Errors of Enchantment Blog Postings

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Why is New Mexico not realizing its potential?
Updated: 43 min 37 sec ago

Yes, Right-to-Work Is Good for the Economy

Wed, 2015-05-20 10:22

Note: Tamara Kay, a sociology professor at the University of New Mexico, has made a habit of attacking the Rio Grande Foundation’s work on the likely economic-development benefits of a right-to-work law in the Land of Enchantment. On May 4, Real Clear Policy reprinted a piece she wrote for the website “The Conversation.” Here is our response.

Earlier this month, University of New Mexico sociologist Tamara Kay wrote a lengthy article largely devoted to attacking our organization and its research on right-to-work (RTW) laws. The piece is riddled with specious charges; here, we respond to the three most egregious ones.

First, Kay cites a flawed four-year-old study by the union-funded Economic Policy Institute to claim that “right-to-work laws have no impact on economic growth.” The study says no such thing. Its subject is exclusively the alleged higher pay and benefits of forced-unionism states.

Kay compounds her mistake by blindly accepting EPI’s finding that, in the professor’s words, “right-to-work laws result in lower wages.” Serious scholars examine the data themselves. When James Sherk, a research fellow at the Heritage Foundation, looked at EPI’s methodology, he found “two major mistakes: it included improper control variables and did not account for measurement error in … [cost-of-living] variables. These mistakes drive [EPI’s] results. Correcting these mistakes shows that private-sector wages have no statistically detectable correlation with RTW laws.”

Other approaches to the question lead to the same conclusion. For example, in April 2014, the U.S. Department of Commerce’s Bureau of Economic Analysis released, for the first time, “a comprehensive and consistent measure of differences in the cost of living … nationwide.” Lyman Stone, an economist with the Tax Foundation, calculated state disposable personal income, per capita, using the BEA adjustments. When, drawing on Stone’s data, we averaged incomes in RTW and non-RTW states, incomes were again equal.

The Missouri Economic Research and Information Center computes its own cost-of-living index, derived from surveys taken by the Council for Community & Economic Research. Using the center’s findings, we calculated that disposable personal income, per capita, in RTW states is 8.5 percent higher.

In addition, neither EPI nor Kay acknowledges that union dues depress “organized” workers’ take-home pay.

The second key flaw in Kay’s argument lies in her assessment of Oklahoma’s impressive economic performance since passing a right-to-work law in 2001. Here, she continues her pattern of making vague assertions rather than supplying original research. She writes that the state “was benefiting from rising prices for oil and natural gas — and more recently from higher levels of production — factors that would make a significant contribution to growth.” If Oklahoma’s success was contingent upon hydrocarbons, why didn’t New Mexico’s economy, which is even more dependent on oil and natural gas, quickly grow out of the Great Recession?

Kay’s focus on Oklahoma’s falling manufacturing employment as a metric of right-to-work’s effectiveness is similarly misleading. For decades, factories have accounted for a shrinking share of American jobs. A better measure is total private-sector job creation, which is far higher in RTW states. It’s true, as Kay writes, that a simple comparison of job creation like this is not conclusive — although the disparity has been so large for so long that the difference is highly suggestive.

In addition, the Rio Grande Foundation is conducting an ongoing analysis of job-creation announcements listed by the magazine Area Development. We are finding a consistent trend of non-RTW-state-based companies moving operations, and breaking ground on new facilities, in RTW states. Some recent examples:

• T&B Tube is moving a facility from Illinois to Indiana.

• Mercedes-Benz USA is relocating its headquarters from New Jersey to Georgia.

• Minnesota-based Polaris is building a new factory in Alabama.

• Adecco Group North America is moving its headquarters from New York to Florida.

• Brad Penn Lubricants is moving production from Pennsylvania to Indiana.

• Superior Industries International is moving its global headquarters from California to Michigan.

• American Stair Corporation is moving its operations from Illinois to Indiana.

• California-based Kaiser Permanente is building an IT campus in Georgia.

• Bechtel Corporation is moving a facility from Maryland to Virginia.

• Brad Penn Lubricants is relocating production from Pennsylvania to Indiana.

