
          Texas Finds Home-Grown Is Best
          By Hightower, JimJim Hightower
          Vol. 9, No. 3, 1987, pp. 9-15
          
          Everybody, of course, is all for economic development, but
traditionally what that has meant is economic development for the few
and the rest of you get in line-the "take that old cold tater and
wait" plan.
          Now I know some will wonder what an agriculture commissioner has to
say to them on economic development-after all most people don't own a
pen of hogs or a field of corn. But as that old bumper sticker reads,
"If you eat, you're involved in agriculture." However, my
message is not about cows and plows, but rather about plowing up
common ground, about planting new seeds of economic growth in our
region, and, if we do it right, throughout this nation.
          My message is simply this: the economic future of the South does
not rest in the continuing pursuit of high-tech, high-cost
pie-in-the-sky deals that are being shopped by national conglomerates
going state-to-state to see what kind of deal they can get. Rather we
ought to be putting our resources, public and private, into
grunt-level, here-and-now economic development programs that invest in
our own people. People who are already here.
          We need to be investing at a grass-roots level in new enterprises
that are based on small- and medium-sized businesses, that are based
on workers in their unions and in cooperatives, that are based on
small farmers and community enterprises, that are based on the
entrepreneurs and on the wildcatters in our society. Not the powers
that be, but the powers that ought to be. And the powers that can be
if we just put a little bit of investment out there and lay some tools
down that people can pick up. This is not trickle-down, but
percolate-up. It is a policy of clearing a broad foundation out of
small- to medium-scale enterprises on which communities can build for
years to come.
          Needless to say, this is not what we have been doing in the country
at a national, state, or even local level. Really what we've got now
is an approach to economic growth that says it's okay to help the rich
get richer. That puts government in the pocket of the big boys and
never holds them accountable for the results that they produce for the
larger public. Basically, we're talking about a perverted public
policy of greed. An attitude of "I got mine, you get yours. Never
give a sucker an even break. Caveat emptor. Adios chump." That's
pretty much what it comes down to.
          For the past six years, of course, at a national level we've called
this policy Reaganomics, with the predictable result that rigor mortis
is spreading throughout our economy. The apologists on the other side
say, "Nonsense, Hightower, look at this, the economy's just
booming. Here's the head-

