Errors of Enchantment Blog Postings

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Why is New Mexico not realizing its potential?
Updated: 2 hours 11 min ago

America’s health care system actually best in the world? And how about those job-locked poets?

Mon, 2014-02-10 15:51

Much was made of America’s expensive and allegedly poor-performing health care system by the media and supporters of ObamaCare prior to the creation of the new health care law. Interestingly, America’s health care system, while deeply flawed as I’ve pointed out in the past, remains the best in the world if the issue is one of results.

For details, check out this article from Forbes which shows how, once car crashes and shootings are subtracted from the equation (can’t really relate these items to our health care system), the US has the world’s longest life spans.

Of course, America’s health care system is expensive and a lot of that spending is of dubious merit. But even government spending is a tricky measuring stick. As Jonah Goldberg notes, with 2.3 million Americans leaving the work force due to ObamaCare, not all costs associated with ANY health care system readily show up in the data.

Luncheon with Stephen Moore, former editorial board member Wall Street Journal – Albuquerque

Fri, 2014-02-07 12:59

Join the Rio Grande Foundation at this Albuquerque luncheon event on Friday, March 14th featuring Stephen Moore, former editorial board member at the Wall Street Journal, now chief economist at Heritage Foundation.

Click here for event registration form.

The Rio Grande Foundation is hosting a luncheon talk with Stephen Moore on Friday, March 14, 2014. Moore will be discussing "A Growth Agenda for New Mexico." 

  • When: 12 noon to 1:00pm on Friday, March 14, 2014
  • Where: Albuquerque’s Marriott Pyramid which is located at Paseo del Norte and I-25
  • Price: $40 for purchases made through March 7th; $50 for purchase made March 8th or later. Books will be available for purchase and signing at the door.

Moore served as a member of the editorial board and senior economics writer for the Wall Street Journal from 2005 through 2013. He splits his time between Washington and New York, focusing on economic issues, including budget, tax and monetary policy.

In January of 2014 he took over as Chief Economist at the Washington, DC-based Heritage Foundation.

Stephen also founded and served as president of the Club for Growth, which raises money for political candidates who favor free-market economic policies. He left that position in 2004, just prior to coming to the Journal.

Over the years, Stephen has served as a senior economist on the Congressional Joint Economic Committee, as a budget expert for the Heritage Foundation and as a senior economics fellow at the Cato Institute, where he published dozens of studies on federal and state tax and budget policy. He was a consultant to the National Economic Commission in l987, and research director for President Reagan's Commission on Privatization.

Stephen is the author of five books, including: “Who’s the Fairest of Them All? The Truth about Opportunity, Taxes, and Wealth in America.” He graduated from the University of Illinois and holds a masters degree in economics from George Mason University.

Click here for event registration form.

Survey: Biggest Obstacle to Economic Growth in NM: Government

Thu, 2014-02-06 18:18

That’s the real story behind a recent Albuquerque Journal story detailing the results of a poll done by the Albuquerque Chamber of Commerce.

While generalized issues like “weak economic growth” were seen as significant problems for businesses, government-created or exacerbated problems like “lack of skilled labor,” “state/federal regulations,” “health care costs,” and “high taxes” were the most important, definitive issues dragging New Mexico down. “Lack of federal funding/budget cuts” was way down the list which is somewhat shocking given New Mexico’s relative reliance on federal dollars.

Solutions? Easy to come up with, but hard to implement: Revamp our education system focusing resources on school choice and vocational education; deregulate the New Mexico economy; end ObmaCare and adopt health reforms based on free market principles, and reduce taxes on productive economic activity both at the state and federal levels.

So, despite all the talk about federal cutbacks hurting New Mexico’s economy, it looks like the real culprit is what government does or does poorly, not the mathematical inevitability of spending cuts in Washington.

Time to update NM broadband regulations to encourage competition.

