TOPICS > Politics

New Mexico Offers Case Study in Economic Inequalities

October 14, 2008 at 6:40 PM EDT
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New Mexico's stark economic disparities are evident in the state's north, from the affluent community of Los Alamos to the struggling Hispanic heartland of Espanola. Paul Solman reports on the reasons behind the inequalities and the efforts to narrow the gap.
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RAY SUAREZ: Finally tonight, our “Big Picture” focus on the political battleground state of New Mexico.

With three weeks to go until Election Day, the NewsHour’s economics correspondent, Paul Solman, reports on economic inequality in northern New Mexico.

PAUL SOLMAN, NewsHour Economics Correspondent: In the Land of Enchantment, a case study in economic inequality. First, a mile-and-a-half high on a New Mexico mesa, Los Alamos, home to the national lab that built the A-bomb to the Hilltoppers football team.

A town as plain-looking as it is wealthy, really wealthy.

It’s amazing that this is the richest community in America. You’d never know.

DANTE CHINNI, The Christian Science Monitor: That’s one of the things about Los Alamos is kind of how understated the wealth is here.

PAUL SOLMAN: Meanwhile, down in the valley of neighboring Rio Arriba County, the struggling citizens of Espanola and Chimayo.

SUSAN MCLUHAN: It’s rough. It’s very hard. I only get $29 in food stamps now. I have no transportation.

PAUL SOLMAN: To Barack Obama, speaking in Espanola, the inequality illustrates what the financial crisis is proving.

SEN. BARACK OBAMA: Let’s be clear. What we have seen in the last few days is nothing less than the final verdict on an economic philosophy that has completely failed. It’s the philosophy that says we should give more and more to those with the most and hope that prosperity trickles down like rain on top of us.

PAUL SOLMAN: In Albuquerque, John McCain promised change, as well.

SEN. JOHN MCCAIN (R), Arizona: The status quo is not on the ballot. We’re going to see change in Washington. The question is, will our country be a better place under the leadership of the next president, a more secure, prosperous, just society?

Failure of a trickle-down economy

Dante Chinni
The Christian Science Monitor
[W]hat we have seen repeatedly this year as we've done this is the service worker centers are the ones getting hit the hardest.

PAUL SOLMAN: It's been a while since both prosperity and justice characterized our economy, says economist Sam Bowles.

SAM BOWLES, Santa Fe Institute: That took place in the United States during the entire 20th century up until around 1980.

RONALD REAGAN, Former President of the United States: I promise...

PAUL SOLMAN: Then came the lower marginal tax rates of the Reagan years and beyond.

RONALD REAGAN: Seize these new opportunities to produce, to save, to invest.

SAM BOWLES: Policies were adopted on the idea that the way to stimulate the economy was essentially to help the rich get richer on the grounds that that would stimulate investment, risk-taking, and also the fact that the ladder would get a little steeper and the rungs farther apart. That was going to stimulate people to work hard to move up that ladder.

PAUL SOLMAN: It stimulated investment and risk-taking, all right, says Bowles, to a fault, while stimulating inequality, as well.

How pronounced is the hill-valley dichotomy?

DANTE CHINNI: Here in Los Alamos, it's enormous.

PAUL SOLMAN: Journalist Dante Chinni runs the Christian Science Monitor's Patchwork Nation Project, which has divvied the U.S. up into 11 demographic groups. Los Alamos is a "monied 'burb."

DANTE CHINNI: High education, high income, low crime, relatively -- not a lot of diversity. This is a very specific kind of place in America.

PAUL SOLMAN: The valley is no less specific.

DANTE CHINNI: It's the kind of place we call a service worker center, where, you know, I work at the Wal-Mart and you work at the gas station, and we're all kind of trading money with each other.

PAUL SOLMAN: Well, almost everyone is feeling some pain these days. Service worker centers are stunned.

DANTE CHINNI: We take monthly data, unemployment, foreclosures, gas prices, and we mash that together with some other stuff, including incomes, average commute and things like that, and then we map it, county by county, across the country to see who's getting hurt.

And what we have seen repeatedly this year as we've done this is the service worker centers are the ones getting hit the hardest.

Trying to bridge the gap

Joe Maestas
Mayor, Espanola
Espanola can benefit from the commercialization of technology that results from the Los Alamos National Labs. We've had many, many initiatives in the past where that has been promised to Espanola, and it's not happened.

PAUL SOLMAN: Espanola, population about 10,000, the valley's main city. Joe Maestas is mayor.

MAYOR JOE MAESTAS, Espanola, New Mexico: This area here was once the center of northern New Mexico's economy. There was a lot of bustling businesses and mercantiles when the railroad was here. When the railroad left town, our downtown died.

PAUL SOLMAN: The Superfund site in the middle of town has hardly helped revival efforts, nor has the land owned by Native American tribes, exempt from taxes.

Mayor Maestas looks to the city on the hill.

MAYOR JOE MAESTAS: Los Alamos National Labs, it was built on a mountaintop in a shroud of secrecy. But yet, over the last 60-plus years, it's evolved into the major -- the biggest employer in northern New Mexico, with a budget of over $2 billion, but the region has not realized the economic benefits of the presence of the labs. Los Alamos has, but not the region.

PAUL SOLMAN: So trickle-down hasn't worked here?

MAYOR JOE MAESTAS: Trickle-down hasn't worked.

PAUL SOLMAN: But at the lab that birthed both Fat Man, dropped on Hiroshima, and Little Boy, Nagasaki, Kurt Steinhaus says Los Alamos makes earnest efforts to help its neighbors, especially in education.

