Economic Recovery in New Mexico

A Quick Note About "Jump Start"

This term typically describes a procedure to start a car engine when the battery is too weak to turn the starter motor.  If the car was recently driven to the place where it wouldn't start, that is, if the rest of the car's mechanics aside from the battery are functional,  the process is usually successful.  However, even though the car will start and run, the troubles with the battery may well make the remedy quite temporary.  In fact, the battery problem may well occur again as soon as the car is turned off the next time.

This may seem to be a strange way to start a MeanMesa post, but here we are.

If the New Mexico economy is the "car with the bad battery," the "jump start" idea may be overly optimistic.  This car hasn't moved for quite a while.

This all comes up now because we need to make a few comments about an editorial in the local news paper.  If you don't regularly read the Albuquerque Journal -- most citizens of Albuquerque don't -- you may have missed it.  Further, although MeanMesa may refer to the piece as an editorial, the Albuquerque Journal, infamous for having difficulty deciding such questions about "articles" and "editorials," placed it on the front page amid other "articles" which were, of course, also, perhaps, not "editorials."

The following disclaimer may help.  It's at the end of the "article."

UpFront is a daily front-page news and opinion column.  Comment directly to Winthrop Quigley at 823-3896 or wquigley@abqjournal.com Go to www.abqjournal.com/letters/new to submit a letter to the editor.

Take a moment to read the "front page news and opinion column" here.

Proposals for Jump-Starting 

Recovery in New Mexico

The Albuquerque Journal

UpFront

Winthrop Quigley

City Edition, October 2, 2012

The Journal's Economy Watch survey of local conditions and the University of New Mexico's economic development summit two weeks ago spur some thoughts about our excruciatingly slow rebound from the Great Recession.

People are nervous, even frightened.  Economy Watch shows Bernalillo County lost 2,700 jobs between the first quarters of 2011 and 2012.  1,500 of them were private sector jobs.  Personal income state wide is growing at about a third the pace one would expect during a robust recovery [1].

It may be small comfort, but it does pay to remember that the nation's economy has been improving for a few years now, albeit at a glacial pace, and that all economic cycles, both good and bad, reverse eventually [2].

Another bit of small comfort: A paper presented at last month's conference of central bankers in Jackson Hole, Wyoming, said our nation's persistent unemployment is probably cyclical and not structural.  That means that given enough time, the economy will simply heal itself [3].

More comforting yet: UNM's summit, called to examine the university's role in improving the economy, was to attract 50 to 75 people.  About 400 showed up.  Albuquerque Mayor Richard Berry, who addressed the group, told me later this is big.  It shows that many people, not just government officials and economic development professionals, want to help get New Mexico moving.

Berry spends a lot of his time selling Albuquerque to out-of-state companies as a great place to expand or relocate.  He told the summit that the consultants who advise those companies track how states and cities tax businesses, the quality of the work forces and other factors.  A client tells the consultant what factors are most important, and the consultant goes through the check list and recommends the cities and states that meet a client's criteria.

Consultants and the companies they advise usually are impressed with Albuquerque's workforce and the quality of life, Berry said.  Some companies the mayor would like to attract, manufacturers in particular, never hear about Albuquerque because the consultants can't check off two items on their lists.

New Mexico doesn't allow a single sales factor when calculating corporate income tax, and we don't have a right to work law [4].  Absent those things, some companies won't even give us a look, he said.

A single sales factor lets companies pay tax only on income derived from sales within the state.  Companies that export most of what they make, Intel for one, would pay very little corporate income tax in New Mexico.  Right-to-work laws prohibit making union membership or payment of union dues a condition of employment.

Berry said both propositions are controversial.  It's the legislature's job and not his to implement them, and voters may not want them.  But, he said, reasonable people ought to be able to leave ideology at the door and have a conversation about what could improve New Mexico's economy, even if it means inviting a little controversy.  And if anyone has a better idea, Berry is all ears.

Berry's fellow Republican Gov. Susana Martinez also spoke.  She encouraged universities to develop synergies with national laboratories, an effort that has been going on for 30 years with only middling results.  Then, as she does at every speech I've heard her give, she said kids who can't read by third grade should be held back and under performing teachers should be called out.

