Errors of Enchantment

As oil and gas prices rise, theoretically, New Mexico's oil and gas industry should be booming and bringing a great deal of revenue to the state. Unfortunately, with an ever-increasing regulatory burden, the industry is moving elsewhere (particularly to Texas) where taxes, regulations, and corruption do not place such a heavy burden on those attempting to do business. Finally, a study has been undertaken to prove what operators in New Mexico's oil and gas industry have been saying. The Canada-based Fraser Institute has done an international, provincial, and inter-state analysis of the barriers to investment in oil and gas exploration and production. The report is available here.

New Mexico fares poorly in the study beating out only Colorado, California, Alaska, West Virginia, and Pennsylvania in terns of the overall Extent of Investment Barriers (chart on page 30). Since the study relied on survey data, comments from those who actually do business in the various jurisdictions were a part of the data. Comments about New Mexico included:

Corrupt government. Furthermore, politicians want to stop development but they still want the income. The state should rely on one agency to police the oil and gas industry rather than every agency, county, and city, having a separate permitting procedure.

State government is extremely ‘anti-oil’; very hard to make a profit.

The study is an interesting read. Even more interesting will be the impact New Mexico's increasing regulatory burden will have on one of the state's most important industries and tax revenues over time.

Jim Scarantino and I will be discussing the findings of this study with its author Gerry Angevine on Saturday's show at KIVA AM 1550 starting at approximately 9:15.

Posted by Paul Gessing at 01:58 PM | Permalink | Comments (0) | TrackBacks (0)

We have certainly been critical of President Obama's bailouts and his interventionist federal policies, but he has a real opportunity now to bring another nation, Cuba, into the fold as a trading partner. This opportunity is something Obama can take credit for and following through on the logical next step, eliminating the US trade embargo and travel ban would strike a blow for freedom.

Obama has already taken a small step by allowing U.S. telecommunications firms to start providing service for Cubans and ending limits on family travel and money transfers by Cuban Americans in the United States to Cuba. These are good moves, but I am hoping for real change in our Cuba policy from Obama that would finally restore Americans' legal right to visit and trade with Cubans.

Such a move would have the following impacts according to recent studies:

-- Embargo costs the U.S. between $3 and $4 billion in lost exports per year. (Preeg, Center for Strategic and International Studies, 1998.)

--Lifting sanctions on agricultural exports to Cuba for the 50 states and 22 commodity sectors, will result in increases in exports of $1.2 billion per year. (Rosson and Adcock, Texas A&M University, 2001)

--Such increase in exports would stimulate an additional $3.6 billion in total economic output and 31,262 new jobs in the U.S. labor market. (Ibid,Rosson, 2001)

Obama's top economic advisor, Larry Summers, says trade liberalization with Cuba is "a long way off." Hopefully he is merely posturing and that Obama turns out to be a free trader in a way that his predecessors going all the way back to Eisenhower were not. Nonetheless, it is one issue on which free market advocates can be cautiously optimistic relative to Obama's policies.

Posted by Paul Gessing at 02:05 PM | Permalink | Comments (0) | TrackBacks (0)

Kudos to our friends at Think New Mexico who achieved a big success in the recently-completed legislative session with the reform of title insurance, a form of insurance that is required when you purchase a home. As Fred Nathan, the head of Think New Mexico, pointed out, until the passage of these reforms, "Only three states in the country allow the government to set prices for the title insurance industry: New Mexico, Texas and Florida. As of 2006, all three states were in the top five for the price of title insurance, according to a 50 state comparison performed by Bankrate.com."

While the legislation introduces some reforms, it does not create a purely free market. It does, however, move New Mexico in that direction. As Barry Massey of the Associated Press notes:

The state will continue to establish a price for title insurance but insurers can charge a lower rate in a county if it's approved by the superintendent of insurance, who runs the division of insurance in the Public Regulation Commission.

Regulators also are to provide the public with information about title insurance rates for residential property. A listing of rates on the PRC's Web site will allow consumers to shop for the best price.

Another provision in the legislation will provide for greater discounts on title insurance policies for homeowners refinancing their loans.

A fiscal impact report containing more information on the legislation is available here. The Governor is apparently going to sign the bill shortly.

Posted by Paul Gessing at 10:25 AM | Permalink | Comments (0) | TrackBacks (0)

Has the current economic crisis been caused by "an unregulated free market" as some in the media would have us believe? To a libertarian or small-government conservative, the answer is clearly "no," but specifically listing the many ways in which government policies have led us down the current, destructive path is another matter. This is a great posting that explains how we got here and the myriad ways in which the supposedly "unregulated free market" has been undermined and twisted by government policies.

Posted by Paul Gessing at 09:32 AM | Permalink | Comments (0) | TrackBacks (0)

Depressing as it may seem, at least for those who are familiar with the book, as Stephen Moore of the Wall Street Journal points out in this interesting article, we seem to be living in the world of "Atlas Shrugged." After all, government is standing the way of success and subsidizing failure like never before and if Obama lives up (or down) to expectations, things will get a whole lot worse in the years ahead.

Fortunately, I think the American people are beginning to realize what is happening and what has happened under the Bush Administration, but we will be in for some tough battles ahead.

Posted by Paul Gessing at 10:33 AM | Permalink | Comments (0) | TrackBacks (0)

At least that is what the folks over at the blog Urban ABQ believe. Apparently, we're also intellectually lazy. But is it true?

Yes, we at the Rio Grande Foundation oppose the taxpayer-financed Albuquerque streetcar, the taxpayer-financed Rail Runner, and the taxpayer-financed Albuquerque arena. But does that mean we oppose "everything?" I believe the evidence points elsewhere.

For example, we support the Heritage Marketplace development which has been killed by the City of Albuquerque. Also, we'd support the parishioners at St. Francis Xavier Catholic Church who were outlined on the front page of today's Albuquerque Journal. It turns out that the churchgoers would like to cook home-made food (tamales, menudo and homemade goodies like bread pudding and bizcochitosfor), but the City health regulators are forcing them to buy food instead.

The fact is that we at the Rio Grande Foundation support private sector efforts and realize that those who use and abuse government power by forcibly taking other people's hard-earned money via taxation are pushing ideas that would otherwise not garner financial (as opposed to political) support from enough people to be viable.

Posted by Paul Gessing at 09:12 AM | Permalink | Comments (0) | TrackBacks (0)

We at the Rio Grande Foundation have been quite critical of the powers that be when it comes to economic development in Albuquerque. While some projects like the streetcar, Winrock Mall, and the downtown arena/convention center (to name just a few projects) receive special treatment in the form of tax breaks and taxpayer subsidies, other projects (like the Scientologists' proposed building downtown) are given the runaround.

Now, SunCal, a company that has been involved in the fights over TIDD's, has experienced the wrath of an Albuquerque government that seems to not care about jobs or economic growth at a time in which both are at a real premium. The New Mexico Business Weekly has an interesting article about SunCal’s Heritage Marketplace project, a 12-building, 20-acre, mixed-use development at Ladera and Unser NW.

According to the article:

SunCal and said two anchors were lined up for the project as designed by SunCal. To make the changes the city requires, it will add 15 percent to 20 percent to the project’s construction costs.

City planners had a different vision. They wanted the plan to conform to the city’s design guidelines, which call for open plazas with pedestrian and bicycle amenities in new shopping center developments. Strip center development is viewed unfavorably. The commission saw a more urban project with less parking and didn’t want the center to face heavily trafficked Unser Boulevard. SunCal argued it couldn’t attract retailers if their stores didn’t face Unser. Unser is a state road, Route 435, and new turn lanes are an issue.

So, we have a company, SunCal, that is looking to invest millions of dollars (without demanding subsidies) by building a new commercial development in Albuquerque and the City says "thanks, but no thanks" because the development doesn't fit the hopes and dreams of a few bureaucrats....don't you just love government?

Posted by Paul Gessing at 11:22 AM | Permalink | Comments (0) | TrackBacks (0)

I presented on an issue I normally don't get to talk about at the New Mexico Restaurant Association's legislative panel today. Federal "card check" legislation will be a top priority of the next Congress, particularly if Obama is elected President. The following are my brief comments:

Passage of the “Employee Free Choice Act” is one of the Democrats’ top priorities in 2009. The legislation which is also known as “card check” was introduced in both the House and Senate as HR 800 and S. 1041.

So, what is “card check” and why is it important to the business community, especially restaurants? Today, employees are entitled to a private-ballot election when deciding whether they want union representation in their workplace. These elections are overseen by the National Labor Relations Board, which has numerous procedures in place to ensure fair, fraud-free elections.

1) If adopted by Congress and signed by the President, the “Employee Free Choice Act” would allow unions to abolish secret ballot organizing elections for unionization votes. Rather than giving employees the ability to make a private decision in a secret ballot (as is currently done) as to whether or not to unionize, a union would be certified if organizers could convince a majority of workers to sign union cards.

Unlike the current secret ballot system, the cards would be signed in public, often under the watchful eye of party bosses and others who might threaten and attempt to coerce people who would otherwise wish to contract privately with their employer. Abolishing the secret ballot exposes workers to the kind of intimidation high-pressure tactics which secret ballots are designed to avoid.

As bad as some of the controversies we are seeing in the election over allegations of fraudulent voter registration and voter intimidation, we can at least take comfort as voters in the fact that the particulars of how we vote is not public information that can be used against us. Union bosses wouldn’t like it very much if employers got to stand over their employees’ shoulders and watch how they voted, I don’t see why union organizers should be able to do that when they are organizing a union.

2) A second component of the “Employee Free Choice Act” is binding arbitration. This aspect of the law would require the federal government to appoint a mediator and impose a contract if management and labor cannot come to an agreement. It would allow either party (usually the union) to delay coming to an agreement in the hope of getting more in binding arbitration than they would get in bargaining.

Obviously, if one party in a negotiation has no desire to come to an agreement on a particular issue, this further tilts the likely outcome of the negotiation to the benefit of the unions.

3) Lastly, the legislation as it is now written would increase penalties for employers, but not for unions or others, who violate union organizing laws.

The Employee Free Choice Act passed the House 241 – 185 in March or 2007, but did not make it to the Senate floor for an up or down vote this Congress.

As far as New Mexico’s delegation is concerned, Wilson and Pearce voted against it and Udall voted for it. The New Mexico House of Representatives passed a memorial in support of the federal “Employee Free Choice Act” on February 4, 2008. I have passed out a roll call vote listing from the Foundation’s new legislative tracking site www.newmexicovotes.org. As an aside, I’d urge all of you who have business in Santa Fe to take advantage of this free and easy to use site. It is much more user-friendly than the Legislature’s site.

So, why are the unions pushing this issue right now? First and foremost, unions have shrunk dramatically relative to the overall workplace over the years. In 1973, private sector unions could count 25 percent of the work force as members. That number is down to about 7.8 percent of the work force currently. Public sector labor unions have not experienced the same decline with membership remaining consistently between 35 and 40 percent of the work force over the same time period.

The fact is that private sector unions are desperate for members and they want to use this fall’s Democratic electoral landslide to increase membership. Many elected officials and Democratic Party activists are enthusiastic about this legislation because strong union support could cement electoral gains for years to come.

Regardless of the political implications associated with this legislation, it is hard to believe that a party that calls itself “Democratic” would undermine a core tenet of the Democratic process, the secret ballot.

If you as a business owner are concerned about this issue, it seems doubtful that the House of Representatives will move to the right after this election. Nonetheless, with three new House members in New Mexico, it is probably still worth talking to them. The real action, of course, will be in the US Senate. Also, while New Mexico’s House of Representatives is on record as supporting the federal legislation, the Senate may not be as enthusiastic about passage of a Memorial.

Certainly, it would not hurt to explain what this legislation could mean to your employees. You can’t be afraid to approach your employees with information. After all, a recent Zogby poll found that union members themselves believed, by an 84 percent to 11 percent margin, that employees should be able to vote on union membership. You will likely receive a receptive audience if you provide non-biased information in a non-threatening manner about the potential negative impacts of this legislation and get your employees involved.

While it might seem that Congress will be more than happy to pass Card Check legislation, it will be easier to preserve the secret ballot in Congress than it will be to head off anti-democratic card-check unionization drives at your work site.

Posted by Paul Gessing at 08:43 PM | Permalink | Comments (0) | TrackBacks (0)

Barack Obama has clearly expressed his desire to redistribute wealth in American society. Unfortunately, while such sentiments may sound nice to the average voter, there are a number of major political and moral problems with such redistributionist policies. Who is to be in control of redistribution efforts and what right do they have to simply take from one group of individuals and give to another? How much redistribution is enough? After all, as this link shows, the wealthy already pay far more in federal taxes than the rest of us. Where does it stop?

