But they don’t have a license!

House Republicans are proposing an $11.4 billion fund to clean up water contaminated by the gasoline additive MTBE. According to the Wall Street Journal (subscription):
“The proposal would give makers of MTBE, which has been found to contaminate drinking water supplies in at least 36 states, protection against product liability lawsuits brought by communities facing billions of dollars in cleanup costs.”
The story goes on:
“MTBE, or methyl tertiary-butyl ether, is an additive that in the 1990s became used widely in gasoline as an oxygenate to help reduce air pollution. It since has been found to contaminate drinking water across much of the country when gasoline leaks from underground storage tanks. While its health impact is uncertain, MTBE even at low concentrations causes a foul smell and taste in drinking water. Unlike other, even more toxic, components of gasoline, MTBE flows easily through water because of its chemical composition and isn’t biodegradable, causing particularly difficult cleanup problems.”
I wonder about doing nothing at zero cost; the foul smell and taste suggest that humans will not drink the stuff.
Incredibly, the story does not mention that use of this additive resulted from EPA regulations in the 90’s. Those regulations require that reformulated gasoline (RFG) have a predetermined percentage of an oxygenate such as MTBE. Now refiners are potentially liable as a result of complying with the regulations! Here is a good description of the background and consequent problem resulting from the regulations.

Did you happen to see the small story on page A3 of yesterday’s Albuquerque Journal: Study: Ethanol Wastes Energy (no link available at the Journal’s website). I did some checking; and here is what I found:
“There is just no energy benefit to using plant biomass for liquid fuel,” says David Pimentel, professor of ecology and agriculture at Cornell. “These strategies are not sustainable.”
The study provides these estimates of the energy waste for ethanol:
*corn requires 29 percent more fossil energy than the fuel produced;
*switch grass requires 45 percent more fossil energy than the fuel produced; and
*wood biomass requires 57 percent more fossil energy than the fuel produced.
Ethanol is NOT renewable energy. Moreover, it actually adds to pollution, since it requires more energy in its production than is provided by the ethanol.
Update: The powerful ethanol lobby (you know, the one that has been ripping us off for years — think ADM) was quick to discredit the study. See this, for example. Typical of this group’s self-serving interest, they criticize the scholars for receiving some payment from the energy industry. They don’t criticize the scholarship itself. Did you notice who will benefit by continuing ethanol subsidies and gasoline-ethanol regulations? (Hint: it won’t be you.) The Iowa caucuses should be more fun than usual in 2008.

As the “living” wage debate heats up in Albuquerque, it seems appropriate to stop and remember how we got here.
Of course, we at the Foundation have long argued that minimum wage laws are abhorrent because they harm the very people they are intended to help: the poor. By raising wages above their market-clearing levels, these laws increase unemployment among low-skilled workers. Don’t believe me? Open up any intermediate microeconomics texts such as this one. Or this one. Or this one.
Aside from the economics of the issue, what does the law say? From the very beginning, American jurisprudence held an individual’s right to contract sacrosanct. No act of government could overturn a contract lawfully entered into by consenting adults. An integral aspect of Roman and English common law since time immemorial, the right to contract was codified in the famous Dartmouth College Case of 1819. The trustees of Dartmouth College had entered into a contract with the King of England in 1769. A half century later, the New Hampshire legislature amended the charter without consulting the trustees. The trustees filed suit and the Supreme Court found that New Hampshire had impaired “the obligation of a contract.” The Dartmouth College case was a powerful demonstration that though governments rise and fall, an individual’s sacred right to contract with his fellows shall not be infringed.
The right to contract was again affirmed in the 1905 Lochner decision which struck down a law limiting working hours. The court found that if two consenting adults can agree on terms of employment, government has no right to interfere.
In 1923, an important case raised the issue yet again. A 21 year old woman of the last name Adkins worked as an elevator operator at a children’s hospital in Washington, D.C. According to the court, “[Ms. Adkins] alleges that the work was light and healthful, the hours short, with surroundings clean and moral, and that she was anxious to continue it for the compensation she was receiving.” For its part, the hotel found her “services were satisfactory” and “would have been glad to retain her.” Unfortunately, upon the enactment of a federal minimum wage law, the hospital could no longer afford to pay Ms. Adkins and had to let her go. Thankfully for Ms. Adkins, the court found the minimum wage law violated her right to contract. The court struck down the law and Ms. Adkins returned to work.
In 1936, in Morehead, the court came to the same conclusion in a similar case. Then, in an astonishing move, the court reversed itself just 10 months later in the famous West Coast Hotel vs. Parrish case. The reversal came about because of one man: Justice Owen Roberts. To this day, it remains somewhat of a mystery as to why Justice Roberts reversed himself (some have argued Roberts was trying to appease FDR in order to get the president to abandon his court-packing plan).
In any case, the sacred and ancient right to contract was forever abandoned and minimum wage laws have been legal ever since.
As the city of Albuquerque contemplates a drastic hike in its minimum wage, it seems appropriate that we pause and remember the plight of poor Ms. Adkins. There are many like her today who stand to lose their jobs because some well-meaning folks haven’t taken an economics class.

