Production and Prototyping

We are told capitalism brought prosperity to the West. Actually, our prosperity is due to the introduction of mass production, the development of rational management, and funding by capitalism. Read The Wealth of Nations and you'll see Adam Smith explain the benefits of the division of labor for increasing productivity. Capitalism is only a part of the pattern.

If America quits producing goods, our prosperity will diminish. Productivity from the division of labor depends upon mass production to generate large profits. These large profits will disappear if mass production disappears from America.

If some investors want to use cheaper labor over seas, then we need investors who can find an economical reason to produce goods in America with higher labor costs. Let's consider reasons to manufacture in America.

First, consider the myth of cheap labor. When products fail and customers quit buying your product or sue for damages, then the cheap labor turns out not to be so cheap.

When an educated and disciplined work force is needed to produce sophisticated products with hi-tech machinery, then cheaper labor that cannot work the machinery properly. Poor quality labor results in poor quality products and profit loss after the customers discover the drop in quality. In this case, cheap labor is a mirage.

Factories that build the production tools for mass production factories are good candidates for Texas industries. Prototyping products and machine tools is another candidate for Texas industries. Here is an example of a prototyping business in Illinois: GPI Prototype and Manufacturing Services. Any new product developed in America could be produced here in Texas with the view of designing factories that can be built in Texas. If the these new businesses want to expand overseas, then the machine tools should be built in Texas factories.

We must not give up on investing in America. We need to invest in factories in Texas so our children can have a future.

Robert Canright

Industrialization Instead of Economic Development

Texas can define and pursue an industrialization policy to create new jobs. Japan and Korea are both created and executed industrialization plans and both now have world class industries. Texas can do the same.

We must put aside the economic development policies that attempt to lure existing companies to relocate to Texas. Cities in Texas give tax breaks to companies, but do not get the jobs they are promised. Look at Austin. It was left with a partially built building when Intel changed its mind. Richardson still has an empty fab building that Texas Instruments never used. At its worst, economic development by tax incentives loses us money and provides us with empty or unfinished buildings.

At its best, economic development lures companies away from existing locals. No new jobs are created. Existing jobs are shuffled around like peas in a shell game. This kind of job shuffling had contributed to the economic decline of America. There is more focus on moving jobs around than in creating new jobs. Sadly, many jobs are being moved out of America.

Texas needs to study how Japan and Germany grew their industries after World War II. We need to study how Korea became an industrial power. We must study and emulate. Banks played an important part in the industrialization of Japan, Germany, and Korea. We must do the same. The Texas Banking and Finance Project will support the Texas Industrialization Project, which will lead Texas to increased economic growth through increased industrialization.

A strong and prosperous Texas must have jobs for its citizens.

Robert Canright

Here are related posts:
North Texas Industrialization  Tuesday, May 5, 2009
Industrialization in Texas: the Italian Model  Sunday, September 13, 2009

Here are Economic Development websites for
Plano, Texas
Richardson, Texas
The State of Texas

Amherst Holdings and the Texas Banking Project

The June 11, 2009 Wall Street Journal article "A Daring Trade has Wall Street Seething" by Gregory Zuckerman, Serena Ng, and Liz Rappaport reported how Amherst Holdings of Austin, Texas, made a big score against large banks like J.P. Morgan, Bank of America, and the Royal Bank of Scotland.

Texas needs a strong banking sector and the story of Amherst Holdings is an example showing Texas banking can compete. I mentioned in December 6, 2008 that this down-turn is a good time to start investment banks in Texas. In December 24, 2008 I mentioned that Texas is weak in banking and needs to become stronger. The Amherst Holdings deal is a good example of how Texas banking and finance can tackle the big boys in New York.

In February 15, 2009 I mentioned that Texas needs greater strength in accounting and law to support a growing banking industry. In June 9, 2009 I described how Huntsman Corp sued Credit Suisse and Deutsche Bank and won over $600 Million. Huntsman is a good example of why we need great lawyers in Texas. Anytime you do business with the big boys in banking and finance you must be ready to go to court.

It is great to see businesses in Texas like Amherst Holdings and Huntsman playing on the big stage. It is important for the state of Texas that they compete and win.


Robert Canright

Here is a followup WSJ article, "Deconstructing That Daring Amherst Trade" and another article at Business Pundit.

TBAR: Texas, China, & a New Currency, Part 3

The Chinese government is definitely putting an end to the US dollar's reign as the reserve currency for the world. After Bretton Woods, the dollar became the reserve currency for the world. Since all governments hold dollars in their exchange reserves, the dollar became indispensable and governments were stuck with it when the US would run it down. This made it easier to sell debt (US Treasury securities) around the world and run an unbalanced budget. These days are coming to an end.

The New York Times reports on Tuesday, July 7, 2008, in the article, "In Step to Enhance Currency, China Allows Its Use in Some Foreign Payments," by Brad Bradsher, that China is not waiting for a synthetic currency to replace the dollar. The Chinese government is starting to introduce their currency, the renminbi, for foreign trade.

The whole world is concerned that the Federal Reserve Bank is beginning the destruction of the U.S. dollar. To protect the wealth poured into China by American businessmen, the Chinese government must break the world's dependence on the dollar and transfer their wealth into other currencies. This has been discussed in Part 1 of this series of articles. I mentioned in Part 2 of this series of articles that Plano, Texas, should participate in the creation of a new synthetic currency to replace the dollar in international trade.

If Texas participates with China in creating and managing a new reserve currency for the world, Texas will become influential in world finance and increase prosperity in Texas.

Robert Canright