Economic Recovery through the Creation of Jobs

A Proposal for a
Hurricane Katrina Regional Economic
Recovery Plan
Objective: Create an Economic Recovery Zone Featuring
Government Investments and Tariff Protections to Develop a
Textile Industry Comprised of Dozens to Hundreds of Businesses
Employing Tens of Thousands of Workers

The Situation is Bleak, and Not Improving:

Hurricane Katrina created personal and economic devastation unparalleled in modern US
history. Millions of people have been left homeless and jobless. The Louisiana and
Mississippi areas had already been among the poorest in the nation and have been among the
worst in education for the last 100 years. Many of those who have been hit the hardest – the
homeless, the jobless, the displaced – lack the educational and job skills to successfully seek
employment in most industry sectors having job growth. Even worse, they lack the
educational background for re-training in high-tech jobs. In 2008, eleven years after the
Louisiana Department of Labor was revamped to make it easier for the unemployed to get
training, there are an estimated 100,000 jobs available in the state; but even though there are
100,000 unemployed, they are too lacking in skills to fill those jobs. Combined, Louisiana
and Mississippi need 200,000 jobs suitable for semi-skilled and unskilled workers.

The few large employers of the hardest-hit regions, mostly casinos, are unlikely to reestablish
themselves and to restore their former employment levels in the foreseeable future. There are
no other industries or employers likely to site facilities in the
Use the Tragedy of
impacted regions sufficient to absorb any noticeable level of
Katrina as the unemployment. Therefore, without aggressive government action,
Opportunity to the prospects are bleak of restoring the economic viability of the
Rebuild Our Nation’s region to even the low level that existed prior to Hurricane Katrina.
Manufacturing Base Further, without government intervention in a fashion that will create
jobs in those regions, the economy of the entire United States will
continue to suffer as we struggle to support the impacted
population through tax-derived welfare, unemployment, medical aid, FEMA, temporary
housing, and other programs.

Central Concepts of this Proposal:

Welfare and other forms of public assistance are not a substitute for jobs, not for the
individuals, not for the economy, not for the country. Economic recovery requires jobs.
Once jobs are created, these regions will turn from a net drag on the US economy to a net
benefit – the citizens of these regions will not only be able to pay their own way, rather than
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requiring welfare and assistance, but in addition will become taxpayers of sufficient
magnitude to help support others in need. New businesses will be provided with startup
capital, grants, loans, and operational subsidies financed by the Federal Government, and
administered by the State Governments of Louisiana and Mississippi.

To be meaningful in the context of the magnitude of the problems, job development must be
of a dramatic scale, sufficient to employ a significant percentage – even a majority – of those
needing help. Achieving the necessary scale of job development will require a systematic
approach to create at least one entire industry capable of supporting dozens or hundreds
of individual businesses and employing tens of thousands of people. A traditional
smattering of small developments characteristic of state economic development authorities
could not create the required environment or momentum, and would not succeed, even over
several decades.

For international tariff and trade rule purposes, the businesses fostered by the Economic
Recovery Zone must focus on a definable industry. Developing an industry will require a
holistic approach so that all of the needs of this nascent industry are anticipated and measures
put in place to accommodate them – from capital formation for the foundling businesses to
pre-wired assurances of market acceptance and retail sale for the finished goods. Creating
such an industry will require the coordinated actions of federal and state governments
working from a unified plan with a long-term commitment – a minimum of 20 years.

Creating such an industry will require much more than simple tax incentives – it will require
significant direct and indirect subsidies, tariff protection, and import restrictions, as well
as the cooperation of other domestic regions that already participate in the selected industry.
Domestic businesses already in the designated industry but not geographically located in the
Economic Recovery Zone will benefit from tariff protection and import restrictions which
will apply to that industry. The over-arching goal of creating an industry is more than just
creating jobs in these depressed regions; it is to create an industry with an American work
force that can compete successfully in the domestic and international markets. Success in this
project will require the hand-in-hand cooperation of federal, state, and local governments, as
well as the participation and commitment of existing businesses in the distribution and
retailing of the resultant products.

