Basic Economics, Basic Morality

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.

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Pre-K in the Womb?

A recent Albuquerque Journal story discusses a study by the national Foundation for Child Development in which full-day pre-kindergarten is recommended for all 3 and 4 year olds. New Mexico’s new and controversial half-day pre-K program was deemed “inadequate” by the Foundation.
I’m not sure if this foundation is funded by the teacher unions or not, but I can’t think of a more effective way to create jobs for public school teachers than allowing the state to get its hands on your kids even earlier. Of course, other studies have found that starting kids even earlier in school to be costly and ineffective boondoggles.

Clearly, the so-called experts are moving quickly towards mandatory in-the-womb schooling at some point. This will clearly create a conundrum for the National Education Association which is adamantly pro-choice.

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‘Private’ Space Development

While New Mexico’s state government gears up to build a spaceport, Space.com reports on a similar endeavor underway next door in Texas.
Both projects were initiated by brazen billionaires, Virgin’s Sir Richard Branson seeking to launch his Virgin Galactic in Southern NM, and Amazon.com’s Jeff Bezos and his Blue Origin setting up in West Texas. Both are supposedly private endeavors, with private companies and investors seeking to make a profit through space development.
The difference? Blue Origin is building its launch site with private funds, on private land, while billionaire Sir Richard Branson is taking advantage of the relatively poor New Mexico taxpayer, conning Bill Richardson and the New Mexico Legislature out of $100 million in public funds, plus a sizeable chunk of public land.
We’re told that a billionaire needs our hard-eared tax dollars for “economic development,” while at the same time we’re asked to forget about the negative impact on economic growth of high taxes and reckless spending by the state government. Given the Texas economy outperforms NM in almost every measure, it’s clear which approach works better.
Low taxes and limited government lead to real economic development, not welfare for billionaires.

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Honor your Country – remember your right to property.

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.

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RGF’s Spend-o-Meter in the News

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.

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Independence Day 2006

We are so fortunate to be blessed by such a heritage: “And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.”

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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.

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