Thu, 2014-02-06 11:22

Other than Marty McFly’s time-traveling DeLorean, 1985 is the distant past in terms of technology. Yet some of New Mexico’s phone carriers are still regulated under a law passed that year – before the World Wide Web was created and before wireless broadband connectivity became the norm for our multitude of digital devices. Carriers are governed under different sets of rules, leading to an overly-complicated regulatory mix that hampers competition among carriers and discourages private investment in the state’s telecommunications infrastructure.

SB 152, which has been introduced in the 2014 Legislative Session seeks to harmonize the regulatory scheme, holding all carriers to the same standards. It enjoys bipartisan support from Governor Martinez (R) and Democrats such as bill sponsor Sen. Phil Griego and House Business and Industry Chair Rep. Debbie Rodella. The bill would hold all incumbent phone carriers to the same standards and apply the benefits of a 1999 rural incumbent telephone law evenly throughout the state.

The old law made perfect sense when it was passed. Back then, there was only one carrier in New Mexico, and telecom infrastructure meant mile after endless mile of copper wire. Telecom technology and the structure of the state’s telecom industry itself have changed so much since then that they would be unrecognizable, even inconceivable, to the legislature that passed the 1985 law.

There is no longer a monopoly on phone service. Broadband is the new standard in the telecommunications industry. Many phone companies are wireless only. It’s entirely sensible to ask that Santa Fe’s regulations attempt to keep pace with these changes.

Harmonizing the regulatory scheme would level the competitive playing field among carriers, pulling up the level of investment and pushing down prices for consumers. Instead of requiring the diversion of resources toward antiquated systems, it represents a full legislative embrace of 21st century technology. The technological capacity already exists, but its full potential is locked up by outdated legislation. The telecoms that currently operate here are capable of modernizing and expanding infrastructure, but are held up by New Mexico’s regulatory schemes. As economics and plain common sense can tell us, resources that are used for 1980s-level technology are resources not used for modern technology.

The ultimate goal of any regulatory scheme should be serving the interests of consumers. The current scheme discourages competition among carriers and investment in modern infrastructure, leading to consumers being underserved relative to potential by the telecom industry in the state. Smarter, fairer regulation that fully recognizes how different the industry is now would allow New Mexico’s telecoms to correct this situation.
It is not only private individuals but also New Mexico’s businesses that suffer. As more and more jobs come to rely on strong, cutting-edge telecom service, New Mexico risks falling even further behind neighboring states with more savvy and up-to-date regulatory schemes. With the lingering effects of the Great Recession still being felt and with one of the country’s highest levels of reliance on government assistance, our state can ill afford to pass up solid opportunities to enhance its economic attractiveness. High-speed broadband is the future of telecommunications, and like our neighbors—states rapidly gaining new residents, new jobs, and broader tax bases—New Mexico should recognize this fact.

Imagine if the state’s transportation authorities still based their rules on the assumption that horses and trains were how most of us got from place to place. It would be no surprise if states that included automobiles in their plans outperformed us economically. Getting the rules to account for automobiles would be legislative priority #1.

The proposed bill is emphatically not a call for deregulation. No one is asking Santa Fe for any kind of free-for-all. It simply seeks to harmonize the disparate regulatory schemes for New Mexico’s phone carriers in a forward-looking manner. We may not yet have time-traveling DeLoreans or flying skateboards, but we can easily enjoy better use of technologies that already exist.

McElroy is a Policy Analyst with 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

Raising gas tax a bad idea

Wed, 2014-02-05 14:52

A proposal in the New Mexico Legislature to raise the gas tax by 5 cents a gallon has been introduced this session. It is not likely to go very far as Gov. Martinez has indicated she won’t sign a tax hike, however, the proposal has picked up support from the Albuquerque Journal and Las Cruces Sun-News to name two papers. To its credit, the Journal does cite the unnecessary burden the Rail Runner’s financing has placed on the transportation budget. Far from being a helpful way to reduce traffic, the RailRunner is an unwise diversion of limited funds.

