Over the weekend, the Journal’s front page carried an interesting article on the difficulties facing young people in finding gainful employment.

It is no surprise that unemployment rates for young people are higher than for the general population. These are, after all, unskilled workers with short employment histories and lower education levels as a group. But, the sad thing is that minimum wages force employers to either overpay young people or not hire them at all. In a weak economy, they tend to not hire at all.

Economist Walter Williams, a national treasure in my opinion, was on John Stossel’s show last week. He explains in the following interview why things like minimum wages and licensing laws actually hurt minorities and young people by forcing them out of certain jobs:

Rio Grande Foundation board member Vic Bruno had an opinion piece in the Albuquerque Journal over the weekend that outlined and explained several of the reforms included in our new policy paper on economic development.

Recently, Gov. Martinez and the State Investment Council have won plaudits for changes they have made to the state’s film loan program. We too are encouraged by these needed reforms.

But, as Joe Henchman of the Tax Foundation writes in a new paper, New Mexico is just one of many states that have cut back dramatically — or eliminated entirely — subsidies for filmmakers. That $50 million could instead be applied to lower the corporate or personal tax rates for all New Mexicans, thus spurring sustainable economic development.

The Environmental Improvement Board has voted to adopt the less-stringent, less-costly haze restrictions on the Four Corners power plant. We applaud this move and hope the EPA is willing to accept the state-level regulations.

Nonetheless, during the public testimony period on the issue, I made sure to add the Rio Grande Foundation’s voice in support of the more reasonable haze reduction measures.

(Albuquerque) Expensive studies are in the works and much discussion is taking place on the best ways to develop New Mexico’s economy. This is great news to advocates of the free market. For too long, economic development in New Mexico meant waiting for the federal government or the Labs to bring more jobs and money to the area.

Of course, some politicians and economic development “experts” are hoping to promote their own visions of targeted economic incentives, tax giveaways, training programs, and other methods of bringing jobs to New Mexico. At best, these methods are unproven in terms of generating net, long-term growth. Rather, the new plant or business may be “seen,” but the businesses and investments that would have happened absent those taxes is the unseen and untold story.

In an effort to steer the debate towards proven, pro-free-market policies, the Rio Grande Foundation has released its own study, “A Roadmap for a More Economically-Competitive New Mexico” that bases its findings on “tried and true” principles of taxation, spending, and regulation as a path forward for New Mexico’s economy. The study is available at the Foundation’s website.

Said Gessing, “Politicians and economic development ‘experts’ love targeted incentives because they give them power and a political constituency and financial support. But, true economic development comes from unleashing the inherent productivity of a given population, not from top-down decisions and resource-shifting.”

Gessing noted that “Reforms like ‘Right to Work’ laws have been shown to increase economic growth rates by 11.5% where they have been enacted. Elimination of state taxes on personal income have also proven effective with no-income tax states having created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts between 1998 and 2007.”

“Other reforms,” Gessing noted, “including reduced regulatory burdens, better, more cost-effective educational systems, and reducing the size of New Mexico’s government work force, are designed to increase the effectiveness of government spending and/or re-direct resources from government to the private sector. These initiatives and ones like them have a high likelihood of driving economic growth and creating jobs.”

Gessing concluded that, “While the reforms contained in this paper WILL spur economic growth, they are also politically-challenging. New Mexicans and their political leaders must choose between political expediency and proven success.”

Channel 13 did a second story over the Memorial Day weekend discussing our efforts to increase transparency in Bernalillo County Government. And, while such efforts have caused consternation among some County employees, there were clearly disparities in pay that merited discussion.

This is a great video showing many of the craziest aspects of our allegedly “free market” health care system.

With a barrel of oil still hovering around $100 a barrel, people are wondering why prices are so high. While violence and instability in the Middle East is one reason, the ongoing weakening of the US Dollar is another. According to Congress’ Joint Economic Committee, the weakening of the dollar since 2008 has added 56.5 cents to the price of gasoline.

Of course, Obama’s Energy Secretary is a big fan of higher gas prices and wants to see “European price levels” here in the US.

I actually sat down with Christian TV station KNAT to discuss the issue of high gas prices and what, if anything, government should do about it. Shows will air at the following times:

Tuesday, May 31st at 1:30am
Thursday, June 2nd at 1:30am
Friday, June 3rd at 11am
Saturday, June 4th at 1:30am

and the station is carried on the following dial numbers:

Cable
COMCAST – ALBUQUERQUE, NM channel 23

National Providers
DIRECTV channel 372
DISH NETWORK channel 260
GLORYSTAR channel 2
SKY ANGEL channel 127

Broadcast
KNAT channel 23

Happy Memorial Day. If you want to do some reading on the Holiday, I recommend the book “Unbroken.” It is an amazing story and gives one an appreciation for what some people went through during WWII.

