One problem with the debate over payday loan regulation in Missouri and elsewhere is a lack of sustained focus on data. Regrettably, both opponents and proponents of regulatory legislation within the state seem to cling reflexively to familiar, abstract narratives and consequently fail to engage the public with meaningful evidence to support their assumptions. To alleviate this problem, I am compiling this list of literature — both sympathetic and unsympathetic to the payday loan industry — to enrich the public dialogue. If any of you know of more quality literature on the topic, please add to this post in the comments.

1. Payday Holiday: How Households Fare after Payday Credit Bans (ungated), Donald P. Morgan and Michael R. Strain.

   “Compared with households in states where payday lending is permitted, households in Georgia have bounced more checks, complained more to the Federal Trade Commission about lenders and debt collectors, and filed for Chapter 7 bankruptcy protection at a higher rate. North Carolina households have fared about the same. This negative correlation—reduced payday credit supply, increased credit problems—contradicts the debt trap critique of payday lending.”

2. The Economics of Payday Lending (ungated), John P. Caskey, Swarthmore College.

   General overview of payday lending industry and basic issues. Written for a lay audience.

3. Do Payday Loans Cause Bankruptcy? (ungated), Paige Marta Skiba and Jeremy Tobacman.

   “Though the size of the typical payday loan is only $300, we find that loan approval for first-time applicants increases the two-year Chapter 13 bankruptcy filing rate by 2.48 percentage points.”

4. Factors Affecting the Location of Payday Lending and Traditional Banking Services in North Carolina (ungated), Mark L. Burkey and Scott P. Simkins.

   Explores the geography of payday loan institutions. “A key finding is that after controlling for many covariates, race is still a powerful predictor of the locations of both banks and payday lenders.”

5. The Profitability of Payday Loans (ungated), Paige Marta Skiba and Jeremy Tobacman.

   “Despite charging effective annualized rates of many thousand percent, we find lenders’ firm-level returns differ little from typical financial returns. The data are consistent with an interpretation that payday lenders face high per-loan and per-store fixed costs in a competitive market.”

6. Quantifying the Economic Cost of Predatory Payday Lending (ungated), Keith Ernst, John Farris, Uriah King:

   “Our analysis of quantitative data reveals that payday lenders collect the vast majority of their fees from borrowers trapped in a cycle of repeated transactions, where borrowers are forced to pay high fees every two weeks just to keep an existing loan outstanding that they cannot afford to pay off.”

7. A Comparative Analysis of Payday Loan Customers (gated), Edward C. Lawrence and Gregory Elliehausen.

   “By analyzing the data collected in a national survey of payday customers, this research allows policymakers to better understand what type of consumer borrows from payday lenders, for what purpose, and what the true benefits and costs are. The results confirm a strong demand for payday loans that satisfy a real financial need within a certain segment of the population.”

8. Mayday Payday: Can Corporate Social Responsibility Save Payday Lenders (ungated), Carmen M. Butler and Niloufar A. Park.

   “In this article we ask what the best ways are to maximize the wealth of the payday lending industry while limiting the industry’s harmful impact on consumer communities? We assert that payday lenders will likely demonstrate greater corporate social responsibility only after there is a change in the laws that govern the industry coupled with industry-wide reform in corporate governance.”

9. Restricting consumer credit access: Household survey evidence on effects around the Oregon rate cap (ungated), Jon Zinman.

   “Borrowing fell in Oregon [after interest rate caps] relative to Washington, with former payday borrowers shifting partially into plausibly inferior substitutes: bank overdrafts and late bill payment. Additional evidence suggests that restricting access caused deterioration in the overall financial condition of Oregon households. Overall the results are consistent with restricted access harming, not helping, consumers on average.”

10. Consumers’ Use of High-Price Credit Products: Do They Know What They Are Doing? (gated), Gregory Elliehausen:

    This paper asserts that consumers of payday loans are sufficiently rational. A caveat, however, is that rationality is a just a process and does not imply that “good” decisions are made.

