The Recognition of Paul Krugman’s Achievement in Economics Sends a Message to South Texas
The recent announcement of the Economic Nobel Prize to Paul Krugman should be of major interest to those in the Rio Grande Valley of Texas. His analysis of free trade and globalization has shown that they are the natural result of more efficient economies of scale rather than misguided wrongful economic practices. Successful economic policy for nations requires specialization, large production capabilities to take advantage of economy of scale, and diversification of products. Instead of the old idea of building an economy about a particular advantage singular to the region the goal should be to improve the infrastructure as a whole to provide economic advantages for diversification.
Successful countries allow competition of similar products by large scale manufacturers. Economic centers develop in urban areas which are efficient because they have high concentrations of highly skilled workers who function in a specialized but diverse economically efficient environment. This means that successful countries will have major cities which are the “economic hubs surrounded by a periphery”.
The relative economic success of the Rio Grande Valley in recent years is due in part to its having low cost labor and a strategic location. The previously unidimensional agricultural economy that was present has been steadily replaced by more and more industrial development.
The Rio Grande Valley could be much more than it is now however. Community leaders have done the right thing in promoting local higher education to allow for a more skilled workforce. The ongoing work of the McAllen mayor, Chamber of Commerce, and City Commission in building an environment to promote a varied industrial base is key.
Improved transportation to the Valley has occurred from Mexico with better superhighways that have been built from Mexico City and Monterrey. The proposed Trans American Superhighway from Mexico to Canada that will run though the Rio Grande Valley needs to move forward.
Although compared with many other modern moderate sized cities, the road planning of the McAllen area is superior but there still exists no plan for modern low cost transportation. Valley leaders have in addition need to push the state and Federal government to improve rail service in and out of the Valley. Imagine the effect of a “Super Port” in Brownsville and a modern high speed rail service to Mexico and the United States through the Valley. The atmosphere of corruption surrounding the Brownsville Port Authority needs to end and the Valley as a whole needs to see the Port as a major hub of economic development.
Instead of quibbling among themselves over which little project goes where in the Rio Grande Valley it is in everyone’s interest to recognize that there will be hubs of development that are necessary for the overall interest of all. We cannot be a community of villages in the new economic world and expect to be competitive. We must be supportive of free trade because it is the only way that our average low wages will ever increase. We have too many politicians and interests in the Valley wanting to spend money on social projects instead of infrastructure which will ultimately do more for our working poor.
Tony Magaña grew up in McAllen Texas, attended Texas A&M University, holds a doctorate from Harvard University. The co-founder of Contempo Magazine has participated in Valley business for over 20 years.He is a member of the National Association of Hispanic Journalists.
