“Government should be transparent. Transparency promotes accountability and provides information for citizens about what their Government is doing.”
— Barack Obama, Memorandum for the Heads of Executive Departments and Agencies, January 21, 2009

This sort of appreciation for the idea of open and transparent government has been one of the higher points of the new presidency. It’s a principle that we take seriously at the Show-Me Institute, as well. The actions taken by our government officials should be open to public scrutiny. Apparently, however, 81 legislators in Missouri’s House feel that the Sunshine Law should not apply to the state’s General Assembly, while only 79 do. That vote defeated an amendment that would have clarified the existing Sunshine Law.

I have a hard time understanding why it wouldn’t, given that the Sunshine Law applies to all other government officials in Missouri. Some speculate that the measure might have failed because legislators are concerned about the privacy of their constituents, but as this Maneater editorial notes (link via Combest), “Many agencies abide by the Sunshine Law and they still get plenty of calls from constituents.”

The laws surrounding this issue are murky themselves; legislators have different ways of interpreting the Sunshine Law with respect to lawmakers being individually exempted. The movement of House Bill 316 is a step in the right direction, but as this News-Leader editorial remarks, “What’s good for the goose may not be so good for the gander after all.”

On the heels of my post about the excellent lecture series going on in Kansas City, I would be remiss not to mention the upcoming fourth installment of the Show-Me Institute’s Lecture Series on Economic Policy, which is co-hosted by Saint Louis University’s John Cook School of Business.  On Tuesday, May 5, Dr. Caroline Hoxby will deliver a lecture titled “The Promise and Performance of Charter Schools: Drivers of Educational Improvement in the U.S.?”

Dr. Hoxby is the Scott and Donya Bommer Professor of Economics at Stanford University, a senior fellow of the Hoover Institution, the director of the Economics of Education Program at the National Bureau of Economic Research, and senior fellow of the Stanford Institute for Economic Policy Research. It is extremely exciting that a scholar of her prestige will be presenting here in St. Louis, so I encourage all of you to RSVP today!

This post is belated, but I feel that people should know about the fantastic message offered last week at an event hosted by the Kansas City Public Library and cosponsored by the Show-Me Institute. Wendy Kopp, the founder of Teach for America, was the latest speaker to take part in the library’s series on urban education, and her message was inspiring. Put simply, she said that for all the gloom and doom coming from those who preach that racial and socioeconomic background dictates academic potential, Teach for America is demonstrating that bright, motivated, and creative teachers can help children succeed in any setting.

For nearly two decades now, Teach for America has been persuading graduates of the nation’s best universities to commit to spending two years teaching in some of the most challenging classrooms that can be found. These range from urban schools populated almost entirely by the low-income, minority students that some proclaim to be “unteachable” to small rural schools in the Mississippi Delta or on Native American reservations, where students consistently rank among the lowest achievers in academic performance. Regardless of the circumstances, Teach for America’s recruits have demonstrated that a good teacher can make all the difference in the world when it comes to inspiring students to academic success. And, thanks to the experiences they have with the Teach for America program, more than two thirds of the program’s alumni continue to work in the field of education when their two-year commitments expire.

Kansas City has just recently started welcoming Teach for America recruits into its school district, and the preliminary results are very promising. So promising, in fact, that the district is clamoring to get as many of them as possible for the upcoming school year! This is an excellent development, and it gives me hope that the prospects are improving for Kansas City public schools.

This is the part of the session where things happen fast and furious. You might think our job here at the Show-Me Institute is closely related to what happens in Jefferson City, and you would be correct, but only to a point. You can easily run the danger here of focusing too much on the horse race instead of the finish, and the horse race is only interesting to a very small number of people. Plus, there are plenty of people who know the game much better than we do. I’ll put my knowledge of the issues surrounding occupational licensing up against anyone’s, but it you ask me the odds of House Bill X getting out of committee and being successfully meshed in conference committee with Senate Bill Y, well … you get my point.

So, with that in mind, here is a quick summary of things important to me, and to the Show-Me Institute, and how they are going in our beautiful state capital. (Note: That was not sarcasm; I really think Jefferson City is great and the capitol building is wonderful.) Thanks to Combest for most of the following links.

Efforts at reforming the judicial selection process have apparently stalled. This is too bad. I didn’t like the more wholesale changes proposed in the past, but the alterations proposed by Sen. Jim Lembke in the latest bill seemed very reasonable, and would likely have made the system better.