Some op-eds include:

• In Defense of Usury (gated), by Dean Karlan and Jonathan Zinman
• Congress Takes Aim at Payday Loans (ungated), by Robert DeYoung
• Payday Loan Reform Bad for Borrowers (ungated), by Justin Hauke

The last of those op-eds was written by a former employee of the Show-Me Institute. Perhaps unsurprisingly, my views on payday loans are fairly similar to his. Taking an economic view, I’m concerned that regulatory reform will be unable to limit payday loan harms effectively without driving the market underground. Taking a political view, I view payday loan consumers as sufficiently rational and believe that a government (at least in this arena) has more of an imperative to maintain free, private contracts than to protect the politically weak.

I’ve noticed that some journalists assume it’s normal for the government to license occupations and restrict entry to them. When states don’t license an activity, these writers point it out as an aberration. An example of this bias appears in today’s Wall Street Journal article about anger management seminars:

There are no licensing requirements for anger-management trainers—anyone an open a business.

Let’s hope it stays that way. I’d hate to see Missouri create a Board of Anger Management Professionals (which would probably hold very calm, boring meetings).

A judge refused to dismiss the state lawsuit against a family that was caught selling raw milk from its distribution stand in a parking lot. The state claims that it’s illegal for farmers to set up any raw milk pickup locations away from their farms.

In a Springfield News-Leader article, the assistant attorney general explains why selling milk “from a farm,” as state statute requires, should preclude off-site pickup spots:

“A farm is not anywhere defined in Missouri statutes as a vehicle in a parking lot away from the farm premises,” Blome argued.

Of course, no one would define a farm as a vehicle temporarily parked in a lot. But that isn’t a good definition of a food establishment, either — and the state, calling this family’s parked vehicle a food establishment, says it should be subject to the same regulations as a mini-mart or a grocery store.

If you can’t pick up raw milk from a farmer’s vehicle, what can you do with it? You can pick it up yourself at the farm. But suppose you drive your car to a parking lot, meet a friend there, and give him a gallon of the milk. Does your car now become a food establishment? Or maybe you bring your milk home, invite guests over, and serve them milk with dinner. Does your house turn into a restaurant?

The National Center for Health Statistics has released a report on out-of-hospital births. In 2006, 64.7 percent of such births occurred in homes. Another 28 percent took place in birthing centers.

The report includes a few maps that allow readers to compare states; one categorizes states according to percentage of home births in 2005 and 2006. Missouri’s percentage was above the national average, and ahead of all neighboring states’ percentages with the exception of Iowa. (Wisconsin and Oregon, two other states I’ve written about a lot, had higher percentages of home births than Missouri.)

The next map shows each state’s change in percentage of home births between 2003–2004 and 2005–2006. Missouri saw no significant change during this period. This is not surprising, considering that Missouri’s General Assembly didn’t pass a bill legalizing midwifery until 2007. I would expect to find an increase in Missouri’s percentage of home births after that bill’s midwifery provision finally became law in 2008.

As the latest egregious example of economic illiteracy to come out of Washington, Sen. Mike Johanns (R-Neb.) has proposed banning Japanese-made cars. This is a knee-jerk reaction that would be ineffectual at making American drivers safer, and would have many unintended negative consequences.

First, the ban wouldn’t even solve the problem, because all of the Toyotas that were recalled in January for malfunctioning gas pedals weren’t manufactured in Japan. They were manufactured in the United States:

As for banning Japanese-made vehicles: All 2.4 million Toyotas recalled Jan. 21 due to sticky gas pedals, and most of the 5.6 million vehicles recalled because floor mats might jam pedals, were assembled in the USA.

Would this ban have anything to do with the fact that the U.S. government has a large financial stake in GM, a major Toyota competitor?

Banning Toyotas would have many negative consequences. For example, the men and women who work in Toyota dealerships and Toyota manufacturing plants would have to join the ranks of the unemployed. This would have a noticeably negative effect in Missouri, which has a high-enough unemployment rate already — 9.6 percent as of December.