Economist Craig Newmark of N.C.S.U. recently lauded our own Ken Brown’s calm and reasonable piece questioning the wisdom of light rail in New Mexico. Professor Newmark is not the only one who has taken notice.
I was recently contacted by an acquaintance of mine (okay, ex-girlfriend). She works for a civil engineering firm in Arizona which might be called upon to build our light rail system should it come to that. She was wondering if the Foundation had done any research on light rail in NM. I told her that there have been no comprehensive analyses but that our own Dr. Brown has written a white paper on the subject.
She apparently passed Ken’s piece along to her boss who was not impressed.
He replied: “I guess we’d have to ask the author to point out a freeway in Albuquerque that pays for itself. The worst part of this thing is the name of the organization: ‘The Rio Grande Foundation.’ They do that to get some aura of respectability they can’t get if they refer to themselves as what they really are. The “Anti-Everything Naysayers” just doesn’t have much of a ring in the media…”
Slightly chagrined, this was my reply:
“Wow. How nice. If I may defend my organization, I believe that our small PhD-laden staff gives us an “aura of respectability.” We have three emeritus economics professors, a former CEO, a former governor’s senior policy advisor, an under-secretary from the Commerce Department’s division of Economic Affairs and, of course, me! Several of our staffers have long lists of publications in peer-reviewed academic journals and all of them have published widely in more popular formats.
As for his suggestion that roads cannot be made to pay for themselves, I’m afraid he is sorely mistaken. To start with, most of the early turnpikes in America were private. Despite onerous price regulations, many of them were quite financially successful. And as for today, the examples of financially-viable private roads are legion. I actually drive on one in Virginia called the Dulles Greenway on a semi-regular basis. Its prices are reasonable and its condition is exemplary. Private roads have also worked in California, Chicago, Israel, Hungary and Chile. It is often these private roads that pioneer new technologies like congestion-pricing.
Economists aren’t anti-everything, just anti-waste.”

Kudos to Rio Grande Foundation’s Tim Walsh. Tim is running 50 miles (yes, 50 miles!) Saturday to raise money for Educate New Mexico scholarships. The Albuquerque Journal provides good coverage today (subscription). Excerpts:
“Walsh says combining his passion for running with his passion for school choice is natural for him. He says that’s how he came up with the idea of a “donor challenge” to help raise money for additional scholarships for Educate New Mexico.
Donors can pledge from $1 a mile to $20 a mile through Educate New Mexico’s Web site: www.educatenm.org.”
As I pointed out earlier, since contributions are tax deductible, a donor who contributes $1,000 ($20 per mile for Tim’s run) will be able to put $1,500 into scholarships at a cost to him or her of only $679 net-of-taxes!
Readers, please help. We really do have some school choice in New Mexico.

