Another from Chuck Muth:
SELLING A LEMON
USA Today revealed on Friday that President Bush’s Education Department paid black conservative columnist/talk show host Armstrong Williams almost 1/4 million dollars to promote Ted Kennedy’s “No Child Left Behind” law. Tribune Media Services immediately dropped Williams’ column, and Williams responded by admitting “bad judgment” and saying he understands “why some people think it’s unethical.”
Gee, why would anyone think that a conservative media personality taking $241,000 to promote a bigger role for the federal government in education was “unethical”?

Today from Chuck Muth:
“POLITICS OVER PRINCIPLE
Not long ago, when the House was considering adding the new prescription drug benefit to Medicare – the largest new entitlement since LBJ’s Great Society days – conservatives by and large were in opposition. However, former Speaker Newt Gingrich made a rather compelling case that passing the benefit would result in electoral gains for Republicans at the polls. Gingrich’s political argument ultimately won over the conservative philosophical argument.
Now the issue is Social Security reform. The president, who no longer faces re-election, is pushing for a dramatic overhaul of the nation’s Ponzi-scheme retirement program…but skittish congresscritters facing re-election again in 2006 are going “wobbly” on him. Unfortunately, as Holman Jenkins reported this week in Political Diary, Gingrich and Jack Kemp – Bob Dole’s running mate in 1996 who lost his debate with Al Gore – are siding with the Nervous Nellies, championing a “reform” package which doesn’t really reform the system.
What’s the sense of having a governing majority if you’re scared to death to govern according to the issues you supposedly believe in and got you elected?”

I wonder if anyone has given any thought to the incentive effects on landlords of this:
“Within 24 hours of the discovery of the lab, Mayor Martin Chavez on Thursday announced three new initiatives against meth labs.
The first is the immediate and strict enforcement of the ordinance that requires property owners to pay for the cleanup of drug labs.
Standing in front of the home at a news conference, Chavez pointed at it and said, ‘This property owner is the first, and he probably won’t be too happy about it.’”
Give it some thought. Specifically, how do you think this action by the mayor will affect the supply of rental housing and its price?

As if writing a coda to a musical farce, Bill Richardson now wants to provide corporate welfare for music. According to the Albuquerque Jounrnal:
“Richardson on Friday described his $100,000 proposal to establish the New Mexico Music Commission as an ‘economic development tool’ that would promote the state’s music and musicians.”
Economic development by means of corporate welfare is like a musical farce. Government does not orchestrate the creation of jobs, but it does dole out favors to interest groups at taxpayer expense. Our economy will continue to fall flat, if we are not sharp enough to take note of this nonsense. The key to prosperity is low tax rates and limited government.

The other day I mentioned that Educate New Mexico is now providing choice to poor parents having children in failing government schools. How can you help? If you are in the 28% federal tax bracket and 6% state tax bracket, a contribution of $1,000 to Educate New Mexico would only cost you $679 net of taxes (assuming, of course, that you are itemizing deductions). But it’s even better! Educate New Mexico receives a one dollar match for every two dollars donated. Using the above example, the donor would be able to get $1,500 into school choice for a cost of only $679 net-of-taxes! It’s worth pointing out that Educate New Mexico has very low overhead, so most of the $1,500 would actually reach the poor family. If you are in a lower or higher tax bracket than the example, your net-of-tax contribution would differ very little.
Another benefit to the taxpayer: not as much of your money will go to our inept government.
I recommend you help us take matters into our own hands when it comes to school choice. Donate to Educate New Mexico. Let’s go around our inept government and make it happen!

This from Craig Newmark:
A saying almost as good as Newmark’s First Law is Margolis’s Observation: “A Liberal is someone who believes a woman should be able to choose to kill her fetus, but if she carries the fetus to term, should not be able to choose where the child goes to school.”

Kudos to Micha and Sarah for their thoughtful and persuasive opinion piece in today’s Albuquerque Journal. An excerpt:
“The public schools enjoy a virtual monopoly on education. So long as there are no real penalties associated with failure, nothing will motivate our schools to improve their performance. In markets for goods and services, the best cure for monopoly is proven to be competition, a powerful force that operates to increase efficiency and improve the quality of products. This principle applies equally to the market for schooling.”
Interestingly, Arnold King also has an interesting post today on the benefits of choice and competition in education. An excerpt:
“In my view, government’s biggest weakness relative to the private sector is its inability to reward success more than failure. The biggest reason that I believe private-sector education would prove superior in the long run is that I think it would tend to weed out failing teachers and failing processes in general.”
Do you know that some help is already available for school choice in New Mexico? Educate New Mexico has some scholarships available for low income families who want their children to escape from failing government schools. Your tax deductible contributions to this self-help program may be made to Educate New Mexico. While our state government sits on its hands proclaiming the charade of “reform,” we can be going around it to promote choice and competition. We can take matters into our own hands.

