New Mexico is one of five states which license the phrases “Interior Design,” “Interior Designer,” and “Designer.” Anyone can practice interior design in New Mexico, licensed or not, but you need the state’s permission to in any way indicate that you do such work. The law clearly isn’t designed to protect consumers, since anyone can offer such services regardless of professional training and experience. Instead, the law is designed to protect a small cartel of state-favored businesses against competition.
Government-approved businesses have the privilege of paying the state an initial $300 plus $250 per year in fees to “license” the above terms and buy protection from competitors. We’ve even got a “New Mexico Board of Interior Design” to manage the program–if there was ever a useless bureaucrat jobs program, this is it.
The Institute for Justice has taken up the case of two New Mexico “interior designers” who are suing the state on first amendment grounds. The IJ has a good report on Interior Design licensing here.
In the meantime, the members of the New Mexico Interior Design Cartel can be identified, even avoided if so desired. There are plenty of other talented and experienced “Designers” out there, but good luck finding them in the Yellow Pages.
Hat tip: Coyote Blog

I took my first-ever trip on the new Rail Runner commuter train this weekend to and from the New Mexico Wine Festival and thought I’d offer a few thoughts on the train. First and foremost, I got on at the Paseo/Los Ranchos station for the first train of the day. The train was jammed to the gills and it wasn’t just standing room, but sardine-like conditions. The train cars are nice and the air conditioning was cranked up so conditions weren’t too bad. On the way back on the 3:05 train, there were fewer people although it was still standing room only.
Obviously, the price for a ticket is still “0” and most economists will tell you that there is a nearly unlimited demand for anything that is “free.” Curiously enough, this very same dynamic was at work inside the wine festival as well where the lines for a “free” sip of wine were upwards of 10 minutes long. I did notice that, while large numbers of passengers did take the train to the wine festival, equally large numbers (at least on the first train of the day) appeared to be joy-riding. After all, I saw many of the people that had just gotten off the train at Bernalillo, get back on the train right away.
While the train may prove popular even after the “reduced fare” of $2 per trip (as opposed to free) is instituted on October 14, the most important number is the estimated $320 million cost to taxpayers. Even if you don’t believe as I do that the $320 million would be best given back to the taxpayers of New Mexico in the form of tax cuts, it is hard to believe that other legitimate needs would not be better served than a train, the tickets for which, are priced far below market prices.

A recent story about Trilby Lundberg, the nation’s guru of gasoline prices, is a must-read for politicians and those who think that high gas prices are the result of some kind of conspiracy. Ms. Lunberg publishes a twice-monthly newsletter that analyzes gas prices nationwide. While Ms. Lunberg, as far as I can tell, hasn’t got a political bone in her body, she does have a few opinions about the possibility for oil companies to manipulate prices on a grand scale. Of price gouging she says, “It would be a comedy because it is impossible” and “oil companies have no interest in helping each other and instead want to increase their sales at the expense of the competition.” She goes on to say, “They all have no mercy.”
So, while some on the left criticize oil companies and business in general for being “greedy” and “merciless,” it is these very traits that prevent businesses from colluding. Ask Trilby Lundberg, the “guru of gas prices!”

One of New Mexico’s few groups of educational innovators came under attack recently when the National Center for Education Statistics released a study that argued, in part, that students in charter shools lagged behind their peers in regular public schools. Unfortunately, as is so often the case when the results of studies fail to make common sense, the analysis used government data that failed to fully account for the socio-economic differences between charter school and public school students.
The charter school concept is a compromise between those who would like to see significant educational reform that goes far beyond the limits presented by the public schoos and those who grudgingly view some forms of school choice as essential tools for improving existing public schools. It is, nonetheless, hard to believe the results of a study that finds students doing worse at schools that are targeted to their needs and interests than similar students who remain in traditional public schools where socialist-style mass production is the name of the game.

According to the August 17 article, about 4.1 percent of New Mexicans moved here from another state within the last year. This puts New Mexico at No. 9 in the nation for the percentage of its residents who had moved from another state within the previous year.
Although New Mexico’s increased popularity is a good sign, it is hard to tell whether the state is actually becoming a more attractive place to live or whether greater numbers of native New Mexicans are leaving the state for greener pastures. The Rio Grande Foundation recently studied the issue and found that at least historically-speaking New Mexico has tended to lose population to other states as a result of poor tax policies.

