Last month, the Missouri Court of Appeals ruled that a St. Louis man cannot be compelled to purchase trash hauling service after he was able to demonstrate that he is a very diligent recycler and does not generate any trash. The Post-Dispatch had a story about the ruling yesterday. The trash plan for unincorporated St. Louis County was incredibly controversial about three years ago. It, along with ticket scalping, was one of the first major issues we debated and covered closely on this blog.

This is a very interesting ruling. I’m aware this ruling won’t actually establish a precedent for courts hearing lawsuits about the federal health care mandate (they’re in different jurisdictions, etc.), but it is still intriguing to note that one court has decided that the government cannot compel someone to purchase something for the public good.

Prior to the county’s trash plan, the law specified that you had to have trash service, but it was left completely up to the individual or neighborhood to acquire it. So, the man who won the lawsuit was probably technically violating the old ordinance for a long time, but nobody noticed or cared because he didn’t produce trash. Now, the hauler that exclusively covers his area wants his money. Thankfully, the court ruled in favor of the individual and against the county.

I think nuisance laws against allowing trash to accumulate on your property are sufficient legal powers for the county to enforce basic health codes against trash. If this man does not generate any trash, he should not have to pay for trash service. I agree with the appeals court ruling, and I wonder if future judges will think the same way about other goods and services. Replace “man who does not generate any trash” with “healthy 25-year-old person who does not need or want any health care,” and it will be interesting to see how the relevant cases are ultimately decided.

On Friday, August 20, the Show-Me Institute, along with Liberty on Tour and the American Civil Liberties Union (ACLU), will host an informal panel discussion about recording the police. Recently, individuals in Maryland, Illinois, and Massachusetts have been arrested for filming either their or others’ arrests. In Maryland, police raided a motorcyclist’s home after he had posted video footage of a traffic stop on YouTube. Anthony Graber, the motorcyclist, faces up to 16 years if convicted of violating Maryland’s wiretap laws. The Illinois legislature has explicitly made it illegal to record an on-duty police officer without his or her permission. A man arrested for filming an arrest in Boston has recently filed suit against the city.

These arrests raise interesting questions of privacy expectations, free speech, differing state laws, and, as Reason Senior Editor Radley Balko has noted, your right to petition the government. This panel discussion is our attempt to explore the issues of liberty at stake, as well as provide the opportunity for anyone who is interested to meet the panelists and to ask questions.

The discussion will begin at 6:00 p.m. on Friday, August 20, at the Show-Me Institute’s office at 4512 W. Pine Blvd in the Central West End of Saint Louis. Please RSVP either by email to info@showmeinstitute.org, by phone to (314) 454-0647, or by commenting on this blog entry.

The event is free and snacks will be provided. However, because Liberty on Tour is traveling across the country, we suggest a $5 to $10 donation to help pay for the group’s travel costs.

Our star-studded panel includes:

• Adam Mueller and Pete Eyre of Liberty on Tour, a project to tour 13 cities in 13 weeks to talk about the principles of voluntaryism. Adam is also a founder of Cop Block, an organization devoted to watchdogging police officers who break the law. Pete Eyre currently works for the Future of Freedom Foundation, which advocates for individual liberty, free markets, private property rights, and limited government. Both Adam and Pete were part of the Motorhome Diaries project.
• Redditt Hudson, of the ACLU of Eastern Missouri. Redditt is a former Saint Louis police officer, and part of his work at the ACLU is to lead workshops that educate people about their rights under the law, including practical advice about how to interact with the police.
• John Payne, a research assistant at the Show-Me Institute, will be moderating the discussion. John has argued for greater transparency and recording of SWAT raids in Missouri, and follows issues of civil asset forfeiture closely.

If you have the time, please drop by, and don’t hesitate to bring questions! The panelists will speak briefly about their perspectives on recording the police, and then we will open up the discussion for questions from the general public. After about an hour of discussion, we will move the group to Sasha’s on Shaw for dinner and drinks.

If you can’t make it, you can send questions you’d like asked to info@showmeinstitute.org, tweet them to @showmeinstitute, or post questions on the event’s Facebook wall. Finally, we will film the discussion and post it online for those who cannot attend.

Saint Louis’s Paideia Academy, a charter school, is set to close its doors following a recent defeat in a court battle with Missouri’s Board of Education, which rejected the school’s charter application earlier this year. The Post-Dispatch reports that the Board of Education, in rejecting the application, and the Cole County Circuit Judge, in upholding its decision, cited poor management, the lack of a sponsor, and low test scores as reasons to revoke the charter. Although I am not in a position to speak about the quality of management, or about the lack of a sponsor (which certainly seems like a valid reason to revoke a charter), I do, however, object to the “low test score” argument on two grounds.

First, although it is true that Paideia’s test scores rank among the lowest in the state, absolute measures of test scores are not a very meaningful measure of school quality. The production of education is similar to the production of anything else in the economy: Poorer quality inputs, in the form of poorer students from historically disadvantaged ethnic backgrounds, translate to poorer quality outputs, in the form of test scores. It’s not only a mistake, then, to compare Paideia’s students to those of high-performing districts, but also to an arbitrary benchmark determined by the state. Taking a snapshot of test scores is not enough, because a reliance on mere glimpses into time discourages an understanding of the underlying trends at work. The more important measure is the longitudinal one: Are Paideia’s students learning more now than they were before the school existed? Perhaps the answer is no, but it doesn’t look like this question was considered by either the Board of Education or the Cole County Circuit Judge.

Second, I am willing to believe that we may overvalue test score measures of all kinds. One-size-fits-all models don’t work in schools, where abilities and interests vary greatly between student populations. Schools that produce less significant test score gains but more significant “creativity” gains may still be cultivating meaningful human capital.

I was pleased to see that the Post-Dispatch ran a letter to the editor today that I wrote in response to its recent editorial calling for St. Louis officials to renew efforts to subsidize the NorthSide redevelopment plan. This is the text of the letter:

Developer Should Bear Risk of Failure

In responding to Judge Robert Dierker’s ruling that St. Louis officials lacked authority to offer hundreds of millions of dollars to subsidize the NorthSide redevelopment plan, the editorial board, in the editorial “Celebrating Decline” (July 12), implies that the plan can proceed only if the city provides the anticipated subsidies. The developer’s own estimates indicate a belief that he will realize a profit of at least $251 million even without those subsidies.

Nothing in the ruling prevents the developer from pursuing his quixotic vision or from enjoying any profits that might result from its success; rather, it requires that, like all other entrepreneurs, the developer must personally bear the risks of failure instead of pushing them onto the taxpaying public.

Dave Roland — St. Louis

Policy Analyst, Show-Me Institute

Just yesterday, I wrote about the loathsome move by the itsy-bitsy, teeny-weeny city of Charlack to install speed cameras on I-170 in St. Louis County. We’ve had a discussion in the comment section of that entry about the closely related issue of what happens when the owner of a road (in this case, the state of Missouri) and the city it goes through (in this case, Charlack) disagree on a policy, such as a speed limit or cameras.

As if on cue, today’s Post-Dispatch has a story about a disagreement between St. Charles County and MoDOT regarding bicycle restrictions on state roads within St. Charles. One councilman, Joe Brazil (I have had the pleasure of meeting him, and we have praised him here in the past for his stances against annexation and TIF abuse), wants to ban bicyclists from certain state roads in the county. MoDOT is opposed. My purpose here is not to discuss this specific issue, but rather the process. Nonetheless, I don’t support banning bicyclists from any roads other than interstate highways, and I have to point out one comment in favor of the proposal to ban bikes by someone who, understandably, has a personal interest in the matter:

Among supporters was Stephen East of Cottleville, whose 16-year-old daughter was seriously injured in a 2003 accident on DD when the vehicle she was driving topped a hill and encountered a bicyclist in her lane. East said she swerved, ran off the road, hit a tree and was thrown from the car.

“Public safety trumps personal rights,” East said.

No, sir, it doesn’t. And it is exactly this far-too-common belief that our safety is more important than our rights that is causing us to lose our rights to safety zealots via death by a thousand cuts. I give you helmet laws, seat belt laws, closed swimming pools, and the fact that organizations can no longer just have a bake sale or parish pot luck because health regulations forbid food cooked at a home from being sold or given away elsewhere. Because, you know, that’s “dangerous.”

