Errors of Enchantment

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Another economic ranking study: Top States for Business

06.30.2011

I’ve written a few times recently about New Mexico’s poor scores in several rankings on economic freedom. Go here and here. Well, CNBC has its own rankings of business friendliness and the results are not much better for the Land of Enchantment.

Overall, New Mexico ranks 43rd which is consistent with the other rankings. New Mexico performs best (24th) on Quality of Life on the CNBC report and performs worst (46th) on Business Friendliness. Not surprisingly, Texas performs highly, ranking second to Virginia on the CNBC ranking).

New Mexico has a lot of work to do to become an attractive place to do business.

Essay Contest: Why is school choice important?

06.29.2011

Americans For Prosperity is a proud sponsor of supporting Dr. Friedman’s Legacy and welcome the opportunity to invite New Mexico’s fourth and fifth graders to submit a 600 word essay on Why School Choice is Important. Winners of the essay contest will receive their choice of $100 cash, a $100 U.S. Savings Bond or a $100 gift certificate.

Americans for Prosperity will announce the winner of the New Mexico contest on Friday, July 29, 2011, just two days before what would be Dr. Friedman’s 99th birthday. The Rio Grande Foundation is hosting its own education-related event in honor of Milton Friedman’s birthday.

If you know a fourth or fifth grader who would like to participate in the essay contest, please have them submit a 600 word essay on Why School Choice is Important to debbiehealy58@aol.com by July 20, 2011. Please make sure they include their name and full address on the submission.

Is US Manufacturing Dead?

06.29.2011

Recently, Stephan Helgesen has written a great deal about the death of American manufacturing over at NMPolitics.net here and here. As I point out in this rebuttal, the reality is that, while manufacturing has changed and it employs fewer workers than it once did, it is extremely efficient and produces a great deal of value.

American manufacturing is hardly dead, but, like the rest of the economy, it would benefit from a boost of certainty and market-based policies.

Truth in Accounting report shows real burden of government pensions and retirement healthcare obligations

06.28.2011

Technically-speaking, New Mexico politicians have to balance the state’s budget every year. In reality, government employee pensions and health care benefits create burdens on taxpayers that are not accounted for in the annual budget process. But those bills WILL come due.

According to the Institute for Truth in Accounting’s new report on the True Financial Condition of the States, New Mexicans will need to cough up $9,000 per taxpayer in order to pay the bills for these future obligations.

The worst state is Connecticut which would require taxpayer payments in excess of $41,000 while a few western states like Utah and Wyoming are actually in the black according to the report. Said Sheila Weinberg, Founder and CEO of the Institute, “If governors and legislatures had truly balanced each state’s budget, no taxpayer’s financial burden would exist.” She continued, “A state budget is not balanced if past costs, including those for employees’ retirement benefits, are pushed into the future.”

Atlas Shrugged Lives on in Google Antitrust Case

06.28.2011

If there ever was a real-world equivalent of Reardan Metal, it might just be Google. I’ve been using the site since college (the late 1990s) when I realized that it was the one search engine that constantly found what I was looking for in what was then the untamed wilds of the Internet.

Evidently, Google, like Microsoft more than a decade ago, has grown too successful for the bureaucrats in the Federal Government to tolerate. So, they have filed an antitrust case against the fabulously-successful internet search company.

The fact is that the antitrust case is silly. Google has a large market share because it is an amazing product. There is no monopoly. I could start my own search engine website if I wanted to, but it wouldn’t be as good as the ubiquitous Google. Simply put, the government should butt out and let Google continue to create jobs and innovative products. Putting the shackles on innovators will only hasten the day when Atlas Shrugged becomes reality.

New Mexico: Rich State or Poor State?

06.27.2011

The American Legislative Exchange Council, a national group of conservative and market-oriented legislators, has released a new report called “Rich States, Poor States,” which studies and ranks the 50 states based on various measures of economic freedom that the authors believe — and evidence shows — generate economic growth. Those authors, by the way include Arthur Laffer, former Reagan Administration economist, and Stephen Moore who resides on the editorial board of the Wall Street Journal, along with Jonathan Williams of ALEC.

Not surprisingly, New Mexico does not perform especially well with a “ALEC-Laffer State Economic Outlook Ranking” of 39th. Also contained in the paper are — and more important for policymakers, are the “10 Golden Rules of Effective Taxation.” This document is a must-read for policymakers along with our own “Economic Roadmap for New Mexico.”

