There are a number of theories about how the dinosaurs died. Some scientists say a mammoth meteor crashed into Mexico, covering the world in darkness. Others say a global shift in climate; or a sudden spasm of seismic activity ended their reign. Most say the dinosaurs died virtually overnight.
If you know dinosaurs, however, you know they do not go quickly and they do not go quietly. Quite the contrary, dinosaurs -- the status quo, the guardians of antiquity -- entrench themselves in a manner that contradicts every change or innovation. And if change evolves around them regardless of their staunch position, the dinosaurs will put on their dresses and paint their faces in a theatrical production to convince themselves and others that, really, the world has not changed at all.
But, the world, including El Paso, has changed indeed.
Long gone are the days when the Four C's -- copper, cotton, cattle, and climate -- were staples of our economy. Gone too are the days when El Paso could depend on its low-wage labor to fuel low-skilled manufacturing. Now, here we are at the outset of the 21st Century hoping for the best and expecting the worst. Our economy is in the dumps and you know what?
We've never really been honest about how we got here.
The Way We Were
This is partially the story about the role of an ethnic minority group in an American economy. But, we'll start with something more simple -- an advertisement.
On September 1, 1957, the El Paso Times ran a special edition, a tribute to Ft. Bliss. In it, the following ad described El Paso like this:
STRATEGIC LOCATION -- Capital city of the nation's largest geographical trade territory, transportation center, transcontinental and regional highways, planes and railroad - the crossroads between the east and the west and threshold of great and rapidly growing scientific installations already established.
DIVERSIFIED ECONOMY -- El Paso's prosperity is based on widely diversified resources -- Copper, Cotton, Cattle, Mining, Smelting, Oil Production, Potash, and pecans are only a few. These resources have already lead to many great industries here -- notably clothing manufacture, the largest in Texas, Copper refining, nationally known Mexican food processors, building materials, concrete block and many others.
LABOR and MANPOWER -- El Paso is blessed with an abundance of skilled, highly adaptable labor. Proof of this fact is that the world's greatest manufacturer of telescopic gun sights is located here -- an industry where technical skill and close tolerance are most important factors.
CLIMATE -- High, dry and invigorating -- altitude 3700 feet -- cool nights and more days of sunshine than any other American city. Blizzards, tornadoes, cyclones, smog, fog and floods are unknown. Never a day's work lost because of inclement weather.
INDUSTRIAL SITES -- Wide selection in planning industrial areas available. Adequate highways and trackage - plenty of room to grow with acreage selling to industries at low and attractive prices. Lowest construction costs of any city in the Southwest.
ADEQUATE FACILITIES --El Paso has never rationed water. Fuel and power both electric and natural gas available in any quantities demanded. Home offices of the El Paso Natural Gas Company, one of the world's largest. El Paso Electric Company now building $12 million plant increasing generating capacity 540% since World War II.
TAX STRUCTURE -- El Paso offers many advantages -- no individual or corporate income taxes, no inventory tax, no general sales tax or other special taxes discriminatory towards industry.
COMMUNITY LIFE -- El Paso is nationally known as a good place to live, Invest and Prosper. It offers every advantage of a modern city. It welcomes industry. Old in historical background yet new in its appearance, homes and buildings. Dozens of attractive residential areas convenient to all city and suburban business and industrial centers. Every cultural and educational advantage.
Another ad from the same edition of the Times focused on the technological advances made in the region:
"El Paso is already one of the nation's primary centers of scientific and electronic research and development and we are destined to become one of the important manufacturing centers of these new scientific industries."
Some Basic Economics
It's a lot to take in -- all the factors that went into making El Paso such a success almost 50 years ago. It becomes a bit more comprehensible after a quick primer in basic economics. From 19-year-old entrepreneur Ryan P. M. Allis:
"What is needed to create wealth?
"Within the marketplace, there are many resources that go into the production of goods and services. These resources can be grouped into four categories. These categories are land, labor, capital, and entrepreneurial ability. The land category consists of not just land, but all natural resources. Labor is the work that is performed by man. Capital is industrial machines and buildings, not financial capital (money is not capital by this definition).
"Finally, there is a special resource called entrepreneurial ability. . . It is the entrepreneur that organizes and arranges the use of land, labor, and capital to create an output demanded by the marketplace. It is the entrepreneur’s responsibility to decide on what amounts of each resource to use and then use those resources efficiently to create a product or service that is valued higher by the marketplace than the collective value of the resource inputs.
Now, let us go back to 1957. Of the four factors of production, which did El Paso focus our efforts on and which did we ignore?
Land and natural resources are easy -- we can check that one off the list. Capital has also never been a problem for El Paso, either. Whatever machinery and buildings we've needed, we've usually been able to get or build.
Then we get to labor, the work performed by human beings. This is where it gets tricky.
Traditionally, labor was considered either agricultural production or industrial/manufacturing production. And El Paso focused on this, too. But, never as a manufacturing center of "new scientific industries," as alluded to in the second ad, but as a center for textile production.
Why?
On
September 11, 1957, the El Paso Times explained, "More than 50
per cent of El Paso's labor force is of Mexican or Spanish-American descent,
whose inherent craftsmanship can be developed into skilled ability in almost
any field . . The local plant of W. R. Weaver Co., a leading telescopic gun
sight manufacturer [mentioned in the first ad], has demonstrated that the
El Paso labor force is psychologically adapted to repetitious work."