So far, we have discovered just one shift from a RTW state to a non-RTW state: a relocation of three workers from Wisconsin to Minnesota. We will publish a paper with six months of data this summer, but four months into the research, it’s clear that RTW states are substantially besting their non-RTW competitors.

Kay’s third major mistake is her endorsement of what’s come to be known as the “blue-state model.” She recommends “equipping our schools and teachers with resources.” But states that are making vast public investments in education are not seeing much success. Economist Richard Vedder, who has done extensive research on the subject, can find “no positive relationship between state higher-education appropriations and economic growth.”

Kay’s call for “seeking out emerging and innovative industries that offer better and more permanent jobs,” meanwhile, is clearly a recommendation of Robert Reich-style industrial policy — or as we in the free-market community call it, corporate welfare. In New Mexico, the most visible (and probably most expensive) effort at “economic development” has been the attempt to cultivate a film industry. According to a 2014 study requested by the state legislature, between 2010 and 2014, taxpayers doled out $251 million in incentives, with $103.6 million in state and local tax dollars generated. So New Mexico’s film subsidies generated 41 cents of tax revenue for every dollar spent.

Our organization has never claimed that a RTW law, by itself, will revive New Mexico’s moribund economy. We believe it should be an item in a longer list of reforms, such as tax simplification/relief, deregulation, privatization, and school choice. It’s unfortunate that Kay, a professor who claims to be committed to “good quantitative data,” continues to make shaky allegations about RTW’s obvious benefits, and refuses to address the Rio Grande Foundation’s numerous critiques of her taxpayer-funded advocacy.

Paul Gessing is president of, and D. Dowd Muska is research director for, the Rio Grande Foundation, 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.

Internet regulation and the NM Technology Corridor

Tue, 2015-05-19 12:03

In February, the Federal Communications Commission adopted utility-style regulation of the Internet. Unless so-called “net neutrality” rules are abandoned, a bastion of innovation and enterprise will be treated as if it were a monopoly service offered by a vintage telephone company.

The FCC’s decision classified the Internet as a telecommunications service under Title II of the Communications Act, thus subjecting the online world to a dense set of federal regulations adopted in 1934 — and updated only once since then. If the agency’s action is allowed to stand, it will put an end to the policy of light regulation of America’s most powerful communications tool, perhaps the most successful bipartisan policy ever created in Congress.

Light regulation never meant anarchy. There were, and continue to be, appropriate laws to prevent abuse of the market and protect consumers from anti-competitive behavior.

As the Heritage Foundation’s James L. Gattuso and Michael Sargent noted, “The FCC did not even attempt to directly regulate Internet access services until 2007,” and its action was struck down in federal court a few years later. Logical, non-intrusive regulation set off a virtuous cycle of investment followed by innovation followed by more investment. Allowing the Internet to flourish created the digital revolution, and continues to drive it today. From 1996 to 2013, U.S. Internet providers invested $1.3 trillion in infrastructure. Pulling the plug on light regulation would short-circuit the hugely productive cycle of investment-innovation-investment. It would jeopardize a creative and competitive marketplace and leave consumers paying more for diminished service.

Here in New Mexico, the end of light regulation would hit businesses along the New Mexico Technology Corridor, what Forbes calls “a concentration of high-tech private companies and government institutions along the Rio Grande.” Centered in Albuquerque, the corridor is making New Mexico a regional technology hub. It appeals to major corporate names and creative start-ups. All of them are major consumers or producers of Internet technology.

Unnecessary regulation would slow the flow of that technology to a crawl. Besides disrupting our tech corridor, this would be a setback to New Mexico’s hopes of bringing even basic Internet access to rural communities and tribal lands to the north. The best option for making these areas part of the digital revolution is a vibrant private market in which those companies have strong incentives to invest in new infrastructure.

If federal policy treats Internet service providers such as Comcast and CenturyLink as if they were traditional phone companies, they lose the incentive to invest in new carrying capacity for additional Internet traffic. If government allows the ISPs to charge heavy users like Netflix — which by itself accounts for 35 percent of all Internet traffic — we all get better, faster service.

