Errors of Enchantment

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New Mexico’s pensions remain problematic

05.12.2025

As prospective gubernatorial candidate Duke Rodriguez pointed out in a recent Albuquerque Journal opinion piece, New Mexico’s PERA pension system’s solvency has worsened in recent years. This, despite reforms adopted in 2020 (that Rio Grande Foundation supported).

As the Albuquerque Journal reported, “Public Employees Retirement Association’s funded ratio — or its total assets divided by liabilities — has dropped from 70% in 2019 to 67% as of last summer. Its total unfunded liability has grown from $6 billion to nearly $9 billion during the same time frame.” That’s not good at any time, but considering the stock market’s performance during that time frame it is even more troubling.

I asked our friend Len Gilroy at the Reason Foundation (pension experts that we worked on pension reform with in 2020) for his thoughts and here’s what he said, “The benefit changes back then helped bend the cost and liability curves and built in some risk protections around new hires, but they didn’t fundamentally pour a bunch of money in to solve the current underfunding. It was a Phase 1 reform and then their leadership team left and they stopped pushing additional phases.”

At this point they (the Legislature) need to keep going. The first reform bent the liability curve, and the outcomes would have absolutely been worse had those not happened. But hovering out around 67% funded when markets are wildly volatile and closer to the next recession  is no place to rest.”

Furthermore, the Journal story noted that “New Mexico’s other public retirement system, the Educational Retirement Board that provides benefits for retired educators, has also faced solvency concerns in recent years. The ERB had a 65% funded ratio as of last summer, which marked a slight improvement from the previous year.”

The Rio Grande Foundation has philosophical concerns with defined benefit pensions in the first place though we don’t expect the transition to a defined contribution plan to happen anytime soon. Rather than pouring money into the State’s myriad “permanent funds” perhaps showing up our pension liabilities would have been a better approach?

You can see the latest PERA funding chart below, it is found at page 34 of this document.

RGF policy paper: “Senseless Energy Policy in New Mexico”

05.11.2025

At the Rio Grande Foundation we have long been frustrated with the prevailing approach to energy. It is anti-science, expensive, and sets New Mexico up for blackouts (Energy Transition Act) and economic destruction (anti-oil and gas legislation). The Foundation’s Adjunct Scholar on Energy Policy, Kenneth Costello, has a detailed takedown of New Mexico’s anti-energy approach in his new policy brief:

“Senseless Energy Policy in the Land of Enchantment”

Tipping Point NM episode 706 Daniel Higbie – Faith Driven Entreprenuership in NM

05.09.2025

On this week’s episode Paul talks to local entrepreneur and businessman (and Hillsdale College graduate) Daniel Higbie. They discuss unique cultural obstacles to entrepreneurship in New Mexico and their historical origins. They also discuss specific efforts that he and other business owners have undertaken in order to change New Mexico and its approach to business, wealth, outsiders, and more.

Here are several links to various concepts discussed in the conversation:

https://www.praxis.co/redemptive-entrepreneurship

https://faithdrivenentrepreneur.org/

https://www.faithdriveninvestor.org/

https://faithdrivenentrepreneur.org/find-a-group/

New Mexico now spends $13,227 per pre-K child enrolled

05.09.2025

According to a new report from New Mexico’s LESC, the State of New Mexico’s LESC. 

Check out the following charts directly from the report linked above. Increasing numbers of 3 and 4 year-olds are enrolled in New Mexico. At the same time spending per-child has ramped up dramatically. In 2023-24 State spending totaled $212,888,058, up $107,488,625 (102%), adjusted for inflation, from the prior year. On a per-pupil basis New Mexico spends about as much as tuition at a top private high school.

What will New Mexico get for this spending? There’s no telling. New Mexicans have been pouring money into pre-K for 20 years without any compelling increase in student outcomes. The State remains dead last nationally in education. The best randomized control study of pre-K outcomes found WORSE results with pre-K.  

Rep. Vasquez joins House GOP to repeal California EV mandate (which New Mexico is using to advance its own)

05.08.2025

The US House of Representatives recently voted on a plan that would (if adopted in the Senate) result in the repeal California’s emissions waiver. That waiver allows the state to require all new vehicles sold by 2035 to be electric. It has also been used by other states like New Mexico to implement EV mandates.

