Errors of Enchantment

Are you feeling down? Honestly, after last night, my feelings are mixed. At the national level, the Republicans got what was coming to them. They increased the size of government (No Child Left Behind, Medicare Prescription Drug Bill, out of control defense spending, to name just a few examples) and governed with more hubris than I've seen in a long time....and that's saying something for politicians. So, I fully expected Obama's victory and tough sledding for Republicans running for Congress, regardless of their personal merits.

It is unfortunate that Republicans in the Legislature and in local offices were also swept away in the tsunami because "change" in New Mexico would require a shift to the right, not the left. Instead, New Mexico's big-government majority has been strengthened and emboldened with primary victories over moderate Democrats and an Election Day shift to the left as well. We'll see what happens with Governor Richardson more than likely leaving for an appointment to the Obama Administration.

Regardless of yesterday's results, we know that free markets and limited government work and have worked around the globe and throughout history. If you are discouraged about the direction we are heading as a nation, read the following from Larry Reed, formerly of the Michigan-based Mackinac Center, now of the Foundation for Economic Education.

Continue reading "Election Reaction" »

Posted by Paul Gessing at 02:16 PM | Permalink | Comments (0) | TrackBacks (0)

The story of an 83 year old California woman Ageda Camargo is unbelievable and truly scary for anyone who cares about property rights. She is from La Quinta, CA and has owned her house for years, before La Quinta was even a city. When she bought her house, it had a third bedroom that was originally a garage. Now they are threatening to put her in jail if she doesn't change the room back to a garage.

Of course, the city is not offering to refund Camargo the additional taxes she's paid all these years for the additional living space. Thankfully, I haven't heard any stories like this from New Mexico, but one never knows what government bureaucrats will do next.

Posted by Paul Gessing at 01:21 PM | Permalink | Comments (0) | TrackBacks (0)

Yesterday I blogged about the "study" that was recently released in order to help justify the construction of an arena/events center in downtown Albuquerque. In my posting, I noted that the information in the "study" was not objective, but was designed instead to justify its construction.

Of course, while our arena faces its own unique issues, other cities have also fallen prey to arena/events center boondoggles sold by the convention and tourism industry. Check out this very interesting story from the New York Times about the failed Pyramid in Memphis.

Among the interesting factoids regarding the arena is the price tag of "only" $68 million ($109 million in today's money according to the Bureau of Labor Statistics). This is obviously far less than the $400 million number being tossed around for the Albuquerque equivalent.

Also interesting is the divergence of opinion between regular people and those who are paid to promote these kinds of projects. Check out the quotes below:

“It’s quite a striking feature on the skyline,” says Ed Frank, the president of the West Tennessee Historical Society. “But as a citizen and as a taxpayer, it was a waste of money to build the Pyramid on low ground there. I have gone to events there, and I can say I’m not that impressed by the feeling inside.”

But Kevin Kane, the president of the Memphis Convention and Visitors Bureau, says the charm of the Pyramid depends on where you stand. Yes, it is a monument to failed dreams. But it also helped to energize downtown Memphis, he says. “From my view, the Pyramid more than paid for itself many times over.”

Perhaps we can just abolish the taxpayer-funded Albuquerque Convention and Visitors Bureau? After all, if they are just going to be shills for taking more taxpayer money, why should we pay them?

Posted by Paul Gessing at 01:19 PM | Permalink | Comments (0) | TrackBacks (0)

These are dark days for those who believe in free markets and limited government. Each day brings a new story of a new, major financial company in trouble and now Congress is dickering over a $700 billion taxpayer-financed bailout package. Many on the left like EJ Dionne and even the supposedly conservative presidential candidate John McCain is blaming "greed." Unfortunately, the conventional wisdom seems to be that massive government intervention is necessary because the financial markets are "broken." Of course, the implication is that we have a free market and it is capitalism, not government, that has created the problem.

