The article below ran at the newly-relaunched NMPolitics.net which is managed by the indefatigable Heath Haussamen. We are thrilled to have Heath back at the helm of NMPolitics.net. Check out the site for more content provided by the Rio Grande Foundation and other political and policy voices from across the political spectrum.
During the 2015 legislative session various proposals were put forth, ostensibly with the goal of improving New Mexico’s roads. One proposal by Senate Finance Committee Chairman John Arthur-Smith would have increased the State’s gas tax by fully 10 cents per-gallon while tying future increases to inflation.
Smith’s plan, if passed, would have represented a 59 percent increase in New Mexico’s gas tax (from 17 to 27 cents per-gallon). It is one thing to claim that we need to spend more on infrastructure and to raise revenues accordingly. It is another thing entirely to claim, as Smith did in an opinion piece, that spending an “additional $140 million annually for road jobs” will be an economic boon.
Before we hike taxes and spend another $140 million on roads, it is important to ask whether New Mexico needs more money for roads in the first place. That is an open question. Certainly, anyone who drives around New Mexico has their “pet” pothole, bottleneck, or bumpy road that they wish could be addressed, but relative to other states, New Mexico’s roads are pretty good.
According to the Reason Foundation’s (Reason is a free market organization that does a great deal of work on infrastructure issues) latest national analysis, New Mexico’s highway system ranked 7th among the 50 states for performance and cost-effectiveness. Each of our neighbors scored lower. New Mexico’s best marks came in maintenance disbursements per mile (1st), capital-bridge disbursements per mile (6th), and rural arterial pavement condition (6th).
Of course, our roads can always be better, but that doesn’t necessarily require higher taxes. We could use the resources we have more efficiently. The simplest way to make our road budget go further would be to eliminate New Mexico’s “Davis-Bacon” law which artificially raises labor costs on public works projects. The House passed a reduction in those rates during the 2015 session. It should eliminate “prevailing wage” laws entirely and allow construction workers to be paid market wages.
A report done by Ohio’s Legislature found that eliminating a similar provision on school construction in that state led to a 10.7 percent reduction in the total cost of each school. Similar savings would likely be experienced by paying market wages on roads as well. Eliminating New Mexico’s “prevailing wage” would give us 15 percent more road construction and maintenance.
This is the “low-hanging-fruit” of better roads (and potentially schools) in New Mexico.
Putting the Rail Runner out of its misery is admittedly more of a challenge, but it is equally necessary. The Rail Runner diverts approximately $50 million annually (between operating and infrastructure expenses) away from roads to a train that forms a miniscule portion of our State’s transportation network in terms of trips taken. Shutting down the train immediately could return nearly $25 million to the road fund. Far from being a radical position, Clifford Winston, a transportation expert with the center-left Brookings Institute recently recommended just such a course of action.
Unfortunately, the infrastructure expenses are “sunk” costs, but making the hard choices now will ensure that further operating costs are not incurred. After all, rails, engines, and train cars must be replaced at some point.
Lastly, it is time for New Mexico policymakers to embrace private sector involvement in the provision of infrastructure. Many “turnpikes” especially in the Eastern United States were built and maintained privately. Private companies manage roads in the Washington, DC suburbs and in Southern California to name just two areas that have seen private investment ameliorate overwhelmed transportation systems. New Mexico’s Legislature should at least set up a framework for greater private sector involvement in infrastructure provision through “Public Private Partnership” legislation.
Leveraging private dollars for transportation projects can help state and federal tax dollars go further, thus giving motorists more and better roads for the dollar.
The Legislature may meet for a special session to discuss infrastructure, specifically the capital outlay bill that failed at the end of the session. Repealing New Mexico’s “prevailing wage” law would immediately allow for more needed projects to be built in our state.
We all benefit from high quality infrastructure even if we never get behind the wheel of a car. New Mexico’s roads are pretty good, certainly not in a “crisis” necessitating a massive tax hike, but there are things we can do to make sure the dollars we invest actually improve mobility.
