a service of NPRI

December 29, 2005 
Vol. 1, No. 39

Also in this issue:

Experts forecast
Nevada's economic future

High-rise demise
no surprise to experts

The Richard Rainwater prophecy

Forced unionization? No, say Washington state workers

Federal government funds green groups that fight it

Monorail: Double or Nothing


Hold the line on spending for public employee salaries

Minimum wage:
minimum sense

Whistling past graveyards

The high cost of
tunnel vision

Recent NPRI Commentaries

Fake Friends
of the Republic

Why the 'direct democracy' charge against TASC is, ultimately, fatuous.

Who gets to 
put you in hock?

The pols have a new scheme to circumvent Nevada's constitutional debt limit.

Hold the line on spending for public employee salaries

By Lyle Brennan
Nevada Business Journal

In November 2004, Clark County voters passed Question 9, a measure to increase the sales tax a quarter of a percent to pay for hiring more police officers. The sales tax was raised to 7.75 percent effective October 1st of this year, and it will be raised another quarter percent in 2009. When this ballot question was being debated, it was estimated the money raised by increasing the tax would pay for approximately 1,278 cops in the first 10 years.


The road to Hell
Minimum wage: Minimum sense

By Hans Sennholz
Ludwig von
Mises Institute

Good intentions, when guided by error and ignorance, may have undesirable consequences.

There is no better example than minimum wage legislation. It means to raise the wages and improve the living conditions of poor workers but actually condemns many to chronic unemployment. It forcefully raises the costs of unskilled and inexperienced labor and thereby lifts it right out of the labor market. Yet, many politicians who neither own nor manage a business and do not employ such labor never tire of lamenting and deploring low wages and promising to raise the wage minimum by law and regulation.

The official Federal minimum presently stands at $5.15 an hour; the actual minimum is much higher. No employer can overlook the mandated fringe benefits which he is forced to pay above the minimum. There are employer Social Security taxes, unemployment and workers’ compensation levies, and paid holidays.


Crunch time
Whistling past graveyards

By Peter Schiff
Euro Pacific Capital

To their credit, Wall Street pundits have noted the proliferation of signs warning financial danger; to their peril most have chosen to ignore them. Four examples of such cognitive dissonance relate to General Motors, gold, pensions, and the housing bubble.

Shares of General Motors, once the world’s largest company, the icon of America’s industrial might, at one time close to being declared a monopoly by a 1950’s Congressional investigation, this week plunged to a new 80 year low. Years ago, my prediction that the company would ultimately face bankruptcy seemed radical. Today that assertion no longer seems so far-fetched. The truth is that GM sold too many gas guzzling SUV’s to too many people without making any profits, saturating its market and piling up debt and pension liabilities in the process. The fact that Wall Street can shrug-off the possibility of a General Motors bankruptcy is mind-boggling. It is not as if automobiles are buggy whips. How can the demise of this industry, once the envy of the world and the driving force behind Roosevelt’s “arsenal of democracy,” be dismissed so easily? Could a warning bell possibly sound any louder?


Pension crisis
The high cost
of tunnel vision

Wall Street Journal

Last week's transit strike in New York City is likely to prove a watershed for the nation. This isn't about next year's wages; it's about pensions, whose obligations in the future for state and local governments are going to be massive and crushing. Some local leaders may conclude that retiree benefits are a "third rail" too dangerous to touch, while others should recognize a problem their citizens can no longer afford to ignore. Either way, the Big Apple's awful Christmas-week strike and the negotiations that surrounded it have placed this question on the nation's agenda. With luck, the strike will be remembered as the moment state and local governments started to get serious about their long-term promises to their employees.


This article will be available to non-subscribers of the Online Journal for up to seven days after it is e-mailed.

WHY BusinessNevada

Politicians Pretend

The heart of Nevada’s public-school problem stands revealed

By Steven Miller

If Nevada’s teacher union ran an NFL franchise for the Silver State, coaches wouldn’t be allowed to evaluate running-back prospects by looking at their rushing stats.

Moreover, if pure chance nevertheless provided some faster, sharper, more talented players who showed real ability on the field, those stars, by union rule, couldn’t be paid more than any unmotivated mediocrities. Instead, all team players—stars and doofuses alike—would have to be paid by seniority.

Given the pathetic roster that would result, pretty soon even many of the talented few would depart. Aghast at the institutionalized indifference to excellence, their self-respect and aspirations would take them elsewhere.

When the team remnants ended their first season with the lowest rating in the entire nation—amazingly parallel to Nevada’s K-12 government schools—the teacher union would publicly “explain” that the franchise’s real problem was selfish Nevada taxpayers who refused to compensate players at “the National Average.” Whereupon Dina Titus, Barbara Buckley and Kenny Guinn would all rush to propose various taxpayer-bleeding schemes that studiously evaded the real structural problems.