The House passed the mandate repeal with 35 Democrats (including New Mexico Rep. Gabe Vasquez) in support in addition to all Republicans. So, kudos to Vasquez on voting for both reality and New Mexico’s ACTUAL interests. Sadly, Reps. Stansbury and Leger Fernandez voted “no” on repeal.

Will this repeal make it through the Senate? We fully expect Heinrich to vote against it. Ben Ray Lujan almost always votes with Heinrich.

Leftist legislator’s bizarre constituent mail

05.07.2025

Rep. Michaela Cadena (D-Las Cruces) is among the farthest left members of the entire New Mexico Legislature. She is also an advocate for dramatically increased taxes on alcohol and reliably supports the “progressive” side in legislative battles in Santa Fe.

We happened to obtain some constituent mail the Rep. sent out to at least one constituent. It contains some text in Spanish and the text of the “letter” is “The people of New Mexico deserve better.” We agree with Cadena on this although we believe that we MAY have a few differences of opinion on what would actually make New Mexico better. As is well documented and you can see below, New Mexico has been under one party rule (Democrats) for nearly 100 years. We agree, New Mexico deserves better, but definitely not Cadena’s version of “better.”

Tipping Point NM episode 704: Latest on New Mexico’s Electric Vehicle Situation with Carlos Garcia

05.07.2025

On this week’s Tipping Point NM interview Paul sits down with Carlos Garcia of Garcia Automotive for an update on New Mexico’s electric vehicle situation. What’s the latest with the mandate both at the federal and state levels? Did the Legislature do anything? When do 2026 vehicles (43% of which are supposed to be EV’s show up on dealer lots?). What’s next for EV mandates and car buyers in New Mexico?

Also, Carlos and Paul discuss the impact of Trump’s tariffs on the auto industry and Elon Musk’s fall from grace (with his best customers).

Opinion piece: Prohibiting housing market technology won’t resolve New Mexico housing shortage

05.05.2025

The following appeared in the Albuquerque Journal on May 4, 2024.

New Mexico’s Legislature adjourned March 22, and not a moment too soon. That’s because the party that controls our state government spent most of the legislative session pushing misguided policies that expand the size of government, increase spending, fail to reduce tax burdens and add red tape to our economy. Our leaders need to address the root causes of these problems by shrinking government. Look no further than the housing market. Policy advisers to Gov. Michelle Lujan Grisham report that in the past eight years, the average home price in New Mexico has gone up 70%, and the median rent costs have increased 60%.

That’s unsustainable for working families.

Analyses have emphasized the drastic undersupply of housing in New Mexico. An accumulation of development-deterring rules and regulations have suppressed the supply of housing, which in turn negatively impacts the going rates to buy or rent.

The Lujan Grisham administration rammed through a costly new building code in 2024. This new code raised insulation standards and mandated electric vehicle-related infrastructure. It also hasn’t helped that cities have been overly slow to reevaluate impediments like building height restrictions and unwise prioritization of costly single-family detached homes — which now makes up more than 65% of the state’s housing stock.

While increasing the housing supply in New Mexico’s largest cities was supposed to be the goal of the 2025 legislative session, a proposed bill (House Bill 215) would have worsened housing issues in the state. The bill would have barred the use of software by property managers to suggest rent prices or lease renewal terms. This entailed revoking the processes for analyzing and training an algorithm/artificial intelligence on historical or contemporaneous prices, supply levels or lease or rental contract termination and renewal dates of dwelling units from two or more rental property owners.

For consumers, much of what we buy is online or is supported by software tools like these that swiftly match our demands with available inventory and executing transactions the moment that we need them — think of flights, trains, cars, hotels and many other necessities.

While New Mexico’s proposal failed in the Legislature, similar laws enacted in California have been passed. In short, statistical assessments of the rental property landscape simply reveal a snapshot of its current market conditions, not the other way around in establishing such conditions, as some may claim. Artificial intelligence tools are just tools. If a landlord wishes to charge different rents or give discounts to customers, they are welcome to do that. AI is simply one of many tools that can be used to make sure that rental prices reflect current market conditions in the area.

Not only is AI not a problem driving New Mexico housing prices, it could be part of the solution. But the real solution to rising housing costs is to increase the housing supply. Austin, Texas, is an example of a fast-growing city that has tamped down rising prices through increased supply. In the market, where construction has been allowed to keep up with and even surpass population growth, rents have fallen 22% from their peak in the summer of 2023.

