Last week the U.S. Department of Commerce’s Bureau of Economic Analysis released another depressing finding for the Land of Enchantment. In 2014, growth in real gross state product lagged behind the performance of every one of our neighbors:
New Mexico’s 1.0 percent was less than half the rate for the nation as a whole.
It gets worse. In a new analysis, demographer Joel Kotkin puts Albuquerque at #86 of 93 medium-sized cities for “employment growth over the short-, medium- and long-term, going back to 2003,” as well as “momentum — whether growth is slowing or accelerating.” Of 258 small-sized cities, Farmington lands at a respectable #44, but Las Cruces (#184) and Santa Fe (#207) underperform.
Isn’t it time for an effective economic-development strategy for New Mexico?
Reliably, my old friend Winthrop Quigley was in the Albuquerque Journal helping sell the latest government scheme for “transforming” Albuquerque. There is so much nonsense contained in the article that it almost requires a point-by-point refutation. He starts with the canard that “Albuquerque has long worked to get businesses to move here, mostly by lowering the cost of doing business.” I’m not sure what Quigley means by that, but the gross receipts tax in Albuquerque has gone up by more than 20% since 2000. That is hardly going to lower the cost of business…
Anyway, Quigley shares a list of amazing things you will be able to do up and down Central once the BRT is in place. What he fails to mention is that the existing Rapid Ride bus (which in its current form is already a type of BRT) already serves much of the same area and can provide the exact same service.
And then Quigley talks up Cleveland and the wonderful things BRT has supposedly done for that town. Of course, famed urbanist Joel Kotkin has interestingly paired Cleveland and Baltimore as “Potemkin Villages” for their policies which divert tax revenue from one area of the city to another “redeveloped” tourist area. I’ve already discussed Cleveland’s myriad problems at some length.
The final point here is that, yet again, an advocate of the BRT makes every argument BUT the one you’d expect from an advocate of a new transit system…that the system will somehow make getting around easier and more efficient. In fact, Quigley doesn’t even argue that BRT would improve mobility, but he notes that “Motorists would have to be willing to tolerate slower speeds around Central.”
This project is right up there with the Rail Runner and Spaceport as a “more smoke than fire” economic development scheme. Rather than a clear path to success based on stated needs and goals, it is the scattershot “if you build it, they will come” approach. If you build a train or a spaceport you’ll generate prosperity. Unfortunately, in the real world, ballplayers don’t live in cornfields and the path to economic prosperity involves making New Mexico and Albuquerque an attractive place to do business.
The Beacon Hill Institute at Suffolk (Mass.) University publishes an annual index of state competitiveness. You can find the full report here. In the 2014 edition, New Mexico beat out only New Jersey and Mississippi. Regardless of whether one agrees with all aspects of this particular index, there are some interesting components once one gets beyond the aggregate ranking.
In terms of safety, New Mexico ranked 49th;
In terms of infrastructure, New Mexico ranked 42nd. This may seem like it points to poor road quality, but two of the three factors in the index were Mobile Phones per 1,000 (we came in 47) and High-speed lines per 1,000 (we came in 48);
In terms of government openness, New Mexico ranked 46th, but this is not an indicator of government openness. Rather, the rankings were based on the percent of population born abroad, exports per capita, dollars (we ranked 49th), and incoming foreign direct investment per capita, dollars 47.
Our best single factor was in the “Environmental policy subindex” in which our toxic release inventory as measured in pounds per sq. miles was ranked 5th overall.
It is an interesting report. 48th is not where we’d like to be, but a lot of the indicators are outcome-based as opposed to public policy based.
Summer means cookouts and bicycle rides and softball games. For those in the Albuquerque region, outdoor activities have an added bonus: clean air. In conducting research on driving and transit in the area, the Foundation ran across an interesting fact. Despite surging population growth and a huge number of new vehicles on the roads and highways, between 1984 and 2014, air pollution plummeted:
Carbon Monoxide (2nd highest non-overlapping 8-hour average): -92 percent
Sulfur Dioxide (2nd highest 24-hour average): -78 percent
Nitrogen Dioxide (98th percentile of the daily max 1-hour measurement): -40 percent
In the American Lung Association’s “State of the Air 2015″ report, “the Albuquerque-Santa Fe-Las Vegas area ranked the 16th cleanest of  U.S. metro areas.” In the future, air quality will only get better. David T. Hartgen, emeritus professor of transportation studies at the University of North Carolina, recently noted: “Improvements in conventional engines, along with alternatives such as fuel cells, electricity, natural gas and better batteries, will significantly increase average fuel efficiency and reduce emissions.”
Kudos to Albuquerque’s Alex Bregman for being drafted by the Houston Astros with the second pick overall in the Major League Baseball draft. Hopefully he gets to the big leagues and makes lots of money. This income, if he stays with the Astros, will not be taxed at the state level potentially saving himself a great deal of money.
Of course, athletes, while facing heavy taxes, often are very smart about shifting their activities around in order to keep more of their hard-earned money. See this story about Derek Jeter who fled high tax New York in favor of zero income tax Florida as soon as his playing days were over.
Golfer Phil Mickelson is just one other prominent athlete to consider changing residency in order to retain more of their earnings.
Why do I bring up New Mexico’s own Alex Bregman in all this? For starters, his dad was recently chairman of the New Mexico Democratic Party, an organization that in recent years has failed to grasp the ways in which taxes influence where economic activity occurs.
It remains to be seen what Alex’s future holds, but if he does make it big he’ll soon learn how governments set out to take as much of his money as possible. More than likely, he’ll also become increasingly sensitive to government efforts to take more of his hard-earned money.