And, to be sure, there are road needs in New Mexico and even possible arguments for raising the gas tax. One argument is that since the rate is charged as a cents/gallon tax, inflation eats into the tax. Also, as cars become more fuel efficient or even electric, gas tax revenues decline. All of these are fair and could necessitate some changes in how roads are constructed and maintained.

However, before tapping into motorists’ pockets, wouldn’t it make more sense to put an end to unfair labor laws that unnecessarily increase the cost of public works projects as Roxanne Rivera-Wiest of the Associated Builders and Contractors of NM recently wrote? The law in question is New Mexico’s equivalent of the Davis-Bacon laws that increase prices by up to 20 percent. Of course, Davis-Bacon laws jack up the costs on ALL state projects, so New Mexicans could also benefit from 20% more schools and 20% more public buildings for the same price currently being paid. Sounds like a win-win to me, but the majority Party in the Legislature would prefer to bilk taxpayers out of more of their hard-earned money than pay their union friends a market wage (as opposed to an inflated one).

Bureaucratic incompetence in zoning harms our economy. Should taxpayers foot the bill?

Tue, 2014-02-04 15:55

Recently, Rio Grande Foundation helped discourage San Juan County from adopting zoning. We believe that Houston’s model is far superior and it is no accident that in a city (within a state) that lacks overweening government regulations, Houston has one of the strongest economies of any city in the nation.

Compare that to the following zoning horror story from Albuquerque in which an incompetent (or 2 or 3) government bureaucrat who has no skin in the game and faces no real personal cost for some terrible decisions, has put a local man out hundreds of thousands of dollars. As much as I hate as a taxpayer for us to have to cover for this egregious mistake, it would seem to be the least we could do to make this right (Kudos to KRQE 13 for the excellent reporting):

The incredible importance of oil and gas to New Mexico: 31.5% of total state tax revenues

Tue, 2014-02-04 14:15

Check out the infographic below. It was created by the folks at New Mexico Tax Research Institute to illustrate the findings of a recent study the organization did on just how important oil and gas are to New Mexico:

As indicated, more than 31 percent of New Mexico tax revenues are the direct or indirect result of oil and gas activities in the state. The full report can be found here.

As poor as New Mexico is and as much as its education system struggles, it is hard to imagine what life would be like in our state without the oil and gas industries. There can be no doubt that New Mexico does need a diverse economy that, while supporting the industry, also goes beyond oil and gas and especially federal government activity. Nonetheless, oil and gas are the foundation of our state economy, are more reliable than Washington, and should be viewed as the tremendous generators of higher living standards that they are by New Mexico’s policymakers.

New Mexico’s telecom regs need to be modernized

Mon, 2014-02-03 12:37

Antiquated telecommunication regulations are holding New Mexico back. According to the 2013 Mercatus Center report “Freedom in the 50 States,” New Mexico suffers under some of the heaviest regulatory burdens of any state. The Rio Grande Foundation has spent a great deal of time researching and exposing many of these burdensome regulations, which can undoubtedly improve the economic climate in New Mexico at no cost to the taxpayer.

New Mexico’s broadband regulations are a classic case of overregulation that should be addressed for the good of our rural economy. Greater competition inevitably leads to lower prices and greater choice for consumers. Antiquated land line phone service providers remain regulated by a 1985 law that dates before implementation of the internet and smart-phone technology. This outdated regulatory scheme has hindered investment in rural broadband resources throughout our state. Having high-speed Internet access throughout the isolated communities of New Mexico will remain integral, if not a necessity, to spurring the rural economic growth everyone desires, while simultaneously increasing statewide effective educational opportunities.

During the current legislative session, a bi-partisan bill has been introduced that will modernize and improve these regulations in a positive and productive manner to encourage greater private sector broadband investments. A 30-day legislative session is brief, but this modest regulatory improvement of New Mexico’s stale broadband regulations can be one commonsense reform that both Republicans and Democrats can agree on.

