Income inequality is a popular discussion topic these days. President Obama made it a central talking point in his recent State of the Union address and policy initiatives – most notably minimum wage hikes – have been proposed as means of reducing such inequality. Unfortunately, while inequality has unquestionably grown in recent years, there are few proven solutions and a lot of heated rhetoric.
It is worth noting that growing inequality is not unique to the United States. According to The Economist, inequality around the world has been growing since the mid-1980s in all areas except impoverished sub-Saharan Africa and the former Soviet Union. In other words, to an extent, inequality is a sign of economic development and strength. There is truth to Franklin Roosevelt’s observation that “Capitalism is unequally divided riches while socialism is equally divided poverty.”
In other words, people are not equal. Their skills and work ethics differ greatly. In a free society, we will all be more prosperous overall, but some will be much more prosperous than others.
I sat down with Margaret Ortiz at TBN for a discussion of the issues moving through the 2014 legislative session. Things are happening fast at this point at the Roundhouse, but this interview remains relevant as it touches on the big, controversial issues facing legislators:
The Rio Grande Foundation released a report in December of 2013 detailing the benefits given to presidents at New Mexico's community colleges. This report caught the attention of Katie Kim at Channel 13, KRQE who put together a major investigative report on the issue. Kim's report aired last night and can be viewed below:
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.
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.
Board Member, Rio Grande Foundation
Candidate foro US Congress, 3rd District
(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.
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.
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.