The Missouri Legislature passed Senate Bill 330 last week. I hope the governor signs it (I cannot see a reason for a veto). SB 330 makes several small but worthwhile changes to state licensing rules. Generally speaking, the legislation expands the practice areas of certain jobs, allowing them to do things they were previously prevented from doing. Nurses, dental assistants, and counselors now all have slightly expanded practice areas and slightly reduced regulatory control of their jobs. This is a good thing. Furthermore, there are now a few more ways to become licensed as a hearing instrument specialist in Missouri. This is also a good thing.

What is a VERY good thing is that we appear to be moving in the right direction on the larger issue in Missouri. To the best of my knowledge, we have not passed wholesale licensing requirements for a new occupation in Missouri for a few years. (I may be overlooking some, but I do not think so.) Last year, due to prompting by court rulings, the state significantly reduced the licensing burdens to open a moving company in our state. This year, we passed SB 330, with its entirely positive changes. At the state level, we have leaders such as Missouri Rep. Eric Burlison (R-Dist. 133) who care about the personal and economic harms when government makes choices that markets and customers should be making.

At the local level, we still see an expansion of licensing abuses, from street performer auditions and valet parking licenses in Saint Louis to totally bogus HVAC rules in Saint Louis County. But at the state level, we are doing the right thing. Remember, occupational licensing of most occupations benefits current practitioners at the expense of future competitors and the public. We need less of it in Missouri.

Senate Bill 207 is a major topic of conversation in Jefferson City this year. Simply put, it allows AmerenUE to add a surcharge to bills to collect funds now to pay for upcoming infrastructure investment. Under current law, AmerenUE has to wait until a project is complete before it can charge for it.

I support the changes in SB 207. I support it because I support infrastructure investment in our state and if the current customers of AmerenUE (which is all of us) do not pay for it then who will? I guess Ameren could make greater use of bonds and debt instead of price increases, but that comes with increased costs of its own (e.g., interest). Who will pay for those bonding costs? Us, of course.

I think electrical companies should operate under the same terms as water and gas companies, which this bill would allow them to do.

In case you think I am shilling for the electric companies, please note that I completely support deregulating Missouri’s electrical system and giving Missouri consumers more choice in their electrical providers. They have done this in Illinois, among other states. I think we should do it here as well.

But for now, we have our regulated monopoly system in place, and I support most ideas designed to encourage real infrastructure investment in that system. (”Real” = actually produces power without ridiculous government subsidies, i.e., not wind energy or ethanol mandates.) That infrastructure investment costs money, and I think charging current customers for the expansion of a system we (or at least most of us) will use is fair.

I have nothing against middlemen nor beer distributors. In fact, I rather like beer distributors. I intend to consume their product at Blueberry Hill for my birthday tonight. I love Guns ‘n Hoses and have had a great time when I have attended. Heck, I even have a Googleganger in the industry. (Note, providing a link to the Googleganger totally defeats the substance of having one.)

That said, I just cannot believe that the latest attempts to preserve the three-tiered alcohol system by further tightening the regulations will be productive. Missouri Senate Bill 412, SB 365, and House Bill 759 will involve the government further in the alcohol industry, and I do not think that is necessary. Look, we can all agree that there should be some government regulation of the alcohol industry: age limits, DWI laws, basic liquor licenses. However, I think that preventing a producer from having even a small interest in a distributor goes way too far, as do the rest of these proposed legislative changes. Producers should be able to, more or less, have the same freedom to get their product in front of final consumers as any other business. As the title suggests, the government should not mandate the use of a middleman.

All that said, I have no doubt that most producers will still continue to use distributors in this industry. The distributors have the contacts, the relationships, the networks, and the equipment to get the product to the market. However, the choice to use a distributor should be a voluntary activity as part of a free-market economy, not a government mandate.

Drawing done for the February book club meeting by former SMI intern Mary Chism

Last night was obviously Snowmaggedon, and I hope everyone is staying safe out there as some of the roads are still nasty. The previous night, Wednesday, we hosted the second Show-Me Institute Saint Louis Book Club meeting of the year. We discussed the classic The Road to Serfdom, by Friedrich Hayek. The central theme of the book is that fascism is a natural outgrowth of socialist central planning. Hayek’s desperate wish was to warn the western nations, especially England and the U.S., not to pursue the path of central planning. Hayek believed that a descent into fascism was more likely than it seemed to his audience: the citizens of non-fascist western nations in 1944.

