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