In case you missed, it, we released Bernalillo County worker salary data on our website this week. That generated a brief story on Channel 13:

I also recently taped what I am told will be a more involved story on the topic this Sunday, so keep your eyes peeled and follow us on Twitter @pgessing if you want to find out more up to date information on this and other RGF activities.

According to the Council on State Taxation and our good friends at Ernst & Young, New Mexico has the highest taxes in the nation on new investments made in that particular state. A link to the release can be found here and the full report can be downloaded in a pdf document here.

As the authors write in their introduction to the study:

This study provides a state-by-state comparison of the tax liabilities that new investments in selected industries or types of economic activities would incur in each state, taking into consideration state and local statutory tax provisions and the financial and economic characteristics of the new investments. The analysis focuses on capital investments in industries that have location choices, such as factories or headquarters, rather than those that are tied to a specific geography, such as retailers or hotels. The estimated tax burdens on selected investments are combined to provide an overall measure of the business tax competitiveness of each state.

In other words, the study explores how much it costs (in terms of taxes) to locate a business in New Mexico. Unfortunately, it looks like the answer is “too much” or “even more than it does in Washington, DC which is not a good thing.

It would seem that our gross receipts tax is a major factor along with our corporate tax rate.

We’ve been saying for years that New Mexico’s film incentive and loan programs were a boondoggle for taxpayers. Recently, Channel 13’s Larry Barker came to the same conclusion and filed this excellent report on the matter:

State film loans, a flop for taxpayers: krqe.com

Thankfully, Gov. Martinez has a far more reasonable view of the film program than did Gov. Richardson, but with boondoggles like this one, can we really trust politicians to pick and choose which industries are used to develop New Mexico’s economy?

New Mexico’s Environmental Improvement Board is at the center of the public policy debate once again. This time, it is hearing comments on a state implementation plan, known as a SIP, to address regional haze. A key part of this plan would require the installation of new technology at the San Juan Generating Station in the Four Corners area, but minimizes the cost to New Mexico electricity customers. As I wrote in a previous blog posting, the plan now before the EIB is far better than a second plan being pushed by the EPA and radical environmentalists.

The meetings take place next week:
June 1, 2011
9:00 a.m. (with public comment portion expected to start at 1 p.m.)
Room 307, NM State Capitol Building
490 Old Santa Fe Trail
Santa Fe, NM 87501
AND
June 2-4 (as necessary)
9:00 a.m.
Room 7103 (Little Theater), San Juan College
4601 College Blvd
Farmington, New Mexico 87402

Some basic information that might be considered for use in comments follows:

• The Environmental Improvement Board should adopt the draft State Implementation Plan as proposed by the New Mexico Environment Department.

• The draft state plan strikes the appropriate balance between minimizing cost impacts and protecting the environment.

• The state plan will lower NOx emissions by 4,900 tons per year at San Juan Generating Station. This, combined with recent environmental upgrades at San Juan, will result in an overall emissions reduction in NOx of 54% since 2005.

• The draft implementation plan proposed by the New Mexico Environment Department is the best option for PNM customers, especially those of us representing the business customer community. New Mexico businesses have been hit hard by the economic downturn and though many factors are impacting energy costs, this is one cost that impacts the cost of electricity that can be minimized with your adoption of this proposal.

• As you know, costs incurred at power plants are part of electric rates to customers. The environmental control technology, SNCR, called for in the proposal can be installed at San Juan for one-tenth the cost that would be incurred if U.S. EPA’s proposed plan for SCR is put into effect.

• In addition, the San Juan Generating Station and the San Juan Coal Mine that supplies fuel to the generating station are major employers in the Four Corners region and contribute to the economic health of the region and the state.

• SJGS employs 394 full-time workers, 20 percent of whom are Native American

• The San Juan mine employs 526 people, of whom 46% percent are Native American

• The plant pays millions of dollars a year in government taxes, including $54.8 M in coal royalties and taxes paid to governments and tribes and $6.4 M paid to in property tax to San Juan County.

• San Juan also purchases about $30 M in materials and supplies each year and hold approximately $122 M in contracts for outside services. The plant pays $280 M each year for coal and ash removal.

• Thank you for your consideration and I urge you to adopt the proposal recommended by the New Mexico Environment Department.