line from an April Dallas Times-Herald, 'Dow Passes 2400 Mark. Wall Street's
record-breaking bull market zipped past yet another milestone of the
history books Monday as the Dow Jones Industrial average closed above
2400 for the first time.'"
          By their standards, America's standing tall. The economy is
booming. Wall Street's whizzing.
          And it is, it's whizzing on us, because if you look down here right
beneath that headline it says, 'General Motors to lay off 2,000
workers at local plant.' And right over here in the column right
next to it it announces that Safeway is going to be closing 141 stores
in north Texas.
          Reaganomics has created a boom but for whom? Who is profiting?
Stockholders, they say. Those little democrats out there who own
America's great economic fortress. Well, eighty-one percent of all
U.S. households own no stock at all. And if you want to look at it the
other way, eighty-five percent of all stock is in the hands of the
wealthiest ten percent of U.S. families. In fact, forty-three percent
of all stock is in the hands of that one-half of one percent of
families that make $280,000 and more.
          Do you want to know who's really making money out of this whizzing
that Wall Street is doing? In 1981, only four corporate executives
made more than $1 million in salary and other compensation. In 1985 we
had 146 executives making more than $1 million. Those shiny new leaves
at the top of the tree are looking mighty pretty as we continue to
sprinkle and polish them with our governmental policies.
          But you know you can't keep a tree alive by watering it at the
top. Meanwhile down here at the roots our economic tree is dying. Now
I'm not talking just about poverty, not talking just about the
illiterate, the unable, the folks who just gotta have welfare. I'm
talking about our most productive people, the middle class that is
supposed to be the hallmark of our economy. I'm talking about the
workers and the businesses that we've been counting on to make this
economy actually run over the years.
          Of course, as a commissioner of agriculture I work out there with
those dirt farmers, you know, and probably six years ago they voted
for Ronald Reagan. He was promising a seven-course dinner and they
didn't know until later it was a possum and a six-pack.
          In the intervening six years we have lost a half-million
U.S. farmers. In my state alone we've lost 49,000 farmers-17,000 in
the last two years. That's ten percent of all the farmers in our
state, but it is one-third of the full-time, commercial, family-farm
operators who have gone bankrupt, who have had their farms, their
productive assets, their economic potential and that of their families
and their future generations, stolen from them by government policy
that establishes a price on their commodity that is about one-half of
what it actually costs to produce that commodity.
          With those disappearing farmers have gone the local implement
dealers, hardware stores, and government services that are financed by
the taxes of people on the land-when they're able to pay taxes. And we
have had the greatest collapse of banks in the United States since the
1930s.
          Bankers are now beginning to understand their direct tie to those
productive families that are being wiped out as a matter of Washington
economic policy. The farm families are going down. People who six
years ago had a cash flow and considered themselves a full member of
the middle class now find themselves out of business and often off the
farm.
          Working families are involved in the same struggle.
          Ronnie Reagan did promise to get American industry moving again,
and he has-it's moved to Japan, to Brazil, to Korea, everywhere except
within our own country. Since 1978 we have lost 11.5 million
manufacturing jobs. Some of which have been replaced by service
economy jobs that pay only forty-five percent of what the
manufacturing jobs paid. It seems that forty-four percent of the jobs
created under Reaganomics now pay poverty-level wages, $180 dollars a
week or less. And thirty percent are part-time jobs. And two-thirds of
the people filling those part-time jobs are people who want and need
full-time work.
          Well, we have the minimum wage.
          In 1968 a minimum-wage earner could make ninety-four percent of a
poverty-level income. Today a minimum wage earner makes about
sixty-two percent of a poverty-level wage. And that's if you're
working at all. None of us are more than about two paychecks from
poverty. If you do get laid off, you've got only a sixty percent
chance of finding a new job. That's unless you're black. If you're
black you've got a forty-one percent chance. And if you do get a new
job, it's going to pay eighty percent of your old wages.
          Not surprisingly what this adds up to in our society for the first
time in fifty years is a national policy of downward mobility. From
1965 to 1973-a period of rising expectations in our society, a period
during which the bad old government was on our backs, remember-annual
incomes for families with children rose by twenty-three percent. In
1985, the annual income of those families was 6.6 percent less than it
was twelve years ago. And for the poorest twenty-four percent of
Americans, it was one-third less than it was in 1973. From the 1940s
through the 1960s, people at thirty years of age were making a third
more than their parents were making a decade earlier. Now people at
thirty years of age make only ten percent more than their parents made
ten years ago. In 1973 it took twenty-one percent of the gross monthly
wages of a thirty-year-old worker to buy the average home. Today it
takes nearly half of his or her gross wages to buy a home.
          We're talking about downward mobility in our society. The decline of the middle class. We're not talking about 

people
coming up out of poverty but people falling down into poverty in
greater and greater numbers. In Texas from 1981 to 1986 we added
891,000 people to the poverty rolls. That is the population of a city
bigger than Dallas that previously was in the middle class and is now
officially on the poverty rolls.
          What in the world's going on?
          An old singer in Texas years ago wrote a tune that went like this:
"Little bee sucks the blossom but the big bee gets the
honey. Little man picks the cotton but the big man gets the
money."
          What we really have today as a result of Reaganomics is freedom for
the capital to flow into what some are calling a casino economy,
essentially money chasing its own tail rather than being invested in
enterprises that create new growth, new jobs, new products, new
productivity, new competition, new wealth for our people.
          Last year there were 4,022 mergers, leveraged buyouts and takeovers
in the United States of America. More than four thousand companies
bought by larger companies, soaking up $190 billion in capital. In the
last three years, nine thousand companies changed owners at a cost of
nearly $500 billion in capital. For what? They didn't build any new
plants. They didn't create any products. They're not doing new
research. They're certainly not hiring new people. They're not adding
new competition to our society. They're not decentralizing wealth.
          They're paper shuffling, that's all. The lawyers, account brokers
and bankers have achieved hundreds of millions of dollars in income
through non-productive fees associated with these transactions that
build nothing. Shareholders-that ten percent of America that owns
eighty-five percent of the shares, or that one-half of one percent
that owns forty-three percent of the shares-split $20 billion in
profits out of those mergers. Twenty billion dollars in profits for
which they did nothing. They created nothing.
          We have a little case study right now down in Texas with the buyout
of Safeway corporation. There's a company called Kohlberg, Kravis and
Roberts-not exactly a household name. But it is an investment
syndicate that since 1979 has made about two dozen buyouts. In 1986
they bought Beatrice Foods, which at the time was the largest food
conglomerate in the U.S., for $6.1 billion. Beatrice had previously
bought Norton-Simon for $1.1 billion and Esmark Corporation for $2.8
billion. Now those are all one company under Kohlberg, Kravis and
Roberts. Ten billion dollars spent to create nothing except they are
now the largest food conglomerate in America, built on financial
finagling.
          Who pays for this? Well, we're going to pay for it, because as a
means of paying off that leveraged buyout Kohlberg, Kravis and Roberts
is shutting down three thousand Safeway stores and unemploying thirty
thousand people. The United Food and Commercial Workers Local in
Dallas, representing some 8,500 workers in Safeway alone, was told
initially to expect a five dollar average pay cut and then later was
told that those 141 stores were going to be closed and/or sold.
          Those that are going to be sold are going to be sold largely to
non-union or anti-union companies that have no interest in picking up
those workers. If they do get hired they're going to take much less
pay than they were getting under the union contract and two-thirds of
those workers stand to lose their retirement and pension benefits.
          Safeway is hardly alone in this process. In fact, in the pension
playing that's going on there are some ten thousand pension
funds-covering some ten million workers-that have insufficient assets
to fulfill the promises that have been made. And there's just example
after example of that. Here's LTV, Inc., when it declared Chapter
Eleven bankruptcy last year announcing that of course they were going
to have to do away with some of the pension programs and health
benefits of the workers. But they also announced that while they were
doing that they were also going to give performance awards to their
executives to the tune of $829,000. The chief executive, in fact, was
to get a $165,625 bonus for his work in driving the company into
Chapter Eleven and he was going to get a $2 million life insurance
policy and a golden parachute worth 150 percent of his annual
salary.
          Here's the Eddie Chiles corporation, the Western Company of North
America, talking of cutting its employee pension benefits at the same
time it was implementing a plan to give key executives bonuses ranging
from thirty to fifty percent of their annual pay. Texas American
Corporation freezing the pension of their workers. General Motors
announcing that its profits were down 31 percent and that it therefore
could not pay workers the production bonuses that they were entitled
to, but GM would of course be able to give 5,700 top executives some
$169 million in bonuses.
          So, you get the sense of it. At the same time corporations overall
have stripped employee pension funds in this country of nearly $16
billion in assets in the last ten years-and there is another $145
billion in promises on pension plans 

