Let Us Keep the Essence of America

There is a robust African community in Dallas and my wife has been on a kick lately for Ethiopian restaurants, to which there are many. Being that we are married, well, I get to tag along.

The last restaurant we went to was not Ethiopian, but Eritrean, which was a part of Ethiopia but broke away in the early 1990s after a decades long civil war. After our meal, the owner approached us to ask if we liked our meal.

We assured him that we did, and then the topic of how and why he opened his business came up. It turns out that he and his wife came to the U.S. three years ago via the Diversity Immigrant Visa program, a government lottery program for receiving lawful permanent residency, informally known as a “green card.”

The Essence of America

He was a lawyer and a judge back in Eritrea. While I will not use the same terminology as our president in describing any country (President Lyndon B. Johnson referred to Vietnam as “that damn little pissant country.”), I can tell you that a casual reading about Eritrea indicates that it is a very repressive country, rivaling that of North Korea.

But what impressed me most about our host was his positive outlook about this country and becoming an American. To him, America was still very much the land of opportunity, of freedom, and where hard work would pay off for him and his family. He had every intention of living the American Dream.

Back in the car driving home, I told my wife, “My God, we need more people like this in our country, not less. This man represents the lifeblood of America, the essence of what this country is about. We cannot lose this or we will lose ourselves.”

Nativist Movements

If you look at our history, we have had our share of nativist movements. The subscribers of this organized xenophobia hold a shared belief that immigrants pose a threat.

During the late 1840s and the early 1850s, there was The Know-Nothing Party, also known as the American Party, empowered by fears that the country was being overwhelmed by Catholic immigrants who were hostile to American values and controlled by the Pope in Rome. The Irish in particular were singled out. (Watch the movie Gangs of New York.)

In 1875, Congress passed the Page Act, also known as the “Asian Exclusion Act,” and in 1882, it passed the Chinese Exclusion Act, which was renewed in 1892 and 1902. In 1890, Wisconsin passed an act known as the “Bennett Law,” which threatened to close hundreds of German-language elementary schools.

In the 1920s after World War I, the nativists focused their attention on Catholics, Jews, and south-eastern Europeans. A book by Madison Grant, The Passing of the Great Race, gained notoriety, in which Grant argued that the American racial stock was being diluted by an influx of immigrants from southern and eastern Europe.

In the 21st century, the Tea Party shifted its primary focus from deficit reduction to immigration, declaring President Obama’s decision to enact immigration reform through his executive powers as “amnesty for millions, tyranny for all.”

Which brings us to today’s political climate.

Stubborn Things

But before I go there, how about a few facts to chew on? President John Adams said, “Facts are stubborn things,” and, indeed, they are. But sometimes, they show us the way.

Analyzing data for 2017, the Center for American Entrepreneurship found that 43 percent of Fortune 500 companies were founded or co-founded by an immigrant or the child of an immigrant. CAE found that the occurrence of first- or second-generation immigrant founders is significantly higher among the largest Fortune 500 companies – accounting for 52 percent of the top 25 firms and 57 percent of the top 35 firms.

Immigrant-founded Fortune 500 firms are headquartered in 33 of the 50 states, employ 12.8 million people worldwide, and accounted for $5.3 trillion in global revenue in 2016.

These American powerhouse companies founded by immigrants or their children include Dow, AT&T, DuPont, Levi Strauss, Anheuser-Busch, Pfizer, Goldman Sachs, Sun Microsystems, Google, Yahoo, eBay, YouTube, PayPal, Tesla, Facebook, and LinkedIn.

What the heck, let’s name a few more – Home Depot, United Parcel Service, Northrup Grumman, General Dynamics, Procter & Gamble, Comcast, Kraft Heinz, Lockheed Martin, Merk, Costco, Apple, Walt Disney, and the current holiest of holies, Amazon.

Job Creators on Main Street and Wall Street

Immigrant entrepreneurs have also made their mark their mark on Main Street. Among small U.S. businesses, almost 20 percent were founded by immigrants.