For a detailed analysis of how people — no matter their profession — shift their productive efforts to those states that allow them to keep more of their own money, check out the detailed data made available at: How Money Walks.
Scott Moody over at Key Policy Data puts together a variety of data on states and government employment. He recently posted some data on New Mexico at his blog.
For starters, New Mexico has an extremely large number of government workers state and local workers relative to those in the private sector (this doesn’t even include federal workers and contractors).
Our government workers are relatively well-compensated:
These and other data calculated by Moody lead New Mexico to have the 5th-least productive government workforce in the nation. The next time some advocate for bigger government claims that New Mexico’s government workforce has been “cut to the bone” or that taxes need to be raised, perhaps this data will come in handy.
For evidence of the problems inherent in government-planned “economic development,” look no further than the controversy over a report released last week by the Borderplex Alliance.
The organization, which is “dedicated to promoting economic development and prosperity in the Ciudad Juárez, El Paso, and southern New Mexico region,” hired a consultant to produce the 155-page “2015 Strategic Recommendations.”
El Paso County Judge Veronica Escobar is upset that the authors, Austin-based Angelou Economics, didn’t get enough input from locals. (“It makes me question the thoughtfulness of the recommendations.”) She’s also angry over the incongruity of the report stressing the appeal of the region’s “abundant low-cost workforce” and advising that the area needs to address its “persistent low wages.”
Jerry Pacheco, founder of the rival Border Industrial Association, is unhappy that his entity was on the list of “Borderplex Alliance Regional Collaborators.” (“We told them we don’t want anything to do with their study.”) According to the El Paso Times, Pacheco is steamed that “the Borderplex Alliance’s … proposed plan conflicts with a number of others being compiled in New Mexico, including a huge planning project in Doña Ana County.”
A commenter on the Las Cruces Sun-News‘s website took exception with the failure to include the Organ Mountains-Desert Peaks National Monument: “The report is way off base. For instance, to attract tourists it does not even mention the national monument. Instead it heralds the development of an Old West theme park. This is such a bad idea.”
The best economic-development strategy remains an aggressive effort to limit government’s intrusiveness and cost, while promoting education-freedom measures that generate workers with widely diverse skills.
Economic-development bureaucracies are adept at spending local, state, and federal revenues on studies, commissions, and conferences. Creating wealth and jobs? The results are consistently unimpressive. For the record, the Bordeplex Alliance’s most recent investment announcement — an expansion of Douglas Steel Supply’s El Paso facility — was issued more than four months ago.
Fresh off my response to Councilor Rey Garduño on the Rail Runner, readers of the Albuquerque Journal were treated to the latest bad financial news about the train. Specifically, new federal regulations called positive train control which has received a great deal of attention in the wake of a Philadelphia Amtrak crash, is set to cost the State and the Rail Runner another $50 million.
Interestingly, while so many on the left think the government is there to protect them, New Mexico is now lobbying the federal government abandon the regulation. Funny how government bureaucrats can be so insensitive to regulations when they are imposed upon average businesses, but will use their tax-funded positions to postpone costly regulations facing them.
Unfortunately, the $50 million is just the start. According to the article, the train also faces $25 million worth of “midlife” refurbishing.
Perhaps the silver lining is that, with all of these expenses piling up, Gov. Martinez may finally realize the wisdom of the statement that when you are in a hole, the first thing to do is stop digging.
Contrary to the alleged wisdom of one of today’s syndicated columnists, the American rail system is indeed robust and functional. The component that works is relatively un-subsidized and transports massive amounts of freight. Unfortunately, leftist supporters of “trains” don’t really care for freight rail. They want to use your tax dollars to support passenger rail no matter what the costs. As the following chart shows, passenger rail subsidies are actually quite high, much higher than roads and air travel. How much is enough subsidy for trains? I don’t think they have an answer to that question. The answer, like their answer to most questions about how much spending is enough is always “more.”
It figures that outgoing Albuquerque City Councilor Rey Garduño is a fan of the Rail Runner. He outlines the supposed reasons for his passenger rail fetish in today’s Albuquerque Journal.
Unfortunately, whenever he discusses specific justifications for the train, he turns to generalities like “Ample evidence exists that a high-quality transit system can make a region more competitive in attracting new workers and businesses.” What evidence? Is transit a cause or an effect? What did the Rail Runner do to boost New Mexico’s economy or that of the Santa Fe/Albuquerque corridor? Of course, he admits that the Rail Runner had no impact in the very next paragraph.
Garduño ultimately embarks upon a series of half-baked arguments as to why roads are MORE subsidized than transit which is silly as the chart from the American Dream Coalition confirms (remember that the Rail Runner is THE MOST HEAVILY SUBSIDIZED transit system in the nation in terms of operating costs (less than 10% fare box ratio) so it is going to be much worse than other commuter rail systems:
And lastly, there is the utility of roads vs. transit. Transit is a perk or service, not a necessity. No housing development or business will locate where you ONLY have transit and no roads. You can’t get emergency services from a train. You can’t make deliveries on the Rail Runner. Roads are a necessity. In sparsely-populated New Mexico, transit is an expensive luxury. If the Big I was destroyed tomorrow. It’d have to be rebuilt starting the next day lest the region’s economy fall into a steep decline. If the Rail Runner went out of service for good there would be little to no impact on our economy.
Unfortunately, Garduño who represents a poor and economically-distressed area, seems to believe that using taxpayers dollars for wasteful luxuries is a great idea.