The reality could not be more different. Back in 2000, my former colleague Jeff Dircksen at the National Taxpayers Union stated that:

The secret of (Fannie's and Freddie's) success --subsidies-- could also prove to be their undoing. Given their market dominance, Fannie and Freddie may need to pursue increasingly risky loans to maintain a portfolio that has grown at 18 percent per year over the past decade. An economic downturn or a change in interest rates could cause substantial numbers of higher-risk borrowers to default, sending Fannie and Freddie’s stock prices tumbling, and leaving taxpayers holding the bag.

NTU is not alone in blaming Fannie and Freddie for being at the heart of the crisis. The Wall Street Journal carried an excellent article yesterday that pinned blame on the two mortgage giants. Economic analyst Peter Ferrara has also said much the same thing.

Unfortunately, offering the correct analysis is not always enough when the media has fixated on "greed" and the misdeeds of Wall Street titans. We who understand the reality of the situation must simply keep hammering away with the truth and it will set us free.

Oh, and if you are opposed to the current plan to use 700 billion taxpayer dollars to bail out Wall Street, click here to sign this petition from the National Taxpayers Union.

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

Whether you like John McCain or not, he has undoubtedly been one of Congress's undisputed leaders in fighting Congressional pork-barrel spending. Recently, Jonah Goldberg who will be coming to Albuquerque for a breakfast and book signing hosted by the Rio Grande Foundation, wrote about how Sen. McCain could capitalize on his leadership against pork-barrel spending as a means of getting elected to the White House.

As Goldberg points out, Alaska is one of the most significant recipients of federal "pork" projects. What Goldberg doesn't mention is that New Mexico actually gets more money out of Washington than even Alaska (according to the Tax Foundation). Maybe we can get Mr. Goldberg to write an article about the porky behavior of New Mexico's elected leaders?

It will also be interesting to see if McCain can make his anti-pork efforts an issue in the campaign. So far, it doesn't seem to be a prominent issue.

Posted by Paul Gessing at 02:08 PM | Permalink | Comments (0) | TrackBacks (0)

In case you missed it, France recently decided to abandon its absurd experiment with a mandatory 35-hour work week. The 35-hour week was introduced by the then Socialist government in France 10 years ago as a way to combat unemployment.

According to a story from CBS News, despite being widespread popularity:

The original 35-hour workweek — introduced on a voluntary basis in 1998 and made compulsory two years later — has failed to create the promised millions of jobs.

A parliamentary committee chaired by conservative deputy Herve Novelli last year claimed the shorter workweek had cost the state upward of euro10 billion (US$13 billion) a year. It also disputed a labor ministry report that it had created 350,000 jobs in its first five years. Novelli welcomed Tuesday's vote, saying the 35-hour law had brought a "salary stagnation that is now difficult to emerge from."

Despite the 35-hour work week, France's unemployment rate has remained stubbornly higher than the US and most other nations.

Certainly, New Mexico has not embarked upon such an unwise experiment, but what is the difference between mandating wage rates and limiting the number of hours worked? Kudos to France!

Posted by Paul Gessing at 09:23 AM | Permalink | Comments (0) | TrackBacks (0)

As most readers of this blog are probably aware, I used to work in Washington with the National Taxpayers Union, which is dedicated to lower taxes, less government spending, and tax reform. For years, my colleagues at NTU and I were voices in the wilderness telling Congress that government-sponsored housing giants Fannie Mae and Freddie Mac were in need of reform.

To his credit, President Bush has repeatedly attempted to reform Fannie and Freddie to make a bailout less likely and wean these two mortgage giants off the taxpayer teat, but to no avail. After all, Fannie and Freddie toss money around Washington ($200 million over the last decade) like it grew on trees. Of course, when you are implicitly backed by the US Treasury and you are competing against banks that are not, money does grow on trees.

Unfortunately, Washington did not act and now, due to the difficult housing market, the chickens are coming home to roost and taxpayers are on the hook for what could be billions in bad debt owned by Fannie and Freddie. Just the latest reason that government should not get involved in business.