Reversing the anti-technology approach to housing is critical given that basic functions of tools for price discovery in the rental market stand to encourage more entrepreneurial activity and motivate more potential property owners to bring more housing units to market. Allowing processes to demystify markets like these can also further push business leaders to move their AI-oriented operations to New Mexico and support better outcomes for local consumers.

Of course, solving New Mexico’s housing shortage starts with increasing supply.

Paul Gessing is president of New Mexico’s Rio Grande Foundation, an independent, nonpartisan, tax- exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

Fact check: by any objective measure oil and gas does NOT run New Mexico’s Legislature

05.05.2025

While the Rio Grande Foundation is proudly on the libertarian/conservative side of the economic debate in New Mexico, there are groups on all sides of the issue that we work (and often argue with). Some are more or less credible. One of the better-funded but less credible groups on the left is ProgressNowNew Mexico.

The far-left group recently offered a policy brief with the name “Oil-garchy: Big Oil Runs NM Legislature.”  The gist of their argument (as you might gather from the title) is that the oil and gas industry “rules our state by fiat.” They cite numerous bills that have been introduced in 2025 and in the past several years (all under Democrat rule) that failed.

It is hard to see how an industry that pays a mind-blowing $15+ billion in taxes to the State of New Mexico “owns” the Legislature (while Hollywood gets checks from taxpayers to the tune of 40% of what they spend), but that is what ProgressNow is arguing. Of course, if oil and gas truly “owned” the Legislature none of these anti-oil and gas bills would have been introduced in the first place. Despite record revenues and economic impact on New Mexico the Legislature just passed a tax hike in the form of increased royalty payments (SB 23).

ProgressNow, like many left wing advocates who don’t get their way 100% of the time, claim that money spent on PR and lobbying have kept oil and gas from being taxed and regulated more, but the reality is that if the Legislature and Gov. acted in a concerted way to kill the industry or attack it in some concerted way (such as this year’s HB 35 which would have forced a mile wide barrier between oil and gas sites and any “school” or recreation area that could serve kids) would reduce state revenues dramatically.

The fact is that no industry or even group of industries could replace oil and gas revenues (at least until or unless the State makes a concerted effort to become more economically-competitive as a business relocation site). But, even if the Legislature and Gov. did nearly everything RGF asked them to do, tax reduction, education reform, deregulation, and much, much more, it would take a long time to bring in the kind of cash New Mexico receives from oil and gas. 

If ProgressNow (or any left leaning group or legislator) would like to work on economic development strategies that would truly diversify our State’s economy in a sustainable way, we’d be happy to work with them, but we’re not holding our breath!

 

Las Cruces moves to eliminate natural gas

05.05.2025

The political left is out to get natural gas. We know Sen. Martin Heinrich is not a fan of gas stoves. So-called “environmental groups” don’t care for them either and have worked to implement various types of bans across the nation. It looks like the City of Las Cruces is going to be moving to limit access to natural gas hookups and possibly appliances. As the notice below notes, there is a public meeting on Tuesday, May 20th from 6 to 8pm at City Hall.

But, assuming that city officials wish to move forward with such a ban, there will be plenty of future meetings on the issue with limiting natural gas as a central goal of the effort. What will happen? That’s anybody’s guess, but it is up to the people of Las Cruces to push back starting with the first meeting on this crazy idea.

Once upon a time President Obama was a big supporter of natural gas, but radical environmental groups now oppose even that clean burning fuel.

RGF president talks taxes in Las Cruces

05.05.2025

RGF’s president recently traveled to Las Cruces for a few speaking events. One was for Concerned Citizens in Action at which Paul discussed the recent New Mexico legislative session and its impact on economic, education, and constitutional freedom, and the other was with our friends at the Americans for Prosperity chapter in Las Cruces. You can see a couple of “action shots” below. If your group needs a speaker don’t hesitate to reach out! info@riograndefoundation.org.

 

RGF weighs in on Gov.’s “contingency fund” for KOAT 7 story

05.05.2025

New Mexico governors including the current one have a “contingency fund.” These funds suffer from a relative lack of oversight and clear limits on what they can be used for. Given her general approach to governance it is hardly surprising that Michelle Lujan Grisham has broadly interpreted the law and potential uses of these taxpayer dollars.

RGF president Paul Gessing offers his insights for this KOAT 7 story which you can also click on below:

Another day, another “remedial” plan for NM education

04.30.2025

Seven years after the Yazzie v. Martinez decision (another) judge has told the Public Education Department to come up with (another) plan to boost the quality of education it provides Native American and underserved students. To say that no one following education policy in New Mexico is surprised would be an understatement. If anything, New Mexico’s educational performance has only worsened since the Yazzie decision (and its remedial actions) was handed down.