The legislature passed a small but important victory for individual liberty when it approved legislation eliminating the mandate for motorcycle helmet laws. Missourians will be better off if the governor signs this return to liberty.

Distribution of the stimulus funds is still up in the air. The proposed tax refund for Missourians deserves to be seriously debated by the legislature. How is this line, from Missourinet, for a little frying pan / fire commentary?

In another move during floor debate, $12 million dollars was taken from a fund to pay ethanol plant incentives and given to aid the financially strapped Metro transit system in St. Louis.

It is also still in dispute how much we will subject the rest of the Midwest to those “Wake Up to Missouri” ads that air during sitcoms. I say cutting those funds is a smart idea. I don’t imagine that even one person in the history of the world has said, “Hey, I just saw an ad for South Dakota while watching Friends. Let’s go there next month!”

When I checked out the Post-Dispatch’s website today, I fully expected the top stories to include President Barack Obama’s visit yesterday. Nope. Instead, I find a story about Brewster McCracken. an Austin, Texas, mayoral candidate, whose ad (available on YouTube) positively slams the city of St. Louis for losing its turn-of-the-century stature.

The statistic quoted by McCracken, that St. Louis was once the fourth-largest city in the United States, but is no longer among the top 50 cities, likely comes from the same statistical source used in this wikipedia list. There, it is plain as day: Austin: #16 (pop: 743,000); St. Louis: #52 (pop: 356,000). Never .mind the footnote in the list indicating that, like Baltimore, St. Louis is an independent city that is not a part of any county. More relevant is the fact that a city’s true population rarely comprises only the people who reside in its boundaries, but also the people who live and work within the vicinity.

There’s a standard measure of such population groupings, called “metropolitan statistical areas” (MSAs). Here’s a list of the top 25 MSAs and their populations. St. Louis is listed 18th now, with a population of 2.8 million. That’s more like it. Notice that Austin is not in the list? I found it here, listed 48th (2002 population: 1.3 million).

It’s true that the Austin MSA is growing fast, much faster than St. Louis’, but it’s unlikely that it will overtake us soon. What can residents of St. Louis and the state of Missouri do to ensure that we remain significant and grow strong? The Show-Me Institute has definitely covered some of this ground before. Here are some reminders.

Critics of parental choice in education sometimes claim that poor people will be taken advantage of in a market system. In particular, I have heard this in St. Louis regarding proposed charter schools. Choice opponents fear that poor parents won’t be able to tell a good school from a bad one, and that they could be taken in by unscrupulous charters looking for state money.

This article by James Tooley shows how baseless those worries are. Very poor parents in Kenya are able to evaluate the quality of various schools, and to act on their observations. Tooley quotes several parents, who explain their reasons for preferring private schools to government-run schools:

We asked parents to elaborate on what particular features made the private schools preferable. One mother told us: “People thought education is free; it may be free but children do not learn. This makes the quality of education poor and that is why many parents have brought their children back here.”
[...]
Parents, it turned out, actively compared children in the government schools with children in the private schools in their neighborhoods.
[...]
Finally, parents were learning from the experience of those who had moved between the two systems.

As you can see, parents are able to exercise choice in Kenya; I think St. Louisians are capable of doing the same.

Maybe that title is a bit of an exaggeration, given that there are plenty of opportunities for rent seeking in other sectors. But the amount of wealth that goes into the public schools, to pay increasing numbers of people to produce a product that doesn’t improve, is staggering. You’d be hard-pressed to find examples of comparably widespread waste in other industries.

Over at Cato@Liberty, Andrew Coulson estimates the extent of the lost wealth. Here’s his conclusion:

So if we’d managed to ensure that education productivity just stagnated, we’d be saving over $300 billion EVERY YEAR.

This inefficiency is a problem by itself; it also stands in the way of potential reform, which compounds the damage. For example, Susan Graham argues convincingly that extending the school year won’t help students in traditional public schools:

What concerns me most is this—if we are going to keep kids in school for longer days, weeks, and years, exactly what will they be getting more of during that time? More of what they’ve been getting? Because that hasn’t been working all that well, has it?

