Trust Texas: Taking a Stand Against Corruption

Establishing a reputation for honesty would improve business opportunities in Texas. I mentioned this in an earlier post in this blog: the Trust Texas Project. A recent article in the Wall Street Journal brings corruption back to the headlines: New Jersey Corruption Bust Had Deep Roots by SUZANNE SATALINE (Aug. 28, 2009). What an embarrassment for New Jersey this event must be. I was happy the scandal was taking place outside of Texas.

Maintaining honesty in politicians has always been a problem. Plato said we would not be free of political corruption unless we were ruled by philosophers, unless we were ruled by people who loved wisdom instead of money. That is a difficult order to meet!

I have suggested in the past that we have our children recite daily the Pledge to Justice in our elementary schools:

The Pledge to Justice
We do not steal, we do not cheat, and we do not hurt other people.
We are people of integrity, competence, and compassion.

Our children's future depends upon a political and economic environment permeated by honesty. We all need to work towards this end for the sake of our children.

Robert Canright

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

Cicero Project and Huntsman Corp

In January 2009 I said, "Our lawyers here in Texas must be the best in the world in litigation." Now on Wednesday June 24, 2009, the Wall Street Journal reports, in "Huntsman, Banks Settle for $1.7 Billion" by Peter Lattman, that Credit Suisse and Deutsche Bank settled the suit brought against them in a Texas state court. They agreed to pay Huntsman Corp., operating out of The Woodlands, $632 Million and extend a $1.1 Billion loan on favorable terms.

This is clear evidence that Texas lawyers must be prepared to litigate against the largest corporations on earth and win.

Texas must operate on the international stage. We cannot be just one more state in a crowd of 50 states. America needs a strong Texas, and for a strong Texas we must have the best lawyers on earth. That is a part of the Cicero Project within the Texas Ascendant Campaign: the best lawyers, but also lawyers with integrity and civic virtue.

Robert Canright

TBAR: North Texas Industrialization

I have been thinking hard about how our children can proper in the difficult times ahead. If we Texans think of ourselves as an independent nation, a sovereign state, then we can think about industrial policy.

Consider the United States of America at its inception. It was largely an agricultural economy with some shipping and a little manufacturing. Alexander Hamilton thought America needed an industrial economy to build wealth and power. As Secretary of the Treasury, on December 5, 1791 he submitted to the House of Representatives an article, Report on the Subject of Manufactures, describing the benefits of industrialization and methods to promote it.

If America could consider launching and industrial economy in 1791, Texas can certainly do it in 2009.

The National System of Political Economy by Friedrich List has been studied by Japan and China when they planned to grow their industries. Maybe we Texas should study and apply it.

The Wall Street Journal, Tuesday May 5, 2009, ran an article, "Indian Steel Forges in U.S." by Robert Guy Matthews that describes how the an Indian Company, Wellspun-Gujarat Stahl Rohren opened a $150 Million steel plant in Little Rock Arkansas. Why is that in Little Rock instead of North Texas? Is Arkansas more on-the-ball than Texas? Well, this does show that industrialization is possible in the South.

Trust by Francis Fukuyama describes on pages 102 -104 how central Italy underwent a small scale industrial revolution in the 1970's. It is the American way to copy what works. If the Japanese, Chinese, and Italians have demonstrated how to grow a world class industrial economy, then we should be able to copy them in North Texas.

Developing an industrial economy will be better for Texas than waiting for Washington to fix the economy.

An ascendant Texas will be wealthy Texas.

Robert Canright