By the time most of you read this, El Paso’s city and school elections will be over. The FBI’s public corruption investigation won’t.
Last month in this space, I touched on the theme that Woody Hunt, the head of Hunt Companies Inc. and a former member of the UT System Board of Regents, has been speaking about in private settings for some time.
Corruption in El Paso and how it has contributed to and may even be responsible for the high level of poverty in this town and for the shortage of highly competitive businesses in El Paso. That was the theme.
I wrote about it without actually speaking to Hunt in advance but to someone who had heard his talk. We only added Mr. Hunt’s name to the piece at the last minute after he confirmed that he has given such talks.
He said he would be willing to talk about it at length, which was the first of several surprises I have encountered in pursuing this.
Here’s the second: After interviewing Mr. Hunt, I thought it would be a good idea to check with someone from the business community who might not agree about what has happened in El Paso.
I called the president of the Greater El Paso Chamber of Commerce, Richard Dayoub, fully expecting him to say that while he and Mr. Hunt are friends, he had to disagree and say El Paso’s public and private sectors are hardly corrupt and that businesses here are as competitive as any city’s.
Mr. Dayoub did say Mr. Hunt is a personal friend, and a significant investor in the chamber.
But as for Mr. Hunt’s take on things, he said, “I would have to agree.”
Mr. Dayoub didn’t agree a little. He agreed completely, and said there are other business people in El Paso who do as well.
“Public corruption certainly inhibits a community in its ability to prosper,” Mr. Dayoub said. “El Paso has certainly had its share of corruption. Thank God he is out there talking about it in the community.
“The chamber has adopted a code of conduct for lack of a better choice of words that we want our members to support, and we have committed to abide by these canons of ethics as an organization.
“We want to institutionalize our support for it and encourage other community organizations to adopt these canons throughout the city.”
Competitive Businesses are Key Mr. Hunt said his views aren’t based on personal or business experience with local corruption but on a statistical look at El Paso’s place in the world.
“I come from a theory of economic development that says look at our income compared to the state,” Mr. Hunt said. “I see a disparity of 35 percent and come to the conclusion that we have a competitiveness issue here. You start looking at the pieces, and see that for whatever reason, we have a heavy dependence on government jobs and projects.”
Is there a correlation between corruption, a community’s poverty and a lack of strong, competitive businesses?
Just Google “corruption poverty competition” and you will get 6.7 million search results. You will find United Nation’s documents and worldwide indexes that statistically base the level of corruption on a nation’s poverty and weak business environment.
One example from a 2003 study called “Corruption and Poverty: A Review of Recent Literature,” states, “Increased corruption reduces economic investment, distorts markets, hinders competition, creates inefficiencies by increasing the costs of doing business and increases income inequalities.
“By undermining these key economic factors, poverty is exacerbated.”
El Paso is not some African nation, but we are one of this country’s poorest cities – a situation that was far from true in the 1950s and ‘60s – where the private sector is a significant provider of services to the school districts, the city and the county, and has become dependent upon them.
“Then the service provider begins to try to manage the process in a way that is not competitive and is not transparent and tries to manage the outcome through campaign contributions or financial transfers,” Mr. Hunt said. “That leads to a loss of competitiveness in our community. If you want to develop strong companies locally that can be strong in the state, regionally and nationally, you need to grow them to compete.
“That’s the kind of environment you need to be in, and government needs to be the one setting the tone at the top.”
Companies that compete locally on the basis of quality and cost instead of whom you know and whom you paid off can compete outside of El Paso, export their goods and services and import both jobs and money.
“Government has to be the leader,” Mr. Hunt said. “That’s where you have to separate the political processes: Getting elected and governing.
“Once elected, you have to separate yourself from your supporters and govern. The last thing that should get decided on any contract is the service provider, but the service provider has been coming first and having too much communication with the government.”
If that separation doesn’t happen, if politicians stay closely tied to their supporters and contributors, then those ties tend to become the real basis for decisions and contracts, not quality, competence and cost, he said.
“The real cost is in the people who don’t show up to compete because they don’t believe price and quality can win, and you end up with … contracts that are not competitive,” Mr. Hunt said. “That can be very wasteful and inefficient because you didn’t have a process that was truly competitive.”
What is there that local governments buy that companies provide? Start big with construction projects, architectural, engineering and contracting services to build them and the bonds to pay for them.
The FBI investigation has implicated companies, officials and other individuals in all those areas.
Now, think about the opportunities for honest competition or the pay-to-play racket in furnishing local health benefits, vehicles, computers and all kinds of supplies.
How many El Paso companies are successfully competing and winning contracts outside of the city? Not many. Why? If they are weak and not very ethical, they probably don’t pay their employees well to do
better work everyday than the guy across town or across the city.
The best new UTEP grads look around every year, find no opportunity to better themselves and leave.
If companies and people from great cities and schools don’t want to come here, not only will our kids leave, but the tax base won’t grow, and El Paso will stay poor and overtaxed.
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To reach David Crowder, write to dcrowder@epmediagroup.com or call (915) 351-0605, ext. 30, or 630-6622.
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Editor's Note: This article was originally published in the May 2009 issue of
El Paso Magazine.
