the wonderful diversity, accomplishment, innovation and opportunities the state provides. Join us for a wide-ranging conversation with some of California's most iconic figures. Architects, actors, athletes and academics, these luminaries draw on the state's culture, climate and creative spirit to build empires, produce legends and push the limits of what's possible. It's what continues to distinguish our great state from all of the others.

Speakers: Ross DeVol, Chief Research Officer, Milken Institute. Rob Lapsley, President, California Business Roundtable. Where does California's recovery stand? And what are our prospects for growth in the months ahead? Ross DeVol, the Institute's chief research officer, offers an insightful look at the latest data.

California's Contra Costa County should be the envy of its peers, with a mature industrial base that generates more than $50 billion in annual sales, and close proximity to the world's most dynamic commercial and technology center -- the San Francisco Bay Area. But Contra Costa's growth has fallen behind its neighbors, with lagging creation of high-paying jobs, contraction in its industrial base, and unbalanced economic growth across the county. This report from the California Center of the Milken Institute presents a strategic plan for creating more widespread prosperity across the county. It provides a platform to engage county and city development officials and civic leaders, to help them chart a brighter future for the county. The study lays out a broad array of specific strategies for Contra Costa leaders, both public and private, to consider in order to forge a more vibrant, balanced, and sustainable economy. It also includes specific recommendations for the county's largest cities.

Once the nation's top exporting state, California has been losing ground for a decade. California's export rank has fallen to fifth place, behind Texas, Alabama, Florida and Pennsylvania. Last year, Texas exported $249 billion in goods and services, compared the Golden State's $159 billion. This report from the Milken Institute charts a path for how the state can reverse the trend. California's export advantages are still considerable, including the largest economy of any state, the largest manufacturing base, robust agricultural production and its role in technology and design. But the lack of a coherent trade policy, combined with a lack of export growth in many of California's key sectors, has sent the state's economically crucial exports into a free fall. California's export growth rate since 1998 has been less than half the U.S. national average. The report makes a number of recommendations to boost the Golden State's exports: 1. Take advantage of existing export promotion resources. 2. Create a synchronized export promotion agency. 3. Leverage private-sector expertise. 4. Open more, but carefully-selected, trade offices abroad. 5. Build a comprehensive performance measurement system for export-promotion efforts. 6. Take advantage of national and local programs supporting export promotion. 7. Develop an effective and comprehensive trade-promotion strategy.

It’s a Cinderella story: Tax incentives bring film production back to California. Entertainment is a staple of California's economy, and other states and nations would love to have a piece of the action. How effective has the Legislature been at protecting this asset that is so key to California's identity? That question is asked and answered in "Fighting Production Flight: Improving California's Filmed Entertainment Tax Credit Program," the latest research from the Milken Institute California Center. The report examines the state's five-year Film and Tax Credit Program just as the original program's final funding is about to be allocated. It turns out the incentives have had much success keeping film production in California. But demand for the tax credits has far outstripped supply, and the program will eventually expire. Read the full report for recommendations on lawmakers' next steps.