Anybody for a $9.50 “living” wage? Then we can really do some damage!
Check this for damage already done by the $8.50 “living” wage (thanks to NCPA for alerting us):
Aaron Yelowitz of the University of Kentucky found that Santa Fe’s
minimum wage had significant and negative effects on the labor market.
Even more troubling, he found that the negative effects of the wage
hike were concentrated on the least-skilled members of the economy —
the very individuals the increase was intended to help.
He found:
o The likelihood of unemployment for employees in Santa Fe
went up by 3.3 percent.
o For less-educated employees, however, the results were much
higher, with their likelihood of unemployment
increasing 8.3 percentage points.
o The usual hours of work fell by 1.0 hours for the full
sample and 3.2 hours for less-educated individuals.
o There was significant evidence to suggest the displacement
of adult employees by unmarried high school age
employees.
These are all unintended consequences that should give pause to
any claims of success of the ordinance, says Yelowitz.
Source: Aaron S. Yelowitz, “How Did the $8.50 Citywide Minimum Wage
Affect the Santa Fe Labor Market? A Comprehensive Examination,”
Employment Policies Institute, December 6, 2005.
We told you so.

http://riograndefoundation.org/papers/living_wage_misguided.htm

Alaska has (or had) its bridge to nowhere; New Mexico has its train to nowhere. It will be interesting to compute how much this ultimately costs the taxpayer per rider.

Unfortunately for NM taxpayers our Guv is poised for an enormous increase in spending during the 30-day session that begins next month. Among the proposals is a big expansion of the pre-kindergarten program. Our public schools don’t work very well. Why do we think that pre-k will work? It hasn’t worked in Georgia. It won’t work in New Mexico. See Reason Foundation’s commentary on a similar proposal for California here.

Here is a great idea for New Mexico. If you don’t think eligibility requirements for various welfare programs are complex, then you should spend a little time navigating around here and here and here. Get the idea about the cumbersome system that Texas’s streamlining is attempting to reduce?
As an added benefit Texas style streamlining may give us insights into how to fix incentive problems. For more on welfare incentives look here (pp. 12-19).

Check out this perspective in January 1999 — no mention of price “gouging.”

Two great posts today on the latest big governement proposals by the chairman of the FCC: One post is local and the other national.

We know our Guv had presidential ambitions; and he thinks he is quite important. But doesn’t this sound like a bit much?
HT: Mickey Barnett

Do you think this will put the global warmers into hibernation?

With all the Wal-Mart bashing going around can you believe that the Washington Post is defending Wal-Mart?
About 8 years ago my daughter was really having difficulty making ends meet. I remember well when she said, “dad, I just don’t know what I would do without the Wal-Mart Supercenter.” Bottom line: Wal-Mart overwhelmingly helps the poor. Read all about it.
Update 11/30/05: Article is in today’s ABQ Journal. Be sure to read it.

Did you see yesterday’s Albuquerque Journal Op-Ed by Rosabeth Moss Kanter entitled “Poverty:
Capitalism’s Powder Keg?” In the Miami Herald it was entitled “Why Socialism is back in vogue in some places.” Excerpt”

Socialism is back in vogue in Latin America. Whatever one thinks about Venezuelan president Hugo Chávez’s outrageous politics, he enjoys support from poor barrios because he has expanded access to educational and social services. Chávez called Mexican President Vincente Fox a ”lapdog” of U.S. imperialism for backing Washington’s trade policies at the summit. Perhaps Chávez’s example reinforced Cuba’s socialist stubbornness, as the government raided farmers’ markets in what Reuters called an “anti-capitalist crackdown.”
Some large companies in the region are rising to the challenge of finding solutions to poverty. ABN AMRO Banco Real in Brazil is offering micro-finance to poor entrepreneurs in urban shanty-towns. Cemex in Mexico created an innovative program to finance housing materials in rural areas, bringing jobs as well as better housing to poor villages.
Believers in a free-market economy (and I’m among them) had better be prepared to do even more to help lift the poor out of misery. Otherwise, markets will not be free enough or our cities safe enough, for any of us.

