Book Reviews

A REVIEWER'SNOTEBOOK JOHN CHAMBERLAIN 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 ca reer as a journalist, interested in capitalist solutions. Kotkin and Grabowicz seem to be unaware of some of their own con tradictions, which involve them in condemning Ronald Reagan for fa voring businessmen during his term as governor and then, in a subse quent chapter, praising Governor Jerry Brown for going Reagan one better in putting entrepreneurs in his kitchen cabinet. The authors ev idently 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 Califor nia's 'manifest destiny.' " Whether Jerry Brown can main tain any consistency over the years still remains to be proved. But the "new class," as Kotkin and Grabo wicz see it, is here to stay in Califor nia. Men of Action The Golden State was always hos pitable to new technologies. Kotkin and Grabowicz spend very little time on California's famed kooks. They prefer to concentrate on the "doers,"

CALIFORNIA, INC. 319 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 pos sible. There were the oil men, John Paul Getty and Henry Salvatori. There were-and are-the great en gineering firms of Fluor and Bech tel, who now build all over the world. And .there was Henry Kaiser, who formed the "six companies" that cre ated 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 Califor nia bank with the "homespun guile learned in the produce trade," mak ing 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 farm ers. When he retired he let his bank be controlled by an Easterner. He was quickly disill usionedby the Easterner's antipathy to innovative methods. To save the bank from col lapse 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 Sili~on Valley Kotkin and Grabowicz take the movie men, William Selig, Sam Goldwyn and Ado~ph Zukor, for what they were, great entrepreneurs who understood the \jVorld's "desperate need for fantasy.':' Howard Hughes, who had gone West to make his name as a film maker, i was a believer in the sales value of fantasy, too. But he was also inter~sted in airplanes. His Hughes Aircraft Company, orig inally started asia lark, was ready for World War II.; By the late Nine teen Forties Hughes, Northrup, Douglas, Lock~eed and North American Aviati~n were all reaping the benefits of military contracts, as Hughes had pred~cted. 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 systemsJ digital computers and other advanced electronic de vices. The Califoirnia universities, notably Stanford,! have fed industry in novel ways; St~nford engineering students, working out of their ga rages, have crea~ed billion-dollar companies. And "~licon Valley," that stretch of coast south of San Fran cisco near Palo Allto, has become a synonym for wh~t is colloquially known as high-tec\h. The silicon chip, which can store thousands of mem ory bits within the space of a dime, has made the modern low-cost com puter age possible:.

320 THE FREEMAN JapaneseInfluence All of which brings Kotkin and Grabowicz to the Japanese, who are so good at taking over American in novations and improving on them. C:;llifornia does not see the Japanese a~ any great menace. As the ulti mate 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 finan cial center of "the Asian commu nity." California agribusinessmen have built fortunes through serving as Japan's leading supplier of fruits and its second-largest source of cot ton. 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 goodsthat used to comefrom the East Coast ... now we look to Japan ...

for us the Japanese are a close mar ket ... you have in Japan an econ omy 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 Val ley, 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 fu ture 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 effi ciency and productivity. In many ways Action Instruments is very Japanese."

Despite their personal antipathy to Ronald Reagan and their partial ity to Jerry Brown, Kotkin and Gra bowicz see "Reaganism" as a contin uing 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 entrepre neurship going strong. The odd thing is that Kotkin was born in West Germany and Grabowicz in Spring field, Massachusetts. But they are Californians now. , the Freernan VOL. 32, NO.6 JUNE 1982 Profits and Pollution John Jefferson Davis 323 A second look at some popular misconceptions concerning the source of pollution. New Dimensions of Population Growth Russell Shannon 332 Concerning the ability of man to produce as well as reproduce. Collectivism in Medicine: An Exception or a Hook? Jane M. Orient, M.D. 335 A thoughtful diagnosis of the doctor-patient relationship under alternative systems.