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Why is New Mexico not realizing its potential?
Updated: 1 hour 52 min ago

Do liberal policies CAUSE greater inequality?

Thu, 2014-10-30 16:23

This isn’t a rhetorical question. Rather, it is a question raised in a new article from The Atlantic magazine which is by no means a bastion of free market ideology.

Check out the chart below which graphs major cities by political ideology (the proxy being the Obama v. Romney vote, imperfect as it is) and housing prices:

The trend is clear. Liberal cities are more expensive to live in than are less liberal cities. One theory that rings somewhat true from the article is that: “Rich liberals prefer to cluster near historic coastal communities with high home values, where they support high taxes, rent control, and a maze of housing regulations to protect both their investment and the region’s “character”, altogether discouraging new housing development that’s already naturally constrained by geography…”

But, it is interesting that New Mexico appears to be afflicted by many of the same issues as these rich coastal cities despite our relative poverty overall…especially when you think about the Rio Grande Corridor and housing regulations/zoning. And, of course, according to the liberal Center for Budget and Policy Priorities, New Mexico, a state that has relied on government like no other and been controlled by liberals for longer than any other, is the most unequal state in the nation:

Real health care pricing will happen in a free market — revised

Wed, 2014-10-29 15:28

Recently, our friends at Think New Mexico came out with a proposal that they believe will help bring medical prices under control by making them more transparent.

We again welcome the folks at Think New Mexico for moving (again) towards the Rio Grande Foundation’s critique of government as the problem, not the solution, in many sectors of our economy. Health care is one such area.

Rather than focus on the root of the problem, Think New Mexico emphasizes “transparency.” Transparency sounds great and anything that attempts to bring health care prices under control and make them more logical is a good thing, right? It is hard to say.

The reason health care is not transparent or logical in the first place is because the consumers of health care don’t pay for their care directly. As the chart below shows, out-of-pocket expenditures are only 11% of total health care spending:

For some thoughts on how the Think New Mexico proposal would have on health care pricing in New Mexico, I contacted one of the nation’s top health care experts, Michael Cannon of the Cato Institute.

Said Cannon:

Price transparency is not a problem for the people who control the money. The government knows the prices it’s paying. Employers and insurers know the prices they’re paying. Until you return the money to the consumer – all of it, including the money that employers or Medicare are spending on their behalf – consumers will not get price transparency. And if you mandate price transparency in advance of that, consumers won’t use the prices because it’s not their money on the line. All you’re going to get is a lot of wrangling and rent-seeking over a new form of regulation. And we will have done nothing to fix the underlying problem.

Price discrimination is made worse by the same thing (third-party payment) that creates price opacity. Give consumers the money, and you’ll tame both problems.

For an even more detailed critique of what might be called “back-end” transparency in health care, check out this recent column from Dr. Deane Waldman.

Transparency is great and it is worth pursuing when it comes to health care. We strongly believe that the best way to solve the issue is to restore some semblance of market forces in health care. It’s hard to say whether the Think New Mexico proposal represents a step in the right direction or is simply a misguided effort to give meaning to meaningless prices.

Tax Foundation: New Mexico 38th on Business Tax Climate

Wed, 2014-10-29 09:11

The Tax Foundation is out with its latest ranking of states based on business taxes:

Notably, New Mexico scores the lowest of any of its neighbors or any of the Rocky Mountain states. Over the years, New Mexico has consistently come in at number 38 in the Tax Foundation’s rankings despite having enacted some recent phased-in reductions in the State’s corporate income tax rate.

We are in the midst of those tax reductions and one hopes that as the rate drops to 5.9% in the next few years, we might get a slight boost in our business climate, but the consistently-low ranking shows that New Mexico has a great deal of work to do in the five areas measured by the index: Corporate, Personal Income, Sales, Unemployment, and Property taxation.

Recent Rio Grande Foundation “Freedom Hour” interviews w/ Albuquerque Mayor RJ Berry and Dr. Deane Waldman now available

Tue, 2014-10-28 16:31

Recently, I interviewed Albuquerque Mayor RJ Berry on a wide variety of economic issues facing the Duke City. These include plans for wi-fi down Central, bus rapid transit, the local and state economies, and what needs to happen to improve both. That episode of the “Freedom Hour” is available for download here.

