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New Mexico: the entitlement state?

By | 4/12/12, 5:56 am | Commentary

Stephan Helgesen

Stephan Helgesen

Our best hope for survival and prosperity during these trying times is to build a new, diversified economy that relies more on private sector growth than government.

There’s so much talk about America becoming an entitlement culture, what with the enormous increase in food stamp clients and welfare and unemployment recipients. But there’s little discussion about how our states have been slowly weaned onto an entitlement mentality through thousands of earmarks, public works projects, military bases and federal facilities like national labs, prisons and satellite government offices of every shape and size.

We all know that our modern economy relies on a combination of public and private investment to stay afloat, and New Mexico is not alone. Just look at the $6 billion/year impact our national labs have on our communities – except that our dependency on public money (and that of many other states) is way out of proportion with our population, if you look at it like a statistician.

Here in the West, from Texas to California, the federal government is very definitely the 800 pound gorilla in the room, with billions of dollars invested in our states and millions of jobs (both public and private sector) dependent upon that investment. Think: suppliers, manufacturers, and service providers – literally thousands of small businesses selling something to Uncle Sam’s many installations.

If we look at the big picture, the U.S. government has around two million employees, excluding the post office, on its payroll. Most of its employees (85 percent) work outside Washington, D.C., but without the federal footprint in D.C. there would be few “Beltway Bandits” (lobbyists), consultants, nonprofits, union headquarters, etc. located there.

Instead, a gaping revenue hole would exist for the D.C. government to fill. Conversely, if there were no national labs or air force bases in New Mexico, we’d have a mass exodus of service providers and suppliers headed out of town.

Where would the small businesses go?

But where would all those small businesses head if the Colorado labs like NREL and Argonne, or the Lawrence Livermore Lab in California, or the vast underground military defense installations in our neighbor states to the north and west didn’t exist? These companies would be like ghost ships perpetually sailing an endless sea, desperately in search of a safe harbor, or they would sink without government contracts.


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Calvin Coolidge said, “The business of America is business.” Back in Coolidge’s time, the federal government was miniscule (approximately 500,000 civilian government employees) compared to the behemoth it is now.

If the quote were updated, it would probably read: “The business of America is government,” as our government dependency has reached epidemic proportions. If we’re looking for someone to blame, we don’t have to look far… our own mirror will do, and then there are our elected representatives. Generations of congressmen and senators have willingly fed at government’s trough at our behest.

We have encouraged them to fight for our fair share of the pork year in and year out, and that pork has taken the form of institutions and installations that have created an addiction that’s been nearly impossible to break.

Going cold turkey?

The piper must be paid. Many Americans now realize that to continue on the path of government expansion will eventually create an unbreakable and dangerous dependency on a host that will soon be unable to deliver the goods as our enormous national debt ticks rapidly upward at over a trillion dollars per year, and the largest single social program in American history, the (Un)Affordable Patient Healthcare Act, kicks in to cripple small business owners.

Is our addiction reversible?

There are only a few remedies for America’s addiction to government’s largesse, and they all involve reducing our dependency on it and taking a new political path to achieve it. The good news is that most of our congressional leaders finally realize it, too, and they are beginning to see that business as usual (earmarking) isn’t working. Americans are also waking up to the realization that every sugar daddy expects something for his money.

Government’s price is often our tacit agreement with its decisions and our promise to keep any criticism to ourselves. Just as votes are bought with campaign promises to fund special projects, our allegiance is often paid for with jobs at government institutions.

Our best hope for survival and prosperity during these trying times is to build a new, diversified economy that relies more on private sector growth than government. It’s that simple. And that’s the main disagreement between the two major political parties. If we don’t solve that ideological impasse, we’ll run into a brick wall of debt and dependency that will force our hand, as many prominent economists forecast.

Assuming we have the will to downsize our government, the operational choices will be difficult. Here in New Mexico we’ve seen how the BRAC (Base Realignment and Closure) Commission operates, and while it’s not perfect, it may be the model to use with our labs and other installations as well.

But before any decisions are made to close facilities, there must be objective, defensible studies done on the impact that closing facilities would have on the local communities and surrounding areas. Traditionally, the best choices are not to simply close installations, but re-mission them. That way America gets what it wants without the upheaval associated with wholesale shutdowns.

While this is happening, we in New Mexico will need to reset our level of expectations, because no government facility lasts forever, just as none of us gets out of life alive. We will need to have a top-down and bottom-up review of our core competencies so that we can transform them into marketable strengths to attract important outside investment. This will take time and dedication.

After all, building a better mousetrap means thinking like a mouse AND the trap at the same time.