At a time when the number of new firms as a percentage of all firms has fallen near a four-decade low, immigrants are twice as likely as native-born Americans to start a new business. Though just 14 percent of the population, they account for a quarter of all business owners.

According to an analysis by U.S. News and World Report, immigrant small businesses are responsible for 10 million jobs in this country. If you extrapolate that to large businesses, it means immigrants and the children of immigrants are responsible for 50 million jobs. That’s 40 percent of all jobs attributable to less than 14 percent of the population. That, my friends, is economic development.

Think about that Eritrean restaurant owner in Dallas for a moment. The idea of leaving one’s home country to go to a different country, with a different language and culture, that in itself is the epitome of risk taking. That takes, forgive me for using a rather course but accurate Mexican-American slang word, cojones.

Pushing Entrepreneurs Away

In his State of the Union speech, President Trump stressed the need for a “merit-based immigration system — one that admits people who are skilled, who want to work, who will contribute to our society, and who will love and respect our country.”

And yet, the Trump administration is considering rescinding the International Entrepreneur Rule (IER), which allows foreign entrepreneurs to build their businesses in the United States if they meet certain criteria and are vetted by the Department of Homeland Security.

In a letter to the president, the National Venture Capital Association, along with 31 other business groups, urged the president not to rescind the IER.

“Twenty years ago, our country’s share of global venture investment was 90 percent, but that number has dropped precipitously to 81 percent in 2006 and to 53 percent in 2017. In 2016, China was home to six of the 10 largest venture capital investments in the world. If we continue to push entrepreneurs overseas, our share of global investment will continue to decrease.”

In a recent analysis of a immigration reform plan offered by the White House, the Cato Institute concluded, “The plan would cut the number of legal immigrants by up to 44% or half a million immigrants annually—the largest policy-driven legal immigration cut since the 1920s. Compared to current law, it would exclude nearly 22 million people from the opportunity to immigrate legally to the United States over the next five decades.”

Note that we are talking about legal immigrants.

Final Thoughts

Nativism, the basis of which is prejudice against immigrants due to their color, ethnic and religious backgrounds or country of origin, does not make logical sense. It certainly makes no economic sense.

And it is also counter to who we are as a people. I actually believe in American exceptionalism. I believe in the everlasting dream, the promise of America. If you take that dream away, we are no longer what Ronald Reagan called “that shining city on a hill.” We’re just another country.

I’ll see you down the road.

Dean Barber is the principal of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. Dean is available as a keynotes speaker and can be reached at dbarber@barberadvisors.com. Visit us at http://www.barberadvisors.com to learn more.

That Was the Week That Was

Wall Street had its freak-out and a new space race was born. What a week. With a little bit of luck, I can bring these interesting new developments “down home” and show how they may affect us all.

Let’s first look at the wild ride last week on Earth, on Wall Street to be precise, leaving many of us scratching our heads and wondering what was going on.

What we have learned is that good news on Main Street – that the U.S. economy added 200,000 jobs in January and that wages grew at the fastest pace in eight years — can be viewed bad news on Wall Street.

For investors, the long dormant fear of inflation was revived – that bigger paychecks might mean bigger price increases and eventually bigger rate hikes on the part of the Federal Reserve. That would be bad for business and the economy at large, which means most of us.

No doubt, investors had become a bit complacent with the stock market rising and never suffering a bad loss. The Dow and other major stock market indexes hit record highs on Jan. 26. The S&P 500 was up 7.5 percent in 2018, with the Dow industrials up 7.7 percent and the Nasdaq 8.7 percent. Amazon and Netflix had sprinted 20 percent and 43 percent.

But last week was crazy. The Dow average experienced two drops of more than 1,000 points and two gains of more than 300 points. The Dow and the S&P 500 both ended the week 5.2 percent lower, their worst performance since January 2016.

What are We Seeing?

Wall Street uses different words for a drop in the markets, all with different shades of meaning. Are we seeing a “dip,” a brief downturn from what has been a long-term uptrend? Or are we looking at a “crash,” a sudden and very sharp drop in stock prices, which while rare, do happen after a long-term uptrend.

