A Study in Pleasant Surprises

Nobody expects the bottom to fall out of U.S. defense spending. Cuts will come gradually. But even if Washington took a terrible swift sword to the Pentagon budget, Southern California would not be devastated. In fact, if some defense savings were invested in space projects, the region would be better off with less defense spending.

These are among the pleasant surprises in a study of the consequences of an immediate one-third cut in defense funds, an extreme and unlikely scenario. The study, admittedly broad and of little use, say, to a defense engineer deciding whether to take on a bigger mortgage, was conducted by a team of researchers at the Southern California Assn. of Governments. Led by economist Gordon Palmer, the team analyzed defense activities in five counties--Los Angeles, Orange, Riverside, San Bernardino and Ventura. Other analysts have come to similar conclusions about San Diego County’s ability to absorb defense cuts.

The report was not specific on space projects, but many are lined up for funding. An Earth Observation System would monitor the planet’s vital signs from orbit. Observatories would be built on the dark side of the moon for astrophysicists to take readings of outer space. A more distant project is a joint American-Soviet manned mission to Mars.

Short as it may be on practical advice to defense workers, the study does make a case that Southern California need not panic over peace. It also delivers timely warning that Southern California can no longer depend on luck and a nice climate that enabled it to survive earlier cuts in defense spending. California must make certain its job retraining and economic development programs are fully funded and ready to step in to help defense workers who need it.

The study arbitrarily assumed cuts in defense from about $300 billion to about $200 billion and projected the effect on jobs by 1995. Its conclusion: The region could not create the 1.3 million new jobs that would exist if defense spending stayed level but would have to get by on 1.1 million new jobs by 1995. Further, there might be more than 1.3 million new jobs if some defense savings were shifted to space programs. That is scarcely doomsday data.

The record of defense firms trying to transfer their high-tech talent to the commercial sector is not good. Rohr Industries tried and failed to build a better subway car. Boeing had a bad experience building urban people movers. But it can be done.

In recent years, Rockwell International--with Chairman Donald R. Beall calling signals--has cut its dependence on Pentagon contracts from upwards of 50% to just over 25% by diversifying into non-defense fields. When Rockwell’s B-1 bomber contract ended, 18,500 workers lost jobs. Some were retrained for Rockwell’s non-defense jobs. Some moved to other aerospace companies that had new defense contracts, a pattern of musical chairs in aerospace that would taper off, if not stop, with a smaller defense budget.

But Rockwell also demonstrated that a shortage of engineers, which has concerned industry for years, can cushion them from unemployment as defense work winds down. Further, Beall argues, the country will need to turn its engineers and skilled workers loose on building and rebuilding highways, bridges, canals, harbors, schools and whatever else it takes to build and deliver the goods that America needs to compete in the new world economy.

New symptoms of what the end of the Cold War will mean to Southern California appear almost daily. Tuesday Robert W. McNamara, defense secretary to Presidents John F. Kennedy and Lyndon Johnson, and Lawrence J. Korb, an assistant defense secretary during President Reagan’s trillion-dollar Pentagon buildup, agreed that the United States could still strengthen its security with a defense budget half the size it is today.

Barring setbacks that could result from breakdowns in Soviet and East European reform, considerations of world commerce will reclaim center stage from the Cold War and military economics. Consumer-oriented industry, competition and trade will dominate strategy just as missiles have for 40 years. Southern California will be an integral part of that change.

The region cannot reject the chance of upheaval in transition. Sacramento and local governments must be prepared to help defense industries feel their way into a new future. But it must dwell less on the past and more on the challenge and opportunity of a future with Europe at peace.