While Richardson bashes Wal-Mart for offering “substandard” wages and health care benefits, millions have been lifted out of poverty by Wal-Mart, in China, other developing nations, even in the US. Why would Richardson want to prevent New Mexicans from obtaining this kind of benefit? Would we not see similar effects on standard of living here in New Mexico, with low prices stretching the dollar further and decent wages for those who choose to work at a local branch?

The Rio Grande Foundation and others knowledgeable of the uses and abuses of eminent domain recently presented before Governor Richardson’s eminent domain task force. Aside from presenting a variety of information relating to eminent domain laws in other states and how New Mexico property owners could best be protected, the experts all criticized Rio Rancho’s recent uses of eminent domain.

In the last few weeks, dueling economic surveys have been published outlining the economic imact of Santa Fe’s minimum wage law. One study by the New Mexico Department of Labor found that “Santa Fe County added only 300 jobs between June 2005 and June 2006, the lowest rate of job growth in almost four years,” most likely due to Santa Fe’s dramatically-higher minimum wage.
Yet, just a week prior to the release of the Department of Labor study, the UNM Bureau of Business & Economic Research had found that for a different time period than was studied by the Department of Labor, “Santa Fe’s minimum-wage ordinance hasn’t affected overall employment levels in the city.”
So, who do you believe? For a trained economist, the answer is obvious: to the degree that a minimum wage is actually effective in the sense that it will raise wages, people at the lowest ends of the economic ladder will lose jobs, businesses will rely on automation, or labor-intensive businesses will move elsewhere. If the wage rate is low enough that it has no reall economic impact on wages, then the economic impact will be minimal.
It seems obvious that as Santa Fe’s wage rate continues to rise, hitting $10.50 an hour in 2008, the impact on Santa Fe’s economy will become more pronounced and job growth will slow. Rather than jumping on the minimum wage bandwagon with Santa Fe, the rest of the state should wait to see how things play out there.

Check out the current probablilities here. Note that these probabilities are derived from the behavior of real traders exchanging real money in a political market. If you think you have better information, then you can profit from your knowledge.

Here is an idea for you taxpayers who are tired of getting ripped off by the Guv’s wasteful use of your money for “commuter rail.” You could rendezvous at the Wheels Museum.
HT: Coyote Blog
Update 8/20/06
This morning Albuquerque Road Runners did their annual Lamy Run alongside the tracks from Eldorado to the Lamy Train Station. This is likely to be a future route for the train to nowhere. And look what we saw south of the tracks!

Our Guv is among the Democratic presidential hopefuls jumping on the bash Wal-Mart strategy. The strategy could backfire. After all, Wal-Mart can be expected to defend itself. Here is Daniel Drezner’s enlightening political and economic commentary on that strategy.
On Wal-Mart defending itself (as quoted from Financial Times): “First, it has attacked its critics – arguing that it is the victim of an unholy alliance between Democrat lawmakers and the unions they rely on to deliver votes and campaign financing. Second, it is seeking to make the argument that the company is good for America.”
On how economists view the matter: “they [the Dems] think Wal-Mart’s greatest impact is as an employer. Most (thought not all) economists, I suspect, see Wal-Mart’s greatest impact as lowering the costs of consumption for Americans who frequent their stores — including the middle class.”
HT: Michael Munger
Update: BTW have you ever noticed that Wal-Mart employees voluntarily work for Wal-Mart rather than someone else? If employment at Wal-Mart is so bad, then why don’t they make different decisions?

New Mexico came in as the 19th best state for employment in june with a 4.1% unemployment rate. But even with low unemployment and strong growth, New Mexico is still among the poorest states.
On a lighter note, The Economist writes about economist blogging. Apparently, you don’t have to go to an Ivy League university anymore, you can just read the blogs of the professors that teach there!

The only thing we heard prior to Congress’s recent vote on a higher mandated wage was that Republicans were acting before the November elections in order to appear more friendly to low-wage workers.
Of course, we might never hear widespread talk of the backlash against Chicago’s recent minimum wage hike due to the fact that it will keep poor and low-income workers out of the work force where they can earn valuable skills that will allow them to move up the economic ladder. Perhaps minimum wage advocates really just want to keep these people on welfare and expand the size of government?

