This Fourth of July, let us respect all of the rights enshrined by the founding fathers. Just as important – but often respected much less – as the right of freedom of speech, freedom of worship, and suffrage, is the right of property.
In fact, it is an even more basic right than many that we hold to higher esteem. The fundamental, inalienable rights of man are: life, liberty and property.
This Fourth of July when we remember our country and our freedom and our constitutionally protected rights, let us reflect on why this right of property is so important. In the words of our founding fathers:
“Government is instituted to protect property of every sort; as well that which lies in the various rights of individuals, as that which the term particularly expresses. This being the end of government, that alone is a just government, which impartially secures to every man, whatever is his own.” – James Madison
“To take from one because it is thought that his own industry and that of his father’s has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association–‘the guarantee to every one of a free exercise of his industry and the fruits acquired by it.’” –Thomas Jefferson
Let us also remember that this recognition – that only the protection of property rights can allow for the protection of freedom – was confirmed by the end of slavery in our country and by the new enslavement of the people in countries which abolished property rights.
As declared by the Great Emancipator himself:
“One of the reasons why I am opposed to Slavery is just here. What is the true condition of the laborer? I take it that it is best for all to leave each man free to acquire property as fast as he can. Some will get wealthy. I don’t believe in a law to prevent a man from getting rich; it would do more harm than good. So while we do not propose any war upon capital, we do wish to allow the humblest man an equal chance to get rich with everybody else.
When one starts poor, as most do in the race of life, free society is such that he knows he can better his condition; he knows that there is no fixed condition of labor, for his whole life. I am not ashamed to confess that twenty five years ago I was a hired laborer, mauling rails, at work on a flat-boat—just what might happen to any poor man’s son! I want every man to have the chance—and I believe a black man is entitled to it—in which he can better his condition—when he may look forward and hope to be a hired laborer this year and the next, work for himself afterward, and finally to hire men to work for him! That is the true system….” – Abraham Lincoln, 1860
Let us remember who we are not. We are not a collectivist society – where property is not a right but a crime and where poverty replaces prosperity and bondage replaces freedom. As the Virginia Institute explains here, it is this loss of private property which destroys the free society.
So, this Fourth of July, let’s rejoice in our right to property and our freedom. And let us not forget to protect them when they come under attack.

As those who regularly visit the Rio Grande Foundation’s main website may be aware, New Mexico’s fiscal year ended on June 30. The end of the fiscal year means that the Foundation’s spend-o-meter cycles back to zero. By this time next year, the state will have spent $12.6 billion.
A recent story in a new, New Mexico-oriented online publication known as The Citizen explored the issues surrounding government spending in New Mexico and how the spend-o-meter helps New Mexicans keep track of how their money is spent.

We are so fortunate to be blessed by such a heritage: “And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.”

This report should be of particular interest to New Mexico. You may be surprised to learn of the history of property rights among Native Americans. If you are a regular reader of this blog and Rio Grande Foundation reports, you will not be surprised to learn that the existence of well-defined property rights and economic freedom have at times led to prosperity for Native Americans.

The Rio Grande Foundation doesn’t take a position on smoking, but we do have a few things to say about government officials twisting the truth. I just knew this was the case when the U.S. Surgeon General came out and stated “The debate is over! Secondhand Smoke Kills!”
Of course, no new evidence was given to buttress the argument and the lapdogs in the media didn’t bother to ask, so it was all dutifully taken as truth with few questions asked. That’s why we have people like Michael Fumento to take a look behind the smokescreen.

As usual, the best solution to smoking is to let the free market decide. Let entreprenuers decide whether to allow smoking or not and let individuals decide whether to patronize them.

I notice that the law of demand reflects reality. When the price of something goes up people buy less of it; and when the price goes down people buy more of it. Why do “progressives” want to suspend this reality in the case of wages? Read Don Boudreaux’s excellent description of reality, including why he is not an “ideologue” when it comes to minimum wage laws.

New Mexico gets $2 back for every $1 in federal taxes paid, according to the Tax Foundation. It’s not because the state demands more from the federal government that other states like New Jersey which receives about 55 cents back for every $1, it is because of the progressive income tax. New Mexicans are poor and the federal tax structure provides the Earned Income Tax Credit and other negative income taxes to help the poor.
New Mexico, as of 2002-2004, had a rate of poverty as defined by the US Census of about 17%, among the highest in the country.
But is the progressive income tax the best way to help out poor New Mexicans? According to a new study reported by the Heritage Foundation the cost to the private sector of providing the government an additional $1 in tax revenue is about $2.50 not $1 as many people assume. So, the redistribution of tax money from the rich – who may live outside New Mexico or within – to the poor, costs jobs, growth, wages, opportunity and innovation of 2.5x the amount actually taxed and redistributed.
Although the progressive tax structure is supposed to help the poor, a low flat tax and smaller government would mean much greater economic growth, the only proven way to lift the poor out of poverty. Aid to developing countries has done little to nothing to alleviate poverty, while policies of growth have lifted millions each year out of poverty – why not help the remaining impoverished within the US in the same way?