Long school years are a component of some successful schools, like KIPP charter schools, and various Asian school systems. Unfortunately, this potentially beneficial reform doesn’t stand a chance to work in the U.S., where more school would be more of the same. This line from Tertium Quids about the prospect of real reform sums it up best:

Regrettably, the political class is utterly cowed by that prospect, preferring instead to do whatever is necessary to prop-up the tottering government school monopoly or timidly fiddle at the utmost edge of reform.

This column is a few days old, but it is still poor enough to warrant criticism. The Star’s Steve Penn writes up all the wondrous things that the stimulus package will provide for job seekers in Kansas City. It really is startling how someone can so brazenly promote a political initiative in the newspaper without even remotely considering the other side of the argument.

As he goes through a laundry list of jobs, training, and scholarships that the funding will provide, he does not even consider that the taxes that would need to be raised in order to pay for these programs will make it harder for people to find good jobs in the future. It is like the issues of taxes and debt don’t even matter. The article reads as though money grows on trees, to put it mildly. This really is not surprising, however. Far too few people have any comprehension or concern about the debt being created by this administration and the last.

One part of the article would be hysterical if it weren’t so terrifying (emphasis added): 

 As a result of the new infusion of dollars, the council is prepared to provide 1,500 youths this summer with what are called next-generation jobs. That program will provide participants 16 to 24 with internships with the government and nonprofit sectors.

So, the next generation of jobs to grow our economy will be with the government. That ought to cure all of our financial ills. …

I read this article about the proposed smoking ban in Clayton with dismay. I know, lots of places have smoking bans, and it’s no surprise that Clayton residents want to follow the trend. I take issue with the reasons they give in support of the ban, like this one:

Among the other speakers was Siobhan Jones, a senior at Clayton High School. Jones said that students learn about the health hazards of smoking in school.

“But then we go to the restaurants in Clayton and we are bombarded with secondhand smoke.” she said. She urged the board to “reinforce what we learn in school.”

So, don’t go to those restaurants! This reasoning — that if you learned something is unhealthy in school, then the city needs to “reinforce” what you learned — boggles the mind. It’s also antithetical to the idea of education. Why study health in school, if the government will make all your health decisions for you?

The student has information about the health risks of smoke, but she chooses to go into a smoke-filled restaurant anyway. She wants Clayton to impose a ban so she can enjoy restaurants without facing a choice, and possibly making the less healthy choice. This reluctance to face the consequences of choices is indicative of a worldview that will stop at nothing in requesting government control, and that’s why I find it scary.

I’ve received a request to blog about a Chicago Tribune article, “Arne to Illinois: Shape Up,” specifically this quote from Arne Duncan:

“In too many places, including Illinois, we are lying to children now. [When] we tell a child they are meeting the state standards, the logical implication is that child’s on track to be successful. In too many places, including Illinois, if you are meeting state standards you are barely qualified to graduate from high school and you are totally unqualified to go to a university and graduate,” he said.

I agree that the standards are low and don’t reflect what students need to know for college or life. Many parents are happy when their children do fine on state tests, not realizing that in a few years, their children will be competing with people from China, Singapore, Sweden, and other countries with more rigorous school systems. Another drawback is that school use the low standards as an excuse, saying they can’t teach anything more advanced because they have to prepare students for the (easy) state tests.

I disagree with Duncan’s proposed solution. He wants the federal government to tell the states what to do — imposing his favorite ideas, like a longer school year, with threats like this:

“Illinois has a chance to compete for hundreds of millions of dollars. I would love to see Illinois compete,” Duncan said. “But Illinois has to change its behavior.”

Rather than bringing in the federal government to pick winners, mediocre public schools should get out of the way and let parents act as consumers. Parents with the opportunity have been choosing schools with longer school years, like KIPP schools, long before Duncan decided to impose that reform from above.

You can read my thoughts on Duncan’s charter school remarks here.

Feel free to make more blogging requests in the comments, or to email me with requests at sarah.brodsky@showmeinstitute.org.

Public schools spend a lot of money and face little competition — a rent-seeker’s dream. So, it’s no surprise that the locavores are turning to schools to advance their agenda. The Post-Dispatch reports on schools and local food. Although the article opens with news from the Forsyth School, which is a small private school, it goes on to explain that many large, public districts are attracted to the same idea.