Also, Rob Nikolewski of Capitol Report New Mexico stepped in to host the show over the past weekend. He interviewed Dr. Deane Waldman, a pediatric cardiologist at UNM, a member of the New Mexico Health Exchange Board, RGF board member, and a writer on a variety of health policy issues. The primary topic of Rob’s interview with Dr. Waldman was, of course, the ObamaCare health law and its ongoing implementation. The interview is available here.

The definition of insanity…New Mexico edition

Mon, 2014-10-27 13:37

They say that the definition of insanity is doing the same thing over and over again and expecting a different result. This link is to a spreadsheet illustrating political control of New Mexico’s Legislature over the past 80+ years (since 1931). In summary, Democrats have controlled the House and Senate for a combined total of 160 years between the two bodies with Republicans having controlled one body or the other for a total of 6 years.

Clearly, given New Mexico’s economic and education outcomes, liberal, big-government policies have failed. But what works? In a new opinion piece, Rio Grande Foundation president Paul Gessing discusses how reduced taxation on micro-breweries has led to a boom in micro-breweries in New Mexico:

It often seems that New Mexico’s economy is haunted by the ghost of Lew Wallace. Wallace, who also wrote Ben Hur, was territorial governor of New Mexico in the late 1800s. Wallace was apparently confounded by our State and was quoted as saying, “All calculations based on our experiences elsewhere fail in New Mexico.”

In dealing with New Mexico policymakers and the business community, Wallace’s attitude towards successful initiatives in the other 49 states seems to permeate discussions. Sure, they say, “Right to work states are generating jobs faster than forced-unionism states, but that doesn’t mean it will work here.”

Or, “Having no income tax may work in Texas or Washington State, but we couldn’t possibly go without an income tax here.” A corollary to that statement is that the Richardson-era tax cuts which took New Mexico’s top income tax rate from 8.2% to 4.9% “failed” even though New Mexico led the region in personal income growth between 2000 and 2009 when those tax cuts were being phased in.

Policymakers in New Mexico often resist school choice, deregulation, and a variety of pro-freedom reforms that have proven track records of effectiveness and popularity elsewhere. Then they wonder why New Mexico’s economy and education systems fare so poorly.

On the other hand, policymakers have repeatedly embarked upon costly infrastructure projects like the Rail Runner and Spaceport and over-generous subsidies for particular businesses or industries that have seen little success wherever they have been attempted with little success.

With all of these failures, it is worth pointing out a recent success brought on by a relatively small policy change in the Legislature. That success, the tremendous growth of New Mexico’s craft brewing industry, is a great example of how lessening tax burdens can lead to tremendous growth.

During the 2013 legislative session, New Mexico law was changed so that microbreweries pay a tax of 8 cents per gallon on the first 10,000 barrels of beer brewed and sold in state. The tax rate increases to 28 cents per gallon for all beer production between 10,000 and 15,000 gallons. Above that, the tax is 41 cents per gallon.

This improves upon previous legislation targeted at microbreweries that gave them an 8-cent-per-gallon rate on the first 5,000 barrels of beer produced with the 41 cent rate kicking in after that.

According to the Tax Foundation, our 41 cent-per-gallon tax is 14th-highest in the nation. That’s the highest rate in the region although Utah’s tax is charged at the same rate. Not surprisingly, Colorado, arguably the epicenter of the microbrew industry, charges only 8 cents-per-gallon on all beer produced in the state.

These modest tax reductions have unleashed a boom in New Mexico’s microbrew industry. Santa Fe Brewing Company recently hired 105 new people to expand their operations, but with new microbreweries opening with increasing regularity, that is just the tip of the iceberg.

The message is simple: tax burdens matter! While the “brewery boom” is encouraging, its lessons need to be translated from a niche industry to New Mexico’s broader economy.

Unfortunately, liberal politicians in Santa Fe who have controlled our political system for generations seem more inclined to give business a hard time than to reduce tax and regulatory burdens.

These policies have resulted in New Mexico being passed over time and time again (and being poor). Simply put, our public policies are unattractive to businesses when compared against other states, especially those nearby.

It is true that taxes and regulations are not the only drivers of business’ decisions when it comes to location. Geography, infrastructure, and workforce issues will always play a role in business location and development, but the impact of public policies is unavoidable.

To become prosperous, we must transform our public policy climate. If serious reforms are enacted, contrary to Lew Wallace’s statement, New Mexico can and will see the same prosperity as other states that have embraced free market reforms.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility

Steve Pearce and Rocky Lara agree on one bad policy

Thu, 2014-10-23 19:12

Should insult be added to injury? Should federal taxpayers be placed on the hook for the costs of New Mexico’s Spaceport? Apparently, challenger Rocky Lara and incumbent Rep. Steve Pearce apparently believe so based on their discussion of the issue in their recent debate.

