New Mexico: the Greece of North America?

Check this article out from The Economist which discusses the relative debt-to-GDP ratios of various states in the US relative to what they would look like if they were independent states within the European Union (as Greece is).

As I wrote recently in the Albuquerque Business Journal, the transition from dependency to fiscal and economic independence will not be easy, but it is necessary and it can be a very good thing for our state’s economic health:

Winthrop Quigley recently discussed a study by New Mexico’s Bureau of Business and Economic Research which found, among other things, that our state could lose 20,000 jobs by 2014 due to the failure of the so-called “SuperCommittee” in Congress and the use of sequestration to “cut” spending.

While Quigley represented the study well, there are a few points that need to be made. First, the sequestration process contains no cuts. Rather, the process only slows the projected growth of the federal government slightly between now and 2021. If we as a nation are ever to get our fiscal house in order, far more dramatic cuts are essential.

The other point to be made is that BBER assumes that money not spent on federal projects in New Mexico will not be spent at all. For starters, policymakers could, responding to these cuts, make policy decisions that spur economic growth. Also, the folks working at Los Alamos and at other federal installations are among the brightest members of our society.

Surely, they could do equally-innovative work in the private sector, probably far more efficiently and targeted at the free market rather than government.

Yes, shifting New Mexico from a federally-dependent economic model to a market-dependent model will not be easy or pain-free, but short term pain will create long-term gain, especially if our legislators realize that federal reliance is no longer an option.