Here is one blogger's humorous take on wealth redistribution and how it works when boiled down to the personal level. Stealing from the "rich" and giving to the "poor" sounds great in concept until your wealth is being taken away.

Posted by Paul Gessing at 02:01 PM | Permalink | Comments (0) | TrackBacks (0)

While it will take quite some time to discern the success or failure of the massive government intervention we have seen throughout the US economy in recent weeks, one policy -- the ban on short-selling -- has already been proven a failure. As the article points out, "The short selling ban hasn't stopped the decline in bank stocks. An index of the 34 U.K. financial stocks on the banned list has fallen 22 percent since Sept. 19, compared with an 18 percent drop for the FTSE 100 Index of the largest U.K. companies and 10 percent for the FTSE All-Share Index."

This is no surprise since government intervention in the economy caused this mess at the outset. As this article points out, it was government policy that created the Great Depression as well. Hopefully policymakers stop these interventions and let the economy run its course, but at this point there is no guessing what will happen next.

Posted by Paul Gessing at 10:51 AM | Permalink | Comments (0) | TrackBacks (0)

The Cato Institute recently released its annual "Economic Freedom of the World" Index. The full study can be found here. Unfortunately, the news for the United States is not good. Since 2000, our score has dropped from 8.55 which was good for second in the world, to 7.86 which was good for only 10th in the world (check page 177 of the index for US rankings and scores). I can only imagine how the current financial crisis and massive government intervention in the economy will affect our relative level of economic freedom.

According to the authors, "Lower ratings in the legal structure area and for the
administrative costs of clearing customs were primarily responsible for the rating reduction of the United States." Sound money, size of government and regulation have all suffered in recent years as well. It would be simple to lay blame for this slide at the feet of President Bush as he has presided over this decline in freedom, but our nation's entire political leadership has been working to destroy economic freedom in recent years and I see no lights at the end of the proverbial tunnel.

Posted by Paul Gessing at 12:31 PM | Permalink | Comments (0) | TrackBacks (0)

In his posting below, Jim rightfully bashes Congress. I want to trash our beloved Albuquerque City Council too. During last night's meeting, Council approved $147 million in TIDD subsidies in order to redevelop Winrock Shopping Center. Abundant literature shows that TIDD and TIF are economic losers.

At the very same meeting, in a move that could have helped revitalize downtown -- yes, remember downtown, the area that is at the center of so many government planning experiments -- Council denied the Church of Scientology a permit that would have allowed them to get to work right away on moving into new digs.

The problem with putting government bureaucrats and politicians in charge of development is that they will subsidize their friends and contributors and they will obstruct those, like the Church of Scientology, that may be outsiders or hold unpopular views. Unfortunately, this is currently the way of the world.

Posted by Paul Gessing at 04:50 PM | Permalink | Comments (0) | TrackBacks (0)

The company that makes Miller Beer is owned by a South African company. The Coors Beer company is traded on the New York Stock Exchange and is jointly owned by a Canadian company. Now, shareholders of Anheuser-Busch brewing company are considering whether or not to allow InBev to acquire a controlling interest in the company.

Unfortunately, politics has reared its ugly head in what should otherwise be a decision based on what is best for the shareholders who own the company. Both of Missouri's senators, Republican Kit Bond and Democrat Claire McCaskill, oppose the deal. McCaskill says it is "patriotic" to do so. In a letter to Anheuser-Busch's board, he writes: "[D]o not hesitate to contact me to discuss ways that I and community leaders can work with you to improve the company without changing its ownership."

This is no place for politics. Americans benefit from foreign investment in companies that do business here. There is no reason for Congress or misguided economic patriotism to get in the way of a deal that Anheuser-Busch shareholders feel is best for them.

Posted by Paul Gessing at 11:00 AM | Permalink | Comments (0) | TrackBacks (0)

Recently I blogged about the negative impact recent minimum wage increases are having on teenagers and others on the fringe of the job market. I expanded and elaborated a bit on the argument in a full-length article in The New Mexico Business Weekly.

Posted by Paul Gessing at 04:18 PM | Permalink | Comments (0) | TrackBacks (0)

The Albuquerque Journal chooses to run some pretty odd articles from time to time. I understand that articles dealing with local topics may not always be the most well-written, but at least they deal with topics relevant to Albuquerque or at least New Mexico residents. The Albuquerque Journal chooses to run some pretty odd articles from time to time. I understand that articles dealing with local topics may not always be the most well-written, but at least they deal with topics relevant to Albuquerque or at least New Mexico residents. This was the case on Sunday when it ran an article from Andrew L. Yarrow of the Baltimore Sun who argued that Americans who retire early from the work force are both "selfish and unpatriotic."

Why is that? For starters, Yarrow argues, people who retire at 55, 62 or even 65 have many good, productive years of work yet and those people should be contributing to the nation's economy and paying taxes. He goes on to make a few somewhat more valid points about our overburdened Social Security and Medicare systems and even discusses some incentives that could get older people to work longer.

While Yarrow makes some valid arguments about the problems with Social Security and Medicare, these are not really the fault of people who retire early. These programs are flawed in their very design and, if policymakers wish to alter their incentives, they must change them. The only way in which these people are being "greedy" is if they vote for and support policies that preserve the broken Social Security and Medicare programs rather than supporting market-based reforms that will benefit their children and grandchildren. Yarrow doesn't even touch on real reforms to either of these programs.

Ultimately, Yarrow's mistake is in approaching the entire issue from the collectivist perspective. In other words, he believes that Americans must work harder to strengthen the nation and preserve these government programs. He should be encouraging policymakers to find ways to alter these programs in ways that allow individuals to make the decisions that are best for themselves, without unfairly burdening others. That is the best way to ensure America's future strength and make sure that Americans live long, productive, and fulfilled lives.

Posted by Paul Gessing at 01:53 PM | Permalink | Comments (0) | TrackBacks (0)

With the Democratic candidates for President campaigning in Texas and Ohio ahead of Tuesday's primaries, both states have become the focus of attention. As the Wall Street Journal points out, the states have pursued very different economic paths and achieved opposite results.

On one hand, Texas has no state income tax and is a right to work state (no forced unionism). The result has been that Texas has gained 36,000 manufacturing jobs since 2004 and has ranked as the nation's top exporting state for six years in a row. Its $168 billion of exports in 2007 translate into tens of thousands of jobs.

Ohio, on the other hand is not a Right to Work state and it imposes the third highest corporate income tax in the country (10.5%) and the sixth highest personal income tax (8.87%).

So which state is New Mexico more like? Well, New Mexico is not a Right to Work state and, while our taxes may not be quite as high as Ohio's, our gross receipts tax places a special burden on businesses that is not found in other states. Unfortunately, until New Mexico reduces its tax and regulatory burdens, it will continue to be more like Ohio than Texas and from an economic perspective, that's a shame.

Posted by Paul Gessing at 09:01 AM | Permalink | Comments (0) | TrackBacks (0)

A week or so ago on this blog I discussed the stimulus package moving through Congress and argued that it was unnecessary and based on bad economics. Unfortunately, the President and Congress don't always listen to us, so we teamed up with the National Taxpayers Union -- a Washington, DC-based grassroots taxpayer organization -- to express our concerns. Read the coalition letter on the stimulus here.

Although I didn't mention it in my previous posting on the topic, one of the additional problems with such politically-motivated legislation is that individual members understand that and will tack on whatever spending or interest group goodies they can. We are now seeing that process at work.

Posted by Paul Gessing at 09:26 AM | Permalink | Comments (0) | TrackBacks (0)

New Mexico Governor Bill Richardson has failed to gain the vaunted status of "front-runner" in either New Hampshire or Iowa that would generate the scrutiny that we've seen of say Mitt Romney's religious beliefs or Barack Obama's past drug use.

Nonetheless, in attempting to educate voters nationwide on Bill Richardson's record -- especially as it relates to the state's all-important energy industry -- I wrote this article for nationwide distribution.

Posted by Paul Gessing at 10:16 AM | Permalink | Comments (0) | TrackBacks (0)

I opened today's West Side section of the Albuquerque Journal to find two seemingly unrelated stories that actually point to one of the biggest problems in economic development here in New Mexico: the tight control government bureaucrats have over land use decisions. As I have stated in the past on this blog, politicians are increasingly taking over land use decisions that should rightfully be made by property owners and developers.

One of today's stories is about TIDD and the effort to prevent local governments from subsidizing some development at the expense of the rest of the city and county. Thankfully, Councilor Cadigan now supports stopping TIDD from being used on "greenfield" developments, most of which would happen on their own terms and without subsidy. This issue will be heard at the Council meeting Monday night.

The other article, also dealing with government micromanaging of land use, is about the owners of 80 acres in the South Valley who have been trying to develop the land into a shopping center. One might think that the political establishment would support economic development in the economically struggling South Valley, but the Bernalillo County Planning Commission seems to believe that pastoral poverty is superior to economic development.

The fact is that the subsidies for TIDD are bad, but the County Planning Commission is essentially stealing land from property owners by preventing them from using it for no better reason than personal preference. In both cases, allowing individuals acting in a free market to make decisions for themselves would be far superior to the political process.

Posted by Paul Gessing at 04:02 PM | Permalink | Comments (0) | TrackBacks (0)

Henry Morgan (subscription required) of Alamogordo is my hero. Why? Because he's sticking it to the man by letting customers smoke in his restaurant. As any smoker and most non-smokers know, New Mexico is now "smoke free" just about anywhere indoors. So, while I personally may not like smoking and under normal circumstances might avoid Morgan's restaurant because it allows smoking, that choice is, at least under law, already made for me by our friends in Santa Fe.

Of course, while advocates of fascism...er...I mean controlling all of our actions say that restaurants are not impacted by smoke free laws, the economic reality is not so pretty. More details on the economics of smoking bans can be found in this recent blog.

Posted by Paul Gessing at 08:45 AM | Permalink | Comments (0) | TrackBacks (0)

It's been 15 years since the North American Free Trade Agreement became law and, while the agreement has been extremely helpful for Canada, Mexico, and the US alike, political opposition has stalled a few key provisions including the legalization of Mexican truckers in the US. While there is a lot of ongoing angst about immigration, the fact is that opposition to Mexican truckers is a function of the political muscle of the Teamsters and other labor unions who want to avoid competition and thus keep their wages artificially high. Unfortunately, the US Senate recently decided to allow the Teamsters to preserve their protected market.

As Dan Griswold of the Cato Institute pointed out regarding the recent Senate vote to again postpone implementation of the NAFTA provision legalizing Mexican truckers:

"The Senate majority claims to be protecting highway safety, but the amendment passed yesterday is really just a bald form of discrimination against our Mexican neighbors. The U.S. government can and should hold Mexican trucking companies to the same safety regulations we impose on American and Canadian truckers. But the Senate bill will exclude even qualified Mexican trucking companies from helping to bring goods to U.S. markets. The Senate amendment sends the message that our international agreements mean nothing in the face of political pressure from the Teamsters. The problem the Senate majority has with Mexican trucks is not that they are unsafe but they are driven by Mexicans."

Posted by Paul Gessing at 12:59 PM | Permalink | Comments (0) | TrackBacks (0)

A state employee named Charles R. Ferguson had what may be the most courageous opinion piece I've ever seen in the Albuquerque Journal today.

The piece is fantastic, but the money quote is "Just think about this: if you walked into a business and demanded money from them, and told them to pay up or go out of business, the district attorney would have a field day charging you with extortion and racketeering. But stick a union label on that scenario and it's called 'fair share' or 'agency fee.'"

Obviously, a key component of economic freedom is for an employer and employee to agree to determine the terms of their relationship and not to have a third party (unions supported by the government) intervening. If New Mexico is ever to have such policies, known as "Right to Work," the Rio Grande Foundation will be a key factor in that success. Unfortunately, despite Mr. Ferguson's courageous words, we are a long way from achieving that freedom here in New Mexico.

Posted by Paul Gessing at 04:56 PM | Permalink | Comments (0) | TrackBacks (0)

The headline in today's Albuquerque Journal (subscription required) says it all: "Union to State Workers: Pay Up."

According to the story, "last month, the State Employee Alliance-Communications Workers of America sent letters to nearly 500 employees saying they faced termination proceedings unless they began paying dues." The story went on to note that "employees covered by the union's collective bargaining agreement with the state are required to pay dues, even if they're not union members."

There are so many angles to this story that I could easily turn this posting into a lengthy essay, but I will refrain, so here are some points to consider: 1) While the role of private-sector labor unions is certainly open for debate, at least they benefit when the private-sector economy grows. Government labor unions on the other hand could care less about the private sector and only want to make government bigger. 2) Competition in the private sector forces labor to compete as well (look at the airline industry as an example). Governments don't compete and there is no check whatsoever on government labor unions. 3) It is simply wrong to force a person to join a labor union in order to obtain employment, especially government employment as we are all taxpayers. 4) Adoption of Right to Work laws would allow individuals to join unions if they choose and to not join them if they don't want to. 5) New Mexico is not a Right to Work State, but it should be in order to prevent labor unions (as opposed to actual managers) from having the ability to hire and fire government workers.