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
The Albuquerque Journal isn’t as anti-tax as its liberal critics believe — it favors a hike in New Mexico’s gas tax, for example — but today’s editorial convincingly demolishes the case for a GRT increase dedicated to the BioPark’s “infrastructure.”
The paper notes that traditionally, “capital projects are financed with bonds, which are paid off with property taxes, earmarked for specific projects, run for a set duration and then retired.” It also suggests other revenue-raising tools, such as raising the admission fee for adults, given that the current charge “is $3 less than El Paso charges, $8 less than Denver and $11 less than Phoenix.”
One issue the Journal didn’t examine is the long-range trend of Albuquerque’s GRT. Between January 2000 and January 2015, it rose by 20.4 percent:
Other cities and towns in the region imposed stiffer hikes, but don’t forget that Bernalillo County’s GRT increase goes into effect in less than a month.
Charles Clements (“Rules keep Wall Street from stealing Internet,” May 24) offered plenty of liberal bromides in his letter in response to my column. (“Internet regulation and the NM Technology Corridor,” May 19).
But the claim that “the Internet exists today because of publicly funded research and infrastructure creatively used by thousands of ‘non Wall Street’ riff raff” should not go uncorrected.
The belief that the Internet is a product of government foresight and “investment” is a sacred tenet of the left, but that doesn’t make it true. The real story is more complex. As economist Michael S. Rozeff observed, the Pentagon’s “ARPANET project (started in 1969) … occurred because of earlier inventions by capitalists.”
Errata Security’s Robert David Graham wrote that the Internet “is a trillion dollars of fiber optic cables laid in the ground and under our oceans. Fiber optic technology was developed by corporations, such as Corning Glassworks, not the government. The trillion dollars in capital that was used to pay for laying cable came from Wall Street, not the government.” In addition, Graham noted that “today’s Internet is based on TCP/IP — a networking standard the government tried to kill off.”
Perhaps The Wall Street Journal’s digital-media columnist L. Gordon Crovitz put it best: “The private sector played a huge role in creating the Internet. And you may recall that liberals objected strongly in the 1990s to the idea that it should become legal for everyone to use the Internet, not just academics and the military. The modern Internet flourished only after it was deregulated and opened up for all to use.”
Dowd Muska, Research Director, Rio Grande Foundation, Albuquerque
I recently blogged about the organization Bernalillo County PLACE Matters and their op-ed that appeared in the Albuquerque Journal.
As I wrote at the time, I noticed that the “partners” of the left-wing “Place Matters” organization included several taxpayer-financed government entities including:
New Mexico Department of Health;
UNM Health Science Center
UNM School of Architecture and Planning
Valle de Oro National Wildlife Refuge
I sent out a letter similar to the one below to each of the agencies today. This is not a trivial matter. The Rio Grande Foundation does not take government funding or support on principal. Just because an organization supports bigger government doesn’t mean that those government agencies should in turn be seen or should lend their support to political efforts to bigger government:
June 1, 2015
Ms. Geraldine Forbes Isais
School of Architecture and Planning
University of New Mexico
Albuquerque, NM 87131-0001
Dear Ms. Forbes Isais:
I am sending this letter to alert you to what I believe may be an inappropriate use both of taxpayer dollars and your organization’s name in support of a political cause.
I read with interest the enclosed article written by Jacque M. Garcia, coordinator at Bernalillo County Place Matters. The article appeared in the Albuquerque Journal Thursday, May 28, 2015. The article was inherently political in nature and included not-so-veiled attacks on both Gov. Martinez and Albuquerque Mayor RJ Berry.
That is why I was troubled, when I went to the website of Bernalillo County Place Matters, to see that the School of Architecture and Planning was listed as a “partner” of the organization. http://www.nmhealthequitypartnership.org/about-us/bernalillo-county-place-matters/partners
It is one thing for liberal non-profits to publicly support a political agenda. We at the Rio Grande Foundation advocate for a free market policy agenda. Voices for Children and the Southwest Organizing Project advocate the opposite. However, it is disheartening and concerning that a taxpayer-funded agency like the Department of Health would line up beside left-wing advocacy organizations in advocating on behalf of a liberal political agenda.