Banning foreign imports like Toyota would hurt consumers because it would limit their choice of cars. When free trade is restricted, a people can only consume what their country is able to produce. In an adapted excerpt from their book Free to Choose: A Personal Statement, Milton and Rose Friedman elucidated what this means to consumers:

We cannot eat, wear, or enjoy the goods we send abroad. We eat bananas from Central America, wear Italian shoes, drive German automobiles, and enjoy programs we see on our Japanese TV sets. Our gain from foreign trade is what we import. Exports are the price we pay to get imports. As Adam Smith saw so clearly, the citizens of a nation benefit from getting as large a volume of imports as possible in return for its exports or, equivalently, from exporting as little as possible to pay for its imports.

The ban would also increase consumer prices on all cars by decreasing the total supply. Domestic car producers do not have the capacity to make up for the shortfall in the short run, which would aggravate this effect. In the aforementioned excerpt, Milton and Rose Friedman explained that “‘Protection’ really means exploiting the consumer” because she has to pay more for goods.

The ban would also decrease the quality of vehicles that are available to American consumers, which is the very problem that this policy is intended to alleviate. When a country attempts to protect certain industries, it removes their incentive to innovate in order to compete in the global market. By banning foreign imports such as Toyota, the United States would do the American car industry and American consumers no favors. GM and Ford have difficulty competing with foreign firms like Toyota and Honda in the status quo world economy because they have “benefited” from American protectionist policies on cars for so long. Furthermore, bans on foreign imports become even more disadvantageous in the future if/when the trade restriction is lifted, because domestic car companies would have lower-tech, lower-quality products than their foreign competitors.

Government intervention in international markets hurts business and discourages economic growth. When a country slaps protective measures on its trade policy, it is probable that other nations will retaliate in kind, leading to increased consumer prices. Impeding free trade is very dangerous policy when international economies are so intertwined. We only have to look to the recent past for evidence of this. Last September, Obama placed a 35-percent tariff on tire imports from China. This was effectively a tax on Americans who drive cars, who were predicted to experience a 20- to 30-percent increase in the cost of tires as a result of the policy. China responded the following Sunday in retaliation by placing its own tariffs on imports of American poultry and automobiles.

I have an alternative suggestion: Instead of banning foreign imports, each U.S. senator should complete a refresher course on macroeconomics before assuming office. Based on Sen. Johanns’ proposal, I see no evidence this the former secretary of agriculture ever took one in the first place.

The U.S. Postal Service doesn’t want to deliver mail on Saturday anymore. Facing a large budget gap, the USPS is lobbying Congress to allow the agency to deliver mail only five days per week, a cost-cutting measure it has advanced for more than a year.

As I said back in August, the Postal Service’s decline seems to be inevitable. USPS is subsidized not by tax dollars but by regulatory capture: The Private Express Statutes limit private mail carriers from delivering mail to mailboxes and from charging less than $3 to deliver a letter.

Luckily for the USPS, it doesn’t have to compete in a free market, where its work schedule would be drastically insufficient to compete successfully with others. UPS and FedEx don’t have the same regulatory luxury, and consequently have some locations that are open 24 hours a day and on weekends, because that is what customers want. Private delivery companies also price shipments based on distance traveled, which makes more sense than the flat rate that the USPS levies for first-class letters. Mailing a letter to one’s landlord in the next town over has a lower marginal cost for a postal service than mailing a letter to a cousin across the country, but first-class USPS prices don’t reflect that.

Unlike private delivery services, the USPS does not face direct competitive pressure, and so has found it difficult to adjust to changing technology and market conditions. This has left the agency well past its prime, if that prime ever really existed. James Bovard pointed out in a review of USPS history that government-provided postal services were originally conceived as revenue generators, and that regulators had to actively stamp out competitors who were providing more reliable, trustworthy services at lower prices:

The early colonists inherited the tradition of government postal monopoly from Britain. In sixteenth-century England, the Tudor monarch outlawed private post in order to hinder communication between potentially rebellious subjects. Later, the monopoly was justified as a revenue raiser for the Crown. But even 270 years ago, private carriers were breaking the law and providing the public with better service than the government:

In 1709, Charles Povey used bell ringers to collect letters, which he delivered anywhere in London for a halfpenny. The Post Office prosecuted Povey, who was convicted and fined, and then it adopted his system for the government service.[2]

Since 1709, not much has changed in how governments run their postal monopolies.

