The Iron Lady of Santa Fe

I just finished a new biography on Margaret Thatcher called, “There is no Alternative: Why Margaret Thatcher Matters.”

When Thatcher entered 10 Downing Street as prime minister in 1979, Britain was considered “the sick man of Europe.” Thatcher’s advisor, John Hoskyns, after analyzing all of the problems of the country, told the new prime minister: “If you change anything you have to change everything.” He went on to add, “you will become brutally unpopular if you do these changes. You will create enemies; it will be painful; consensus politics is not an option.”

Our new governor faces the same woefully unattractive dilemma as Thatcher. Granted, it is smaller in scale, but it’s no less daunting as a personal challenge of character and leadership.

Thatcherism is summarized as “conviction politics.” She promoted free markets, financial discipline, firm control over public expenditure, tax cuts, privatization, and a dash of populism. She took a hard line against unsustainable collectivist policies that were sapping Britain in the 70s of its productive output – a hard line, in fact, that earned her the moniker, “Iron Lady.”

Will our new governor become the Iron Lady of New Mexico?

Pugilistic bipartisanship

Everyone is pointing fingers over who is to blame for the deficit and who is misrepresenting for doubtless political reasons the true figures of that deficit.

Before what is now commonly referred to in the media as the Great Recession, in 2008, New Mexico’s gross domestic product was valued at $80 billion. More than a third of that – $26.3 billion – was attributable to two sectors of our economy: mining ($12.4 billion), which includes oil and natural gas production, and government ($13.9 billion).

The national deficit is running at 9 percent of GDP, which is ruinously large, according to economists. Today, New Mexico’s deficit as a percentage of its GDP is less than 1 percent. Not too bad, you might think. But tell that to all the people who have lost their jobs in New Mexico these past three years.

Though things are certainly bad, actually, New Mexico is not as bad as most states. The Brookings Institute’s MetroMonitor is a quarterly report that tracks the economic recession and recovery in America’s 100 largest metropolitan areas. The report examines the nation’s largest metropolitan areas using indicators such as employment, unemployment, output (gross metropolitan product), home prices and foreclosure rates. The report is a barometer of the health of America’s metropolitan areas – measuring how the metros are recovering from the peak of output, just prior to the start of the Great Recession in 2007.

Albuquerque just missed being included in the strongest 20 metro areas, ranking the 21st healthiest out of 100.

Cut government spending and we cut the deficit

The Government Restructuring Task Force (a legislative task force) is currently looking at our economy from a structural point of view. It is searching for ways to consolidate state agencies and streamline government so that it can still deliver core services but at more efficient costs.

Chances are, commodity prices will rebound and retail activity will inch up incrementally and help fill the deficit hole.

On the cost side, it’s my belief that the lion’s share of closing the deficit ought to come from the spending side. Entitlements are the root of the problem, as Ms. Thatcher was faced with in an ingrained society having the belief that “the government owes us a living.” Entitlements should be trimmed as research has shown that although spending cuts weigh on growth in the short run, they hurt less than higher taxes.

And in the long run, later retirement and other reforms will expand the labor force and thus potential output – whereas higher taxes dull incentives to work, save and invest.

The Iron Lady of Santa Fe

Devising a plan that reduces the deficit ought to be relatively easy come this January. Getting politicians to agree to it is a different thing.

Some say Thatcherism was an inflexible devotion to a certain moral set of principles that ran roughshod over oppositional interests.

I get the feeling that Ms. Martinez is less an ideologue than a pragmatic politician imbued with moral conviction. Not unlike Margaret Thatcher.

This January isn’t about whether the budget deficit is $260 million or $450 million – or even a higher number by the time this column is posted. This January is about character, about leadership, about having the intestinal fortitude to execute moral and political will.

When Thatcher left office she took Britain – the “sick man in Europe” in the 70s – to being the most prosperous country in Europe in the 90s.

I’m sure adroit brinksmanship will have a lot to do with New Mexico achieving the same turnaround. But I have a deep feeling it’s going to take the actions of an “Iron Lady” to get there.

Molitor is a regular columnist for this site. You can reach him at tgmolitor@comcast.net.

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