But I digress. MoDOT says St. Charles can’t enforce the ordinance because the Highway Commission won’t approve it. MoDOT says it simply won’t post the signs telling people about the law — making it invalid under state law, which specifies that traffic rules must be properly posted for people to see. So, if St. Charles passes the ban and MoDOT won’t allow the county to enforce it, there will be some sort of court challenge. That might be the only way to answer the question of who has final say about roads — the governmental jurisdiction that owns it or the governmental jurisdiction it passes through.

In my opinion, the final say on traffic laws should belong to the jurisdiction that builds, maintains, and “owns” the road, if for no other reason than consistency. Hopefully, this will be further clarified soon, and hopefully in a way that does not allow cities like Charlack to do whatever they please on state or county roads.

I’d be delighted to see a statewide ban on things such as red light cameras and speed cameras on all roads. As the laws are currently written, though, I don’t think there is any doubt that cities can do whatever they want on city roads. (Thanks to Combest for the link.)

The Post-Dispatch reports today that the city of Charlack is installing speed cameras along I-170 in near-north St. Louis County. The city is installing the camera on a state-owned bridge to give tickets for speeding on a federal/state highway. The mayor of the town of 1,431 people must think the rest of us are morons if he actually expects anyone to believe this:

Despite criticism that cameras are aimed at generating revenue, [the city's mayor] said Charlack passed a budget that did not count on camera fines. He said the ultimate goal is to phase out the photo program once motorists regularly drive more slowly through town.

The idea that the city will phase out the cameras once people drive more slowly is perhaps the most unbelieveable statement I’ve heard a politician say in a long time. And who cares if they passed a budget that did not count on camera fines? All that means is that they can spend the money however they want once it starts flowing in.

I have argued that the many small cities in St. Louis County should continue to exist as long as the citizens want them to. Here is the conclusion to my Government in Missouri study:

Missourians have chosen to have a large quantity of smaller government units. They have also chosen to have a large number of elected officials, representing smaller areas than the national average, so that the citizens may be in closer contact with those officials and monitor them more effectively. Economies of scale can be exploited in larger governments, as shown in the graph of per-capita spending for class three counties, but the efficiencies and benefits of larger government are less common and less significant than often supposed. The assumption that larger, less fragmented government is a more capable and efficient provider of services does not stand up to initial analysis and is not supported by the research.

But behavior like installing speed cameras, which is nothing more than a technologically advanced version of St. George–style speed traps, makes me question that once again. I would certainly favor legislation at the state or county level to forbid these types of cameras on the road — at the very least, on state or county roads.

I believe that speed cameras, just like red light cameras, are nothing more than a giant scam. I also believe they violate our rights — most importantly, the right not to be tracked by cameras every moment of your life. I am confident that would have been the Eleventh Amendment included in the Bill of Rights, if cameras had been invented yet.

Yesterday morning, Missouri’s lieutenant governor filed suit against the recently passed federal health care reform. It’s difficult to know exactly what to make of certain aspects of this lawsuit, because it assumes the manner in which the federal health care law will function — and it is not clear that the lawsuit’s assumptions are correct. Even if they are correct, however, there are a few issues that may prevent this lawsuit from proceeding. The first is the question of standing. Before a court will consider and rule on a legal issue, plaintiffs must establish that there is a current case or controversy between themselves and any defendants. Where the government is the defendant, this usually means that the government must have taken some act that has caused a harm or detriment to the person filing the lawsuit. It is not usually sufficient simply for a law to be on the books; courts usually (although not always) require that there must have been some implementation of the law before they will address its validity. Also, it is important to remember that plaintiffs cannot generally bring claims on behalf of others.

This lawsuit has eight counts. Several of these assert rights properly belonging to the state of Missouri. The lieutenant governor suggests that because a state statute gives his office the responsibility to be an advocate for the state’s elderly citizens, he has authority to seek relief on behalf of the state government. Similarly, the lawsuit claims that the citizen plaintiffs, as taxpayers, have a right to raise these claims on behalf of the state government. It is possible that courts have previously found citizen taxpayers to have standing to sue on behalf of their state government, but I cannot think of any examples and I do think it unlikely. Thus, I don’t think a court is likely to agree to consider counts one, three, and four. And, even if the court did address them, I question the viability of several of the lawsuit’s assertions in these counts. It may be correct that the federal government has no proper authority to require the state government to adopt certain programs (count one), no authority to compel the state government to make a payment to the federal Department of the Treasury (count three), and no authority to force the state government to increase state taxes in violation of the Missouri Constitution (count four) — but it is not particularly clear that the federal health care law would actually do any of these things. As I have pointed out, the lawsuit assumes that the law will be implemented in a particular way, but we cannot be sure that its assumptions are accurate. This has an enormous bearing on the validity of these claims.

Count two deals with the compensation provided to state officials, so it is at least arguable that the lieutenant governor could have standing to assert the claims of that count. The substance of the claim, however, is dubious. It seems highly unlikely that the federal government is not permitted to impose certain limitations on how the state of Missouri is permitted to compensate its employees. For example, would the state argue that it is not required to pay minimum wage or to comply with anti-discrimination laws? The principles of state sovereignty expressed in count two are, I believe, well made, but they do not necessarily demand a conclusion that the targeted provision of the federal health care law is unconstitutional.

Counts five and six address the individual insurance mandate, which does not even go into effect until 2014. I think the legal arguments in these counts are well-founded, but the claims are premature and will continue to be so until the mandate is actually implemented.

Count seven may actually have some legs. It addresses the provision of special treatment for citizens of certain states, which was incorporated into the health care law in order to secure the votes of certain congressional representatives. The count points out that these exemptions, or “grandfather” provisions, require that the law be applied differently to similarly situated citizens based on nothing other than their geography. That’s a powerful claim, assuming that the law will be implemented in the way that the lawsuit envisions. Those aspects of the statute go into force on Jan. 1, 2011, so it’s possible that the court will be willing to address them.

Count eight attacks the infamous “panels” that are expected to be established to evaluate the appropriate levels of treatment for various health care situations. The lawsuit assumes that these panels will have the power to forbid doctors to provide services to citizens willing to pay for them. If that assumption is correct, this count may have life — if and when the panels are ever constituted and actually issue the anticipated prohibitions. I do not, however, think that a court is likely to assess this claim until those things have taken place.

So, taken as a whole, I think it likely that the court will ultimately dismiss at least half of the claims raised in this lawsuit (and probably three quarters of them) as lacking either standing or ripeness. It is possible that the court will address the merits of counts two and seven. It is difficult to predict how the court will come out on count two, although I think it unlikely that the court will find a constitutional violation. If, however, the federal statute implements the provision targeted by count seven in the manner that the lawsuit anticipates, I think there is a very strong chance that it will be struck down as unconstitutional.

The Supreme Court of Ohio ruled Wednesday that a “police officer’s unaided visual estimation of a vehicle’s speed is sufficient evidence to support a conviction for speeding in violation.”

In 2008, Mark Jenney was issued a ticket for traveling 79 mph in a 60 mph zone. At his municipal trial, the charge was revised to 70 in a 60 mph zone. Radar results were deemed inadmissible at all trial levels.

Traffic violation cases are increasingly becoming the locus of a fundamental reinterpretation of the rights of the accused, in ways that already begin to set a wider precedent for shift the burden of proof from the accuser to the accused.

Take, for example, the 2009 case of Gant Bloom in St. Louis, who fought — and won — his red-light camera ticket appeal. Representing himself, Bloom successfully argued that he could not be charged with running a red light, because the city could not prove beyond a reasonable doubt that he, rather than his girlfriend, was the driver of his BMW at the time of the incident.

The recent ruling in Ohio provides yet another reason why Missourians ought to be concerned about how traffic cases are handled, lest this nascent precedent that abrogates the rights of the accused for traffic violations be spread to other states and other areas of law.

As many fans of the Show-Me Institute will already know, I have spent a lot of time during the past six months discussing the questionable constitutionality of Congress’ attempt to punish individual citizens who choose not to purchase government-approved health insurance policies. In fact, I’ll be discussing this issue tomorrow morning between 10:15 and 10:45 on Sarah Steelman’s radio show on KWTO 560-AM in Springfield. You can also listen in online.

Early in this year’s legislative session, members of the General Assembly asked me to offer testimony on the Health Care Freedom Act, which was proposed as a constitutional amendment that would recognize the fundamental right of citizens of Missouri to decide for themselves how they will pay for their health care, and that no government could rightfully interfere with that decision. In my testimony, I pointed out that if courts decided that nothing in the U.S. Constitution prevented the government from mandating the purchase of government-approved insurance policies, a constitutional amendment of the sort contemplated in the Health Care Freedom Act could offer a legal “Hail Mary” — a last line of defense that might prevent further congressional intrusion into citizens’ lives.