This isn’t merely because we disagree with their perspective as explained in the article, but because government agencies should be serving the taxpayers, not lending their names and resources in support of public policy issues.
I hope this was merely an oversight and that this issue can be cleared up shortly. If you need to contact me for any reason, please do not hesitate to call me at: 505-264-6090 or email me at email@example.com.
Paul J. Gessing
“Massacre” isn’t descriptive enough.
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.”
Last month, of 19,530 projected jobs, 18,100 — 92.7 percent — were slated for right-to-work (RTW) states:
Eleven domestic companies based in non-RTW states disclosed investments in RTW states. Just two announcements went the other way.
There were two domestic relocations from compulsory-union to RTW states: the District of Columbia to Florida, and California to Texas. And Japan’s Kubota moved its headquarters from California to Texas.
It was a big month for foreign direct investment. Here again, the disparity was wide. Thirteen investments were made in RTW states, but only three in non-RTW states.
It’s important to note that Kentucky continues to attract a wildly disproportionate share of “non-RTW” projects. In May, a whopping 44.5 percent of non-RTW jobs were located in Kentucky, which is experimenting with county-level RTW ordinances.
For the year, Area Development listed announcements of 78,985 jobs, with 84.1 percent slated for RTW states.
* 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.
The U.S. Supreme Court is poised to issue its decision in King v. Burwell in June. The ruling could have tremendous consequences for the health care law commonly known as Obamacare – and more importantly, it could have a huge impact right here in New Mexico.
King v. Burwell was argued before the Supreme Court in March. The case hinges on an interpretation of the Obamacare law. The plaintiffs argued that the text authorizes premium subsidies for people in “exchanges established by [a] State.” A separate section describes the creation of a federal exchange by the Secretary of Health and Human Services for states that do not create their own exchanges.
An IRS rule issued in 2012 allowed premium subsidies to be paid through exchanges established by the secretary. The plaintiffs argue these subsidies are illegal, since there is no congressional authorization for the spending. If the justices concur, states that have not created exchanges under the law could see some dramatic changes.
However, New Mexico has a “hybrid” exchange. So the first question is whether our state will be impacted by a ruling for the plaintiffs. Amy Dowd, director of the New Mexico Health Insurance Exchange, has argued that we won’t be impacted.
Michael Cannon, a health care expert at the libertarian Cato Institute, disagrees. The liberal Kaiser Family Foundation also believes that New Mexico could be impacted by a finding for the plaintiffs.
What would such a ruling mean for New Mexico and what should policymakers do in that event? According to Kaiser, 72,280 New Mexicans could lose their subsidies, and could thus have to pay the full cost of their health care. This may be an undesirable outcome for these individuals, but those costs would no longer be borne by taxpayers.
Subsidies are not the only thing that could be at stake in a ruling for King. States that have not set up state exchanges would also find themselves exempted from several mandates within the law.
A report by the American Action Forum found that 87,296 New Mexicans would be exempted from Obamacare’s individual mandate and would no longer face average annual penalties of $1,166.
The same report found that 5,790 New Mexicans would be added to the workforce under a finding for the plaintiffs as a result of small and medium-sized employers being exempted from the employer mandate.
Obviously, there will be significant confusion in the wake of a decision in favor of the plaintiffs. Tremendous pressure will be put on states to set up exchanges in order to tap the federal subsidies. Ed Haislmaier of the Heritage Foundation recommends that states should not bow to such pressure because they “gain no meaningful flexibility from administering the exchanges while their long-term costs fall squarely on the states, as any state implementing a state exchange must develop its own revenue source to fund the exchange’s annual operations.”
Others, like Cato’s Cannon, argue that states should weigh in politically by calling on Congress to repeal Obamacare. In the meantime, he advises, states should offer transitional assistance to those with preexisting conditions that lose subsidies, and fund such efforts by withholding any funds they otherwise would have sent to the federal government, such as Medicare Part D claw-back payments.