Ironically, the Obama Administration embraced technology in unprecedented ways to get elected and engage with citizens. Unfortunately, the president, who enjoyed tech-savvy campaigns and support from tech-obsessed Millennials, has sowed the seeds for the destruction of the Internet as we know it.

It may not be realistic for the White House and the FCC to walk back all of “net neutrality,” absent a ruling in the courts. But at the very least Title II of the Communications Act should be on the chopping block. Its rules, the industry group Broadband for America believes, “go far beyond protecting the open Internet, launching a costly and destructive era of government micromanagement that will discourage private investment in new networks and slow down the breakneck innovation that is the soul of the Internet today.”

Federal regulation of the Internet won’t help the Land of Enchantment’s consumers, and it’s a major threat to our technology sector.

D. Dowd Muska ( is research director of New Mexico’s Rio Grande Foundation, 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.

Tweeting Facts and Freedom in New Mexico

Mon, 2015-05-18 17:18

Do you know that the Rio Grande Foundation is on Twitter?

Selfies? Comments about reality-TV stars? Restaurant recommendations?

Not exactly. Every day, Rio Grande Foundation staffers issue tweets on our research, media appearances, and events. We also link to news of note to citizens of the Land of Enchantment and other organizations’ policy analysis that is applicable to New Mexico.

Our Twitter handle is @RioGrandeFndn. We encourage you to follow us — and spread the word!

Steve McKee Albuquerque Luncheon: How New Mexico Can Beat Texas. For Real

Mon, 2015-05-18 12:14

Rio Grande Foundation Speaker Series Event:
How New Mexico Can Beat Texas. For Real.

Click here for registration form!

Please join the Rio Grande Foundation for our first speaker of 2015, Steve McKee. Steve McKee is the co-founder and president of McKee Wallwork + Company, an integrated marketing firm that specializes in revitalizing stalled, stuck and stale brands.

Have you ever wondered why so many New Mexicans accept the idea that behind states like Colorado, Arizona and (especially) Texas is where we belong? Our economy has lagged behind theirs for so long it's almost as if doing so is some sort of natural law. But branding and business growth expert Steve McKee believes that thinking is incorrect. He'll explain how a number of factors are actually working in New Mexico's favor, and how our state can and will turn the tide — and soon.

    A longtime columnist, he is also the author of When Growth Stalls: How it Happens, Why You're Stuck and What To Do About It, an award-winning business book now published in four languages, and Power Branding: Leveraging the Success of the World's Best Brands.

    His firm made the Inc. 500 list of the fastest-growing private companies in America its first year of eligibility, has twice won the prestigious Effie Award for marketing effectiveness from the American Marketing Association, and has been recognized by Advertising Age as one of ten top small agencies in the nation.

    Steve has been published or quoted in The New York Times, USA Today, Advertising Age, Adweek, Investor's Business Daily and The Los Angeles Times, among others, and he has appeared on CNBC, ESPN2, CNNfn, Bloomberg, and network television affiliates across America.

  • Location:  Marriott Pyramid 5151 San Francisco Rd NE, Albuquerque, NM 87109
  • When:  Wednesday, June 24, 2015, 11:45am to 1:00pm
  • Cost:  $30 until Wednesday, June 17, 2015; $40 after the 17th

Click here for registration form!

School Choice Works in New Mexico

Fri, 2015-05-15 11:20

In today’s Albuquerque Journal, the editorial board notes that “New Mexico charter schools are at the top of the class.” U.S. News and World Report named “three Albuquerque charters at the top of the 12 New Mexico schools that made the list of the 2,500 top high schools in the United States.”

As the Manhattan Institute’s Diana Furchtgott-Roth and Jared Meyer wrote in a recent issue of City Journal: “Charter schools offer many of the same benefits as private schools, since they are free from the stranglehold of teachers’ unions. This leaves them able to experiment with and adopt new education methods, including uniforms and stricter discipline, and to attract successful teachers. While teachers’ unions detest charter schools, the public favors charters by a two-to-one margin. Among African-Americans — arguably the biggest beneficiaries of alternative schooling options –support runs greater than three-to-one. Even 38 percent of public school teachers favor charters, while 35 percent are opposed.”