Taxpayer financing by New Mexicans for the Spaceport (totaling more than $200 million to date with little to show for it), long a point of contention with us at the Rio Grande Foundation, was bad enough, but adding federal funding to the mix here in New Mexico would invariably lead to other states getting in on the action, demanding funding for their own spaceport projects.

It is not surprising that a big-government liberal like Lara would endorse federal involvement in yet another area of our economy, but Pearce’s endorsement of the concept is truly baffling (aside from the misguided view that he’d somehow be bringing more “pork” into the district).

Rather than putting federal taxpayers on the hook for spaceport boondoggles nationwide, Pearce and Lara (not to mention other public officials) should embrace privatization of existing airports like those supposedly “socialist” Europeans. In fact, According to the 2010 ACI EUROPE report “The Ownership of Europe’s Airports, 80% of Europe’s airports operate as commercial companies (private or corporatised businesses). Moreover, nearly half of European air passengers currently travel through airports that are either fully or partially privatised.”

My Cato Institute podcast on the New Mexico economy

Tue, 2014-10-21 08:34

At the recent State Policy Network conference, I had the opportunity to sit down and discuss New Mexico’s struggling and federally-dependent economy for a Cato Daily podcast. You can listen to the podcast which is just under eight minutes in length here:

By the way, Cato’s podcasts are a great way to keep track of some of the major issues impacting your freedom. You can subscribe or check out more of them here.

National Transportation Expert Randal O’Toole Weighs in Against ABQ BRT

Mon, 2014-10-20 08:36

Randal O’Toole is one of America’s foremost transportation experts. Unlike most such experts, his primary goal is not to control people by directing resources to politically-favored modes of transportation and away from those that actually work. Unfortunately, dedicating precious traffic lanes on Central to buses will likely make mobility worse, not better.

O’Toole had an article in today’s Albuquerque Journal detailing some of the potential drawbacks to the proposed bus rapid transit system for Albuquerque.

If you have thoughts or concerns, send the City an email: theplan@cabq.gov

Albuquerque BRT system could worsen mobility in Central corridor

Fri, 2014-10-17 10:23

I attended one of the ongoing public hearings on Albuquerques’s proposed bus rapid transit (BRT) system last night. And, while BRT would be an improvement over Mayor Marty’s ill-fated trolley/streetcar, the BRT plan is not ready for prime time.

For starters, the plan (information on which is available here) would reduce Central traffic by one lane each way in order to dedicate one lane of traffic in each direction to buses. In places, that means only one lane of traffic in each direction on Central. Simply put, that is not enough.

The other major issue is that motorists turning left onto Central will see their ability to do so severely limited except for at major intersections. In other words, you can turn left to Central at Carlisle, but not Cornell or on several other smaller roads. Additionally, left turns from Central on to these smaller streets or to simply get to a business on the opposite side of Central will be reduced significantly. Instead, motorists will be required to make a U-turn at a major intersection and then head back down Central to the business or side-street.

A Channel 13 KRQE story covers some of the concerns area business owners and residents have with the plan.

RGF has no problem with BRT as a concept (the current Rapid Ride system is a less costly variant of BRT), but it appears that the City is planning to spend $150 million for a system that will REDUCE mobility throughout the Central corridor. Seems like an unwise use of limited funds.

If you are concerned, please send a note to the Transit Department here. Mayor Berry is at least taking a slower, more collaborative approach to BRT. We can still modify or even convince the City to abandon BRT if it is not workable.

Energy Outlook Conference

Thu, 2014-10-16 14:54

This should be an interesting conference, particularly given the recent gyrations in the markets and the oil and gas markets in particular. I know I’ll be there!

Come celebrate “Wilderness” with a guy who wishes humans were extinct

Thu, 2014-10-16 08:20

The “National Wilderness Conference” is now under way in our fair city. For between $75 and $350, you too can celebrate LBJ’s signing of the Wilderness Act 50 years ago.

While I’m sure all of the participants walked or biked to our fair city for this event in order to not emit any more carbon into the air, one of the most radical speakers at the conference is a man named Dave Foreman who helped found the radical environmental group Earth First. Earth First members have repeatedly been jailed over the years for vandalism and the practice of tree-spiking (a practice designed to break logging equipment They have been labeled an “eco-terrorism” organization.