Stephan Helgesen is a former U.S. diplomat and former director of the N.M. Office of Science and Technology. He is currently the honorary German consul in New Mexico and heads up his own export consulting company. He can be reached at helgesen@2ndopinionmarketing.com.

IcarusPhoenix20:08 April 18, 2012

Er, stever, they’re words on a screen; just because you know what tone-of-voice you meant those words in doesn’t mean that the words themselves automatically convey that same tone-of-voice to every person who reads it; in short, yes, you’re doing something wrong.

stever16:39 April 18, 2012

IP, if my ridiculous and unprovable assertion in response to gofdisks, equally ridiculous and unprovable assertion was not obviously seen as a joke, then I must be doing something wrong. 

IcarusPhoenix14:18 April 18, 2012

Dr. J and stever:
 
You know, I’ve never once specifically denigrated the intellectual capacities of either of you; I have questioned why you frequently insist on believing things that are demonstrably untrue and often don’t believe things for which there is evidence, but that’s questioning your knowledge, not your intellect.  Methinks you both have some serious insecurities if you automatically assume that my disagreements are the same as me calling you both stupid.

Dr. J10:03 April 18, 2012

So true stever, no matter how much education, experience, and intelligence we may possess we will always come up short if IP disagrees with us.  Fortunately, the exact opposite is also true.

stever08:31 April 18, 2012

IP  You obviously missed my point, I’m not as smart as you so next time I’ll try harder.  Please forgive me.

Michael H Schneider08:10 April 18, 2012

let’s try to agree that government in general has become too pervasive and meddlesome in our affairs. OK?
 
No. I can’t agree because I don’t know what that means.
 
The problems with general statements like that is that we can apparently agree while having very, very different ideas of what we mean. I could agree, thinking of recent state government efforts to eliminate abortion, which I think are too intrusive. You could agree, thinking of the new consumer financial protection laws at the federal level. We might agree on the general statement, but you might think the abortion laws are just fine, and I might think the financial regulations are just fine, so we’d be deluding ourselves that we were in agreement.
 
I LIKE some meddling in my affairs. I like the fact that I can go into any supermarket in this country and be pretty sure that if I buy a piece of meat that it will be clean and wholesome. That I can do this even if I’m shopping in some small town in a state I’ve never been to before. 
 
If you want a fer instance, try the Patients’ Affordable Healthcare Act.
 
What don’t you like about this law?
 
I think it’s pretty lousy, myself. I’d have preferred fully socialized medicine, like the VA. As a second choice I’d have taken a single payer system, like Medicare. As a third choice, I’d have like a public option. This is a distant fourth choice. The only thing going for it is that it’s far, far better than our current system – and it managed to get enacted.
 
I like the fact that
- it will probably reduce overall medical expenses, saving everyone money
- it eliminates the problem of pre-existing conditions when shopping for insurance
- it eliminates the problem of recession of insurance contracts
- it eliminates some of the money insurance companies waste making underwriting decisions
- it reduces the number of people who free-load on emergency rooms and hospitals, making things fairer
- it will most likely save some people’s lives
 
I think those are all good results, and they are good results that the market could not and/or would not provide. So we needed government to act to get those good results. It’s unfortunate that it’s not a better law, but sometimes we get the laws that congress passes, and not the laws that we would have preferred the congress to pass.

IcarusPhoenix20:18 April 17, 2012

stever:
There is no evidence that government is more efficient than private business.
 
Aside from Medicare, the Post Office prior to 1969, the United States armed forces, government vs. private prisons, the interstate highways system, the Tennessee Valley Authority, the FDIC, and a whole slew of things that you have apparently intentionally chosen not to educate yourself about.  As Mr. Schneider pointed out, belief in an absolute is a nonsensical prospect.  Just because the private sector is the correct place for manufacturing, many kinds of research (which are often still government-funded anyway, despite the claims of certain archaic laissez faire obsessives), and the majority of our economy does not mean that it is the correct place for all of our economy, nor that we should allow the private sector free reign over an artificial economic system created by the people’s government without oversight by the people’s government.

Michael H Schneider18:46 April 17, 2012

Just to throw in some more data, let me back up a statement I made last week. I said “On the contrary, compared to a lot of other advanced and civilized countries, our government is too small – it fails to provide the services that make for happy and prosperous civilizations.”
 
Look at this chart showing general government receipts as a share of GDP. Note that this is a proportion of GDP, meaning that when the GDP is suddenly lower because of a terrible great recession, this number will spike upwards. Note that this is for 2009, when we were in a terrible great recession – but so were a lot of countries, so maybe that doesn’t matter.
 