Michael Munger does not think so:
“For one, the comparison defames prostitutes. Politics is the oldest profession. Second, in prostitution, it is the hooker who gets screwed. In politics, it is the customer.”
That reminds me, have you noticed that Joe Thompson has decided to lobby for UNM? I’ll bet hookers don’t get $20K. (Okay, hookers don’t have to do it for 60 days either.)
Let’s face it, politics often trumps principle.

Wow! Free money is rolling in. Some excerpts:
“The windfall has been greatest in the sparsely populated states of Alaska, Wyoming and New Mexico, where revenue from oil and natural gas has yielded large budget surpluses at a time when most states are recovering from deficits. Together, the three states are on track to pull in $4.5 billion from royalties and taxes on energy for fiscal 2004, up $900 million, or nearly 25%, from fiscal 2003 and from a mere $2.9 billion as recently as 2002.”
“A similar scenario is playing out on a much grander scale from Saudi Arabia to Russia to Venezuela, where money is pouring into oil producers’ coffers. The U.S. produces five million barrels of oil a day, behind only Saudi Arabia and Russia, and 19.15 trillion cubic feet of natural gas. When energy prices rise, as they did to $55 a barrel in October before falling back recently, so do taxes and royalties on oil and gas. Yesterday, oil traded on the Nymex was up $1.79 to $43.91 a barrel, as violence flared in oil-rich Iraq and Saudi Arabia said it is making good on a pledge to cut output.”
What is to stop NM from ending poverty now? We are well on our way to imitating utopian Venezuela.

If you have not yet checked out the blog at Division of Labour, you should do so immediately. Their posts are quite entertaining as well as informative. And they have just added three sensational bloggers: Larry White, Deirdre McCloskey and Michael Munger. This is a blog worth checking every day.

Simple Solutions and Simple Care just became more expensive in New Mexico; and complicated care just became less expensive. Of course, the growing cost of additional administrative burdens may more than offset the gross receipts tax advantage enjoyed by complicated care.
According to my calculations, a health care provider now accepting straightforward fee-for-service billing will effectively be taxed on her income at a rate that is 10 to 14 percentage points higher than for an equivalent “managed care” provider. I have created an Excel Spreadsheet that will give you more precise estimates of the difference. Let me know if you would like a copy.
To break even net of tax, a fee-for-service provider must charge roughly 25 percent more (for the same procedure) than a managed care provider.
See my previous post on how well health care turns out when we keep it simple and allow markets to function without government controls.

A friend of mine recently recounted a debate he had with a liberal on libertarianism. His counterpart claimed that in a libertarian world, the FDA would not exist and we would all die of a terrible disease. Sound familiar?
This is a common argument. It has many flaws. I think we can all agree that under laissez-faire, as under any system, some people will do bad things some of the time. Some producers will try to dilute their medicines, take short-cuts in production processes, etc. The question is whether the government is better at policing bad activity than the market. A priori, there is no reason to think that it is. There are several ways that markets police themselves:
1. Reputation. Once people discover that a product is bad, it does not take long for profits to nose-dive. Firms can either: (a) cut corners now, earn high profits in the short term and nothing in the long term, or (b) make their products as diligently as possible and earn a long stream of moderate profits for years to come. The second strategy is almost always more profitable.
2. Asset markets. Stock prices do not just take account of current business conditions, they actually account for a firm’s prospects of long-run performance. What’s more, these markets react instantaneously to news, so stock prices immediately reflect new information the instant it hits. People who claim that businesses have an incentive to cut corners in the short run don’t understand that these asset markets take advantage of the best information available about the future. If a share price does not reflect the actual long-run health of a firm, people can make money by buying or selling shares until the value is accurate.
3. Competition. Rival companies have an incredibly strong incentive to find flaws in their competitor’s products and vociferously publicize them.
4. Information markets. If an industry is not good at policing itself, this provides an opportunity for others to make a profit in the “information industry.” This includes consumer magazines like Consumer Reports or buyer’s services like those that millions use when they buy cars. There is no reason to believe that these wouldn’t pop up if the FDA were eliminated.
What are the FDA’s incentives to police accurately and thoroughly?
1. Reputation? The FDA already has a bad reputation. They certify drugs that are unsafe and keep other, life-saving drugs off the shelf. Their profits are unaffected by this. If you try to stop ‘shopping’ at the FDA, the IRS will bang on your door and arrest you.
2. Competition? There is only one game in town. The FDA has no rivals looking over its shoulder.
3. Asset markets? Fat chance. Unlike stock owners, regulators and politicos have no incentive to look past the next election. Political institutions ensure that almost no one thinks about the long term (witness the impending Social Security crisis).
4. Information markets? The public is notoriously misinformed about political realities. This is because it costs money, time and effort to make oneself informed and unlike in private interactions, it just doesn’t pay off to be informed about politics. The chance that any one vote is decisive is about 1 in 60,000,000 (that was the actual probability going into 2004) so this gives voters little incentive to do their homework and learn whether the regulators are doing their jobs well.
People often assume that economists denigrate regulations because we fear that it hurts business. Actually, the opposite is true. The problem with regulation is not that it hurts business, but that it hurts consumers (it tends to enrich politically powerful business leaders). Regulations like those promulgated by the FDA raise the price of goods. They also raise the cost of doing business so that fewer firms enter the business in the first place. This grants a de-facto monopoly position to those firms already in. This is why, historically, producer groups and not consumers are usually the chief constituencies pushing for regulations!
In some cases, regulatory bodies flat out set monopoly rates. This is what happened in the case of the very first federal regulatory body, the Interstate Commerce Commission. It was instituted to keep railroad rates low. Within a very short time, railway barons were using the Commission to raise rates not lower them. Before the Commission, barons had tried unsuccessfully for years to establish monopoly cartels, but the cartels would always break down. With the Commission setting prices by law, government effectively established a cartel that was unsustainable under laissez-faire.
All of this is to say that I seriously doubt we will all die of a horrible disease were the FDA to be abolished.

