Winthrop Quigley’s merry band of economists discuss ways to turn NM’s economy around

Recently, the Albuquerque Journal’s economics reporter, Winthrop Quigley, decided to take some time off from pimping for Voices for Children and asked some economists what to do about New Mexico’s flailing economy. To his credit, Quigley started on a strong note by saying that governors receive too much blame when times are bad and too much credit when times are good. Obviously, this depends on the legislative hands they are dealt as well. In Gov. Martinez’s case, she has had a GOP-controlled House for one session, but nearly all of her agenda was blocked by the Democrat-controlled Senate.

Below I have summarized each economist’s points and briefly discuss their merits.

Jim Peach, NMSU: Tax incentives and job-training funds don’t work. We need a skilled workforce. Peach is generally on-target. Targeted incentives and job-training funds are inadequate. A better education system from the Kindergarten to the higher education level would help. My only quibbles with Peach are: It will take at least a decade to create a skilled workforce. Do we want to wait that long? What are your specific ideas, more spending on schools or reforms like school choice etc? While incentives don’t work, how about real policy changes that would make us more attractive to the construction industry (NM was just ranked 51st in the nation on friendliness to the construction industry)?

Jeffrey Mitchell, BBER at UNM: Similar to Peach, focus should not be on tax incentives, cheap labor and low business costs. Need to invest in human capital for decades. Mitchell echoes Peach, but implies that New Mexico has not invested in human capital. This is often a proxy for “we need to spend more on education.” According to this data — H3 on page 52 — from the National Education Association (NEA), New Mexico spends 13th-most in the nation per-capita on “all education.” I’d hardly say that represents “under-investment” in higher education.

M. Brian McDonald, former BBER director, now a consulting economist: Richardson’s tax cuts were bad, the Spaceport and RailRunner were also bad as was elimination of the grocery tax (which resulted in a higher gross receipts tax). It is certainly true that the projects mentioned as well as the grocery tax were bad public policy. I’d take issue with the idea that reducing New Mexico’s income tax didn’t have a salutary impact. They did improve it, but the national economy went into a deep recession shortly after those cuts were phased in. Again, “workforce” issues are McDonald’s focus.

Conclusion: It is easy to see that New Mexico needs to improve its workforce and its education system. Quigley seems to be making the case for expanding early childhood programs yet again when in reality there are several immediate and cost-effective policy reforms that can be undertaken first. Those have been consistently ignored by Quigley who seems to see only two options for New Mexico policymakers: 1) expand welfare 2) expand corporate welfare.