Here’s the chart, showing that government receipts (taxes + fees and such) are much lower than most other civilized places:
 
http://www.tnr.com/blog/jonathan-cohn/102726/happy-tax-day-2012-us-comparative-burden-cut-entitlements

stephan helgesen18:46 April 17, 2012

Dear Mr. S., Thanks for the history lesson and for your comments. Unfortunately, we cannot always take a pragmatic view of problem-solving when it comes to government (“properly identify the situations in which the market fails and government should act”) because we have a Constitution which more or less clearly defines what government can and cannot do regardless of the facts on the ground or what our prevailing wisdom tells us should be done. We must try to make the best of what we have while operating within the bounds of our purview – public and private sector. While I think your points are well-made, let’s try to agree that government in general has become too pervasive and meddlesome in our affairs. OK? To me, that’s every bit as bad as  too big –  too much of a disruptive intervening force. Let’s face it, size matters, especially when the big ‘stick’ we’re being beaten with is an overreaching executive branch that, in my opinion is ignoring the very documents that grant it power. If you want a fer instance, try the Patients’ Affordable Healthcare Act. I pray that our Supreme Court strikes it down. If they don’t you’ll have a multitude of examples (facts) that you can use to make the case for a more laissez faire (or at least benign) government…or not. Peace.

Michael H Schneider12:44 April 17, 2012

Thank you for your reply, Mr Helgesen. You say:
 
The arguments I’m making for NM’s future are based on my fervent belief…
 
That’s the problem. My argument isn’t based on belief (fervent or otherwise) but on some facts, some history, and a theory based on facts and history.
 
The theory: in some situations the free market works fine; in other situations the market fails, and the government should act to avoid bad outcomes. That’s the outline of the theory;  it then explores identifying in which situations the market fails (but that’s for a later comment).
 
Some history: take the story of the Broad Street Pump, 1854, London (if you don’t know the story, Google is your friend). The lesson I draw is that individuals who are choosing a supply of drinking water may not have the information available necessary to making a good choice. In other words, the market fails, and a lot of people die of cholera. If the government can see the big picture, if it looks at a range of information not available to individuals, it can act to deprive individuals of the freedom to drink poisonous water, and a lot fewer people will die of cholera. To restate the lesson (theory): when individuals don’t have, or can’t intelligently evaluate, the choices available they won’t make good choices in the market, and the market won’t produce a good result.
 
More history: patent medicines in the US before the passage of the Pure Food and Drug Act of 1906. Before the government intervened, people were buying patent medicines which secretly contained such addictive drugs as heroin, but which didn’t identify their ingredients. As you can imagine, some consumers ended up with some problems. So the government intervened in the market, required truthful and accurate labeling of ingredients, and some bad outcomes were avoided.
 
Government interventions cost money. Whether you’re talking about public health and clean water, or talking about product labeling, government interventions cost money.  Even where they make a lot pf people happier and healthier, they cost money and make the government bigger.
 
So the right question is: is this particular government expenditure worth the money? The wrong question is: is government too big?
 
We’ve got a classic case of “asking the wrong question” right in front of us:
 
Qofdisks says: There is no evidence that private business is more efficient than government.
 
Stever says: There is no evidence that government is more efficient than private business.
 
I say: We need to properly identify the situations in which the market fails and government should act, and distinguish them from the situations in which the market does just fine. The question of whether the government does things through its own employees (e.g. VA health care) or does things by paying private businesses (e.g. Medicare) is a different question. In either case the government pays. The question is: are we using the government to pay for the right things?
 
That’s why I object to your premise, your claim that the government is too big. That makes no sense. You can’t decide in the abstract that government is too big, or too small, or just right. You can only look at each situation, and ask: if the government spends money to do this particular thing, will it make us (in general, overall) happier, healthier, and/or wealthier? If so, the government should do it. Otherwise, not.
 
I don’t mean to denigrate your experience, but simply saying “believe me, trust me, I’ve seen the world and I know” just doesn’t impress me. It’s a simple claim to authority, and I’ve always found that an explicitly argued theory based on verifiable facts is a superior method of discerning truth.
 
 
 

stever10:41 April 17, 2012

There is no evidence that government is more efficient than private business.  See that’s easy

qofdisks09:41 April 17, 2012

There is no evidence that private business is more efficient than government.  I would believe that true small businesses with a passionate and involved owner can be efficient and provide good quality until they are taken over by a predator like Bain or worse.  Perhaps you think that Bain style of doing business is more “efficient” with the laying off of the best and most experienced workers, the looting of benefit plans, lengthening of work hours and the demoralization of the underpaid workers that are left just before the entire operation is outsourced overseas?
This is the type of efficiency applied by those short term profiteers that are ignorant of the true ramifications of the second law of thermodynamics and systems theory of modern physics.  If you squeeze too hard, the system becomes un-self-sustaining, loses self-organization and collapses.  
Something long ago went wrong with the notion of profit over product model.  Contrary to erroneous economic theory that greed will mitigate quality and prices, the evidence shows that excessive profits do just the opposite and in fact, are undermining civilization.  
Denmark happens to have strong governmental regulatory control on it’s economy and businesses relative to the the United States. I would love for our nation to be as enlightened as the European country of Denmark in some ways.

