The dark side of life in Los Angeles

Creative Commons/Russ Allison Loar

The great dilemma at the heart of modern America is encapsulated in just a few blocks of downtown Los Angeles, where I was this past week.

The Arts District is an area of reclaimed industrial and warehousing facilities that has been made over into a buzzy and business-friendly community where trendy restaurants and hip retail facilities service a residential population of young entrepreneurs and small businesses. It’s a pleasant place for a family night out and after-dinner stroll.

If you try that just a few blocks west, in the quarter infamously known as Skid Row, you literally take your life in your hands.

• Observing Barbie in La La Land
• UAE-US trade relations defy region’s pivot to the east
• A looming US fiscal crisis could hit the Gulf hard

Whole streets have been abandoned, it seems, in a dystopian shanty-town of canvas and cardboard where the crime rate is amongst the highest in the USA and law and order seems non-existent. “Disneyland for addicts” it has been called in local media.

It is a real shock for visitors from the well-ordered urban communities of the UAE, of which there are many judging by the sold-out Emirates flights at this time of year.

How could they have got it so wrong in one of the wealthiest cities in the world in the booming economy of California, which would rank fifth globally if it were a country?

I’ve written before in this column about the many similarities of life in the UAE and California, and how economic development in the two is based on hydrocarbons and maritime logistics against a challenging climate background.

But the Skid Row nightmare is something it is literally impossible to imagine happening in the UAE.

The problem in California is a failure in public policy that is unimaginable in the Arabian Gulf, and one that will be put into sharp relief on an international stage as America gears up for one of the most bitter presidential elections of many decades in 2024.

Deep disparity

Much has been written about widening disparities of wealth in many US cities, and a simultaneous decline in standards of public affluence.

Donald Trump, who looks certain to get the nomination of the Republican party, is sure to make great political capital of the fact that the vast majority of these crumbling inner cities have been under Democrat control for decades.

It is even possible that he could do so against Gavin Newsom, the governor of California since 2019 and a leading light of state administration for nearly three decades.

Newsom is the man most often spoken of as a Trump-beating alternative if President Biden proves incapable of running for a second term or is talked out of bidding for re-election by an increasingly worried Democratic machine.

Big “ifs” for sure, but if that scenario comes to pass, Newsom’s economic record will be on the line and for a whole variety of reasons – ranging from urban decline to business competitiveness to energy policy – it could be a weak spot for the Democrats.

Urban issues

On the urban question, Newsom has woken up to the scale of the problem, and thrown billions of dollars at the issue of homelessness in LA and the rest of the state.

He has even enforced some pretty draconian policing to remove homeless encampments from cities. But – as the continued existence of Skid Row proves – it is a difficult one to solve quickly.

On the broader economy, Californians still enjoy an enviable standard of living, and the state is still a world leader in technology and advanced engineering, as well as the creative and entrepreneurial sectors.

But sky-high taxes compared to the rest of the USA and increasingly tough regulation mean that the state has lost some of its competitive edge in recent years.

Lessons on transition

The Los Angeles Times recently reported new data on how many of the wealthiest Californians were leaving the state, and a few days later how public pension money – some of the largest funds in the world are based in California – was moving to neighbouring states in droves.

On energy policy, Newsom’s administration has taken a aggressive line on renewables and efficiency, pledging net zero emissions by 2045 and making life difficult for the oil and gas companies that were the foundation for the state’s  original prosperity.

But – in an abject lesson for the Gulf in how not to undertake energy transition – California is blighted by summer electricity shortages and is forced to rely on grid imports from neighbouring states which do not share its reluctance to burn hydrocarbons for fuel.

Don’t get me wrong – life in “La La Land” is still good. But its dark side will come under a global microscope in the coming year.

Frank Kane is Editor-at-Large of AGBI and an award-winning business journalist. He also acts as a consultant to the Ministry of Energy of Saudi Arabia