Capitalists themselves often do not “believe” in the free-market. But one thing is for sure: they have every incentive to help the more poverty stricken nations as long as those nations have reasonable regulatory and tax regimes, they enforce property rights and they enforce the rule of law. Captitalists help by engaging in trade with the people and businesses of those nations. When trade occurs everyone is better off.
Be careful, though, because there is one thing that will not work: foreign aid. New Mexico itself is proof of that. If foreign aid does not work why not encourage dictators to try some economic freedom? That really does work!
Update 11/29/05: MARY ANASTASIA O’GRADY in Friday’s WSJ(subscription):

…despite persistent claims that the region has tried the “free-market” model and found it wanting, Latin America is stubbornly stuck in a statist time warp.
When it comes to burdensome government and weak property rights, Latins don’t fare as badly as Africans but their freedoms lag behind those in much of Asia and the former Soviet satellites of Europe.

She concludes:

Rich-country bureaucrats also often tie their handouts to objectives favored by rich-country pressure groups, such as environmental and labor “protections” that in the name of “social justice” add more red tape and further destroy individual initiative. All the while, Godzilla government is leaving Latin America’s underclass living in the shantytowns and favelas with little opportunity or hope.

New Mexico is a poor state. We need “bold” changes to improve education if we are to keep it from getting poorer. How do we implement these bold changes? Throw a lot more money at education is the answer according to the Journal. And money from windfall energy revenue is available for the throwing. That is the essence of yesterday’s editorial (subscription).
This is wishful thinking in the extreme. Education “reforms” have not worked in the past. And they will not work in the future as long as K-12 education is a socialistic, one-size-fits-all, union-run monopoly. Real per capita spending on education has increased well over 20 percent in the past 15 years and what do we have to show for it? Nothing! But if we have more bold reforms and throw more money at it things will get better? Give me a break.
I wonder if anyone at the Journal has ever heard of school choice? Let’s empower parents instead of the union monopoly. Parents can make better decisions for their kids than education bureaucrats in Washington and Santa Fe.

Steve Moore’s article yesterday does a superb job of dissecting John McCain’s economic philosophy from a market liberal perspective.
On limited government he frequently looks quite good:

“Look at my National Taxpayers Union rating. I’m near 100% every year.” (I do. He is.) Then he fumes: “I’m so disgusted with the way my party is wasting money. It’s an embarrassment.”
It is on this issue that Mr. McCain has struck the mother lode. More than any other first-tier GOP candidate in 2008, Mr. McCain has shrewdly tapped into the rage that conservatives are feeling over President Bush’s $800 billion Medicare drug bill (which he voted against), the highway bill with its 6,000 earmarked white-elephant projects (which he also voted against), and the infamous $500 million Alaska Bridge to Nowhere (which he led the crusade to defund). Mr. McCain whips out a spreadsheet detailing the legislation he drafted with Oklahoma Sen. Tom Coburn to cut the budget by $100 billion by canceling the highway pork, delaying the prescription drug bill, establishing a commission to end worthless government programs, and so on. Give the man his due: He has monopolized the anti-big government Reaganite message of late.

In addition he defends free trade, school choice, and a sensible immigration policy that

involves a three-step process: better border enforcement, a guest worker program, and an earned legalization program with a $2,000 fine for those who are here already. Anyone who has heard Mr. McCain on the stump lately knows that this is an issue he feels passionately about. “America must remain a beacon of hope and opportunity. The most wonderful thing about our country is that this is the one place in the world that anyone — through ambition and hard work — can get as far as their ambition will take them,” he says, in optimistic rhetoric that is somewhat reminiscent of Ronald Reagan.

Unfortunately, McCain also displays many nanny statist tendencies that are emphatically not market liberal:
He is against most tax cuts. His campaign finance “reform” demonstrates his unbelievably naive view of political process. He wants us to do something (regulate, regulate, regulate) about global warming. He wants to tax greedy profiteers. He thinks its the state’s job to regulate steroid use in sports.
Maybe, if we can teach him some more economics, we can reduce these statist tendencies and have a fine presidential contender on our hands. But I don’t want to get my hopes up. I wonder how someone who was part of the Keating Five (and seems to recognize his mistake) can have such a naive view of political process.
Update 11/28/05: Jane Galt’s take

http://www.janegalt.net/

I’m uncomfortable with a president who looks for a villain to pillory every time people are unhappy. Moreover, the senator’s evident belief that any and all ills can be fixed with a sufficiently complex law make me wonder why one would vote for him instead of the democrat saying the same thing.