In 1789 the Constitution granted the federal government the right to set up a post office, but it did not prohibit competition from private services. However, the first postal act, in 1792, did effectively outlaw private competition.

The first postage rates were extremely high, as Congress tried to force easterners to subsidize the more expensive service to outlying settlements on the western frontier. As the Postal Service’s official history notes, “Until 1851, the cost of sending a single sheet letter 40 miles was either 6› or 8›. When the letter traveled over 400 miles, it cost 25›. These prices doubled, tripled, or quadrupled with each additional sheet.”[3] In 1843, “it cost 18 1/2› to send a letter from New York City to Troy, New York, but only 12 1/2› to send a barrel of flour the same distance.”[4] The government charged 25› to deliver a letter from Philadelphia to New York.

Henry Wells (later of Wells-Fargo fame) entered the market, charged 6› a letter, and delivered faster.[5] In the Boston area alone, over a hundred private express companies carried the mail. Private companies delivered letters directly to addressees’ homes, while the government still required people to pick up their mail at the nearest post office.

As private business flourished, government postal revenues declined. The postmaster general admitted in 1843 that many people thought the government’s monopoly was “odious,” but insisted that it had to be preserved for the good of the country.[6] In 1845, Congress tightened the laws prohibiting competition and increased the penalties for violators. In 1851, Congress lowered postal rates and began providing a direct subsidy for postal operations.

An 1844 competitor, the American Letter Mail Company, was founded and operated by notable proto-libertarian Lysander Spooner. This competition was so effective and efficient that “The end result was that in 1851 Congress again had to lower the postal rates to a uniform 3 cents” from previous prices “of 18 3/4 cents or 25 cents.” Lawmakers simultaneously put Spooner out of business for good by strengthening the USPS monopoly laws.

The notion that government postal services may have been necessary to provide a crucial public service in the absence of trustworthy private alternatives doesn’t stand up to the historical record, and is even less justifiable in today’s electronic information age, in which private companies are the primary means by which most people send and receive sensitive communication.

Missourians — and the United States in general — would greatly benefit if the USPS lost its monopoly protection so that costs could be reduced through the efficiency of competitive pressure, rather than through elimination of services.

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.

A committee in the Missouri House has heard a bill to keep the Missouri Gaming Commission from closing the President Casino (or any other casino) on “purely economic grounds.” The testimony makes clear the Kafkaesque bureaucratic nightmare into which the commission has placed the President Casino:

Some House lawmakers said the idea of “inadequate declining performance” seemed subjective and was a hard standard to interpret.

Rep. Vicki Englund, D-St. Louis County, questioned how the commission evaluates casino’s performance and asked lobbyist Jim McNichols, who testified on the commission’s behalf to explain how casinos could be expected to meet standards when they weren’t explicitly provided with standards to comply with.

McNichols said the commission works hard to involve casinos in the rulemaking process.

The Missouri Gaming Commission opposes the bill, but McNichols said he couldn’t speak to the specifics of the President Casino case because there was a pending legal matter.

This may strike some people as a crazy idea, but I think it should be up to the owners of a business to decide whether it lacks sufficient revenue to justify operating, not the decision of a government commission with no set standards by which it must abide. And, of course, if the President is forced to close, it is not only the casino’s owners, employees, and patrons that would suffer, but also gamblers at other casinos. Following the decrease in competition, casinos would be able to pay out a lower amount in winnings at the margin.

Missouri Gaming Commission Executive Director Gene McNary got right to the heart of the matter in his written testimony when he wrote that passing the bill to keep the President Casino open would “neuter the commission and, in effect, take away our ability to regulate Missouri’s gaming industry.” I doubt he shared my view that this would be a positive development, however.