Given charter schools’ success, why not expand choice options in New Mexico? The House of Representatives attempted to do so during the 2015 session. But the legislation failed in the Senate.

Liberty on the Rocks – Albuquerque

Fri, 2015-05-15 10:17
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. Liberty on the Rocks will take place on Thursday, May 21st 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!

Low teacher pay in New Mexico and the growing K-12 bureaucracy

Thu, 2015-05-14 16:59

A recent report by New Mexico’s Legislative Finance Committee has found that teacher pay in our state is too low to keep good teachers. Interestingly, according to the NEA, New Mexico’s per-pupil spending on education is about average (25th according to the chart on p.54), but our teacher salaries are ranked 43rd in the nation (page 18).

What gives? For starters, New Mexico is known for having high capital spending when it comes to our public schools (7th-highest in the nation according to the chart on p. 58). Also, as data compiled by the Friedman Foundation and presented below by the Rio Grande Foundation shows, bureaucracy and administrative staffing levels have grown dramatically in recent years:

Sen. John Arthur-Smith does make a good point in the original Albuquerque Journal article about how teacher pensions may be unsustainable (teacher pay is essentially back-loaded to retirement). This means seniority is valued over competence as young people are scared away from a 20+ year commitment in order to get their “return on investment.” Perhaps Smith would introduce legislation to transfer teachers (on a voluntary or mandatory basis) from defined benefit pensions to defined contribution 401K-style programs?

As seen in the map below from NCSL, this is an option that is in place in several other states (and is becoming increasingly-popular):

There’s Too Much (‘Clean’) Money in Politics!

Wed, 2015-05-13 20:13

Kudos to New Mexico In Depth’s Sandra Fish for uncovering an inconvenient truth about lobbying at the Roundhouse.

Fish’s research found that Common Cause of New Mexico “spent the most overall during the [2015] session: $86,462 on an advertising and phone campaign to encourage lawmakers to pass a series of campaign finance and lobbying transparency bills.” The University of New Mexico landed in a distant second place, with $28,311 spent on “various receptions and other entertainment.”

When the deepest-pocketed “special interest” lobbying state lawmakers is pushing to rein in “money in politics” … well, it’s time for a little soul-searching for New Mexico’s McCainiacs.

RGF Policy Brief: What King v. Burwell Could Mean for New Mexicans

Wed, 2015-05-13 09:19

(Albuquerque, NM) – The health care law known as ObamaCare remains controversial, not just among the population at large, but among legal experts and in the courts. The latest decision relating to the health care law popularly known as “ObamaCare” was heard by the US Supreme Court in March of this year. The decision could impact the flow of hundreds of billions of dollars in Obamacare subsidies as well as taxes and mandates under the law.

A new report from the Rio Grande Foundation, “New Mexico and King v. Burwell What Kind of Exchange Are We? What does that Mean for Citizens and Policymakers” finds that New Mexico’s “hybrid” exchange would likely be impacted by a US Supreme Court finding for the plaintiffs in a decision that is expected to be handed down this summer.

To date, Amy Dowd, the director of the New Mexico Health Insurance Exchange, has claimed that “the case isn’t likely to have a bearing on New Mexico because the court is looking at the federal, as opposed to state, exchanges. But, in discussions with health care experts and research on the law, Paul Gessing, president of the Rio Grande Foundation found information to the contrary.

Michael Cannon, a health care policy expert with the Washington-based Cato Institute who has been called the “architect” of King v. Burwell by The New Republic, stated plainly that New Mexico’s “hybrid” exchange would be considered “federal” under the law (with subsidies at risk and businesses and individuals exempted from many of ObamaCare’s costly mandates).

This point of view on New Mexico’s exchange is not limited to conservatives. The Kaiser Family Foundation, which supports the Law, places the state among those where subsidies are “at risk.”

In other words, said study author Paul Gessing, “New Mexico’s political leaders and citizens should be ready for the likelihood that New Mexico’s current ObamaCare exchange may be invalidated by the Court. Such a decision could create temporary chaos as well as opportunities to reform or even abolish the Law in ways that lead to a freer market in American health care.”