It is hard to believe that we have a brand new entitlement mess on our hands. We can’t even fix the Social Security mess we’ve already got. The new mess is the Medicare Prescription Drug Benefit entitlement.
In its editorial yesterday the Wall Street Journal correctly points out that the political process is sure to make things even worse:

…the new benefit will be a poor substitute for the drug coverage that some three-quarters of seniors already have, and which it will undoubtedly do much to replace.
In particular, seniors are nonplussed by the “donut hole” they see in the new coverage. The benefit envisaged by our Capitol Hill solons has coverage starting after a $250 deductible and continuing until annual drug expenses reach $2,250, after which it will disappear again until total costs reach $5,100. That means that if you spend $2,000 annually on drugs, Medicare will cover 66%. But if you spend $5,000, Medicare’s share will be only about 30%.

It goes on:

We also can’t forget how damaging the shifting cost estimates for this program have already been to the Administration’s credibility. Everybody knew the original 10-year, $400 billion figure that Congress was shooting for was a polite fiction. But that figure is now more than $700 billion, and both parties did their best to cover that fact up during the debate that led to the benefit’s passing the House by a single vote in 2003.

Do you know how your representative voted? There cannot be any ducking of responsibility on this one, Heather.
Finally:

Politically, the worst is probably yet to come as private employers start ditching retiree drug coverage and throwing more people into the government system. And as costs for the program inexorably increase, so will the pressure to raise taxes.

And don’t forget about pressure to do something in the form of price controls.
In a few years we will be in for an intergenerational battle royal as old fogies like me seek to tax our working kids to pay for our government goodies.

Absent because of the vision thing. Bush is economically incoherent:

“Bush’s reputation in at least the academic community is about as low as you can imagine,” said William A. Niskanen, who was a member of the council during President Ronald Reagan’s first term and is now chairman of the Cato Institute, a libertarian research group. “A lot of people would not be willing to give up a good tenured position for a position in the White House.”

Today I received an email from a very good friend of mine in Virginia. He is worried:

I went to your Rio Grande Foundation Web site and read most of your articles. Interesting.
However in your article…”Why We Have a Water Crisis”…Point of View: March/April 2001… Published In: Intellectual Ammunition, you state: “There is no crisis in oil today, and there will be no crisis tomorrow.”
Do you still believe that?
Vivian and I not only believe in a forthcoming oil crises but also a worldwide environmental crisis due to global warming. We are trying to do our part by…our recent purchase and use of an electric lawn-mower; our recent purchase the 2006 Toyota Highlander Hybrid. Less fuel burned, less harm to the environment; and hopefully, help reduce the increasing demand for oil.

Here is my reply:
Jim, my first piece of advice is that you learn to love economics. Discover the joy of being a type C thinker. Stop worrying about the fear mongers (politicians and uninformed journalists).
Once you do that you will discover that we will never run out of oil and that there will never be an oil crisis (okay, I admit that government could get active and cause a crisis — but we would still have plenty of oil waiting once the government stopped its silliness).
As far as global warming goes the science is far from settled. And assuming there is warming caused by us humans, there is even more disagreement on whether it would be good or bad. You might want to check out Fred Singer’s website (one of the leading spokespersons for the skeptics). You can also subscribe to his weekly newsletter – I find it quite interesting. He is an authority on lots of stuff besides global warming (ozone, mercury and the like).
Also, you might be amazed (contrary to what journalists generally say) that the environment is getting better all the time.
Don’t you feel better now? You can be type C civil engineer and stop all that worrying.

They are wedge issues. Here is how George Leef puts it:

Wedge issues show political hucksterism at its finest, just like the old-time snake-oil salesmen who took advantage of people’s ignorance to get them to buy bottles of elixir that supposedly cured all ailments. Conservatives and liberals each make use of wedge issues. The former’s wedge issues tend to revolve around patriotism and the latter’s tend to revolve around “social justice.”

