My driving instructor used to be a member of a South L.A. gang, but business dried up in the 1990s, and he was forced to get a job instead. He’s about five feet tall, but everyone calls him “Big.” “It was pretty sweet round here in the Nineties,” Big tells me as we navigate the barren streets between the Westside and South Central. That was what he calls the “golden age” of the Crips and the Bloods. Both African-American gangs are still strong, but they’ve lost a lot of their clout. “They were tough bastards, but they were our bastards,” says Big. “They were born around here, you know? They were real Americans.” And they sang and danced about it, too, turning South L.A. into a site of cultural significance for nearly a decade. It was here that the Rodney King riots started in 1992, turning the ghetto into the Immortal City of black poverty, fetishized in the hip-hop of Snoop Dogg and the movies of Spike Lee.

But, as Big explains to me, South L.A. has undergone some changes since then. The decline of the black gangs and the rise of a new Hispanic force based around 18th Street is a fascinating tale of globalization, endemic crime, and social turmoil. Likewise, the ignorance displayed by Hollywood and its environs north of the ghetto offers a glimpse into the myopia of West Coast liberalism.

Put simply, South L.A. used to be majority black; now it is majority Hispanic. In 1980, 71 percent of the population was African-American. According to the 2010 census, that figure has fallen to 31 percent, while the proportion of Hispanic residents is now 62 percent. One fun innovation the Hispanic migrants have brought with them is a culture of raising livestock at home. In contemporary South L.A., it is not unusual to be woken up at 6 a.m. by the sound of a rooster crowing. While turning onto Gage Avenue, I nearly drove my car into a goat.

The demographics of South Los Angeles have changed, but its problems have remained exactly the same. The 1993 figure for those living in poverty is identical to the one in 2009: 30 percent. The proportion of those who have been the victim of a crime was 27 percent in 1993 and is 26.3 percent today. The statistics confirm that the origins of crime are circumstantial rather than innate. Those appalling crime rates are caused by environment and poverty. Were the movie producers of wealthy Bel Air to lose all their jobs and relocate to South L.A., they’d be killing and stealing from one another in no time.

But the emergence of organized Hispanic crime is not a freak of nature: It is the consequence of government policy. In the late 1990s, the U.S. government hiked the cost of the ingredients necessary to produce good-quality meth. That shut down the so-called “kitchens,” putting hundreds of American-born “cooks” out of business. These were ordinary working-class blacks who labored in basements and warehouses, naked from head to toe to prevent them from sneaking stuff home. When they were priced out of the market, some Salvadorians moved in to replace them. The African-American gangs went bust as they lost control of the drug trade. The Salvadorians took their place, hitting the streets with a much cheaper brand of meth shipped straight from the Central American source. “The thing is,” says Big, “that the product is of inferior quality. Just like those sh**ty toys from China.” Government intrusion and globalization killed local enterprise (someone tell Pat Buchanan).

As soon as the Salvadorians solidified their drug assets, they moved into mergers and acquisitions. There was an aggressive buyout of prostitution and protection. All the whores had to learn Spanish. “The whole damn business changed,” says Big. “They killed anyone who wanted to go on selling and pushing with the old guys, and forced everyone to buy from them instead. All the opportunities for the people who was born here disappeared.”

And so the African-American gang members either were killed or emigrated. By 2000, the 18th Street Gang was in control of most of South Los Angeles and was a growing concern nationally. In 2009, the U.S. Justice Department put its likely membership at 50,000, with branches in 44 cities in 20 states. Justice estimates that 80 percent of those gang members are illegal immigrants. What does membership provide? “A sense of belonging,” says Big. “The 18th Street is really young. The immigrant kids see their parents working 18 hours a day for the minimum wage, and they think, ‘Why bother?’ The schools are s**t and the cops are racist. The 18th Street is the only thing that gives the kids pride and money.” There’s even a sorority called Baby Locas. The gang now runs sophisticated food-stamp scams. In recession-era America, it provides a safety net for struggling illegal immigrants drawn to the U.S.A. by the promise of jobs that have gone elsewhere.

Yet the liberal establishment remains strangely ignorant of the changing face of crime in South L.A. I spoke with an activist who works with reformed gang members. He takes them to fundraisers thrown at Hollywood mansions, where they testify about the good things the program has done for them. “But whenever I pick who will deliver the speech,” he confesses, “I always pick someone who is black. For two reasons. First, white liberals associate poverty with black people: It’s a Civil Rights thing. Second, if I got a Hispanic person to speak, the donors would feel uncomfortable. All their staff are Mexican: the maid, the cook, the gardener. They don’t want to think about what’s happening to those people’s kids while they’re in their homes working for the minimum wage.”

The result is a cultural misunderstanding about poverty in Los Angeles and a misapplication of resources. Yes, the endemic problems of the black community are a major issue. But the demand for cheap labor — which generates illegal immigration and all its associated evils — is just as big a trigger. Yet the people who provide the demand — often well-intentioned, liberally minded whites — remain blissfully unaware of the dramatic changes taking place on their doorstep. Whatever its precise demographics, Los Angeles remains forever segregated between the fantasy kingdom of Hollywood and the terrible reality of life on the South L.A. streets. All is not lost, however. The outsourcing of meth threw Big out of work, so he retrained as a cab driver. That’s one in the eye for all those protectionists who said no good ever comes from free trade.

— Tim Stanley researches politics at the University of London and blogs on American politics for the Daily Telegraph. He is writing a biography of Pat Buchanan and can be followed on Twitter as @timothy_stanley.