I urge all New Mexicans to support SB 152.

Tom Mullins
Board Member, Rio Grande Foundation
Candidate foro US Congress, 3rd District

Pressure builds for Obama to approve Keystone XL Pipeline

Fri, 2014-01-31 16:30

The latest government report is about to come out and according to insiders familiar with it’s contents, the Keystone XL pipeline WILL NOT significantly impact carbon emissions or man-caused climate change. This is something that we and others (like the Obama-supportive AFL-CIO, for example) have been saying all along, leading even Bill Clinton to endorse the pipeline. Obama now has every excuse to go ahead and give the pipeline the go-ahead.

But, the radical anti-energy activist community is vehemently opposed to the pipeline and they have had Obama’s ear to this point. Interestingly, the President did tout his “all of the above” energy strategy in his State of the Union talk, so perhaps he was setting up Keystone approval? After all, I’m sure he had access to the results of this report in advance of his speech.

It would be great to have this pipeline built and safely transporting needed energy from our friendly neighbors in Canada with thousands of well-paying (union!) jobs being created at the same time. Will Obama stand up to the radical, professional environmental movement? It’s now or never.


New Mexico Congressional Delegation, Supporters of Minimum Wage Hike, Don’t Pay Interns

Thu, 2014-01-30 18:23

I interned for a Congressman in Washington, DC in the late 1990s (Daniel Patrick Moynihan to be exact, yes, he was a Democrat). I used that unpaid internship to find my first paid job in Washington on the Senate Finance Committee on which Moynihan was Ranking Member. I and literally thousands of other policy wonks and even politicians can credit an unpaid internship in Congress with getting them started in their careers in politics and policy. To this day, one of the most notable things if you walk around the Congressional office buildings is the striking number of young people roaming those halls.

New Mexico’s Congressional delegation also relies heavily on unpaid interns as reported by Rob Nikolewski. This flies in the face of the efforts of liberal activists who are campaigning to eliminate such unpaid internships. More importantly, the reliance on unpaid internships illustrates the apparent hypocrisy of the four Democrats from New Mexico (and just about any Democrat in Washington) who supports efforts to raise the minimum wage to $10/hour while they directly benefit from unpaid interns. Under current laws, if you want to pay someone $5 an hour, that’s illegal, but if you don’t pay them at all and call it an “internship,” it’s okay. Ya gotta love Washington!

I benefited from my unpaid internship despite having to work part-time jobs to make it work. I learned that I loved public policy, but had no interest in working on the Hill long-term. Shouldn’t other young people, not just those working in Congress, have the ability to work for a bargain-basement wage that they and their prospective bosses agree to in order to gain valuable work experience? It would seem that 4 of New Mexico’s 5 members of Congress would say “no.”


Reduce Unemployment Benefits (and enact other free market policies), reduce unemployment like North Carolina

Wed, 2014-01-29 16:35

Check out this story from Business Insider. It details North Carolina’s experience with falling unemployment in the wake of the elimination of extended unemployment benefits last summer and free market tax reforms that “reduced or eliminated dozens of special tax breaks and exclusions while replacing North Carolina’s multi-rate personal income tax, with a top rate of 7.75 percent, with a flat-rate tax of 5.75 percent. The corporate tax rate drops from 6.9 percent to as low as 3 percent, if the state meets revenue growth targets.”

In other words, ambitious, free-market reforms are working in North Carolina as they tend to in states that retain or embrace free market reforms (even New Mexico has benefited from tax cuts in the past).

Check out the incredible falling unemployment rate chart from Business Insider relating to North Carolina below:

Will Obama Use State of the Union to Outline Unilateral Action?

