Errors of Enchantment

On this week’s podcast conversation, Paul and Wally start with a bunch of COVID information. First, they discuss a report from the CDC which says kids wearing masks doesn’t work. Former podcast guest David Clements has been fired from NMSU for being unwilling to get vaccine/wear mask in the classroom. MLG’s State Fair vaccine policies generate frustration and outrage.

In a small bit of good news, the livestock exhibits are relocating to Roswell. Finally, there was another round of protests on vaccine/mask mandates, this one focused on health care & public workers. Finally, one ABQ pastor “gets it” on masking/vaccines.

Wally and Paul discuss mask policies for school kids by state. 

NM has “more money than legislators know what to do with.”

The Rio Grande Foundation succeeded (barely) in advocating for the defeat of the 2019 “Democracy Dollars” system which left-wing advocates were touting as a hoped-for expansion of the City’s existing financing scheme.

Now, with just two months to go before the City election this fall, we have the spectacle of a Keller-appointed City Clerk Ethan Watson, who the Foundation JUST won a significant financial settlement against (for failure to disclose public record relating to Democracy Dollars), denying $650,000 to Keller’s main opponent this fall, Sheriff Manny Gonzalez.

In 2017 Keller notoriously violated the City’s campaign finance laws when he sought private AND public money for his campaign. Of course he was given a mere “slap on the wrist” post-election.

The system was always open to myriad problems (like having the clerk appointed by one mayor making financing decisions for his competition) and the use of third-party supporters to skirt the supposed effort to keep “big money” out of mayoral races, not to mention the “after the fact ‘enforcement'” of 2017.

If elected, candidates Gonzales or Aragon should work to abolish the current system. If Keller is elected he will gladly keep it intact as it has served him well.

With the recent report of unprecedented revenues flowing into the State of New Mexico (largely from oil and gas), New Mexico’s general fund budget will have increased from $5.7 billion in 2017 to $8.8 billion in FY 2023. That is an astonishing increase in excess of 54%.

The revenues come at a time when New Mexico’s economy as experienced by a majority of the State’s residents remains mired in a slump. The unemployment rate is 2nd-highest in the nation and the civilian labor force is struggling to recover even from earlier in the pandemic. But, oil and gas operate on different market forces such as newly discovered formations and prices that are driven by myriad government policies and international market forces.

So, despite higher taxes and more regulations imposed by Gov. Lujan Grisham and the Legislature, the Government of New Mexico is doing very well. Unfortunately, the State’s economic trajectory won’t change for the better until the electorate demands that oil and gas money which currently fuels bigger government (as seen in the bar chart below) is actually used to benefit New Mexico’s economy instead.

Surprising absolutely no one at the Rio Grande Foundation, the State of New Mexico’s revenues have risen to astronomical levels (an estimated $8.8 billion). According to Dan Boyd of the Albuquerque Journal, “Estimates released Friday by executive and legislative economists project New Mexico lawmakers will have nearly $1.4 billion in “new” money.”

The astounding influx of cash prompted LFC vice chairman Sen. George Muñoz, D-Gallup to say, “There’s going to be a lot more money than we know what to do with in the next few years.”

This is thanks to a few trends:

• The “Biden Bucks” stimulus which dumped billions of dollars into the State to address the COVID pandemic.
• Oil and gas: New Mexico is the only top-producing state to rebound to pre-pandemic oil production levels and reached a record high of 1.2 million barrels per day in April, according to state Taxation and Revenue Department data. As you’ve undoubtedly noticed at the pump, prices at the pump have also been higher than they were before Joe Biden took office in January. Even natural gas prices have rebounded a bit from their all-time lows of a few years back.

The critical question is whether the Legislature will actually do anything useful with the money. Democrats consistently trash oil and gas while the State grows ever more dependent on the Industry. Eliminating taxes on Social Security and corporations are two options, but reform of New Mexico’s onerous gross receipts has long been the priority of the Rio Grande Foundation and would provide better economic outcomes without a great deal of lost revenue.

ALL of these priorities would be welcomed, but the “progressive” Legislature has continued to raise taxes even in times of strong revenues.

According to a leaked memo from the House Natural Resources Committee – related to its portion of the $3.5 trillion “partisan” reconciliation package that Democrats in Washington are working on, a  carbon tax, also known as a  “Carbon Pollution Fee” is among the possible “revenue raisers” in the legislation.

A few months ago New Mexico State University professor David Clements sat down for a Tipping Point New Mexico episode. You can listen to that show here. The episode is more relevant than ever because Clements was recently fired from his job at NMSU for not wearing a mask while teaching. Clements had ALSO stated that he would not be getting vaccinated (all University employees are required to be vaccinated under the Gov.’s new policy).

No one knows how many other government employees in New Mexico are refusing the vaccine, but it COULD create serious issues for the State’s health care system.

You can watch Clements explain his position in the video below.

And, while Gov. Lujan Grisham has mandated that children in ALL schools including private ones wear mask in school, the evidence for this policy is skimpy at best. The CDC studied numerous issues involving the spread of COVID 19 in school. According to the article/study, “requiring student masking was found to not have a statistically significant benefit. In other words, these measures could not be said to be effective.”

