Part 2: Scarcity, Abundance and New Mexico’s Permanent Fund

Originally Published on LinkedIn July 17, 2025

I was pleasantly surprised by the engagement with Part 1 of this article and the general agreement with the underlying principle of using a significant portion of the Permanent Fund to invest in our future now. I recognize that my article may be preaching to the choir, as my LinkedIn network skews heavily toward people in the entrepreneurial world. That said, I did get some back-channel criticism of my proposal. I will address the objections in Part 3; however, for Part 2, I would like to delve deeper and propose two hypotheses.

A quick background for those of you who haven’t read Part 1. When I refer to the State’s Permanent Fund, it is actually multiple Funds. The two largest and most important are the Land Grant Permanent Fund (LGPF), established by Federal legislation in 1893 and 1910, and the Severance Tax Permanent Fund, established in 1973. The fundamental goal of these funds, established over 100 years and 52 years ago, respectively, is to secure and grow them for the sake of future New Mexicans. This might be best summarized by a quote from the SIC’s “60 Years Anniversary Report 2018”: “The SIC’s purpose is to optimize the earnings of the permanent funds that contribute to the state’s operating budget while preserving the real value of the funds for future generations of New Mexicans.” My goal with the following two hypotheses is to challenge the current thinking on how those funds are used.

Hypothesis 1: At some point, the future is now! At some point, the future generation is the current generation. If we are always saving for a future generation, then no generation will reap the benefit, since there is always a future generation ahead.

Hypothesis 2: We (the citizens of New Mexico) can get a better return for future generations by investing a significant portion (40-60%) of the Permanent Fund over the next 5 years than we could get by investing in a conservative diversified portfolio managed by the NMSIC.

Hypothesis 1: At some point, the future is now! When searching for the purpose of the Permanent Fund, the quotes that come up so often are some variations of “saving for future generations” or “securing New Mexico’s economic future.”  Who are we saving this for? What year is the future generation, 2050, 2075, 2100?

The “securing New Mexico’s economic future” quote is the one that gets me the most. This is where I aim to challenge prevailing thought. “Secure New Mexico’s Future?” The problem is that we haven’t even figured out how to secure our economic present. If we can’t secure today, what makes us think we can secure tomorrow? Remember, we are ranked 50th in education and 43rd economically among states. If the Permanent Funds are intended to move the economic needle, we may need to reconsider their purpose.

The best opportunity to secure our economic future is a thoughtful strategic investment in infrastructure, workforce development, education, entrepreneurship, and diversification, among other key areas. At this point, I’m not suggesting “how” it should be done. Only “that” it should be done. Imagine how $20-$30 billion strategically invested could change New Mexico.

There will be those who point out that the benefit to future generations is that time when the interest from the permanent funds can help fund our state’s general obligations. That is a nice thought. However, it fundamentally means that those who hold this position believe that there is nothing we could invest in New Mexico that could provide a higher return for our future than putting that money in a diversified portfolio run by the NMSIC.

Hypothesis 2: We (the citizens) can get a better return on those funds. I realize that New Mexico is not a business, but hear me out. A well-run company will reinvest its profits into products, projects, new features, and new offerings that will satisfy the needs of its customers and help them grow in the years to come. The goal is to evaluate these projects for high-quality returns to secure a long-term future. Any business that does not reinvest in its future will eventually fall behind its competitors and languish.

We talk about diversifying our economy and investing for the future, yet most of the money remains in the Permanent Fund. Let’s discuss a recent example of investing in the Quantum Computing Industry. Numerous US States have taken initiatives to encourage and support the development of Quantum Computing as a tool of economic development.

Recently, the State of New Mexico authorized $25 million to invest in a quantum venture studio. This is a single-year allocation with no continuity. On its own, this is a good thing. However, relative to the investment needed to be relevant in quantum computing, it is immaterial. We are not competing with ourselves. We are competing with other states and the world.

New Mexico’s $25 million quantum investment will not enable us to compete with other states that have invested heavily in promoting and encouraging this next-generation computing technology. In addition, timing is essential. Even in Texas, Quantum leaders in Austin believe the state is already behind other states, despite the investment goal of rivaling Maryland’s. If other states are investing this much money in quantum computing, where does that leave our $25 million 1-year investment?

We will never compete in any industry with an anemic commitment with no long-term sustainability. It would be one thing if we were a state with limited resources and were doing the best with what we had. However, this is not the case. We are not taking the necessary steps to be competitive, and we have significant assets held in a conservative portfolio.

A quick reminder, we have $57 billion in the New Mexico Permanent Funds. These funds are invested in a conservative, well-diversified portfolio. These funds are not diversifying our economy; instead, they are employed in a conservative investing strategy. For reference, here is the return profile for the two largest funds, the New Mexico Land Grant Permanent Fund and the New Mexico Severance Tax Permanent Fund, compared to the S&P 500. Note: The funds are performing as they should for their current purpose. I’m not critical of the fund’s performance as such, I’m critical that we don’t invest these funds in the people of New Mexico and our future.

In closing, I’d like to return to the scarcity mindset that I began with in the initial article. We are not a poor state, despite what the ranking says. We are a rich state with a poverty mindset that prevents us from using the abundant resources at our disposal. We can do better. To quote a comment from Gary Oppedahl from the Part 1 Article, “when we invest in our own people, we unlock our state’s greatest potential.” That is a statement of abundance. Hoarding such an amazing asset as the Permanent Fund, only to receive a conservative market rate of return, conceals scarcity and fear under the façade of a long-term vision.

The ask:

I have been amazed at how many New Mexicans are entirely unaware of the Permanent Fund’s existence, much less the enormity of the asset. Awareness is key.

If you agree with the hypotheses, please this article. If you disagree with the hypotheses, please feel free to send me a message. There will be a Part 3 where we discuss the objections to using the Permanent Fund as outlined.