Tue, 2014-01-28 16:50

State of the Union speeches are normally applause-filled snooze-fests. Lots of vague and expensive promises with little bearing on the actual policy situation. This year could be different. In implementing his health care plan, President Obama has bent the rule of law to the breaking point with no fewer than 19 unilateral changes to the Law. Now, according to recent news reports, he is threatening even more unilateral action.

The last thing America needs is for the Obama Administration to completely discard the Constitution by circumventing Congress to enact new regulations and wealth redistribution schemes. The Rio Grande Foundation, along with dozens of other state policy research institutes, has signed a letter to this effect that can be found here.

It is of dire importance that the presidency be restrained (no matter which party holds the White House).

Quality v. quantity: evidence on reduced class sizes and expanded pre-k

Tue, 2014-01-28 13:45

Rep. Mimi Stewart (D-unions) has introduced legislation (HB 3) that would reduce class sizes in New Mexico (she’s also got a bill, HB 66 to reduce graduation standards). Small class sizes sound great in concept, but even the very liberal Center for American Progress (CAP) which has studied the issue and found that reducing class sizes is usually not a cost-effective route to higher student performance. Not surprisingly, CAP is not alone in noting the failure of small class sizes as public policy. The libertarian Cato Institute has come to the same conclusion, noting that:  ” in 72% of the (300) studies reviewed, there was no statistically significant effect on measurable student achievement associated with smaller classes.”

And then there is the Constitutional Amendment (SJR 12) to tap the permanent fund for a massive new pre-kindergarten program. Again, left and right agree (nationally at least) in the form of Cato and the center-left Brookings Institute, both of which are skeptical of the impact of pre-k programs in improving educational outcomes. Says Andrew Coulson of Cato,federal pre-K programs have proven ineffective for half a century and that the claims of large returns-on-investment due to pre-K stem almost exclusively from just three small-scale programs—out of hundreds of such programs operating around the nation for decades.”

Brookings researcher Grover “Russ” Whitehurst concludes that:  ”They (policymakers) and the general public need to be wary of the prevailing wisdom that almost any investment in enhancing access to preschool is worthwhile. Some programs work for some children under some conditions. But, ah me, which programs, children, and conditions?”

So, if the educational basis for pre-k and smaller class sizes is not the reason for the massive push for these expansions of government, what is? Simply put, these programs massively expand both the entitlement mentality and the number of unionized teachers and administrators on the government payroll. It’s about bigger government in much the same way that ObamaCare is about growing the federal role in our daily lives (as opposed to reforming/improving health care).


New Mexico’s Unionized Public Employees Earn More than non-union Counterparts

Mon, 2014-01-27 14:14

(Albuquerque) As the Legislature discusses the budget during the 2014 legislative session, pay hikes for State and local government workers are on the table. The Legislative Finance Committee has proposed relatively ambitious pay raises ranging from 1.5 percent to more than 3.0 percent. Gov. Martinez, on the other hand, has proposed more modest pay hikes targeted at teachers. Martinez’s plan would result in small raises for about 7,000 of the state’s roughly 22,000 workers.

With these competing proposals on the table, it is worth looking at the data to better understand the compensation premium that’s already enjoyed by government workers in New Mexico. New research conducted for the Rio Grande Foundation, documented in “New Mexico’s Unionized Employees earn more than their non-union Counterparts” demonstrates the source of that premium: In unionized sectors of New Mexico government, employee pay is higher than it is for government workers who aren’t union employees. In other words, taxpayers pay more than they have to for basic public services.

Economists from the University of Miami (OH) and Trinity University conducted a study of 819 public employees in the state, and found that collective bargaining in the state leads to less-affordable services for the taxpayers and artificially-inflated pay for unionized government employees.

Noted Rio Grande Foundation President Paul Gessing, “Around the state, government employees who are working under a union-negotiated collective bargaining contract cost taxpayers 7.4% more in total compensation – the “union premium” – for services the taxpayers could be getting more affordably from a non-unionized counterpart.”

