Saturday, March 25, 2017

New Mexico: The Last Hapsburg Colony

New Mexico is a desperately poor state, if it cost a dollar to go around the world, the state treasury couldn't finance a bus trip to Oklahoma.  Our unemployment rate is the highest in the nation, and the most valuable export from the state is newly graduated college students seeking jobs.  The annual exodus of our best and brightest is the educational equivalent to eating your seed corn. 

Recently, I have come to realize that these problems have historical roots that go back much further than I had previously realized.  In fact, roots of the problem go back half a millennium.

It is easy to forget that it wasn't that long ago that New Mexico was part of Mexico for about half a century.  Before that—for about 300 years—this was New Spain, part of the Spanish Empire.  Unfortunately, you can still see the signs.

Spain treated her colonies as assets to be shorn, strip-mined, and squeezed until the last peso had been extracted.  (This is exactly the way Enema U still treats her students—perhaps this is where my Alma Mater learned this trick.)

This extreme protectionism is called the mercantile system.  (Take notes, there will be a quiz next Friday.). Colonies were expected to produce raw materials and to manufacture NOTHING that could be purchased from Spain.  Clothing, wine, metal goods, paper products, tools—anything manufactured you could think of—were forbidden for the Spanish colonies in the New World to make.

The colonies were not even allowed to trade with each other.  These severe limitations not only stalled economic development, but left scars that can still be seen today.  An excellent example is the lack of infrastructure in some of the former Spanish colonies.  There is not—nor has there ever been—a railroad connecting any two of the countries of Central America, and until well within my lifetime, there were almost no highways.  (Actually, Belize, Guatemala, El Salvador, and Nicaragua no longer even have internal railroads: most of the track and rolling stock have been sold as scrap metal.)

The Spanish colonial policy resulted in some curious supply shortages.  Pretend that you live in Santa Fe in the year 1700.  The annual governor’s ball is coming up and you decide you need a new hat.  A local merchant gladly takes your order, and for a small deposit, has one shipped from Spain (it being illegal to manufacture one in the new world).

The merchant will have to wait until the next supply wagons depart from Santa Fe, traveling down the Camino Real to Chihuahua, and then continue on to Mexico City.  This means there will be a couple of months wait, but eventually the ox-drawn wooden carreteras—moving at a pace that would make Congress look productive—begin traveling southward.  A man could easily walk ahead of the oxen for an hour, then spend the rest of the morning taking a nap while waiting for the oxcarts to finally catch up with him.

Once the order finally reaches Mexico City, it will be taken by yet another line of oxcarts making their way eastward to Vera Cruz, the only port on the east side of New Spain allowed to trade with Spain.   (This simplifies tax collection and makes smuggling more difficult.)  Spain, worried about pirates, combined all shipments to and from the New World into single convoys each way—La Flota—each sailing only once a year.  Unfortunately, your order has just missed this year’s convoy, but will certainly be sent next year!

Assuming that the ship (a Spanish ship with a Spanish crew, of course!) carrying your order were to make the perilous crossing of the Atlantic, eventually your order will reach Seville—the only Spanish port allowed to trade with the colonies—and be filled by a merchant licensed by the crown.  When the next convoy finally leaves Spain, your new hat will be subject to an additional tax of 7.5%, the almojarifazgo, an import and export tax.  When the ship finally arrives in Vera Cruz, this is technically an importation, so the almojarifazgo will be charged again

Your hat slowly makes it way from the coast, by oxcarts, to Mexico City, then Chihuahua, and finally back to Santa Fe, where the original merchant charges you an additional 10% sales tax, the alcabala, for your hat.  After a wait of a mere two years, your new hat has finally arrived and you discover that not only can you not afford the costly item, but it’s the wrong size.

Note.  Spanish is the sexiest language—I don't care what the French say.  It is a shame that beautiful words like almojarizgo and alcabala are used to denote taxes.  My favorite word in Spanish is 'estacionamiento'.  Pretend that Ricardo Montalban is saying that in his sultry "rich Corinthian Leather" voice: e-sta-ci-o-na-mi-en-to.  It is not my fault that the word means 'parking lot' and from now on, I think the word should mean: "moonlight reflected off of still ponds".

Obviously, these economic policies stifled colonial development, all but forcing the colonists to turn to smuggling and cheating on taxes.  As revenue to the crown fell, the shortsighted kings behaved exactly like the inbred Hapsburg monarchs they were—they raised taxes and increased economic sanctions...And as revenue continued to decline, they raised taxes again and again. 

The inbred Hapsburg monarchs kept repeating their stupidity until neither they nor the economy could get it up, and both died out.  The new royal family, the Bourbons, abandoned most of the previous economic policies, lowering taxes and freeing trade.  As it does every time this economic relief has been tried, the economy took off, trade increased, and government revenue increased dramatically. 

Unfortunately, the reforms arrived too late to help the impoverished colony at New Mexico, which by that time, had become a royal patronage colony (meaning that the King of Spain paid the expenses of New Mexico, recognizing that it was too impoverished to be self-sufficient).  When Mexico became independent, the king naturally withdrew his patronage, and economic conditions in New Mexico collapsed to the point that even the Catholic Church removed its priests.

Today, New Mexico still wallows in Hapsburg thinking.  The state has high taxes, excessive regulation, and punitive license fees.  We have strong union laws that protect unions that have never (and probably will never) exist in this state.  The only revenue the state could consistently count on was from extracting raw resources—usually oil and natural gas—that we sold to the states that manufactured goods for us. 

Suddenly, the global market is awash in oil and natural gas.  As the price of oil drops below $50 a barrel for oil, our state treasurer has become as nervous as a whore in church.  And just like the Hapsburg monarchs, an impotent state legislature is attempting to balance the budget by raising taxes, creating new fees, and restricting licenses.  

New Mexico is still a patronage colony, even though our "charity" no longer comes from a royal purse.  For every $1 the state pays in federal taxes, it receives $3 from Washington, DC.

To paraphrase Blanche Dubois when she, like New Mexico, began to lose her grip on reality, "We have always depended on the kindness of strangers."


  1. Being a charity state - $50.1 billion
    Net loss of youth with professional degrees - 2601
    Net gain of youth with (relatively useless) liberal arts degrees - 27,665
    Comparing New Mexico to Blanch Dubois - Priceless!

  2. And the lure of easy money is as strong as it was when the wagons were rolling down the Santa Fe trail. Texas, Arizona and even California complain about things and people moving up from the south, but na'er a peep from NM...