Author: gnell

While Richardson bashes Wal-Mart for offering “substandard” wages and health care benefits, millions have been lifted out of poverty by Wal-Mart, in China, other developing nations, even in the US. Why would Richardson want to prevent New Mexicans from obtaining this kind of benefit? Would we not see similar effects on standard of living here in New Mexico, with low prices stretching the dollar further and decent wages for those who choose to work at a local branch?

Anyone who reads this blog regularly won’t be surprised to find out that once again, it is government meddling that has created what many see as a problem. However, this one, like the price of oil, is being blamed on companies and few are discussing the real issue.
Tech Central Station has the first article I have come across that actually explains why corporate compensation is so high to begin with. Big corporations are using the heavy hand of government to prevent take-overs. And use of this government intervention (something we could make illegal and let the free market respond to prices as we used to) is what allows compensation to increase seemingly without limit.
“As a result of the takeover boom of the early 1980s the managements of some of the larger corporations started to look for permission, from both courts and politicians, to protect themselves with poison pill defenses in order to thwart takeover bids. These take a number of forms but the essential outcome is much the same: it makes the hostile takeover of a company by a corporate raider more expensive.”
How does preventing takeover allow CEO compensation to skyrocket?
“…back in the 1950s and 60s, when there was a fairly unregulated market for corporate control, managers could not pay themselves huge sums in this manner because someone could and would come along and buy the company and throw the bums out. Now that those poison pills form the corporate defenses they can’t, or at least only at vastly greater cost.”
So, if another corporation can’t come along and buy the company and toss out those who are leeching profits, companies – stockholders and workers – are left with little choice but to pay whatever the market rate is, and the market rate is as high as it is because nobody can buy these companies up and throw out the expensive and wasteful CEOs.
Once again, market rigidity is the cause of the non-competitive pricing.

Economic growth depends on division of labor. Division of labor depends on freedom of trade. Freedom of trade depends on, in the words of Adam Smith, “the obvious and simple system of natural liberty.”
So writes P.J. O’Rourke in a column for the Weekly Standard about Adam Smith’s lesser known book, The Theory of Moral Sentiments. If the economic system in America depends on liberty, should we not imagine that it is moral? But we don’t. And very few even understand why it works.
How could tax cuts actually lead to higher tax revenues? Taxes discourage productive work and move investment from the private to the public sector – reducing taxes leads to higher private sector growth, higher wages and higher profits – which, taxed at the lower rate, still bring in more tax revenue. It is so simple, but it means thinking about the economy over time, as a dynamic system, not as a static state. This is something that many economists forgot after Smith.
So, as some politicians preach morality in anti-market economics, saying that “we need to do right by hard-working Americans and raise the minimum wage,” rational thinking men should re-open their Adam Smith texts and remember the morality of markets. As other states push through higher minimum wages, New Mexico should steadfastly refuse to make the same mistake. The simplistic thinking of minimum wage advocates reveals itself in absurd hypocrisies – such as advocates of minimum wage hikes asking to be exempt because it would cause the same layoffs that they claim the minimum wage doesn’t cause!
Instead, New Mexico should lower taxes, encourage business and wage growth, and take pride in our moral and free market system.

This Fourth of July, let us respect all of the rights enshrined by the founding fathers. Just as important – but often respected much less – as the right of freedom of speech, freedom of worship, and suffrage, is the right of property.
In fact, it is an even more basic right than many that we hold to higher esteem. The fundamental, inalienable rights of man are: life, liberty and property.
This Fourth of July when we remember our country and our freedom and our constitutionally protected rights, let us reflect on why this right of property is so important. In the words of our founding fathers:
“Government is instituted to protect property of every sort; as well that which lies in the various rights of individuals, as that which the term particularly expresses. This being the end of government, that alone is a just government, which impartially secures to every man, whatever is his own.” – James Madison
“To take from one because it is thought that his own industry and that of his father’s has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association–‘the guarantee to every one of a free exercise of his industry and the fruits acquired by it.'” –Thomas Jefferson
Let us also remember that this recognition – that only the protection of property rights can allow for the protection of freedom – was confirmed by the end of slavery in our country and by the new enslavement of the people in countries which abolished property rights.
As declared by the Great Emancipator himself:
“One of the reasons why I am opposed to Slavery is just here. What is the true condition of the laborer? I take it that it is best for all to leave each man free to acquire property as fast as he can. Some will get wealthy. I don’t believe in a law to prevent a man from getting rich; it would do more harm than good. So while we do not propose any war upon capital, we do wish to allow the humblest man an equal chance to get rich with everybody else.
When one starts poor, as most do in the race of life, free society is such that he knows he can better his condition; he knows that there is no fixed condition of labor, for his whole life. I am not ashamed to confess that twenty five years ago I was a hired laborer, mauling rails, at work on a flat-boat—just what might happen to any poor man’s son! I want every man to have the chance—and I believe a black man is entitled to it—in which he can better his condition—when he may look forward and hope to be a hired laborer this year and the next, work for himself afterward, and finally to hire men to work for him! That is the true system….” – Abraham Lincoln, 1860
Let us remember who we are not. We are not a collectivist society – where property is not a right but a crime and where poverty replaces prosperity and bondage replaces freedom. As the Virginia Institute explains here, it is this loss of private property which destroys the free society.
So, this Fourth of July, let’s rejoice in our right to property and our freedom. And let us not forget to protect them when they come under attack.

New Mexico gets $2 back for every $1 in federal taxes paid, according to the Tax Foundation. It’s not because the state demands more from the federal government that other states like New Jersey which receives about 55 cents back for every $1, it is because of the progressive income tax. New Mexicans are poor and the federal tax structure provides the Earned Income Tax Credit and other negative income taxes to help the poor.
New Mexico, as of 2002-2004, had a rate of poverty as defined by the US Census of about 17%, among the highest in the country.
But is the progressive income tax the best way to help out poor New Mexicans? According to a new study reported by the Heritage Foundation the cost to the private sector of providing the government an additional $1 in tax revenue is about $2.50 not $1 as many people assume. So, the redistribution of tax money from the rich – who may live outside New Mexico or within – to the poor, costs jobs, growth, wages, opportunity and innovation of 2.5x the amount actually taxed and redistributed.
Although the progressive tax structure is supposed to help the poor, a low flat tax and smaller government would mean much greater economic growth, the only proven way to lift the poor out of poverty. Aid to developing countries has done little to nothing to alleviate poverty, while policies of growth have lifted millions each year out of poverty – why not help the remaining impoverished within the US in the same way?