We are quickly going broke according to economist Larry Kotlikoff. Kotlikoff

concludes that countries can go broke, that the United States is going
broke, that remaining open to foreign investment can help stave off bankruptcy, but that radical
reform of U.S. fiscal institutions is essential to secure the nation’s economic future. The paper
offers three policies to eliminate the nation’s enormous fiscal gap and avert bankruptcy: a retail
sales tax, personalized Social Security, and a globally budgeted universal healthcare system.

Neither major party has shown much interest in the radical reform of fiscal institutions that Kotlikoff recommends. Closer to home, Governor Richardson is counterproductively trying to exacerbate our long-term Medicaid budget problems.
I do wonder about Kotlikoff’s proposed retail sales tax rate of 33 percent. Combined with state sales tax rates the large (40 percent or more) tax wedge between buyer and seller would encourage tax avoidance. Maybe the proposal should be somewhat less vast. That is my feeling about Charles Murray’s recent welfare reform proposal too. But at least these reform ideas are on the right track.
BTW, I find our bankruptcy problem to be orders of magnitude more important than global warming. Yet global warming seems to be getting orders of magnitude more attention.
HT: NCPA

Under the pretense of trying “leading the way” on global warming, the Albuquerque Journal reported today (link available to subscribers) that because the state has failed to cut emissions adequately under its self-imposed effort to reduce greenhouse gas emissions, the state is going to spend 30 to 50 thousand taxpayer dollars to purchase emissions credits from some lucky source that will cash in on the state’s wasteful use of taxpayer money for meaningless credits.
Of course, this has very little to do with “global warming,” rather it is about Governor Richardson position himself as a national leader on the before the Democratic primaries two years from now. Of course, NM is the only state in the program so we are the only taxpayers being gouged for no reason at this point.
According to the story, New Mexico’s efforts supposedly removed a whopping 433 cars off the road. I’m sure that if global warming is caused by humans and their use of carbon-based fuels that we are well on our way to solving the problem now.
Oh well, it just goes to show that politicians will never run out of creative ways to waste our tax money.

Check out this thoughtful commentary by Brad Smith on the recent politics of the minimum wage. The GOP sure has put itself in a bind by losing its principled limited government philosophy.

New Mexico has been on a spending spree over the last four fiscal years. The Richardson record is now clear: The general fund budget has increased by 31.2 percent. When adjusted for inflation and population growth, the budget has grown by 13 percent. That means New Mexico is spending 13 percent more in current dollars (FY2007) per person than it did four years ago.
The general fund budget in FY2003 was $3,873,944,000; and this year (FY2007) it is $5,084,063,000. If we could have held government growth to inflation plus population growth, then $659,771,000 would be available for the hard working taxpayers. That is enough money to have eliminated our personal income tax altogether. Or we could have lowered the statewide gross receipts tax rate from five percent to three percent.
Of particular concern is the growth of welfare. We seem to be very good at rewarding unproductive behavior while punishing work and saving. The budget for Medicaid has increased by over 40 percent in current, per capita dollars! The remainder of Health and Human Serivces has increased by over 22 percent. As a percentage of the general fund budget these welfare programs now consume 23.9 percent compared to 20.9 percent four years ago. Now we are being told to expect another major expansion of Medicaid while no one notices why what we have doesn’t work very well as they engage in more wishful thinking.
More detailed explanations of the budget data appear below the fold. Contact me if you have any questions.

General Fund Budget in FY03: $3,873,944,000
General Fund Budget in FY07: $5,084,063.000
Population Growth over the most recent four years: 5.2 percent
Total inflation over the most recent four years 13.0 percent
(source BEA and BLS)
Medicaid Budget in FY03: $395,790,000
Medicaid Budget in FY07: $629,400,000
Bottom LIne: Medicaid has grown by 7.1 percent annually in real, per capita dollars
Health and Human Services in FY03: $415,406,000
Health and Human Services in FY07: $583,542,000
Bottom Line: HHS has grown by 4.5 percent annually in real, per capita dollars
Public and Higher Education have grown at an annual rate of 1.6 percent in real, per capita dollars. Here are their budget numbers:
PUBLIC EDUCATION in FY03: $1,808,568,000
PUBLIC EDUCATION in FY07: $2,279,995,000
HIGHER EDUCATION in FY03: $601,715,000
HIGHER EDUCATION in FY07: $759,194,000

