The theme of PROJECTIONS 96 is "Focus on Future Growth." It prompts us to examine the factors that will lead to future economic vitality. Both the Bay Area and California are still recovering from the recent economic slowdown. California and the Bay Area were hard hit by the recession because of a unique combination of factors that converged to make it the worst economic period since the Great Depression of the 1930s. Those factors were: the downturn in the national economy; the region's high-cost business environment; the restructuring of American business; and the major cuts in military expenditures. Even as these factors are improving, they will continue to influence the regional economy over the next several years.
While the Bay Area's economy is strongly tied to the high technology sector that is leading the national economic recovery, jobs are not being added as quickly as we previously expected. Stock values for high technology firms have increased, but employment, particularly in the Bay Area, has not necessarily followed. Productivity gains, and business restructuring in the high technology sector have resulted in an economic recovery, while the "jobs recovery" has lagged.
Economic analysts have begun to describe a new stage in our commercial relationships. The change from a manufacturing to a service economy is obsolete. This new stage is being characterized as an "information economy," where computerized information flows and electronic products will dominate. Analysts have emphasized the importance of the emerging information industry to the Bay Area economy. Microprocessors and personal computers have been widely available for over twenty years, and they constitute the mature portion of the high technology sector. Increasingly, the growth of the high technology sector is shifting from those companies producing chips, computers, and hard drives, to companies developing multimedia applications and networking software. Eventually, these products will allow us to combine the services we currently receive from separate telephones, cable television and computers.
However, even though information companies will undoubtedly play a large part in the future of the Bay Area's economy, their growth will take time, and it is not without its challenges. If we are witnessing the birth of the information economy, there will be a long hard labor before it arrives.
While technology progresses, its acceptance by people in their private and work lives will be the ultimate determinant of a successful information economy. Even if we acknowledge the inevitability of an information-based economy, it does not mean that in the foreseeable future everyone will be a computer programmer or software developer. Traditional sectors in our economy will continue to exist and grow. Technology will eventually change every industry and the way that workers perform every job. However, technology will not eliminate traditional manufacturing, services, retailing, or other major sectors of the economy. Goods must still be physically moved to consumers. Workers will continue to travel to the sites of their jobs. Over time, technology will alter the way that we make purchases, and our working environments. However, traditional sectors of the economy will continue to be important. Tourism and travel will continue to be a significant and growing part of the regional economy. Financial and business services will be one of the strongest areas in the regional economy.
The region's economy is also a global economy. International trade has become an increasingly important part of the national and regional economies. Markets for many products are now worldwide. The Bay Area's air and sea ports are among the busiest in the nation. In part, this is because of the shift in world trade toward the Pacific Rim. Increases in the amount of commerce going through the Bay Area, even while key trading partners like Japan have had weak economies, has been a bright spot in the regional economic picture. The potential expansion of trade with emerging countries like China suggest enormous potential for the future of the Bay Area as a trading center.
At the same time the information industry is growing, citizens and national political leaders are reevaluating the relationship, and responsibilities, of people and their government. It has become a widely held belief that less government is better. Current government initiatives focus on reducing spending, more limited eligibility for social programs, less regulation, and the shifting of responsibilities to the most local level that is feasible. Particularly in California, tax increases have become almost impossible to enact, regardless of their purpose. In order to meet the need for infrastructure and investments in education, the public and private sectors will have to provide innovative solutions.
While it is important to streamline the way we perform business in both the private and public sectors, we must also preserve the natural and cultural amenities that attract people to the Bay Area. The unique amenities that characterize the Bay Area assure the future health of our economy, as the location of work and homes become more flexible over time.
Neither the emergence of the information economy, nor the changing role of government, solve the fundamental planning issues that face the Bay Area. What may change is the how we will address these challenges. In the public sector, the focus must be on educational quality, expanding opportunities for all our citizens, producing affordable housing, investing in transportation, and maintaining environmental quality. These factors combined create the ingredients for a labor force that can generate ideas and solutions that will maintain the long-term economic strength of the Bay Area.
Growth does not cause congestion, overcrowding, deteriorating infrastructure, and environmental degradation. Rather, inadequate planning, and inaction by the public and private sectors cause these problems. With the apparent change in responsibilities of various levels of government, increasing emphasis is being place on individual and local responsibility for solving our problems. The emphasis to do more with less will also place an increasing burden on local government to find innovative solutions to problems.