Anyway, you don’t need to do a bunch of research on the organizations he’s founded and been involved with to figure out that Foreman is a true anti-human, radical eco-nut. Just check some of Dave Foreman’s quotes which can easily be found on the Internet.

We advocate biodiversity for biodiversity’s sake. It may take our extinction to set things straight.

Phasing out the human race will solve every problem on earth, social and environmental.

We must make this an insecure and inhospitable place for capitalists and their projects . . . We must reclaim the roads and plowed land, halt dam construction, tear down existing dams, free shackled rivers and return to wilderness millions of tens of millions of acres of presently settled land.

With all of the talk of ebola right now, it seems that Mr. Foreman and some of the more radical attendees of this conference, now taking place in downtown Albuquerque, might be silently cheering it’s spread.

If you like your health care plan, you can’t keep it

Wed, 2014-10-15 10:03

Repeatedly in defense of his marquee legislative accomplishment, President Obama claimed that “If you like your plan, you can keep your plan.”

I can’t read a man’s heart, so I can’t say with confidence whether Mr. Obama was simply lying or, like then-Speaker Pelosi, he actually hadn’t read the bill, but I can say that my family and I recently learned that under ObamaCare, you can’t keep your health care plan no matter how much you like it.

By way of background, I have had a “individual” health savings account through Blue Cross since I started with Rio Grande Foundation in early 2006. Health savings accounts are the most market oriented of health insurance plans because they provide relatively “bare-bones” insurance policies that are supplemented by pre-tax savings accounts designed to pay for day-to-day health care expenses.

Over the years I have added my wife and two young daughters to the plan. My family’s monthly premium is approximately $330 per month. Yes, we are relatively healthy, but we have used the plan and the thousands of dollars of health savings that we have built up for health care costs which included two ER visits during 2014 alone. We have also used those savings for chiropractor visits and physical therapy.

My point is that we were very happy with our insurance plan. It fit with my ideological desire to have something resembling a free market health policy that put me, not my employer or insurance company in charge of my health care decisions. It was also reasonably priced for my family and my non-profit employer.

While my plan was “grandfathered” for a year, I knew that it was scheduled to be canceled under ObamaCare at the end of 2014. I recently received a letter from Blue Cross to that effect.

I can’t even begin looking for a new insurance policy until mid-November. According to media reports, a total of 30,000 New Mexicans are in the same proverbial boat.

The good news is that more so than a vast majority of New Mexicans, I, my wife, and our kids are healthy and I know my way around government rules and regulations and, hopefully, will be able to figure out a decent new plan. The bad news is that I run a non-profit that can’t afford a massive increase in health insurance rates. I’d be “thrilled” if my monthly policy merely doubles in price under ObamaCare, but I have no way to know that until at least mid-November.

And this is the real issue with ObamaCare and so much of what government does both here in New Mexico and in Washington. Rather than setting basic rules and regulations under which all are treated equally and individuals are free to make their own choices, politicians seem to think they know more about what is good for us than we do.

ObamaCare is just the tip of the iceberg which happens to be impacting my family in a very real and personal way. Energy regulations and the blind push for politically-correct energy sources impacts our energy costs. Regulations on everyone from hair-stylists to ride-share firms presume that average people (you) are simply too stupid and ill-informed to make the “right” choice and that you need big-government there to tell you what to do.

And don’t even get me started on education which is a government-run monopoly with school choices dependant on where you live.

The Rio Grande Foundation is a think tank. We deal a lot in numbers, data, and abstract policy issues. But in this case bad policies in Washington have hit me and my family by interfering with our health care. It only makes me wish to work harder to bring more freedom to New Mexicans and ultimately our nation.

This November, I hope New Mexicans will vote for candidates that respect individuals and their choices, not the whims of bureaucrats and politicians.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility

What happens to the NM economy if the oil boom goes bust?

Mon, 2014-10-13 16:28

New Mexico’s economy has been under-performing at a time when one of the state’s major businesses, the oil industry (31% of our tax revenue) has been booming.

Unfortunately (for the state at least), between slowing growth in Europe and China and an apparent willingness on the part of the Saudis to see oil prices drop further, oil prices could be in for further declines in the intermediate future.