KURT STEINHAUS, Los Alamos National Laboratory: We have worked with a group of teachers in northern New Mexico. And if you look at the test scores of their students and compare them to the teachers that haven't gotten the specialized training, there's a dramatic improvement.

PAUL SOLMAN: Moreover, says Steinhaus...

KURT STEINHAUS: The laboratory matches -- for every dollar that's contributed to a nonprofit in northern New Mexico, the laboratory matches another dollar from those employees. And in just the last year, over 100,000 hours of volunteer time has been logged on volunteermatch.com.

PAUL SOLMAN: Volunteers like scientist Cathy Wilson, who says she asks herself about the inequality here constantly.

CATHY WILSON, Los Alamos National Laboratory: Can I bring in a student who's from Espanola or who's at University of New Mexico from Espanola in the sciences? Can I go out and give a lecture to students to get them excited about science? What can I do that will help bridge the gap, not concentrate on the gap?

PAUL SOLMAN: But Mayor Maestas is looking for something more tangible.

MAYOR JOE MAESTAS: Areas like Espanola can benefit from the commercialization of technology that results from the Los Alamos National Labs. We've had many, many initiatives in the past where that has been promised to Espanola, and it's not happened.

PAUL SOLMAN: Instead, says Loyda Martinez of Chimayo, a native Chicana whose family goes back here eight generations, promises to her were broken.

After working at Los Alamos for 31 years with a master's in computer science and a minor in math, she filed a discrimination suit on behalf of female and Hispanic employees there.

LOYDA MARTINEZ: Not only pay inequality, but also the lack of promotions, job opportunities, job placements. And, you know, we aspire just like anybody else.

Oh, inside, there were many times that I'd go to sleep at night, and I would sleep in a fetal position because I ached so bad, because it just hurt me, what they would say and do to me, all because of my advocacy work for better living conditions for our community.

A persistent sharp divide

Sherman McCorkle
Technology Ventures Corporation
New Mexico has had the highest percentage growth in venture capital coming in to start-up companies of any state in the nation over the last 10 years.

PAUL SOLMAN: The lab recently settled the case. And everyone we talked to there was concerned for the folks in the valley, but the great divide seems as sharp as ever.

LOYDA MARTINEZ: Being the wealthiest community in the country, they can send their kids to the wealthiest schools in the country. Well, we can't.

Even if there's drug addiction, they can send them to the best rehabilitation center. We have no rehabilitation center here.

PAUL SOLMAN: What this area has instead is a mobile outreach van to at least try to keep its addicts safe and alive, its many addicts. This county is the heroin overdose capital of the United States.

Social worker Sheila Gayler.

SHEILA GAYLER: And this is where we keep the clean syringes that we distribute. We have, like, alcohol pads. We have cookers.

PAUL SOLMAN: Indeed, she and assistant Randy Charles even dispense Narcan.

SHEILA GAYLER: And it is a drug that brings out of an opiate overdose.

RANDY CHARLES: In another community where, as a young person, you're -- like, you grow up and you're exposed to alcohol or you smoke marijuana. And in an unlucky twist of fate, here it's heroin.

PAUL SOLMAN: As to the need for any of these drugs, well, one argument is that it hurts to be so poor, especially in the shadow of such wealth.

RANDY CHARLES: And heroin is a great painkiller.

PAUL SOLMAN: Inequality would seem to be feeding on itself here. Next door in Espanola, where the mayor had hoped for high-tech, high-pay spin-offs from Los Alamos, big box stores paying minimum wage are sprouting instead.

Down the road, arguably the town's top business, an Indian casino, surrounded by loan brokers, a pawn shop.

MAYOR JOE MAESTAS: They prey upon people that need some money, some quick money to gamble, in that constant quest for hitting the big jackpot. And the harsh reality is, as the economic times become worse and worse, people continue.

PAUL SOLMAN: For those on top of the hill, though, it was great, while it lasted.

SHERMAN MCCORKLE, President, Technology Ventures Corporation: Well, New Mexico has had the highest percentage growth in venture capital coming in to start-up companies of any state in the nation over the last 10 years.

PAUL SOLMAN: Sherman McCorkle finds venture capital to commercialize research like that done at the national labs.

SHERMAN MCCORKLE: If I look at the last 15 years, it's been about 100 new companies started, somewhere in the area of 4,000 core jobs, 12,000 total jobs, and private-sector investment of a billion dollars.

A market economy at work

Sam Bowles
Santa Fe Institute
America is distinct in the extent to which inequality is inherited from generation to generation.

PAUL SOLMAN: If the trickle-down didn't trickle very far, it's not for lack of policy or compassion, says McCorkle. It's just how market economies work nowadays.

SHERMAN MCCORKLE: A function of the market is rewarding people who add great value to a process. And, fortunately or unfortunately, in today's world, that parallels one's education.

PAUL SOLMAN: Dante Chinni concurs.

DANTE CHINNI: The people here have what they like to call transportable skills. Very well-educated. If they don't get enough money to work here in Los Alamos, they can simply take what they have and go apply it someplace else in the new economy.

PAUL SOLMAN: Well, maybe not like they used to, given the current crisis, but they sure have better prospects than those below them, says Sam Bowles.

SAM BOWLES: America is distinct in the extent to which inequality is inherited from generation to generation. The kids of rich parents have a strong tendency to be rich. And the kids of poor parents are very, very likely to be poor, to a far greater extent than is true of any other country, except for England.

That's a huge discrepancy from what we think of as the land of opportunity.

PAUL SOLMAN: All right, good luck.

SUSAN MCLUHAN: Thank you.

PAUL SOLMAN: And a huge potential problem in a land now in economic crisis.