Who is right on economic development?

I like Fred Nathan. His group Think New Mexico has largely embraced the view that New Mexico is in dire need of a healthy private sector and this can only come about with the adoption of free market policies. Fred recently had an article that outlined some specific reforms. Those reforms were countered by some conservative voices including Kenneth Brown who used to work at Rio Grande Foundation and, writing in the Santa Fe New Mexican, Jack Stamm, a friend and supporter of RGF.

Undoubtedly, Rio Grande Foundation differs from Think New Mexico in our approaches and policies. But where do we come down on their proposals? For starters, Nathan’s group proposes an economic development strategy based on post-performance incentives as has been enacted in Utah. Nathan claims great successes based on these strategies in his article. RGF is all for cost-benefit analysis of all economic incentives.

The idea of rebating companies for 30 percent of the new tax revenue produced when they relocate to or expand operations in New Mexico also makes sense and should be considered in the Legislature. Of course, we already know that film incentives are bad policy and that Right to Work and other regulatory and tax reforms are direly needed. I wouldn’t say there is much disagreement here.

Nathan’s other proposal involves allowing New Mexico’s public universities to offer in-state tuition to international STEM students and to enhance their STEM programs for local students. I don’t have a huge problem with this either although I question its effectiveness: The federal government controls immigration policy and that is where the bottleneck is in terms of skilled workers. Also, just because a student comes to New Mexico as a student doesn’t mean that they will choose to set up business here, especially once they learn about our business-killing gross receipts tax, our regulations, and our poorly-trained workforce resulting from an inadequate K-12 system.

In other words, bringing new talent here to start businesses will take a long time (they’re still college students by definition) and is a high-risk proposition. It might not be a bad idea, but New Mexico needs jobs and economic prosperity NOW, not in 10 years.

To conclude, I think Fred and his group are attempting the “art of the possible” given our current Legislature which, by and large, is controlled by the economically-ignorant. Rio Grande Foundation is looking big-picture, hoping to change public opinion to the point that whoever controls the Legislature embraces free market ideas because they are proven to work.

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