Gessing relies on nationally-recognized experts to put together a series of recommendations for New Mexico’s state and federal elected officials to seize the opportunity to free American health care from the straight-jacket of ObamaCare.

End of the Line for the Richardson Express?

Tue, 2015-05-12 13:34

The Rail Runner is a growing burden on New Mexico’s budget. In a recent story in the Albuquerque Journal we learned that the state takes in $2.8 million from fares and costs an astonishing $28.4 million annually just to operate. Then there’s the $784 million in debt that must be repaid over the next 20 years. The annual operating costs, by the way, can be saved by simply mothballing the train while the $784 million will come due no matter what thanks to the “unique” way in which Richardson set up the capital outlays to fund this boondoggle. Of course the Legislature is also to blame for going along with this scheme.

It is true, as mass transit advocates claim that transit systems rarely cover their operating costs (perhaps that is an indicator that current transit models don’t work?). However, according to the authorities at Wikipedia, no transit system in the world had a farebox recovery ratio of 10 percent or less (the Rail Runner’s is just less than 10%). It is no surprise, based on this terrible performance, that Coyote Blog called the Rail Runner “The worst American Rail Project Ever” back in 2012.

We at the Rio Grande Foundation have been calling the Rail Runner a boondoggle from the beginning. In fact, we urged Gov. Martinez to shut the train down back in 2011. Perhaps we were ahead of our time, but shutting the train down is no longer a “fringe” viewpoint. Clifford Winston, a transportation expert at the center-left Brookings Institute, recently was quoted by the Albuquerque Journal saying, “In a state like New Mexico with low population density, it’s questionable whether a train is worth the cost…If it is socially undesirable, then cut your losses and no longer incur the cost … and try to recover the capital that you can and walk away.”

It would seem to me that our policymakers must make the tough but obvious choice to shut the train down now and to use the funds saved either to improve New Mexico’s roads or to pay down some of the debt on the train.

Oh, and lest you think that the Rail Runner is “catching on,” ridership is on a slow, steady decline.

‘Public’ Land or Hungry Hungry Hippos?

Tue, 2015-05-12 12:00

Last night’s “listening session” on the Valles Caldera National Preserve offered solid evidence of the problems inherent with collective “ownership.”

Held at the Anderson-Abruzzo Albuquerque International Balloon Museum — another will occur tonight in Jemez Springs, with the final session in Los Alamos on Wednesday — the meeting took input from New Mexicans who use and do business on the nearly 90,000-acre property, which will shift from being managed by a nonprofit trust to the National Park Service on October 1.

When the event’s facilitator (no word on what taxpayers were billed for her time) asked for participants to name their concerns, the list included horse trails, cross-country skiing, hunting/fishing access, wildlife-watching, camping, elk grazing, cow pastures, management of natural and cultural resources, riparian restoration, multi-use roads, overnight accommodations, building a visitor center, and access for the mobility-impaired.

In the evening’s greatest understatement, Charles Strickfaden, Valles Caldera acting superintendent admitted, “Obviously, some of these comments counter each other.”

The highlight of the event — one that brought hearty chuckles — was when a woman suggested her desire for the “reintroduction of wolves.” In response, a man quickly shouted, “Predator control!”

Government ownership of land means endless squabbling — conflicts between ranchers’ livestock and indigenous creatures, hunting/fishing and “wilderness” preservation, human access and protection of sites said to have cultural/historical/spiritual significance. It’s a lot like the children’s game Hungry Hungry Hippos, with every interest group grabbing as much as they can.

Valles Caldera is an amazing place. But after last night’s gathering, it’s more clear than ever that when “everyone” owns a property, conflicts are unavoidable. Wouldn’t a property-rights-centered approach be better?

NM should avoid higher gasoline tax

Sun, 2015-05-10 11:15

Some New Mexicans have convinced themselves that the challenges facing the state’s highways require a higher gasoline tax. They’re wrong, and here’s why.