and health benefits that they
have set aside no money to provide for.
          If you did to a 7-Eleven what these folks are doing to our economy,
you'd be doing ten to twenty down at the state penitentiary. But
they're getting away with golden parachutes, more money, buying Jaguar
cars and feeling good about themselves. That's the situation we're
in.
          What are we going to do about this? Well it seems that we have a
couple of things to do.
          First, we can be developing our own enterprises.
          I use agricultural examples because that's where I come from. In
Texas, we've been working with farmers, small business people, poor
people, and local officials to try to do three things.
          One, help farmers sell what they produce. It seems obvious to do
that, but it has not been a focus of agriculture policy in the
past. Instead, we've tried just to produce more-higher yield out of
each seed and out of each acre, never worrying what we're going to do
with the yield once it becomes a surplus and nobody's buying it.
          Now we're trying to help folks sell their yield. Part of this is
localizing our economy again. For example, when we started our first
project in Houston, Kroger Corporation was importing watermelons from
Florida. Meanwhile, Texas melon farmers were losing sixty percent of
their crop because they didn't have a market for it. It was rotting in
the fields. What little they did sell was out of a pickup truck on the
side of the road, getting a penny a pound for it.
          So we persuaded Kroger to try Texas melons and we organized a coop
to handle the distribution. In 1984, the 

