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A Public Service Message from the American Income Life Insurance Co.Waco, TexasBernard Rapoport, Chairman of the Board and Chief Executive Officer A Progressive Plan For Economic Development By Meg Wilson Texas is at a crossroads. That is obvious. But the direction we should take is not. Even now when the evidence is clear that oil and gas revenues will never again be the mainstay of the Texas economy, there is not a consensus on the direction state government should go to best exercise its responsibilities to Texas residents. Though times may get better for the economy generally, they will not get better for state government without some structural change in our. revenue base because higher oil prices in the future cannot overcome lower and lower production rates. On his most optimistic days, Bill Fisher of the Bureau of Economic Geology says that production will only decline 1 to 2% per year. When he first said that oil was at $30/barrel. Economic diversification is the watchword of the day. But for that to happen a very pro-gressive ‘climate is called for pro business, pro consumer, pro social services, and pro education. We are a far distance from that progressive climate there are numerous disincentives and market gaps in our system that will take multiple strategies to remedy. Those strategies require killing a few sacred cows and breeding some new ones. This brief overview will summarize the structural and traditional barriers in Texas to economic diversification and suggest a few ways to hurdle those barriers. EDUCATION 1.Texas has an unfortunate tradition of antiintellectualism. Because of that U.T. was blackballed by federal agencies and foundations in the 40’s and 50’s, losing an opportunity to recruit bright faculty and obtain federal research and educational funding. 2.Texas has a tradition of supporting access before quality in higher education. In the mid-seventies there was enough money around to believe that both goals could be achieved. In tight budget times, they become mutually exclusive unless structural changes are made. 3.Diana, Hobby put it best when she said that the history of Texas is a history of things ‘men do outdoors. This has led to controversy over the policy of “no pass, no play,” a policy that should never have been otherwise. As a Waco coach put it to a Texas Senator, “I’d rather have my kid well adjusted than well educated.” . . . Boys play sports, girls sit on the sidelines and neither is well educated enough for a hard-driving, world-wide economy. 4.Our legislature has never understood that research is an integral part of teaching as well as an expansion of the knowledge base from which teachers teach. Though they guffawed at research on the sex habits of fruit flies, they laughed no longer when it was Texas that knew how to combat California’s Mediterranean fruit fry infestation. Meg Wilson is the Science Technology Coordinator for the Governor’s Office of Economic Development, and is a Director of the Texas Lyceum Association, a non-profit organization 5.Our universities and our legislature have only recently begun to understand that education in general and our universities most specifically have a role in economic development one that they are still reluctant to accept and adapt to. 6.There are some onerous red-tape requirements for our faculty which make it hard for them to do their jobs hard to travel, use the phone, use a computer, purchase research and teaching equipment and hard to network with potential funding sources. We don’t define research as a legitimate part of faculty workload, even in graduate schools where research is a primary teaching activity. 7.We have created a double standard that says that any degree from a two or four year school is valued more than technical training, even though the technical training may be in more demand in the job market, bring a higher salary, and require a more rigorous educational experience. ECONOMIC DEVELOPMENT 1.The business of Texas government has been to stay out of business. Thus our state government spends less on economic development than most of our major cities, and states such as Delaware and Rhode Island have larger economic development budgets than Texas has. We also have a very decentralized system which makes coordination and leveraging of our scarce resources difficult at best. Effective use of our appropriate resources was less important when the Texas economy was booming and active economic development was a little like watering in the middle of a thunderstorm. The situation is quite different today and has been for at least the past 5-6 years. Other states have active economic development programs designed to assist small business, promote science and technology development, aid women-owned and minority-owned businesses, actively train technicians and provide advanced degree continuing education programs through night or business development in other states puts our businesses at a competitive disadvantage for domestic and international markets, all other factors being equal. 2.The Texas banking community, on the whole, has not been friendly, aggressive or progressive in lending to small businesses, especially technology-related businesses. Even a company following a classic pattern, shaky bUt growing, with orders in hand, has trouble getting a working capital loan worth two-thirds the value of the orders. The loan requests were obviously within good lending practices because Texas companies have gotten their capital from banks in other states. created to foster leadership for Texas. This article first appeared in the Autunm,1986 issue of Lyceum: The Journal of The Texas Lyceum and is reprinted with permission. 16 FEBRUARY 20, 1987