Of course, as PED (rightly) pointed out, the Legislature has increased spending by $2 billion since Yazzie. Considering the precipitous drop in New Mexico’s student population during the same period there should be no financial issues at New Mexico schools, but  finances have never TRULY been the issue anyway.

So, what can we expect from this latest judicial edict? We KNOW PED under this Gov. has been in a state of chaos. We know that MLG has ZERO desire to embrace either school choice or successful Mississippi-style reforms. Of course Susana Martinez attempted to implement Mississippi-style reforms to no avail.

Unless this latest judge both understands education policy and is willing to force PED to embrace ACTUAL reforms that have been proven successful in other states, nothing is likely to happen. Of course, 2026 is an election year for Gov., so it is more likely that voters will have a higher likelihood of impacting New Mexico’s abysmal education outcomes than will the current intransigent Gov. and Legislature.

 

Tipping Point NM Episode 703: Dems Pick State Party Chair, EV Mandates, Heat Regulations and Renewable Energy

04.30.2025

NM Democrats pick teachers union official as new state party chairwoman. Paul and Wally discuss the TRUE purpose of NM’s government education system.

The 2025 legislative session concluded with no action taken on the Gov.’s EV mandates. latest on EV mandates in New Mexico. With the 43% mandate set to kick in soon, what are the latest EV numbers?

Paul will be in Las Cruces for two presentations on May 1/2nd.

Proposed New Mexico regulations on working in the heat could have a profound impact on some businesses.

A recent event in Santa Fe put on by the media outlet Axios involved several New Mexico political types. The event was about “renewable energy” but it included discussion of the budgetary impact of renewables when compared with oil and gas that were enlightening.

 

The latest New Mexico oil production highlight continued strong production

04.30.2025

As oil prices dip under the $60/barrel level for the first time since the COVID 19 pandemic the Rio Grande Foundation is highlighting Energy Information Administration data which shows that (as of January 2025, the latest month available) crude oil production in New Mexico remains near record highs. You can see the data highlighted on the chart below.

While there is no question that the dropping per-barrel price of oil will impact future oil production and therefore New Mexico’s budget, this remains a production driven boom in oil revenues (not price-driven). How low prices can go before production begins to drop is an inexact science, but we believe that we are approaching that price point at $50/barrel. Of course, declining oil prices benefit motorists and other consumers.

A significant drop in oil and gas revenues will have inevitable impacts on New Mexico’s budget and economy although the State has $60 billion stashed away for its own use in case of a downturn. As the Rio Grande Foundation has noted repeatedly, the Legislature and Gov. SHOULD HAVE taken the opportunity to diversify and grow New Mexico’s private sector economy during the recent oil boom, but they have done nothing of the sort (and show no signs of changing their approach unless or until they are forced to by the voters).

 

Of course they did: NM Democrats pick teachers union official as new state party chairwoman

04.28.2025

I doubt we at the Rio Grande Foundation would have liked ANY of the candidates to be chair of New Mexico’s Democratic Party, but it is hardly a surprise that they chose “a teachers union fundraising official” to run the Party. As if it needs to be said, the government-fun education system is NOT about educating our children. It is an employment program for adults and a tool for maintaining political power. The teachers’ unions are one big part of the Democrats’ three legged stool: government employee unions, radical environmental groups, and trial attorneys.

So, New Mexico’s education system is inarguably the very worst in the nation and the unions have had more to do with that failure than ANYONE, with two cycles of NAEP scores ranking it dead-last in the nation, the Party that has controlled New Mexico for generations has tabbed one of their “union fundraisers” to lead it. Totally checks out.

RGF’s “Freedom Index” results covered by Santa Fe New Mexican

04.28.2025

Rep. Randall Pettigrew of Hobbs received the best score in the 2025 edition of the Rio Grande Foundation’s Freedom Index. You can read about the results and what legislators say about the Index here thanks to Daniel Chacon of The New Mexican who does a fantastic and evenhanded job of covering the Legislature for the paper.

You can find scores for 2025 here and look back into the archives (all the way back to 2014) here.