Posted by Paul Gessing at 04:01 PM | Permalink | Comments (0) | TrackBacks (0)

The US Supreme Court recently ruled against the Washington Education Association's efforts to levy fees on public employees who choose not to join a union but are represented by the union in collective bargaining. George Will explains that had the Court ruled any other way, it would have allowed labor unions who have been unable to persuade people to join, the option coercing the unpersuaded.

Maybe someday New Mexico will rid itself of its "Little Davis-Bacon" which allows unions to unfairly set prices on construction projects.

Posted by Paul Gessing at 10:12 PM | Permalink | Comments (0) | TrackBacks (0)

Whole Foods recently struck a deal to purchase rival organic grocery Wild Oats. No big deal, right? It is a very big deal actually if you work for the Federal Trade Commission and you believe that consumers must be protected from a "monopoly" in organic grocery stores.

Leaving aside the debate over whether federal intervention to ensure competition in the organic food grocery sector is really a pressing national interest, I find the argument that the merger of these two companies is somehow "anticompetitive" quite unreasonable. If anything, the fact that Wild Oats has been losing money and yet was still able to find an interested purchaser implies that Whole Foods management sees ample room to grow the organics market and for new players to enter and expand their selections of organics.

In fact, prospects for growth and the obvious optimism expressed by Whole Foods might even spur other grocery chains like Kroger and Safeway to start doing even more in the organics sector...and where does Trader Joe's fit in to the discussion? Aren't they a competitor of Whole Foods?

The fact is that the grocery industry is highly competitive and (even after the purchase of Wild Oats) Whole Foods is a relatively small player, not a monopolist.

Hopefully the FTC will get a grip on reality before this gets tied up in court. Seems like another case of a bureaucracy looking for new dragons to slay when it might be better just to put down the sword.

Posted by Paul Gessing at 04:53 PM | Permalink | Comments (0) | TrackBacks (0)

Although the focus of this great new book is about the relative absence of prosperity in West Virginia, it could just as well be about New Mexico. The book is receiving lots of attention in WV. Maybe we could get the authors to write about New Mexico too, since it ranks right down there with WV and gets lots of attention in the book.

The first four chapters explain why economic freedom (rather than government) promotes prosperity. Chapters 5 thru 14 lay out specific policy measures that promote prosperity. Notice, however, that New Mexico has been doing just the opposite of what these scholars recommend -- NM emphasizes playing favorites (chapter 8), does not emphasize tax competitiveness (chapter 5), does not reduce labor restrictions (chapter 10), does not quit punishing the working poor (chapter 11) and so forth.

This is a good read for those of you who want a better understanding of the relative weakness of NM's economy. Hat tip: Professor Lawson at Division of Labour.

Posted by Harry Messenheimer at 06:59 PM | Permalink | Comments (0) | TrackBacks (0)

The Chairman of the Federal Communications Commission, Kevin Martin, has waded into the debate over so called "a la carte" programming on cable television. What is "a la carte?" Essentially, the FCC wants to mandate that cable companies offer consumers the choice over what programming they do and don't want to receive when they pay for cable (or satellite).

Of course, most consumers understand the concept of "bundling" of services and how costs can be driven down under such pricing schemes, but that is not good enough for the bureaucrats who regulate what we see and hear in the media. Worse, the FCC itself admits that an "a la carte" regulation would cost consumers even more money than they are already paying for these services.

If politicians want to cut costs, they might want to consider reforming video franchising at either the federal or state levels. Creating more competition, not government regulation, is the only surefire way to cut costs.

Posted by Paul Gessing at 11:25 AM | Permalink | Comments (0) | TrackBacks (0)

I had the opportunity to listen in on a conference call hosted by Senator Byron Dorgan and others including Savetheinternet.org who want to regulate the Internet. The plan is to enact legislation known by the touchy-feely name "net-neutrality," but what the term and the legislation these people support really would do is regulate to the point of socializing the Internet.

Interestingly enough, while several major companies that use large amounts of bandwith on the Internet are trying to pass the "net-neutrality" legislation, it was notable that a New Mexico company: NMChili.com was the major business presence on the conference call. From the looks of their website, they certainly don't seem like the kind of high-bandwith user that would benefit from "net neutrality" regulations, but many New Mexicans seem to embrace government regulation almost instintively.

Given the high stakes and the support for regulation among the left and even among some on the right, it is clear the issue is not going away. Listening in on this conference call made that clear.

Posted by Paul Gessing at 12:53 PM | Permalink | Comments (0) | TrackBacks (0)

The Club for Growth is one of the groups that not only advocates for real fiscal responsibility, but has the resources to hold Members of Congress accountable for their actions at election time. New Mexico's delegation did not fare particularly well in their most recent congressional ratings.

Posted by Paul Gessing at 04:01 PM | Permalink | Comments (0) | TrackBacks (0)

Check out Rio Grande Foundation President Paul Gessing on KNME's show "In Focus." Gessing and the rest of the panelists discuss the use of eminent domain by the Albuquerque-Bernalillo County Water Authority to take over the privately-run New Mexico Utilities.

Posted by Paul Gessing at 10:35 AM | Permalink | Comments (0) | TrackBacks (0)

Recently, the Washington-based Heritage Foundation released its 2007 Index of Economic Freedom. This popular study analyzes the freedoms that exist or do not exist in countries around the world and ranks them.

Not surprisingly, the United States fares relatively well (4th worldwide) and freer countries are wealthier than those that restrict freedom. Perhaps the most relevant aspect of this study for New Mexicans is the fact that Hong Kong -- an island with few resources, but a great deal of economic freedom -- is much wealthier than Cuba, another island nation, but with greater natural resources.

The fact is that economic freedom, not natural resources -- Iran, Venezuela, and Nigeria each have rich oil supplies -- make countries wealthy. New Mexico, while blessed with natural resources, is not as economically-free as other states and is also poorer.

Posted by Paul Gessing at 12:16 PM | Permalink | Comments (0) | TrackBacks (0)

On Wednesday, Albuquerque City Council Member Michael Cadigan (and Water Authority board member) and Bob Gay of New Mexico Utilities faced off in the west side edition of the Albuquerque Journal over whether it makes more sense for a government agency or a private company, to manage the provision of water services to a large portion of the west side of Albuquerque.

Having read both sides of the argument, it is plain to see that this is yet another case of a government agency forcibly attempting to crowd private providers out of the market. I'll take Cadigan's points one by one:

1) The Water Authority has agreed not to raise New Mexico Utilities' (NMU) customers rates to pay for the acquisition. This is meaningless government doublespeak. The Authority could raise its existing customers' rates; it could wait and then raise NMU customers' rates to pay off debt; or, since it has access to government revenue sources, it could simply get the money from taxpayers by other means.

2) NMU has outgrown its water rights and will have to buy more. Again, this is meaningless. If there is a problem, it is a problem for NMU and provides no justification for the Water Authority to forcibly take over NMU.

3) NMU sells water for a profit and doesn't have the incentive to conserve. Heaven forbid, someone tries to make a profit by giving customers what they want. When Cadigan and the Water Authority go to Santa Fe and demand that urban areas -- not to mention 65% of New Mexico's population -- receives more than 10% of the state's water, then he can complain about NMU's business practices. Forcing 10% of New Mexicans to adopt draconian conservation measures is ridiculous when 90% of the water is used elsewhere.

4) NMU customers can't take advantage of the Water Authority's rebate program. Again, Cadigan and the Water Authority have control issues and simply want to be able to tell NMU how to run their business. I'd be interested to know if the Water Authority has ever sat down with NMU to figure out a way for the Water Authority to pay for these conservation subsidies?

5) The Water Authority has "improved" its service over the years. Once a government agency has control of the region's entire water supply, what incentive do they have to keep improving...perhaps they decided to improve in the first place because they looked bad when compared with NMU?

Posted by Paul Gessing at 04:05 PM | Permalink | Comments (0) | TrackBacks (0)

Richard Branson and his company, Virgin, may someday launch spacecraft from the New Mexico desert and yet, he can't own an airline that flies within the United States because he's a foreigner. Aside from the fact that such regulations are unfair, they are harmful to American travelers. Competition is reduced and the variety of services provided is constrained. In fact, a study by consulting firm Campbell-Hill Aviation Group argued that Virgin America would save travelers $786 million per year.

So, what special interest might be behind such a misguided policy....why, labor unions of course! How typical of the labor movement. Instead of welcoming competition and the new jobs that would be created by additional airlines, the labor unions would rather stifle competition and stick travelers with the bill. And they wonder why union membership is collapsing.

Posted by Paul Gessing at 10:09 AM | Permalink | Comments (0) | TrackBacks (0)

The New York Times today reports on the latest release on population trends from the Census Bureau:

Measured by rate of growth, Arizona was first, followed by Nevada, Idaho, Georgia and Texas, Utah, North Carolina, Colorado, Florida and South Carolina. For 2005-6, Colorado and South Carolina displaced Delaware and Oregon. Arizona’s estimated population grew by 213,311 to 6.2 million, an increase of 3.6 percent. Most of the increase was driven by more people moving in from other states than leaving — most from California. But immigrants also contributed to the growth, as did more than twice as many births as deaths. (By comparison, in West Virginia, deaths outnumbered births.)

Posted by Harry Messenheimer at 07:44 AM | Permalink | Comments (0) | TrackBacks (0)

Rarely are the cutthroat politics of our nation's agriculture cartels exposed for average Americans to see, but a recent example of a California dairy man being crushed by the establishment dairy interests clearly illustrates how depression-era federal laws designed to keep the industry afloat in tough economic times are now used to eliminate competition and keep prices (and profits) artificially high.

Agriculture is undoubtedly one of the last great bastions of socialism in this country. Fortunately, groups like the Cato Institute are working to publicize how these policies hurt consumers and taxpayers alike.

Posted by Paul Gessing at 04:59 PM | Permalink | Comments (0) | TrackBacks (0)

Alan Meltzer has written a fine tribute to Milton Friedman. He documents how the country and world have changed due to Friedman's courage and steadfastness in challenging the climate of opinion of the 1930's and 1940's:

Friedman’s four major successes were ending the military draft, floating the dollar and other currencies, removing interest-rate ceilings on bank deposits, and auctioning government debt. Each of these examples shows that a market solution is rarely the first choice of governments. Free-market solutions have a greater chance of success if officials gradually become familiar with the proposal and come to believe it can work.

And how it will continue to change:

In Free to Choose the Friedmans proposed to phase out Old Age and Survivors’ Insurance. They would honor existing obligations, repeal the payroll tax, and rely on voluntary decisions about savings and pensions. The United States has so far rejected every move to permit choice in the government pension program, but other countries have changed their programs in the direction the Friedmans advocated: Chile is a well-known example. Even Russia now relies heavily on private decisions after providing a public minimum. As the present generation of young workers moves toward retirement and recognizes the very low return they will receive on their public pensions, pressure for change will likely increase. Milton devoted a large part of his later years to urging education vouchers that would permit students or their parents to choose a preferred school. Despite strong opposition--especially from teachers unions--school choice has expanded. The charter-school movement is a widely adopted example of choice. It is not the Friedmans’ proposal, but it is a move in their direction.

Welfare reform has emphasized work and choice in place of welfare. The present system is not what the Friedmans proposed. They preferred a negative income tax--a cash payment to the poor that would replace all other programs. The closest we have come is the earned income tax credit that supplements incomes for the working poor. Welfare reform and the earned income tax credit reflect the Friedmans’ influence and their emphasis on personal incentives and individual choice in place of bureaucratic regulation.

Check it out.

Posted by Harry Messenheimer at 08:25 AM | Permalink | Comments (0) | TrackBacks (0)

Check out Arnold Kling's summary of Friedman's arguments for freedom. This is the best summary by far that I have seen since Friedman's passing. This is the superb kind of writing that I have come to expect from Kling.

Posted by Harry Messenheimer at 09:50 AM | Permalink | Comments (0) | TrackBacks (0)

Following up yesterdays article, the NY Times again features Larry Reed with emphasis on how free markets will free Africa from poverty.

Once again the reporter's overuse of the adjective "conservative" shows that he does not really understand what economic freedom is all about. Otherwise, though, an excellent article.

Posted by Harry Messenheimer at 02:49 PM | Permalink | Comments (0) | TrackBacks (0)

Good news this morning. Freedom is featured in the NY Times.

BOWLING GREEN, Ky. — Lawrence W. Reed is one of those people with so much passion for an unusual line of work that he invented a new occupation, and it has helped shape the conservative movement from here to the Himalayas.