But all that just makes the book sound like a dated warning against something no one really advocates anymore, right? Well, the book has staying power because of two timeless features which are perhaps separate sides of the same coin: Hayek explains why the price system not only works, but is the best system possible for maximizing individual welfare while also making a strong case for individual liberty and limited government, which Hayek calls (using the connotation of his time), liberalism.

It was a wonderful meeting and a rousing discussion. Book club meetings start at 7 p.m. and usually wrap up about 8:30 or 9 p.m. But Wednesday’s meeting did not end until shortly after 9:30 p.m. — we all had so much to discuss. Here are some of the topics and ideas we discussed:

• Whether a person’s concept of what is possible constrains their action.
• The important distinction between freedom and power: what it is and why it is important that they not be confused.
• This wonderful quote from Adam Smith (introduced roughly by Hayek): “[the regimentation of economic life puts governments in a position where] to support themselves they are obliged to be oppressive and tyrannical.”
• Where Hayek drew the line on the proper role of government and how that might undermine his overall message of liberty.
• Whether market competition is inherently violent (hint: it is not).
• Whether a legal system is necessary for competition, and David Friedman’s “the discipline of constant dealings.”
• The contradiction and ugliness of “competitive socialism.”
• An extended interlude about “Little House on the Prairie.”

The reading for next month is The Machinery of Freedom, by David Friedman, another classic. Friedman is an economics and law professor with a Ph.D. in physics, and the son of free-market titan Milton Friedman. From the Amazon description: “This book argues the case for a society organized by private property, individual rights, and voluntary co-operation, with little or no government.” I am looking forward to some excellent discussion on this one at our March meeting, so please join us if you can (date of meeting to be announced, check here).

Remember that time your older brother swiped the last slice of pizza from the box (when he already had two), and you realized life is not fair?

It is an unfortunate moment, and you can pout all you want, but nothing will bring back that last slice. You might demand from your parents that they institute a rule to punish any child who takes more pizza than anyone else; they will say no, and you will pout some more.

But imposing rules when something does not seem fair to you is not a good reason to institute a rule. It is dangerous to make a decision that affects others based solely on your opinion.

The legislation proposed this week to prevent Missouri retailers from opening on Thanksgiving Day smells like it is based on personal opinion of what is “best” for others. Would some retail employees benefit from it? Absolutely. But there is no way to determine that closing retail stores on Thanksgiving is correct, or good for the state.

Missouri Rep. Jeff Roorda (D-Dist. 113), who proposed the “Thanksgiving Family Protection Act,” said that as retailers have expanded store hours on Thanksgiving, employees have less time to spend with their families. This may be true, but I would like to highlight why that is not a good reason to enact this policy.

1. Retail employees are aware of the expectation to work some holidays and weekends when they take the job. We all have aspects to our jobs that we do not love — should we enact legislation to prevent all those things from happening?
2. Some people may actually want to work on Thanksgiving. They may depend on that extra day of income and this bill would take that away from them. (Or, maybe they just want an excuse to avoid Aunt Esther’s squash casserole.)
3. If people did not want to shop on Thanksgiving, stores would be closed. People have demonstrated it as enough of a priority that stores decided to be open. It is not like the Target CEO is walking into people’s dining rooms and forcing them against their will to go shop.

I have worked in retail — I know it is not fun to be stuck at work when my friends or family are all hanging out together. But as Show-Me Institute Policy Analyst David Stokes said, “It’s not the government’s role to tell businesses when they can operate.”

Like monsters in a horror film, Tax Increment Financing (TIF) districts keep coming back larger and more rapacious. Officials in Columbia and Joplin are now both considering huge TIF districts that will encompass major parts of their cities. (I wrote about Joplin’s TIF here, and we can all admit this is a different circumstance than most TIF plans in Missouri.)

The Columbia plan is thrilling to me in that its supporters do not even bother trying to couch their intentions. TIF was passed originally as a way to revive blighted communities. But, from the beginning, it was used to subsidize retail establishments. Now, in Columbia, they are basically admitting it is a tool of progressive urban planning; using other people’s (and other government’s) money to get what they want. Doubt me? Take this letter in support of a new TIF district (scroll to end) in Columbia from Rosalie Gerding with the Downtown Leadership Council:

Developers who come forward with plans that will accomplish the designs proposed in the report could be encouraged to apply for TIF funds.