First, the true condition of New Mexico’s roads contrasts with the oft-heard claims that they are “crumbling” and “in disrepair.” In the Reason Foundation’s latest national analysis, the overall performance and cost-effectiveness of New Mexico’s highways ranked seventh. States graded worse included our neighbors Texas (11th), Arizona (19th), Oklahoma (22nd), Utah (29th), and Colorado (33rd).

New Mexico scored its best marks in maintenance disbursements per mile (1st), capital-bridge disbursements per mile (6th) and rural arterial pavement condition (6th).

Still there’s no denying that the revenue needed to build and maintain highways is stagnant. Autos are becoming more efficient, and Millennials do not drive as much as previous generations. Between the 2009 and 2014 fiscal years, New Mexico’s road fund rose from $371.1 million to $380.6 million. Adjusted for inflation, the increase became a small decline.

That’s why pressure is mounting for action. Lawmakers and the governor, the argument goes, must hike the gasoline tax. “They are going to have to do something to raise revenue,” Greg Rowangould, a University of New Mexico professor of civil engineering told the Albuquerque Journal in a May 2 article. “They don’t have an option of doing nothing.”

Really? Isn’t spending existing revenue more efficiently an option? In the 2015 session, Sen. Carroll H. Leavell, R-Jal, drafted a bill to gradually transfer 100 percent of the receipts from the motor-vehicle excise tax — currently applied to general expenditures — to the road fund. Legislative analysts predicted that by the 2019 fiscal year, the switch would yield an additional $156 million for highways.

Another boost could come from halting the siphoning off of gasoline-tax revenue. Currently, a portion is devoted to the state’s aviation and general funds, as well as the coffers of counties and municipalities.

And putting the expensive and underused Rail Runner out of its misery would free up tens of millions of dollars annually.

Also on the spending side, the purchasing power of transportation projects would be enhanced by the repeal of New Mexico’s prevailing-wage law. The mandate is anti-competition, and thus, profoundly anti-taxpayer.

According to Roxanne Rivera-Wiest, the president of Associated Builders and Contractors of New Mexico, prevailing-wage rates are “determined by the director of the Labor Relations Division of the Department of Workforce Solutions, at the same wage rates and fringe benefit rates used in collective bargaining agreements as supported by the unions.”

But the vast majority of the construction industry in the Land of Enchantment is not unionized. Thus, highway projects in the state are unnecessarily expensive.

A report by Ohio’s Legislative Service Commission found “overall savings of 10.7 percent” when the Buckeye State exempted school construction from its prevailing-wage requirement. The New York Times recently reported that limited rollbacks have been enacted in West Virginia and Nevada, and campaigns for full repeals “have been offered in more than a dozen states, including Michigan and Missouri, as well as Wisconsin.”

A final way to avoid a gasoline-tax hike is to invite the private sector to contribute.

R. Richard Geddes, of Cornell University, noted that for-profit entities “were widely used in the 19th century to build and operate toll bridges and roads, and the vast majority of U.S. railroads were constructed with private money.”

Peter Samuel, the publisher of the newsletter Toll Roads, believes that by “allowing takeovers, consolidations, and spin-offs of highway assets, the markets would ensure that highways are managed for the best return on capital — the dynamic that gives us our food, our fuels, our housing, our electric power, and all the rest of what goes into our standard of living.”

Imposing higher taxes on a state where employment, incomes, and home values have yet to recover from the Great Recession isn’t sound policy. There are indeed innovative, proven, and cost-free options to upgrade and expand New Mexico’s roads.

A reason to pick up the ABQ Free Press?

Fri, 2015-05-08 13:37

The ABQ Free Press has been around for a year now. I can’t imagine too many conservatives and libertarians would decide to pick it up since the paper tends to be a steady diet of left-wing columnists with a weekly appearance by none other than Robert Reich, the former extreme liberal Secretary of Labor under Bill Clinton.

If you do desire some “free” reading material, the paper has recently started carrying a discussion/debate series involving Rio Grande Foundation president Paul Gessing and failed Democrat gubernatorial candidate (and my sometimes debate opponent) Alan Webber. Webber is a smart guy and a capable debater so it should be an interesting read and you won’t find it anywhere but the Free Press.