People often think of the U.S. as a bastion of economic freedom. In the 19th century there could be little doubt that it was. With a strong commitment to the rule of law and property rights, low taxes, moderate tariffs, and almost no federal regulation of commerce, no place on Earth better-exemplified the “natural liberty” of a free market for which Adam Smith so passionately argued.
Today, the U.S. is no longer conspicuous for its economic freedom. Sure, we have drifted closer to a command-and-control economy than many thought possible. But perhaps more importantly, the rest of the world has caught on to Adam Smith’s timeless lesson: economic freedom leads to economic prosperity. Hong Kong, Ireland, Estonia, the United Kingdom and even Chile have all undergone remarkable market liberalization in the last few decades. Not coincidentally, all have prospered–outpacing their neighbors in almost every measure of economic well-being.
In the last few years, even the former communist nations have caught on. Latvia, Estonia, Lithuanian, Russia, Ukraine, Slovakia, and Romania ALL have flat taxes! Two weeks ago, Russia took one further step and abolished its death-tax.
Many of these nations have been slow to develop a strong commitment to the rule of law or property rights. And indeed, these prerequisites for prosperity are some of the more difficult to establish (sadly, they seem difficult to maintain, even here). Nevertheless, we could learn a thing or two from our former enemies.

Albuquerque is ranked 27 out of 50 cities for high-deductible health insurance plans according to research by eHealthInsurance. Of course we could do much better if we did not penalize such plans. Thanks to NCPA for the link.

It is good to see Bobby Wolff’s bridge column back in the Albuquerque Journal today.

Not likely according to this (thanks to Craig Newmark for link).
While you may now have confidence in getting good value for housing in Albuquerque, this will not help.

Is it any wonder that NM’s economy grows more slowly than other states’ economies? NM cannot control spending and taxing.

New Mexico has its own version (subscription) of the Folk Song Army. Here is a sample of the hyperbole (good intentions notwithstanding) of the misguided rationale of redistribution:
“As long as the majority of our state’s children are living in or very near to poverty— without the basics they need today, and the hope of a better tomorrow— we will certainly be advocating for increased spending on education, health care, child care assistance and other essentials before tax cuts that benefit only upper-income earners. We believe in accountability to our children, as well as fiscal responsibility and sound policy making.”
As Arnold Kling points out:
“In short, the Folk Song Army believes that redistribution will cure poverty. The squares believe that market institutions will cure poverty. Most of the emotion seems to be on the side of the Folk Song Army. Most of the evidence seems to be on the side of the squares.”
I am one of those squares who are convinced that market institutions will cure poverty.

With thanks to the Bluegrass Institute:
The Founders’ Cornerstones
In this modern age, when we commemorate the 229th birthday of these United States, we may recite the rightness of our Declaration of Independence from Great Britain:
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. –That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.”
Less often, though, do we ponder how the Founders of our nation came to this understanding of legitimacy in government.
The magnificent document from which the above passage is taken defines the basis of our Republic, but whence arose the ideas that impelled the Founders to set our nation off on the path of separation from rule by the kings of England? These precepts are a distillation of the free English laws in which the American colonists were schooled before setting foot on this land, where the colonial Americans became steeped in the experience of life in conditions of freedom.
Thus, the cornerstones on which the Founders built our new country were religious liberty, sanctity of personal property, practical exercise of freedom in daily living, and necessity of self-government. These were laid deeply in the manners and principles by which the earliest American colonial settlers made their way in the New World, during the century before the Founders concluded that we must embark on a course of nationhood.
In the Declaration, our Founders criticized King George III, saying, “He has refused his Assent to Laws, the most wholesome and necessary for the public good.” Could this charge not as readily apply to U.S. judges striking down laws people believe to be just as essential today?
Our Founders continued criticizing the King, noting, “He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.” Although more subtle and insidious, our courts today have “repeatedly dissolved” the actions of our “Representative Houses” in “opposing with manly firmness” the judiciary’s “invasions on the rights of the people.”
Hence, the colonists felt the profound injustice of the British king’s deviation from adherence to the laws underpinning his reign, which led to the break in 1776. As the Founders noted, “But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States.”
Reading these charges today, especially in light of the Supreme Court’s assault in recent weeks on the U.S. Constitution — the document that implements the Declaration’s principles in practical government — we should wonder, are we indeed the heirs of our Founding generation? Two indictments are suspiciously aligned with allegations we could, and perhaps should, lay against our U.S. courts.
Consider this charge: “He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance.” Could this not as easily describe the Supreme Court’s decision permitting governments to take the private property of one citizen and bestow it on another who is expected to pay more taxes?
Add this: “For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments….” This past week’s Supreme Court decisions in regard to Kentucky and Texas governments, acting under their state charters to acknowledge God and the Ten Commandments, could be argued to have abolished their “most valuable laws” and “fundamentally altered the forms of those governments.”
Are these parallels remarkable? Or does growing tyranny present the same face wherever it appears?
Founder John Adams made an eloquent case for both private property ownership and public religious observance:
“The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence. If ‘Thou shalt not covet’ and ‘Thou shalt not steal’ were not commandments of Heaven, they must be made inviolable precepts in every society before it can be civilized or made free.”
We would do well this Independence Day 2005 to ponder them, and to pray that we ourselves will have the courage of purpose and strength of character to put back aright those cornerstones so carefully laid by our Founding Fathers.
– Reprinted in this abridged form courtesy of The Federalist Patriot, free by e-mail at http://FederalistPatriot.US

