When economic times are good and budgets are flush, politicians love to come up with ambitious new projects for the supposed purpose of "economic development." One such initiative is New Mexico's supercomputer, the ultimate costs of which are unclear, but the benefits of which are highly suspect.
So says a new study by the New Mexico State Legislature's own analysts on the Legislative Finance Committee (LFC). The report is available on the LFC Website.
According to the new report on the supercomputer which was published in May, taxpayers have spent $13.8 million on the project to date. Gov. Richardson originally asked the state Legislature for $42 million for the project, but according to the LFC, documents provided by the governor's science advisor indicate that $115.5 million will be required over a seven-year period for recurring and nonrecurring costs.
According to the LFC, the supercomputer known as Encanto has taken in only about $300,000 in cash. That's a poor return on investment in a computer that will only grow less cutting edge as time goes on. In fact, back in 2007, Encanto was the world's third-fastest supercomputer. Now it's dropped to 12th-fastest.
Three research universities, two national laboratories and one nonprofit have used the supercomputer at no cost since July 2008, and the supercomputer isn't currently generating any revenue. Given the lack of revenue and the expected need for significant additional resources, it seems highly unlikely that the project's financial outlook will see a turnaround.
The Rio Grande Foundation has never viewed New Mexico's purchase of a supercomputer as a wise use of taxpayer dollars. In fact, we included the supercomputer in our 2008 Piglet Book (available at www.riograndefoundation.org ) which outlined government waste and frivolous spending throughout the state.
The fact is that businesses and universities that expect to benefit from such projects should form their own privately-financed consortiums if a supercomputer is indeed a worthwhile enterprise.
One reason for this philosophy is that private businesses putting up "real" money -- whether that is $13.8 million or millions more -- have a very real incentive to make such a costly investment only if it is absolutely necessary and will lead to real productivity gains.
Politicians, on the other hand, have many incentives to purchase fancy new toys regardless of whether they will provide a reasonable rate of return to taxpayers.
First and foremost, it cannot be repeated enough that the money politicians spend is not their own. Rather, it belongs to taxpayers and could, were it not diverted to the supercomputer or other purposes, be used by us for our chosen purposes.
Secondly, items like the supercomputer can generate good "buzz." After all, politicians have egos and having one of the fastest supercomputers in the entire country -- even if it does not generate much in the way of economic activity -- is a point of pride. This is not much different than the neighbor who buys the new sports car to brag about it except that neighbor probably paid for the car with his or her own money.
Lastly, politicians are ignorant. I don't mean that they are ignorant people, but they -- like each of us -- only have a limited amount of knowledge. The beauty of the marketplace is that it doesn't rely on one or two elite decision-makers to point us all in the right direction. It is the cumulative decisions of all of us that determine prices and which products succeed while others fail.
In the current economic downturn, politicians may not have the resources to waste on $115 million supercomputers and other wasteful projects. But when the economy does turn around and our next political leader tries to sell taxpayers on the latest "investment" of our hard-earned money, we need to be skeptical and question whether the project in question is a proper function of government or whether businesspeople should invest their own money.
Paul Gessing is the president of New Mexico's Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.