Lastly, Cannon thinks states should pass laws showing what they would do with their insurance markets once Obamacare is lifted. This might include passing contractual medical malpractice reform to allow patients and providers to agree, in advance, on how the patient will be compensated in the event of simple negligence on the part of providers.
Supporters believe that such a model offers potential improvements in the areas of costs, patient preferences, the pursuit of more efficient liability rules and quality of care.
If the plaintiffs in King v. Burwell prevail, New Mexico’s policymakers must be prepared to offer paths forward that will actually accomplish the stated, but woefully unachieved goals of Obamacare: improving the quality and reducing the cost of health care.
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.
Border regions are fascinating because they often highlight more clearly the impact of good and bad public policies. After all, often, border areas have similar population and geographical characteristics, thus clarifying for the public that economic policies are the ultimate arbiter of economic success (or failure). Nowhere is this more stark than the Korean border where the socialist North is completely dark at night and the capitalist South is bright and active:
Rio Grande Foundation also did some in-depth analysis of border economics a few years ago, but today I’m writing about Española which happens to be partially located in Santa Fe County (which recently raised its minimum wage to $10.66 an hour from just $7.50). Now, according to the Rio Grande Sun, two fast food restaurants in the Santa Fe County portion of town have closed.
Now, as reported in the article there are additional restaurants looking to open (or re-open) in Española, but it would seem likely that these restaurants and other businesses are going to do their best (within the scope of traffic and land-use patterns) to locate themselves outside of Santa Fe County.
HT: Samuel Z. LeDoux
Today’s Albuquerque Journal included yet another ill-informed left-wing screed. We’d actually agree with their concerns about TIDD’s, but much of the piece simply attacked Gov. Martinez, Mayor Berry, and the very concept of “the private sector.”
Nothing new there except that it was written by someone from a group called “Bernalillo County Place Matters.” Being the curious sort, I “googled” the group and found that their “partners,” include, aside from the usual left wing fellow-travelers and funders (Voices for Children, Robert Wood Johnson Foundation, and Southwest Organizing Project) a number of government entities. These taxpayer-financed “partners” include: New Mexico Department of Health, UNM Health Science Center, UNM School of Architecture and Planning, and Valle de Oro National Wildlife Refuge.
It is one things for free market institutes like Rio Grande Foundation to fight and win the battle of ideas against our better-funded left-wing opponents, but it is another thing entirely to have taxpayer-financed entities take ideologically-liberal stances on various public policy issues. In the next few days, we will be reaching out to these government entities to see why they are involved in an entity that engages in left-wing policy attacks in the local media. More to come…
“A lot of the parents might think that it’s for the poor only, but it’s not — it’s for every child.”
That’s Johnny Chavez, program director of Clovis’s Sacred Heart Summer Food Service. A “federally-funded, state-administered program,” the SFSP “reimburses providers who serve healthy meals to children and teens in low-income areas at no charge primarily during the summer months when school is not in session.”
Chavez is correct about eligibility. No means test is applied.
Hunger is America is a wildly overblown “problem,” but to the extent that it afflicts children, shouldn’t programs be narrowly targeted? And if parents are not providing adequate nutrition to their kids, shouldn’t the state’s Children, Youth & Families Department step in?
As the 2014-2015 school year comes to an end, decisions are undoubtedly being made as to whether or not to promote 3rd graders who cannot read. Efforts to end that policy have been proposed by Gov. Martinez since she became Governor, but Democrats have repeatedly opposed the reform. This, despite overwhelming public support for the reform as indicated by polling from Brian Sanderoff:
The Rio Grande Foundation has supported social promotion reform and continues to do so (although we’d prioritize robust school choice even higher), but I just encountered some additional research on the issue from education analysts Jay Greene and Marcus Winters:
Most New Mexicans want to see critical species and habitats preserved if it can be done at a reasonable cost. But what about the imposition of a costly regulatory regime on behalf of a species that hasn’t been seen in the area for years? The following is a press release from the Pacific Legal Foundation, a free market-oriented public-interest law firm which filed suit against the US Fish and Wildlife Service on just such an issue last week.