“(Numerous) countries, along with the World Health Organization, whose child-masking guidance differs substantially from the CDC’s recommendations, have explicitly recognized that the decision to mask students carries with it potential academic and social harms for children and may lack a clear benefit.”

“Scientists (the author) spoke with believe that the decision not to include the null effects of a student masking requirement (and distancing, hybrid models, etc.) in the summary amounted to “file drawering” these findings, a term researchers use for the practice of burying studies that don’t produce statistically significant results.”

In other words, the CDC didn’t like the results and essentially covered them up.

On this week’s podcast interview Paul sits down with Thaddeus Preston. Preston is one of the hosts of the New Mexico Rising podcast. The podcast attempts to “give New Mexicans a better understanding of their political and cultural landscape, through in-depth engagement with political figures, business owners, and anyone else who is actively engaged in the effort to see our state reach it’s full potential.”

In early July the Biden Administration issued a broad Executive Order on “Promoting Competition in the American Economy.” While there are many things to like in the Order including allowing hearing aids to be sold “over the counter” and “limiting unnecessary, cumbersome occupational licensing requirements that impede economic mobility,” there is one area of the order that should be of special concern for supporters of free markets. Specifically, that involves what amounts to partial re-regulation of  railroads.

In the Order, the Administration encouraged the Surface Transportation Board (STB) — the federal agency that oversees economic regulations for private freight railroads like Norfolk Southern and Union Pacific — to consider imposing “forced access” more regularly. This means that privately owned and maintained railroads could be forced to turn over traffic to competing railroads at potentially below-market rates – a clear violation of private property rights and free market enterprise as we know it. It is like net neutrality but for railroads.

Such a system would cause harm to most shippers and the broader economy, which railroads play a critical yet silent role in.

How would it work?
Forced access would allow companies to petition the government to force a railroad to use its infrastructure and equipment on behalf of its competitor. Railroad 2 gets access to Railroad 1’s lines because the government forces Railroad 1 to provide that access across its network. It is like the government forcing Coca-Cola to allow Pepsi to produce and bottle soda at its facility. 

Switching already happens.
Any shipper who believes a carrier is abusing its market power by engaging in anti-competitive conduct can already file a case with the federal government, and if true, they can order the switch. Proponents want to remove the need to show anticompetitive conduct.

New regulation ignores reality.
Railroads compete with trucks, barges, and other market forces. Estimates show that 80% of rail traffic is subject to competition and thus exempt from rate regulation. There is no market failure.

American businesses, consumers and taxpayers would suffer.
Widespread forced switching would force inefficiencies. Customers dissatisfied with rail service would likely move goods to strained highways. Diversion of traffic from rail to trucks, which are subsidized, create congestion and would further damage the nation’s highway system.

Railroads, like pipelines or broadband companies, cover the costs required to maintain and update their privately owned infrastructure. Investment hinges on a broad base of business and sufficient revenue. By driving railroad rates for certain customers to below-market levels at the expense of other customers through forced access, the government would ultimately hinder U.S. commerce and increase the costs of consumer goods.

You can send a note to Congress asking them to rein in the Biden Administration’s proposed policy as implemented through the Surface Transportation Board here.

Today, August 25, 2021, hundreds of protesters showed up to protest against Gov. Lujan Grisham’s vaccine and mask mandates in downtown Albuquerque. Numerous photos are below including public employees and medical professions throughout the crowd (both groups are being told to get the vaccine, or else). RGF’s president took these photos and his own protest sign reflects his opposition to ineffective mask mandates for children in school (as noted by the CDC itself).

Last week was one of the worst in ABQ in Paul’s memory. He shares a bit of his experience due to the shootings/lockdowns in NE Heights.

MLG has imposed a mask mandate and is demanding state fair attendees be vaccinated. Most New Mexico kids are back to school. While it is more “normal” than last year, there are many challenges facing New Mexicans and the education system. Paul wrote about this recently in the Las Cruces Sun News. On his way out the door, NM’s (former) PED secretary says he pushed hard for allowing outdoor learning options for New Mexico students (to no avail).

Pfizer vaccine has been approved for adults 16 and up. 

The White Sands Balloon Festival has been cancelled for another year. Is this COVID or a federal lands dispute?

According to National Bureau of Economic Research study covered by Yale News on recent research: Using a quantitative model to examine the consequences of extended school closures for high school students, the researchers determined that children living in the poorest 20% of U.S. neighborhoods will experience the most negative and long-lasting effects of school closures. For example, their model predicts that one year of school closures will cost ninth graders in the poorest communities a 25% decrease in their post-educational earning potential, even if it is followed by three years of normal schooling. By contrast, their model shows no substantial losses for students from the richest 20% of neighborhoods.

New Mexico’s unemployment rate is now 7.6%, tied with New York and California for 2nd-worst in the nation.  The Biden Administration says states can use surplus stimulus money to extend unemployment benefits beyond September 6. Will MLG?

What about a “Guaranteed basic income” for New Mexicans?