Despite overwhelming support in both the House and Senate, the Missouri General Assembly did not agree to let citizens vote on this constitutional amendment. Instead, the legislature placed the original bill’s language into House Bill 1764, which would allow voters an August referendum on adopting a new statute. Many of the legislators and citizen groups who had worked to pass the original bill are now hailing the passage of HB 1764, implying that if the people vote to adopt this statute, it will have the same effect as the proposed constitutional amendment might have. Unfortunately, this is simply not true. Missouri voters may well use this referendum as a political statement through which they can express their opinions about the federal health care reform law, but the text that might have been legally useful as a constitutional amendment will have zero legal effect as a statute.

The text that will be presented at the referendum states, in part: “No law or rule shall compel, directly or indirectly, any person, employer, or health care provider to participate in any health care system.” A court called upon to evaluate whether this provision would be effective against any federal enforcement of the health insurance mandate will first point out that because the language makes no reference to any particular government, it must be assumed to apply only to law- or rule-making subdivisions of the state of Missouri. Not only is it virtually unheard of (and generally futile) for a state statute to attempt to bind the federal government or one of its agencies, the plain text of the bill says nothing to suggest that is its purpose. A court looking at this provision as a statute will almost certainly end its analysis there.

However, even if the court infers that the General Assembly intended to prevent the enforcement of certain federal laws, the statute will fail. In order for the Health Care Freedom Act to have any hope of being effective, it would have to give citizens the basis to argue that health care freedom is a fundamental right beyond any government’s rightful authority to transgress. If the citizen could make that argument, there would be a very slight chance that the U.S. Supreme Court might consider such a fundamental right sufficient to prevent the government from punishing those who chose not to abide by the individual insurance mandate. A statute, however, is not the mechanism by with citizens establish fundamental rights or liberties — they put those in their constitutions, where they are insulated from repeal or avoidance by future legislation. Thus, even if HB 1764 had purported to establish a fundamental right or liberty, courts would have been unlikely to take them seriously. It just so happens that HB 1764 does not even make such an effort, further diminishing any legal usefulness it otherwise might have had.

To be clear, I do not mean to suggest that proponents of the Health Care Freedom Act are intentionally misleading people as to the likely effect of HB 1764. But Missouri’s citizens deserve to know that the bill and the upcoming referendum it authorizes can only be considered a political statement. Even if the people adopt this statute at the August referendum, their rights and liberties will be no more secure than if the bill had been defeated.

Combest this morning linked to a story in the Post-Dispatch about the decision by the Missouri Supreme Court to adopt a national standardized bar exam that will, in the future, make it easier for Missouri lawyers to practice in other states and vice versa. I think this is a great move, and I hope that a number of states follow it. Changes like this — which improve the ability of people to practice their chosen job where and how they would like — really have no downside.

The law is one field for which I support some level of licensure. In my opinion, though, that licensure should begin and end with the bar exam. If you can pass the bar exam without attending law school, I see no reason why you should not be allowed to ply your trade. I can’t imagine there would be any reputable firms, nor many clients, that would want to hire someone with that kind of limited background. Yes, I think people who want to be lawyers should go to law school, but that would be a perfectly reasonable decision for competitive legal markets, rather than a rationale for intervention by state laws.

(Also, the thought of someone just becoming a lawyer out of the blue could make for a whimsical ”fish-out-of-water” story about a urban lawyer definding his cousin in a rural community. The possibilities are endless. …)

The editorial board for the St. Louis Post-Dispatch recently published a piece denouncing politicians who support payday loans. The editorial is filled with rhetoric, but doesn’t contain much economic analysis or critique of the bill’s actual provisions. I’d like to expand on the discussion here.

From the editorial:

The big losers are the vulnerable Missourians who are being ripped off with impunity by payday lenders. Republicans have let the public down. Gov. Jay Nixon, a Democrat, hasn’t been much help either.

The highly charged language of this paragraph ignores that payday loans are consensual agreements made by individuals. Payday loan customers are not forced to take these loans, but rather take them out voluntarily for any number of personal reasons.

People who apply for payday loans usually have a high risk of default, or need money immediately — otherwise, a bank would be willing and able to offer a longer-term loan at a much lower interest rate. When payday loan stores lend out money, they have to take into account the risk of that loan remaining unpaid. Because these loans are made to people who are less likely to pay them back, that higher risk is counterbalanced by a higher interest rate. If rates are lowered by force of law, many higher-risk borrowers will find themselves entirely without access to legitimate forms of credit.

(For those who read Show-Me Daily often, you know that payday loans have been a regular discussion topic for the past two years. The previous posts are well worth reading.)

The Post-Dispatch also includes an AP photo of a group of payday loan stores, which well illustrates the abundance of stores in the market. This image illustrates an important free-market principle: competition. The close proximity of the stores means that payday loan lenders need to compete for customers. If one store is charging a higher rate than warranted by customer risk factors, accounting for an individual’s ability to pay back the loan, then another lender will be willing to undercut their competitor by offering that loan at a lower rate (an ongoing process, until the “market rate” is reached). Any worry about people being “ripped off” should be abated when one factors in the idea of marketplace competition: Each store sets rates to vie for customers while balancing the risk of repayment.

The Post-Dispatch ignores the fact that some people who really need loans cannot always get those loans from a bank, but that the necessity of the money immediately outweighs the longer-term potential cost of a payday loan. Setting any sort of regulations on payday loan operations means that some people will not be able to get loans legally. That does not mean they won’t get loans at all, but they will have to use underground or black market means to obtain them. This puts high-risk borrowers in an even worse situation, because if someone can’t pay back a payday loan or a bank loan, there are legal methods to handle the situation, like bankruptcy. If someone doesn’t pay back a loan, on the other hand, the lender has little recourse other than black market violence.

Deciding to increase payday loan regulations amounts to misguided paternalism. People at the margin will still take out loans they cannot afford to pay back — but that will happen whether they get them from a payday lender or, as the present mortgage crisis has shown us, from a traditional bank. In an attempt to save consumers from themselves, such loan regulations push desperate borrowers to illegal sources. Payday loan rates should be left to market competition, not government officials.

It is no secret that I believe Congress has no constitutional authority to mandate that citizens purchase a product they do not want. But people who are eager to see this portion of the federal health care reform law struck down would be very wise to put the brakes on the current wave of litigation.

You see, it is a bedrock principle of American law that federal courts cannot offer “advisory opinions.” In order for a federal court to resolve a legal issue, the person or organization presenting that issue to the court must demonstrate that they have suffered, are suffering, or are in immediate danger of suffering some injury. If the complainant can’t show how they are being harmed, the court rules that there is no current “case or controversy” existing between the parties and the case gets thrown out.

In the weeks since Congress adopted the new health care reform law, state officials all over the country have been trumpeting their intent to challenge the law’s constitutionality. Attorneys general, governors, and lieutenant governors in 15 (or more) states have already joined or have pledged to join federal lawsuits intended to strike down the individual health insurance mandate. But there are two big, big problems.

First, the individual mandate is not scheduled to go into effect until 2014. In other words, no one will be required to comply with the mandate for another four years. And, until someone is bound by this requirement, it will be virtually impossible to persuade a court that anyone has been sufficiently harmed by this law to create the “case or controversy” necessary for the court to address the merits of the claim. The second problem is that federal courts do not generally allow one person to assert a claim based on injury suffered by someone else (although there are a few limited exceptions to this rule). Although these state officials could file lawsuits on their own behalves, if they did not have compliant health insurance policies, it is much tougher for them to suggest persuasively that these officials have any basis for asserting the rights of individual citizens, independent of any private citizen asserting a claim against the federal law. The state officials’ claims might have a bit more substance in states that have passed a statute or constitutional amendment limiting governmental authority to interfere with citizens’ decisions regarding health insurance, but it is still a tenuous legal position unless the state is intervening on behalf of a private citizen’s lawsuit.

So, in all likelihood, these impassioned crusades to knock down the health insurance mandate will prove to be utterly worthless until the targeted provision actually takes effect. And, in the meantime, those in support of the mandate will point to the failure of these lawsuits as proof of both the mandate’s constitutionality and the general wrongheadedness of those who oppose the mandate. My advice to these well-intentioned officials is to withdraw their lawsuits for the time being, and for the next four years focus instead on addressing the mandate through the legislative process. If the mandate remains in place after the elections of 2010 and 2012 pass by, then will be the appropriate time to take this issue to the courts.