Posted by Paul Gessing at 04:21 PM | Permalink | Comments (0) | TrackBacks (0)

Whether or not the Federal Emergency Management Agency (FEMA) should even exist is, in my opinion, an open question. After all, the Constitution makes no provision for a federal role in addressing emergencies. If any government was to respond, it is state and local governments that are in the best position and are the most capable. This was clearly the belief held by those who founded this country and lived in the early years of the Republic.

Now, private actors are organizing and getting directly involved in assisting with natural disasters. Engineers Without Borders, a coalition of local engineer organizations around the world, is looking to fill the competency void left by government bureaucrats and assist when disasters happen all over the globe.

Clearly, despite the crowd-out effects associated with government, the rise of private, voluntary organizations like Engineers Without Borders (and volunteer efforts by companies like Wal Mart) are our best chance to avoid future disasters like Hurricane Katrina.

Posted by Paul Gessing at 03:38 PM | Permalink | Comments (0) | TrackBacks (0)

The Rio Grande Foundation has long decried New Mexico's economically-destructive Gross Receipts Tax and urged other states to avoid our mistakes.

Unfortunately, at least in Maryland, that message seems to be falling on deaf ears. That state recently decided to levy a 6 percent tax on companies that provide computer support services, computer programming, consulting services for computer systems design and disaster recovery.

Critics say the tax will be a “small-business tax,” as many smaller companies outsource their computer network maintenance work. Of course, those who like bigger government call the $200 million tax hike a "fiscal necessity."

One would think that Maryland, a state with the 5th-highest personal incomes in the country would not be taking economic policy cues from New Mexico, a state with the 45th highest personal income level in the nation, but revenue-hungry governments are not known for their discretion. If Maryland is wise, they will refrain from adopting the rest of New Mexico's GRT "model" which includes rates as high as 8 percent and includes nearly all services, not just those related to computers.

Posted by Paul Gessing at 12:39 PM | Permalink | Comments (1) | TrackBacks (0)

In 2005, a narrow majority of Colorado residents voted to allow their state government to keep all tax revenues it took in for the next 5 years. In most states, politicians are always allowed to spend whatever they can convince taxpayers to give them, but something called the Taxpayers' Bill of Rights made Colorado different and its citizens wealthier. As Michael New points out here, in giving the state more of their hard-earned money, the average Colorado taxpayer has missed out on 910 dollars in tax rebates during the past two fiscal years.

Other states, including my home of New Mexico, should emulate Colorado's economic success by adopting Taxpayer Bill of Rights-style spending limits. Unfortunately, as Paul Jacob experienced in Oklahoma, the establishment (conservative or liberal) doesn't like limited government.

Posted by Paul Gessing at 08:16 AM | Permalink | Comments (0) | TrackBacks (0)

Unfortunately, New Mexico doesn't have the initiative process which would allow voters to place laws and constitutional amendments on the ballot. In Oklahoma, however, they do have this process in place, but the political establishment jealously guards its power from the people. After all, there is no bigger threat to those who control the process than an informed and energized citizenry.

My friend Paul Jacob and some others who believe in limited government and were trying to put an amendment on the ballot in 2006 to limit taxes and spending in the state have run afoul of the state's attorney general who is carrying out a vindictive campaign against them. Read Jacob's account of the absurd efforts to stop citizen-activists.

Posted by Paul Gessing at 04:08 PM | Permalink | Comments (0) | TrackBacks (0)

News today is that the United Auto Workers have struck General Motors. While this may not be immediately relevant to New Mexico, the reasons for the strike should be relevant to any non-government union worker. The union says the strike is not about wages or benefits, but "job security" and I believe them.

The problem is that job security for unionized workers in plants run by GM, Ford, and Chrysler will force the so-called Big Three to continue shifting production out of the US in order to avoid combative and inflexible unions. That is not to say that US workers are not the best in the world or that the Japanese car companies that have set up shop here are under-paying their workers. They are not.