Perhaps we are experiencing what most analysts are calling a “correction,” defined as a 10 percent drop in the market from recent highs. Then again, we might be in the early stages of a “bear market,” a long, sustained downturn in which losses will surpass 20 percent from the market’s most recent high.

I doubt that anybody truly knows right now. I cannot help but recall the words of John Kenneth Galbraith who said, “The only function of economic forecasting is to make astrology look respectable.”

A Lack of Serious Leadership

And while the fundamentals of the economy appear to be very good, I do worry that our nation’s debt, now at over $20 trillion and growing, is not being addressed in any serious manner by policymakers in Washington, D.C.

And therein may be another underlying cause for the jitters on Wall Street – nobody, it seems, is minding the store, the ship of state, in a competent manner. I quote from the New York Times from last week:

“Republicans propelled themselves to power in Washington by promising an end to fiscal recklessness. They are now embracing the kind of free spending and budget deficits they once claimed to loathe.

“Congress is debating a bipartisan spending deal that would blow through the caps imposed by the 2011 Budget Control Act, unlocking $300 billion in additional spending for the military and domestic programs over the next two years. That comes on top of last year’s $1.5 trillion tax cut package and as the White House prepares to unveil Monday a $1.5 trillion infrastructure plan that would require $200 billion in government funding.

“While the White House says it plans to offset that $200 billion through unspecified cuts, none of the other spending is paid for at a time when the nation’s debt already tops $20 trillion.”

Some day the chickens are going to come home roost, and I fear that it’s going to get very, very ugly.

Now let’s go onto something a little more uplifting.

A New Space Race

Somewhere floating out there in outer space is a red shiny 2008 Tesla roadster with a space-suited mannequin named “Starman” behind the wheel. Conceivably car and driver could be up there for a very long time. And the car will probably get a little dusty along the way.

“It’ll probably get hit with something the size of very fine sand every year or so, and get hit a few times an hour with 100-nanometer-size dust,” Andy Rivkin, a planetary astronomer at Johns Hopkins Applied Physics Laboratory, told The Atlantic magazine. “On average, we think it’d get hit by a fist-sized rock every several million years.”

Several million years. And to think, back here on Earth, Consumer Reports says the average life expectancy of a new vehicle these days is around eight years or 150,000 miles.

This Tesla’s life expectancy was extended by its billionaire owner, Elon Musk, the real-life Iron Man whose enthusiastic embrace of technology for technology’s sake and desire to push the limits of what is possible for private enterprise has ignited a new space race.

“We want a new space race,” Musk told a press conference in Cape Canaveral after the launch of his SpaceX’s Falcon Heavy rocket into deep space. “Races are exciting.”

Mind you, the original space race was between the old Soviet Union, which took an early lead with the launch of Sputnik 1, the first artificial Earth satellite, on October 4, 1957, and the United States, which came roaring back with NASA’s Mercury and then Apollo programs, which resulted in man setting foot on the moon.

Competition is the American Way

Last week’s launch of the Falcon Heavy, now the most powerful operational rocket in the world, underscores that we have entered a new era in which companies and not just governments are competing for a place in space.

And it comes at a time when the Trump administration is looking to restructure the role of NASA, ensuring that private enterprise and international partners work closely with the space agency. Musk is forcing the issue whether NASA likes it or not.

“He’s being Elon again. I’d call it competition, and competition is the American way of life,” said John Logsdon, professor emeritus at George Washington University and founder of the Space Policy Institute told the British newspaper The Guardian. “SpaceX has challenged the traditional launch industry in the United States and in Europe and in China and in Russia.”

Elon, Jeff and Richard

Now billionaires and their companies have ambitions well beyond government contracts but the commercialization of space itself. Virgin Galactic, the space company founded by Richard Branson, and Amazon founder Jeffrey P. Bezos’ Blue Origin are hoping to fly humans for the first time this year on suborbital jaunts that could reach the edge of space.