My only objection to the article is their overuse of the adjective "conservative." We are not "conservative," we are market liberals. No nanny-state conservatism for this think tank.

Update: BTW, the NY Times misunderstands the basics of economic freedom, to wit: their deciscion to place article about Milton Friedman's death in the business section. Friedman specifically, and our think tank movement generally, tries to explain human interaction -- how the world works. We are not for or against busness; we assess both sides of a transaction whether it be in a free market or in a "political" market.

Posted by Harry Messenheimer at 07:21 AM | Permalink | Comments (0) | TrackBacks (0)

Larry Reed's recent visit to New Mexico was a big success. Diane Velasco of The Citizen covered the event and offered her own assessment of Reed's speech and the freedom movement in New Mexico. We appreciate the coverage and hope to continue expanding the circle.

Posted by Paul Gessing at 06:29 PM | Permalink | Comments (0) | TrackBacks (0)

Aren't you glad you are being coerced into supporting these coming attractions? When will our government stop production of the fantasy that it can spend your money better than you can?

Posted by Harry Messenheimer at 09:40 AM | Permalink | Comments (0) | TrackBacks (0)

The recent interest in North Korea provides us with another reminder. Here is a stark contrast that even makes New Mexico look good:

Maybe we could entitle it "how big government saves energy."

HT: Grover Norquist

Posted by Harry Messenheimer at 07:22 AM | Permalink | Comments (0) | TrackBacks (0)

In citing David Henderson's fine book The Joy of Freedom: An Economist's Odyssey, George Leef explains why our national economy is doing so well despite our failed school system.

Wake up, New Mexico! You, too, can join in the prosperity.

Posted by Harry Messenheimer at 09:14 AM | Permalink | Comments (0) | TrackBacks (0)

After last year's much-publicized battle over Referendum C and Colorado's Taxpayers' Bill of Rights, the conventional wisdom among the media was that the movement to create constitutional protections for taxpayers was dead.

Nothing could be further from the truth. In fact, voters in Maine, Montana, Nebraska, and Oregon, will decide this November whether to adopt their own versions of Colorado's Taxpayers' Bill of Rights. Although New Mexico does not have the initiative and referendum process available to its constituents as these other states, the Rio Grande Foundation is working to start the discussion on a similar measure for New Mexico in the upcoming legislative session. Check back soon for information on the need for such taxpayer protections.

Posted by Paul Gessing at 10:34 AM | Permalink | Comments (0) | TrackBacks (0)

As Harry pointed out, New Mexico's ranking for economic freedom among US states and Canadian provinces is quite dismal. New Mexico always seems to stand out on a map:

Not so pretty, is it?

Posted by Justin Smith at 03:33 PM | Permalink | Comments (0) | TrackBacks (0)

New Mexico was near the bottom of the recent rankings of states and Canadian provinces:

New Mexico

New Mexico’s climate for economic freedom has worsened steadily over the past
two decades, to the point that, by 2003, its overall all-government ranking was 50th,
while the subnational fell to 47th after five straight years at 44th. Size of government
helped sink the overall ratings, coming in at 56th all-government and 53rd state and
local. Takings and taxation provided no help, coming in at 48th all-government (in
free fall since finishing 13th just three years earlier) and ranked 48th subnational. In
the labor market freedom area, New Mexico was ranked 41st and 40th. At 10.1%, its
state and local tax burden is well above average, unlike the gasoline tax at 17¢, which
is below average. And don’t try drowning your sorrows; all three alcohol-related
taxes are among the highest in the nation.

Posted by Harry Messenheimer at 11:49 AM | Permalink | Comments (0) | TrackBacks (0)

The Cato Institute has just released its 10th annual report on Economic Freedom. Whether it be big limitations or small limitations New Mexico continues to remain unaware of the benefits of economic freedom. For example, here is an excerpt from the press release:

"Economic freedom is unambiguously good for the poor, not just in terms of incomes, but also in terms of the whole range of development indicators such as longevity, access to clean water, or the extent of child labor," states Ian Vásquez, director of the Cato Institute's Project on Global Economic Liberty.

Check it out.

Update: Professor Boudreaux comments on the link between freedom and prosperity.

Posted by Harry Messenheimer at 10:31 AM | Permalink | Comments (0) | TrackBacks (0)

New Mexico is one of five states which license the phrases "Interior Design," "Interior Designer," and "Designer." Anyone can practice interior design in New Mexico, licensed or not, but you need the state's permission to in any way indicate that you do such work. The law clearly isn't designed to protect consumers, since anyone can offer such services regardless of professional training and experience. Instead, the law is designed to protect a small cartel of state-favored businesses against competition.

Government-approved businesses have the privilege of paying the state an initial $300 plus $250 per year in fees to "license" the above terms and buy protection from competitors. We've even got a "New Mexico Board of Interior Design" to manage the program--if there was ever a useless bureaucrat jobs program, this is it.

The Institute for Justice has taken up the case of two New Mexico "interior designers" who are suing the state on first amendment grounds. The IJ has a good report on Interior Design licensing here.

In the meantime, the members of the New Mexico Interior Design Cartel can be identified, even avoided if so desired. There are plenty of other talented and experienced "Designers" out there, but good luck finding them in the Yellow Pages.

Hat tip: Coyote Blog

Posted by Justin Smith at 03:13 PM | Permalink | Comments (0) | TrackBacks (0)

In the last few weeks, dueling economic surveys have been published outlining the economic imact of Santa Fe's minimum wage law. One study by the New Mexico Department of Labor found that "Santa Fe County added only 300 jobs between June 2005 and June 2006, the lowest rate of job growth in almost four years," most likely due to Santa Fe's dramatically-higher minimum wage.

Yet, just a week prior to the release of the Department of Labor study, the UNM Bureau of Business & Economic Research had found that for a different time period than was studied by the Department of Labor, "Santa Fe's minimum-wage ordinance hasn't affected overall employment levels in the city."

So, who do you believe? For a trained economist, the answer is obvious: to the degree that a minimum wage is actually effective in the sense that it will raise wages, people at the lowest ends of the economic ladder will lose jobs, businesses will rely on automation, or labor-intensive businesses will move elsewhere. If the wage rate is low enough that it has no reall economic impact on wages, then the economic impact will be minimal.

It seems obvious that as Santa Fe's wage rate continues to rise, hitting $10.50 an hour in 2008, the impact on Santa Fe's economy will become more pronounced and job growth will slow. Rather than jumping on the minimum wage bandwagon with Santa Fe, the rest of the state should wait to see how things play out there.

Posted by Paul Gessing at 09:39 AM | Permalink | Comments (0) | TrackBacks (0)

If you caught Paul's appearance on The Line last night, the discussion on government incentives to attract businesses to the state was especially useful. When a business is looking to locate in the Southwest, New Mexico is in competition with its neighbors. Two chief strategies come into play in this competition. States can either 1) create a business-friendly environment through low taxes, unobtrusive regulations, and protection of private property, or 2) use high taxes and an active government to bribe favored companies.

According to an index developed by the Pacific Research Institute, New Mexico ranks 37th in the nation for economic freedom, based on a number of indicators in the fiscal, regulatory, and judicial policy sectors as well as government size and state welfare spending. A color map is available, but New Mexico's situation stands out most clearly in black and white:

That big dark blip in the middle of the Southwest, that's us. Here's how New Mexico compares to its immediate neighbors.

While its neighbors have generally proceeded with the first strategy, fostering economic development through economic freedom, New Mexico has stood out in its zeal for the tax-and-bribe approach.

Has this been a successful strategy for New Mexico? As Harry pointed out last week, New Mexico lags behind its neighbors in private sector generated income. Indeed, most economic comparisons with neighboring states are unfavorable.

With taxes from the oil and gas industry filling the state coffers, New Mexico is in a good position to create a climate more friendly to all business in the state, not just to a handful of bureaucratic favorites. Give home-grown businesses a better chance, and the entire state will be more attractive to outside investors and entrepreneurs.

In case you missed it, KNME will rebroadcast The Line Sunday at 6:30 am.

Posted by Justin Smith at 02:00 PM | Permalink | Comments (0) | TrackBacks (0)

Want to be enlightened on a wide range of issues? Check out this interview with Milton Friedman.

Posted by Harry Messenheimer at 08:44 AM | Permalink | Comments (0) | TrackBacks (0)

When the Bureau of Economic Analysis released its per capita income data for 2005 it looked at first like there might be some good news. The release emphasizes changes in per capita income from 2004 to 2005. And, while New Mexico continues to be near the bottom of the income rankings, its growth was in the top 25 percent (12th out of 50). That seems like a good reason for celebration, right? Wrong!

The reason we should not celebrate is income growth was disproportionately for state and local government and welfare payments. In fact, New Mexico had the highest yearly growth of income for state and local government in the nation! Here is how NM government growth compares to states in the region:

For yearly growth rate of welfare NM was 7th in the nation, and it would have been higher had we not been muscled out by the hurricane ravaged states. Here is how NM compares to states in the region:

Netting our the disproportionate effect of government and welfare growth on per capita personal income from 2004 to 2005, we see that New Mexico is lagging behind other states in the growth of private sector generated income:

So there you have it. Prosperity is generated by private sector growth and not by reliance on government -- just the opposite of what the trend is in NM compared to other states.

Posted by Harry Messenheimer at 09:13 AM | Permalink | Comments (0) | TrackBacks (0)

As those who regularly visit the Rio Grande Foundation's main website may be aware, New Mexico's fiscal year ended on June 30. The end of the fiscal year means that the Foundation's spend-o-meter cycles back to zero. By this time next year, the state will have spent $12.6 billion.

A recent story in a new, New Mexico-oriented online publication known as The Citizen explored the issues surrounding government spending in New Mexico and how the spend-o-meter helps New Mexicans keep track of how their money is spent.

Posted by Paul Gessing at 01:17 PM | Permalink | Comments (0) | TrackBacks (0)

This report should be of particular interest to New Mexico. You may be surprised to learn of the history of property rights among Native Americans. If you are a regular reader of this blog and Rio Grande Foundation reports, you will not be surprised to learn that the existence of well-defined property rights and economic freedom have at times led to prosperity for Native Americans.

Posted by Harry Messenheimer at 09:32 AM | Permalink | Comments (0) | TrackBacks (0)

The Rio Grande Foundation doesn't take a position on smoking, but we do have a few things to say about government officials twisting the truth. I just knew this was the case when the U.S. Surgeon General came out and stated "The debate is over! Secondhand Smoke Kills!"

Of course, no new evidence was given to buttress the argument and the lapdogs in the media didn't bother to ask, so it was all dutifully taken as truth with few questions asked. That's why we have people like Michael Fumento to take a look behind the smokescreen.

As usual, the best solution to smoking is to let the free market decide. Let entreprenuers decide whether to allow smoking or not and let individuals decide whether to patronize them.

Posted by Paul Gessing at 10:40 PM | Permalink | Comments (0) | TrackBacks (0)

I have signed on to the following open letter on immigration. The only thing I could add is that our inefficient and ineffective welfare system tends to reduce the benefits of immigration while enabling the "misguided commentary." Look here to find the many distinguished scholars who signed the letter. Thanks to Alex Tabarrok for putting it together.

Dear President George W. Bush and All Members of Congress:

People from around the world are drawn to America for its promise of freedom and opportunity. That promise has been fulfilled for the tens of millions of immigrants who came here in the twentieth century.

Throughout our history as an immigrant nation, those who were already here have worried about the impact of newcomers. Yet, over time, immigrants have become part of a richer America, richer both economically and culturally. The current debate over immigration is a healthy part of a democratic society, but as economists and other social scientists we are concerned that some of the fundamental economics of immigration are too often obscured by misguided commentary.

Overall, immigration has been a net gain for American citizens, though a modest one in proportion to the size of our 13 trillion-dollar economy.

Immigrants do not take American jobs. The American economy can create as many jobs as there are workers willing to work so long as labor markets remain free, flexible and open to all workers on an equal basis.

In recent decades, immigration of low-skilled workers may have lowered the wages of domestic low-skilled workers, but the effect is likely to have been small, with estimates of wage reductions for high-school dropouts ranging from eight percent to as little as zero percent.

While a small percentage of native-born Americans may be harmed by immigration, vastly more Americans benefit from the contributions that immigrants make to our economy, including lower consumer prices. As with trade in goods and services, the gains from immigration outweigh the losses. The effect of all immigration on low-skilled workers is very likely positive as many immigrants bring skills, capital and entrepreneurship to the American economy.

Legitimate concerns about the impact of immigration on the poorest Americans should not be addressed by penalizing even poorer immigrants. Instead, we should promote policies, such as improving our education system, that enable Americans to be more productive with high-wage skills.

