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.

Education Retirement Board member Brad Day has a must-read column in today’s Albuquerque Journal in which he outlines the sorry state of New Mexico’s pension system and how the situation is both getting to the point at which it will be irreparable and how the unions and the groups in charge of maintaining the system would prefer to stick it to the taxpayer rather than actually make these systems sustainable.

The pension bills passed this session may slow the bleeding, but more transformative changes like a shift to a defined-contribution system are needed.

Interestingly enough, a shift away from defined benefit to defined contribution, 401K plans, was recently approved by 83% of Boeing’s engineers. I don’t know all of the particulars of the negotiations and Boeing is obviously a private company, but it is possible to convince workers of the benefits of controlling one’s own retirement as opposed to relying on a business or government’s investments.

I’ve had a few opportunities to discuss the recent legislative session recently. This one was done with Mike Jaxson of KSVP radio as the session came down the stretch. I followed up with a second interview focusing on some of the last-minute tax deals made as the session concluded.

Lastly, I’ll be on with Bob Clark on 770 KKOB on Monday, March 25th from 9am to 10am to discuss the last-minute tax deal.

Gov. Martinez initially threatened to veto the budget passed during the recently-completed legislative session. The issues involved her priorities of “merit pay” for high-performing teachers and the 1% pay raise for government workers.

We support Gov. Martinez on both the teacher pay and the overall government employee pay issues, but more importantly, we don’t see how New Mexico can sustainably increase its budget by 4.4 percent in a single year with anemic national economic growth and an even more anemic New Mexico economy. How do we expect to generate enough revenue to pay the bills?

In summary, it would behoove New Mexicans if Gov. Martinez vetoed the budget or at least went in with a scalpel to take out some line-items that would bring annual growth down to 3 percent or less which is at least close to the combined effects of inflation and population growth on a year-over-year basis. It seems that her success in getting some corporate income tax cuts may have tempered her enthusiasm about vetoing the entire budget, but 4.4 percent spending growth at a time when the US economy is expected to grow by only 2.4 percent seems hard to sustain.

The sequester has been in effect for a few weeks now and, despite President Obama’s histrionics (and those of some Neoconservatives), the world has not come to an end. That said, some small reductions in government spending have taken place like the plowing of the main road into and out of Yellowstone.

Guess what? With a clear market incentive (tourist dollars), local chamber of commerce types stepped up to the plate and are paying the $70,000 or so to plow the roads! Imagine what other government activities the private sector could handle were it not regulated and taxed into oblivion by the overweening hand of government…road building and operation, air traffic control, trash collection, golf course maintenance, grounds keeping and building repair, and railroad operation (Amtrak), just to name a few.