Blue Origin recently opened a facility at Kennedy Space Center in Florida to build the New Glenn reusable rocket system, named after John Glenn, the first American to orbit Earth, which will be even bigger than the SpaceX Falcon Heavy rockets. In a tweet posted Tuesday night, Bezos congratulated Musk on the launch with a “Woohoo!”

Branson, founder of airline Virgin Atlantic, established Virgin Galactic back in 2004 with the goal of provide suborbital spaceflights to tourists and suborbital launches for missions into space. There are also plans for orbital human flight.

“Elon is absolutely fixated on going to Mars and I think it’s his life mission,” Branson said on CNBC “Squawk Box” in October 2017. “Jeff and ourselves [at the Virgin Group] are more interested in how we can use space to benefit the Earth.”

So 49 years after the first man set foot on the moon, we have entered a new era, a new space race where the private sector may take the lead. While this may alarm some of the traditionalists at NASA, I believe this is a very good thing in the long run.

Along Florida’s Space Coast, most of which lies within Brevard County, there is a renewed excitement

“No question that other companies around the world, they are looking at establishing facilities in Florida so they can be near the center of space activity,” Space Florida President and CEO Frank DiBello told the Orlando Sentinel. “We want to drive all of those to create tourism and job opportunities for next-generation engineers and the space workforce.”

Musk was right. Space races are exciting.

I’ll see you down the road.

Dean Barber is the principal of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. Dean is available as a keynotes speaker and can be reached at dbarber@barberadvisors.com. Visit us at http://www.barberadvisors.com to learn more.

The U.S. Emerges as an Energy Superpower

No doubt you have heard the expression, “that which does not kill us makes us stronger.” That might be in essence the story of America’s oil and gas industry. Not surprisingly, Texas, where I live, has figured prominently in it.

From 2000 to 2008, the price of oil saw an unprecedented spike, going from under $25 per barrel to almost $150 per barrel. In response, U.S. drillers began in earnest to employ hydraulic fracturing, a technology pioneered by Mitchell Energy in the early 1980s near Fort Worth. In short, fracking — blasting water and sand deep underground to free oil from shale rock — gave the drillers access to once inaccessible shale gas reserves.

That development did not escape the attention of Saudi Arabia, which soon recognized this “fracking revolution” to be a potential threat to its hegemony around the world. Faced with the prospect of ceding market to these upstart American wildcatters, the Saudis convinced other OPEC nations to increase production, figuring that plentiful supply and lower oil prices would devastate the U.S. industry.

And it did. The price of oil dropped from over $100 a barrel in the summer of 2014 to $26 a barrel in February 2016. Most U.S. oil and gas producers were scratching and clawing just to survive, and many did not. More than 100, nearly half of them in Texas, went bust. The oil patch workforce in Texas dropped from 300,000 in December 2014 by 192,000 workers by September 2016.

Firing on All Cylinders

But late 2016, the Saudis came to the realization that these crazy Texans were in it for the long haul and would not go away. OPEC then decided to cut production and the price of oil rose to where it is today at about $65 a barrel.

Now that prices have stabilized, the Texas economy is “firing on all cylinders,” projected to add about 366,000 new jobs in 2018, according to Keith Phillips, senior economist for the Federal Reserve Bank of Dallas.

(The gross domestic product of the state is $1.6 trillion. If it were an independent country, and it once was, it’s economy would rank 10th in the world. My apologies for the apparent bragging about Texas. As a New York Times writer noted, “You don’t just move to Texas, Texas moves into you.)

Doing More With Less

Texas oil production is projected to reach 1.42 billion barrels a day this year, beating the 1972 record of 1.26 billion barrels. But it is worth noting that oil companies will do that with 75,000 fewer workers than at the peak in 2014 when 300,000 worked in the industry in Texas.

Efficiency is now the watchword. In short, the drilling companies have learned they can do more with fewer people. And that, too, has the world watching.

U.S. shale is “seemingly on steroids,” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. in London, told Bloomberg. “The market remains enchanted by the ability of shale producers to adapt to lower prices and to continue to grow.”