Last week, the Missouri Supreme Court ruled on the case Klotz v. Shapiro, which challenged the 2005 tort reform legislation and its $350,000 cap on non-economic damages. The court unanimously declared that state caps on non-economic damages cannot be applied retroactively, but did not declare the caps themselves unconstitutional. This is a big victory for both doctors and patients in Missouri, which is one of several states in which caps on non-economic damages have been challenged in the courts. Just the day before this decision came from the Missouri Supreme Court, the Georgia Supreme Court unanimously overturned the pain and suffering caps that were implemented in 2005. Earlier this year, the Illinois Supreme Court also struck down a law that provided for such caps. We are lucky that Missouri did not follow suit.

In 2004, the Congressional Budget Office conducted a review of nine studies that looked at the effects of tort reform. The review notes that studying tort reform is difficult because of the many types of reform and the issue of controlling for differences between states, but it does present some evidence in favor of imposing caps on non-economic damages. Of the three studies that examined this specific type of reform, two found that premiums declined significantly for at least some insurance lines (the other one found no significant effect). These three studies also found that insurers’ profitability increased after the imposition of caps. Contrary to what some politicians may have you believe, this is a good thing. Health insurance profit margins are typically about 6 percent, give or take a few points, which is very low compared to other forms of insurance. Increased profitability for health insurance companies allows for more firms to survive and compete for business, which will drive down costs and make insurance more affordable.

Opponents of caps on non-economic damages would probably point to this same CBO study, which also points out that malpractice costs account for less than 2 percent of health care spending. But this does not take into account the amount of defensive medicine that is practiced by physicians on a daily basis. According to this Gallup poll of 462 randomly selected U.S. physicians, one in four health care dollars is spent on defensive medicine. The study defined defensive medicine as “the practice of diagnostic or therapeutic measures conducted primarily not to ensure the health of the patient, but as a safeguard against possible malpractice liability. This may include tests, prescriptions, hospitalizations and referrals that may not be medically necessary, but are viewed as providing protection from a potential lawsuit.”

As demonstrated by this survey, this is a very real phenomenon. For example, a young female who complains of frequent headaches might get a brain MRI to rule out a tumor, even though she is young and has minimal risk factors. The only way to legally and definitively say that there is no tumor is by using an MRI, even though clinical suspicion is low and does not warrant the scan. So in a case like this (a real example provided to me by a medical student), legal implication trumps clinical judgment, and the unnecessary tests that result then drive up the cost of health care. Caps on non-economic damages mean that doctors can reduce the amount of defensive medicine they practice, because they know they’re not subject to the arbitrary determinations of juries about how much a plaintiff may deserve in compensation. They can instead focus on using their clinical training to make the proper diagnoses and do their jobs as doctors.

Another tangible benefit of imposing caps on non-economic damages is the increased physician supply that occurs as a result. A study published in 2005 looked at the impact of caps on non-economic damages from 1985 to 2000, and concluded that caps increased the per-capita supply of physicians by 2.2 percent relative to states without caps (another study put this number at 2.4 percent; these studies were summarized by the American Medical Association in this report). Missourians will therefore have greater access to care as a result of the court’s decision in this case.

Unfortunately, because the court did not specifically invalidate the plaintiff’s other complaints about the 2005 tort reform bill’s supposed unconstitutionality, the door is open for more challenges in the future. Let us hope that any such challenges are rejected.

Having a huge state budget deficit does have positive consequences, albeit few. One particular example is that the Missouri state government is making an effort to curb excessive spending.

The prison system in Missouri is one area of the state budget that would benefit from some fiscal restraint, as John Payne has noted before. According to an op-ed in the Saint Louis Post-Dispatch, the Missouri legislature has proposed to reduce the number of nonviolent first offenders sent to state prisons, and it is projected to realize significant savings as a result. From the editorial:

If 1,200 offenders were put into judicially supervised drug treatment programs and 800 received “enhanced probation,” costs would go down to $7.1 million.

Those savings would increase steadily and reach $26.6 million a year if a prison were to close. Aggressively pursued, the financial goal could be reached within a year.

Additionally and parenthetically, the article also points out that the practice of incarcerating nonviolent felons has some negative unintended consequences that perpetuate the state’s fiscal troubles:

Recidivism and re-incarceration rates have risen, guaranteeing that “this cycle will continue to worsen at a faster and faster pace, eating tens of millions of dollars in the process,” [Missouri Chief Justice William Ray] Price said.

Missouri would be wise to consider the competing needs of other programs for this money, such as education and incarceration of felons that committed violent crimes. Alyssa Curran articulated this point in a previous post on this blog:

Regardless of how one feels about the morality of such activities, it’s hard to justify expending so many resources on their prosecution when the core functions of the judicial system — protecting life, liberty, and property from actual direct, measurable harm — is suffering from a lack of resources.

Here at the Show-Me Institute, we have been following the North Face / South Butt lawsuit with great interest. Many of us know the father of the South Butt founder’s line of fine clothing, and think the entire lawsuit by North Face to be ridiculous. So, last month on my annual family ski trip to Colorado, I could not resist getting a few pictures taken of me in my South Butt T-shirt. Needless to say, the North Face store in Beaver Creek seemed the perfect location to snap a few photos. Enjoy, and I hope everyone at the South Butt keeps up the fight for truth, justice, and humorous relaxation.

Click to enlarge.

The U.S. Supreme Court heard arguments today in McDonald v. Chicago, otherwise known as the Chicago gun ban case. The court’s decision in this case will determine whether the Fourteenth Amendment means that the Second Amendment right to bear arms should prevent state and local governments from prohibiting citizens’ possession of functional firearms in their homes.

This is a very, very important case — but maybe not for readily apparent reasons. The central question is not so much the meaning of the Second Amendment — that was largely decided by last year’s D.C. gun ban case. Rather, this case concerns the meaning of the Fourteenth Amendment.

When it was drafted and ratified, the first section of the Fourteenth Amendment was intended to do several things: First, to ensure that United States citizenship would be universal for those born within the country, and that no state could deny state citizenship to someone who is an American citizen; this was a pressing concern given that the recently Confederate states might well have denied citizenship to freed slaves. Second, to ensure that all citizens were assured of a certain baseline of liberty that could not be denied by any state or local government, because some state governments, when left to their own devices, had previously refused to offer the same protections for liberty enshrined in the U.S. Constitution. Under the new amendment, states were required to afford all U.S. citizens the “privileges and immunities” protected under the U.S. Constitution — including a right to travel freely across state lines, a right to earn a living in a common profession, etc. And, finally, the amendment was intended to ensure that all citizens must be treated equally under the law, so that no state could fashion laws that would discriminate against newly freed slaves or other “outsiders.”

Very shortly after the amendment’s ratification, however, the U.S. Supreme Court handed down The Slaughterhouse Cases. At issue was a law in New Orleans that created a butchering cartel controlled by the city, limiting the number of people permitted to practice the profession. The law made it so that citizens could only practice the profession with the city’s permission, and then only at a time and place of the city’s choosing. The city’s butchers sued, claiming that the Fourteenth Amendment prevented a state or local government from infringing upon their right to practice their profession. The Supreme Court responded with a ruling that the vast majority of legal scholars now consider one of the least-defensible in the court’s history (see p. 11 of the brief in the preceding link).

The court couldn’t negate the provision establishing universal citizenship, but its decision in Slaughterhouse completely eviscerated (so to speak) the other provisions of the first section — leaving the states free to limit access to professions, set up sweetheart deals for favored business interests and industries, institute poll taxes or other requirements that disenfranchised targeted segments of the population, and pass the Jim Crow–era segregation laws. Had the Fourteenth Amendment been properly applied from the outset, there might have been no need for a civil rights movement because segregation would never have been permitted in the first place, and freed slaves (as well as new immigrants) would have had easier access to self employment in entry-level professions.

Over time, the Supreme Court realized the evils that states were perpetrating against their citizens and so they came up with the doctrine of “substantive due process” as a way of selectively applying the Bill of Rights to strike down illegitimate state laws. It’s an absolute legal fabrication, but it has allowed the court to address issues of constitutional freedom in the way it has seen fit, without admitting that the court got Slaughterhouse wrong. So, almost the entire Bill of Rights has now been “incorporated” into the idea of substantive due process (meaning that 140 years later, the court has almost completely accomplished the original purpose of the Fourteenth Amendment), but several of the most important “privileges and immunities” — such as the right to earn a living — remain on the outside looking in. For whatever reason, the court has continued to hesitate in taking the final, proper, liberty-respecting step.