Albuquerque, N.M.; May 21, 2015: Attorneys with Pacific Legal Foundation (PLF) today sued the U.S. Fish and Wildlife Service (FWS) for illegally designating tens of thousands of acres in New Mexico’s Hidalgo County as “critical habitat” for the jaguar even though the species has not been sighted in the county, or anywhere else in New Mexico, for years; indeed, the state doesn’t even have any environmental features that are essential to jaguar recovery.
Donor-supported PLF is a watchdog organization that litigates nationwide for limited government, property rights, and a balanced approach to environmental regulations. In asking the court to overturn the designation of jaguar critical habitat in New Mexico, PLF attorneys represent three broad-based organizations with members who are harmed by this reckless and unjustified expansion of federal Endangered Species Act (ESA) regulations in the region — the New Mexico Farm & Livestock Bureau, New Mexico Cattle Growers’ Association, and New Mexico Federal Lands Council.
PLF represents these organizations free of charge, as with all its clients.
Reckless regulating: Roping off “critical habitat” for a species that isn’t there
The jaguar’s global population is estimated to be at least 30,000; 90 percent live in tropical, jungle, and swamp habitats in Central and South America. According to the FWS Recovery Outline for the species, there are no jaguar populations in New Mexico — or anywhere in the United States.
The jaguar has been listed as “endangered” under the ESA since 1972; but the FWS did not designate any terrain as “critical habitat” for the species until more than 40 years later (in 2014), and then only in response to a lawsuit by environmental activists. This long practice of not designating jaguar habitat reflected a basic biological reality, at least in New Mexico: The state has not been occupied by jaguars in many decades, and it is not home to any environmental features that are essential to the future of jaguar recovery. Indeed, the closest jaguar population to New Mexico is a small one (100 animals or fewer) living fully 130 miles south of the border, according to the FWS’s Recovery Outline.
Hurting landowners and wasting environmental resources
“Habitat designations mean significant — sometimes crippling — restrictions on property owners and managers, both private and public,” said PLF Senior Staff Attorney Tony Francois. “They also compete for the limited money and resources available for environmental protection.
“Clearly, the government doesn’t have the luxury of careless overreach when it comes to roping off property as critical habitat,” he continued. “But that’s exactly what we see with the jaguar habitat designation in New Mexico. The bureaucrats have cordoned off tens of thousands of acres for a phantom species. This amounts to reckless regulating, and a heavy-handed power play against landowners.
“At most, only two jaguars have been credibly sighted anywhere in the state over the past four decades,” Francois noted. “There are no breeding pairs or evidence of resident jaguars in the state. This species’ connection to New Mexico is a matter of distant memory, not recent reality. There is no justification for bringing down the regulatory fist on property owners, and wasting scarce environmental resources.”
Jaguar regs’ threat to fire prevention
A significant portion of the New Mexico habitat designation lies within the Coronado National Forest — creating an impediment to fire-prevention and fire-fighting initiatives in that region.
Indeed, the FWS’s “Final Critical Habitat Designation” for the jaguar admits that the designation of critical habitat creates new regulatory hurdles for forest-fire management strategies, such as “fuels-management activities, and some prescribed fire.”
“Over and above the legal issues, it’s simply poor public policy to designate a fire-prone National Forest as critical habitat for an animal that isn’t there,” said Francois. “Important projects to reduce fire risk will be impeded by new layers of bureaucracy and a time-consuming approval process. It will be harder to implement effective, flexible fire-prevention strategies. This means increased danger of catastrophic wildfire, with potentially devastating impacts not just for people, property and natural resources — but also for species. That’s right: The environment is at greater risk because of unjustified regulations by the very bureaucrats who are paid to protect the environment.
“The jaguar habitat designation can also impede development of community infrastructure like road improvements and pipelines, and range improvements for cattle ranches that are important to the local community and economy,” he noted.
