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?
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.
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.
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!
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.
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.
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.
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.
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.
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.