first year of that co-op, we
sold Kroger every melon the farmers produced, 500,000 pounds of
watermelon, not at a penny a pound but at seven and a quarter cents a
pound, a negotiated price. Those farmers had a 165 percent increase in
their income as a result.
          The consumer benefited because instead of paying $3.50 for that
Florida melon they got that sweet Walker County melon for $1.98. And
the money they spent stayed right there doing good and rippling though
that local economy. This year those farmers are producing a million
and a half pounds of watermelon and other crops not only for Kroger
but for distribution to other supermarket chains. We've got dozens of
these co-ops in the state of Texas now organized to sell directly into
the market that's already established within our state and now even
going out of it. We've got the Pathmark chain in the Northeast buying
directly from low income Mexican-Americans in the Rio Grande valley,
who are able to get four times what they were getting down at the
packing shed for their squash and peppers by selling it directly to
Pathmark. And Pathmark gets a cheaper price than they were getting and
a quality that meets their specifications. We can do that across the
board. We've got beef co-ops, all kinds of co-ops that are involved in
this business.
          Then another step that we are taking in marketing is going
international. There's no reason the South and individual states can't
form their own foreign relations. You don't have to go through the
State Department for this. We made a formal agreement with Mexico
called the Mexico-Texas Exchange Commission. We are organizing trade
projects, joint ventures, dealing in educational programs with each
other, solving bureaucratic problems, going direct to Mexico. We've
done the same thing with Israel. We're about to do it with
Italy. We're finding markets around the world directly from our
state.
          The federal government's international trade development policy for
agriculture amounts to hoping that the Russian wheat crop fails and
that Cargill and the big conglomerates can make a sale to them, rather
than going out there and finding small purchases that these people
want to make and bring them home. Of course we've got an advantage in
Texas-we've got a high volume of production, diversification, and an
awfully good-looking agriculture commissioner. That may give us a leg
up, but other states can do it, too, and we can begin to do put
together some international trade programs as a region.
          In addition to marketing we can work with people throughout our
economy to diversify what they produce. There's no reason all of our
blueberries have to come from Maine and Michigan. We can produce
blueberries in Texas and now we're doing it. Blueberries are going to
be a $50 million a year crop for us. You can make a living on forty
acres of blueberries in our state. In fact if you diversify your
acreage and set aside maybe four acres for blueberries you'll make
enough on that four to subsidize the cow and wheat operation that
you're running on the other four hundred acres that you might have. We
have west Texas farmers farming two sections of land-that's two square
miles-who have been producing wheat and going broke. Now they are
producing sprouts on an area about the size of a kitchen table and
making a ton of money off that sprout production.
          The point is to find things that you can make money on. We're not
opposing what another state is doing but we are trying to regionalize
and localize our economy in a way that makes sense for little folks
out there.
          The third step that we are taking is building food and fiber
processing facilities. The South has done a poor job of this. We have
grown the raw commodities and shipped them to Chicago and Philadelphia
and Los Angeles where they chop it up, put it in a box, freeze it, and
sell it back to us at a hundred times what we sold it to them. We can
get into that business ourselves. We have wheat farmers on the high
plains of Texas that this year will mill the first flour to be milled
in the panhandle in a generation's time. We were producing wheat which
was selling to Kansas because they're wasn't a flour mill within 150
miles of Amarillo. In Kansas, they were making Texas wheat into plain
old white flour in barrels and selling it back to hotels and bakers in
Amarillo for twenty-eight cents a pound. For every twenty-eight cents
a pound that Amarillo consumers bought they were sending twenty-three
cents to Kansas because the Texas farmers were only getting a nickel a
pound.
          Now those farmers are building their own enterprise in Dawn, Texas,
outside of Amarillo that is going to make 300,000 pounds of flour a
day. That'll make a pretty good biscuit.
          We're not talking about a science fair project; this is a real
enterprise that will put $10 million a year into Dawn and in its first
year of operation will create fourteen jobs right there. Now that
doesn't solve Texas's unemployment problem but it takes care of it in
Dawn pretty well. Instead of worrying about the global situation,
let's worry where our people live. A little bit here and a little bit
there will add up.
          Rice farmers in the Gulf Coast area who have been going broke
producing rice get about four cents a pound have moved into
crawfish. Texas is a crawfish-deficit state, believe it or not, but we
can produce crawfish and get seventy-five cents a pound for them in
the same area where we produce that rice. And all you do is put a
little bad hay out there in that rice paddy and throw some crawfish in
and come back later with some nets. But then we've been sending our
crawfish crop over to Louisiana, which was cutting the heads off the
crawfish and deveining them, putting them in a box, freezing them and
selling them to Houston at wholesale for $7.50 a pound. Now maybe
we're not too bright in Texas, but we can dehead crawfish. We're 