The Rio Grande Foundation will be hosting Jonathan Williams of ALEC, one of the study’s authors, at an event this fall.

Rep. Heinrich embracing tax cuts?

06.24.2011

In what many have called a surprising move, Rep. Martin Heinrich (a candidate for the US Senate) has come out in favor of dramatic reductions in the US Corporate income tax rate. Heinrich has not exactly compiled a record of fiscal restraint in Congress, so this is definitely a shift.

Well, let’s give Heinrich the benefit of the doubt here. First and foremost, the United States now has the highest corporate income tax rate in the world. Heinrich — like most mainstream economists — undoubtedly views the current corporate income tax rate as problematic. Good for him. I hope he makes corporate tax reduction a central focus of his efforts in Washington.

Of course, the cynic would say, Heinrich is also running for the US Senate. With concerns about jobs paramount in Americans’ minds, coming out in favor of reduced corporate income taxes is a good way to position yourself as a fiscal moderate, regardless of your actual record. This is especially true given the very real problems Democrats — Obama in particular — are facing on the economy.

Personally, while I do believe that corporate income tax rates are problematic, I think the policy uncertainty inherent in ObamaCare and new financial regulations (along with the nation’s deteriorating financial situation) is what is driving current economic problems. Reducing corporate income taxes would be a good move, but overturning ObamaCare and dramatically-reducing federal spending would do more for the economy, particularly if one — like Heinrich — might be concerned with future electoral success.

Gary Johnson: best job creator among presidential contenders?

06.21.2011

I couldn’t help but notice this story from National Review online which seems to indicate that our own Gov. Gary Johnson was the best “job creating” governor among the GOP presidential field when he was Governor of New Mexico.

While I like Gary Johnson a great deal, the analysis really doesn’t hold up under scrutiny. First and foremost, not all of the GOP candidates were governors. Bachmann, Gingrich, Santorum, Cain, and Paul were not. That leaves just Pawlenty, Huntsman, Romney, Palin, and Johnson (throw in Perry for good measure though he hasn’t announced).

Then, there is the very real fact that Governors don’t “create” jobs. They only have partial control — along with their respective legislatures — over setting the conditions to create those jobs. Also, the policy conditions that a governor encounters while in office were created over generations. New Mexico is a liberal state that relies on federal largesse while Texas is a conservative one that creates jobs and economic growth by itself. Comparing the two is nearly impossible.

Lastly, there is the issue of time-frame. Johnson governed during the boom times of the 1990s and early 2000s. Most of the other candidates were in office more recently and thus have endured a struggling US economy.

I’m still looking at and learning about the other contenders, but I do know that Gary Johnson would never go for RomneyCare.

Baby steps towards fiscal restraint in Washington

06.21.2011

Recently, the House Appropriations Committee in Congress voted to slash funding for the proposed Chemistry and Metallurgy Research Replacement Nuclear Facility at Los Alamos. This project is one that we have criticized in the past as costs have spiraled out of control as the project has moved forward in the design stages — let alone construction.

The actual savings are small and yes, there may be some minimal impact on New Mexico’s economy, but the time for fiscal restraint is now. Hopefully Congress will continue cutting!

Of branch campuses and athletics

06.20.2011

Kate O’Neill of the UNM Taos campus and UNM president David Schmidly had an inane column recently in the Albuquerque Journal. The sum total of their arguments was to argue on behalf of the myriad branch campuses throughout New Mexico. By my count, UNM alone has 10 statewide education centers, main campus, and a campus in Rio Rancho. Other universities such as NMSU and Highlands have their own campuses throughout the state as well.

Basically, the assertion is that New Mexico simply can’t afford to cut down on any of these branch campuses lest we fall behind even further in education. Of course, the “local jobs” argument was thrown in as well for good measure. To say the least, their arguments don’t hold much water in my book as they have no data to back up their arguments.

The Legislative Finance Committee, on the other hand, has an excellent report that is well worth reading on higher education in New Mexico, the fact that we have too many branch campuses and a bloated higher ed system that is not accountable for results. Interestingly enough, New Mexico has among the worst college graduation and first-year retention rates in the nation.