I recently sat down with Jeremy Jojola, the investigative reporter at Channel 4, KOB, to discuss some expenditures made by state workers on out of state travel. While legal, the purchases certainly seemed unnecessary at times. Check out the full report here:

So much of what policymakers and economic development experts get caught up in involves short-term economic gains. But what about the long-term? Well, in terms of the US economy, 50 years is a pretty long time, so this new report on personal income growth over the past 50 years is of interest.

First off, New Mexico fares pretty well in the report with a ranking of 18. But, what caught my eye is the success of states without personal income taxes and that do have “Right to Work” laws in place.

It is noteworthy that three of the top states in terms of economic growth: Nevada, Florida, and Texas, lack personal income taxes. Also, of the top 11 states in income growth over the past 50 years, nine (all but Alaska and Colorado) are among the 22 right to work states.

Obviously, 50 years is a long time and other economic forces are at work, but it would seem that economic policies like lack of a personal income tax and right to work laws have significant economic impacts.

Sometimes news stories slip through the cracks. Imagine my surprise when I ran across this story which detailed a study from Yale that looked at New Mexico teachers, collective bargaining, and the student achievement gap.

As the study points out, New Mexico has been on both sides of the collective bargaining issue as it comes to teachers with Gary Johnson having gotten rid of it for part of his term. Well, as it turns out, the researchers found that collective bargaining led to “an increase in students’ SAT scores and a decrease in high school graduation rates.”

Collective bargaining causes the best teachers to push to get into the best (easiest to teach at) schools, thus increasing the advantage among students attending those schools. We at the Rio Grande Foundation have our own ideas about reducing the achievement gap (including opening the teaching field up to new people through alternative certification and merit pay), but it is nonetheless interesting to see how teachers respond to the “incentives” of collective bargaining.

Taking up where the Bernalillo County Commission left off with its recent transparency website initiative, the Rio Grande Foundation has made Bernalillo County payroll information available online (click here).

To publicize this information, the Foundation has called a press conference at Civic Plaza at which Rio Grande Foundation president Paul Gessing will speak along with Commissioner Wayne Johnson, a transparency leader in Bernalillo County government, and Sarah Welsh of the Foundation for Open Government. The press conference will take place at 10am on Wednesday, May 25th.

Said Rio Grande Foundation President Paul Gessing of his organization’s role in releasing the data, “Taxpayers are the ultimate ‘bosses’ of government workers and should have access to this data. We applaud the Bernalillo County Commission for recently taking steps to place a variety of important information about how Bernalillo County is spending taxpayers’ money online, the Commission refused to make payroll information available on the site.”

Under New Mexico law, employee salary data is already public information, available on request from the County or other local government. The Rio Grande Foundation has previously requested such information from school districts around the state and made the information readily-available to the public at: www.newmexicospending.com.

Responding to the most likely critique of having this information online, Gessing said, “Having salary information online is not a privacy threat. After more than two years of having such information available for school districts statewide, we have not heard any specific complaints.”

“We at the Rio Grande Foundation believe strongly that transparency and openness are keys to achieving a more limited, fiscally-responsible government. Understanding who is hired to do what and how much they are being paid is information that must be available and accessible to the public” said Gessing.

Conservatives have been claiming for years that Obama’s stimulus was an abject failure while liberals and the Obama Administration have claimed that the stimulus either worked well or (as Paul Krugman believes) needed to be even bigger. New economic research indicates that conservatives were right.

According to this article, which is based on this study, the “stimulus resulted in a net loss of 595,000 jobs from April 2009 to September 2010.” The study’s findings go on to state:

the stimulus created or saved 443,000 government jobs and 92,000 non-HELP [that’s Health and education, leisure, and business and professional (HELP)] service jobs. But it destroyed or forestalled 772,000 HELP jobs and 362,000 goods-producing positions. That’s a net loss of 1.042 million private jobs.

It is impossible to “prove” anything beyond a reasonable doubt in economics and other studies claim better results, but the idea that we needed bank bailouts and stimuli lest America’s economy crater into a second “Great Depression” is just silly.

The video below illustrates how an innovative charter school — Carpe Diem Charter School — allows children to learn at their own pace while achieving results that blow “traditional” government-run schools out of the water in terms of results. In a free market educational system, this kind of innovation would be much more common, but the freedom given to charter schools has spurred some exciting innovations. Check out the compelling video below:

Carpe Diem Marketing Video – Final Cut from Nicholas Tucker on Vimeo.