At least she dissented in the Kelo and Medical Marijuana decisions.
But other than that she seems to have forgotten that she took an oath to uphold the constitution. Here is Chuck Muth on some of her swing votes:
“Well, there was that 5-4 affirmative action decision in which “The O.C.” was the swing vote. That’s the one which said some racial discrimination in college admissions is OK, while other racial discrimination isn’t. And that certain racial discrimination policies are OK today, but might not be OK 20 years from today. Reflect on that one.
And then there was the 5-4 decision in which “The O.C.” was the swing vote upholding the blatantly unconstitutional McCain-Feingold law which bans political advertisements by most Americans (but not the liberal editorial pages of the Washington Post or the New York Times) which are critical of candidates in the final 30 days of an election. Yeah, that’s something to reflect on.
We should also reflect on “The O.C.’s” embrace of the practice of using international law and court opinions as the basis for Supreme Court decisions, rather than that silly, old, antiquated, outdated U.S. Constitution thingy.
And then there was O’Connor’s swing vote which overturned a ban on one of the most grisly surgical procedures ever devised by man: partial-birth abortions. Even most pro-choicers find this procedure to be a bridge too far. But not “The O.C.” Sucking out the brains of an infant and killing it inches away from delivery. That’s certainly something to reflect on.”
By the way, if you do not already subscribe to Muth’s newsletters, you should.

This via Professor Frasca at Division of Labour:
On Monday June 27, Logan Darrow Clements, faxed a request to Chip Meany the code enforcement officer of the Towne of Weare, New Hampshire seeking to start the application process to build a hotel on 34 Cilley Hill Road. This is the present location of Mr. Souter’s home.
Clements, CEO of Freestar Media, LLC, points out that the City of Weare will certainly gain greater tax revenue and economic benefits with a hotel on 34 Cilley Hill Road than allowing Mr. Souter to own the land.
The proposed development, called “The Lost Liberty Hotel” will feature the “Just Desserts Café” and include a museum, open to the public, featuring a permanent exhibit on the loss of freedom in America. Instead of a Gideon’s Bible each guest will receive a free copy of Ayn Rand’s novel “Atlas Shrugged.”

This sort of ruling gets my constitutionalist-blood boiling.
As Harry recently noted, its nice to have a doubting Thomas.
His dissent showed crystal clear economic insight with regard to subjective value and consumer surplus:
“So-called ’urban renewal’ programs provide some compensation for the properties they take, but no compensation is possible for the subjective value of these lands to the individuals displaced and the indignity inflicted.”
I hope good people running for local office in New Mexico are paying attention to this. Let’s not let this happen here!