Separately, in a letter to the editor published today, a writer claimed — in a letter that I otherwise agreed with — that UNM’s graduating students have the second-highest debt load in the nation. This is simply not the case as this report from the Project on Student Debt points out. No New Mexico university appears on the report’s “heavy debt” listing although two of them do appear on the listing of “low debt colleges and universities.”

Another misguided call for more K-12 spending

06.20.2011

Las Cruces teacher Bill Soules writes in the Sun-News that if we spent more money on education, we’d have better schools. Haven’t we explained this canard before?

Here is a chart of US spending on education as compared with actual education results:

Here is a chart of students per teacher:

As this paper notes, New Mexico’s experience is not out of line with those elsewhere.

The problem is clearly not a lack of spending, the problem is instead one of incentives and the fact that spending more money doesn’t necessarily result in the hiring of better teachers and overall improvements in educational output.

Albuquerque red-light cameras create revenue, not safety

06.19.2011

It has been a contentious point at City Council in Albuquerque and the Albuquerque Journal has editorialized in favor of the cameras, but I tend to think — like Councilors Lewis and Cook — that red light cameras are more about revenue than they are about safety. Read their article here.

Regardless of their effectiveness or lack thereof, I’d like to at least have a public vote on them. Data from the Virginia study on the increase of accidents at camera-enforced intersections can be found here.

Loss of weekend service illustrates RailRunner’s lack of sustainablility

06.18.2011

The only way for the RailRunner to break even is to reduce service. By definition, this means that the system is not sustainable.

The folks at Rio Metro who operate the train understand this and were faced with some tough decisions in face of a loss of federal funds for the train. A few days ago, I wrote that discontinuing some early morning services and eliminating stops on a few trains could actually improve service.

Instead, Rio Metro will discontinue weekend service on the train. In some ways, this is a logical decision. After all, if the goal of the train is that of a “commuter” train, weekday service must be continued at the expense of weekend service.

The Journal also had an article on the decision and, while the tourists who use the train were understandably perplexed, Rey Garduno who sits on the Rio Metro board had the silliest remarks. Said Garduño, “Weekend routes are valued by the community and should be protected.” Well, if that service was valued by the community, wouldn’t the community be willing to pay enough to continue it? To date, weekend service is only “valued” to the extent that a $1.2 million federal grant is available.

While she did not move to shut down the RailRunner during this legislative session, Gov. Martinez is wisely not planning to add even more General Fund dollars to subsidize weekend service. I hope she maintains this stance, but as long as it rolls down the tracks, the RailRunner will continue to be an unnecessary burden on New Mexico taxpayers.

Santa Fe: second-worst graduation rate in New Mexico

06.17.2011

I blogged yesterday about the confusing and often-conflicting data on graduation rates. Well, in taking a closer look at the data, I found that Santa Fe schools had one of the worst graduation rates in the state in 2010 at 53 percent.

One would think that one of the wealthiest cities in New Mexico with median household incomes of $52,045 as compared to New Mexico’s median income of $43,028 would have some of the best schools around, but that is not the case. Instead, students in “The City Different” lag behind some of the smallest and poorest towns in New Mexico.

The fact is that we have a systemic problem in Santa Fe and New Mexico schools. Time to follow reforms that have worked in other states.

Getting a grip on graduation rates

06.16.2011

With the school year having recently been completed, there has been a lot of talk about graduations and graduation rates. According to state data, New Mexico’s rate is 67.3 percent. But, according to the latest “Diplomas Count” study, New Mexico’s graduation rate is only 57.1 percent. According to this same study, APS’s graduation rate is 55.4 percent (49th of 51 states (including the District of Columbia).

According to the State, however, APS graduates kids at a 64.7 percent rate with the various schools in the City charted here. The problem is that, according to the Albuquerque Journal, 12 percent of those students were not actually qualified to receive their diplomas.

Yes, there is some difference in the years being analyzed here, but a majority of the discrepancy has to do with varying methods of calculation. In a free market or even “choice” environment with competing schools, you can bet that we’ve have a firm grasp on these numbers. Until then, finding out the truth about graduation is a real challenge.