We must not forget that the gains to immigrants coming to the United States are immense. Immigration is the greatest anti-poverty program ever devised. The American dream is a reality for many immigrants who not only increase their own living standards but who also send billions of dollars of their money back to their families in their home countries—a form of truly effective foreign aid.

America is a generous and open country and these qualities make America a beacon to the world. We should not let exaggerated fears dim that beacon.

Posted by Harry Messenheimer at 08:04 AM | Permalink | Comments (0) | TrackBacks (0)

It looks like California may be the next state to succumb to "minimum wage madness," only this time, the Governator, supposedly a big fan of Milton Friedman and his book "Free to Choose" looks to be in on the plan to not only raise the state's minimum wage, but to index it to inflation. In "Free to Choose," which was published in 1980 when the federal minimum wage was much higher relative to wages, Friedman wrote "The high rate of unemployment among teenagers, and especially black teenagers, is both a scandal and a serious source of social unrest. Yet it is largely a result of minimum wage laws.”

New Mexicans can't do much about California's misguided politicians, but perhaps we should all send our legislators copies of Friedman's book?

Posted by Paul Gessing at 04:41 PM | Permalink | Comments (0) | TrackBacks (0)

The latest Weekly Alibi features the chilling tale of the Crematorium that nearly killed the Cultural Center.

Bryan Arndt, property owner, made the grave mistake of leasing a lot to Charlie Finegan, business owner--New Mexico Mortuary Service and Riverside Funeral Home, to be exact. Finegan sought to expand his business, creating jobs and new tax revenue for the city, by building a new crematorium.

But the Chinese Cultural Center across the street had a problem with this private business transaction. To its owners, explains the Alibi:

It’s about feng shui, the Asian art of placement that aims to create positive, flowing energy, promoting health and balance. Having the energy of death from the crematorium flowing into their space would wreak havoc on the positive energy they’ve spent years producing.

City Council President and Ethnoscientist Martin Heinrich explains: "Zoning was created to prevent conflicts like this."

Mayor Martin "powerful tool" Chavez joined the fight, quickly forcing the city planning department to revoke their approval of Finegan's plan.

“There’s nowhere to move,” complained one of the Cultural Center's owners, while insisting the mortician do just that. Finegan did find a new location, which he's as yet keeping secret to avoid threatening someone else's chi.

So Albuquerque entrepreneurs are out tens of thousands of dollars, with private property rights one step closer to the ideological crematorium. But that's okay because the Parkland Hills neighborhood is safe from "death energy," an outcome which "feels wonderful."

A note of caution to businesses looking to locate in Albuquerque: make sure your plans balance universal energy.

Posted by Justin Smith at 10:24 AM | Permalink | Comments (0) | TrackBacks (0)

This is hard to believe. Don Harris seems to suffer from the Fatal Conceit. One wonders what kind of takings our councilors will think of next?

Posted by Harry Messenheimer at 09:34 AM | Permalink | Comments (0) | TrackBacks (0)

As a result of the Wall Street Journal's good editorial (sr) today on immigration, I have discovered this online record of President Reagan's public papers. Liberty, opportunity, prosperity: check it out.

Posted by Harry Messenheimer at 10:42 AM | Permalink | Comments (0) | TrackBacks (0)

The lack of basic economic knowledge in this country is unbelievable. Politicians who should know better (they have easy access to top notch economists) are showing no principle at all as they purport to do something about high gasoline prices. New Mexico is right in there with the worst of them. Here is a great quote from Michael O'Hare describing the situation:

...politicians treat an election, or an office, as the worst thing one can lose, and promise to fix everything with a trick that won't require any actual work by us; we vote for people who tell us fairy tales that would excuse us from any heavy lifting if they were true, and excuse us from confronting downers and grownup responsibilities if we pretend to believe. This game is being played at a really frenzied level around gas prices, and the mix of ignorance and plain mendacity both parties are wallowing in is--this is really amazing--neck and neck with the immigration performance in the theater next door.

HT: Asymmetrical Information

Update 5/5/06: Kudos to Steve Pearce who was one of the few who voted against the federal price gouging law sponsored by Heather Wilson.

Posted by Harry Messenheimer at 08:12 AM | Permalink | Comments (0) | TrackBacks (0)

Check out Paul's great article about the socialist interlopers from ACORN in today's ABQ Journal (SR). Some excerpts:

But bowing to ACORN's demands without so much as a fight is exactly what this radical outfit wants and, like an unruly child who throws a tantrum until his parents give in, ACORN will view this "compromise" as a sign of weakness. It will quickly move to impose the rest of its far-left agenda on Albuquerque residents and businesses. First and foremost, ACORN and its activists are, by and large, not locally based, so most of them don't really care what happens to Albuquerque's economy once they have their "victory." ACORN was founded in Little Rock, and has offices spread around the country and Latin America. While portraying itself as a humble advocate for the poor, ACORN actually promotes an agenda of anti-capitalism, central planning, victimology and government handouts.

Posted by Harry Messenheimer at 08:21 AM | Permalink | Comments (0) | TrackBacks (0)

Here is a picture of the relative size of state and local governments relative to the private sector in our region. It is the ratio of the state and local government component of gross state product to the private component. Note how the prosperity driving force of markets is crowded out by big government in New Mexio:

How much of a difference does the heavy hand of big government make? Check this picture of disposable income for the same states in our region:

Continue reading "How Govt Reduces Prosperity" »

Posted by Harry Messenheimer at 08:05 AM | Permalink | Comments (0) | TrackBacks (0)

Recently, I had the privilege of serving on a panel convened by Human Events Magazine that was assigned with the task of naming the 10 worst government programs. Other panelists included such luminaries as Larry Kudlow of Kudlow and Cramer fame, Walter Williams, one of the best-known economists in the country, and former House Majority Leader Dick Armey (among others). The votes are now tallied and here is what we came up with. This was a weighted vote that included some 50 federal programs. I don't necessarily agree with all of the panel's choices, but it is a good listing and should provoke discussion.

Posted by Paul Gessing at 03:22 PM | Permalink | Comments (0) | TrackBacks (0)

The Wall Street Journal's John Fund (sr)gives us this update today:

Justice Won't Be a Regular at Motel 6

Supreme Court Justice David Souter's home has been saved from possible
condemnation by his neighbors in Weare, N.H. Some locals and a few
well-heeled outsiders were furious that he formed part of the 5-4
majority in last year's infamous Kelo decision. Because that ruling
effectively expanded the rights of governments to seize property for
private use through eminent domain, Kelo critics launched a campaign to
seize the farmhouse that serves as Mr. Souter's local home and replace
it with a hotel that would bring in more property-tax revenue.

Yesterday, residents of Weare voted by 1,167 to 493, a 70% majority, in
favor of a measure that asked local officials not to use their power of
eminent domain to seize Justice Souter's home and instead urge the state
legislature to pass a law forbidding Kelo-type seizures. All in all, a
sensible measure although the irony that voters had to pass such a
proposal was not lost on Logan Darrow Clements, the Los Angeles
businessman who came up with the idea of building the "Lost Liberty
Hotel" on Mr. Souter's property. "The vote makes Souter the only person
in the United States with special protection against his own ruling," he
told reporters.

But efforts to afford other Americans that same protection are
proceeding smartly at the federal, state and local level, led by the
Institute for Justice's "Castle Coalition." The U.S. House has passed a
bill to bar federal funds from being used to make improvements on any
lands seized for private development. One of its key supporters is
liberal Democrat John Conyers, ranking Democrat on the House Judiciary
Committee. He notes that the NAACP, Operation PUSH and the Leadership
Conference on Civil Rights all believe that "this court opinion makes it
too easy for private property to be taken," a practice that has been
"used historically to target the poor, people of color and the elderly."

One person who felt herself targeted was Wilhelmina Dery, an 88-year-old
resident of the New London, Conn. neighborhood that was at the center of
the Kelo decision. The city had teamed up with the drug company Pfizer
to promote building a modern "urban village" in Ms. Dery's neighborhood,
which would have forced her out of the home in which she had been born
in 1918. Ms. Dery and her neighbors may have lost their Supreme Court
battle, but they appear to have won the war. In the wake of the Kelo
uproar, Connecticut Governor Jodi Rell has promoted an alternative that
would create an "enclave" to protect all 15 homes while the Pfizer
project is built around it.

Unfortunately, Ms. Dery did not live to see it. She died quietly at home
last Sunday after a long illness. "She was a wonderful lady and I'm glad
we were able to grant her final wish," Scott Bullock, an attorney for
the Institute for Justice, told an audience at a Smith Family Foundation
eminent domain debate last night here in New York. "Her courage in
taking on New London in an effort to save her home will be remembered by
many of the more than 10,000 other families and businesses who face
eminent domain proceedings every year in the United States."

Posted by Harry Messenheimer at 06:37 AM | Permalink | Comments (0) | TrackBacks (0)

Paul seems to be pretty much a lone voice in the media in New Mexico so far. Here is an interesting update from New Hampshire:

America, Where What's Yours Is Ours (IJ) 03/15/2006 Day, The Marc Guttman

Weare, N.H., citizens voted yesterday on two candidates for Board of Selectmen who ran on the platform of seizing Supreme Court Justice David Souter's home to build The Lost Liberty Hotel in retaliation for his vote in the Court's decision on Kelo v. New London. While this proposed initiation of force is no more right than the one legalized by the court last summer, it redraws attention to an issue of national importance.

The U.S. Supreme Court ruled that in the public's interest of local economic improvement, it is legal for the government of New London to seize privately owned homes and deliver them to private developers. The property owners, represented by the libertarian firm, the Institute for Justice, argued that the city violated the Fifth Amendment of the U.S. Constitution, which allows government to take property for a “public use” as long as it provides just compensation.

The Court's ruling embraced a broad concept of what constitutes a public use and infringed on the property rights of these unfortunate citizens. New London's action is simply theft. The initiation of force, even for a perceived good, will always lead us down harmful paths. This ruling has caused many to pause to consider whether they truly own what they have earned or whether everything belongs to the state and those able to garner government's favors. This has been a concern of libertarian-minded people since our country's inception.

Justices Stephen Breyer and Ruth Bader Ginsburg, appointees of former President Bill Clinton, joined Justices John Paul Stevens, Anthony Kennedy, and David Souter in the majority decision. They affirmed, “the disposition of this case therefore turns on the question of whether the city's development plan serves a 'public purpose' ... promoting economic development is a traditional and long accepted function of government. There is, moreover, no principled way of distinguishing economic development from the other public purposes that we have recognized.”

Please check the Constitution. Promoting economic development is not a function of our government, and there is a principled way of distinguishing economic development from “public purposes.” Private enterprise in no way falls into what critically needs to be a narrow and firm definition of a “public good,” such as clean air and water. If we choose not to stick with a strict definition of true public goods, then what you have earned for your family belongs to who ever can gain government favor, whether it is the wealthy contributors or the agenda of a powerful voting block whose votes politicians are eager to secure.

A definition of public good should not be what the voting majority decides. This is why the framers, who abhorred democracy, created a constitutional republic that would protect the individual from the “tyranny of the majority.” To them, democracy is two wolves and a lamb deciding what to eat for dinner. The recent oppression of New London's citizens is another example.

People are free to interact with one another through voluntary trade, negotiation, and cooperation, not by infringing on property rights, lives or liberty. In the absence of an incontestable public good, we should not support companies stripping people of their property through government force any more than we should support companies using thugs with axe-handles. The Supreme Court has made such theft legal, but it cannot make it moral.

Libertarian-minded people agree with the dissenting opinion of Justices Sandra Day O'Connor, Clarence Thomas, Antonin Scalia, and William Rehnquist, that, “the Court abandons this long-held basic limitation on government power. Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, as long as it might be upgraded ... but the fallout from the decision will not be random. Beneficiaries are likely to be citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with few resources to those with more.”

Justice Thomas said seizing homes for private development, even with “just compensation,” is unconstitutional. “The consequences of today's decision are not difficult to predict, and promise to be harmful,” Thomas wrote. “So-called 'urban renewal' programs provide some compensation for the properties they take, but no compensation is possible for the subjective value of these lands to the individuals displaced and the indignity inflicted.”

Since the Kelo decision, we have seen two patterns nationwide. While several communities are drafting legislation to strengthen local property rights, many communities emboldened by the ruling are moving to acquire land from private citizens to redistribute to corporations, developers,and to preserve as open space.

So that people will not have “disproportionate influence” over others, it is necessary to reclaim the extended, unconstitutional powers government has stolen from the individual over the last several decades. George Washington rightly explained that government is force. This force must be contained and not wielded by the highest bidders. Our government was to protect us from force and fraud, not initiate it.

Marc Guttman lives in Niantic.