Pete DuPont makes the absurd claim that Bill Richardson has exercised spending discipline:
“Colorado’s Bill Owens supported (though he is wavering a bit) the Taxpayer Bill of Rights, or Tabor, a constitutional provision restricting the growth of state spending to the growth in population plus inflation and mandating the return of any revenue surplus to the taxpayer, making Colorado a top personal income growth state in the country for a decade. New Mexico’s Bill Richardson has followed the same successful path, holding state spending to Tabor levels even though there is no requirement that he do so, and reducing income and capital gains taxes.”
Here is my response:
DuPont needs to get his facts straight about Bill Richardson. Richardson is on a spending binge. In current dollars Richardson is on pace to have increased New Mexico’s general fund budget by $400 million above inflation plus population growth by the end of his term. That constitutes an increase of 9.5% ABOVE a TABOR limit. He has squandered the opportunity for significant tax reductions inherited from Gary Johnson’s 8 years of budget discipline.
CATO and Forbes had their facts wrong about Richardson’s tax record. Now DuPont can’t get it right about spending. Why all of this disinformation about New Mexico?

Never content to derail a bad idea, New Mexico is poised to become the next rail disaster. Unless New Mexico learns to decouple from this kind of runaway spending, its economy will remain at half throttle.

Did you see this editorial in Friday’s Wall Steet Journal? Excerpts:
“It hasn’t yet hit the intensity level of Howard Jarvis’s Proposition 13, the famous ballot measure that slashed California property taxes by 30% and sparked a nationwide tax revolt in the late 1970s. But activists in at least 20 states — from Alaska to South Carolina — are working to enact Taxpayer Bill of Rights (Tabor) laws to cap runaway state spending and tax increases.”
“Last week in Richmond, Virginia, taxpayer groups from 30 states gathered under the banner of the State Policy Network to discuss how to insert these anti-tax restrictions into state constitutions.”
The Rio Grande Foundation is taking part in this revolt. Stay tuned this summer as we further our documentation of runaway state spending in New Mexico.

In today’s report from Chuck Muth:
YOUR FDA AT WORK
According to the latest “Give Me a Break” commentary by ABC’s John Stossel, the chemical Mexoryl effectively blocks UVA the rays from the sun which cause wrinkles. Dermatologists swear by it. And sun worshippers in Rio, Paris, Mexico, Canada and Australia have been lathering up with it for over a dozen years now.
But don’t look for it on the shelves of your local drug store here in the U.S. of A. It ain’t there. Why? Because it’s illegal here. You see, the federal Food & Drug Administration (FDA) still hasn’t “approved” Mexoryl as safe and effective.
How typically “governmental” to be told over and over and over that the sun is dangerous and not to forget to wear sunscreen…while the feds continue to ban the most effective sunscreen on the market today.
And this is the same group some want to turn the regulation of tobacco over to? Give me a break.

A bad idea filled with feel-good rhetoric has been exposed. So called “smart” growth policies are not working out after all. Unfortunately, Albuquerque has not yet caught on.

New Mexico now has a law requiring ignition interlocks on the cars of convicted drunk drivers. (An interlock is a device that uses a breathalizer to estimate the driver’s blood alcohol content and then shuts down the ignition if the driver flunks the test.)
These devices cost more than $500–not cheap. So here’s my prediction: Within the next 18 months a bill will be introduced in the state legislature to pay for interlocks for drunks who “can’t afford them.”
Does this sound absurd? Yes, but not unlikely.

Two weeks ago Winthrop Quigley (subscription) gave us a pessimistic report on the status of Health Savings Accounts in New Mexico. An excerpt:
“Tax-advantaged savings accounts designed to restrain health-care spending have been slow to take off and haven’t made much of a dent in the number of uninsured workers, according to insurance industry research.”
But a report today from Michael Barone is much more promising. Health care costs may actually be slowing their rate of growth. According to Barone “…the evidence is that health care costs are being held down, by the workings of the marketplace, partly in response to health care legislation passed in the last four years.”
New Mexico is not likely to benefit, however. Our tax treatment discourages these accounts. And our vast array of Medicaid recipients do not need the accounts, since someone else pays for their health care.

So called “school reform” New Mexico style is not going to work because the incentives are all wrong. Look here for one assessment of the results so far. Last again.