Folks in one area of Albuquerque are currently embroiled in a heated debate over whether kids one one side or another of an arbitrary line should be able to go to a particular school. The Albuquerque Journal has editorialized in favor of onerous annual proof of residency checks for Albuquerque Public Schools to make sure that “the right kids” are going to “the right schools.”

What a joke! Why should where you live have anything to do with where you go to school and how good of an education you can get?

The principled left (as opposed to the self-interested labor unions which support the status quo) has been complaining about “apartheid” in our nation’s public schools. What do you expect when the home or apartment you are able to afford also determines the quality of your child’s education?

Unfortunately, the left appears not to have any good ideas on how to improve our schools. Universal vouchers available to all kids would do the trick, but are despised by the unions. Other forms of school choice like tax credits and charter schools can help overcome the segregation (geographical, racial, and class) that is rampant in our education systems, but again, the unions often stand in the way.

It is one thing to have a disagreement over priorities. It is another thing to think one’s opinions are that of a crackpot or are downright crazy. While RGF and New Mexico Voices for Children certainly don’t agree on much (even they agree that film subsidies are a bad idea though) Nick Estes’ column in today’s Albuquerque Journal is downright nutty.

His premises are twofold: 1) budget deficits and debt don’t matter; 2) trade deficits do matter and are bad. Naturally, he is exactly wrong on both accounts.

See the chart below as a starting point:

Yes, World War II saw an incredible run-up in the national debt. Thankfully, this was a TEMPORARY situation as the debt was “invested” in defeating Imperial Japan and Nazi Germany. That’s a good investment if there ever was one. Notice what happened to the debt after the War. It went down quickly. Notably, federal spending declined dramatically after WW II which was decried at the time by Keynesians who thought it would plunge our economy into another Great Depression. It obviously did nothing of the sort. Instead, the massive resource shift from war fighting to the private sector economy drove the economic boom of the following decades.

Today’s debt is a result of decades of overspending and the design of our so-called “Entitlement” programs, specifically Medicare and Social Security. As the chart above illustrates, the debt problem will get a whole lot worse, not better, with no end in sight.

Oh, and just because “we owe it to ourselves” doesn’t make indebtedness any less problematic. The problem with debt is not in the debt itself, but the burden it places on those who must pay it back and the potential for default. Remember the housing bubble? “Owing it to ourselves” didn’t make it any less painful. Ever make a bad loan to a friend or relative? Still painful.

Estes’ 2nd point is that trade deficits DO matter. Wrong again. China and other nations with which we have trade deficits are giving us stuff and accepting dollars. When it comes down to it, I’d rather have stuff than dollar bills because you can do a lot more with stuff than those slips of money which are being printed (not bills, but just zeroes these days) by the Federal Reserve. Oh, and Estes is wrong again in stating that China is not the world’s worst currency manipulator. It is actually the USA and Ben Bernake.

UPDATE: If Mr. Estes or anyone from Voices for Children reads this column, I’d love to set up a public debate on these issues, especially the all-important government debt/deficit issue. Any reasonable time, any reasonable place. It would be great to have a public discussion on these issues.

The latest information piling on to what we already know (Albuquerque’s economy is doing poorly) comes from the center-left Brookings Institute which finds the following:

Overall recovery in the Mountain region’s largest metropolitan areas continued apace in the fourth quarter of 2012. On the Monitor’s measure of overall recovery—which takes into account changes in employment, unemployment, output, and house prices together from each metropolitan area’s respective troughs through the fourth quarter of 2012—nine Mountain-region metropolitan areas
saw no change in standing relative to peers nationally over the quarter.

A strong end to 2012 proved sufficient to advance Las Vegas ahead two full quintiles over the quarter into the second-strongest group
of performers since recession’s end. Of the metro areas with no change, Boise, Phoenix, Provo, and Salt Lake City remained among the most strongly recovering metropolitan areas in the country. Denver, Las Vegas, and Ogden followed in the second-strongest performance quintile on this composite measure. Tucson landed in the third quintile; Colorado Springs in the fourth; and Albuquerque, with the region’s slowest recovery, languished in the fifth.