There it is. How could a labor force hailed for its simple psychological profile ever serve as a foundation for technological achievement? It never could and never would. And after 1994 and the creation of NAFTA, El Paso's labor force became a huge liability rather than a asset.
Today, labor is understood to include innovation, research, and development; and the product of this work is considered intellectual property or IP. And commercialized IP can garner millions and millions of dollars.
While El Paso failed to realize the power of an idea, other communities suited up and rode the wave of innovation. And those from El Paso who had ideas, left forever. [Ralph Rodriguez, from El Paso's Segundo Barrio, was an engineer for the United States' early space program].
The Power of an Idea, The Cost of Not Having One
In
January 1977, Bill Gates dropped out of Harvard to work with Paul Allen and
half a dozen other programmers at a small company called Micro-soft
(the hyphen was later dropped). They located their headquarters in Albuquerque,
New Mexico to be near the manufacturing plant of a microcomputer called the
Altair 8800: a small, rectangular box that had no keyboard or screen and didn't
do much more than blink.
The young company saw a future in writing a programming language for microcomputers and began to adapt BASIC for the Altair. The rest is history -- but it began with an idea.
For the dinosaurs -- yes, they've been looming all along -- it is difficult to imagine an industry that does not require a warehouse, that has the potential to zero-out transportation costs, and that only requires two tools -- a computer and a brain. But, that is the software industry.
Another fine example is Napster. In 1998, long before the lawsuits and the international furor, Napster was just an idea in a young college student's head. Shawn Fanning, then a 19-year-old freshman at Northeastern University in Boston, wanted to solve a problem his roommate was having. Back then, downloading music required people to search for websites where songs were posted. Most were unreliable. Links broke. Traffic spikes slowed download times. So Fanning wrote a simple program, using peer-to-peer networking, that would search and index music files.
Again, the rest is history. And all it took was a brain and a computer.
By 2000 -- over 40 years since the inception of this technological boom in this same region -- El Paso realized it was being left in the dust. And what was the answer? Call centers.
Dialing for Dollars
The Greater El Paso Chamber of Commerce had a message in late 2000 -- technology was finally coming El Paso's way. The El Paso Inc.'s Wendy White Polk wrote in November 2000, "Moving the city's economy from cut-and-sew operators to dot-com industries takes a strategic plan with a strong foundation, and call centers are just the right building blocks."
Wes
Jurey, then-President and CEO of the Chamber said, "Right now we have
about 9,300 people employed in what we insist on calling the call center industry,
when in reality what we have is an emerging information technology cluster."
Consistent with this strategy, the Chamber and the City of El Paso -- at the time intimate economic development partners despite recent denials from the current Chamber president, Bob Cook [El Paso Inc. Oct 26, 2003, ". . . the Chamber has had too little influence on City policy over the past few decades. The business community's voice has gone unheard too often in the halls of City Hall."] -- coordinated to give Providian Financial Corp. and other call centers tax incentives in order to locate in El Paso.
Some incentive packages were described by then-Economic Development Director Bobby Franco as "very aggressive" -- they provided that the companies pay no real property and personal property tax for the next 10 years.
[Providian announced on June 20, 2003 that it planned to lay off about 230 employees from its El Paso call center.]
In 2000, the Chamber provided the public with a pyramid that explained the progressive prosperity of their economic development strategy. What it failed to do, however, was explain how sitting in front of a computer making telephone calls is related to software development or information technology. And arguing that they're related because a computer is a factor in both equations is like arguing that I could be a surgeon because I used a knife at dinner, or that I could be an automotive engineer because I drove to the grocery store.
I don't know if it's dishonesty or stupidity. Maybe it's both. But it's insulting that we were expected to buy it and its worse that some of us did -- including the El Paso Inc.
Please, Reformat this Hard Drive
Going back to the cotton gin and the discovery of interchangeable parts, innovation and the power of ideas have been the drivers of economic prosperity. Everything else in the economy, including manufacturing and residential development, is a reflection of that and that alone.
If we continue to see ourselves as a city of simple laborers -- and there is plenty of evidence to that effect [i.e. when the Hispanic Chamber was talking about creating a Tech Incubator and the Greater Chamber kept calling it a Manufacturing Incubator] -- then we'll never be real players in the modern economy.
And if we continue to fail to invest in the genuine entrepreneurs in our region, we'll never get anywhere. So, why don't we have a Small Business Investment Corporation (SBIC) in El Paso? What happened to the Community Development Finance Corporation (CDFI) we promised at the Access to Capital Summit? Today in El Paso, you'd have better luck starting a company with a title loan.
Of the four factors of the production, we have focused on only half of the labor -- the hands and not the mind -- and we have virtually ignored entrepreneurial ability as an asset [it has always been a focus on "industrial recruitment"].
And it goes on and on.
Bottom line, the dinosaurs do not understand our modern economy -- yet, they're still in the driver's seat. And they're rumbling along like it's 1957, as if we haven't missed the turn in the road. So, we're giving away $25 million in tax dollars to start a mall. Great! We don't even need a pyramid to justify this one.
We need to reformat our economic develoment hard drive and install a new operating system -- pronto. [And if you didn't get that one, you'd better get out of the way.]
Emanuel Anthony Martínez