Taking that step would mean that federal courts could strike down state laws in violation of the privileges and immunities that have been neglected for all this time – but that is not only what the Constitution requires, it is inherently a good thing for liberty! Getting the history and constitutional theory correct would simply re-anchor the methods of analysis to their historical underpinnings, instead of allowing the unprincipled free-for-all that sometimes becomes apparent in the way the court addresses constitutional freedoms. I can’t help but think it would be a good thing, both at the philosophical and the practical level.

[NOTE: Since the original publication of this blog entry, additional information has been released about the filmmakers accused of purchasing personal vehicles using Iowa's film tax credit program. From the Iowa Republican:

We would like to emphasize that these are separate filmmakers from those involved in production of the film The Scientist, also referenced in the blog entry below.]

Three companies and three individuals that were involved in the production for the film The Scientist have been charged with inflating and falsifying expenses in order to obtain more than $1.85 million in tax credits through Iowa’s film tax credit program.

According an article in the Des Moines Register:

Weiner Runge, a 44-year-old film-maker and resident of St. Louis Park, Minn., is accused of a felony for reportedly inflating values of expenses on applications to the state for tax credits. Over the course of the project, Weiner Runge inflated the cost of making the film from $767,250 to almost $1.8 million, according to the Attorney General’s office. [...]

Saunders, 37, [...] provided free services that were used to claim $2.5 million in credits. Saunders also faces felony theft charges.

The following are specific examples of how they are accused of inflating the cost of the services and products that they consumed under the guise of the film tax credits.

Court records indicated Maximus Production Services filed claims for rental equipment that were significantly inflated, such as $225 each for a push broom, a hand broom, a metal rake, a pick axe and a sledge hammer, and two shovels for $450.

The invoices also included various sizes of step ladders that ranged from $900 each up to $1,125, and a 24-foot extension ladder reported to have been rented for $1,350.

As for the most egregious misuse of Iowa’s film tax credits, filmmakers involved in two other productions bought a Mercedes and a Land Rover for themselves. From the Des Moines Register again:

[S]tate officials found [movie]-makers had used the tax credit program to purchase two luxury vehicles worth more than $60,000 and other items later put to personal use.

If these filmmakers purchased their vehicles in Minneapolis, the combined state and county sales tax rate would have been 7.375 percent if not for the tax credit exemption. That means that the filmmakers avoided paying more than $8,850 in sales taxes on their combined vehicle purchases. This is the amount of money that the film producers saved buying the vehicles in Iowa under the guise of a film production, and it represents lost sales tax revenue for Minnesota. Filmmakers who live in Hollywood, Calif., would have an even greater incentive to buy luxury cars using film tax credits in other states because the combined state and county sales tax rate there is 9.75 percent. For a purchase of $120,000, then, a person would have to pay an additional $11,700 in sales tax.

Supporters of film tax credit programs say that the films have economic and fiscal impacts beyond the amount that the filmmakers spend in the state. We’ve discussed this concept in a previous post on this blog, in fact. I’d like to pose the following questions to these supporters: How much economic activity does the purchase of a luxury car generate in the state economy? How much extra output does it yield for the state? Will this motivate more people to move to the state? My answers are, in order, “not much,” “none,” and “no,” but I am eager to read their comments.

I worry that Missouri’s film tax credit program could be at risk of the same kind of fraudulent activity, because it has a structure similar to Iowa’s program. Under both programs, the tax credits are transferable. Iowa has since pulled the plug on its program to scrutinize its accounting, and Missouri would be better off doing the same.

Writing in the Missouri Record, Mizzou political science professor David Webber highlights some of the hard numbers behind Missouri Chief Justice William Ray Price’s call to lessen the criminal sanctions on nonviolent offenders:

Missouri has twice the number of nonviolent offenders in prison [as] it did in 1994. The number of new inmates in 1994 was 4,857; in 2009 it was 7,220. The cost per inmate is now $16,456 per year or about $45.00 per day. The total appropriation to the Department of Corrections in 1994 was $216 million now it is over $670 million—an increase of over 300 percent[.] Worse yet, Missouri’s recidivism rate is 41.4 percent within two years.

Price is also concerned with inconsistencies in sentencing across the state’s judicial circuits. The average sentence for the lowest sentencing circuit is 4.5 years and for the highest circuit is 9 years.

The Chief Justice shares the same opinion that most citizens have about crime—violent, dangerous criminals need to be incarcerated—but he doubts the effectiveness of locking up first-time offending drug and alcohol addicts. Price states boldly: “We also know that simple incarceration, no matter how expensive, does not cure addiction. Treatment with strict judicial oversight does.”

If newspaper editorials are any kind of indication, the idea that we need a cheaper and more humane way of dealing with drug offenders and the like is extremely popular. Hopefully, political inertia will not doom such a worthy cause.

The first round of arguments against a projected $8.1 billion development of the city of Saint Louis’ north side was made in court yesterday.

The bulk of the trial, which will continue on Feb. 25, was devoted to testimony by Washington University economist Michele Boldrin, who clearly doesn’t think much of the projections and forecasts developer Paul McKee used to persuade city officials that his development was viable and worthy of more than $390 million in tax increment financing (TIF).

“I find these numbers completely unbelievable,” Boldrin said. “Pie in the sky” was another frequent characterization.

And, later, “This is something that if an MBA student came up with this as a term paper, I’d throw him out of the office.”

Boldrin’s main argument, repeated many times, was that no justification was given for any of the especially rosy growth and employment estimates. For example, the development company, NorthSide Regeneration LLC, estimates:

1. That property value growth rates will be as high as 20 percent in 2010, and 15 percent in a number of following years.
2. That more than 20,000 new, permanent jobs will be created as a result of this development.
3. That there will be buyers for 6,000 new homes, valued at an average of more than $450,000.

Dave Roland, a policy analyst at the Show-Me Institute, testified briefly that the north side area, which you can explore here, is not as blighted as NorthSide asserts. He, and Terry Artis, the owner and founder of the River City Examiner, took video of some of the areas NorthSide had noted as being especially blighted. The video, which is a publicly available court record, is linked below.

Dave Roland – A Look at Purported Cases of North Side “Blight” in St. Louis from Audrey Spalding on Vimeo.

Click to Enlarge

Interactive NorthSide Map

Another round of challenges to the $8.1 billion development of the city of Saint Louis’ north side will be heard in court tomorrow.

If you’re about to skip reading this post because the word “development” seems boring, hold on a moment. The project, put forward by developer Paul McKee, is contentious because it’s enormous — about two square miles — and because it has been approved for a large amount of public financing. McKee has asked for about $380 million in city tax increment financing (TIF), received approval for more than half, and will likely receive the rest in a few years. In late December, the state granted the development company, NorthSide Regeneration LLC, more than $19 million in tax credits (which can be used dollar-for-dollar to pay off taxes). Interestingly, the Department of Economic Development did not issue a press release, which it generally does when it issues tax credits.

One of the issues that will likely be raised at trial tomorrow is whether NorthSide unfairly characterized the area as being blighted. In its TIF application, NorthSide submitted a blighting study that systematically categorized more than 4,600 properties within the redevelopment boundary as being blighted. Along with its classification of properties as blighted for being dilapidated, unsafe, or unsanitary, the company also included blighting factors for properties with excessive vegetation, properties that had neither increased or declined in assessed value between 2003 and 2005, and properties with an increase in assessed value that totaled less than the city average from 2003 to 2008.

Another issue that could be raised at trial is that of eminent domain. McKee, along with the city aldermen who backed the project and pretty much every other public proponent of the project, have sworn repeatedly that eminent domain will not be used on owner-occupied property. What that means for the fate of non-owner-occupied properties within the boundary is less than clear.

Publicly available court documents also reveal some interesting details:

• NorthSide is curious about how the plaintiffs’ court costs are being financed, and requested that Sheryl Nelson and Elke McIntosh (two of the plaintiffs) reveal how they’re paying for litigation. Judge Robert Dierker did not grant the request.
• Both sides have taken deposition from Michele Boldrin, an economics professor at Washington University.
• NorthSide submitted a letter of interest from the Bank of Washington (in Missouri) as evidence of financial backing of the development. However, NorthSide has not submitted evidence of a contract with the bank, which has less than $800 million in total assets.
• According to NorthSide’s application for state tax credits, the company has spent about $25 million to purchase property in the redevelopment area.