The Roundhouse Report: Politics in New Mexico

The latest on EV sales/mandates in New Mexico

04.25.2025

The Rio Grande Foundation has continued in its efforts to both track and overturn MLG’s electric vehicle mandates. These mandates take effect in model year 2026. Those cars will start appearing on dealer lots early this fall. Under the Gov.’s mandate 43% of them will have to be electric.

According to the Center for Automotive Innovation as of the fourth quarter of 2024 (the most recent information available) just 5.35% of all vehicles sold in New Mexico are currently electric. In other words, it is impossible that New Mexicans will willingly ramp up purchases of EV’s by a factor of nearly 10 in the span of less than a year.

Sadly, despite the fact that some Democrats in New Mexico’s Democrat-controlled Legislature oppose the Gov.’s mandate they (again) did nothing to restore their policymaking power by eliminating this absurd EV mandate and prohibiting unelected bodies from imposing similar regulations. What will happen next?

The US House is poised to vote to overturn the Biden Administration’s waiver which allows California to set its own EV mandates (and states like New Mexico to follow them). That may be the best option available at this point. MLG could choose to not enforce the mandate when it starts later this year due to the impossibility of achieving it, but it is impossible to say at this point. At this point I wouldn’t want to own or work for a New Mexico car dealership.

 

Tipping Point NM Episode 702: Rep. Elaine Sena Cortez introduces herself and wraps up the 2025 legislative session

04.24.2025

On this week’s interview Paul talks to Rep. Elaine Sena Cortez a freshman Republican from Hobbs, NM. Cortez has a unique and compelling story that has led her to the New Mexico Legislature. Paul and Elaine discuss the recent session, some of the bills she sponsored, and her philosophy as a legislator. Sena Cortez is an energetic and exciting person to have in New Mexico’s Legislature!

RGF president to make two presentations in Las Cruces May 1 & 2

04.24.2025

RGF is heading to southern New Mexico next week for two presentations in Las Cruces (both of which are free, but please RSVP for the Americans for Prosperity event):

On Thursday, 01 May 2025 @ 6pm Paul will talk to the Coalition of Conservatives in Action meeting   CCIA meets at Kitchen Kraft, 980 N Telshor Blvd., Las Cruces.(next to Rudy’s BBQ)

He’ll discuss the recently completed New Mexico legislative session and the Foundation’s new report on declining economic freedom in New Mexico and the reasons behind it.

Then Paul will discuss the critical need to reform New Mexico’s tax structure. Details on that event (including RSVP info) can be found on the graphic below:

What Should Society Expect from Business?

04.24.2025

Commentary by Kenneth Costello
Costello is an adjunct scholar with the Rio Grande Foundation

What societal purpose do private companies serve, and what are their roles in society? Those questions are fundamental to the topic of corporate social responsibility (CSR) or the interchangeable term “stakeholder capitalism.” One generic definition of CSR is a company integrating the interests of those directly or indirectly affected by it (e.g., the community as well as its customers and investors) into its business model and activities. Those affected are referred to as “stakeholders”, which is the reason for labelling CSR as stakeholder capitalism.

As I discuss below, the concept of stakeholder capitalism is redundant: in free markets, successful companies must accommodate the interests of their customers, investors and employees and not do serious harm to their communities. That, in fact, is one of capitalism’s
most admirable aspects, which many politicians, NGOs, and the general public often fail to recognize. Government-induced (or hereafter “contrived” because of mandates or out-of-market incentives) CSR activities involve companies doing many of the things that markets demand them to do but less effectually. Introduction to Corporate Social Responsibility | 1st Formations

In other words, CSR, reflecting the preferences of a company’s customers, employees and investors, is the preferred approach for achieving many of the goals in a contrived CSR world. The latter world contains fundamental problems that either (1) ironically, act at odds with the intended goals or (2) leave the job of addressing social problems like climate change and income inequality in the hands of a company’s management and their boards, who have dubious incentives to execute this task effectively when it lies outside its financial interest.

We observe that when companies get entangled in political matters, they will become vulnerable to criticism by their customers, employees, investors and others who now recognize them simply as an extension of government. This relationship resembles “corporatism” where the
government acquires more control of large companies, who reciprocate with undue influence over the government. Under corporatism, the private sector coordinates its activities with the government for social purposes. This has become increasingly true for regulated utilities who
have become more like social agencies.

Why would companies want to place themselves in that predicament, jeopardizing their financial well-being and independence? Yet, some companies with social activists on their boards or in management have done just that.

