NMAG 2.ppt

New Mexico First How Community Capitalism Can Revitalize the State Economy

Introduction
TINA
vs.
LOIS

TINA–There Is No Alternative
Get Toyota
Prioritize Export-led Development

LOIS– The Alternative
LO:
Local Ownership
IS:
Import-Substituting Development

Overview
LOIS Is Better Than TINA
LOIS Opportunities in New Mexico
A Key Challenge: Financing LOIS

Challenges for Sustainable Community Development
What’s Being Produced?
How?
Who Owns?

The Costs of Going Global
$$$ to Lure Firms
$$$ to Keep Firms
Falling Standards

Advantages of Local Ownership
High Standards
No Destructive Exits
Long-Term Wealth
Flexible RoR

Examples of Local Ownership Ben & Jerry’s (Early) Community Held Burlington Telecomm Public-Private Partners 2,500 50+% ESOPs Worker Owned 6,300 Examples Municipally Owned 47,000 Success Stories Cooperatives 6.5% GDP Nonprofits 50% U.S. Economy Small Business

Community Stock Ownership
Green Bay Packers
Hybrid Nonprofit
$25 Voting Shares
60% Local
Poison Pill

IS - Import-Substitution (Community Self-Reliance)
What are the risks of dependence?
Why favor IS-development?

Risks of Import Dependency
More Vulnerable
Lower Multiplier
Lower Tax Receipts

Healthy Economic Multiplier UNM Students UNM Purchasers NM Farmers NM State Government

Weak Economic Multiplier UNM Students UNM Purchasers NY Farmers NY State

The Perils of Chains

Advantages of IS-Development
Minimize Vulnerabilities
Maximize
Multiplier
Maximize Tax Receipts

Self Reliance Is Not Autarky Local Electricity Demand Wind Machines Windmill Manufacturing Import Import Import Outside Utilities Outside Windmill Manufacturers Outside Parts Manufacturers North Dakota Rest Of World

Community Scale Economies Recycling Anaconda Materials Flexible Networks Multinationals Manufacturing KW Wind/Solar GW Nuclear Energy $100 M Assets CitiCorp Banking New Economy Old Economy

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

Inefficiency of TINA Distribution
Food Systems
Telecommun’s
Electric Utilities

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

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. 1
October 25, 2001

II. LOIS Opportunities for NM
In which sectors does New Mexico produce relatively more than a typical U.S. state?

(1) Food & Fiber
Trendy Clothing
High-Value Livestock
High-Value Crops

(2) Forestry
Reforestation
Paper Industries
Wood Industries

(3) Biofuels & Biochemicals
Petrochemical Success Is Unsustainable
Carbohydrate Economy

Oil Price Trends

(4) Renewable Energy
Electricity & Gas Success Is Unsustainable
Solar & Wind

(5) Water Conservation

(6) Relocalize Retail

(7) Services
Easily Filled Gaps

(8) Home-Based Businesses
Integrate with Family & Community Life
New Industrial Parks
Zoning Reform
The Going Local Staff

(9) Manufacturing
Hollow State
Small-Scale Opportunities

Flexible Manufacturing Networks
90,000 N. Italy Manufacturing Companies
97% Have Under 50 Employees

(10) Finance, Insurance, Real Estate (FIRE)

III. A Key Challenge: Financing LOIS

Finance Potential for LOIS

Localness of Financial Assets

NM-PERA Investments

Traditional Economic Development Strategy
Small Business Dev.
- Entrepreneurship TA
- $$$ Assistance
Banking Access
- Community Banks
- CRA
$ $

A New Economic Development Strategy Small Business

Breaking the LOIS Monopoly TINA Stocks Qualified Investors Hedge Funds Grassroots Investors Mutual Funds Pension Funds Venture Funds LOIS Stocks (27-J) LOIS Stock Creators

Challenges to Localizing Stocks?
Low Entrepreneur
Awareness of 27-J
Low Interest by
Underwriters & BD’s
Disorganized Local-
Minded Investors

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

Challenges to Localizing Pensions
Absence of Local
Mutual Funds
Absence of State
Innovation
ERISA Provisions

What Can Private Innovators Do?
27-J Creators
27-J Underwriters & Broker-Dealers
27-J Hedge Fund & Venture Fund

Gulliver Venture Fund – Santa Fe, New Mexico Local DPO Global IPO Exit Strategy <50% >50% VC Ownership Mature Buz Start Up Stage Ma & Pa High Tech Type Buz. 2 x > 5-10 x 5-Year Growth Gulliver Fund Typical VC

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

State Investment Council

What Can Philanthropy Do? Research and advocacy to reorient subsidies, taxes, zoning, and wage policies to support local business. Policy “ New Mexico First” campaigns through local directories, B-C credit cards, B-B marketplaces, B-G purchasing. Purchasing Development local banks, mutual funds, retirement accounts, VCs, and selective G investment. Plus PRIs. Investing Incubators, training centers, mentorship programs. Training Studies of indicators, assets, and leakages. Planning

The 21 st Century’s Choice

For More Information:
Michael Shuman
202-364-4051
[email_address]

NMAG 2.ppt

by Freddy56

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