The trial will start at 11 a.m. in Division 18 of the city’s Circuit Court. Judge Dierker, who quoted economist F.A. Hayek when rejecting the plaintiff’s request for a preliminary injunction, will hear the case. You can read that ruling here.

Last week, Judge William Price, the chief justice of the Missouri Supreme Court, delivered the State of the Judiciary address. He made one thing clear: The judiciary is tasked to protect the people of the state, but they cannot carry out this commitment successfully without sufficient resources. Missouri’s essential government services must be carried out even in the worst of economic times. The Missouri judiciary is doing its part to be fiscally responsible, returning millions of dollars of appropriated funds even though their own budgets are tight. They feel the same economic pressure that other government agencies are experiencing, but they are making an attempt to keep the interest of the public at the forefront.

We have all undoubtedly felt overworked and underpaid, and during a recession, the proportion of the labor force feeling this way has surely increased. As Judge Price pointed out, those who make some of the most important decisions throughout the entire criminal justice system — state prosecutors — are being spread thin. This is a worrying state of affairs if we want prosecutors to make well-considered decisions. People work better when they are happier — it’s as simple as that.

One of the most pressing issues mentioned in Judge Price’s address is the state’s overspending on the incarceration of nonviolent criminals, something that Show-Me Institute research assistant John Payne mentioned in an earlier blog post. This is a situation resulting from too many restrictive laws that have resulted in the criminalization of nonviolent offenses, such as transactions involving drugs, alcohol, and even prostitution. Regardless of how one feels about the morality of such activities, it’s hard to justify expending so many resources on their prosecution when the core functions of the judicial system — protecting life, liberty, and property from actual direct, measurable harm — is suffering from a lack of resources.

Too many people are being arrested and tried for crimes that have no complaining victim. As Reason editor Radley Balko has observed, “Because there is almost never a complaining victim in vice crimes, law enforcement officers must go to extraordinary lengths to investigate and prosecute these crimes. This leads to all sorts of other problems, including invasions of privacy, entrapment, and police corruption.” The situation has also led to inconsistency in prosecution throughout Missouri. The toughest counties are prosecuting five times as many offenders as the most lenient counties.

Judge Price has has offered a rather convincing reason to change these policies, and to decrease the rate of prosecution and incarceration of nonviolent criminals — because we can’t pay for it. What’s even more convincing is that we cannot afford to pay for the proper treatment and rehabilitation for these offenders. Price outlines how poorly the system treats people who haven’t directly harmed anybody else, by tearing them from their lives, throwing them in a “concrete box with very expensive guards, feeding them, providing them with expensive medical care, surrounding them with hardened criminals for long periods of time, and separating them from their families who need them and could otherwise help them[.]” What’s worse, while in prison, some of them are being trained by full-fledged violent criminals on how to further divide themselves from mainstream society. These people are also citizens, and deserve to be given a chance to reintegrate into society.

Price provides some sobering numbers:

In 1994, shortly after I came to the Court, the number of nonviolent offenders in Missouri prisons was 7,461. Today it’s 14,204. That’s almost double. In 1994, the number of new commitments for nonviolent offenses was 4,857. Last year, it was 7,220 — again, almost double. At a rate of $16,432 per offender, we currently are spending $233.4 million a year to incarcerate nonviolent offenders … not counting the investment in the 10 prisons it takes to hold these individuals at $100 million per prison. In 1994, appropriations to the Department of Corrections totaled $216,753,472. Today, it’s $670,079,452. The amount has tripled. And the recidivism rate for these individuals, who are returned to prison within just two years, is 41.6 percent.

Price observes that if the state government were run like a business, these wasteful practices would have been done away with years ago. “Business” may not be the most convincing metaphor to use, because one of the classic economic justifications of government action, particularly the justice system, is that public goods are not optimally provided by markets. Some economists, however, have suggested that many aspects of government action that are commonly justified in terms of their status as public goods, including some within the justice system, can’t correctly be considered public goods:

The standard economics approach to delineating the optimal set of the state’s functions is unsatisfactory.² In particular, when economists such as Joseph Stiglitz (1988: 24) indicate that “a primary role of government” is to provide the legal framework “within which all economic transactions occur,” not much is said about the desired content of the laws, and how it might affect the desirability or efficiency of their enforcement. Besides, there is typically no mention of nonstate enforcement mechanisms and their relationship to those of the state. The impression is created that all conflict resolution in economic life is in the unavoidable domain of the state. That impression is in contrast with the empirical evidence (see, e.g., Greif 1997, Gow and Swinnen 2001, and Waldmeir 2001).

This confusion is related to the use that is made of the concept of public goods as being nonrival in consumption and nonexclusive (Samuelson 1954: 387–89). If these goods are to be provided at all, taxes and the related state’s coercion are necessary. However, which goods are truly public? Is the justice system the domain of the state because the relevant services are a public good? Clearly, that cannot be said of all such services. Then, which “justice services” constitute a public good? Is the lighthouse, the favorite textbook example of a public good, a public good? Ronald Coase (1974) has shown that lighthouses in 19th century Britain were operated and financed privately. This finding, however, has not prevented the lighthouse to continue serving as the primary example of a public good in many textbooks (e.g., Stiglitz 1988: 75).

There may be fewer public goods in real life than typically assumed. As a result, the necessary (or desirable) scope of the state’s activity may be narrower, too. Some of the goods declared “public” may in fact be private goods, pushed into the state’s domain by public intervention that has eliminated or undercut the possibility of voluntary private financing of these goods. In other words, some uses of the theoretical concept of public goods may inadvertently constitute ex post justifications for the results of previous expansion of state activity.

Judge Price is not an economist, but by questioning whether the routine prosecution and incarceration of nonviolent offenders for committing consensual crimes actually provides more value than cost for the people of Missouri, this may well be the type of argument he was trying to make, using different terminology. Price is suggesting that it’s time for a more thorough analysis of which interests are truly being served by prosecuting many types of nonviolent offenders, and whether such prosecution actually provides results that could be considered a public good. His address doesn’t contain all the answers, but it’s the starting point for a worthy debate.

In times of fiscal crisis, it sometimes becomes necessary to embark upon a new policy path, and welcome changes that we might otherwise avoid. Whether Judge Price’s recommendations are inspired by a concern for justice or for more practical financial reasons, this would be a positive step for the government to take. The judiciary appears to be willing to do its part in order to withstand the jolts of the recession, but are the other branches of government also up to the task?

Barbara Geisman, an aide to Saint Louis Mayor Francis Slay has questioned whether the city needs a drug court and recommended cutting funding for the court by $325,000. Now, I’m all for cutting the budget of pretty much any government agency, but if this just shifts people that would be going to drug court into the more punitive side of our criminal justice system, it will likely wind up costing Missouri taxpayers more in the long run.

Geisman’s view has been challenged by William Ray Price Jr., Chief Justice of the Missouri Supreme Court, who last week called for increased drug court funding.

From the Post-Dispatch:

“We know drug courts work. We have more than 8,500 graduates,” said Price, who is seeking $2 million more a year for drug courts. “We know the tremendous savings that result from drug courts in Missouri.”

As for studies about drug courts, Price had this to say in his speech to the state House and Senate:

At one fourth to one fifth the cost of incarceration, more than one half of drug court participants graduate, and recidivism is only in the 10 percent range. The last five meta studies on drug courts, from all across the United States, have shown that drug courts reduce crime from 8 to 26 percent.

As the editorial board of the Post-Dispatch noted, this is the low-hanging fruit in our justice system. I will reiterate that the cheapest of all alternatives here is to not to criminalize the behavior of nonviolent drug offenders at all, but since that is not currently on the table, drug courts are an improvement over prison — even if you think people who consume politically incorrect substances should be forced by the state to change their behavior.

Last week, I noted with some pleasure Missouri Chief Justice William Ray Price Jr.’s call for a less punitive approach to nonviolent offenders in our legal system. In an editorial today, the Post-Dispatch praises Price and offers some concrete recommendations for reform:

• Drug courts need more funding. This is the low-hanging fruit in criminal justice reform — the chance to save serious money by ending the cycle of crime and keeping nonviolent, drug-related offenders out of prison. A lack of funding means state leaders aren’t serious.

• Leaders in rural counties must start to deal with nonviolent offenders in their own communities. If their prosecutors and judges insist on sending everyone to prison, then local taxpayers should be forced to pick up the tab.