The first installment ran in the May 6th edition and appears on page 10 (click here for the full edition). We actually agree to a great extent that regulators should encourage rather than discourage ride-sharing services like Lyft and Uber although Webber wants to apply the same terms to utilities. Interestingly, this pro-Uber/Lyft stance puts Webber cross-ways with the most powerful Democrat in New Mexico and his lobbyist brother who killed reasonable regulations during the 2015 session.

Kicking the Habit, or Dodging Taxes?

Fri, 2015-05-08 12:56

The Tax Foundation reports that revenue from the federal tobacco tax is declining.

The same can be said of New Mexico’s levy on coffin nails. Here, in millions of dollars, are the sums the tax generated recently, and are predicted to yield in the future:

2011: 88.2

2012: 85.4

2013: 86.1

2014 (unaudited): 78.5

2015 (estimated): 79.0

2016 (estimated): 78.1

With a cigarette tax higher than the national average, and above the rates of Texas, Oklahoma, and Colorado, it’s likely that evasion is a major contributor to New Mexico’s declining revenue. According to the Mackinac Center for Public Policy, the Land of Enchantment is a top “inbound smuggling state”  — 46.1 percent of the smokes consumed here are contraband.

Giving to Panhandlers Doesn’t Help anyone

Thu, 2015-05-07 10:15

We talk a lot about government economic policies at this site. This is more of a personal plea: “Don’t give to panhandlers!” Kudos to the City of Albuquerque for finally taking action to address the issue. You can’t get off of a highway in this town without someone with a sign asking for money. That’s not the real problem.

Rather, my issue with panhandling is that it doesn’t really help the people who are out doing it because it violates the old proverb “Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.” One panhandler detailed on the front page of the Albuquerque Journal this morning is a perfectly-healthy 38 year old man who makes up to $30/hour tax-free from begging. I don’t know what his personal issues are, but he should be able to work. At $30/hour (or something like it), what incentive does he have to work? If he doensn’t work, how will he get skills and become a productive member of society? If he does have real issues that prevent him from working (mental health, say) he certainly isn’t getting help on a street corner.

And here’s where the government policies come in. According to the Cato Institute, in New Mexico government welfare payments already exceed the minimum wage (as seen in the chart below). So, in our personal lives and the government policies we advocate for, it only makes sense that we emphasize what Arthur Brooks calls “earned success,” as opposed to the quick freebie.

Stuck-on-Stupid ‘Economic Development’

Wed, 2015-05-06 18:44

Albuquerque Economic Development, a “private” organization, is receiving $80,000 from city taxpayers to hire CBRE Consulting’s John Rocca. The Southern Californian will be charged with finding “50 qualified companies interested in expansion or relocation,” and arranging “for AED to be in one-on-one meetings with those firms,” president and CEO Gary Tonjes told Albuquerque Business First.

It’s more of the same — government picking winners and losers, rather than lowering the tax burden, enacting regulatory relief, passing a right-to-work law, and promoting a more capable workforce through school choice.

Elsewhere, doubts about states’ giveaways to businesses are growing. Oklahoma’s governor recently signed legislation “to sort out effective incentives from ineffective ones.” While not an elimination of corporate welfare, it’s an acknowledgement that oversight is long overdue.

As for film-production freebies, many states — including Michigan, Louisiana, Florida, Texas, and Massachusetts — are rethinking handouts to Hollywood. Don’t look for New Mexico to join the club.

New Mexico’s job market is improving, but our work-force participation rates remain depressed

Wed, 2015-05-06 11:22

New Mexico’s job market is finally showing signs of life in the wake of the “Great Recession” as new federal data presented here by the Rio Grande Foundation show:

Obviously, New Mexico’s job situation remains far worse than it is in any of our neighboring states, but at least there is a pulse. Unfortunately, not much was done during the recent legislative session to set the stage for continued job and economic growth, so perhaps it was inevitable that New Mexico would see some job growth after years of the State economy being flat on its back.

As the chart below clearly shows, workforce participation in New Mexico lags the national average badly (by nearly 10 percentage points). And, while the national rate has declined in the wake of the “Great Recession,” New Mexico’s has quite literally collapsed with only slight improvement having taken place since 2011.