If you are in need a thin smear of rhetorical mush today, then look here.

There is a debate going on within the Republican Party that makes me want to hold my nose. Unfortunately, I may soon have to hold my tongue.
Kudos to George Allen for standing up for free speech.

In case you missed it, the Rio Grande Foundation got some nice ink in the Albuquerque Journal relating to our rally marking the one-year anniversary of the Kelo decision.
Whether Governor Richardson’s commission succeeds in finding a solution that secures our individual property rights or whether John Dendahl pulls an upset and pushes legislation through the legislature next year, we hope that this will be the last time New Mexicans are forced to mark this dreadful Supreme Court decision.

President Bush celebrated the first anniversary of the Supreme Court’s Kelo decision with an Executive Order, basically restating the Fifth Amendment to the US Constitution. By the President’s order, private property is now protected by:

limiting the taking of private property by the Federal Government to situations in which the taking is for public use, with just compensation, and for the purpose of benefiting the general public and not merely for the purpose of advancing the economic interest of private parties to be given ownership or use of the property taken.

It’s absurd that the Fifth Amendment needs repeating, especially to certain Justices whose reading comprehension is diminished in the presence of our founding documents.
We’re still at the mercy of state and local government land grabs, but I guess we’re not supposed to worry about the Federal government, at least until January, 2009, when our next chief executive may have other orders in mind.
Our government was founded on the principle that individual rights are not subject to the whim of any one man or government body. They are not granted to us by government, but inherent in our very existence as sentient beings. We should demand a government that holds our Constitutional rights as inviolable, not feel grateful for whatever meager scraps of rights a government official is willing to indulge.
The President’s Order is an insult. His oath of office would be better served by leading a movement to impeach those Justices who rule in clear violation the US Constitution.

Speaking of the failure of New Mexico to protect the cornerstone of liberty, there is a new book out. In Cornerstone of Liberty: Property Rights in 21st-Century America, a new book published today by the Cato Institute, Timothy Sandefur, a staff attorney at the Pacific Legal Foundation, examines the state of property rights after Kelo.

Today marks the 1st anniversary of the Supreme Court’s Kelo decision. It was such a bad interpretation of the constitution that it makes you wonder what they were smoking.

Property rights are the cornerstone of the liberty that has made us so prosperous. Paul is leading an event today that calls attention to New Mexico’s subsequent failure to protect those property rights.
Thanks to Robin for the graphic.

Should New Mexico replace the state income tax with an immigrant tax?
No country can let in an infinite number of immigrants. And, if we allow immigrants to take advantage of public schools, welfare, social security and Medicaid, it will cost us a lot. Tech Central Station has come up with a strategy: tax the immigrants. According to the plan, each immigrant must put the dollar amount necessary to pay for his own deportation into an account; if he is ever unable to support himself, the money will be used to pay for his removal; in addition other taxes are levied on his wages that don’t apply to citizens. This way we could be sure that there is no drain on the economy of taxpayer funded programs and instead immigrants create more revenue.
Why not replace some current taxes with a tax on immigrants? Nobody can argue against a tax refund for all citizens. In any case, it is an interesting and innovative idea for an old and sometimes divisive problem.

I have signed on to the following open letter on immigration. The only thing I could add is that our inefficient and ineffective welfare system tends to reduce the benefits of immigration while enabling the “misguided commentary.” Look here to find the many distinguished scholars who signed the letter. Thanks to Alex Tabarrok for putting it together.