When discussing across-the-board pay raises for public sector workers, it is important that policymakers and the Legislature have a full understanding of public employee pay and benefits relative to their private sector counterparts.

Concluded Gessing, “New Mexico desperately needs to improve the health of its private sector. While a growing private sector economy can support a growing and better-compensated public sector, this is not currently the case in New Mexico.

You shouldn’t have to ask permission from ANYONE to work or start a business

Fri, 2014-01-24 11:48

We at the Rio Grande Foundation supported efforts to dergulate New Mexico’s motor carrier industry which includes taxi cabs and all manner of motorized, public transport. Unfortunately, our definition of “deregulate” is different from the Democrat-controlled Legislature’s. True “deregulation” means that as long as I am operating in a safe manner, I should be able to get into a specific business. Under the Legislature’s warped definition, “deregulation” still means having hearings at the Public Regulation Commission to determine whether there is a “need” for a particular service.

See this recent article from the Albuquerque Journal which describes efforts by two companies to enter the motor carrier business, one as a taxi service in Albuquerque and the other to give tours of sites used in the filming of the show “Breaking Bad.”

Unfortunately, as the Journal reports, despite last year’s modest reduction in the regulatory stranglehold of certain incumbent cab companies, you still need to get the PRC’s blessing before going into business. This kills jobs and economic growth. At a time when New Mexico’s economy is struggling worse than almost any other state, we need real, broad deregulation not just of motor carriers, but of a wide variety of activities. Overcoming the entrenched special interests won’t be easy, but it is essential to New Mexico getting out of 50th place on so many economic measures.

More gory data on New Mexico

Thu, 2014-01-23 15:44

The following series of charts and data are taken directly from a blog posting from a Washington Post blog. We at the Rio Grande Foundation have been raising concerns over New Mexico’s lack of economic freedom. No matter what, it would seem that some serious changes are needed in New Mexico’s economy and education systems.

One of New Mexico’s top economists hosted an annual economic forecasting conference Thursday, but what stands out in the presentation she delivered is the dire state of the state.

Population growth is at a virtual standstill. On good indicators, the Land of Enchantment often ranks near the bottom; on bad indicators, it’s often near the top. It relies heavily on the public sector, including the fickle federal government; and the gap between the top and bottom on education and income is wide.

Overall, the forecast shows the state adding jobs and income at a rate just below the national average over the next few years. But the real estate market in Albuquerque, the state’s largest city, remains relatively weak, according to a presentation given by Dr. Lee A. Reynis, director of the University of New Mexico’s Bureau of Business and Economic Research. Sectors that will drag the economy down include construction, the federal government, professional and technical services and manufacturing. But there are bright spots, too: mining, oil and gas production, technology, tourism and transportation.

The state “needs to protect its water resources, to deal with income inequality and deep and persistent poverty, to address the inadequacy of its public education system,” Reynis concludes in her presentation.

Here are some of the highlights, which show the tough spot New Mexico is in:

Population growth is approaching zero


The education disparity is wide, too

A similar trend is apparent in education, with New Mexico ranking fourth among states on PhD holders and in the bottom 10 on those with a bachelors or higher degree.

Reliance on food stamps and Medicaid is rising

Over the past five years, there has been a big increase in the use of food stamps (top left) and Medicaid (bottom right). Welfare (top right) rose but is close to its pre-recession levels.

The state is highly reliant on the public sector

Local and state employment have risen significantly over the past 20 years, contributing to New Mexico’s high reliance on the public sector.

Even though the graph below shows federal government employment has held relatively steady and military employment is down, both accounted for 4.8 percent of jobs in 2010, compared to a national 3 percent average. Federal spending in New Mexico was $13,578 per capita, the sixth highest in the nation. As a share of federal taxes paid, New Mexicans got the most bang for buck.

The map below, from a fall Mercatus Center report, shows the state’s reliance on government in another way. The share of total jobs accounted for by the public sector and federal contracts was higher in New Mexico than any other state, a less-than-ideal reality given the recent trend toward slashing spending.