While contrived CSR may seem appealing to some, it has both latent and transparent costs. The
major ones are a short-term focus on politically related matters, less management accountability, and diminished efficient resource use from a weakened profit motive.

Companies spend substantial sums of money to block legislation and regulations that would coerce them to address social problems. Why then should we expect them to mitigate those problems under a contrived CSR regime? By agreeing to a “social agenda” but executing it
languidly, company managers may believe that they can forestall injurious (from their perspective) governmental actions and improve their public images. It is folly to think that companies will take seriously the advancement of objectives that jeopardize their financial
condition.

As a practical matter, it would be extremely challenging for companies to balance the conflicting interests within and between stakeholder groups. While multiple “stakeholder” groups have been identified, no one person is representative of any one of them. Individual investors, for instance, are heterogenous, meaning that some may favor CSR-like actions while others would oppose them. The same is true of employees: some are childless and consider family leave policies worthless; others would rather earn higher wages than have access to on-site daycare. Advocates of contrived CSR actions seem to presume that individual “stakeholder” groups are monolithic. Prioritizing the diverse interests of different stakeholders can be so overwhelming, convoluted and counterproductive that companies focus less on their core purpose of profiting from selling goods and services that consumers want. Instructive here is the phrase “accountability to everyone means accountability to no one.”Friedman vs. Friedman

Contrived CSR actions can insulate management from accountability and managerial slack (e.g., inflating costs). Such actions obscure poor financial performance: a company can claim to be “socially responsible” even when losing money and continuing to raise funds from socially
conscious investors. Imposing multiple objectives and performance criteria on a company weakens managerial accountability, thereby aggravating the principal-agent problem that presently exists between shareholders and managers.

Would not society be better off by separating the actors who undertake money-making activities from broad-based social activities? One must ask: what expertise or capabilities do companies have in deciding how to address social problems that should fall under the auspices of government? Wouldn’t it be better for individual shareholders to dispose of dividends in the ways they see fit than requiring them to cede responsibility to others who might prefer to support the local opera rather than the local foodbank?

Stakeholders can reveal their preferences for social-responsibility objectives either directly through market transactions or via politically through lobbying and voting. I argue that the preferred source of CSR is market driven. As a “bottom up”; approach, it places top priority on pricing and market incentives. Its flexible rules accommodate the demands of individual market players. One example is the market processes that allow companies to charge higher prices for healthier products in line with consumers’ demands.

Companies should spend money on social problems only in response to the demand of their customers, investors and employees. We have already seen market participants revealing their preferences for environmentally friendly products by buying them, investing in companies th at supply them and offering their labor services for lower wages and salaries than what they could earn elsewhere. For example, investors can choose companies that best mimic their personal values; they can vote by buying or selling company stock, rather than letting managers/boards impose their own preferences on them.

There is really no difference between consumers paying more for a food product that looks more appealing or is healthier than consumers paying more because, say, the company lowers its carbon footprint. The reason for consumers paying a premium for low-carbon products is immaterial. If enough consumers are willing to pay premiums for cleaner air or “fair-trade” coffee, profit-seeking businesses will deliver those goods.

If market participants value noneconomic goals, companies that combine the profit motive with environmental and other concerns can thrive and even prosper more in a competitive environment. Shareholders should retain primacy, but they also should have the right to push for
different objectives if they so prefer.Business Skills You Need as an Entrepreneur

Shareholders, of course, may disagree over what company policies can best achieve greater wealth for them. Some may prefer the company to maximize short-term profits while others take a longer view. Concerning nonpecuniary objectives, shareholders exhibit even greater heterogeneity: some may ascribe no importance to them while others place a personal value on them. Within the last group, shareholders would have different priorities.

For example, a subgroup may value more the company’s carbon footprint; another subgroup may assign a higher value to the company having a diverse workforce. The difficulty is aggregating these divergent values to reveal the collective preference of investors. This reality supports having individual investors choosing what companies to invest in, rather than investors jointly dictating their preferences to company management and the board on social issues.

Voluntary market transactions profoundly epitomize the economic situation where sellers and buyers cooperate in consummating a mutually beneficial deal. How could one dispute that this would not improve social welfare?

Just as society should not engage in activities that the private sector can do better, the private sector should avoid social activities that are better addressed by government. Many if not most people probably would agree that government should take on the responsibility to identify and redress social problems. A caveat is that the marketplace, not government, often can better address some of these problems.