And while the oil and gas industry remains a key economic driver in certain cities in Texas, Midland and Odessa would be examples, it represents less than 1 percent of the workforce in the Dallas-Fort Worth Metroplex. Statewide, it is less than 3 percent.

Explosive Growth

In his first state of the union speech last week, President Donald Trump, not surprisingly used the word “strong” to describe the state of the nation (all presidents do), all the while taking credit for an economy that appears to be doing very well.

Notwithstanding the Dow loss of 1,100 points last week in what most analysts says was a self-correcting response, the Labor Department on Friday reported that the economy added 200,000 new jobs in January, up from 160,000 in December.

Wages saw their biggest year-over-year increase since June 2009, rising by 2.9 percent over January 2017.

Other than saying, “we have ended the war on American energy,” Trump touched little on that subject. But prior to his speech, he has talked not only of energy independence for the U.S., but energy “dominance” in the world. There are indications that this might be actually happening.

U.S. oil production has surged above 10 million barrels a day for the first time since 1970, and the International Energy Agency says the U.S. is poised for “explosive” growth in oil output that will push it past Saudi Arabia and Russia this year.

Exports of crude oil and petroleum products have risen 20 percent in 2017 in the past few months to 7 million barrels per day. Natural gas production has also hit a record of more than 93 billion cubic feet per day.

“For the last 40 years, since the Arab oil embargo, we’ve had a mindset of energy scarcity,” said Jason Bordoff, founding director of the Center on Global Energy Policy at Columbia University and a former Obama administration official in an interview with Bloomberg. “As a result of the shale revolution, the U.S. has emerged as an energy superpower.”

That is also the assessment of Dr. Daniel Yergin, author of “The Prize: The Epic Quest for Oil, Money and Power.”

“This is a 180-degree turn for the United States and the impacts are being felt around the world,” Dr. Yergin told the New York Times. “This not only contributes to U.S. energy security but also contributes to world energy security by bringing new supplies to the world.”

Trump no doubt will claim credit for this relatively newfound superpower status, but the shale fracking revolution took place mostly during the Obama administration. The ban on crude exports from the U.S. was lifted in 2015, also when President Obama was in office.

Environmental Concerns

Much to the ire of many, the Trump administration supports opening 90 percent of the outer continental shelf to oil drilling as well as the Arctic National Wildlife Refuge where there is an estimated 11.8 billion barrels of recoverable crude.

Alarmed at the prospect that an offshore spill could devastate tourism in their respective states, governors of states along the Atlantic and Pacific coasts are seeking the same exemption that Florida Gov. Rick Scott (R) apparently got from the administration that would keep the offshore drilling ban in place.

Truth be told, there is not much planet sensitive about the current administration’s energy plans. Many environmentalists argue that shale drilling only extends the life of fossil fuels, much to the detriment of the planet.

It should be noted that the last three years have been warmest in 138 years of record keeping, resulting in, what scientists point out, the decimation of coral reefs, thawed polar ice at an unprecedented rate and raised global sea levels.

“We’re warming up pretty much at the rate we anticipated a decade ago,” Gavin Schmidt, director of NASA’s Goddard Institute for Space Studies, told Bloomberg. “Basically, all of the warming of the past 60 years is attributable to human activities.”

Whether you agree with that assessment, held by most scientists, or not, the environment would appear to be a low priority with the Trump administration.

What Does This Mean?

So what does the shale revolution and America’s rise as an energy superpower mean to most of us? Lower energy costs, at least compared to much of the world, is likely one result, which can and should be a boon to certain industry sectors, particularly manufacturing.

Will there be a movement away from renewable sources of energy, such as solar or wind? Possibly, which would not be in the nation’s long-term best interests. But in the short-term, the economy is very much cooking with gas.

I’ll see you down the road.

Dean Barber is principal of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. Dean is available as a keynotes speaker and can be reached at dbarber@barberadvisors.com. Visit us at http://www.barberadvisors.com to learn more.