Residents unable to live up to their work potential

The number of New Mexicans who are marginally attached to the workforce (see definition below) or involuntarily in part-time as opposed to full-time jobs is high. In fact, it basically doubled from 2007 to 2012, according to statistics cited in the presentation. An analysis of 2011 data, charted below, shows that New Mexico is second only to Nevada in its share of such workers.

Relatedly, job growth is very low in New Mexico. After ranking among the top 15 states in employment growth over the past 40 or so years, it was ranked 48 in November. Albuquerque, a key part of the state economy that bested state and national performance for years, was “seriously lagging,” Reynis said in the presentation. The problem is exacerbated by the fact that “in the good years growing employment masked many serious problems,” including the “extremely high” poverty, low per capita income and wages and racial and ethnic disparities in income and employment.

But many of the problems facing the state are ones facing the nation as a whole — some just tend to be more severe in New Mexico. And the presentation wasn’t all bad.

“It’s easy to find evidence of improvement,” Reynis said at the Thursday forecasting conference, according to the Albuquerque Journal. Most sectors are adding jobs after nearly all were losing them in 2010, the paper notes.

Paul Gessing interviewed on New Mexico’s economy and criminal justice reform

Thu, 2014-01-23 10:52

RGF president Paul Gessing recently sat down with KNAT TV’s Mike Cosgrove for two separate interviews to discuss New Mexico’s economy, why it is such an important issue, and what can be done to turn it around. Gessing also discusses criminal justice reform efforts that have been under way in the New Mexico Legislature. He explains some of the concepts his group is looking to use to influence criminal justice policy reforms, his involvement with Right on Crime, and how such reforms could help New Mexicans prosper.

To get ahead, Americans must move

Wed, 2014-01-22 12:19

I found this report fascinating. The basic point is that Americans who are struggling to make ends meet can most help themselves by moving to where the jobs are. As previously noted, this is exactly what many New Mexicans are doing, but the idea of moving rather than staying in one place could also be applied to government benefits like unemployment and food stamps which tend to make the poor and unemployed more comfortable and thus less likely to move to find work.

Interestingly, but not surprisingly, the federal government’s meddling with the housing market and the powerful incentives it provides for home ownership as opposed to renting are major reasons why Americans are not moving (or working) as much these days as they used to.

Amazing how many of our problems are caused by the unintended consequences of government!

Lottery Scholarship Program should not pay full costs

Tue, 2014-01-21 17:17

The Legislature will soon be considering reforms to New Mexico’s Lottery Scholarship Program. While a number of tweaks such as increasing the GPA requirement have been offered and will likely be considered, after taking a careful look at the program as a whole, it would appear that the Lottery Scholarship could use a serious overhaul.

Before getting into specific reforms, it is worth pointing out that while they have provided college educations for thousands of New Mexico students, the Lottery Scholarships are not free money. Their proceeds are the result of voluntary lottery ticket purchases which are disproportionately made by middle and low income people. These people could have potentially saved, invested, or even invested in their own child’s educations.

The fact that there are tradeoffs and that the Lottery Scholarship is a regressive (albeit voluntary) tax, makes it extremely urgent that the return on New Mexico’s Lottery Scholarships must be maximized both in terms of educational outcome and overall impact on our state’s economy.

To maximize the program’s positive impact, it is imperative that lottery scholarships not cover 100% of tuition and that they instead be offered in limited amounts. This policy change alone would force New Mexico’s institutes of higher education to compete on price for the 26 percent of their undergraduate customers receiving lottery scholarships. It would also encourage students to look for additional funding sources for their educations. Outside scholarships, parents, and obtaining employment could provide additional funds for college that would in turn allow more students to receive a college education.

Furthermore, having scholarships of a set, limited value would encourage students to look for the educational option that makes the most sense for them such as a community college or a vocational degree without feeling the need to “take advantage” of a four-year full-ride at a more expensive, four-year institute.

