NMAG 2.ppt
53
05/24/22 1 New Mexico First How Community Capitalism Can Revitalize the State Economy
Transcript of NMAG 2.ppt
04/12/23 1
New Mexico First
How Community Capitalism Can Revitalize the State Economy
04/12/23 2
04/12/23 3
Introduction
TINA vs. LOIS
04/12/23 4
TINA–There Is No Alternative
Get Toyota
Prioritize Export-led Development
04/12/23 5
LOIS–The Alternative
LO: Local Ownership
IS: Import-
Substituting Development
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Overview
LOIS Is Better Than TINA
LOIS Opportunities in New Mexico
A Key Challenge: Financing LOIS
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Challenges for Sustainable Community Development
• What’s Being Produced?
• How?
• Who Owns?
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The Costs of Going Global
• $$$ to Lure Firms
• $$$ to Keep Firms
• Falling Standards
$0$500
$1,000$1,500$2,000$2,500
Subsidies Per Job ($1,000s)
Illinois Indiana Alabama
Reinvesting Kentucky New York
Florida Washington
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Advantages of Local Ownership
• High Standards
• No Destructive Exits
• Long-Term Wealth
• Flexible RoR
0%
5%
10%
15%
20%
25%
Library Bureau RoR
Pre-Buyout Post-BuyoutBreak Even
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Examples of Local Ownership
Small Business 50% U.S. Economy
Nonprofits 6.5% GDP
Cooperatives 47,000 Success Stories
Municipally Owned 6,300 Examples
Worker Owned 2,500 50+% ESOPs
Public-Private Partners
Burlington Telecomm
Community Held Ben & Jerry’s (Early)
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Community Stock Ownership
Green Bay Packers
- Hybrid Nonprofit
- $25 Voting Shares
- 60% Local
- Poison Pill
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IS - Import-Substitution(Community Self-Reliance)
• What are the risks of dependence?
• Why favor IS-development?
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Risks of Import Dependency
• More Vulnerable
• Lower Multiplier
• Lower Tax Receipts
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Healthy Economic Multiplier
UNMStudents
UNMPurchasers
NMFarmers
NM State Government
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Weak Economic Multiplier
UNMStudents
UNMPurchasers
NYNYFarmersFarmers
NYNYStateState
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The Perils of Chains
$0
$20
$40
$60
Impact of $100 Spending (Austin)
Borders BookPeople
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Advantages of IS-Development
• Minimize Vulnerabilities
• Maximize Multiplier
• Maximize Tax Receipts $0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
Leaks in Vermont ($ Millions/Year)
Credit Card Interest Mortgage Interest
Energy Insurance Investments
Food
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Self Reliance Is Not Autarky
LocalElectricit
y Demand
Wind Machines
WindmillManufacturi
ng
Import
Import
Import
OutsideUtilities
OutsideWindmillManufacturers
OutsidePartsManufacturers
NorthDakota
RestOfWorld
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Community Scale Economies
Old Economy New Economy
Banking CitiCorp $100 M Assets
Energy GW Nuclear KW Wind/Solar
Manufacturing
Multinationals
Flexible Networks
Materials Anaconda Recycling
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Why LOIS Is Competitive
• Inefficiencies of Global Distribution
• Energy Cost Escalation
• Environmentalism• Niche Marketing• Personalized
Services
• Brains, Not Brawn• Shrinking Subsidies• Localist Preferences• Humane Workplaces• Terrorist Resistant
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Inefficiency of TINA Distribution
Food Systems
Telecommun’s
Electric Utilities
Where Food Dollar Goes
0
20
40
60
80
100
1900 1990Year
Distribution
Inputs
Farmer
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Services Are Mostly LOIS
• Industrialized Trends
• Internet Trends
“A steadily rising share of the work force produces services that are sold only within that same metropolitan area….And that’s why most people in Los Angeles produce services for local consumption, and therefore do pretty much the same things as most people in metropolitan New York – or for that matter in London, Paris and modern Chicago.”
- Paul Krugman, Pop Internationalism
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LOIS = Homeland Security
“Even before terrorists leveled the World Trade Center, economic and technological forces were combining to decentralize the economy. Sept. 11 will only reinforce these centrifugal forces…”
Wall Street Journal, p. 1October 25, 2001
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II. LOIS Opportunities for NM
0%
100%
200%
300%
400%
NM v. US Economy
Mining Pipelines
Fed. Gov. Military
In which sectors does New Mexico produce relatively more than a typical U.S. state?