HT: Mickey Barnett

Posted by Harry Messenheimer at 10:09 PM | Permalink | Comments (0) | TrackBacks (0)

Check out Paul's column in todays Albuquerque Journal (sr). Excerpt:

In June 2005, the Supreme Court's decision in Kelo v. New London made eminent domain abuse constitutional by interpreting the Fifth Amendment to mean that any eminent domain taking, even for the express benefit of another private entity was legal as long as the condemning authority had a "plan" and officials believed that some public benefit would result from the taking. Although the court's decision was a tremendous blow to property owners everywhere, the court explicitly allowed for the possibility that states could place restrictions on the use of eminent domain. That is exactly what had been happening nationwide as more than 40 states have bills under consideration and six states had already passed bills to address the court's decision. In fact, until Richardson's veto, no governor had opposed efforts to limit Kelo's reach. It is surprising that the governor sees no problem in allowing state and local governments unfettered power to take people's homes and small business. Even more surprising is that a man faces re-election this year and who by all accounts wants to run for president in 2008 would choose to take such an unpopular stand.

Posted by Harry Messenheimer at 10:05 PM | Permalink | Comments (0) | TrackBacks (0)

Richardson has vetoed eminent domain restrictions in New Mexico. Read Paul's commentary here. Nicely done, Paul.

Posted by Harry Messenheimer at 10:22 AM | Permalink | Comments (0) | TrackBacks (0)

New Mexico ranks 28th friendliest among the 50 states in the Tax Foundations new index.

The good news is NM ranks #1 (friendliest) for individual and business wealth (meaning property) taxes.

The bad news is that NM ranks #48 for its gross receipts tax. It looks to me like the weight given to the gross receipts tax understates its adverse effect on NM's business climate.

Posted by Harry Messenheimer at 10:24 AM | Permalink | Comments (0) | TrackBacks (0)

Bruce Bartlett explains why Bush is a big government conservative. The Bush administration is not one that "believes in the historical conservative philosophy of small government, federalism, free trade and the Constitution as originally understood by the Founding Fathers." Bartlett provides lots of examples.

For more check out this interview with the Wall Street Journal's Paul Gigot.

Posted by Harry Messenheimer at 09:11 AM | Permalink | Comments (0) | TrackBacks (0)

The National Taxpayers Union has just released its ratings. Each "rating, based on hundreds of roll call votes, is considered the most comprehensive scorecard available on federal tax, spending, and regulatory issues." Here they are for New Mexico:

Steve Pearce 55% (C+)
Heather Wilson 46% (C-)
Tom Udall 12% (F)
Jeff Bingaman 17% (F)
Pete Domenici 66% (B)

Posted by Harry Messenheimer at 05:50 PM | Permalink | Comments (0) | TrackBacks (0)

Patsy Madrid advocates big government "solutions" to every problem imaginable as she runs for congress, hoping to represent Albuquerque and environs. Yet her campaign organization could not even arrange to have her national radio broadcast heard in Albuquerque:

...no one with Madrid's campaign, nor the Democratic Congressional Campaign Committee, confirmed that KKOB would actually broadcast the speech. The radio station aired a program about computers in the Saturday morning slot.
In fact, KKOB does not broadcast the weekly Democratic National Radio Address— nor the President of the United States' Weekly Radio Address, station officials said.

Not to worry, though, this is just one little error. When it comes to big government making our decisions for us, errors will not be made. Right? Yeah, right.

BTW: in case you were wondering there is no way I can defend Heather Wilson's support of the Bush Administrations new prescription drug entitlement program under Medicare. But you should be suspicious of Madrid's supposed "simplification" involving even more government mandates over markets.

Posted by Harry Messenheimer at 09:52 AM | Permalink | Comments (0) | TrackBacks (0)

Drip, drip, drip.

Posted by Harry Messenheimer at 09:08 AM | Permalink | Comments (0) | TrackBacks (0)

Former FEC chair Brad Smith has some good advice for Republicans, although I doubt they will take it:

...use this [Abramoff] scandal to cut the size of government. Go forward and make the case: "This, dear people, is what big government is. It is favors for special interests, unrestrained pork barrell spending, and a government so big you, dear voter, can't begin to keep an eye on all parts of it. It is lobbyists and money and corruption. Lobbyists lobby because government is giving out favors and subsidies, writing exemptions into the tax code, regulating most things you do and claiming the right to regulate everything else. The solution is not more regulation. It is smaller government. Take the power away from the politicians."

Of course, the advice is good for politicians of all stripes, not just Republicans.

Posted by Harry Messenheimer at 11:19 AM | Permalink | Comments (0) | TrackBacks (0)

The Heritage Foundation and Wall Street Journal have just released their 2006 index of economic freedom.

It isn't government-sponsored spaceports and the like that lead to prosperity. I wonder why New Mexico (and numerous others) don't get this?

Posted by Harry Messenheimer at 09:27 AM | Permalink | Comments (1) | TrackBacks (0)

Here is a great blog that contains breaking news. Thanks to John Onesti for the link.

Posted by Harry Messenheimer at 10:02 AM | Permalink | Comments (1) | TrackBacks (0)

Here is an update on the Lost Liberty Hotel project of Logan Darrow Clements. Recall that the project seeks

to build a hotel on the land currently owned by Judge Souter. The town has declined Clements' request for the land, but he and some residents of Weare, New Hampshire, are working to bring the issue to a vote of the townspeople.

The Lost Liberty Hotel will feature the "Just Desserts Café" and include a museum, open to the public, featuring a permanent exhibit on the loss of freedom in America. Instead of a Gideon's Bible each guest will receive a free copy of Ayn Rand's novel "Atlas Shrugged."

Clements indicated that the hotel must be built on this particular piece of land because it is a unique site being the home of someone largely responsible for destroying property rights for all Americans.

If you would like to help with the project you can purchase a new song called "Preeminent Domain" for only $2.00 here. Here are the song's lyrics:

Allow me to make it eminently clear

It's a free country Judge, or didn't you hear.

Facts are facts, and rights are rights

Take my land and you take my life

So easy to give when it ain't yours

So easy to take what you didn't create

Nothing grows on trees but leaves

And if you don't leave us free, that's all there'll be

All we want is to be left alone

From the Right and the Left they invade our home

So easy to give when it ain't yours

So easy to take what you didn't create

When did we fall asleep, when did we turn to sheep?

How did we get so dependent, how did we get so dumb?

Why did we let this happen?

When did our government becomes our master?

It's time to remember who we are...

I hear you laughing, but it won't be funny

There's only so far you can push this country.

'Cause facts are still facts, and rights are still rights

Take our land and you take our life

So easy to give when it ain't yours

So easy to take what you didn't create

It's upside down and inside out

But not for long as you'll find out .

HT: Mickey Barnett

Posted by Harry Messenheimer at 08:25 AM | Permalink | Comments (0) | TrackBacks (0)

Chuck Muth comments today on how Colorado voters are like New Mexican voters. They have been fooled:

It was only a little over a month ago that voters in Colorado, spooked by "the sky is falling" rhetoric of the left and a few misguided souls on the right, decided to suspend the spending restraints imposed by the state's TABOR law (Taxpayer Bill of Rights) and allow the government to keep budget surpluses for the next five years. Voters were warned in ominous terms that unless they loosened TABOR's restrictions, critical and necessary government operations would have to be cut.

Voters bought it, proving once again that it IS possible to fool a majority of the voters a lot of the time. And as Brendan Miniter points out in Monday's Political Diary, "The state is now allowed to keep an estimated $3.7 billion in revenue it otherwise would have had to give back to the people."

So what are the politicians planning to do with their share of the loot?

Well, in Boulder, Colorado, local officials intend to use some of the new-found dough to fund efforts to make their county "climate neutral" by 2025. As Miniter explains, this means "offsetting any greenhouse gases (the county) creates by planting trees and funding other 'green' programs." One of those other "green" programs already being discussed is requiring "contractors to use both sides of the paper they use to submit bids."

Good grief.

Your tax dollars are the football. The politicians are "Lucy." And the taxpayers are "Charlie Brown." The TABOR referendum in November was Lucy telling Charlie Brown to "trust her," that she wouldn't yank the football away at the last minute as Charlie Brown tries to kick it.

And once again voters are finding themselves flat on their backs. Will we never learn?

Posted by Harry Messenheimer at 04:49 PM | Permalink | Comments (0) | TrackBacks (0)

Here is a good article on the politics of immigration. Despite the recent hardline rhetoric, there is hope for a bipartisan consensus that immigration is good for the country. Putting up our own iron curtain is not an effective and efficient way to combat terrorism.

Posted by Harry Messenheimer at 08:29 AM | Permalink | Comments (0) | TrackBacks (0)

Two great posts today on the latest big governement proposals by the chairman of the FCC: One post is local and the other national.

Posted by Harry Messenheimer at 10:34 AM | Permalink | Comments (0) | TrackBacks (0)

Did you see yesterday's Albuquerque Journal Op-Ed by Rosabeth Moss Kanter entitled "Poverty:
Capitalism's Powder Keg?" In the Miami Herald it was entitled "Why Socialism is back in vogue in some places." Excerpt"

Socialism is back in vogue in Latin America. Whatever one thinks about Venezuelan president Hugo Chávez's outrageous politics, he enjoys support from poor barrios because he has expanded access to educational and social services. Chávez called Mexican President Vincente Fox a ''lapdog'' of U.S. imperialism for backing Washington's trade policies at the summit. Perhaps Chávez's example reinforced Cuba's socialist stubbornness, as the government raided farmers' markets in what Reuters called an ``anti-capitalist crackdown.''

Some large companies in the region are rising to the challenge of finding solutions to poverty. ABN AMRO Banco Real in Brazil is offering micro-finance to poor entrepreneurs in urban shanty-towns. Cemex in Mexico created an innovative program to finance housing materials in rural areas, bringing jobs as well as better housing to poor villages.

Believers in a free-market economy (and I'm among them) had better be prepared to do even more to help lift the poor out of misery. Otherwise, markets will not be free enough or our cities safe enough, for any of us.

Capitalists themselves often do not "believe" in the free-market. But one thing is for sure: they have every incentive to help the more poverty stricken nations as long as those nations have reasonable regulatory and tax regimes, they enforce property rights and they enforce the rule of law. Captitalists help by engaging in trade with the people and businesses of those nations. When trade occurs everyone is better off.

Be careful, though, because there is one thing that will not work: foreign aid. New Mexico itself is proof of that. If foreign aid does not work why not encourage dictators to try some economic freedom? That really does work!

Update 11/29/05: MARY ANASTASIA O'GRADY in Friday's WSJ(subscription):

Continue reading "Ending Poverty" »

Posted by Harry Messenheimer at 01:41 PM | Permalink | Comments (0) | TrackBacks (0)

Steve Moore's article yesterday does a superb job of dissecting John McCain's economic philosophy from a market liberal perspective.

On limited government he frequently looks quite good:

"Look at my National Taxpayers Union rating. I'm near 100% every year." (I do. He is.) Then he fumes: "I'm so disgusted with the way my party is wasting money. It's an embarrassment."

It is on this issue that Mr. McCain has struck the mother lode. More than any other first-tier GOP candidate in 2008, Mr. McCain has shrewdly tapped into the rage that conservatives are feeling over President Bush's $800 billion Medicare drug bill (which he voted against), the highway bill with its 6,000 earmarked white-elephant projects (which he also voted against), and the infamous $500 million Alaska Bridge to Nowhere (which he led the crusade to defund). Mr. McCain whips out a spreadsheet detailing the legislation he drafted with Oklahoma Sen. Tom Coburn to cut the budget by $100 billion by canceling the highway pork, delaying the prescription drug bill, establishing a commission to end worthless government programs, and so on. Give the man his due: He has monopolized the anti-big government Reaganite message of late.

In addition he defends free trade, school choice, and a sensible immigration policy that

involves a three-step process: better border enforcement, a guest worker program, and an earned legalization program with a $2,000 fine for those who are here already. Anyone who has heard Mr. McCain on the stump lately knows that this is an issue he feels passionately about. "America must remain a beacon of hope and opportunity. The most wonderful thing about our country is that this is the one place in the world that anyone -- through ambition and hard work -- can get as far as their ambition will take them," he says, in optimistic rhetoric that is somewhat reminiscent of Ronald Reagan.

Unfortunately, McCain also displays many nanny statist tendencies that are emphatically not market liberal:

He is against most tax cuts. His campaign finance "reform" demonstrates his unbelievably naive view of political process. He wants us to do something (regulate, regulate, regulate) about global warming. He wants to tax greedy profiteers. He thinks its the state's job to regulate steroid use in sports.

Maybe, if we can teach him some more economics, we can reduce these statist tendencies and have a fine presidential contender on our hands. But I don't want to get my hopes up. I wonder how someone who was part of the Keating Five (and seems to recognize his mistake) can have such a naive view of political process.

