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.
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.
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.
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.
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.
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.
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.
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.
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.
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.