These musings arise after learning how the Nevada Legislature knowingly sabotaged its own self-proclaimed educational “accountability” legislation in 2003. Needed to qualify for federal dollars under No Child Left Behind legislation, Senate Bill 1 of the 19th Special Session had been in the works for over two years. Nevertheless, because of the demands of a flock of teacher-union lobbyists, the legislation at the last minute was crippled to nullify its single most important accountability provision.


Nevada 2006
Experts forecast Nevada’s economic future

By Jennifer Rachel Baumer
Nevada Business Journal

Nevada’s economy enjoyed a banner year in 2005. Most industry sectors reported their strongest year yet, and predictions for the future are very positive. Most of the experts interviewed expect bright futures in their industries as population and job growth continue to expand. Rural counties are experiencing healthy economies. Mining and tourism both look good. Nevada’s economy looks healthy across the board.


Vegas growth
High-rise demise no surprise to experts

By Tony Illia
LV Business Press

Financing, developer equity, and hard contracts have resulted in some recent high-rise cancellations. Banks, as a result, will likely scrutinize future projects more closely before providing a construction loan.

Australian developer Victor Altomare, for instance, recently placed his planned $700 million, 80-story Ivana condo tower for sale at the northeast corner of Sahara Avenue and Las Vegas Boulevard South. The asking price is $49 million.


The Rainwater Prophecy

Richard Rainwater made billions by knowing how to profit from a crisis. Now he foresees the biggest one yet.

By Oliver Ryan

Richard Rainwater is doesn’t want to sound like a kook. But he’s about as worried as a happily married guy with more than $2 billion and a home in Pebble Beach can get. Americans are “in the kind of trouble people shouldn’t find themselves in,” he says. He’s just wary about being the one to sound the alarm.

Rainwater is something of a behind-the-scenes type—at least as far as alpha-male billionaires go. He counts President Bush as a personal friend but dislikes politics, and frankly, when he gets worked up, he says some pretty far-out things that could easily be taken out of context. Such as: An economic tsunami is about to hit the global economy as the world runs out of oil. Or a coalition of communist and Islamic states may decide to stop selling their precious crude to Americans any day now. Or food shortages may soon hit the U.S. Or he read on a blog last night that there’s this one gargantuan chunk of ice sitting on a precipice in Antarctica that, if it falls off, will raise sea levels worldwide by two feet—and it’s getting closer to the edge.... And then he’ll interrupt himself: “Look, I’m not predicting anything,” he’ll say. “That’s when you get a little kooky-sounding.”


Government unions
Forced unionization? No, say Washington state workers

Eighty-four percent don't believe the union represents them in its political activities

By Ryan Bedford
Evergreen Freedom Foundation

Between Friday morning, December 9, and Tuesday morning, December 13, more than 1,750 state workers responded to an informal survey by the Evergreen Freedom Foundation. Ninety percent of these respondents said they should have the choice whether to join a union or not. How ironic. During the same exact period, the state initiated termination proceedings against more than 300 state workers simply because they refused to join their union.


Federal government funds
green groups that fight it

By Rita Beamish
Associated Press

Environmental groups that frequently spar with the Bush administration over protecting the air, water, and human health also have collected millions of dollars in government grants, failing in one recent case to properly account for the money.


Public bonds
Monorail: Double or Nothing

Failing project's execs talking up
new line on west side of Strip

By Richard N. Velotta
InBusiness Las Vegas

Executives with the Las Vegas Monorail Co. admit they’ve done a poor job of selling tickets to the thousands of conventioneers who attended meetings and trade shows in the city this year. “We really didn’t go after it as well as we could have or should have,” said Las Vegas Monorail President Curtis Myles. “But that’s one of the things we’ll be doing in 2006, putting together a concerted plan to reach conventioneers.”


Tax burdens
Gaming tax increase sought

By Sean Whaley
LV Review-Journal Capital Bureau

CARSON CITY -- A Clark County activist attempted to file an initiative petition Tuesday that would significantly raise the gaming tax on Nevada’s largest casinos and use the money to fully pay single-family homeowner property tax bills. But activist Tony Dane, who said he has $100,000 in the bank to get the measure on the ballot, found out he was a week early.


Canadian drugs
Buckley drug law a no-go

FDA rules within legislation sink program, says AG

By Sean Whaley
LV Review-Journal Capital Bureau

CARSON CITY -- A legal opinion issued by the attorney general’s office Tuesday said legislation allowing Nevada residents to buy less expensive prescription drugs from Canada via the Internet is unworkable. The opinion brings to a halt the move to provide access to government-subsidized drugs from Canadian pharmacies.


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