The problem is that unions and their convoluted work rules are simply not flexible enough to adjust to today's economy. Without that flexibility and with unions limited to preserving existing jobs, union membership is dropping and fast. In fact, the only workplaces that are bureaucratic and resistant to change enough to sustain growing union populations are governments...kind of expains why governments work (or fail to work) the way they do.

Posted by Paul Gessing at 05:06 PM | Permalink | Comments (0) | TrackBacks (0)

I've discussed the dairy cartel in past blogs, but the Albuquerque Journal ran an excellent opinion piece from a farmer and critic of the House-passed farm bill now moving through Congress. This legislation, as the author points out, would continue Congress's tradition of hurting family farms while professing to help them. That is nothing new considering that Ted Turner and Scottie PIppen (a former NBA star) have received massive subsidies in recent years.

Unfortunately, the simple fact is that agriculture policy in this nation is set by a handful of extremely wealthy and well-connected people. The rest of us must deal with the consequences of these absurd policies.

Posted by Paul Gessing at 06:16 PM | Permalink | Comments (0) | TrackBacks (0)

Despite the tax to support it having been repealed by Albuquerque's City Council, the Mayor's trolley plans refuse to die and it is widely expected that he will bring the issue up in the not-too-distant future.

Of course, followers of the issue know very well that supporters of the propsed system believe that Portland is a model that Albuquerque should follow.

Before the issue does come up again, I hope our Councilors will take a few minutes to read transportation analyst Randal O'Toole's excellent study which studies the impact of massive rail spending on cities and clearly illustrates that if Albuquerque adopts a similar, pro-rail policy, we can expect higher taxes, less government services, more expensive housing, and gridlock on the roads like we've never seen before.

Since so few in this state seem to care or understand the very real fiscal impact of wasting taxpayer dollars on transportation boondoggles (see the Rail Runner as an example), I will focus on O'Toole's points on congestion. For starters, O'Toole points out, in its 2020 regional transportation plan (published in 2002), Metro (the regional government body that runs Portland and surrounding areas, picture MRCOG on massive doses of steroids) predicted that its plans would increase the amount of time Portlanders waste sitting in traffic more than 6.6 times. Congestion would increase despite all of the region’s land-use and transit plans because those programs, predicted planners, would attract no more than about 4 percent of auto drivers to other modes of travel.

In 2007, the Federal Highway Administration chastised Metro for its anti-auto transportation plans. “It is difficult to find the transportation focus” in Metro’s regional transportation plan. Metro “should acknowledge that automobiles are the preferred mode of transport by the citizens of Portland,” added the agency. “They vote with their cars every day.” Based on that “vote,” “The transportation solution for a large and vibrant metropolitan region like metropolitan Portland should include additional highway capacity options.”

These problems are just the tip of the iceberg. For more horror stories on what could happen in Albuquerque if we follow Portland down this one-way track, you'll have to read the study.

Posted by Paul Gessing at 10:36 AM | Permalink | Comments (0) | TrackBacks (0)

While the World Bank and opposition to its existence has long been a favored cause of the whacky left, ironically, this is one issue on which right and left can work together if not agree. As George Will points out, the Paul Wolfowitz scandal has drawn attention to the Bank, but what really needs to be brought to light is the colossal waste of money that the Bank really is.

The fact that both the World Bank and the International Monetary Fund are blatantly socialist organizations that hurt the very third world countries they are supposedly trying to help should give left and right enough ammunition to kill these institutions.

Posted by Paul Gessing at 03:26 PM | Permalink | Comments (0) | TrackBacks (0)

With all of the controversy surrounding possible shady business involving the New Mexico film industry and our tax dollars, it might be easy to forget that providing these subsidies in the first place is dubious economic policy.

Apparently, California is now discussing subsidies for the film industry to keep up with states like New Mexico. As the Orange County Register points out, "giving one industry tax money is government discrimination against every industry that doesn't get tax money."