about
to be in the crawfish processing business in Port Arthur.
          My point is, if you have lemons, make lemonade.
          We have a lot of lemons throughout the South on which we can build
enterprises. I work on behalf of agriculture, but opportunities also
exist in all kinds of industries. We can have a decentralized economy
that's environmentally sound, that generates wealth at a local level,
that has not only jobs but good-paying jobs that are upwardly mobile,
that allows a local, diversified, abundant management opportunity for
little people to be involved. It doesn't have to be owned by some
conglomerate. We can do this ourselves and our people can be the
managers and the owners.
          The role of the state is to be a catalyst. First you must recognize
that there is a role for the state and you must stand up and say
that. People understand that. They're ready for it. They want help; if
it's pragmatic help that's going to benefit them and their community,
then they like to see the government working side by side with
them.
          Reagan said a couple of years ago that there was some lag in the
economy but the magic of the marketplace was going to take care of
it. The problem is that the magician performs an illusion. You cannot
eat or pay your bills with an illusion. Magic has nothing to do with
the marketplace, which works because of a lot of hard effort and a lot
of good luck. It is a proper role of government to serve as a
catalyst, working with local folks to create a pool of capital so they
have the financing to do what they are wanting to do in an enterprise
that makes economic sense.
          You aren't putting people in business to fail. You have work on the
market development so what they produce actually has a market,
preferably one that is already established and signed for before you
build a processing facility. The object is not to put money in a few
pockets but to generate for our region a substantial, sound,
diversified economy where real money is made, is in the hands of a lot
of people and stays in the region.
          Some people say, "Now, Hightower, these are cute little projects
but we have big economic problems. We need big industry coming in
here."
          I saw where Kentucky spent $77 million of its economic development
money chasing the Saturn auto plant that located in Tennessee [see Southern Changes, Oct./Nov. 1986]. Most states,
including mine, were in that chase, all competing against each other,
telling General Motors we will build you a railroad spur, we will give
you free utilities, we will get you some water, we will train your
employees, we will knock wages down, we will take your laundry out-
whatever you need. Please come here. What was GM promising? Six
thousand jobs were going to come with this, a great economic boom for
any state. We all cheered and we should. You've got to pursue those
things. But it turns out, of course, that now in Tennessee where that
plant is being built that the economy is such that Saturn doesn't look
like quite the deal that it was. Now they are talking about three
thousand jobs and a lot of those workers are going to be shipped in
from other plants throughout the United States.
          I looked last summer at three little projects in the Rio Grande
valley, an area where real unemployment is between thirty and fifty
percent-a desperately hard-hit economy. Two of the poorest Standard
Statistical Metropolitan Areas in the nation are in that area. One
project was a redfish hatchery and processing facility that is being
built in the little town of San Benito. The second was by low-income
Mexican-American cucumber producers who had been selling cucumbers to
the local packing shed which shipped the cucumbers to Chicago where
pickles were made of them. Now these farmers are building a pickle
factory. The third project was a new enterprise making newsprint out
of a plant called kenaf. Those three projects-the kenaf
facility, a pickle farm, and a redfish farm, will put $157 million in
first-year sales and create 3,800 jobs for the people in that
region.
          This is real economic growth. Texas now does six percent of the
nation's food processing. You have a similar situation in any state in
the South. If we were to do just one percent more it would put $3
billion a year in sales into our economy and create ninety thousand
jobs. The thousands and thousands of jobs and billions of dollars we
have to generate will come from small enterprises, not conglomerates
moving out from other states down to us.
          To do that will require that we alter our national and state
policies.
          One vital area of work is capital formation, to counteract the
capital being siphoned off by the federal deficit or by this 

casino
economy. Congress needs to look at the Federal Reserve in terms of
national policy. Congress needs to mandate some
"greenlining"-guaranteeing that a certain amount
of a bank's assets or loan portfolio has to go to community
enterprises and small business, to new enterprises, to co-ops, to
union efforts in plant buyouts.
          At a state level we can create, as we are doing now in Texas,
small-enterprise growth funds. It's time to generate some public
projects again. We need the jobs. The economy is down. Many things
that need to be done are relatively inexpensive to do and now is the
time to invest in them. All those conservatives talking about the big,
bad government are walking down the river walk in San Antonio
marveling at how beautiful it is, and it was built by the WPA in the
1930s. We need to have those kinds of programs again. They do not have
to come from a national level. We can do them at a state level as
well.
          Finally, we need to look at worker investment. The United States'
greatest economic advantage and most underutilized asset is its
workforce-not based on its cheapness but based on its intelligence,
its adaptability, and its gumption to make things work. The workforce
is there. As much as eighty-five percent of the workforce for the year
2000, a dozen years from now, is already working. These are the people
in whom we must make the investment of basic education programs, not
cutting back on our public schools and higher education and technical
colleges and vocational programs. We should put those loan and grant
programs back out there so a typical family can get the kid into
school again. Then we need training and constant advancement within
the workforce. We need portable pensions that go with the worker, not
with the job. We need child-care at an affordable level that meets the
needs of families who are having to earn two incomes to make ends
meet. We need health care.
          The American public understands that need because they are the ones
who are needy. We need not be afraid of advocating these things at a
state and at a national level. The people are way ahead of the
politicians. You go out there and talk these things and you will be
supported on them.
          Our programs will work if we base the nation's growth not on the
Rockefellers, but on the little fellers. It will work because it taps
genius instead of greed.
          There is a moving company in Austin that has an advertising slogan,
"If we can get it loose, we can move it." That is what we are
talking about. If we can get this economy loose at a grassroots level,
the people will move it themselves. 
          
            Jim Hightower is the Texas Commissioner of
Agriculture.
          
        