As a motorist, I’m thrilled. As an extremely-interested observer of New Mexico’s economy and economic policies, I wonder what this means for New Mexico. Perhaps a 1980s style oil bust could create additional momentum for free market reforms like Right to Work and pro-growth tax and regulatory reforms? We’ll see.

Liberty on the Rocks – Albuquerque, this Thursday night

Mon, 2014-10-13 11:03
Join the Rio Grande Foundation For an Evening of
Discussion and Fellowship at Liberty on the Rocks!

"Liberty on the Rocks" is a no-host happy hour discussion and information-sharing session.

Liberty on the Rocks will be held at Scalo Northern Italian Grill which is located in Nob Hill at 3500 Central Avenue SE in Albuquerque. A private room has been reserved for this event. In October, Liberty on the Rocks will take place on Thursday, October 16th from 6:00 to 7:30PM.

There is no cost for this public event, but attendees are encouraged to have dinner or drinks. Registration is not required but is much appreciated. Click here to register online … it's fast and it's free!

Come celebrate liberty with us!

Weh ad nails Udall on ObamaCare

Mon, 2014-10-13 08:53

It is that time of year when the deluge of political ads becomes too much to bear. Part of the problem is that so many of these ads make wild claims and accusations that just don’t hold water or they take one statement, perhaps made years or decades ago, and twist it to the point where voters just tune them out. So, it is refreshing to see a political ad that relies on facts and even the statements of the opposing candidate in making the point. Those statements reveal an honest and real difference between the candidates on policy.

Allen Weh’s ad on Sen. Tom Udall’s support for ObamaCare is one fact-based ad that seems like it should be a template for conservatives running against liberal incumbents around the country. The ad is below:

This is all good. And, within the span of a 30 second political ad, it is about all that can be achieved. The bad news is that Weh hasn’t exactly fleshed out a lot of specifics in terms of what he’d like to see done to reform health care. On his website, his position is stated simply “Fixing the healthcare train wreck we’ve got now.” To his credit, Weh has stated elsewhere that he would repeal ObamaCare.

NM’s economy illustrated: UNM can’t sell naming rights for “The Pit”

Fri, 2014-10-10 11:28

KRQE channel 13 had a fascinating story about UNM’s inability to sell naming rights for “The Pit” and “University Stadium.” It only backs up something I’ve long believed was an indicator of the troubles plaguing New Mexico’s economy: while other sports arenas are named after local businesses, the only local sponsor of a major sports arena is a law firm (Branch Field at University Stadium).

Now, I’m not a huge fan of corporate naming rights for sporting arenas: “Qualcomm Stadium,” FedEx Field, and the like, but in the case of UNM’s money-losing athletic department, dollars generated through naming rights don’t have to be taken out of the pockets of students or the taxpayers.

In summary, this is yet another way in which New Mexico and its institutions are held back by our history of left-liberal economic policies. After all, while we would be in unimaginably bad shape without the Labs, they aren’t going to sponsor these sorts of things.

Video: One bizarre why New Mexicans are losing their health insurance under ObamaCare

Thu, 2014-10-09 13:43

As one of the 30,000 New Mexicans to have recently lost my health insurance due to ObamaCare, I was intrigued by the following video from our friends at the Mercatus Center which illustrates how pointless many of these cancellations may be in terms of “improving” or even impacting the quality of American health care. The stupidity of a system that is set up in such a way really can’t be overstated:

Las Cruces: Rumble by the Rio debate on NM economy between Paul Gessing and Alan Webber

Wed, 2014-10-08 15:28

Check out this exciting free debate event taking place in Las Cruces on Tuesday, October, 21. See flier below for details.

This Saturday on the New Mexico Freedom Hour

Wed, 2014-10-08 09:57

The New Mexico Freedom Hour is presented by the Rio Grande Foundation. It next airs on Saturday, October 11, 2014 from 12pm to 1pm on 770 KKOB AM. This week we are very pleased to announce that Albuquerque Mayor RJ Berry will be joining host Paul Gessing for the full hour.

The show will be focused on a variety of economic policy issues relevant to Albuquerque residents including the city’s overall economy, the Administration’s proposed bus rapid transit and wi-fi systems, “Innovate ABQ,” and the ongoing fight over “union time.” We’ll also discuss the bigger picture including the struggling state and local economies and what the Legislature and Gov. Martinez can do to help spur economic growth in New Mexico’s largest city.

Listeners are encouraged not only to tune in and listen, but to call in with questions: 505-243-3333.