Dear President George W. Bush and All Members of Congress:
People from around the world are drawn to America for its promise of freedom and opportunity. That promise has been fulfilled for the tens of millions of immigrants who came here in the twentieth century.
Throughout our history as an immigrant nation, those who were already here have worried about the impact of newcomers. Yet, over time, immigrants have become part of a richer America, richer both economically and culturally. The current debate over immigration is a healthy part of a democratic society, but as economists and other social scientists we are concerned that some of the fundamental economics of immigration are too often obscured by misguided commentary.
Overall, immigration has been a net gain for American citizens, though a modest one in proportion to the size of our 13 trillion-dollar economy.
Immigrants do not take American jobs. The American economy can create as many jobs as there are workers willing to work so long as labor markets remain free, flexible and open to all workers on an equal basis.
In recent decades, immigration of low-skilled workers may have lowered the wages of domestic low-skilled workers, but the effect is likely to have been small, with estimates of wage reductions for high-school dropouts ranging from eight percent to as little as zero percent.
While a small percentage of native-born Americans may be harmed by immigration, vastly more Americans benefit from the contributions that immigrants make to our economy, including lower consumer prices. As with trade in goods and services, the gains from immigration outweigh the losses. The effect of all immigration on low-skilled workers is very likely positive as many immigrants bring skills, capital and entrepreneurship to the American economy.
Legitimate concerns about the impact of immigration on the poorest Americans should not be addressed by penalizing even poorer immigrants. Instead, we should promote policies, such as improving our education system, that enable Americans to be more productive with high-wage skills.
We must not forget that the gains to immigrants coming to the United States are immense. Immigration is the greatest anti-poverty program ever devised. The American dream is a reality for many immigrants who not only increase their own living standards but who also send billions of dollars of their money back to their families in their home countries—a form of truly effective foreign aid.
America is a generous and open country and these qualities make America a beacon to the world. We should not let exaggerated fears dim that beacon.

Today’s Albuquerque Journal reports on HB80, Equitable Sentencing Schedule, which among other things doubles the threshold at which shoplifting becomes a felony from $250 to $500. This bill was passed during the 2006 legislative session and is set to go into effect on July 1.
The bill’s sponsor, Hector H. Balderas (D), argues the change is necessary to keep up with inflation, one of the chief tools in the belts of those seeking higher minimum wages at the local, state, and federal levels. Professional shoplifters will now be able to steal just under $500 at a time to avoid a felony arrest, instead of the presumably inadequate bundles of grifted goods available today. I guess even Jane’s Addiction needs to make a decent living.
But it’s certainly not good for New Mexico retail businesses and their law abiding customers. According to the Online Lawyer Source:

The consequences of shoplifting cause one third of all new businesses to fail. Businesses lose sixteen billion dollars annually in lost revenue as a result of shoplifting. In addition to lost profits, the consequences of shoplifting also force businesses to raise prices and take other costly preventative measures to reduce their vulnerability to shoplifting… The average family in America spends $300 every year in order to subsidize the cost of what shoplifters steal.

So who does benefit, beside those employing the five-finger discount ? Following the nail-bitingly close presidential election in 2000, Richard Romero’s 2001 Restoration of Felony Voting Rights act allowed an estimated 50,000 convicted felons to return to the polls after completing their sentences, and passed after:

Every Democratic member of both the House and the Senate received copies of a study in progress which demonstrated that Democratic defeats in several close elections in various states could be attributed directly to felony disenfranchisement.

Apparently, removing some shoplifters from the voter rolls during the maximum 18 month sentence for a fourth degree felony conviction is too much a burden for the state’s politicians to bear, especially with mid-term elections coming up. Maybe this post should be titled “The Voting Rights Act for Shoplifters.”
Lawmakers should concentrate on protecting the property of the state’s businesses and providing a secure environment in which residents can engage in mutually-beneficial trade. Easing the lives of criminals, and their voter eligibility, in order to maintain entrenched political power is as perverted as special interest politics can get.

It looks like California may be the next state to succumb to “minimum wage madness,” only this time, the Governator, supposedly a big fan of Milton Friedman and his book “Free to Choose” looks to be in on the plan to not only raise the state’s minimum wage, but to index it to inflation. In “Free to Choose,” which was published in 1980 when the federal minimum wage was much higher relative to wages, Friedman wrote “The high rate of unemployment among teenagers, and especially black teenagers, is both a scandal and a serious source of social unrest. Yet it is largely a result of minimum wage laws.”
New Mexicans can’t do much about California’s misguided politicians, but perhaps we should all send our legislators copies of Friedman’s book?

The latest Weekly Alibi features the chilling tale of the Crematorium that nearly killed the Cultural Center.
Bryan Arndt, property owner, made the grave mistake of leasing a lot to Charlie Finegan, business owner–New Mexico Mortuary Service and Riverside Funeral Home, to be exact. Finegan sought to expand his business, creating jobs and new tax revenue for the city, by building a new crematorium.
But the Chinese Cultural Center across the street had a problem with this private business transaction. To its owners, explains the Alibi:

It’s about feng shui, the Asian art of placement that aims to create positive, flowing energy, promoting health and balance. Having the energy of death from the crematorium flowing into their space would wreak havoc on the positive energy they’ve spent years producing.