Necessary Industry Characteristics:

The majority of the new jobs must be suitable for unskilled labor; that means
manufacturing jobs, and that means the creation of a manufacturing industry. At the
same time, that industry will provide employment, hope, and opportunity for all walks of life.
To provide stable employment over decades, the chosen industry should provide staple
products – not fad products like cell phones or mp3 players that might be replaced with the
next technology innovation.

The target markets should be of significant size to be able to absorb the output of many new
businesses. The industry should not require high tech skills for most potential employees and

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should have a minimum of technology and engineering requirements for entry by new
businesses – thus, manufacturing automobile engines would have onerous entry requirements,
whereas manufacturing textiles or clothing, while requiring the purchase of modern
equipment, is essentially a low tech industry.

The industry should not be one that requires enormous capital investment, nor should it be
one whose economics favors giant corporations – which, as we have all seen, are fickle, and
are driven by the next quarter’s profits rather than the good of the employees or the good of
the country. Depending on a giant corporation puts the success of the entire project and the
welfare of the nation at the mercy and goodwill of a single board of directors.

The Target Industry – Textile, Clothing, Shoes:

The target industry will produce finished goods of clothing, bedding, towels and linens, shoes,
and other items of apparel such as belts and handbags that can be synergistically produced and
marketed, as well as other types of fabrics such as drapes, curtains, and furniture coverings.
The industry sub-segments will include both horizontal and vertical production from growing
the raw materials, to production of rolls of fabrics, to manufacture of retail products. The
Hurricane Katrina Economic Recovery Zone of Mississippi and Louisiana is in the cotton
belt, and so the textile industry will be a natural extension of existing industries and
knowledge base in that area. Since a great percentage of finished goods are made wholly or
in part from cotton, the proximity of the raw material to the other stages of manufacture will
provide a further advantage to the development of a textile and clothing industry in these
regions.

Funding the Project:

In that the regions included in the Economic Recovery Zone are incapable of funding the
development of this industry, costs will be borne by the federal government. There are
numerous direct and indirect ways of providing funding by the federal government. However,
to ensure that all government participants live up to the requirement for a long-term
commitment, one method that will be successful will be for state governments and/or agencies
to sell long-term bonds, the repayment of which will be guaranteed and paid by grants from
the US government.

The administration of the actual development activities should be left to the individual states
and their respective appointed agencies. Each state should charter one or more Economic
Development Authorities, which, in conjunction with oversight committees from industry and
academia, will manage the administration of the funds. The charters of the Economic
Development Authorities will be laid out in sufficient detail to ensure that the actions of the
agencies will be consistent with the goals of this proposal, in its final form, as endorsed by
each state and the US Congress. The individual Economic Development Authorities will be
responsible for reviewing business proposals, funding the selected proposals, monitoring the
performance and success of the new businesses, and otherwise ensuring that the actions taken
are clearly targeted to the over-arching goal of creating a successful and profitable domestic
and international industry.
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A Protected US Industry in an International Arena:

Globalization has caused US Corporations to invest overseas, rather than domestically, which
has undermined employment opportunities within our borders. It is our obligation as
Americans to create an environment that fosters domestic employment and business
opportunities. The successes of first Japan and now China in developing international
industries has been a result of the active intervention of the respective governments in the
protection of the emerging industries through tariff manipulation, direct and indirect
subsidies, management of exchange rates to favor their pricing, and other obvious and subtle
schemes. The American worker has been disenfranchised as a result of these deliberate
actions of these and other foreign governments.