Locavores want schools to give preference to local farmers when purchasing food, even if the farmers charge more than distant suppliers. The 2008 federal Farm Bill allows it, the 2009 economic stimulus pours money into it, and a bill in the Missouri General Assembly would encourage it.

The locavores are acting in the name of “sustainability”:

“Sustainability is at the forefront,” said Kiersten Firquain, owner of Bistro Kids.

It beats me why anyone would think this practice is sustainable. Restricting yourself to food grown in a narrow region puts you at risk of starvation in the event of crop failure. How can a practice be sustainable if it will collapse at the first poor harvest? The locavores can’t even put their money where their mouths are for one year straight, because no food is grown in Missouri’s climate for a significant chunk of the year — during which season children are in school.

Food protectionism doesn’t help food consumers, but it does help the local farmers, who stand to earn a nice profit for doing their job less efficiently than farmers who are far away.

Andrew Coulson of Cato responds to the latest National Assessment of Educational Progress (NAEP) data here. The picture is bleak. Students’ skills haven’t changed much since testing began 30-something years ago, but the United States has spent more and more money only to get those same results.

Coulson is absolutely correct about this:

Anyone who points to the slightly higher scores in the early grades as cause for celebration is missing the point.

Nobody hires a fourth-grader. Gains in elementary school achievement are worth something only if they can be sustained until students graduate.

The most appallingly horrible proposal in recent history might be coming to Missouri, which makes it even worse. The Kansas City Star has the details on how supporters of a national public service academy are considering Kansas City as a location. Sarah touched on this a few months ago, and I am still mortified by the thought.

It is difficult for me to comprehend how some people think it is a good idea to take some of our best and brightest, and convince them to dedicate their lives to the government. How is this for a frightening statement from a Missouri official? 

Robert Stein, Missouri’s commissioner of higher education, said public service is the lifeblood of our country, but there is no institution dedicated to developing public-service leaders.

“We need to explore how to establish a public service academy that will prompt a cadre of new leaders into government at local, state, national and even global levels,” Stein said.

I have news for Mr. Stein: Working as a bureaucrat for the government is not the lifeblood of our country. Things like liberty, freedom, individualism, entrepreneurship — these are the lifeblood of our country. Making sure that someone who wants to be a hair braider has the proper license is hardly at the same level. Nothing will get us out of this recession like convincing an entire generation that the smart move is to get a cushy job with the government, you know, with nice benefits and a feeling of fulfillment that you are not harming others by engaging in capitalism.

Look, I worked for St. Louis County for six years. There is a level of government service that has to be performed by someone. But we need our leaders to come from society and have a broad range of experiences. That is how you gain wisdom and judgment. Trying to form a culture of insular government workers who never leave government service, and who at the same time attempt to be our permanent leaders, should terrify anyone who believes in individual liberty. It only takes a short tenure in the government’s employ before too many people start to believe that the government knows best, rather than free people or markets.

Bob Compton at Two Million Minutes is blogging about education in New Orleans. Like Compton, I’m impressed by New Orleans’ commitment to rebuild its school system and bring in charter schools. On the other hand, I find it disconcerting that nothing less than a natural disaster will instigate reform.

Compton lists three key components to success in New Orleans. I don’t get this one:

implement a rigorous instructional system that is high standard and can be followed to teach effectively even by the weakest teacher

What is an “instructional system”? Is that new jargon for “curriculum”? Weak teachers should be taught to improve, or be fired. You can’t wait and hope that some other factor will make up for weak teaching, because teaching determines the classroom experience.

I’m all for the other two items — namely, certifying talented teachers “regardless of where they come from” (hear, hear!), and spending enough time on crucial subjects. However, I think we should bear in mind that the relative importance of academic disciplines is subjective. Reading and arithmetic would require the most class time in an elementary school serving disadvantaged students, while music might be an essential course in a high school for the arts. Parental choice is a good way to sort out those priorities — a lesson that New Orleans has taken to heart, given that half of the schools in the Recovery District are charters, and they’re aiming for 80 percent.

There are two sides to every story. Here’s what Kit Bond says about government incentives for green jobs:

“It sounds really neat to think we’re going to have wind-powered jobs, except I don’t see cars going down the road with propellers on them.”

Bond argues that incentives for these jobs entail a lot of waste. The government provides a huge incentive, and the resulting jobs are few and far between. I’m inclined to agree with him. It’s nothing personal against the environment or job creation. When the state subsidizes any job, you can bet that it doesn’t make sense economically. Private businesses would step up to the plate if it did, without having to be coaxed by incentives.