Sadly, and typical of New Mexico politics, our Cong are at or near the bottom of the rankings in the fight against pork barrel spending. See the nationwide Club for Growth’s rankings here (a score of 19 is perfect, meaning that that particular Cong voted for 19 out of 19 anti-pork meaures). New Mexico’s scores from best to worst:
Tom Udall – 5
Steve Pearce – 1
Heather Wilson – a big fat ZERO
Update: Over half of the Cong nationwide had a score of ZERO. That is bad news for the prospect of budget discipline. Only 21 protectors of taxpayers had a perfect score of 19.

Out enjoying the gross receipts tax holiday this weekend, but confused about which items are exempt? Be sure to bring a shopping list–in this case, the state’s 7-page list of taxable and nontaxable items.
You’re going to need it…
Belts aren’t taxed, but the buckles are if sold separately. Bowling shirts aren’t taxed, but bowling shoes are. Sweat suiits and sweatpants are tax free, but forget about the sweatbands. Golf clothing isn’t taxed, and neither are most gloves, except for golf gloves which are still taxed. If you’re cold, ear muffs aren’t taxed but hand muffs are. Neckware such as ties and scarves are tax free, but you’ll pay taxes to tie a new bandana or handkerchief around your neck. Antique clothing will be taxed if you don’t wear it, but won’t be if you do. I could go on like this forever.
This would all be so much simpler if the tax holiday was applied across the board to all goods and services.

When you are running for governor against a powerful incumbent and you lack the financial resources to put your message out in a massive media blitz, the last thing you should be doing is unnecessarily attacking large voting blocks. Unfortunately, that is exactly what Republican gubernatorial nominee John Dendahl did recently in attacking teachers themselves for New Mexico’s abysmal education results.
Rather than attacking teachers themselves, Dendahl should have used the lousy results as an opportunity to speak out about a failing monopolitic model of education that discourges innovation and initiative while encouraging mediocrity. After all, in a free market system, parents would have the ability to choose whether sex-ed is tought in their children’s school or whether the focus is placed on the basics like reading, writing and arithmetic.
Governor Richardson does indeed deserve some blame for our failing schools, but he is only one of many governors in the nation — Republican or Democrat — that presides over a failing monopoly.

As if we needed any more proof that New Mexico’s schools are doing a poor job, the latest statewide testing administered under No Child Left Behind shows that most of the state’s schools are failing. Given Justin’s post below on the relatively low number of high school graduates in New Mexico, it is hard to believe that our political leaders have not done more to provide choice and competition in public education.

New Mexico always seems to stand out on a map. Sunday’s New York Times reports on projected changes in the number of high school graduates and its consequences for future college enrollment across the country. The article features this map based on the Interstate Commission for Higher Education’s projections for 2015:

That bluish hue indicates that New Mexico should expect a smaller class of graduating seniors a decade from now. The Western Interstate Commission for Higher Education has further projections, up to 2017-18, that reiterate this expected trend.
Why is New Mexico’s population of high school graduates expected to fall, as every one of our neighboring states will see increases? One clue lies in the breakdown WICHE provides by race/ethnicity.
Let’s take a closer look…