Update 11/28/05: Jane Galt's take

Continue reading "Economic Enigma" »

Posted by Harry Messenheimer at 09:42 AM | Permalink | Comments (0) | TrackBacks (0)

They are wedge issues. Here is how George Leef puts it:

Wedge issues show political hucksterism at its finest, just like the old-time snake-oil salesmen who took advantage of people’s ignorance to get them to buy bottles of elixir that supposedly cured all ailments. Conservatives and liberals each make use of wedge issues. The former’s wedge issues tend to revolve around patriotism and the latter’s tend to revolve around “social justice.”

Posted by Harry Messenheimer at 10:24 AM | Permalink | Comments (0) | TrackBacks (0)

A special session of the legislature is scheduled to start tomorrow morning. Yet there is no specific proposal that I can find on the state's website. Somehow that doesn't seem right.

Posted by Harry Messenheimer at 09:22 PM | Permalink | Comments (0) | TrackBacks (0)

Young, inexperienced workers can breathe a sigh of relief. The "living wage" ordinance in Albuquerque failed--but just barely.

Posted by Matthew D. Mitchell at 12:24 PM | Permalink | Comments (0) | TrackBacks (0)

I am not surprised that Steve Moore shares (subscription) my view of the already profligate GOP's response to the New Orleans tragedy:

"There's an old adage that no one in Washington can tell the difference between $1 million and $1 billion. Seldom has that Beltway learning disability been more vividly demonstrated than in the weeks since Katrina.

When President Bush announced last Thursday that the feds would take a lead role in the reconstruction of New Orleans, he in effect established a new $200 billion federal line of credit. To put that $200 billion in perspective, we could give every one of the 500,000 families displaced by Katrina a check for $400,000, and they could each build a beach front home virtually anywhere in America.

This flood of money comes on the heels of a massive domestic spending build-up in progress well before Katrina traveled its ruinous path. Federal spending, not counting the war in Iraq, was growing by 7% this year, which came atop the 30% hike over Mr. Bush's first term."

It gets even worse:

"Rapacious trial lawyers are already on the hunt rounding up Katrina's victims to unleash a barrage of multimillion dollar lawsuits. Now they have been empowered by Congress to finance these lawsuits against taxpayers � with taxpayer dollars."

Posted by Harry Messenheimer at 08:53 AM | Permalink | Comments (0) | TrackBacks (0)

Bush's proposal to throw money on New Orleans raises a bunch of initial comments and questions:

1. This will cost the average taxpayer (those who actually pay taxes) about $2,000 each. Harry to W: Yes, it is taxpayers who will foot this bill, not �government.�
2. Because of 1. I wonder how much private giving will be crowded out? Are you going to give generously knowing that you the taxpayer will be coerced into sending an average of $2,000 for �government� help? I�d like to know.
3. New Orleans residents will receive an average of roughly $100,000 each of government spending. Wouldn�t it be better to give them some direct financial aid and let them decide how to use it to rebuild their lives?
4. Shouldn�t local citizens, businesses and government determine their own risks and benefits for rebuilding? Why is it our responsibility to totally rebuild a below-sea-level city in a hurricane zone? They rolled the dice and lost; now the rest of us pay up.
5. Economic freedom, not big government, is what works. Bush was already moving us quickly in the opposite direction by his unprecedented spending binge. That being said, I wonder what kind of sea change this may cause in political loyalties? Those of us (and there are many) who are enthusiastic about the joys of liberty are not going away.

Posted by Harry Messenheimer at 07:52 AM | Permalink | Comments (0) | TrackBacks (0)

My mission in life is to keep pointing out that bigger, more intrusive government is counter productive. Those who think big government will improve our lives are wishful thinkers. For example, here is my very first blog. Or, here is the first research work I did for RGF.

Now empirical evidence of the counter productive effects of big government (North America or worldwide) is available at your fingertips. Thus my challenge to the wishful thinkers: tell me again how you are going to make things better when you have not done so throughout history????? How is it that you think government bureaucrats and politicians can make decisions about people's lives better than the people themselves???? I really want to know.

Posted by Harry Messenheimer at 09:33 AM | Permalink | Comments (0) | TrackBacks (0)

You've probably noticed tha little yellow box on the home page of this website. It's a quote from Henry Hazlitt that cites his "economics in one lesson" principle: The art of econmics is to look past the primary effect of some action to all of the good and bad effects that follow. This certainly applies to the "living wage" proposal that would set the miniumum wage in Albuquerque to $7.50 an hour, to be adjusted upward with the cosumer price index.

Here's the chain of effects past the first one of raising the legal minimum: Those workers not worth $7.50 get fired. Cost of doing business in Albuquerque rises. Firms either raise prices or move out of town. Tax base declines. Taxe rates increase. Higher tax rates capitalized into the price of commercial and residential real estate, both of which decline.

So much more than (supposedly) just raising someone's wages.

Posted by Kenneth M. Brown at 10:59 AM | Permalink | Comments (0) | TrackBacks (0)

Arnold Kling has some good thoughts on why political process leads to inferior results. Good follow-up to my post on why I think Tyler Cowen is wrong on Tax and Spend Limitations.

Posted by Harry Messenheimer at 09:43 AM | Permalink | Comments (0) | TrackBacks (0)

I am a big fan of Tyler Cowen. He always makes me question my own views. But on this one I think he is wrong.

Constitutional limits on taxing and spending are put in place because voters cannot "simply cut spending by voting for anti-spending politiicians." The reason is that the political process itself leads to outcomes which are biased in favor of bigger government. On that score he could take a lesson from his student.

Tyler may be justifiably "surprised" about whether or not Tax-Expenditure limitation will survive as a long run political equilibrium. The reason for that is clear; and it is the reason mentioned above.

Experience has shown, though, that Colorado's limits on taxing and spending could have been better designed. New initiatives in other states will anticipate these problems.

Posted by Harry Messenheimer at 08:26 AM | Permalink | Comments (0) | TrackBacks (0)

Look here to see that NM is in the top half of states ranked by business expenses (even though New Mexico has competitive wages and below average energy costs).

A few thoughts: There is no attempt to capture regulatory burden. There is no measure of gross receipts tax pyramiding. The weighting scheme for each of the 5 elements making up the index is not clear.

Thanks to Ralph Frasca at Division of Labour for the heads up.

Posted by Harry Messenheimer at 07:53 AM | Permalink | Comments (0) | TrackBacks (0)

From RGF President John Dendahl:

The Rio Grande Foundation is a new, and small, part of the network of think tanks giving so much heartburn to the wealthy bunch of Leftists discussed today in the Washington Post. Excerpt:

"At least 80 wealthy liberals have pledged to
contribute $1 million or more apiece to fund
a network of think tanks and advocacy groups
to compete with the potent conservative
infrastructure built up over the past three
decades."

The Heritage Foundation is probably the largest and best known, but our movement may include one hundred or more.

The Left has just one problem, but it's a fatal problem: its answer is always some version of socialism. In the memorable words of Lady Margaret Thatcher: "President Reagan and I knew ... what didn't work -
namely socialism in every shape or form. And how many forms there are! Socialism is like one of those horrible viruses. You no sooner discover a remedy for one version, when it spontaneously evolves into another ... Nowadays socialism is more often dressed up as environmentalism, feminism, in international concern for human rights ... New slogans; old errors."

Posted by Harry Messenheimer at 05:05 PM | Permalink | Comments (0) | TrackBacks (0)

The money is rolling in; but don't expect to see any tax cuts in New Mexico. No, the big government folks are dreaming up evem more ways to waste your hard earned income.

You can expect a strong objection to this nonsense soon from the Rio Grande Foundation.

Posted by Harry Messenheimer at 02:41 PM | Permalink | Comments (0) | TrackBacks (0)

As the �living� wage debate heats up in Albuquerque, it seems appropriate to stop and remember how we got here.

Of course, we at the Foundation have long argued that minimum wage laws are abhorrent because they harm the very people they are intended to help: the poor. By raising wages above their market-clearing levels, these laws increase unemployment among low-skilled workers. Don�t believe me? Open up any intermediate microeconomics texts such as this one. Or this one. Or this one.

Aside from the economics of the issue, what does the law say? From the very beginning, American jurisprudence held an individual�s right to contract sacrosanct. No act of government could overturn a contract lawfully entered into by consenting adults. An integral aspect of Roman and English common law since time immemorial, the right to contract was codified in the famous Dartmouth College Case of 1819. The trustees of Dartmouth College had entered into a contract with the King of England in 1769. A half century later, the New Hampshire legislature amended the charter without consulting the trustees. The trustees filed suit and the Supreme Court found that New Hampshire had impaired �the obligation of a contract.� The Dartmouth College case was a powerful demonstration that though governments rise and fall, an individual�s sacred right to contract with his fellows shall not be infringed.

The right to contract was again affirmed in the 1905 Lochner decision which struck down a law limiting working hours. The court found that if two consenting adults can agree on terms of employment, government has no right to interfere.

In 1923, an important case raised the issue yet again. A 21 year old woman of the last name Adkins worked as an elevator operator at a children�s hospital in Washington, D.C. According to the court, �[Ms. Adkins] alleges that the work was light and healthful, the hours short, with surroundings clean and moral, and that she was anxious to continue it for the compensation she was receiving.� For its part, the hotel found her �services were satisfactory� and �would have been glad to retain her.� Unfortunately, upon the enactment of a federal minimum wage law, the hospital could no longer afford to pay Ms. Adkins and had to let her go. Thankfully for Ms. Adkins, the court found the minimum wage law violated her right to contract. The court struck down the law and Ms. Adkins returned to work.

In 1936, in Morehead, the court came to the same conclusion in a similar case. Then, in an astonishing move, the court reversed itself just 10 months later in the famous West Coast Hotel vs. Parrish case. The reversal came about because of one man: Justice Owen Roberts. To this day, it remains somewhat of a mystery as to why Justice Roberts reversed himself (some have argued Roberts was trying to appease FDR in order to get the president to abandon his court-packing plan).

In any case, the sacred and ancient right to contract was forever abandoned and minimum wage laws have been legal ever since.

As the city of Albuquerque contemplates a drastic hike in its minimum wage, it seems appropriate that we pause and remember the plight of poor Ms. Adkins. There are many like her today who stand to lose their jobs because some well-meaning folks haven�t taken an economics class.

Posted by Matthew D. Mitchell at 03:28 PM | Permalink | Comments (0) | TrackBacks (0)

People often think of the U.S. as a bastion of economic freedom. In the 19th century there could be little doubt that it was. With a strong commitment to the rule of law and property rights, low taxes, moderate tariffs, and almost no federal regulation of commerce, no place on Earth better-exemplified the �natural liberty� of a free market for which Adam Smith so passionately argued.

Today, the U.S. is no longer conspicuous for its economic freedom. Sure, we have drifted closer to a command-and-control economy than many thought possible. But perhaps more importantly, the rest of the world has caught on to Adam Smith�s timeless lesson: economic freedom leads to economic prosperity. Hong Kong, Ireland, Estonia, the United Kingdom and even Chile have all undergone remarkable market liberalization in the last few decades. Not coincidentally, all have prospered--outpacing their neighbors in almost every measure of economic well-being.

In the last few years, even the former communist nations have caught on. Latvia, Estonia, Lithuanian, Russia, Ukraine, Slovakia, and Romania ALL have flat taxes! Two weeks ago, Russia took one further step and abolished its death-tax.

Many of these nations have been slow to develop a strong commitment to the rule of law or property rights. And indeed, these prerequisites for prosperity are some of the more difficult to establish (sadly, they seem difficult to maintain, even here). Nevertheless, we could learn a thing or two from our former enemies.

Posted by Matthew D. Mitchell at 02:33 PM | Permalink | Comments (0) | TrackBacks (1)

Is it any wonder that NM's economy grows more slowly than other states' economies? NM cannot control spending and taxing.

Posted by Harry Messenheimer at 09:43 AM | Permalink | Comments (0) | TrackBacks (0)

Did you see this editorial in Friday's Wall Steet Journal? Excerpts:

"It hasn't yet hit the intensity level of Howard Jarvis's Proposition 13, the famous ballot measure that slashed California property taxes by 30% and sparked a nationwide tax revolt in the late 1970s. But activists in at least 20 states -- from Alaska to South Carolina -- are working to enact Taxpayer Bill of Rights (Tabor) laws to cap runaway state spending and tax increases."

"Last week in Richmond, Virginia, taxpayer groups from 30 states gathered under the banner of the State Policy Network to discuss how to insert these anti-tax restrictions into state constitutions."

The Rio Grande Foundation is taking part in this revolt. Stay tuned this summer as we further our documentation of runaway state spending in New Mexico.