Another choice quote:

Six Mountain metro areas—Boise, Denver, Ogden, Phoenix, Provo, and Salt Lake City—closed 2012 with four consecutive quarters of job growth. By contrast, employment levels in Albuquerque fell for the fourth straight quarter, by 0.2 percent in the last three months of 2012, to a new low.

While we support the recent tax compromise, the tax cuts don’t fully take effect for five years and (as we noted) the package contains several economically-harmful measures as well. The Legislature and its continued unwillingness to make New Mexico competitive is holding our state (and its largest city) back.

The Rio Grande Foundation recently hosted John Blundell for a series of talks on Margaret Thatcher and Ladies for Liberty. Video of the Thatcher presentation is below:

3-26-13 Blundell on Thatcher from Paul Gessing on Vimeo.

The Ladies for Liberty presentation can be found here:

Blundell Ladies for Liberty from Paul Gessing on Vimeo.

It is amusing and frustrating to read some of the opinion writers’ views on economics. Today we are treated to an author who states “tax cuts won’t bring more jobs.” The author argues against so-called “supply side” tax cuts on business and in favor of raising the minimum wage. He couldn’t be more wrong, but perhaps not for the reasons you might think.

Jobs are not the issue in our economy. Wealth creation is the issue. I could create millions of jobs in America overnight by banning the use of construction and farm implements. Doing all such work with shovels by hand would sure create jobs, but what would it do to our living standards? They’d go down. So, job-creation in and of itself is not a good thing.

The author mentions Henry Ford to justify the minimum wage. Ford paid his workers more because he wanted them to continue working for him and not to leave for his competitors. Ironically, the labor-saving assembly line which was invented by Ford was a huge job-killer. After all, the time and effort for one craftsman to make a car from hand would be immeasurable. The assembly line created tremendous wealth by reducing the amount of time it took for cars to be built, thus creating plenty of jobs, but it is also a labor-saving-practice which cost many other people their jobs. Imagine the poor horse-and-buggy makers!

Lastly, tax cuts, while not a panacea, should reduce the “friction” involved in every day economic activity. When they are applied at high rates and tax things like income, taxes provide a disincentive to do more of a particular activity. In a federalist system like ours, New Mexico’s high corporate tax rate will chase such businesses to other states. While we’re not celebrating the relatively minor tax plan passed at the end of the legislative session, it would be folly to say that tax cuts are not good for everyone.

It has been announced that New Mexico will provide a $2.5 million tax credit and the use of city-owned land (it is unclear what subsidies will be given in terms of lease rates and/or property taxes) to facilitate the construction of a grocery store in downtown Albuquerque.

What I don’t understand is why taxpayers are subsidizing a new grocery store when there is already an existing grocery store downtown. It just doesn’t make sense. Government should not pick winners and losers by directing taxpayers’ resources to specific projects. I wonder how the owners of the current grocery store downtown feel about having a taxpayer-financed competitor? Also, if there was a market demand for more supermarkets in downtown Albuquerque, wouldn’t someone have built it already (absent, that is, from government interference?)

It is time to tell Mayor Berry, City Council, and our state leaders that this is not a wise use of scarce tax dollars.

Despite an abject lack of progress on Right to Work during the 2013 legislative session, the push for a Right to Work law in New Mexico (begun most recently by RGF) seems to be gaining steam. Mark Mix, the head of National Right to Work made a return visit to the Land of Enchantment which was written up in Albuquerque Business First.

We have done the research on the potential economic benefits of such a law. If we’d adopted a law during the 2013 legislative session:

By 2020, New Mexico would have 42,300 more people working as a right-to-work state,
with more that 2,000 in increased manufacturing employment.