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(1) Food & Fiber
0%
10%
20%
30%
40%
50%
NM v. US Economy
Apparel (15% )Leather Goods (18% )Food Products (45% )
• Trendy Clothing
• High-Value Livestock
• High-Value Crops
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(2) Forestry
0%
10%
20%
30%
40%
50%
NM v. US Economy
Forestry, Fishing (13% )Paper Products (19% )Furniture (24% )Wood Products (44% )
• Reforestation
• Paper Industries
• Wood Industries
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(3) Biofuels & Biochemicals
0%
20%
40%
60%
80%
100%
120%
NM v. US Economy
Chemicals (10% )
Petroleum Products(109% )
• Petrochemical Success Is Unsustainable
• Carbohydrate Economy
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Oil Price Trends
WTI Crude
0
10
20
30
40
1998- 2003
$/bbl
SpotPrice
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(4) Renewable Energy
0%
1000%
2000%
3000%
4000%
NM v. US Economy
Oil & Gas (36% )Electricity & Gas (125% )Coal Mining (3,792% )
• Electricity & Gas Success Is Unsustainable
• Solar & Wind
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(5) Water Conservation
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(6) Relocalize Retail
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(7) Services
0%
10%
20%
30%
40%
50%
60%
70%
NM v. US Economy
Motion Pictures (25% )Business (63% )Educational (63% ) Legal (67% )
• Easily Filled
Gaps
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(8) Home-Based Businesses
• Integrate with
Family & Community Life
• New Industrial Parks
• Zoning Reform
The Going Local Staff
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(9) Manufacturing
0%20%40%60%80%
100%120%140%
NM v. US Economy
Electronics (135% )Durable Goods (54% )Nondurable Goods (31% )
• Hollow State
• Small-Scale Opportunities
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Flexible Manufacturing Networks
• 90,000 N. Italy
Manufacturing Companies
• 97% Have Under 50 Employees
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(10) Finance, Insurance, Real Estate (FIRE)
0%
20%
40%
60%
80%
NM v. US Economy
SecuritiesBrokers (21% )
InsuranceCarriers (50% )
Depositories(70% )
Real Estate(80% )
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III. A Key Challenge: Financing LOIS
LOIS Business
LOIS Investment
0%
10%
20%
30%
40%
50%
Wealth Creation v. Investment
n
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Finance Potential for LOIS
NM Household Wealth = $234 Billion
Real Estate ($72 B) Durable Goods ($14 B)
Deposits ($18 B) Bonds, T-Bills, Credit ($12 B)
Stock ($22 B) Life Insurance ($4 B)
Pension Funds ($39 B) Noncorp. Equity ($24 B)
Other ($9 B)
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Localness of Financial Assets
DepositsBonds, T-Bills
Stocks
Mutual Funds
Life Insurance
Noncorp. Equity
Pension Fund Reserves
Misc.
0102030405060708090
100
Low Higher
$ B
illions
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NM-PERA Investments
$Millions (Mid-2002)
$344
$2,746
$1,346
$1,646
$1,162
Commercial PaperUS SecuritiesStocksBondsInternational
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Traditional Economic Development Strategy
Small Business Dev.- Entrepreneurship TA- $$$ Assistance
Banking Access- Community Banks
- CRA
Deposits
Misc.
Noncorp Equity
0
10
20
30
40
50
60
70
High Local Assets
$ B
illions
$
$
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A New Economic Development Strategy
Bonds, T-Bills
Stocks
Mutual Funds
Life Insurance
Pension Fund Reserves
0102030405060708090
100
Low Localness Assets
$ B
illions
Small Business
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Breaking the LOIS Monopoly
TINA Stocks
Qualified InvestorsHedge Funds
Grassroots Investors
Mutual FundsPension Funds
Venture Funds LOIS Stocks (27-J)
LOISStockCreators
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Challenges to Localizing Stocks?
Low Entrepreneur Awareness of 27-J
Low Interest by Underwriters &
BD’s
Disorganized Local- Minded Investors
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Challenges to Localizing Mutual Funds?
Bias Against Localization
Absence of Investment Opportunities
Arguments FOR Local Investment
1. Verify Risk
2. Local Investors As Consumers
3. Multipliers As Risk Hedge
4. Synergies
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Challenges to Localizing Pensions
Absence of Local Mutual Funds
Absence of State Innovation
ERISA Provisions
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What Can Private Innovators Do?
27-J Creators
27-J Underwriters & Broker-Dealers
27-J Hedge Fund & Venture Fund
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Gulliver Venture Fund – Santa Fe, New Mexico
Typical VC Gulliver Fund
5-Year Growth
> 5-10 x 2 x
Type Buz. High Tech Ma & Pa
Stage Start Up Mature Buz
VC Ownership
>50% <50%
Exit Strategy
Global IPO Local DPO
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What Can State Government Do?
(1) Refocus Subsidies
(2) NM Stock Market
(3) BIDCO Legislation
(4) Tax Credit for Local Pensions
(5) Reinvest Public Funds Locally
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State Investment Council
$6,298
$3,539
$275 $239 $70
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
Equities Bonds EmergingMarkets
Partnerships NM Buz
$Millions Invested (mid-2002)
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What Can Philanthropy Do?
Planning Studies of indicators, assets, and leakages.
Training Incubators, training centers, mentorship programs.
Investing Development local banks, mutual funds, retirement accounts, VCs, and selective G investment. Plus PRIs.
Purchasing
“New Mexico First” campaigns through local directories, B-C credit cards, B-B marketplaces, B-G purchasing.
Policy Research and advocacy to reorient subsidies, taxes, zoning, and wage policies to support local business.
04/12/23 52
The 21st Century’s Choice