• And, Gov. Jay Nixon should convene a panel of top law enforcement, legislative and judicial officials. Their task over the next 120 days should be to develop a plan for closing five of Missouri’s 21 adult correctional institutions over the next five years — one a year for five years — using part of the savings to support alternatives to incarceration for nonviolent offenders.

I agree that all of these would be positive developments, but I will note that we could save even more money if the state did not attempt to force people to abstain from certain vices.  Oh, well — baby steps, I suppose.

Although it changes nothing immediately, it is good to hear Missouri’s highest-ranking judge point out the inefficiency and waste of imprisoning nonviolent criminals:

During his annual State of the Judiciary address, Missouri Chief Justice William Ray Price, Jr. urged lawmakers to take a closer look at the incarceration of nonviolent offenders and the expansion of the state’s drug court system.

In a speech today before the house and Senate, Price said Missouri’s “broken strategy of cramming inmates into prisons” isn’t working and costs the state millions of dollars each year.

He said the state should focus on rehabilitating nonviolent offenders, instead of sending them to jail. Jailing nonviolent offenders, Price said, frequently leads to higher recidivism rates. 41.6 percent of nonviolent offenders who are jailed, then released, return to jail within two years, he said.

Price praised the state’s drug court system, but said it needs at least $2 million more funding per year to operate at full capacity.

According to the Show-Me Institute’s new spending tool, “Show-Me: The Books,” Missouri spends more than $2.7 billion a year on the Department of Corrections. Much of that spending keeps violent criminals off the street and is justified, but much of it goes to lock up petty criminals and drug offenders. Of course, I would go much further than Judge Price by eliminating prosecution of all victimless crimes (e.g., drug possession, prostitution) completely, but given how rare it is to hear someone in power even approximate my position, I will gladly take it.

It appears that the Missouri state Supreme Court may be poised to strike down the $350,000 cap on damages for pain and suffering in medical malpractice lawsuits. I’m fairly certain that some here will disagree with me, but I for one hope the cap is eliminated. From a legal perspective — keeping in mind that I am not a lawyer — the law seems inherently unequal, as it carves out a special exception in tort law for doctors. Furthermore, if doctors have this special exemption, they have less economic incentive to be careful in their work.

On the other hand, not having a cap can encourage too many lawsuits and add to medical cost inflation. However, it is important to keep the costs of excessive lawsuits in perspective. The Congressional Budget Office estimates that the savings for instituting a typical set of tort reforms (including but not limited to a cap on damages) saves 0.5 percent on total medical spending. This is not completely insignificant, but those savings would be totally swamped by a single year’s medical inflation.

There is a way to reform the tort system without giving anyone special privileges. Outside of the United States, most of the developed world uses what is usually referred to as the “loser pays” system, whereby whoever loses the lawsuit must pay both sides’ legal expenses. This system would have the salutary effect of eliminating frivolous lawsuits and lowering total lawsuit expenses. A 2008 Manhattan Institute study found that when compared to countries with the loser pays system (e.g. Britain, Australia, Germany), the United States spends at least twice as much on tort litigation as a percentage of GDP. If Missouri instituted loser pays, we could reap the benefits of lower litigation costs without creating a privileged legal class.

In a recent post, I commented on how I supported preventing felons from working as bail bondsman, but stated that I did think, on the whole, that we were being too restrictive about which positions that felons can work in once they serve their sentences. So, I was delighted to read that in Kansas City Councilman John Sharpe has introduced legislation changing the city’s liquor code to allow felons to work in bars. I think that this is a very positive change, and I commend Councilman Sharpe. There is no reason that felons who have done their time should not be able to serve drinks, or work in any of the other assorted jobs that are available in bars. (I, myself, used to be a barback and a bouncer — although no, I am not a felon.) I hope this change goes through, so it can give former convicts a few more opportunities to build back their lives after they serve their punishments.

I was also delighted to read the story first at Tony’s Kansas City, which is always informative and fun to read for a number of reasons — which you will discover as soon as you visit.

Nobody covers the bail bond industry like we do here at the Show-Me Institute. Combest has linked to an AP story in the Springfield News-Leader that details how a state agency is recommending that Missouri tighten its requirements to become a bail bondsmen. Now, I loathe most occupational licensing, but these recommendations (as reported by the article) don’t seem that bad.

I understand the reasoning behind not letting convicted felons serve as bail bondsmen, and that strikes me as a reasonable change. I say this as someone who is very sympathetic to the plight of former convicts getting jobs after serving their time, and I think we have gone too far in limiting the ability of felons to work after their sentences are complete. However, jobs that deal with the court system, like bail bondsmen, seem a reasonable restriction in my opinion. 

The other changes, according to the article, are:

The report also recommends larger fines for violations and requiring that applicants have high school diplomas.

Restricting entry requirements through rules or costs are the biggest economic problem with occupational licensing. Fines levied by regulatory agencies to punish misconduct by those who have done something wrong — after they’ve been licensed — are less of an issue, so I don’t greatly object if such fines are raised for current practitioners.

However, the last rule proposal is just stupid. I realize that getting a high school diploma or GED is very simple and has a low cost, but the main question should be whether performing the job competently requires a high school diploma. I fail to see why the job of bail bondsmen should require a high school diploma. The customers who need you don’t care whether you have a diploma on the wall. They care that you have the money to put up, and they need to know that you are going to find them and harm them (I don’t necessarily mean physical harm; returning them to jail is “harming” them) if they skip out on you and the court. The diploma requirement and the requisite job skills just don’t connect.

This is not in any way an attack on the intelligence of bail bondsman. I don’t think being a policy analyst at a think tank should require any type of diploma if you can do the job without it. (But, yes, the author does have a high school and college diploma, just like I am certain that most bail bondsmen have diplomas.)

Because the Show-Me Institute’s staff took some time off during the holidays, we missed writing about a few things that I might otherwise have jumped on. In the interest of catching up, I want to highlight this excellent piece by James Harris — whom I have had the pleasure of knowing for some time — that ran about a week ago in the Springfield News-Leader. I like how he puts the issue here:

Right now, having tort reform laws on the books puts us at a comparative advantage with other states and other nations when competing for new industries. The loss of these laws would put us at a disadvantage, discouraging companies from creating new jobs in Missouri which could be created more cheaply in other states.

I actually disagree with James on a related issue: that of judicial appointments in Missouri. However, I totally agree with every word he wrote in this piece. If the state Supreme Court strikes down the current tort laws that were enacted in 2005, it would be a disaster for Missouri in countless ways, especially economically. I won’t get too worked up, because I am optimistic that the court will agree that elected officials have a right to set limits on government actions, such as court verdicts.

If opponents of tort reform laws want to go back to the way it was in Missouri, they need to get people elected to office who run on rescinding the lower award limits and other reforms that were passed. After all, the officials elected in 2005 almost all ran on the issue of tort reform. The people of Missouri elected legislators who had proposed to limit awards, change venue laws, etc. If you want to change those laws, do it through the democratic process — not the courts.

Here at Show-Me Daily, we have long documented the efforts of the Missouri Municipal League to prevent this state’s citizens from voting on constitutional amendments that would severely limit abuses of eminent domain in this state. For years now, the league (its leadership is made up of elected officials from across the state) has successfully persuaded cities to use your taxpayer dollars in order to help support their effort. Part of that effort has included litigation that the filers claimed to be an attempt to get a “fair” ballot title — but, in reality, it was intended to keep the measure off the ballot entirely by so delaying the signature-gathering process that it would be impossible to collect the necessary number within the limited time available.

Up until a few weeks ago, advocates of eminent domain reform had no real proof that the Municipal League’s lawsuits had this suspected insidious purpose. On Nov. 20, however, at a meeting of the Missouri Bar Association’s Eminent Domain Committee, a managing partner in the law firm representing the Municipal League was asked to give an update on the litigation. She had this to say (audio transcript; emphasis added):

It’s not a real big update, but … um … from the standpoint of the initiative petition, uh, we did partially win, uh, in the … at the trial court level, and it’s on expedited appeal for the western district, um, which will be argued in December, with the main objective being to delay the gathering of signatures and, um, hopefully we’re … we’re accomplishing that.

Missouri Citizens for Property rights, the group spearheading the petition effort, has asked the court for permission to supplement the record with the audio evidence of the attorney’s statement, and should hear today whether the court will agree. If the court chooses to take her statement seriously, it could assign sanctions against her firm for violating the ethical rules (yes, attorneys are supposed to understand ethics) governing the legal profession.

