Below is a guest opinion article submitted for publication to this blog by private business owner, developer and entrepreneur Paul Silverman.
According to Paul Silverman, he has been an entrepreneur since 1957 when he was 9 yrs.old. He has lived in NM since 1977 investing in NM and places as far away as Singapore. His experience, and being very frugal, has allowed him to invest and operate in real estate, oil & gas, restaurants, listed stocks and start-ups. His greatest achievement to date has been the repatriation of his two sons with their families from California to take over the family real estate portfolio. He will tell you that the only thing he is allergic to is poverty and stupidity, which sometimes comes across as crass or arrogant, but he believes that hard work and making mistakes is the anecdote for both.
(EDITOR’S NOTE: The opinions expressed in this article are those of Paul Silverman and do not necessarily reflect those of the political blog www.petedinelli.com and Mr. Silverman was not compensated for the column).
The recent oil price war between Russia and the OPEC countries has had a major crippling impact on New Mexico’s oil and gas industry to the point of the state’s oil industry is shutting down. The current State budget relied on oil prices being $52 dollars a barrel and the price has now plummeted to $20 a barrel. It has forced a special legislative session. The crisis has highlighted the State’s reliance on the oil industry royalties to finance government. The State is faced with a $2.5 billion deficit from loss of oil production royalties and the oil industry literally shutting down in New Mexico.
The State’s reliance on oil industry royalties to finance government is not just the only problem it has. The biggest problem we have is way too much reliance on Federal Dollars, which for 10 years was declining or flat and in no event will ever grow fast enough to support the growth potential of the State. For decades, elected officials talk about diversifying our economy and talk about economic based jobs versus service-based jobs, and still nothing is done. The film industry had promise for the State in diversifying the economy, but that industry is heavily subsidized by the State and the subsidies may now be on the chopping block during the special session.
The only thing that made the film industry possible were the petroleum dollars. Netflix was the only company that actually made a major investment in brick and mortar in the State. NBC Universal was paid for with LEDA and Garcia family money. The Garcia’s will take a big hit in that when NBC leaves.
As to reliance on government jobs, that has been the basis of existence for people of European descent in NM for 422 years. It is a decent job, but no one ever got rich working in a government job. Very little wealth has ever been created in NM that stayed here with the exception being businesses created by Jewish and Italian families because they actually knew how to do business.
All the wealth created by our minerals, which is the basis of all wealth creation in all societies, goes out of state. With wealth from minerals, you usually get a second level of wealth creation. Think coal and iron ore gets you steel in the Midwest, oil and gas refining gets you petrochemicals in the Gulf coast, and gold and silver In Spain and Italy created the watch and jewelry industry in Switzerland.
Then there is a third level of valuation where the steel created the railroads and then auto industry and petrochemicals created the plastics industry. And so it goes.
But because government has always dominated the economy of our State, our stupid elected officials let people come in and take the wealth as long as the government got their cut. So our inheritance as a State was government jobs and a nice set of permanent funds but no real wealth creation. Without having the things that wealth creates, factories, real estate, and other hard assets, the only thing the State has to tax is the income from our jobs and the things it buys. I would also be remiss to note that wealth also buys things like concert halls, museums, hospitals, libraries, school buildings, etc. (named after the wealth that created them – not the elected people who spent your money to pay for them.
But then, in the early 1970’s, we nearly hit the jackpot with Bill Gates and Bill Allen. But a group of lawyers let them get out of town to pay a bill rather than investing in them. But the computers they created have given us the tools to mine the most important assets on earth – information. It started out as the tool to penetrate the government labs – tech transfer. But now has turned into the tool to gather all the information in the world.
Slowly, but with steady effort, we have been building up a 21st century industrial based composed of the most precious assets NM has in abundance – brain power. We have hundreds of small companies, not only in high tech but many other areas who are thriving in NM.
This is the future growth industry in NM that will stay here and create the wealth we have been missing. About 8 years ago, I started investing in these companies. To date, we have made 15 investments and have had only one failure which was my first investment. Given that failure is not something I can easily accept, I am resurrecting the some of the good work that did get done, moving the IP to a new company that will be very successful going forward with a new start. And it will be a NM company creating jobs and wealth for New Mexico.
You will read about the rebirth soon. My portfolio also includes some incredible other companies like Aqua Membranes (water technology), mPower (solar power), NtxBio (pharma-tech) and my biggest investment, Electric Playhouse which will have 500 stores across the US before it goes international. This is not said to be braggadocios, but to hopefully encourage others reading this to dig a little deeper to find these emerging start-ups or search out people like John Strong, John Chavez, Stuart Rose or others you read about to find a path into this incredible opportunity to invest in NM and take advantage of this renaissance of the NM economy.