The last thing New Mexico needs is to get into a bidding war with California over who can subsidize movie studies the most. Instead of providing subsidies to one narrow interest, Governor Richardson and the Legislature should focus on reducing gross receipts tax rates or on eliminating the income tax. Those are fair solutions that will provide far greater benefits to New Mexico's economy.

Posted by Paul Gessing at 04:43 PM | Permalink | Comments (0) | TrackBacks (0)

I attended Mayor Chavez's budget meeting (schedule available at link) at Taylor Ranch Community Center on Saturday to voice support for the tax cut proposal and opposition to the Mayor's streetcar plans that he refuses to let die. While taxes and police were discussed, by far the hottest topic was transportation.

Interestingly enough, transportation and more specifically rail transit is a big issue in our Nation's Capitol as well. While visitors to Washington are often impressed by the City's clean and relatively fast METRO, far fewer people understand the costs associated with this system and that Albuquerque by its nature could never have something similar.

First and foremost, Congress is considering spending $1.5 billion over the next 10 years to support the system. This will not happen in Albuquerque. Even with that massive infusion of cash, METRO will still require tax hikes in DC, Maryland, and Virginia in order to create a "dedicated funding source" to keep the system afloat.

More importantly, the Washington area is massive compared to Albuquerque and its traffic problems are much bigger. This makes transit more viable, but what really helps is the massive concentration of federal jobs around METRO stops as outlined by Congress. The Pentagon alone has more people working in it than all of downtown Albuquerque.

Before Albuquerque spends the money to try to create a rail transit network like Washington or Portland, citizens need to understand what they are getting themselves into.

Posted by Paul Gessing at 11:46 AM | Permalink | Comments (0) | TrackBacks (0)

This just in: the US Senate has voted to raise the minimum wage to $7.25 an hour. The only kicker is that the Senate version, unlike the House version, contains some tax breaks and other benefits for small businesses and others that will be disproportionately (and negatively) impacted by the higher mandated wage.

Assuming that this legislation is passed and passed quickly -- I doubt it will take more than a week or two -- it will be interesting to see whether New Mexico's Legislature decides to go along with Governor Richardson's demand for a $7.50 an hour wage. It would certainly make sense to simply go along with the new federal wage rate, but sometimes things just don't make sense here in New Mexico.

Posted by Paul Gessing at 05:46 PM | Permalink | Comments (0) | TrackBacks (0)

I wonder how often this sort of thing happens in New Mexico. On second thought, the minimum wage issue is a perfect example of how the left professes to care about the "little guy," but really doesn't. Wal Mart can easily factor the cost of an increase in the minimum wage into its bottom line, but how about the mom and pop bookshops and the little stores run by recent immigrants?

Posted by Paul Gessing at 08:46 PM | Permalink | Comments (0) | TrackBacks (0)

As much as one doesn't want to pick on the citizens of the Gulf Coast region, one might think that taxpayers and residents of the area would agree that we don't want something like Katrina to ever happen again. Unfortunately, it looks like that is what federal taxpayers are in the midst of paying for -- rebuilding in flood-prone areas.

Unfortunately, Congress has proven once again to be an inadequate steward of our taxpayer dollars. So, instead of reforms or, better still, the elimination of the National Flood Insurance Program which ultimately creates these perverse incentives, we'll have aother Katrina-like storm in the future.

Posted by Paul Gessing at 06:37 PM | Permalink | Comments (0) | TrackBacks (0)

What a concept! Take a government monopoly -- in this case I'm talking about America's taxpayer-funded national passenger railroad known as Amtrak -- and allocate a portion of the money appropriated to you by Congress every year to fund a group to lobby for more funds for you. These practices are not entirely uncommon in the federal government, but at least there is usually a middleman, say the public employee unions, that does the lobbying. In this case there is no pretext, Amtrak simply gives the National Associtation of Railroad Passengers -- one of Amtrak's most dedicated backers -- money to lobby on its behalf, theoretically as a citizen-backed organization.