Statement from the New Mexico Farm & Livestock Bureau
“Food producers in New Mexico are under the gun as the federal government continues to endanger their livelihood,” said Chad Smith, CEO of the New Mexico Farm & Livestock Bureau. “The designation of tens of thousands of acres of prime New Mexico ranch lands as critical habitat for endangered jaguars is one more example of how endangered species have taken precedence over people. We must restore balance, and members of the New Mexico Farm & Livestock Bureau ask the federal government to ensure a successful future for ranchers in Southern New Mexico by overturning the designation of jaguar habitat.”
Filed in the U.S. District Court for the District of New Mexico, the lawsuit is New Mexico Farm & Livestock Bureau, et al. v. Jewell. More information, including the complaint, may be found at PLF’s website: www.pacificlegal.org. Check out an article on the issue from WorldNetDaily.
Just in time for the start of the summer cookout season, our friends at the Tax Foundation have updated their map of beer excise taxes:
Perhaps unsurprisingly, New Mexico has the highest (tied with Utah) beer excise taxes in the West (not including Alaska and Hawaii). This map doesn’t tell the full story as small brewers have been exempted from the State’s onerous taxes on beer, but New Mexico also (uniquely) charges gross receipts taxes on beer production.
That’s not to say that New Mexico hasn’t had success in cutting taxes on some brewers as I pointed out in a 2014 article.
New Mexico isn’t in the Baptist South of the old Confederacy where excise taxes are highest. We’re not dominated by the LDS religion which frowns upon alcohol as is Utah. So, why is New Mexico’s tax on beer so high? Perhaps it is our State’s near-religious adherence to big government.
(Albuquerque) In an effort to improve government transparency throughout New Mexico, the Rio Grande Foundation has requested and published payroll data for the 32 largest cities throughout New Mexico.
Some cities including Albuquerque and Rio Rancho post payroll information online. However, these were the laudable exceptions as few city websites have a comprehensive listing of payroll data. Find city data here. A few cities demanded nominal payment for the data and one city, Socorro, was unwilling to provide the data at all.
Said Rio Grande Foundation President Paul Gessing of his organization’s role in releasing the data, “The Internet in its current form is now more than 20 years old; it is time for governments at all levels to leverage this inexpensive tool to make data more readily-available to citizens.”
Under New Mexico law, employee salary data is already public information, available on request from the county or city government. Now, thanks to legislation passed during the 2011 legislative session, this and other data must be made available in a format preferred by the requestor.
Responding to the most likely critique of having this information online, Gessing said, “Having salary information online is not a privacy threat. The Rio Grande Foundation has had similar information posted for cities, counties, and institutions of higher education online for years and we have not heard any specific complaints.”
“We at the Rio Grande Foundation believe strongly that transparency and openness are keys to achieving a more limited, fiscally-responsible government. Information on who is hired to do what and how much they are being paid is information that must be available and accessible to the public” said Gessing.
Socorro (refused to comply)
Bill Richardson’s tenure as Governor of New Mexico was a little like that of a house guest who urinates and defecates in hidden places around your house only to leave a horrible smell and mess once for you to clean up once he leaves. We’ve discussed the Spaceport and Rail Runner repeatedly over the years, but the supercomputer purchased with $20 million of your tax dollars by the Richardson Administration is, as KRQE’s investigative reporter Larry Barker notes in a recent story, a “gigaflop.” Kudos, BTW, to Barker for continuing to expose this waste (here is his 2011 story on the supercomputer).
According to Barker, this computer “can now be found hidden away among junked chairs, discarded desks and obsolete filing cabinets.”
Darryl Ackley, New Mexico’s Chief Information Officer and Information Technology Cabinet Secretary, says the supercomputer is not worth much anymore.
“Zero dollars,” Ackley said. “There may be some residual value for the metals and the equipment, but as far as its value on the books, its zero dollars.”
It is amazing that New Mexicans at the time went along with so much spending that (we knew back in 2007) was clearly destined to be wasted. We are still footing the bill for hundreds of millions of dollars of waste foisted upon the taxpayers of this state by Richardson. Check out Barker’s story below:
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.
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 (firstname.lastname@example.org) 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.
Do you know that the Rio Grande Foundation is on Twitter?
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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!
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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.
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.
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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.”
"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!