Here, TIF is blatantly proposed as a carrot for urban planning, not a way to revitalize a depressed area. Of course, because downtown Columbia is not the least bit depressed, that makes sense in a weird way. Like being wrong by 359 degrees almost makes you right.

There are more unsettling aspects to this plan. Eminent domain abuse goes hand-in-hand with TIF, so it should be frightening for Columbia residents to read this line from the letter (emphasis added):

Without incentives in place, we continue to run the risk that projects we don’t necessarily want will go up in the very spots that we have targeted for higher-use development.

My translation, “We need to use other people’s money to subsidize our friends’ developments because we can’t allow the free market to determine what happens in downtown Columbia.”

The plan that the Columbia City Council accepted last week (see p. 35) clearly states they want to turn all of downtown into a huge TIF district. (To be fair, they just accepted the plan, they did not pass the TIF.) I continue to find it amazing that a great city like Columbia wants to imitate the failed examples of Kansas City and Saint Louis by passing more and more TIFs and other subsidies (EEZs) to encourage things that have been happening without subsidies. Then again, maybe the market forces were making plans that the “urban planners” did not like, and Lord knows you cannot allow that to happen.

I cannot commend Boone County Assessor Tom Schauwecker enough for his continued fight on this issue.

Have you heard about Ticketmaster’s new “paperless ticketing” for events? I talked to Justin Bieber fans to find out how they would feel about the switch to restrictive ticketing.

My previous post prompted some questions about whether I support government action to prevent paperless ticketing. I do not think the government needs to get involved here. However, I do believe event-goers should have a voice in the matter. (Watch the video to learn more about the issue.)

Ticketmaster, as I am sure everyone knows, is practically a monopoly. Because of their strong market power and lack of competition, Ticketmaster has freedom to enact unpopular policies. They are able to do this without suffering a huge loss in business because fans do not have the option to buy tickets from a different company. It is like Ticketmaster is saying, “My way or the highway, fools!”

But that is not what fans want. They want choice, and they do not want to be told what to do with their tickets once they buy them. There is value in customers telling companies what they want, not the other way around. Watch the video to see what Bieber fans have to say (the kids were so cute with their posters and costumes).

Beginning Jan. 1, due to a ballot initiative approved in 2006, Missouri will see its minimum wage increase by 10 cents. There is a healthy debate as to whether this wage increase is a good thing for Missouri. Advocates for the wage hike argue that increasing the minimum wage will increase the buying power of low-income workers. Opponents of the minimum wage increase argue that increasing the minimum wage will hurt Missouri’s business competitiveness.

Who is right? According to research conducted for the Show-Me Institute, David Neumark, an economics professor and director of the Center for Economics and Public Policy at the University of California-Irvine, found that there is no evidence to suggest that increasing the minimum wage will help stimulate the economy. Nor is there a basis for concluding that minimum wages help reduce the proportion of families living at or near poverty. In fact, according to Neumark, “Minimum wages can have unintended harmful distributional effects — possibly increasing the number of poor or low-income families.”

A 10-cent increase in the minimum wage is not going to change things much one way or another. However, even if the minimum wage were to increase by $1 an hour, there are still better ways to help poor people. In Neumark’s paper, he suggests expanding the Earned Income Tax Credit (EITC) as one way to help poor families. Patrick Ishmael and I think eliminating the corporate income tax and the tax on small business income will enable Missouri businesses to further expand their businesses and create jobs.

Despite what a majority of Missouri voters thought at the time, the automatic increases to Missouri’s minimum wage are not good for the state. Markets should determine wages, not government. The state would be better served if, at the minimum, it would desist with the automatic wage increases.

This week is Global Entrepreneurship Week. It is a time to celebrate the innovators and job creators who, simply put, make our lives better. They bring ideas to life, they create jobs, and they persevere.

Greg Glassman is a true entrepreneur. He is the CEO and founder of Crossfit, a rapidly growing fitness program (of which I am a huge fan). This week I heard him speak at a conference about the development of his business.

If I could recite his whole speech for you I would, but here is my takeaway: Glassman uses freedom to grow the Crossfit movement. Standardization works for some businesses, such as McDonalds, but Glassman realized that Crossfit would touch more lives if he allowed affiliates to use his fitness program and run their businesses how they chose.

None of the Crossfit methods are protected, and affiliates only pay to use the Crossfit name. There are no requirements to use a certain brand of equipment, to operate specific hours, or to run the gyms in any specific way.

