Crony Socialism, From Santa Fe to Silver City

Crony Socialism, from Santa Fe to Silver City 1/19/17 by Peter Burrows, ,

Everybody is against crony capitalism but crony socialism doesn’t get much attention, probably because it’s a relatively new term or maybe because it‘s so ubiquitous we don‘t notice it. Crony socialism is the government sponsoring and/or favoring government controlled enterprises and their employees, and it is hugely more expensive than crony capitalism.

For example, politicians and public unions have colluded to pay government workers much more than comparable workers in the private sector, especially when retirement benefits are included. In fact, some states and municipalities will soon be declaring, or attempting to declare, bankruptcy in order to rewrite employment contracts for public workers that simply cannot be paid.

Perhaps the most common, everyday example of crony socialism is public education, especially K-12. Any attempt to introduce school choice, particularly involving vouchers, is met with fierce resistance from politicians and educators. Gotta keep those unionized teachers on the job and payin’ dues.

In the world of tangibles, government owned Amtrak has for years been the poster child for wasteful crony socialism. If you Google “Amtrak” you’ll find the railroad has been operating in the red for 40 years, posting a $307 million operating loss in fiscal 2015, which doesn‘t include depreciation or any cost of capital. I cite Amtrak because New Mexico has its own socialized railroad, the Rail Runner.

Like Amtrak, the Rail Runner has supporters on both sides of the aisle. Politicians in the Santa Fe/Albuquerque area like the Rail Runner because they have constituents who use it, many of whom I suspect are state workers who live in Albuquerque and work in Santa Fe.

The Rail Runner FY 2016 revenues of $26.8 million included $8.7 million in Federal grants, $13 million from a four-county .125 GRT, and only $3 million from fares. The NMDOT web site claims a Rail Runner rider going between downtown Albuquerque and downtown Santa Fe saves $1,210 A MONTH instead of driving. That’s over $14,500 per year! No wonder so many riders like the Rail Runner. (Round trip, Albuquerque-Sana Fe: $10.)

The web site says the Rail Runner receives “$0 from State Funds,” which is not quite the whole truth. You see, “operating” results by accounting definition do not include interest on debt, which cost the NMDOT $18.35 million in FY 2016. (The NMDOT, as we all know, gets its money from the Tooth Fairy. There was also a debt payment of $6.8 million the Tooth Fairy picked up.) The bottom line is that for commuters to each save $14,500 a year, taxpayers, somewhere, shelled out over $40 million, before debt payments.

Here in Grant County our version of the Rail Runner is Corre Caminos, hereafter “CC,” the bus service that has been operating since 2001. I wasn’t around in 2001, so maybe somebody can tell me if there were any taxis operating in the city back then. There aren’t any now.

FY 2017 funding for CC of $1,100,000 is estimated to be about sixty percent from Federal grants funneled through the NM Department of Transportation, a little over ten percent from fares, and about thirty percent from Silver City, Deming and the counties of Grant and Luna.

In 2016, Silver City spent $75,000 to support CC, and Grant County $80,000, according to CC manager Kim Dominguez. The per capita cost for residents of Silver City, population 10,500, was therefore about $7.15, and Grant County, population 29,500, had a per capita cost of $2.70.

The combined cost for us Silver City folks was about $10 apiece. That’s less than a buck a month in local taxes and some might say it’s a small price to pay for the entertainment of screaming at a CC bus carrying only one passenger. (If you live in Silver City and haven’t seen that wonderful example of your tax dollars at work, you are not paying attention.) This ignores, of course, the Federal Government subsidy which the aforementioned Tooth Fairy pays.

Defenders of CC cite the reduction in DWI tickets thanks to CC being on call to take drinkers home, and that’s a good thing, a very good thing. The same thing could be achieved at far less cost if the city or county paid a taxi company the fare resulting from a bartender-issued drunk driver voucher, or something like that. Ditto for people who can’t afford to pay cab fare, and I think private charities should be in charge of both efforts.

The bottom line, if all that government subsidy CC money were given to proven entrepreneurs, e.g. the Silver City folks who run Little Toad Creek or W&N Enterprises, I bet they’d do a better job and even make a profit, probably a BIG profit.

Profit? PROFIT!?!? OMG! You Progressives out there are probably breaking your fingers in your haste to get to another web site. I expect to see indignant letters to the editor critical of allowing anyone to post an article with the “P” word where children might see it. Calm down. CC will never be turned over to private operators, which is too bad. It would sure save us some tax dollars.

Another Grant County enterprise that will be unveiled in the next few months is the newly refurbished Grant County Convention Center. In August of 2015, the Grant County Commissioners approved spending $2.4 million on the project, and Commission President Bret Kasten said he’d be keeping close tabs on the work because the Convention Center was “my baby.” I’m sure you’ll agree that “my baby” is not the same thing as “my money.”

Commissioner Gabe Ramos seconded Kasten’s vow to follow this project closely, saying they would be watching it “like hawks,” which is very comforting to know. (Those guys sitting in the back of pickup trucks in the Convention Center parking lot, binoculars trained on the Convention building? Yep, Gabe and Bret.)

One of the nominal REPUBLICANS running for Grant County Commissioner in the recent election approved of spending tax dollars on the Center, saying, “If we build it, they will come.” Econ 101 from The Field of Dreams, or maybe from the poet Ralph Waldo Emerson, who famously said, “Build a better mousetrap, and the world will beat a path to your door.”

No, the world will not beat a path up 180 or across 152 unless somebody goes out and sells the convention center as the place to go, in spite of Silver City’s isolation. I hope the Convention Center is a success, but I suspect that any success will come at the expense of local businesses also looking for convention customers, e.g. The Murray Hotel, or the Flame Convention Center. .

Wouldn’t it be nice if the politicians who propose a government enterprise be compelled to pony up their own money if the idea failed? A few years ago I explored the idea of requiring politicians to purchase a surety bond to indemnify taxpayers if their “babies” came a cropper. I talked to a banker and an insurance executive about this brilliant concept. Both thought the idea was, as a practical matter, really, really stupid. Sigh.

I guess the best we can do is vote such politicians out of office, although the next batch will assuredly go down the same path. Power, especially with OPM, is very corrupting. At the very least, we should name such projects after their sponsor, e.g. The Bill Richardson Spaceport, or The Brett Kasten Convention Center. I think success, or failure, deserves to be recognized, don’t you?

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