David Friedman asks the following question:
“Assuming that airline passengers will soon be allowed to use their cellphones mid-flight, is it ethical not to wrench a phone from a loud talker’s hand and twist the earpiece off the phone, thus rendering our offensive communicator phoneless?”
It will be interesting to observe what etiquette and/or rules emerge voluntarily. Maybe we will soon see “talking” and “nontalking” sections on airplanes. Of course, if a cong gets personally offended (as is likely) airlines may be coerced into enforcing the cong’s rules.

Leave it to Venezuela. This (subscription required) makes the wishful thinking of New Mexico’s social and economic development schemes look small. Any bets as to the success of Venezuela’s new utopian cooperatives?
Here is a sample of what Hugo Chávez is trying to do:
“To accomplish that goal, the Chávez government is plowing billions of dollars into new programs, called “missions,” which act as social welfare agencies. Mostly financed by the PDVSA and run by a hodgepodge of bureaucratic offices, the missions are largely devoted to health-care education and jobs training. They exist as a sort of parallel government and are controlled by Mr. Chávez. The missions provide hundreds of thousands of Venezuelans with monthly stipends to learn everything from reading and writing to setting up cooperative farms. Mr. Chávez plans to combine the dozen or so existing missions into a megaproject dubbed “Mision Cristo,” or Christ’s Mission, which he proclaims will end poverty in Venezuela by 2021.”
This is bad news for Venezuela, bad news for Latin America and bad news for New Mexico.

Congratulations to the Rio Grande Foundation’s Micha Gisser. His excellent letter to the editor regarding health policy was published yesterday in the Wall Street Journal. Here is a portion:
“The economic problem lies in the fact that traditional medical insurance covers two dissimilar events, catastrophic and minor illnesses. Consumers’ demand for catastrophic medical incidents is inelastic: a consumer will not use more of the heart-surgeon’s services just because his out-of-pocket spending is zero. Consumers’ demand for care for minor illnesses is elastic: it is inversely related to price. At the true high price a consumer would consult the medical encyclopedia and use over-the-counter drugs. At a low price (zero if her insurance pays the entire cost) a person would consume much more freely, mainly by making appointments with her doctor for every sniffle and headache. The problem with the prevailing health insurance is that the third-party payment of health-care bills insulates the consumers from the real costs of medical care services for non-catastrophic incidents.”
For the entire letter, click here (subscription required).
Nice job, Micha!

Welcome to Mario Burgos with his new blog. He promises lots of interesting insights into our “emerging” state. Are we really that dumb? Check it out.

Look who dropped into our Toastmasters meeting Tuesday evening!
No shopping mall Santa, he proceded to distribute gifts purchased by each of our generous members. Reality based as it was, we all felt like kids again.
He left these parting words of wisdom: “It’s too bad New Mexico cannot be reality based. We still have too many grownups who believe in the tooth fairy.”

A few years ago I conducted a national study of private prison costs. The results were published in two papers, one written for the Foundation and the other for the Maryland Public Policy Institute. The editor of an important book on the subject and a professor of my acquaintance at George Mason recently received a letter from an expert on the subject–a prisoner. Read it here.