It has too many type M thinkers who hate economics. The latest proposal for a minimum wage hike is an example of type M thinking.

Government does not make good deciscions when considering tradeoffs in the uses of government land. The political process seems to generate all-or-nothing competition among interest groups rather than carefully balanced multiple uses. For example:

ANWR itself, if only a symbol, is a symbol of something more complex than greedy executives or green extremists; it’s indicative of an irresolvable tension over publicly held land, uselessly locked away and yet uniquely vulnerable to special interests.

Closer to home it looks like the tradeoffs for Otero Mesa and Valle Vidal will be decided by political opportunists rather than by private market participants who have the incentives to encourage wise stewardship:

Richardson and state Attorney General Patricia Madrid, a fellow Democrat, have filed a lawsuit to limit oil and gas drilling at Otero Mesa in southern New Mexico.
Another battle is being waged over proposed methane gas drilling on the Valle Vidal in the Carson National Forest in northern New Mexico.

Will our governor run for president in 2008? Robert Novak has learned he probably will:

Democratic insiders have raised from “possible” to “probable” the prospect of presidential candidacies in 2008 by New Mexico Gov. Bill Richardson and Sen. Joseph Biden of Delaware.
Richardson has said he will await his 2006 re-election campaign in New Mexico before making a presidential decision. But party insiders say now he is preparing the groundwork for a national campaign, assuming that his second term as governor is likely. Richardson is a former member of Congress, U.S. ambassador to the United Nations and secretary of energy.

Here is an interesting perspective on the prospect of a bird flu pandemic. I did not know that the bird flu has been around since at least 1959 and has yet to mutate. Did you?

Would you like to know how to easily reduce the likelihood of future scandals? See our research director’s recommended reforms here.
The problem is not merely some sticky fingered officials, but rather the way the operation ignores some obvious lessons of economics. Incentives really do matter.
Check it out.

Good economic evaluation by Professor Henderson of so-called “windfall” tax here, including why it is unjust. Check it out.

According to the Albuquerque Journal today (subscription) New Mexico’s two senators are not in favor of implementing a “windfall” profits tax on oil companies. This is good news. Our senators are not joining the illiteracy stampede.
I nonetheless sent them both a letter today. Here it is:
Dear Senator
I encourage you not to make matters worse for oil and gasoline consumers by imposing a “windfall” profits tax on oil production. I am a consumer of gasoline; and I am as unhappy as anyone else about higher prices. But a windfall profits tax would make me unhappier, since it would insure that oil and gasoline prices would be higher than without such a tax. The reason: it would undermine the roll of profits in that sector of our market economy.
Seeking profits (and avoiding losses) is what drives all sectors of our prosperous economy; and it is why we are prosperous. When we see rising profits we can be sure that more resources will be devoted to the profit generating activity. It may come about a bit slower in the case of oil and gasoline (compared, say, to Microsoft) because of the difficulties of bringing new wells into production or of building and expanding refineries. The high prices associated with high profits should be viewed as our friend. This friend encourages economizing on the part of buyers and more production on the part of sellers. That is just what we want to reduce the scarcity of oil and gasoline and what we cannot accomplish with windfall profits taxes and price gouging laws. Unfortunately we seem to forget how bad the results were when government last felt it had to do something about prices. The roll of price in making good things happen in a market economy seems to be universally misunderstood by the public; and I am always amazed by the vilification of profits.
Profits have recently been analyzed and compared by my good friends at the Tax Foundation. They have found that oil companies’ profits may be a little higher than their long-term average; but those profits are not unreasonable compared to other industries. They have a good point that helps put recent energy trends in perspective; but that point tends to deflect attention from the crucial roll of profits (and prices) in guiding the behavior of buyers and sellers in energy (or any other) markets.
There is a change in energy policy that would be helpful. It seems to me that you could strike a better balance between benefits and costs when it comes to regulation. Why not allow the building of new refineries? Why not allow transportation of gasoline between geographic areas of the country? Why not relax restrictions on drilling and exploration for oil? All of these actions would reduce the costs and risks for producers, benefiting us all.
Sincerely,
Harry Messenheimer, Ph.D.
President and Co-Founder, Rio Grande Foundation

Good for Utah!