As these companies mature and grow, they are going to be part of the new economic engine of NM. They are also going to make a lot of people, a lot of money which will stay and get reinvested in NM. Then we can start to create the wealth that will create better schools, a concert hall, better funding for behavioral health and a stronger economy to make business the focus of the State, not government. Hopefully kids will want to stay in school to become business-people, scientists and professionals rather that gang bangers, drug dealers and criminals.
That is the dream and that is what I am focused on …along with continuing to prod our elected officials to make better decisions.”
Below is the contact information for Mr. Silverman:
Paul L. Silverman
Address: P.O. Box 7459
Albuquerque, NM 87194
ALBUQUERQUE JOURNAL GUEST COLUMN
(EDITOR’S NOTE: The opinions expressed in this guest column are those of DALE R. DEKKER and do not necessarily reflect those of the political blog www.petedinelli.com. The link to the Journal follows the column).
On Friday, April 17, the following guest column was published by the Albuquerque Journal:
TITLE: NM NEEDS A 21st- CENTURY BUSINESS PLAN TO RECOVER
BY DALE R. DEKKER / FOUNDING PRINCIPAL, DEKKER/PERICH/SABATINI
Friday, April 17th, 2020 at 12:02am
“New Mexico is experiencing the perfect storm:
• Crashing oil prices; a global pandemic that is hammering our state’s tourism and hospitality industries;
• A much-needed social distancing mandate that by necessity keeps people in their homes and not spending money, which in turn greatly reduces gross receipts taxes that fund our state and city operations;
• Huge job losses that in turn will create unprecedented unemployment and impact the lives of thousands of New Mexicans.
Our state has gone from riding on top of the wave to getting crushed by events and circumstances beyond our control. Nobody could have seen this coming, but it should serve as a wake-up call for our state’s businesses, nonprofits and government entities that business-as-usual will not work in the future, and that there will be a “new normal.” So that is today’s grand challenge – trying to figure out what the new normal might look like and how New Mexico can begin to position itself now.
It is clear that New Mexico needs a 21st century business plan. The thinking of the past is not sustainable and will not meet the needs of current and future New Mexicans. The global pandemic has exposed the serious vulnerability of the United States to supply chain interruptions and the impact to critical infrastructure, particularly in pharma, personal protective equipment and medical devices. For example, more than 90% of all antibacterial drugs are manufactured in China and over 70% of active pharmaceutical ingredients are made in China and India. Other industries impacted are apparel, automotive, aerospace and manufactured goods and products of all kinds. Will these identified “vulnerabilities” bring businesses and manufacturing back to the United States? My hunch is yes. The re-shoring trend of industry back to the United States, in combination with advanced manufacturing, robotics, artificial intelligence, big data and 5G, are going to create the next industrial revolution 4.0. New Mexico’s 24/7/365 days of production, our state’s lack of extreme weather and natural disasters, our low cost of renewable energy and our strategic location along major east-west and north-south trade routes could influence where manufacturing re-shores to the United States.
Besides our state’s natural environment, abundant natural resources and location advantages, we as a state have existing infrastructure that will serve to attract companies to our state and provide new opportunities for our citizens to grow and thrive. World-class research universities; a robust community college and workforce training system; our national labs with centers of excellence focused on artificial intelligence, advanced manufacturing, aerospace and robotics – these are all assets that will differentiate New Mexico in the new normal.
So why should we create a new business plan now? Because if we don’t make some bold moves, and fast, our state’s goals of improving our public education system and dealing with crime, mental health and homelessness will never happen. We as a state won’t have the tax revenue to fill the gap left by a business model that was over-dependent on oil as well as respond to the shock of the pandemic’s impact to our state’s economy and revenues. The need to diversify our economy has never been greater. We need to encourage and reward innovation, ingenuity and the risk-takers who grow our state’s economic base. There has never been greater need in our state’s history to rethink and reinvent itself for the new normal and for a sustainable path forward in the 21st century.
New Mexico’s budget is upside down and not if, but when, there is a special legislative session, I would hope a public/private task force could be created and empowered to craft New Mexico’s 21st Century business plan. The charge will be to develop a blueprint for how our state can thrive in the new normal, diversify our economy and enhance the quality of life for all New Mexicans. No easy task, but one that must be undertaken with a sense of urgency and collective determination. New Mexico has no time to waste.”