A significant percentage of textile clothing products now sold in

the United States are produced in China (some believe, close to Combine Market Force
100%) – we, collectively, have allowed the circumstance where
China can succeed industrially, but we cannot. We can succeed,
Dynamics with
however, by employing the same protective techniques as Government Funding
Japan and China – there is no rational reason why China and Protection to
should be developing full employment at the expense of Foster World-Class
America. We may choose to erect trade importation limits and Competitive Industries
tariffs, slanted to defend against those countries which hold a
balance of trade in their favor, and targeted to protect our industries from major international
competitors, while not impacting trade with less threatening countries such as those in
the Caribbean.

While low wages have been a partial contributor to the success of China in the clothing and
textile industry, an equally important factor has been the deployment of the most modern
technology in Chinese textile factories, resulting in the efficient production of low-cost goods
with minimal manual labor per article. Given a proper investment and subsidy arrangement,
as outlined in this proposal, we, as well, can offer our new businesses the opportunity to
acquire the latest technology so that our products also are produced in the most efficient
manner possible.

Constructing an Industry to Assure Success:

Establish the Technology Infrastructure: Create industrial engineering and consulting
companies, specializing in industry sub-segments, to aid new manufacturing businesses in the
selection and procurement of equipment, to help design factories and the manufacturing
processes for individual items, and to provide other getting-started engineering services.
Similarly, create product design firms to aid in the artistic design of fabrics and finished
goods. Create technical “centers of excellence” to foster the development of new
technologies – new materials, new fabrics, new design and manufacturing processes, etc.

Establish Guaranteed Distribution Channels: Obtain commitments of major manufacturers

and retailers (Sears, Wal-Mart, The Gap, Old Navy, Target, Nike, Wrangler, Levi’s, etc.) to
partner with, and establish long-term commitments and purchase contracts with recovery
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businesses. Participation of the private sector will be motivated through direct and indirect
economic incentives. In addition, use political forums, PR, and other marketing and
promotion channels to promote awareness and encourage active support.

Link Success to Investment and Ownership: Promote private sector minority ownership in
the new businesses by existing manufacturers and retailers so that their long-term success is
tied to the success of the recovery businesses. Create marketing and consulting companies to
forge partnerships between new businesses and existing manufacturers and retailers. Create
recovery businesses with local ownership funded by grants and other subsidies.

Major Manufacturers

PRODUCT
PRODUCT PURCHASES
PRODUCT PURCHASES
PRODUCT
CAPITAL

New Suppliers Major Retailers

PRODUCT PURCHASES CAPITAL PRODUCT

How to Begin
Assemble an academic “think tank” comprised of experts in business and industry, marketing,
international trade, international law, and associated subject matters from colleges and
universities in Louisiana and Mississippi.

The “think tank” role: Create a detailed analysis of this proposal to financially model the
opportunity, and determine the level of federal funding required; Propose the necessary tariff
and trade restrictions; Recommend Congressional actions required to assure success; Draft
proposed legislation for the US Congress; Draft proposed laws in Louisiana and Mississippi;
Develop the charters for the Economic Development Authorities and the roles and participants
of the respective oversight boards; Create a marketing and promotion plan to inform the
American public of the Economic Recovery Zone plan and its advantages; Seek initial state
funding from the states of Louisiana and Mississippi for the marketing and promotion plan

Summary:
 Establish a Hurricane Katrina Economic Recovery Zone
 Provide subsidies within the Recovery Zone to establish new businesses in the textile
industry
 Protect this textile industry with trade barriers and tariffs

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 Expand the role of state Economic Development Authorities to oversee the

development of this industry
 Enlist the participation of the private sector, especially existing manufacturing,
distribution, and retailing businesses within the textile industry
 Establish a Think Tank comprised of industry and academic experts within the region
to provide guidance, monitoring, and reporting for this project
 Create Centers of Excellence to develop new techniques, technologies, and materials
in the textile industry
 Create a marketing and promotion plan to inform Americans of this project

The Bottom Line:

What is the alternative, other than to continue as we are, extending the despair? Ultimately,
this demands a choice between China versus Louisiana and Mississippi – there is no other
option.

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