City Council President and Ethnoscientist Martin Heinrich explains: “Zoning was created to prevent conflicts like this.”
Mayor Martin “powerful tool” Chavez joined the fight, quickly forcing the city planning department to revoke their approval of Finegan’s plan.
“There’s nowhere to move,” complained one of the Cultural Center’s owners, while insisting the mortician do just that. Finegan did find a new location, which he’s as yet keeping secret to avoid threatening someone else’s chi.
So Albuquerque entrepreneurs are out tens of thousands of dollars, with private property rights one step closer to the ideological crematorium. But that’s okay because the Parkland Hills neighborhood is safe from “death energy,” an outcome which “feels wonderful.”
A note of caution to businesses looking to locate in Albuquerque: make sure your plans balance universal energy.

As we rapidly approach June 23rd, the one year anniversary of the Supreme Court’s Kelo decision, this story made me pause and think about just how out of touch most Hollywood elites are with the rest of Americans.
Where was Hannah when Susette Kelo and her neighbors when they were evicted by the city of New London recently? How about a little righteous outrage over the fact that any of us can now have our homes taken away from us for any reason, by some government bureacrat?
No, instead, we have actress Daryl Hannah sitting in a tree to stop the owner of the land on which an urban garden has been located. Worse, Hannah and her cadre of anti-property rights activists are only making it less likely that land owners will allow others to use their land on a temporary basis because when the time comes that they do need it back, the property owner is in for nothing but ingratitude and trouble.
Paul Gessing

Some additional context on the previous entry resurrected by Jason Kottke, hat tip to Marginal Revolution.
As the Economist showed back in 1997, consumption of Coke correlates strongly with both health, measured by the UN human development index, and freedom as reported by Freedom House:

Ah, now the American Medical Association’s attempt to reduce soft drink consumption by restricting economic freedom makes sense.
But won’t reducing our soda intake make us less healthy? I guess I’m still confused.

America’s doctors, fresh out of lollipops, are demanding that government do something about sweeteners in our sodas. Specifically, they want a ‘fat tax‘ imposed to reduce demand and fund “health education.”

Delegates at [the American Medical Association’s] Chicago conference are gunning in particular for high fructose corn syrup, the sweetener which is added to everything from ketchup to cola.

One American politician labeled it the ‘crack of sweeteners’ because it is so widespread.

Before begging for government intervention in the sweetener market, it may help to ask “how did we get here?”
The ‘crack of sweeteners’ epidemic broke out in 1984, when both Coca Cola and Pepsi switched from using sugar to high fructose corn syrup. Why switch? Protectionist sugar tariffs and import quotas, designed to keep domestic producers happy, had made sugar prohibitively expensive. America’s clever entrepreneurs found a more profitable alternative, corn syrup.
The domestic sugar market crashed, as soda manufacturers weren’t the only ones to respond in ways unpredicted by the politicians:

Entrepreneurs were importing high-sugar content products, such as iced-tea mix, and then sifting their sugar content from them and selling the sugar at the high domestic price.

Given this history, and the size of the soda market, legislative efforts to increase the cost of certain sweeteners will be met with the full force of American ingenuity. American consumer demand for cheap, sweet drinks will not go unsated.
As for the proposed “massive public health education campaign” funded by any corn syrup tax, this is also unlikely to make Joe Sixpack-of-Sodas less likely to obey his thirst. If people don’t listen to these concerned doctors face to face, in their offices, they’re not listen to them in a public service message.
Doctors are among America’s most educated and intelligent of citizens. Unlike politicians, they have a hard time succeeding in their profession without understanding that their charge, the human body, is complex, often responding in unpredictable ways to their interventions. Drug interactions are one example among many. Doctors would do well to apply this same understanding to an economic body before rushing to treat the patient.