Bracken Hendricks of the Center for American Progress, who is apparently an expert in PR, puts a positive spin on inefficiency:

“He made it sound like federally funded purchase of jobs when what we’re talking about is smart incentives and public investment in new infrastructure,” Hendricks said.

Edspresso links to this American Thinker essay about the causes of student achievement. The author, Robert Weissberg, contends that choice reforms like charter schools or tuition tax credits will not solve America’s education problems. When parents want their children to succeed academically, they take advantage of the vast market supplying books and tutoring, many of which products and services are reasonably priced. So, Weissberg says, if parents and students don’t seek out academic help after school, they’re unmotivated and no improvements in supply will help them.

It’s true that the education market isn’t limited to schools. But Weissberg’s reasoning contains a fundamental flaw: He does not acknowledge that information is costly. Wealthy, educated parents are more likely to provide their children with books and tutoring because they know about those resources and how their children will benefit. An illiterate parent won’t be able to read advertisements for tutoring, and is probably surrounded by other people who don’t hire tutors. Even when that parent finds out about a free after-school tutoring program, he may not have enough information to judge how tutoring will improve his child’s chances in life.

The illiterate parent is an extreme example. However, the same idea applies to parents with a little more education and wealth. Parents give their kids the educational opportunities they know about and can afford. Many parents think that education just means “school,” so they look to charter schools but not extra books or tutoring. (One of the goals of parental choice advocates should be to give parents access to information about different kinds of education, beyond the in-school variety.)

Weissberg is right that we shouldn’t count on the government to fix education or improve achievement. His error lies in assuming that the current market provides a free flow of information to parents.

The first is by David Nicklaus. He responds to the argument that immigrants take Americans’ jobs with this reasoning:

In an area where the overall population is declining or stagnant, this argument loses its potency. Without an adequate supply of labor, employers would be under pressure to move out of the region. Or, in many cases, the jobs wouldn’t get created in the first place.

Nicklaus concludes that immigrants to the Midwest are doing low-skilled work that wouldn’t get done otherwise because midwesterners are leaving the area.

Nicklaus’ points are relevant to Missouri, but immigration in general isn’t just about low-skilled labor. Will Wilkinson discusses immigration’s role in Toronto’s economic and cultural development:

Multicultural Toronto and cities like it prove that the institutions of liberal modernity are robust. Life within them is so good that people the world over flock to them. And newcomers do not take these institutions for granted. They have a stake in seeing them last. They can and do make them stronger.

Restricting immigration is just like restricting trade in food, electronics, or any other commodity. In fact, it can actually be worse than some of those forms of protectionism, because people are an extremely valuable resource.

Neal McCluskey comments on a KIPP charter school in New York that is being forced to let its teachers unionize:

But this is the chance you take when you run a charter school: No matter how much you want to act like a private school, sooner or later the public-schooling powers will remind you of what you really are.

I still think it’s worth it to take the chance. Charters introduce choice, competition, and specialization into the public education system and make it a little bit less coercive. When families can choose a charter school, it’s no longer, “You have to go to the closest school building, or else.” And the fact that one KIPP school is being threatened by imminent unionization doesn’t mean that every charter is about to lose its character. I’m sure the unions will try, but charters may be able to stay one step ahead — at least until some other reform gives families more options.

However, this should serve as a warning to parents who want to transfer their children from private schools: Charters are not exactly the same as private schools. There are attendant drawbacks to public financing of any school.

I’m amused by this editorial in the Kansas City Star. It laments the fact that police in Missouri and Kansas can’t pull over drivers just for not wearing a seat belt. Then it says that raising the fine for not wearing a seat belt, from $10 to $100, is uncalled for.

If driving without a seat belt is so bad that the police should pull you over for it, then it should be discouraged with a noticeable fine. If, however, the fine is not worth more than such a paltry amount, then the police shouldn’t stop you for that in the first place.

This is a scary follow-up to my last post on exotic animals. Missouri has almost no regulations about owning large carnivores? And the requirement that people notify their local sheriff if they own a lion isn’t enforced? I blog again and again about excessive regulations, and now it turns out that in one of the few instances where detailed regulations would be appropriate, there aren’t any.

