The Liberal Blue View From the Left
Author: Alan WebberDemocratic primary candidate for Governor
New Mexico’s Economy is in Crisis
To call it anything less is to refuse to face facts. When it comes to job creation, small business growth, entrepreneurial startups, wage improvement — virtually any economic indicator you can think of — New Mexico is in deep trouble. That’s why our own people are fleeing our state. They are out of work and out of hope.
They know the economy isn’t some abstract economic theory. The economy is about people. It’s an expression of our confidence in ourselves and in our future. Right now, that confidence is at an all-time low. Make no mistake: This crisis is not caused by “big government” or some scary theory out of an old Austrian economic textbook.
Our current crisis is a direct result of more than three years of Governor Martinez’s incompetence and indifference. Having come to the Governor’s job with no experience in the private sector, with no vision or strategy to guide the state’s economy, with the prosecutorial mindset of a district attorney and the personal ambition of a self-serving politician, Martinez has driven the New Mexico economy into the ditch.
The job of governor is to have a vision and a strategy for the state’s future, and to display the leadership skills to work constructively with business, labor, non-profits and the faith-based community to move the state forward.
But Susana Martinez is no leader. She is ill-prepared and ill-equipped when it comes to economic leadership. However, with new leadership, an agenda for New Mexico’s economic future is almost self-evident. We can build a strong and sustainable economic portfolio that takes advantage of New Mexico’s diversity and recognizes that our State has not just one economy, but many economies.
Here’s a simple five-step program to get New Mexico working:
First, build the economy from the ground up. Assign local economic development agents to work with small and medium-sized businesses across New Mexico. Right now, when it comes to helping small businesses grow, according to a report in The Economist newspaper, New Mexico rates a “D+”. Want a better grade? Make it faster, easier and simpler to do business with State government.
Second, make New Mexico a fast state. The Internet changes everything — it is creating the economic future. New Mexico is currently tied with Mississippi as the nation’s sixth slowest state when it comes to Internet speeds. Without high-speed Internet service, it’s hard to foster an entrepreneurial economy — which explains why New Mexico is ranked #48 in the annual State Entrepreneurial Index. In case you think leadership in the Governor’s office doesn’t matter, New Mexico’s ranking has fallen 31 places in the last two years.
Third, build on what’s already working — and could work even better. When Susana Martinez took office, New Mexico had the nation’s most successful state-level film program. She kneecapped it — purely on political grounds. Now other states, such as Georgia, are doing more and going farther, developing job-training programs to lock in the film and entertainment industries.
Fourth, focus on the future. Whoever gets to the future first, wins. New Mexico could win this race by focusing on energy and water. With so much sunshine, we should be the nation’s most solarized state. With so little water, we should lead the country in water management technology. We have cutting edge technology that’s looking for help in getting to market.
Fifth, support entrepreneurship of all kinds. New Mexico is rich in innovators: social entrepreneurs who want to use business practices to solve social problems; cultural entrepreneurs for whom art is both a calling and a way to make a living; entrepreneurs looking to start a for-profit enterprise. They need a supportive ecosystem — starting with an innovative state government.
Those are examples of short-term initiatives to get New Mexico out of the ditch. Long term, the agenda needs to include investing in early childhood education; putting more money into education at all levels, including money to make our universities centers of excellence; more job training to produce the next generation of skilled workers; and a progressive tax code that reflects the economy of the future, rather than the one from the past.
All of this is do-able. We are not ordained to be the worst performing state in the country. Other states have fashioned turnarounds, embracing new leadership to chart a new course.
We need to create our own vision, fashion our own strategy and select new leaders. We need solutions that work for problems that matter. That’s progressive pragmatism. That’s the New Mexico Way.
The Conservative Red View From the Right
Author: Paul GessingPresident, Rio Grande Foundation
Turning New Mexico’s Economy Around
There’s no question that New Mexico’s economy is struggling these days. Truthfully, this is nothing new. Our state has relied on the federal government for the better part of its history. Poverty too has been a hallmark of New Mexico’s history.
Broadly-speaking, we at the Rio Grande Foundation believe that Washington’s largesse has allowed its political leaders to avoid making the tough policy decisions that lead to economic growth. Fortunately or unfortunately depending on your perspective, the Washington gravy-train is coming to an end.
To the Rio Grande Foundation’s way of thinking, the need for New Mexico to adopt free market economic principles is clear. Government reliance hasn’t gotten us to where we need to be (our state government also plays an outsized role in our economy). Instead, New Mexico suffers from a lack of economic freedom. One report by the Canada-based free market Fraser Institute ranked New Mexico 50th among US states on economic freedom, but study-after-study gives our state low marks on “business friendliness,” tax climate, and the like.
It’s not the wealthy that suffer from New Mexico’s poor private sector economy. Capital is mobile and New Mexico’s wealthy, at least those who don’t make their money in oil and gas, tend to make their money elsewhere or to move here to retire. Rather, it is the working class, who cannot find decent-paying jobs that struggle to keep their financial heads above water, have a few tough breaks and wind up on the dole, or leave New Mexico for greener pastures.
So, what can be done?
New Mexico is now making the difficult transition from economic dependence to independence. A healthy private sector is possible, but politicians and bureaucrats are notoriously bad at picking winners and losers. Government should set fair and simple tax and regulatory policies and let the creativity of New Mexicans take it from there.
Specifically, economic analysts repeatedly note that New Mexico needs a “right to work” law. Far from anti-union, these laws simply demand that workers not be coerced into joining a union as a pre-condition of employment. Recently, in the context of the Tesla “gigafactory” issue, site selection expert John Boyd was quoted as saying “I can’t underscore how critical right to work status is.”
Secondly, there is the issue of taxation. In recent years there has been a bi-partisan realization that New Mexico’s tax structure is a hindrance to economic development. Richardson’s income tax cuts took New Mexico’s top tax rate from a high 8.2 to a moderate 4.9 unleashing a decade of solid growth in New Mexico.
Martinez has continued to work on tax reform by reducing the “pyramiding” effect of the gross receipts tax and gradually phasing down the corporate income tax rate over five years. There is still work to do.
The gross receipts tax, for example, is applied at high rates on services, so entrepreneurs are taxed at rates exceeding 7 percent in New Mexico for contracting with attorneys and accountants (and a host of other service providers) which are not taxed in other states. Generally-speaking, New Mexico which has always had relatively low rates of workforce participation needs to reduce taxes on productive activity (business formation and work).
In order to get more New Mexicans into the work force, they need to be trained for the 21st century information economy. Unfortunately, we have a 19th-century education system that also happens to be a government-operated monopoly. Monopolies are bad. Government monopolies are even worse.
Louisiana under Gov. Bobby Jindal has enacted dramatic reforms to its notoriously-poor K-12 education system including dramatic expansion of school choice and the creation of America’s first all-charter school district in New Orleans. It is absolutely critical that New Mexico expand the educational options available to parents and students while also holding schools, principals, and teachers accountable for educational improvement.
Allowing for real school choice while giving schools more leeway in hiring, firing, and paying teachers could reduce micromanaging on the part of state-level bureaucrats.
New Mexico’s economic and educational issues did not come about overnight. In many ways they have been papered over by decades of largesse from Washington, but that money is drying up and with it New Mexico’s economy. Rather than empowering government managers in Santa Fe to dole out incentives and pick winners and losers, New Mexico needs to empower entrepreneurs, workers, and students to lead our state into the 21st Century.