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Rx for Texas: Staying in Business in the 90s.

Rx for Texas: Staying in Business in the 90's.

David Ronin. In 1988, the giant Formosa Plastics Group of Taiwan, facing stiff environmental protests at home, decided to build its smelly new petrochemical plant where it was welcome: Calhoun County, Texas. The proud Lone Star State didn't merely accept the $1.3 billion project, expected to produce about 1,500 permanent jobs for Americans. Terrified of losing the plant, Texas dispatched economic-development delegations to Taiwan on bended knee, bearing promises of swift environmental approvals and a tidy $168 million package of tax abatements and other inducements.

Was the boom--the day when corporations begged for the privilege of building a plant in Texas--really just a decade ago? Will the state's economy ever recover? Will Texas ever again be ... Texas?

Prospects don't look terribly promising at the moment. The oil and gas business is still in the toilet. The struggling real estate industry is staring at a billion-dollar inventory of foreclosed properties from busted financial institutions that Uncle Sam's preparing to dump on the market. Texas banks and S&Ls are doing a little better; they're failing at a slower rate. And Texans are bracing for a double whammy from the untimely outbreak of world peace: the cancellation of corporate defense contracts and cutbacks--maybe even closings--at Texas military bases.

It is the Lone Star State that is the subject of David Ronin's book. But with the New England economy now in early freefall, the patterns of regional boom-and-bust resonate across America. Remember: Long before economic gurus pronounced Massachusetts a recession-proof miracle, they were calling Texas the promised land. Its decline started with its core industry, energy, then rippled into real estate and banking; substitute high-tech for oil and gas, and you see the very same pattern afflicting New England.

So Ronin's prescription for healing Texas might make interesting reading even for Yankees--if only it offered any real promise of a cure.

A Texas business writer, market researcher, and MBA, Ronin embraces the blunt "let-me-tell-it-to-ya-straight" style of offering his wisdom. Ronin is a self-styled "born-again Texan" (he arrived in 1971), and, with the passion of the converted, he offers a selfishly statist perspective. Texas's dependence on agricultural and oil exports has made it "an economic colony" for the rest of America and the world, argues Ronin. But oil and gas reserves are dwindling, and so is the underground water supply that makes farming and ranching possible on the arid half of the state west of Austin. More of the same simply cannot do.

The author persuasively dismisses solutions popular with public officials and economic-development specialists. High-tech projects are "relatively insignificant in an economy as large as that of Texas," he notes; opportunities to attract relocating corporations or foreign plants (like Formosa) are costly and rare.

But Ronin doesn't stop there. In sweeping rhetorical flourishes, he dismisses the economic value of defense contracts, military bases, and corporate branch plants--bulwarks of the post-bust Texas economy. "[I]t's probably a blessing in disguise," Ronin argues, "that small Texas cities lost out in the competition a few years ago to become the site of the General Motors Saturn Corporation facilities."

Those small Texas cities--now struggling with high unemployment--might well beg to differ. But Ronin insists such projects would make Texas an "economic junkie," dependent on outsiders "for another injection into its economic mainstream." Instead, as the central theme of his book, Ronin preaches the gospel of "bootstrap economics"--"pull[ing] ourselves out of this mess with our own hands," and becoming "economically self-reliant."

In Texas, that's a crowd-pleasing suggestion. And the handful of ideas Ronin cites for working toward that goal certainly makes sense: Intensive local efforts to support existing small businesses, since such companies produce most new jobs. A replica of the "Oregon Marketplace" program, which encourages companies buying goods out of state to find local suppliers. And expansion of a pilot Texas program to expand in-state processing of the state's agricultural harvest.

But Ronin's basic premise is misguided. If Texas can no longer afford to be a colony, neither can it afford to act as though it were still an independent nation. In modern times, as a clear-eyed look at the world reveals, economic self-reliance is impossible for a country, much less a single state. And to what end, even in theory, would Texas become economically self-reliant? Does it serve a national interest for Texas to take jobs away from Ohio?

Rx for Texas offers little that could make a significant difference during the 1990s. Ronin expresses dismay at the state's failings in public education, but offers few specific suggestions. He says nothing about boosting productivity--except that he's for it.

Perhaps more than any other group of Americans, Texans truly believe that through grit and hard work and sheer force of will, they can shape the world and alter history. But the harsh reality is that Texas, like other regions, is inevitably subject to the boom and bust of economic cycles. It makes far more sense to recognize that reality than to tilt at windmills.

David Ronin's biography gives some evidence that he has learned that lesson himself. His book jacket reports that at one point he became an entrepreneur, but his business "fell victim to a breach of contract. After finding out the hard way how much it costs to maintain a lawsuit, he decided it was cheaper in the long run to become an attorney himself." Ronin is now a student at the University of Texas Law School.
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Author:Elkind, Peter
Publication:Washington Monthly
Article Type:Book Review
Date:Mar 1, 1990
Previous Article:The Decline of American Parties 1952-1988.
Next Article:Blooperfund; that's supposed to be cleanup, not coverup.

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