Something’s wrong when there’s more state oversight of manicurists at the mall than of people who keep tigers in their homes. It must be because cats and dogs aren’t lobbying for the government to erect barriers to entry, to keep out more exotic competing animals.

The Missouri House has passed a bill that would require large carnivore owners to: a) get a permit; b) provide the animal with “adequate” food and care; and, c) put up a sign that they have a potentially dangerous carnivore.

The requirement to feed the animal is meaningless. I’m not worried about the owner feeding the animal, I’m worried about the animal feeding himself. Big carnivores like lions do not eat set portions three times a day — they kill prey whenever they can get it. In other words, they’re always hungry. It’s not like you can make a lion less dangerous by feeding it on a schedule, the way you can make a toddler less irritable by giving him a snack.

Posting a sign is also not enough. Large carnivores do not read signs, are difficult to contain, and may leave their designated premises to go hunting in the surrounding neighborhood, despite the owner’s intentions.

Large carnivores belong in zoos — not in homes.

The Kansas City Star reports on Barack Obama’s first 100 days in office, and the effect on Kansas and Missouri. Didn’t everybody do something like this in kindergarten? Once you’d been in kindergarten for 100 days, you had to bring in 100 pennies or marbles, or whatever, and learn about triple digits.

The Star explains that most of the money that will be coming our way isn’t being spent yet. This illustrates one of the drawbacks of the fiscal stimulus — Washington doesn’t act with the exact timing necessary to step in and avert recessions.

Anyone who doesn’t yet read State House Call should start, if only for John LaPlante’s awesome reactions to statements like this one. After Kansas’ insurance commissioner declared that sick people should be able to purchase insurance as if they were healthy, LaPlante responded:

Yeah, it would be great if I could walk into Best Buy and come out with a 50 inch TV and not have to pay for it.

Plus, he explains economic principles. Read the whole thing.

No insurance plan is going to cover every illness. It would be so expensive that no one could afford it. And no one would want it, anyway. People buy insurance to cover a limited number of potential events, not every possible occurrence. When you get up in the morning, you don’t buy insurance for everything that might happen that day.

Given that health insurance will never cover all ailments, insurance mandates don’t make sense. Whenever the state imposes a new mandate, insurance companies will comply with it by moving away from covering other diseases (and, of course, by charging higher prices).

Legislators should keep that in mind when they consider this mandate for eating disorders. If it becomes law, the mandate will mean that other disorders go uncovered.

Daniel Hamermesh at Freakonomics writes about the silliness of “local” production and employment restrictions. Like the “locavore” consumption enthusiasts, the proponents of these policies think that if you just confine yourself to a small geographic area, scarcity and other facts of life don’t apply to you. Hamermesh points out that when places thus tie their hands, they forgo gains from trade and specialization. Then he turns prophetic:

Even worse, if it were to spread so that national governments helped to “protect” local companies and employees even more than they now do, we would be headed rapidly down the protectionist road that helped produce the Great Depression. I hope this truly stupid idea is localized and does not spread.

Let’s accentuate the positive: Nowadays, almost nobody is truly local. Look at this locavore blog, which chronicles the local food movement in all its obsessive-compulsive glory — by posting lists of stuff people ate, where it came from, etc. This is from the “About This Site” description:

Spanning the United States, the group is committed to challenging themselves to eat mainly local food during a specific period of time during the year.

First, if eating local is good, why do they do it only during a specific period of time? is that because during other periods of time, no food is grown in their areas and they would starve? It gives new meaning to the term “fair-weather fan.”

Second, it says the bloggers come from all over the United States. That doesn’t sound very local to me. I think the locavores intuitively understand that it’s counterproductive to restrict the exchange of information. Now, if only they could apply that concept to the food supply. …

We periodically hear calls for the state to tighten its payday loan regulations and to keep interest rates down. Such restrictive caps on interest would result in fewer people getting access to payday loans at all — or they might have to pay even higher rates of interest on the black market. Fortunately, ineffectual regulations aren’t the only answer to the problem of high interest rates. Free-market competition can give borrowers other options and better deals. For example, see this Post-Dispatch article about credit unions that offer short-term loans on better terms than the payday lenders.