If the Governor has a jobs policy, this would have been a good time to let us know what it is.

The summit promoted the rain forest model of economic development.  The model calls for the creation of "ecosystems" that help entrepreneurs thrive and companies grow.  It is inspired by the way the San Francisco Bay Area's Silicon Valley has done business for years.  Its foundation is encouraging trust among people.  Among the seven precepts of the rain forest approach are "experiment and iterate together," and "open doors and listen."

Not for the first time, I found myself thinking that New Mexico's economy is hostage to our culture, which is hostage to our history [5].

The San Francisco area developed a trader economy in the 19th Century built around the seaport.  Trading with people across the ocean whom you have never laid eyes on in the 19th Century required a great deal of trust.  Trust was part of the ecosystem long before anyone dreamed of Silicon Valley.

New Mexico in the 19th Century learned the lessons of mistrust.  People lived in isolated mountain valleys where they could find flowing water they protected from outsiders with their lives.  Property taxes were manipulated by politicians in league with speculators to throw farmers off their land.  Rail road, cattle and mining interests dictated governance.  Trade with the outside world didn't take off until after World War II.

There is nothing wrong with the rain forest model.  To implement it in New Mexico would require a cultural revolution.  I can think of few politicians and even fewer business people who are prepared to lead one.

UpFront is a daily front-page news and opinion column.  Comment directly to Winthrop Quigley at 823-3896 or wquigley@abqjournal.com Go to www.abqjournal.com/letters/new to submit a letter to the editor.

Taking a Closer Look

Although MeanMesa has no reluctance whatsoever in taking Mr. Quigley's comments under the microscope, there's little to be gained by limiting our review exclusively to him.  There are, clearly, many New Mexican residents and pundits who can sit with him quite comfortably in MeanMesa's "defendant's dock."

As we review Mr. Quigley's column, MeanMesa can strive to validate the tone of this post by looking for a larger picture, that is, although scrutinizing his comments, also seeking generalizations beyond his specific ideas. As is the case with much of the material similar to this, everything reads like the Boy Scout rule book.  The identical talking points have been repeatedly hammered down the throats of anyone who would listen to them.

 So, to begin, let's examine a few of them -- by the numbers.

[1.]  Personal income state wide is growing at about a third the pace one would expect during a robust recovery.

Personal income in New Mexico, the poorest state in the country, has never particularly grown during prosperity here or during a robust recovery in the rest of the country.  The State's unemployment was bad enough as the country entered the Great Republican Recession of 2008 that the downward change was actually less severe than what was encountered in more prosperous states.

The "this isn't a robust recovery" line is a rather road weary talking point borrowed from Rupert Murdoch and repeatedly parroted by both Governor Romney and his side kick.

[2.] ...all economic cycles, both good and bad, reverse eventually.

What is presently happening to the country is not a coincidental "economic cycle."  The economy was gang raped during the Bush W. autocracy.  Reframing the 2008 economic disaster as some sort of deterministic divine prank fails to convincingly disguise the criminal nature of its causes, although this overly generous characterization might possibly sell as persuasive in heavily Catholic, tragically low information, New Mexico.

Remember, this crack appeared on the front page of the Journal.

[3.] A paper ... said our nation's persistent unemployment is probably cyclical and not structural.  That means that given enough time, the economy will simply heal itself. 

If one is simply interested in promoting the faux-FOX image of the Obama Administration as ineffective and incompetent, what better arguments than:

a. the persistent unemployment is cyclical and not structural; and,

b. the economy is simply healing itself?

Really, Mr. Quigley?  Unemployment is not persistent, although it is quite durable this time.  It was caused by the Republican Administration of George W. Bush.  It is durable because the damage inflicted by W's oligarchs was so grave that the country is still staggering four years later.  $6 Tn worth of new Republican debt didn't help at all.

And, "the economy is simply healing itself?" Mr. Quigley!  The President's policies have nothing to do with it?  Tune your radio into FOX and lock your entire attention to it -- just be sure to discard any possible skepticism first.  You'll be surprised at how few join you in your "listening party."  That -- the quivering adolescent FOX hyperbole, the convenient departures from fact and the constant amalgamation of "interpreted" news and opinion -- worked for a while, but its thrall from the 2010's has now been cleansed by pain in most cases.