Gary Johnson: the only “major” GOP candidate popular at home

06.15.2011

With Gary Johnson having been snubbed this week by having been excluded from the CNN debate, the race to oppose Obama in 2012 is really getting started. Interestingly enough, a recent poll by Public Policy Polling finds that of the “major” GOP candidates (Ron Paul was inexplicably excluded from the poll), Johnson is THE ONLY GOP candidate to have positive polling numbers in their home state.

Johnson as 44-32 favorability ratings here in New Mexico. This is good news both for America and New Mexico for three reasons:

First and foremost, it shows that CNN was wrong in excluding Johnson;
Secondly it shows that being a fiscal conservative is popular, even in a heavily-Democrat state like New Mexico (hopefully Gov. Martinez has seen these numbers);
Thirdly, it would seem to indicate that the people who know the various candidates best like Gary Johnson better than people in other states. Interestingly enough, Mitt Romney, former Governor of another liberal state (Massachusetts), the front-runner and father of the failed “RomneyCare” experiment, has polling numbers that have him 12 points in the negative among his home-state voters. It would appear that small government ideas are still more popular among voters than are big government ideas.

Railrunner subsidy loss could result in better service

06.15.2011

The Santa Fe New Mexican has reported that the loss of $1.2 million in federal funding could force the system to alter service in ways that might include:

Using bus service to replace the earliest northbound and southbound trains on weekdays.

Having other trains make fewer stops by bypassing the soon-to-open Sandia Station north of Albuquerque and the unopened Zia Station in Santa Fe.

Other changes might be made as well, but the fact is that buses can make the trip from Albuquerque to Santa Fe far more quickly than the train does. Also, the Rail Runner has built way too many stations into the system (slowing the train’s path), eliminating certain, little-used stops would be helpful.

With buses being far faster (1hr 9 min. vs. 1hr 38 min), more flexible, and cheaper than the train, it leads one to wonder why New Mexico taxpayers have been asked to pour more than $500 million into the train to date.

New Mexico Watchdog: Richardson’s Judges Donated Much More Than Predecessors

06.14.2011

This fascinating report from the New Mexico Watchdog (a project of the Rio Grande Foundation), tracks judicial donations.

According to the report, “Members of the Richardson-era judiciary on average paid more than four times as much in political donations during recent years, compared to the recent political donations of long-time judges who remained through the Richardson era.”

Find out who donated how much and to whom here.

Emanuel makes Chicago government worker salaries public

06.14.2011

The Rio Grande Foundation caused a bit of a stir recently when we posted the salaries of County workers online. Interestingly enough, according to news reports, the new Mayor of Chicago, Rahm Emanuel (a former Obama Administration Chief of Staff) has taken the same step with city workers in Chicago.

Said Emanuel of the decision:

During the campaign I promised to have the most open, accountable and transparent government that the City of Chicago has ever seen. Today’s effort is another step toward this goal, as we create an administration that is accountable to the citizens of Chicago.

Kudos to Rahm Emanuel for his leadership on basic governmental transparency.

HT to Sarah Welsh @ New Mexico FOG.

Patients are not consumers: the “original sin” of American health care

06.13.2011

Greg Scandlen has an excellent post on American health care expenditures relative to those of other nations here. Folks on the left constantly talk about how much the US spends on health care and to an extent they have a point.

Problem is that, as the following chart illustrates (from Scandlen’s blog posting), Americans do not directly spend much on health care. Rather, the spending is done by governments and insurance companies:

How can this be rectified? Well, the first thing to be done is to equalize the tax treatment of health care so that employers are not given the incentive to buy insurance for their employers and that individuals take control for more of their health care spending.

More regulations: the answer to all our woes

06.13.2011

Left-wing environmentalists like recent Albuquerque Journal columnist Edward Mazria love government regulations. In this case, the author is calling for more restrictive energy efficiency regulations on buildings.

As usual, he argues that 1) rather than costing money (or at least acknowledging that regulations have trade-offs), the preferred regulations have nothing but economic benefits; 2) Unstated, but implicit is the assumption that customers and consumers are too ignorant and uninformed to demand greater energy efficiency on their own 3) The regulations will save the world from the dire threat of global warming.

Simply put, Mazria fails to answer or even address any of these issues and instead simply asserts the need to use government force to demand that the rest of us simply fall in line with his personal preferences. Rather than falling victim to his scare tactics, New Mexicans should return to the old building code regulations and, if they prefer greater energy efficiency, the market will fulfill that wish.