By 2020, the state’s personal income would be nearly $5 billion higher and wage and
salary income would be $2.2 billion higher.

And, of course we welcome the support of NAIOP, Mayor Berry, and business and community leaders across the political spectrum. Of course, this Legislature can’t pass even modest tax reforms without raising taxes and increasing subsidies elsewhere. Game-changing free market reforms like Right to Work are simply too much for this Legislature to consider.

How else do you explain his refusal to bring legislation to a vote that would have preserved $5.5 million in federal funding for Temporary Assistance for Needy Families (TANF).

The bill, HB 12, breezed through the House on a 63-0 vote, yet Sanchez never brought the bill to the floor for a vote and even was the lone vote against it in the Senate Committee that heard it.

Now, there are certainly dozens of other policies that New Mexico’s Legislature has enacted over the years that continue to keep us poor, but if you believe in government welfare as Sanchez clearly does, how can you not push HB 12 through the Legislature?

If you haven’t already gotten your tickets to our exciting events on Monday and Tuesday, please do so here for lunch, here for our Santa Fe reception, and here for our Albuquerque breakfast.

However, we have another upcoming event coming up soon. Information on that follows (note that it is at the Marriott on Louisiana, not at the Pyramid off I-25):

One of the nation's leading experts on how over-regulation is choking off productivity and economic growth will be speaking in Albuquerque on Friday April 5th and you are invited.

Myron Ebell is Director of the Center of Energy and Environment at the Competitive Enterprise Institute (CEI). Ebell will speak from 12:00 noon to 1:00PM on Friday, April 5th, at the Marriott Hotel uptown (at Louisiana Blvd. NE and Interstate 40).

Cost of this event is $25 if you register before April 1, 2013 and $35 thereafter. You can pay online here or send a check noting that it is for the Myron Ebell event and listing the attendee names to: PO Box 40336, Albuquerque, NM 87196.

Mr. Ebell will give chapter on verse on how over-regulation such as the Dodd-Frank financial regulation, the Environmental Protection Agency, and the so-called "Affordable Care Act", among many others, are ill-founded, illogical and counter-productive, hindering a robust free enterprise market which can benefit all citizens.

Further, Mr. Ebell will address energy regulations due to the importance of energy to the nation and to New Mexico, a state with vast energy reserves. He is regarded as a national leader in challenging global warming assumptions, and was active in battling the proposed "cap and trade" congressional bill (that was defeated).

The event is hosted jointly by the New Mexico Prosperity Project, Citizens Alliance for Responsible Energy, and the Rio Grande Foundation.

Nobody reported on it, nobody talked about it. It got bi-partisan support. Now it is the law of the land.

Unfortunately, it has the potential to do incredible harm to New Mexico businesses. The bill was HB 216, the Fair Pay for Women Act. Who could be against that? After all, according to the folks who track such things, women earn about 77 percent of what men make. So, there oughta be a law, right?

Of course, as Reason Magazine points out, women make different job choices, take time off to raise children, and work fewer hours than men. All of those differences add up to significant salary “discrimination.”

So, it is now New Mexico law that “In addition to any judgment awarded to the plaintiff or plaintiffs, allow costs of the action and reasonable attorney fees to be paid by the defendant. In any new proceedings brought pursuant to the provisions of this section, the employee shall not be required to pay any filing fee or other court costs necessarily incurred in such proceedings.”

The potential for cases to be brought forth goes back up to six years, so if someone suddenly decides they were discriminated against five years ago, they can come back on their employer, take them to court, and force the employer to pay all of their legal costs. This is a disaster waiting to happen. UPDATE: some small good news is that the bill was changed before passage to state that suits “could be brought no later than two years from the last date of the employee’s employment.”

We at the Rio Grande Foundation apologize for not finding this before it was too late, but we wonder how such a business-unfriendly piece of legislation managed to pass through the Legislature with so little opposition.