[4.] Some companies the mayor would like to attract, manufacturers in particular, never hear about Albuquerque because the consultants can't check off two items on their lists.

New Mexico doesn't allow a single sales factor when calculating corporate income tax, and we don't have a right to work law.

The voices which yearn so fervently for a return to the economy of the 1950's are always attracted to "supply side" anomalies.  In good times or bad times, ALEC in New Mexico (and, of course, everywhere else, too) continues with its relentless legislative opportunism.  If "People are nervous, even frightened." [second paragraph] ALEC's oligarchs see a ripe opening for promoting even more arcane supply side "relaxations" to increase profits.

"Relax" environmental regulations.

"Relax" unemployment benefit obligations.

"Relax" any reasonable hesitation about incentive "tax expenditures."

"Relax" labor rights for collective bargaining.

"Relax" due diligence over New Mexico State's oil investment fund.

The poorest state in the union should lower corporate taxes, right?  And, the poorest state in the union should pass a "right to work for less" law, right?

Otherwise, the corporatists who insist on these favors won't come here.  Okay.  Mr. Quigley and his ilk should probably consider making a nice long list of all the "high paying jobs" that have come to New Mexico -- and stayed in New Mexico -- because of the ALEC authored tax expenditures and legislative incentives.  The state ponies up $1.3 Bn annually in tax expenditures to incentivize new business here -- where is the new business?  [MeanMesa: Recalling Martinez]

 [Anyone interested in the local ALEC story might enjoy the MeanMesa post on the subject:
 ALEC in New Mexico - Anti-Democracy on the High Desert ]

[5.] Not for the first time, I found myself thinking that New Mexico's economy is hostage to our culture, which is hostage to our history.

Although MeanMesa very strongly agrees with Mr. Quigley's premise here, there's a little more to it than simply mouthing the words.  New Mexico's social culture truly does introduce obstacles to any path to a modern economy, but they are not supply side obstacles. 

The "elephant in the living room," at least, the largest of the elephants, is the tacit acceptance of poverty as an inescapable disadvantage by parochialized New Mexicans.  For six centuries they have been told -- every Sunday -- about the pious nature of suffering.

The "second largest elephant in the living room"  is the blinding illiteracy arising from a public educational system that has been in an over priced, flat line, failure state for decades.  New Mexico is so good at producing barely literate high schoolers that we could conceivably market it as a strategic weapon to be exported to any adversary the DOD desired to crush without firing a shot.

We've got poverty perfected to an exquisite state of refinement.  There are plenty of unwanted pregnancies, unemployable teen gangsters, horrendous policemen and under-20 heroin addicts, every one of them awash in the stark hopelessness of a social culture which is not only suspicious about, but essentially allergic to, any glimmer of economic prosperity. 

However, MeanMesa departs from Mr. Quigley's view right here.  Incorporating another truck load of ALEC legislation or bribing any more high tech manufacturers to come to New Mexico is not a solution.  This brutal approach is more akin to the annual cartoon with Lucy holding the football for Charlie Brown.

These wretched policies do not roll in on the high desert wind. They might be ever so slightly more palatable if they were simply the machinations of New Mexico oligarchs, but they're not.  Time after time the State Treasury is gutted by the most recent "idea" emerging from the cess pools of the ALEC "think tanks."  Every time, the "idea" winds up draining money which could have actually accomplished something if it had been applied sensibly

New Mexicans can not and will not ever staff Silicon Valley factories here.  Most of the Round House bunch wouldn't recognize a capacitor if it were eating one of ALEC's budget proposals.  The federal laboratories are in New Mexico because they needed to be too far inland for the Japanese to bomb them before they could construct an A bomb.  It wasn't New Mexicans who were engineering and managing that effort -- those folks came from Princeton.

The Governor is worrying about how many third graders can read and how many teen agers in Espanola aren't addicted to heroin yet.

Thanks for sharing your great conversation with the Mayor, Mr. Quigley.  MeanMesa will be posting an alternate "jump start" proposal on this blog in a few days.