Posted by Harry Messenheimer at 09:49 PM | Permalink | Comments (0) | TrackBacks (0)

In today's report from Chuck Muth:

YOUR FDA AT WORK

According to the latest "Give Me a Break" commentary by ABC's John Stossel, the chemical Mexoryl effectively blocks UVA the rays from the sun which cause wrinkles. Dermatologists swear by it. And sun worshippers in Rio, Paris, Mexico, Canada and Australia have been lathering up with it for over a dozen years now.

But don't look for it on the shelves of your local drug store here in the U.S. of A. It ain't there. Why? Because it's illegal here. You see, the federal Food & Drug Administration (FDA) still hasn't "approved" Mexoryl as safe and effective.

How typically "governmental" to be told over and over and over that the sun is dangerous and not to forget to wear sunscreen...while the feds continue to ban the most effective sunscreen on the market today.

And this is the same group some want to turn the regulation of tobacco over to? Give me a break.

Posted by Harry Messenheimer at 05:19 PM | Permalink | Comments (0) | TrackBacks (0)

New Mexico now has a law requiring ignition interlocks on the cars of convicted drunk drivers. (An interlock is a device that uses a breathalizer to estimate the driver's blood alcohol content and then shuts down the ignition if the driver flunks the test.)

These devices cost more than $500--not cheap. So here's my prediction: Within the next 18 months a bill will be introduced in the state legislature to pay for interlocks for drunks who "can't afford them."

Does this sound absurd? Yes, but not unlikely.

Posted by Kenneth M. Brown at 08:50 AM | Permalink | Comments (0) | TrackBacks (0)

It is distressing to see that Bruce Bartlett is waving the white flag on taxes and spending. That is his rationale favoring a value added tax.

Posted by Harry Messenheimer at 10:42 AM | Permalink | Comments (0) | TrackBacks (0)

They just don't get it. Why do they think "the siren song of collectivist solutions" is going to make things better? There is no empirical evidence either specifically (for example, here or here) or generally to support them. Their wandingerous arguments mainly consist of flippant remarks and personal insults.

I think Milton Friedman best sums up John's points (subscription) in Capitalism and Freedom:

��conditions have changed. We now have several decades of experience with government intervention. It is no longer necessary to compare the market as it actually operates and government intervention as it ideally might operate. We can compare the actual to the actual. If we do so, it is clear that the difference between the actual operation of the market and its ideal operation � great though it undoubtedly is � is as nothing compared to the difference between the actual effects of government intervention and their intended effects.�
�Milton Friedman, 1962

Whether it be light rail, pre-K or all the other past and current interventions of government, why do they think the actual effects are going to be anywhere near their indended effects. Aren't they just engaging in wishful thinking?

Posted by Harry Messenheimer at 09:59 AM | Permalink | Comments (0) | TrackBacks (0)

New Mexico cannot get over its anti-market mind set. Now big Bill wants to impose price controls in the form of caps on payday loans (subscription):

"Gov. Bill Richardson says he'll introduce a measure to the Legislature this week that will cap interest rates on payday and car title loans.
'I'm going to enter the fray and propose a bill of my own that sets a reasonable cap,� Richardson said Sunday in a telephone interview."

I have seen only a little skepticism on this bad proposal. Why is it bad? Let's answer the question by asking some questions.

1. Since there are so many payday lenders, how can it possibly be that they are charging too much for their loans? Wouldn�t an exorbitant rate of profit lead to even more lenders, driving down the charges for payday loans?
2. Similarly, why don�t those who say that payday lenders charge too much enter the market themselves and charge something more �reasonable.�
3. Undoubtedly there are a few borrowers who are misled by these loans. But with all the overbearing regulations now existing, why isn�t our government catching those who commit fraud? Isn�t detecting and prosecuting fraud one of the main reasons we have a government? Why do we want to drive this market underground where fraud will be even more difficult to detect and prosecute?
4. What is so hard to understand about the terms of these short-term payday loans? Example: Lender lends $200 for two weeks with a charge to borrower of $30. Even a borrower educated in NM should be able to understand that.
5. Why do we want to penalize borrowers who act responsibly and will get shut out of the market as a result of this bad proposal? They will suffer more when financial emergencies occur than they would with a payday loan � otherwise they wouldn�t be seeking the loan.
6. Proponents of this bad law are making a big deal out of converting the payday loan charges to an annual rate of interest. But they don�t include the value to the borrower of being able to obtain the loan hassle-free. Why not?

One thing we economists know is that price controls always make matters worse. This bad law will too.

Posted by Harry Messenheimer at 10:39 AM | Permalink | Comments (1) | TrackBacks (0)

Bad things are happening in Santa Fe. They prevent voluntary interaction; they coerce us into doing what we do not want to do. Why cannot the Guv and Legislature leave us alone?

Posted by Harry Messenheimer at 10:04 AM | Permalink | Comments (0) | TrackBacks (0)

Some of you may have to see this post by Alex Tabarrok at marginalrevolution.com to believe it. Does this help you see more clearly that "government is the problem, not the solution?"

Posted by Harry Messenheimer at 09:15 AM | Permalink | Comments (0) | TrackBacks (0)

The State Investment Council has just agreed to lend $7.5 million at zero interest for three years to finance the production of a movie to be filmed in New Mexico. The film will tell the inspiring story of a man and his grandson who drift into Mexico and both fall in love with the same prostitute.

The opportunity cost of making such a loan is around $1 million, that being the returns that could be had by investing the money elsewhere. There is also an element of risk to be considered: presumably the loan is unsecured by property, and who knows how the production company figures its profits and hence its ability to repay the loan.

It’s said that 97 film jobs will be brought into the state, but only for the duration of shooting. That figures out to about $10,000 per job, some or perhaps most of which will go to movie makers brought in from Hollywood.

Is this a good deal for New Mexican taxpayers? Probably not. But as usual, we aren’t given enough information by the state to make a reliable calculation.

But one thing is for sure: No one will ever make a film in New Mexico without first paying a visit to Santa Fe to pick up some free money.

Posted by Kenneth M. Brown at 02:56 PM | Permalink | Comments (1) | TrackBacks (0)

Have you ever wondered what New Mexico might be like had its state government not grown so fast? We can get some idea by looking to our neighbor to the north. Colorado has imposed tax and spending limitations by rule since 1992. These limitations are known by the acronym TABOR (Taxpayers� Bill of Rights). State spending is limited by TABOR to the rate of inflation plus the rate of population growth. In essence TABOR holds real state spending per capita constant.

Suppose New Mexico had implemented a TABOR in 1992. What would now be the size of its general fund budget as constrained by the rates of growth of population and the price level? Population has grown by an annual average of 1.6 percent in the period from July 1992 to July 2003. The price level has grown by an annual average of 2.6 percent from February 1992 (index of 138.6) until February 2004 (index of 186.2) as measured by the consumer price index. A New Mexico TABOR would have limited general fund average annual growth to 4.1 percent (1.6% population growth plus 2.6% inflation).

Since the New Mexico general fund budget was $2,044.9 million in FY 1992, TABOR would have limited it to $3,447.8 million for FY05 (beginning July 1 2004). Contrast that with the actual FY05 budget of $4,380.6 million! TABOR would have saved the taxpayers $932.8 million. That works out to be $491 for every man, woman and child in New Mexico. According to our estimates such a saving would have permitted a gross receipts tax rate reduction of some two and one-half percent! The gross receipts tax we pay would be more in the neighborhood of four and three-quarters percent rather than six and one-quarter percent. Now that would promote economic development!

Some other observations based on the general fund budget over time: The budget has grown at a rate of 6.0 percent annually since 1992 (rather than at a TABOR constrained 4.1 percent). The Medicaid portion of the budget has grown at an annual average rate of 13.3 percent and it increased 16.3 percent for FY05. We predicted the Medicaid budget would be out of control without real reform. Governor Johnson was able to hold general fund spending to an average annual rate increase of 5.0 percent during his eight years in office (nice going, Governor J). He was able to hold Medicaid's average annual increase to 11.2 percent.

Posted by Harry Messenheimer at 12:31 PM | Permalink | Comments (0) | TrackBacks (0)

When Gregory Mankiw, President Bush�s Chairman of the Council of Economic Advisors recently noted the benefits of outsourcing jobs, politicians crawled over one another to be the first to denounce his idiocy. Senators Clinton, Kennedy and Schumer, for example, wrote �[we are] troubled by the astonishing statement of�Gregory Mankiw, that �outsourcing is just a new way of doing international trade�.� Read the story here.

I must give the press some credit. The media have not let the senators get away with their blithe dismissal of Mr. Mankiw. After all, Mr. Mankiw is hardly some right wing nut (Look at what he named his dog!). What�s more, the Chairman is in rather good company. On his side are the vast majority of Ph.D. economists (for evidence on the extent of the profession�s faith in free trade see the Survey of Americans and Economists on the Economy, 1996). Luckily, the press has actually picked up on this. See, for example, this story by the AP, and this one in our own Albuquerque Journal.

The basic economic story is not terribly complicated: barriers to trade do two things: they raise profits for a select few (steel workers, farmers, etc.) and they raise prices for consumers at large. What is more, it can be shown with minimal recourse to graphing paper that when we add up all the price increases and compare them with the profit increases, the price increases outweigh the profit increases.

Unfortunately, most economists want to stop the story there, assuming they have won over the skeptic. They should not assume so. I suspect that when he or she hears this story, the average America says �So what? If we remove the trade barrier, someone will loose their job. I�d rather have 50,000 consumers pay one extra dollar for a product, than have one worker loose a $30,000 job. I don�t care that the barrier is more expensive, the benefits are everything to the worker.� This is actually a good point.

But there is a better counter point. The economy is constantly changing. Ninety percent of Americans were once farmers. Now a tiny fraction of Americans work on the farm. Thousands were once blacksmiths. Now almost no one is. These changes had to come. And they will have to come for other industries too. But every year we leave steel tariffs and farm subsidies in place is another year that we encourage 18 year olds to go into the steel and farm industries. We are lulling millions of workers into industries that cannot support them.

The inevitable result will be too many steel workers and too many farmers. When those industries collapse, millions will lose their jobs at once. Is that compassion?

My compliments to Anthony J. Evans of The Filter for pointing out Mankiw�s Animal Spirit.

Posted by Matthew D. Mitchell at 12:02 AM | Permalink | Comments (1) | TrackBacks (1)

Last week I visited an eye clinic in Albuquerque. As I was completing the paperwork prior to my exam, a young woman entered the office. She was visibly upset because she had been unable to obtain new glasses under her old prescription. She was informed that opticians in New Mexico are prohibited from filling eyeglass prescriptions that are more than one year old. It turns out that her prescription was about 13 months old.

Isn't it wonderful that we have the all-knowing state to decide her trade-off between the expense of another eye exam, fulfilling her old prescription or going without? The optometrist's administrative assistant explained to me that some states are much less efficient than New Mexico, allowing as much as two years before mandated expiration of a prescription!

Who do you think benefits from this restriction on free choice in the marketplace? Who loses? If the overall losses are greater than the benefits, how could such a restriction be passed by our legislature?

Posted by Harry Messenheimer at 10:51 AM | Permalink | Comments (2) | TrackBacks (0)

Economic Freedom Promotes Prosperity

The Rio Grande Foundation�s research and educational activities are based on the principle that:

Increased individual liberty leads to increased prosperity, individually and collectively, so long as voluntary contracts are enforced and well-defined property rights exist.

This principle is derived from a sound empirical foundation and examination of incentives. When societies are ranked by an index of economic freedom over the long run, we find their ranking of prosperity to be in nearly one-to-one correspondence with their degree of economic freedom. The more economic freedom there is, the better-off people are. That fact deserves notice in New Mexico!

The link between freedom and prosperity is not surprising when we compare incentives that guide individual behavior. Behavior is quite different for different degrees of economic freedom. But those differences are usually overlooked by decision makers, so the freedom-prosperity link also is usually overlooked. Lacking a careful examination of incentives, it often seems plausible that increased taxation and/or regulation will achieve a worthy goal (such as improved safety, environment, or transportation; or increased economic development; or helping the poor). On the contrary, economic freedom usually guides people to coordinate their activities in ways that better achieve these worthy goals.

The following graph depicts the empirical relationship between economic freedom and peoples' well-being for states in the region. As the size of government increases, economic freedom decreases. And the greater is the size of government the less prosperous are the state�s people. New Mexico needs to reduce the size of government and move up the hill toward prosperity.

We should be aiming for G* if we are going to maximize well-being. Unfortunately, however, we are sliding down the slippery slope toward serfdom. For more on the link between economic freedom and prosperity go to Economic Freedom of North America, New Mexico 2000, or Economic Freedom of the World.

Posted by Harry Messenheimer at 03:07 PM | Permalink | Comments (1) | TrackBacks (0)