Why do the credit unions offer lower interest rates? Because they’re nicer? Not quite. Actually, the credit unions have found a way to lower the risk that borrowers will default. They require borrowers to deposit their paychecks with the credit union, and to place part of their loans in a savings account there. The benefits of the practice for the credit union and its borrowers are manifold: the credit union gets to hold on to some of the cash; it establishes a relationship with the borrower; and the borrower hopefully builds up savings and reduces his dependence on payday loans.

The payday lenders offer better rates on certain loan amounts, and there will still be a place for them in the market, serving customers who can’t or won’t abide by the credit unions’ policies. But there’s now an alternative.

Besides the credit unions’ model, another way to reduce the risk of default is to ask borrowers to pay back a loan in several installments, rather than as a lump sum. I hope more lenders will enter the market, using that or other ideas to offer lower interest rates.

As many different Missouri outlets have been reporting (links via Combest), the state government is trying to sort out what it will do with $1 billion in stimulus funds allocated by the federal government. Show-Me Institute commentators have largely stayed away from this issue, in part because there really is no good answer. Even to the extent that the stimulus was well-intentioned, it was a poor decision on the part of the federal government to plunge the nation even deeper into debt. The borrowing and money-printing that are making the stimulus package possible are almost certain to hobble our future economic growth, because of the higher levels of taxation that will be necessary to pay for it, but also because of the government’s backward policy of propping up failing businesses rather than encouraging the growth or expansion of new and successful enterprises.

But, for now, the die has been cast and we must decide how to make the best of this bad situation. A number of politicians have suggested that the best course of action would be just to refuse part of the money, sending it back to Washington as a symbolic disapproval of the policy that led to the stimulus package. This definitely has a certain appeal, seeing as how spending the money might well be perceived as encouragement for similar federal action in the future, but there is another unpleasant truth to be considered: Missourians are going to be on the hook for the use of that money, regardless of how it is spent. And it will be spent, even if Washington has to send it to another state. So, Missouri’s free-market thinkers have to decide whether it is wiser to take a principled stance that will effectively donate our future tax dollars for other states’ benefits, or whether it is wiser to figure out the most effective way to use these dollars in our own state.

So, what might we do with this $1 billion in federal stimulus funds? While I can’t speak for my colleagues here, I’m intrigued by Gov. Jay Nixon’s plan to promote loans for small businesses. One of the great challenges we face in this recession is the contraction of available credit just at the time when many out-of-work people will be interested in starting their own businesses. I can’t speak to the details of the governor’s plan, because I haven’t reviewed it closely, but the central idea strikes me as a very, very good one in terms of jump-starting innovation and growth in our state. If private non-profit agencies are helping to ensure that small businesses have the funds they need to get off the ground, it just might spur the banks to start lending more freely, as well.

Of course, if the state government is really serious about spurring entrepreneurial growth in Missouri, the perfect compliment to this sort of a lending plan would be an effort to lower some of the regulatory barriers that make it difficult to start new businesses.

That title might not be the best choice of words, but let’s move on to the topic. Yesterday, the Kansas City City Council defeated a proposal we have been following closely, to consider privatizing the two Kansas City airports. I commend the four officials who voted in favor of it for their willingness to think outside of the runway.

The Shifting Gears Blog has a great writeup of our luncheon in Springfield earlier this week. Please check it out.

CWIP has been the subject of several previous articles and blog entries, both here at the Show-Me Institute and elsewhere, so I won’t use this entry to rehash the issue.

KMOX reports that controversy over proposed CWIP legislation, which would have supported the construction of an AmerenUE nuclear power plant expansion, has reached its final episode today. State lawmakers did not round up enough support to pass the constitutional amendment that would have been needed to move the new plant construction forward. Altogether, this was a not-so-surprising conclusion for a bill surrounded by a stream of publicity that, many people felt, raised more questions than answers.

Two significant amendments to an expansion of the Sunshine Law have recently come under debate. The first, sponsored by Rep. Jake Zimmerman (D-Olivette), required that the open records law would apply to all public officials. This failed to pass, by a small margin. The second seeks to close internal investigation records for police officers. Arguments about the latter revolve around the the tradeoffs between protecting bad officers on one hand, versus the potential for tarnishing the names of those wrongly accused.

The bill itself is a positive step in transparency, implementing harsher fines for those who fail to comply with sunshine laws and increasing the required delay between announcements of important public meetings and the actual commencement of those meetings.