Simply, in its current form, the Lottery Scholarship reinforces the idea that a free higher education is an “entitlement.” Providing scholarships in a fixed amount will both encourage students to value their educations while encouraging our institutes of higher education to compete for those students.

Ideally, once this most important reform is enacted, we at the Rio Grande Foundation would like to see that Lottery Scholarships be made available for any institute chosen by the student whether that is in or outside New Mexico. There is no educational justification for forcing students to use their scholarship at an institution here in New Mexico. In fact, enabling students to experience cultural and educational institutions outside New Mexico could go a long way towards broadening the outlook of top students throughout our state.

No matter what happens with the Lottery Scholarship program, it makes no sense to prop it up with revenues from the General Fund. The Gov. is calling for $16 million in state funds while the Legislative Finance Committee is calling for $22 million. The Legislature has already spent $10 million from the state’s Tobacco Settlement Fund (really the General Fund) to prop up the Lottery Scholarship program.

Unfortunately, human nature being what it is, the Legislature is only likely to deal with the issue when students and their families lose of face the threat of losing their scholarships and put pressure on their elected officials. More money will just kick the proverbial can down the road again.

Lastly, while raising GPA standards sounds like an easy enough fix for the Program’s finances, this must be done with great care. Maintaining a 2.5 GPA in University Studies or Political Science (I was once a Poly Sci major) is far cry from maintaining the same grade in Engineering or Math at New Mexico Tech. At a time when STEM is being encouraged throughout our schools, some accounting must be made not to discourage Scholarship recipients from those areas of study for fear of losing their scholarships.

The program as designed today has several unattractive features and inefficiencies as outlined above that need to be changed. Hopefully, the Legislature will lead the way to maximizing the benefits of this program.

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

New Mexicans need attitude adjustment on freedom

Mon, 2014-01-20 12:40

As the 2014 Legislature gets under way tomorrow amidst an ongoing flurry of bad economic news (check out this Washington Post blog for even more depressing details), it is easy to wonder why our state constantly finds itself at the bottom of most good lists and at the top of most bad ones. I have blamed the Legislature and their failure to adopt needed policy reforms, but it is the voters of this state who elect and re-elect these people, so at some level they must represent us, right?

Take a look at some recent actions (outside of the legislative process) taken by everyday New Mexicans that hinder the ability of businesses and individuals to interact on a voluntary basis.

Railroad town battles train crude cars: Lamy tries to stop oil transport plan in its track: Lamy, (I’ve been there) a town that really barely qualifies as a town, doesn’t want crude oil transfers made there. No word on whether the protesters all walked to the meeting to oppose plans that might possibly bring some economic development to the area.

Winery plans stall as permit denied: Think “dirty” oil is the only thing New Mexicans get up in arms about? Not so fast. Recently, the Bernalillo County Planning Commission denied a special use permit to have public art and music events at the winery. Heaven forbid someone use their own property for an activity they might enjoy that could put a few people to work.

Horse slaughter: Congress recently helped kill this one by abusing its power (not appropriating money for horse slaughter). Of course, private entities would do a better job of inspecting meats, but I digress. Anyway, Congress only helped New Mexico Attorney General Gary King who was doing everything in his power to stop this business from ever opening.

Mora County bans oil and gas drilling (need we say more): Interestingly, they have been sued on this.

In Albuquerque, Wal Mart’s efforts to open a store at Coors and Montano were denied. An unemployed relative of mine could be working at this store right now if it had been approved, but I’m sure glad that the empty lot is still in place.

My point in recounting these stories is to show that if New Mexico is ever going to get out of 50th place, changing who represents us in various elected bodies won’t do much by itself. We need a broad, philosophical change in our relative attitudes towards dependency on government, work, poverty, and one’s freedom to operate a business without NIMBY voices dominating the discussion.