E What Does The Movie “Chinatown” Have To Do With Emerging Markets?

At first glance it may seem gratuitous to discuss China and other autocratically-run emerging markets with a headline drawn from a movie which had nothing to do with China, and almost nothing to do with LA’s Chinatown. But in fact the character of the film Chinatown’s villain, Noah Cross, is loosely based upon the real-world first superintendent of the Los Angeles Water Department, William Mulholland.

Mulholland is alleged to have lied to, cheated and threatened the farmers and ranchers of the Owens Valley, which was then called “the Switzerland of California,” thanks to the abundant snow runoff from the Eastern Sierra. He promised that only a small amount of their water would be diverted via a grand project that became the Los Angeles Aqueduct. In fact these residents were merely pawns in the game to turn the near-deserts of the San Fernando Valley into an oasis of agriculture and commerce. All their water was taken from them, resulting in the dry lake bed that has replaced Lake Owens and the desert that replaced grazing and farming lands, both results on display today as one drives from LA to Reno along Highway 395.

As these rural residents lost not only their livelihood but came close to losing their means of survival, Mulholland’s provocations became more intense. The result was the biggest of the California Water Wars, with the aqueduct being dynamited in various places. When the press and the state politicians refused to sanction any more abuse of these citizens, Mulholland was quoted as saying that he “half-regretted the demise of so many of the valley’s orchard trees, because now there were no longer enough trees to hang all the troublemakers who live there.”

Mr. Mulholland met his own Water-loo just a few short years later when a huge dam, which he had personally inspected and declared safe only 12 hours prior, burst and collapsed, spilling a torrential river 140 feet high into the valleys below. In addition to the untold physical destruction, more than 600 people were known dead, including over 100 children, most buried in mud or swept into the ocean.