RIDER OP-ED: Absent defense, our local economy is awful

Richard Rider, Chairman, San Diego Tax FightersRichard Rider, Chairman, San Diego Tax Fighters 6 Comments


Today the NORTH COUNTY TIMES ran my op-ed on the effect of defense spending in San Diego County. My thesis is that, absent our massive federal defense spending (responsible for 1 in 4 jobs in the county), the San Diego economy is simply “awful.” This fact is amazing, considering that that San Diego has the best climate in the nation. But our terrible government-imposed anti-business economic climate trumps our inherent advantages of nature.


RIDER: Without defense, our economy awful

June 26, 2012   •  By RICHARD RIDER

The North County Times recently reported on the latest study detailing the remarkable dependency of the San Diego County economy on national defense spending. The study, prepared with the assistance of the Point Loma Nazarene University Fermanian Business a Economic Institute, found that 1 in 4 jobs in the county is dependent on military spending (including federal retirees and the iffy “ripple effect”).

Clearly, San Diego benefits from a huge, ongoing federal “stimulus package” that dwarfs federal subsidies to most other areas of the nation. Moreover, our area has disproportionately gained from the last decade’s defense “realignments,” in contrast to most other military-related local economies around our country.

Let me be clear. I’m not here writing about the merits or demerits of our national level of defense spending, nor our country’s de facto goal of remaining the world’s policeman. I’m here discussing the economic effect of defense spending in San Diego, and the strength of San Diego’s overall economy —- taking into consideration our region’s stridently anti-business economic climate.

San Diego boosters love to cite our area’s relatively low unemployment rate compared to the state of California. But taking defense spending into consideration, our local private sector economy is anything but vibrant.

Currently California has the nation’s third highest unemployment rate —- 10.8 percent in May. While the national unemployment rate is 8.2 percent, not including California it is only 7.8 percent —- making the California unemployment rate 37.7 percent higher than the average of the other 49 states.

San Diego County’s April unemployment rate was 8.7 percent, much better than our state’s dismal figure. Moreover, if the job/bean counters included the 100,000-plus San Diego jobs of the folks in the armed forces, our rate would be another half-percent lower —- though still higher than the average of the other 49 states.

. . .

To read the rest of my commentary, go to the link above.


Comments 6

  1. Interesting points here, especially since it’s questionable whether or not all that we’re spending on defense is actually going to enhancing the military’s ability to project power and deter foreign enemies.

    It looks like if sequestration happens in November (thanks to the budget deal last year) there will be cuts in defense spending and contractors are loudly playing up layoff fears. Should be interesting to see what, if anything happens.

    [btw the NCT link isn’t working for me now]

  2. We saw what happens with huge cuts in defense spending in the early to late 1990s. In the South Bay/Long Beach area, San Fernando valley, Orange county, and in San Diego county. The economies where devastated. In some of these areas, the economy,except for the artificial boom period between 2002-2007, has never recovered. It’s important to realize, that a lot of the job losses 20 years ago were not necessary because of cuts in defense spending, but a removal of guaranteed profits, forcing companies to cut cost, which a lot of times meant, moving work out of California, to states with a lower cost of business.

    You would think the politicians would have at least attempted to address the business climate of California, tried to encourage business to stay and move here. However, for there own selfish reasons, they not only did nothing, but continued, and continue to make it more expensive to do operate a business in this state.

  3. Post

    Just to be clear — I’m not here touting the benefits of defense spending, nor justifying such expenditures.

    My concern is that our huge local defense spending MASKS the terrible status of our local private sector economy — giving us a false barometer reading of the economic climate in which we live and work.

  4. Richard–We probably have the most diverse base of economic/industry clusters in the nation if not the world. We have a tourism industry, a broad-reaching innovation economy and a healthcare sector that all employ as many individuals as the military. There are over 90,000 businesses in San Diego County, we have more research institutions than anywhere in the world and we have one of the largest biotech clusters in the world. We are an emerging hub for clean-technology, industrial biotechnology, cyber-security, health-IT and other new high tech industries. Our military sector is a critical driver of our local economy and any downsizing will be sure to hit close to home. But the status of our local economy is anything but terrible. While the region, the state and the country have not yet fully recovered from the worst recession of our lives, and thousands of our friends and neighbors are still struggling, San Diego is poised for more growth, expansion and innovation in the years ahead than most regions in the country. It is without a doubt a difficult time to do business within the State of CA, but fortunately for us the creativity and ingenuity of our private sector can often make up for our lack of government incentives and support. The overwhelming majority of businesses are not leaving our region, new businesses are coming to and growing within San Diego everyday and still more are calling our offices daily to inquire about doing business here. All of that tells me that the status and spirit of our private sector is quite strong and resilient and will be for some time. 

  5. Mark, thanks for the rah-rah long single paragraph ode to the San Diego business climate. I disagree.

    Take away 1/4 of the employment in the county (the defense related employment) and then try to get your arms around the economic level of activity in the region. And keep in mind that defense employment pays better than non-defense employment (the multiplier effect is a wash in that regard). I love the tourist industry, but it’s not noted as a high paying field.

    Stop blaming the recession. With far less naturally attractiveness, most of the rest of the country is doing better than San Diego WITHOUT the massive ongoing federal defense “stimulus” program we are blessed with. Our dreary private sector economy is masked by all the defense spending.

    Any non-retail business that moves to San Diego from out of state does so at its peril. It’s only going to get worse here.

    The implementation of AB 32 and perhaps one of the millionaires’ tax measures in November will further depress the economy. The state legislature continues its Jihad against both the private sector and local government fiscal reforms. The litigation “industry” (the legal lottery) runs amok, and businesses are prime targets. The state and local regulators operate like Boss Hogg from Hazzard County.

    Check the last two decades of NET domestic migration — movement between states. California has lost a NET 4 million people. That’s not a good economy.

    I realize that your job (President & CEO — San Diego Regional Economic Development Corporation) requires the active waving of pom-poms, but your rosy outlook flies in the face of our economic reality.

  6. Thanks for the lesson in paragraph structure Richard, and while we are on the subject, your punctuation is impeccable. Unfortunately neither make your arguments any better. Let me break my paragraph here so I don’t cause you any undue angst (I sense you have enough already.). 

    I’m not disagreeing with you at all on the importance of the military to our economy. I know the numbers, analyze the economic impact and make that argument to people every single day. I’m just telling you that just about everything else you are saying is alarmist and overblown. Is that rah-rah enough for you?

    I realize that your job (chairman of San Diego Tax Fighters) requires you to wave your own set of pom-poms, but your less than rosy outlook flies in the face of our economic reality as well. 

    As I stated is several sentences within my long, single paragraph to you…our economy and our private sector are diverse, resilient and innovative. Your facts are all correct Richard and  many of your arguments are credible, I just completely disagree with your notion that everything else around our military economy is weak and vulnerable. 

    The bottom line is this: you state that our disadvantages trump our advantages and I know that they do not. Probably best to leave it at that. 

    So happy 4th of July Captain America. I’m sure I’ll catch you around town at some point. 

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