The story has started to gain interest nationwide — as it should. It is yet another example of powerful people trying to prevent ordinary citizens from having their own say on important issues. The AP article has so far been run by media outlets in Atlanta, Phoenix, Washington, D.C., Seattle, Miami, Philadelphia, Minneapolis, and Dayton, Ohio. Here in Missouri, the story has been reported in Kansas City, Springfield, Columbia, Jefferson City, Joplin, Cape Girardeau, and St. Louis — although it is interesting to note that the Ost-Pay Ispatch-Day, for some reason, has not yet covered this story.

Among the elements of the health bill being considered by Congress is a requirement that every adult would either have to purchase a health insurance policy or face punitive fines to be collected by the Internal Revenue Service. There has been widespread debate in legal circles about whether the courts would uphold such a requirement, but lawmakers in several states are trying to do what they can to insulate their citizens from such a requirement. In Missouri, state Sen. Jane Cunningham has already persuaded half of her colleagues to cosponsor Senate Joint Resolution 25, an amendment to the state Constitution that would recognize the citizens’ right to decide for themselves whether they will participate in any health care system.

Under this amendment, the government would be denied the authority to prevent citizens from offering or accepting direct payment for health care services, and it would not be permitted to substantially limit the purchase or sale of health insurance in private health care systems. In addition to recognizing that this is a sort of common-sense freedom that ought to be enshrined in the Constitution, the proponents of SJR 25 are aware that state constitutions are permitted to afford liberties above and beyond those secured under the U.S. Constitution, and that there is a possibility the courts might find that even a federal statute cannot violate those additional rights.

This proposed amendment has sparked the interest of some in the media, including an article from the St. Louis Beacon (authored by William Freivogel, director of the School of Journalism at Southern Illinois University–Carbondale) with a headline suggesting that, if passed, SJR 25 would itself violate the U.S. Constitution. I quickly posted a rejoinder in the comment section of that article, but I felt it would be worthwhile to restate in this forum the points I made in those comments.

There are four major constitutional issues raised by the potential federal health insurance mandate and Sen. Cunningham’s proposed amendment: 1) Does the proposed law fit within the powers that the Constitution gives to Congress? 2) Does the proposed law infringe upon powers reserved to the states by the Tenth Amendment? 3) Does the requirement to buy health insurance unconstitutionally infringe upon the individual liberties secured to American citizens under the First, Fifth, and Ninth Amendments? And, 4) Does the Supremacy Clause allow for the enforcement of a federal statute even if that statute conflicts with individual rights protected under a state constitution? I’ll address these points in order.

As we all remember from high school, congressional authority is limited to those powers explicitly granted by the Constitution. In this case, the question would be whether the Constitution gives Congress the authority to punish citizens for refusing to purchase health insurance.

Those backing the bill suggest that this authority is part of part of Congress’ power “to regulate commerce … among the several states[.]“ It is true that courts have generally interpreted this power very broadly, resulting in the decision that a farmer named Filburn was bound by agricultural regulations even though he was not taking his grain to market, as well as the decision that Angel Raich was subject to federal drug laws even though her medical marijuana was homegrown and neither bought nor sold.

But courts have also recognized limits to congressional authority under the Commerce Clause. In U.S. v. Lopez, the Supreme Court held that the Commerce Clause did not permit Congress to create a federal law banning possession of firearms in a school zone. In U.S. v. Morrison, the court struck down a law that addressed the subject of gender-based violent crime. The primary reason that the court struck down the laws in Lopez and Morrison was that the subjects Congress sought to regulate lacked a clear impact on commerce among the states.

While much of the health insurance industry is handled within the bounds of individual states (it is very unusual to be able to purchase insurance from a company in a state other than the one in which you are domiciled), I believe that courts will be inclined to find that health insurance as a whole is an issue with a sufficient connection to interstate commerce to permit congressional regulation. But, if Congress passes a bill mandating that individuals must either buy health insurance or face financial sanctions, courts will have to answer a very specific question: Does the power to regulate interstate commerce give Congress the authority to penalize citizens who do not wish to engage in commerce? As Prof. Randy Barnett pointed out at a recent Heritage Foundation debate, the Supreme Court has never faced such a question, so we cannot be certain how it will be answered. I tend to agree with Barnett that the Court’s response will likely hinge on the solicitor general’s ability to explain which aspects of citizens’ lives (if any) would remain beyond the reach of congressional regulation if the Court permitted these mandates to be enforced.

One of the law professors cited by Freivogel argued that even without relying on the Commerce Clause, authority for the health insurance mandate could be found in Congress’ power “to lay and collect taxes … [to] provide for the … general welfare of the United States[.]” I disagree. While this provision might permit the creation of a tax-based public health insurance system like Medicare that all workers pay into, this is not what is anticipated in the insurance mandate under consideration, which is neither tax-based nor public. Nor would the alleged “tax” be collected from all workers. Furthermore, even if the fees for failing to purchase health insurance were classified as a tax, Congress is specifically denied the authority to impose capitation taxes “unless in proportion to the census,” a requirement that this proposal does not seem to meet.

Assuming the courts were to determine that Congress does have the general authority to impose a health insurance mandate, the next question would be whether the issue should be reserved to the states under the Tenth Amendment. While Congress has for decades been active on the subject of health care, this does not necessarily imply that Congress may remove state governments’ ability to decide whether their citizens should be punished for failing to purchase health insurance. In fact, this is an issue that several states have previously dealt with, in which at least one state (Massachusetts) has adopted such a mandate and a number of other states have considered — yet refrained from — doing the same. Federal courts have previously been very willing to permit congressional interference even in areas that were traditionally the sole province of the states, but considering the current ideological composition of the Supreme Court, it is possible (although, admittedly, unlikely) that a majority might take this opportunity to redefine (or restore) the balance of power between the federal government and the states.

Most of the arguments I’ve heard so far regarding the proposed health insurance mandate have neglected to address whether it might violate the First, Fifth, or Ninth Amendments, but I think this is an oversight. The Supreme Court has previously recognized that the Constitution protects citizens’ rights to associate with others of their choosing, to enter into contracts, to make their own decisions regarding health care, and, of course, their right to privacy. A violation of any one of these rights could be sufficient to invalidate the health insurance mandate.

While some people may not carry health insurance because it is unaffordable, many choose not to purchase health insurance. Some people’s religions may not permit the use of modern medicine, while others may not believe it to be effective. Still others are simply confident enough in their propensity for health that they are willing to risk the costs of illness or injury in order to direct their money to concerns that they believe to be more pressing. And there are some who, recognizing that most people pay far more to insurance companies than they are ever likely to need for their own treatment costs, would prefer to self-insure by creating their own health fund. For each of these people, a congressional directive to purchase a health insurance policy would mean giving up a huge amount of money — as well as a significant amount of privacy — committing themselves to a contract for goods and services that they do not want, and in some cases may be prohibited from using.

There is a principle in American law that says the government may not punish someone for exercising a constitutional right, and neither may it offer a benefit on condition of the citizen’s willingness to refrain from exercising a constitutional right. In the case of an individual health insurance mandate, the government would be telling its citizens that if they choose not to associate with an insurance company by entering into a contract under which they will be required to pay large sums of money while also disclosing private information about their health, they will be subject to very large fines. I think that this is clearly an infringement of some, if not all, of the constitutional rights listed above.

Unfortunately, establishing an infringement of rights does not end the analysis. In fact, the Supreme Court has long permitted infringement of these kinds of liberty, as long as the government could advance what the court considered to be a sufficiently important interest in doing so. In the case of the individual health insurance mandate, the goal advanced by the government would be to bring about slightly lower insurance premiums and, thus, to increase the number of people with access to health care. This is just a hunch, but I suspect that courts will not find this interest sufficiently compelling to justify forcing citizens to purchase coverage that they do not want and may have no intention of using, particularly when doing so necessarily requires an invasion of their privacy.

My final point is that if the courts find that the U.S. Constitution does not afford citizens protection from being forced to participate in a health care system, the courts will have to decide whether the Supremacy Clause permits a federal statute to be applied in such a way that it violates an individual freedom recognized by a state constitution. As I pointed out in my first comment, it is very possible — perhaps even likely — that the courts will decide that these state constitutional amendments do not bind the federal government. It is important to note, however, that this sort of holding would not strike these provisions down as “unconstitutional.” Rather, it would simply prevent their application against the federal government — perhaps foiling the hopes of the state constitutions’ drafters, but certainly not preventing the effectiveness of the provision against state governments and their subdivisions.