Today’s Sunday Journal reports on the failure of one of the state government’s many ‘investments.’ TCI Medical, which was to build a nuclear medicine plant in Carlsbad, has ceased business after receiving $7 million from New Mexico’s taxpayers.
The immediate cause of TCI’s closure? Private investors realized the company simply wasn’t competitive with others in the industry, and pulled their financing. New Mexico’s taxpayers have all lost money on an investment they never chose to make.
If an endeavor is unable to generate private financing, this is likely because investors have decided the risk of losing their own money is greater than the potential returns. With personal wealth at stake, those with money to invest must be cautious, targeting their investments towards those enterprises most likely to succeed. Even an investment firm working on behalf third-party clients is held to this constraint, for any such firm that doesn’t find profitable returns will lose customers to those that do.
Politicians and bureaucrats, on the other hand, face little personal risk in investing other peoples’ money. Brian Birk, vice president of New Mexico Co-Investment Partners, which funnels tax-payer money to companies who haven’t earned it in the marketplace, laments the failure of “an opportunity that people thought could bring high-paying jobs to rural New Mexico.” Mr. Birk himself mustn’t be too sad at his failure, however, as he is unlikely to find his own job and salary at risk as a result.
Simply put, “thought” and “could” are not sound investment principles. With the risks of investments minimized, Mr. Birk and his colleagues are more susceptible to making decisions based on wishful thinking, how they think and hope things might turn out, rather than any underlying economic reality that actually does bear on the success of such investments.
Meanwhile, the economic harm from stripping this money from the state economy is hard to measure. That $7 million, which could have supported 140 salaries of $50,000 each if left in the hands of the businesses and residents of New Mexico, has simply fizzled away.
The Journal assures us, however, with a meaninglessly broad figure, that “from 20 percent to 90 percent of an investor’s equity portfolio will likely fail.” Often, a few big successes will make up for many individual losses. Given the incentives in play, it would be safe to assume that investments from personally uninvested bureaucrats and politicians lie closer to that 90 percent failure rate.
The verdict is still out on the other technology companies receiving these massive subsidies from tax payers. The state’s dabbling in the film business, however, has shown more rapid results. Of the 4 state funded productions as yet released, none have reported any profits from which New Mexico taxpayers can claim a share, and the state isn’t expecting profits from 9 other productions any time soon. 100 percent failure rate so far.
The use of forcibly confiscated tax dollars in such ‘investments’ is typically justified for ‘creating jobs’ or ‘economic development.’ Never mind the impact on jobs and economic growth of stripping money from productive earners in the first place. Politicians can’t take credit for jobs the private sector creates, and usually escape blame for the jobs they destroy. A politician can count as a victory the hidden destruction of two jobs in creating one high-profile job.
$7 million in state funds wasn’t enough to keep this unprofitable firm in business. You might ask, how many tax dollars would have been required to keep TCI operating in NM, producing pharmaceutical radioisotopes less efficiently than its competitors? In this case, we may never know, but with other investments, in tech companies, movie productions, etc., we’ve so far seen no limit to what Santa Fe is willing to throw into this risky business.
The surest way to see that New Mexicans’ money ends up investing in successful, profitable, job-creating businesses is to simply allow New Mexico’s residents and businesses to keep more of their own money, which they can spend and invest as they see fit.

As Harry mentioned, a majority of Senators sought today to permanently end the federal death tax, but could muster only 57 of the 60 votes needed to advance the measure.
New Mexico tax law links the state’s death tax to the federal one. By 2005, recent abatement of the federal estate tax effectively eliminated the state death tax. If nothing is done in Washington, however, New Mexico’s death tax will return, along with the federal tax, in 2011.
New Mexico’s Jeff Bingaman spoke out on the floor of the Senate against killing the death tax, before voting against the tax’s repeal. Given the strong tradition of family-owned businesses in New Mexico, one would think all of our representatives in Washington would know better.
Bingaman excuses the confiscation of the fruits of a lifetime of effort, effort that has already been subject to income and other taxes, because before the reductions, “there were only 200 people dying with any estate tax liability” in NM in 2001. That’s 200 of our favorite restaurants, our historic tourist-drawing ranches, our most productive family farms, even many of the funeral homes New Mexico families have relied on for generations.
And that’s only taxed deaths occuring in one year. The number of New Mexicans who will be subject to the death tax at the end of their lifetimes is much greater, unless the current federal law is changed.
It’s time the death tax itself took a trip to the funeral home.

This morning I was pleased to receive the following links from John Goodman, President and Ph.D. economist for National Center for Policy Analysis. If you would like to be enlightened on the “death tax,” international trade, the connection between social security and high tax rates on the elderly, the benefits of Roth IRA’s and/ or the harm done by minimum wage laws, then check out these links:
We All Pay for the Estate Tax –
Who would benefit from a Roth IRA?
Taxing the Elderly –
Trade & Economic Growth, Part I –
Trade & Econmic Growth, Part II –
The Negative Effects of The Minimum Wage –