While projected numbers for Hispanics and other “underrepresented” groups are quite stable, graduating seniors identified as “White, non-Hispanic” are on a steady downward trend from a peak in the 1999-2000 school year.
A child graduating high school in 2018 was born around the year 2000. As such, these projections are based on past demographic data, and we can work backwards to find the source of this trend. The steady decline in “White, non-Hispanic” high school graduates could potentially be explained by two related factors: 1) a decline in “White, non-Hispanic” birth rates in the 1980-90s, and 2) a decline in the state’s “White, non-Hispanic” population overall. Over time, of course, #1 causes #2. What’s been going on in New Mexico?
Digging into archival census data, it’s clear that #1 is the dominant factor. New Mexico’s “White, non-Hispanic” population grew nearly 18% from 1981 to 1999, slower than the other racial/ethnic groups, but growth nonetheless. But this is an aging population, not reproducing as rapidly as the other racial/ethnic groups.
In 1981, “White, non-Hispanic” children under 5 years old numbered 50,266, 41.6% of the states youngest children. These are the infants that would fuel the peak in “White, non-Hispanic” graduation 18 years later. At this peak in 1999, however, the next generation of “White, non-Hispanic” children under 5 numbered only 42,025, just 32% the state’s youngest cohort.
One other possibility comes to mind–the high degree of racial admixture in New Mexico. I’ve been unable to find any data on this point, but many so-called “non-Hispanic” parents have “Hispanic” children. Children under 5 identified as “White, Hispanic” numbered 68,054 in 1999, up from 53,359 in 1981, enough to make up for the difference. But this fails to explain the overall drop in projected high school graduates.
Whatever the cause, the relatively low replacement of those self-identified as “White, non-Hispanic” will have a dramatic impact on more than just the make-up of New Mexico’s high schools. Lower public school enrollment and fewer high school graduates imply a smaller pool of students for the state’s university system. A shrinking supply of young, educated, and skilled workers does not bode well for New Mexico’s economy in the 2010s and 2020s.
We can’t beat demographics–those students in the projections have already been born. However, we can still prove the predictions wrong. Improving the high graduation rate from our dismal 56.7% (free registration required) could add thousands of educated young workers to the labor pool, and is an obvious place to start. New Mexico’s universities could also make recruiting qualified out-of-state students a priority, a tactic employed successfully by the University of Oklahoma.
Finally, since we’ve already got unbeatable weather, nothing attracts the young, industrious entrepreneur better than free markets and personal liberty.

Anyone who reads this blog regularly won’t be surprised to find out that once again, it is government meddling that has created what many see as a problem. However, this one, like the price of oil, is being blamed on companies and few are discussing the real issue.
Tech Central Station has the first article I have come across that actually explains why corporate compensation is so high to begin with. Big corporations are using the heavy hand of government to prevent take-overs. And use of this government intervention (something we could make illegal and let the free market respond to prices as we used to) is what allows compensation to increase seemingly without limit.
“As a result of the takeover boom of the early 1980s the managements of some of the larger corporations started to look for permission, from both courts and politicians, to protect themselves with poison pill defenses in order to thwart takeover bids. These take a number of forms but the essential outcome is much the same: it makes the hostile takeover of a company by a corporate raider more expensive.”
How does preventing takeover allow CEO compensation to skyrocket?
“…back in the 1950s and 60s, when there was a fairly unregulated market for corporate control, managers could not pay themselves huge sums in this manner because someone could and would come along and buy the company and throw the bums out. Now that those poison pills form the corporate defenses they can’t, or at least only at vastly greater cost.”
So, if another corporation can’t come along and buy the company and toss out those who are leeching profits, companies – stockholders and workers – are left with little choice but to pay whatever the market rate is, and the market rate is as high as it is because nobody can buy these companies up and throw out the expensive and wasteful CEOs.
Once again, market rigidity is the cause of the non-competitive pricing.

If you caught Paul’s appearance on The Line last night, the discussion on government incentives to attract businesses to the state was especially useful. When a business is looking to locate in the Southwest, New Mexico is in competition with its neighbors. Two chief strategies come into play in this competition. States can either 1) create a business-friendly environment through low taxes, unobtrusive regulations, and protection of private property, or 2) use high taxes and an active government to bribe favored companies.
According to an index developed by the Pacific Research Institute, New Mexico ranks 37th in the nation for economic freedom, based on a number of indicators in the fiscal, regulatory, and judicial policy sectors as well as government size and state welfare spending. A color map is available, but New Mexico’s situation stands out most clearly in black and white:

That big dark blip in the middle of the Southwest, that’s us. Here’s how New Mexico compares to its immediate neighbors.

While its neighbors have generally proceeded with the first strategy, fostering economic development through economic freedom, New Mexico has stood out in its zeal for the tax-and-bribe approach.
Has this been a successful strategy for New Mexico? As Harry pointed out last week, New Mexico lags behind its neighbors in private sector generated income. Indeed, most economic comparisons with neighboring states are unfavorable.
With taxes from the oil and gas industry filling the state coffers, New Mexico is in a good position to create a climate more friendly to all business in the state, not just to a handful of bureaucratic favorites. Give home-grown businesses a better chance, and the entire state will be more attractive to outside investors and entrepreneurs.
In case you missed it, KNME will rebroadcast The Line Sunday at 6:30 am.