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Forbes on How That ‘Giant Sucking Sound’ Made the Perots Another Billion Dollars

The cover story of the new Forbes is about how Ross Perot Jr. made another billion-dollar fortune for his family with the Alliance development north of Fort Worth. Writer Christopher Helman discusses that, as well as the relative disappointment of the Victory development in downtown Dallas and the influence Perot’s Hillwood company may have wielded to stifle that rival “inland port” project south of Dallas. (You’ll recall that county commissioner John Wiley Price is the subject of an FBI investigation for his role in those dealings.)

Helman notes that much of Alliance’s success comes thanks to free trade policies with Mexico, something that Ross Perot Sr. was wary of (referring to the loss of American jobs due to free trade as a “giant sucking sound”) as a presidential candidate in the 1990s:

Hillwood’s first big deal with Brookfield was the $900 million buyout of Verde, a warehouse developer with broad holdings that straddle the U.S.-Mexico border–perfectly positioned to benefit from the growing trade with Mexico and to deliver more cargo, more traffic, more growth to AllianceTexas. “We’re building spec warehouses, which is risky,” says Perot, who cites the same warehouse-upgrade dynamic as at AllianceCalifornia.

Thus has the Perot family come full circle. At the end of the day Perot Jr. isn’t scared of free trade, or of the U.S. losing jobs or opportunity to the rest of the world. “The U.S. has the most competitive spirit on the planet, and the economy is stronger than what people say it is,” says Perot Jr. “We complain about it, but America is still lean and efficient compared to the rest of the world.”

What does “Pop” think? The most famous protectionist of the past quarter-century is simply proud that his family is poised to prosper as long as free trade washes over America’s borders. “Alliance showed a lot of creativity and imagination, and it worked,” says Perot Sr.

The article also outlines how often Perot Jr. has turned to local governments for help in indirectly financing his efforts. Take Alliance:

Throughout the process Perot made sure various governments helped subsidize the growth. When he decided that he needed a new highway cutting through his land to make it easier for trucks to get from I-35 to DFW airport, Hillwood spent some $10 million on the engineering and proposed handing over 281 acres of his land for the road. That convinced the Texas Department of Transportation to build it at a cost of $42 million in taxpayer dollars. Hillwood also helped set in motion the far more costly ongoing expansions of I-35 between Alliance and Fort Worth and of I-820 between Alliance and DFW airport.

“He’s the ultimate welfare baby. He doesn’t do anything without subsidies or tax rebates,” says Sharon Boyd, who campaigned unsuccessfully against public financing of Perot projects in downtown Dallas. “He has a mentality that views the public sector as a fat pig that’s going to be slaughtered anyway, so it might as well be by us.”

Of course, it can be argued that these deals are a win for the local governments too:

Perot’s developments have added more than $1 billion to tax rolls and generate some $120 million a year in taxes for the city and surrounding towns. “AllianceTexas is a cash machine for our public partners,” says Perot.

  • Bill Marvel

    “He’s the ultimate welfare baby. He doesn’t do anything without subsidies or tax rebates.”
    The wonder of it is that anyone should imagine that American capitalism has ever done business any other way. “Free enterprise” has always grown on the backs of taxpayers since the grand days of railroad-building, the first large scale American capitalist enterprise.Those who babble about a market free of government interference are either ignorant or lying. (We won’t judge which.) Those who want to see this mistaken but powerful myth at work should read Ayn Rand.

  • Jackson

    Marvel is right. This backscratching between business and government has always created untold wealth. And yes, it helps generate tax base and jobs. This is all good, and all the more reason why those who score such largesse should help pay the societal piper, tax-wise, for those not so lucky….which is basically everyone else. A pity that so many who achieve this station want to pull up the draw bridge behind them, to keep out the riff-raff.

  • Tim Rogers

    That quote, Bill, was from Sharon Boyd. Very strange to see her quoted as an knowledgeable source in Forbes.

    Not to be missed, by the way, is the sidebar about the competing logistics hubs in southern Dallas that, according to the conspiracy theory, was killed by the Perots with help from John Wiley Price:

    http://www.forbes.com/sites/christopherhelman/2013/09/04/the-mystery-of-ross-perots-vanquished-dallas-competitor/

  • Dubious Brother

    Perot had a bird’s eye view of wasteful government spending prior to his run for President as he built his first fortune with EDS attached to the government teet.

  • Jason Heid

    The Forbes piece discusses Perot Sr.’s government-generated wealth as well:

    “Perot founded Electronic Data Systems in Dallas in 1962 to help convince executives and government officials that they needed computers–and needed EDS employees to install and operate them. His timing couldn’t have been better: Another legendary Texan, Lyndon Johnson, was ramping up his Great Society. Perot thrived on contracts that administered Medicare and Medicaid. In 1971 the leftist magazine Ramparts tagged Perot as ‘America’s first welfare billionaire,’ and his son saw how lucrative it could be to row in the same direction as government spending priorities.”

  • Wylie H Dallas

    [the relative disappointment of the Victory development in downtown Dallas]

    – If you survey experts in urban development, you will find a surprising consensus that Victory Park was ill-conceived at the outset.

    – Even when the Perots lose, they win: witness the extension of the Sports Arena TIF at a cost to the City’s general fund approaching $100 million through 2028. Coming out of the recession, Victory is arguably one of the hottest development locations in Dallas… obtaining a $100 million set aside in future City of Dallas tax revenues (plus subsidies from DISD and Dallas County) to subsidize competition against other developers working outside the Victory TIF was simply masterful.