Posted by Paul Gessing at 08:31 AM | Permalink | Comments (0) | TrackBacks (0)

If you are in need a thin smear of rhetorical mush today, then look here.

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

I really dislike using the word "idiot." This is supposed to be a civil forum. But what better description is there? First it was the bridge to nowhere; and now this. For you wishful thinkers: does this do anything to alter your trust in government? Just curious.

Posted by Harry Messenheimer at 10:54 AM | Permalink | Comments (0) | TrackBacks (0)

I am no fan of Newsweek. It frequently gets a lot wrong; but to the extent that this story about our president is accurate, it is quite distressing. Bruce Barlett weighs in here.

Posted by Harry Messenheimer at 09:17 AM | Permalink | Comments (0) | TrackBacks (0)

Does this sound familiar?

Posted by Harry Messenheimer at 06:32 PM | Permalink | Comments (0) | TrackBacks (0)

Yep.

Jane Galt writes:

As you may or may not know, the states set the level of Medicaid spending, but the Feds match the states dollar for dollar. New York State decided that a good way to soak up extra Federal money was to require the local governments to match the state, dollar for dollar. Since the Feds match all state and local spending, this had the effect of doubling Medicare spending in the state of New York...

Posted by Matthew D. Mitchell at 06:30 PM | Permalink | Comments (0) | TrackBacks (0)

A federal judge has ruled that a sex-discrimination suit against Wal-Mart Stores can proceed as a class action, which could lead to a huge loss for the megastore. Up to 1.6 million women could join the class action, and at a few thousand apiece it could cost Wal-Mart billions.

Baltimore trial lawyer Peter Angelos made enough from his asbestos lawsuit work to buy the Orioles. Lawyers’ fees in this case could buy the entire American League.

This is not the first big case involving women’s wages. Coke, Home Depot, and Texaco have paid more than $100 million each in such lawsuits.

Now I don’t want to quarrel with any of these decisions. Who knows what went on? How could American courts be wrong? But I call your attention to a larger version of this alleged discrimination, the oft heard claim that women earn, on average, 70 percent of men’s salaries. NBC News this evening cited this figure as a virtual national scandal. Should an Equal Rights Amendment pass, you can bet that lawsuits would follow gigantic enough to make Senator John Edwards dance with anticipation

Any economist worth his or her salt will immediately wonder where this 70 percent number came from and how it would be changed if it accounted for differences in experience, education, difficulty of jobs, and the other factors that affect the demand for a person’s labor. This requires rigorous analysis, not just quoting some data.

But where do you find such analysis? Well, you go to one of my favorite websites, www.iwf.org, the home page of the Independent Women’s Forum. This organization published a report called “Women’s Figures” that challenges the 70 percent shibboleth, and they keep up to date on other such issues, presenting a clear, market oriented analysis in a lively format. Yes, they are conservative women!

Maybe women economists should get a raise!

Posted by Kenneth M. Brown at 06:44 PM | Permalink | Comments (3) | TrackBacks (0)

There are many things to appreciate about America�s decentralized, federalist system. One is the fact that we can all learn from the mistakes of another state or local government without having to bear the bad consequences. Arizonans, Texans and Coloradoans, for example, have benefited from New Mexico�s experiment in socialism-lite. They have seen that New Mexico�s high tax rates and bloated government spending have made the state one of the poorest in the nation.

But even New Mexicans can learn from others. This county in North Carolina has recently decided to impose a hotel tax. Never mind the fact that the county has no hotels. They put the tax in place for �down the road,� according to Jeff Jennings, the Chairman of the County�s Board of Commissioners. How many hotel managers do you suppose will be eager to move into this county? I�d guess that the commissioners will have to look WAY down the road before they see any tax revenue from their new tax.

Posted by Matthew D. Mitchell at 09:34 PM | Permalink | Comments (0) | TrackBacks (0)