For example, economic growth stimulated by profit-maximizing companies may be the most effective factor in mitigating poverty; and bottom-up, market-based approaches (rather than command-and-control regulations) can be more feasible and effective in addressing climate change, especially when prices reflect prevailing supply and demand conditions. These approaches include adaptation based on the pricing mechanism and the provision of “clean products” by companies at the demand of consumers.

A company advances its interests when it treats stakeholders well. A company can engage in goodwill to improve its profitability. Competent management cannot ignore the interests of customers, workers, investors and the local communities if it wants its company to survive.

Finally, let us not forget the wisdom of Nobelist George Stigler with something he said over 50 years ago: George J. Stigler

Let our businessmen return to making shoes and locomotives and toothpaste. Let us not seek to transform the greatest economy in all history into a third-class welfare agency. Let the reformers address their schemes, whether noble or ignoble, to the real

source of power, the public [sector], and to the real administrators of that power in our society, the leaders of the political system.

Tipping Point NM episode 701: Blue Origin’s Technology Superior to Virgin Galactic’s, I-40 is Dangerous Embarrassment, APS Spends $35,384 per Student

04.23.2025

RGF opinion piece: Understanding New Mexico’s Lack of Economic Freedom

04.22.2025

The following piece ran in the Santa Fe New Mexican on April 20, 2025. It ran in other publications across the state as well.

A thousand years ago, a group of people settled along the Red Willow Creek at the base of the Taos Mountains and never left.

They were among the first, but hardly the last, to be enchanted by New Mexico’s snow-capped mountains and sun-drenched vistas.

The state’s moderate climate, rich culture, and mouth-watering cuisine are peerless. And now that New Mexico churns out 2 million barrels of oil every day — more than 15% of all U.S. production — you’d think New Mexicans would be riding high.

Instead, the state’s citizens struggle to get by. Over the last decade, New Mexico ranked 47th in employment growth and 36th in real GDP growth. It has the third-highest poverty rate in the union and more children on federal food assistance than any other state.

Over the past decade, New Mexico’s population edged up just 1% while neighboring states grew by an average of 12%.

State employment also grew 1% while neighboring state employment growth averaged 19%.

In a new report, published by the Fraser Institute and the Rio Grande Foundation, we examine these trends, comparing the state with its more prosperous neighbors.

One key explanation for New Mexico’s dismal economic record is its lack of economic freedom.

People are more economically free when they are allowed to make more of their own economic choices.

But New Mexico’s high spending, steep taxes and burdensome regulations have made the state one of the least-economically free in the union. It ranks 47 out of 50, well behind each of its closest neighbors.

The Fraser Institute began measuring economic freedom nearly three decades ago, first at the national level and then at the state and provincial level.

This data has been used in over a thousand peer-reviewed studies assessing the effects of economic freedom on wellbeing. And the evidence is overwhelming that economically free people are prosperous people.

Economically free places attract people, entrepreneurship, and growth. They tend to experience lower levels of poverty, less homelessness, and less food insecurity.

People in economically free places are more tolerant of others, more philanthropic, and more satisfied with their lives. They are even less likely to recommit crime.

Yet as this evidence has accumulated, New Mexico’s policymakers have moved to further restrict the economic freedom of New Mexicans.

The state is the only one in the country to have reduced the economic freedom of its citizens over the four decades for which we have data.

In recent years (and despite massive growth in spending) New Mexico has had budget surpluses of more than $3 billion annually.

This is a considerable surplus in a state where rapid spending growth has led to the annual general fund budget of $10.8 billion.

What can be done? New Mexicans themselves hold the key. When they head to the polls, they need to be acutely aware of candidates’ approaches to basic issues like taxes, spending, and regulations.

They should question those who continue to believe that the government should be the dominant force in New Mexico’s economy. The state’s top marginal income tax rate is nearly twice that of its neighbors.

Its labor regulations are the second-most-burdensome in the country. And the state imposes especially heavy licensing requirements on low-income occupations.

Economic freedom isn’t the only thing that matters for prosperity. Geography, demography, culture, and luck also play a role.

But policy makers can’t move mountains or fundamentally alter a state’s culture. What they can do is remove the barriers to prosperity that have held New Mexicans back for more than four decades.

Matthew Mitchell is a senior fellow in the Center for Human Freedom at the Fraser Institute in Canada. He lives in Northern New Mexico. Paul Gessing is president of the Rio Grande Foundation in Albuquerque.