Because of this, Glassman has enabled thousands of Crossfit gyms to open in the past few years. Glassman gives all of his affiliates an equal opportunity to survive and thrive on their own. This is important. Entrepreneurs like Greg Glassman create jobs, not the government.

Missouri, please learn from Glassman’s success. Show-Me Institute analysts have written about the importance of treating businesses fairly and allowing them to grow or fail on their own. Business growth means more job creation, less unemployment, and happier Missourians. Entrepreneurial growth such as Glassman’s means all the above plus more individual and economic freedom for all. Isn’t this what all of us want?

Earlier today, I participated in a conference call with Steve Forbes, who was promoting his latest book. Forbes talked about the morality of free markets and how entrepreneurs can create abundance for all of society, much like what Arthur Brooks said during the most recent Show-Me Institute Speaker Series. Forbes stressed the necessity of tax reform and advocated for simplifying the tax code.

I asked Forbes about the tornado of tax cuts that have recently swept across Kansas. He stated that what Kansas is doing is highly important and that states have a tendency to imitate successful actions that their neighbors implement. He used welfare reform as an example of one state enacting a significant policy change and other states following suit. Missouri should be following Kansas’ lead, just as Oklahoma and Nebraska are considering doing.

Missouri already lags behind its neighbors economically. In the past, we have argued that the state should eliminate its corporate income tax in order to boost Missouri’s economic growth. The Show-Me Institute has also examined ways that Missouri could eliminate the income tax entirely.

Missouri’s neighbors are moving forward. The state is at a decision point; will it make real changes or will it stick to the status quo?

The other day, the Kansas City Star published a truly pathetic piece from a college instructor literally begging to be put on the dole. The author, Michael Borich, is demanding that adjunct college teachers be eligible for unemployment benefits. He needs to learn a little about economic reality.

In basic theory, workers offer services in exchange for wages. There is a set (yet always changing) demand for labor in any field. There are a number of people with the skills and desire to perform that labor in exchange for money. If the number of people with the skill and desire to perform a service is greater than the demand for that labor, wages in that field will go down. If, because of the reduced wages, certain workers leave that field, wages may go back up and the wage labor in that field will come to equilibrium. It works the other way, too.

But let me tell Mr. Borich how it does not work, or, at least, would not work unless the government interferes. When the supply of labor in a given field exceeds the demand for their work, not all individuals should be guaranteed employment. By his own admission, there are too many college adjuncts. This means we need fewer of them, not more adjuncts on government assistance. As the author himself explains:

This summer I was fortunate to be promised an English Composition class because more like me want to teach than there are classes.

Alas, enrollment was low; my class was canceled at the last minute.

Read more here: http://www.kansascity.com/2012/08/21/3772593/as-i-see-it-a-policy-unfair-to.html#storylink=cp

In a market with a labor surplus, some of those people will, over time, choose alternate jobs. Supply of labor will decrease and compensation for that labor will equalize. That is how it should work. But Mr. Borich wants a system where everyone gets to do what they want whether there is appropriate demand for it or not, and the government will intervene to ensure people do not have to make any hard choices.

Unfortunately, there are far more examples where the government interferes in market decisions instead of staying out of those decisions. Too many people have Mr. Borich’s attitude that the government should subsidize their choices rather than have them compete in the free market.

And do not even get me started on what happened to the stigma of being on public assistance. I am going to stop now before I get myself in trouble. Thanks to johncombest.com for the link.

In their struggle to pull Missouri out of the economic doldrums, policymakers in Jefferson City have proposed expanding a tax break for small businesses that add jobs. Now, this law is not exactly horrible. Worse things have come out of Jefferson City, such as Mamtek, but considering that Kansas is cutting income rates by a significant amount, isn’t this action a little weak in comparison?

Like it or not, Missouri competes with other states. The tax incentive situation in Kansas City is a perfect example of such competition. The excise tax situation in Illinois is another. Yet when Kansas enacts a large tax cut, Missouri expands a tax deduction. No wonder Missouri is doing so poorly economically.

The Show-Me Institute has discussed the benefits of eliminating the state’s personal income tax. My colleague Patrick Ishmael and I have argued for the state to completely eliminate the state’s corporate income tax and make up any lost revenue with the elimination of economic development tax credits. Both courses of action would benefit the state’s economy. Both ideas would provide a more robust response to the actions of our neighbors. Yet, in Jefferson City, it is business as usual.

Missouri has the chance to rev up its economic engine. In order to do so, it has to change the way it thinks about competing with other states and move toward more significant policy initiatives that will boost growth.