We at the Foundation are saddened to learn of the death of our good friend, supporter and champion of liberty.
Leland and his family moved to New Mexico from Midland,
TX around 1960. He had been a wildcatter in the Permian
Basin, an activity in which George H.W. Bush had also been
active, and they were (and remained) close friends. In
fact, Leland gave George W. Bush his first ride in a small
airplane.
He was a first-rate businessman, and a valued director in a
number of New Mexico companies. He was also a wise
investor in real estate, owning outright or with others
in partnership perhaps 25,000 acres of undeveloped land
on the outskirts of Santa Fe. One such investment, Rancho
Viejo, is now home to Santa Fe Community College as the
result of an outright donation of its campus lands by Leland
and his partners. The Institute of American Indian Arts and
a large Catholic church have similarly located on land donated
by the Rancho Viejo Partnership.
Leland was also a founder of Santa Fe Preparatory School,
the premier independent school (grades 7-12) in Santa Fe,
and involved in a major way assisting establishment of
the Santa Fe campus of St. John’s College.
His widow is Evaline (nee Rife), and they have five grown
children. Three are married daughters with children who
live out-of-state. One is a son, Warren, who is married
with (I believe) two sons, is now chairman of the Santa Fe
Preparatory School board and is respected in the Santa Fe
business community. Another son lives in Taos.

Read the latest column by George Mason Professor of economics and nationally syndicated columnist, Walter Williams, for yet more evidence on the academy’s bias.

Harry recently posted about liberal academia. The London-based Economist magazine (a moderate-left paper, in my opinion) has an article about the phenomenon in its latest issue. The Economist calls liberals’ reluctance to release their grip on academia is a “tragedy not just for America’s universities but also for liberal thought.”
Here is some more:
“Academia is simultaneously both the part of America that is most obsessed with diversity, and the least diverse part of the country. On the one hand, colleges bend over backwards to hire minority professors and recruit minority students, aided by an ever-burgeoning bureaucracy of “diversity officers”. Yet, when it comes to politics, they are not just indifferent to diversity, but downright allergic to it.
Evidence of the atypical uniformity of American universities grows by the week. The Centre for Responsive Politics notes that this year two universities—the University of California and Harvard—occupied first and second place in the list of donations to the Kerry campaign by employee groups, ahead of Time Warner, Goldman Sachs, Microsoft et al. Employees at both universities gave 19 times as much to John Kerry as to George Bush. Meanwhile, a new national survey of more than 1,000 academics by Daniel Klein, of Santa Clara University, shows that Democrats outnumber Republicans by at least seven to one in the humanities and social sciences. And things are likely to get less balanced, because younger professors are more liberal. For instance, at Berkeley and Stanford, where Democrats overall outnumber Republicans by a mere nine to one, the ratio rises above 30 to one among assistant and associate professors.”
And my favorite:
“It is notable that the surveys show far more conservatives in the more rigorous disciplines such as economics than in the vaguer 1960s ‘ologies’.”
If you would like to read the whole article, it can be found here with no subscription required (though I’m not sure how long that will last).

Of the 12,167 certified “provisional” ballots cast for Bush or Kerry in New Mexico Bush received less than 40 percent. Does that seem suspicious?

Yep.
Jane Galt writes:
As you may or may not know, the states set the level of Medicaid spending, but the Feds match the states dollar for dollar. New York State decided that a good way to soak up extra Federal money was to require the local governments to match the state, dollar for dollar. Since the Feds match all state and local spending, this had the effect of doubling Medicare spending in the state of New York…

I propose that we add two new words to the English language:
wandingerous adj., colorless, feeble, tiresome and repetitious — wandingerousness n. To see why you should read the opinion piece by Angela Wandinger-Ness in the Albuquerque Journal Friday (11/10).
In it she attacks our president John Dendahl for poor writing and lack of rigor. Here is a sample of what she thinks is good writing:
“There should be accountability and a factual basis that underlies a credible opinion.”
I am not making this up. If you have a subscription to the Albuquerque Journal , you yourself can compare the writing skills of John and Ms Wandinger-Ness. Now tell me what do you think of my proposed new words!
With respect to lack of rigor, Ms Wandinger-Ness cites the ACLU website as evidence that John has not done his homework. The ACLU website???? Why doesn’t she look here or here or here?
Ms Wandinger-Ness lost her PC constraint in the article. I guess the Academy will forgive her, since her personal insults are directed at someone who does not share the Academy’s world view. Aren’t you glad your tax dollars fund such wandingerousness?