Obviously, there are some systemic issues with New Mexico’s economy and the New Mexico Senate in particular blocked any and all significant reforms.

Plenty of Room for Improvement

Tue, 2015-05-05 13:22

The Pew Charitable Trusts has looked at the health of the nation’s metro areas, in terms of “jobless rates, housing permits averaged over three years to 2015, 2013 gross domestic product and the number of incoming residents in 2014.”

Of the 377 regions Pew ranked, here’s how New Mexico fared:

Santa Fe: 180th

Albuquerque: 204th

Farmington: 240th

Las Cruces: 275th

Not much to be proud of, is it?

Lyft bails on New Mexico: Is Michael Sanchez to blame?

Tue, 2015-05-05 12:03

In a story published yesterday, the ride-sharing company Lyft is leaving New Mexico citing “mounting legal pressure from local (New Mexico) regulators.” From the looks of Facebook comments that I found it was a mysterious “DWI lobby” that caused onerous regulations to be passed by the PRC thus forcing Lyft out of New Mexico.

In reality, the situation seems quite a bit simpler. A better set of regulations for ride-share services was introduced by Rep. Monica Youngblood during the 2015 legislative session. This bill, HB 272, passed overwhelmingly 56-8. Unfortunately, the bill, as with so many others, got killed in the Senate without so much as a floor vote.

Notably, Raymond Sanchez, the former Speaker of New Mexico’s House and current Senate Majority Leader Michael Sanchez’s brother is the lead lobbyist for the taxi industry which HATES ride-sharing.

In the wake of the Senate’s failure to pass a reasonable bill, the PRC stepped in with some onerous regulations and now Lyft is gone.

So, there you have it: a microcosm of why New Mexico remains poor and doesn’t create as many jobs and as much economic prosperity as its neighbors. Michael Sanchez is by no means the only liberal politician that likely scared the ride-share companies (AG Balderas’ calls for drug testing were likely another factor). The PRC can also be faulted for passing onerous regulations. But, when blame is assigned for Lyft (and possibly Uber) leaving New Mexico, Majority Leader Sanchez and his near-dictatorial control over the Senate’s calendar must be near the top of the list of reasons.

The RTW Advantage Continues in April

Mon, 2015-05-04 11:18

Another month, another victory for job creation in right-to-work (RTW) states.

The Rio Grande Foundation is tracking announcements of expansions, relocations, and greenfield investments published on Area Development’s website. Founded in 1965, the publication “is considered the leading executive magazine covering corporate site selection and relocation. … Area Development is published quarterly and has 60,000 mailed copies.” In an explanation to the Foundation, its editor wrote that items for Area Development’s announcements listing are “culled from RSS feeds and press releases that are emailed to us from various sources, including economic development organizations, PR agencies, businesses, etc. We usually highlight ones that represent large numbers of new jobs and/or investment in industrial projects.”

April had a somewhat surprising result — non-RTW states posted their best performance of the year, and nabbed 29.4 percent of projected job creation:

As has been the case since January 1, in April, Kentucky claimed a disproportionate share of non-RTW employment. But it should be noted that the Bluegrass State is moving in a RTW direction — compulsory unionism may be repealed at the state level, and a dozen counties have passed RTW ordinances.

April saw a number of non-RTW-to-RTW shifts, including Adecco Group North America moving its headquarters from New York to Florida, California-based Kaiser Permanente establishing an IT campus in Georgia, and T&B Tube Company relocating an Illinois facility to Indiana.

Nationally, the total number of jobs projected so far this year is 59,455 — with 81.2 percent slated for RTW states.

How long will it take for New Mexico’s elected officials to recognize that RTW is a powerful economic-development tool?

Methodological specifics:

* All job estimates — “up to,” “as many as,” “about” — were taken at face value, for RTW and non-RTW states alike.

* If an announcement did not make an employment projection, efforts were made to obtain an estimate from newspaper articles and/or press releases by elected officials and economic-development bureaucracies.

* If no job figure could be found anywhere, the project was not counted, whether it was a RTW or non-RTW state.

* Intrastate relocations were not counted, interstate relocations were.