Can we bring a similar model to New Mexico?

There are so many problems facing America these days. Congress frustrates just about everyone on all sides of the policy debate. Of course, this is not what the Founding Fathers envisioned. Power should not be centralized in Washington and, as we’ve seen over the last 70 years, it isn’t working.

As I wrote in this recent article, much of what Washington currently does, should be handed over to the states, thus restoring Constitutional federalism.

Politics get pretty funny sometimes. I just blogged a few days ago in response to a Republican who advocates the use of government incentives and breaks as a tool for development. Then, Javier Gonzales, the seemingly clueless Chairman of the Democratic Party of New Mexico, writes this column in which he advocates for those very same incentives as the Republican author would likely advocate.

More amazing still is the fact that his party’s previous Governor built his economic development legacy on, what else but tax cuts! Read articles here, here, and here (none of which are mine) praising the legacy of Richardson’s tax cuts here in New Mexico.

Is the left hand (of the Democratic Party) unaware of what the right hand is/was doing or his he just desperate to score political points against Gov. Martinez? How many Democrats would have gone along with proven economic growth tools like eliminating the personal income tax or enacting Right to Work legislation? My answer is zero, but I’d LOVE to see one step up on those issues.

Lastly, Gonzalez is just flat out wrong when he takes Martinez to task on the unemployment rate in New Mexico. He claims that “unemployment is stuck in the 9 percent range.” I like using round numbers as much as the next person, but New Mexico’s unemployment rate recently dropped from 8.7 to 8.1 percent. That’s closer to 8 percent for you math majors out there. Also, New Mexico’s rate, while not spectacular, is well below the federal rate.

New Mexico needs to do better to generate economic growth (which will result in the employment of more workers), but Martinez is not a dictator. Democrats have to step up and support job creation efforts that work.

In keeping with her promise to spur economic growth, Gov. Martinez has asked New Mexico’s Construction Industries Division (CID) to eliminate costly regulations that will raise building prices by 10%. Unless the code is changed back to its previous level this regulation will adversely affect your business; your ability to hire and to keep your employees; your ability to develop new properties, or to attract new companies to the state.

Why? The current enhanced NM statewide code is over 10% higher in energy conservation mandates than the 2009 International base code. It will make New Mexico one of the most expensive places in the country to build new or remodel existing commercial buildings. Not one of our surrounding states has a code as expensive to implement as the enhanced statewide code. In fact only Utah has passed the base 2009 International Code, which does not contain the added energy conservation mandates that are in the NM code.

You can help:
1. Please send letters/faxes to CID (Construction Industries Division). See attached letter as a sample. (see contact info below).
2. Plan to be at the Public Hearing on June 2nd to voice your concerns directly to the CID.
3. Sign the Petition in Support of Rolling Back the Codes here
4. Then circulate to your co-workers and business contacts.

Contact for CID: Send your written comments to the Construction Industries Division, 2550 Cerrillos Road, P.O. Box 25101, Santa Fe, New Mexico 87504, Attention: Public Comments. FAX (505) 476-4685. All comments must be received no later than 5:00 p.m., on June 2, 2011.

(Almost) nothing bothers me more than hearing multi-billionaires like Bill Gates — who made their money honestly in a relatively free marketplace — saying that they are going to “start giving back” to the community or their nation. As if we gave them all that money for no good reason.

The fact is that Gates became a billionaire because he made some really unique and useful products and sold them to millions and even billions of people worldwide. Profits ARE a social good. Check out this video from the Atlas Foundation which further argues (and explains) the point.

President Obama and many in Congress are going after tax breaks given to the oil industry. The issue is controversial even among free marketers. Folks at the Cato Institute are generally supportive of Obama’s efforts while my old friends at the National Taxpayers Union oppose Obama’s plans. I generally side with NTU on this one, but I’m wondering, if subsidies are bad, why aren’t President Obama and the Democrats taking on the $60 billion in ethanol subsidies which dwarf the $21 billion in breaks given to oil and gas?

As a believer in the free market, I support getting rid of ALL energy subsidies or special exemptions. But, as the Wall Street Journal points out:

solar energy is subsidized to the tune of $24.34 per megawatt hour, wind $23.37 and “clean coal” $29.81. By contrast, normal coal receives 44 cents, natural gas a mere quarter, hydroelectric about 67 cents and nuclear power $1.59.

Obviously, it is the politically-correct so-called “renewables” that receive a bulk of the subsidies, but, if people want to pay more for politically-correct power — as PNM customers will be soon — they should be able to.