stephan helgesen06:58 April 17, 2012

Mr. Schneider, Thanks for your comments. This is a ‘think piece,’ and I’m glad it got your gray cells bubbling! If I were to make the arguments you say I would have had to have written a 5,000 word essay. I lived and worked in 24 different countries in my work life and have seen our federal government, foreign governments and our state government up close and personal and as such have some experience on which to base my assertions. For instance, when I lived in Denmark (on three different occasions over a 30-year period) I saw the government sector account for about 40% of the country’s jobs. It eventually came down, but it took a mega change of attitude and political will to do it. There’s no question in my mind that we have a spending problem here in the USA and an inefficiency problem. This goes, to a smaller extent, for NM as well. Our current governor has attacked the spending side, and I hope she now focuses on the efficiency side.
The arguments I’m making for NM’s future are based on my fervent belief that unbridled government dependency will eventually lead to a breakdown in the entrepreneurial spirit and lead to a disparity between the private and public sector that is more like the Grand Canyon than the Tijeras Canyon.
Sounds like you have some interesting opinions. Why not send them in in the form of an article on what we ought to be investing in? I would welcome reading it. Thanks, again.

qofdisks09:31 April 16, 2012

“The idea that the “scope of government” is going to get smaller is preposterous. The capacity of government to provide justice for individuals, or rein in the power of corporations may get smaller. Just because the prison is “privatized” doesn’t mean it isn’t an institution of “government”.” by David54

“In the United States, the only honest fiscal solution is to end the Bush tax cuts, end foreign military adventurism, stop pretending that it’s necessary to spend more on military and ostensible national security hardware than the rest of the world combined, and end all forms of corporate subsidies. If a corporation cannot survive on its own it deserves to die. If a corporation’s survival serves some vital social or security need and it cannot survive on its own, then it should be socialized rather than publicly subsidized. After all, public subsidies to privately held corporations already are a form of socialism, it’s just that much of the money goes into private pockets rather than serving the public good.”
http://www.dailykos.com/story/2012/04/15/1083315/-The-cruel-stupidity-that-is-economic-austerity#comments 
 

Michael H Schneider20:02 April 13, 2012

Many Americans now realize that to continue on the path of government expansion will eventually create an unbreakable and dangerous dependency on a host that will soon be unable to deliver the goods as our enormous national debt ticks rapidly upward at over a trillion dollars per year, and the largest single social program in American history, the (Un)Affordable Patient Healthcare Act, kicks in to cripple small business owners.
 
Wow. That’s a truly remarkable sentence. Such a collection of fallacious assertions and non sequiturs I haven’t seen in a long time.
 
Government is not too big. You assert, and assume, that government is too big, but you don’t actually give any evidence to support this belief.  On the contrary, compared to a lot of other advanced and civilized countries, our government is too small – it fails to provide the services that make for happy and prosperous civilizations.
 
The PPACA will make this country more prosperous, healthier, and happier – your unsupported assertion to the contrary notwithstanding. Health care is well known as one of those situations where the free market cannot possibly produce an optimum solution.  As with clean water and sewers, government action is necessary for the benefit of everyone.
 
If you think that there are government programs in NM that should be cut, then make the argument.
 
Perhaps you think that the US doesn’t need an Air Force any more, so we should close all the air force bases. Okay, make that argument.
 
Perhaps you think that the US doesn’t need a nuclear weapon stockpile, and therefore we should end that function at Kirtland. Okay, make the argument.
 
Maybe you think that we don’t need to worry about nuclear proliferation, so we should stop doing that at Kirtland. Okay, make the argument.
 
Maybe you think we don’t need any border security, and the federal government should shut down ICE and DHS. Okay, that would reduce the government footprint in NM. Make that argument.
 
Make the argument for cutting specific things – don’t just keep making the nonsensical claim that government is too big – point to what you want to cut.
 

Dr. J08:47 April 12, 2012

Very true Mr. Helgesen, but our left wing reps in DC keep telling the people how lucky a state we are to receive much more fed funds than we pay.  They act like we are a virtual gold mine for fed funds and that is good they say.  Meanwhile the truth is we are 45th-49th in the nation in most all measures of wealth, prosperity, success, and education.  All those fed funds just put us on the government dole and dependent on a nanny state, not a formula for success in America.

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