I’m quite a bit late on this one, but a couple of weeks ago, the Missouri Senate overwhelmingly approved a bill that would essentially shut down all strip clubs in Missouri. The bill would ban strippers from, well, stripping, because it would would require them to be at least partially clothed, and even when partially clothed, they must stay at least six feet away from customers. Oh, and they wouldn’t be able to serve liquor, either. I doubt many strip club patrons are going to want to go to a club where they can’t drink, and where the girls all have to walk around with tape measures to ensure they don’t get too close, so I suspect many of these businesses would likely close.

The most obvious consequence of these closings would be that people formerly employed in that segment of the adult business in Missouri would either seek new lines of work or move to other states that are more accommodating of their current professions. The supply of this good may diminish or even disappear, but the demand for it won’t go anywhere. This situation could easily lead to results that should give pause to the social conservatives who support this bill.

The increased hassle of the legislation might dissuade some people from consuming such lascivious services, but others will seek out substitutes. It would likely lead to an increase in the consumption of pornography and prostitution (and some unemployed strippers would probably enter the world of prostitution, as well). But that still may not be the worst of it.

A 2006 study by Clemson University economist Todd Kendall argued that greater access to Internet pornography helped drive down the incidence of rape during the prior two decades. In a Slate article, fellow economist Steven Landsburg summarized Kendall’s findings:

First, porn. What happens when more people view more of it? The rise of the Internet offers a gigantic natural experiment. Better yet, because Internet usage caught on at different times in different states, it offers 50 natural experiments.

The bottom line on these experiments is, “More Net access, less rape.” A 10 percent increase in Net access yields about a 7.3 percent decrease in reported rapes. States that adopted the Internet quickly saw the biggest declines. And, according to Clemson professor Todd Kendall, the effects remain even after you control for all of the obvious confounding variables, such as alcohol consumption, police presence, poverty and unemployment rates, population density, and so forth.

OK, so we can at least tentatively conclude that Net access reduces rape. But that’s a far cry from proving that porn access reduces rape. Maybe rape is down because the rapists are all indoors reading Slate or vandalizing Wikipedia. But professor Kendall points out that there is no similar effect of Internet access on homicide. It’s hard to see how Wikipedia can deter rape without deterring other violent crimes at the same time. On the other hand, it’s easy to imagine how porn might serve as a substitute for rape.

If not Wikipedia, then what? Maybe rape is down because former rapists have found their true loves on Match.com. But professor Kendall points out that the effects are strongest among 15-year-old to 19-year-old perpetrators—the group least likely to use such dating services.

Moreover, professor Kendall argues that those teenagers are precisely the group that (presumably) relies most heavily on the Internet for access to porn. When you’re living with your parents, it’s a lot easier to close your browser in a hurry than to hide a stash of magazines. So, the auxiliary evidence is all consistent with the hypothesis that Net access reduces rape because Net access makes it easy to find porn.

There are legitimate reasons to question such a strong conclusion on Kendall’s part, some of which were pointed out by Steven Levitt of Freakonomics fame, but it cannot be easily dismissed. Furthermore, it would be inappropriate to draw direct parallels between Kendall’s study and the strip club situation in Missouri, because they are not perfectly analogous. Most obviously, 15-year-old to 19-year-old boys are not likely to be found in strip clubs to begin with. Still, the general idea holds up. People seeking sexual gratification may turn to much worse alternatives in the absence of easy access to common consensual options like pornography and strip clubs.

Let me be very clear: I am not predicting that this law would result in a measureable uptick in rapes in Missouri. In fact, absent a good control group, it would be hard to establish statistical correlation, let alone causation. What we do have is some very suggestive evidence that the law of unintended consequences may apply to this law in a fierce way, and it is something that the law’s supporters should think carefully about.

Yesterday in St. Louis, opponents of the payday loan industry held a hearing, which was covered by the Post-Dispatch and linked to by Combest.

Here is my advice to every person in Missouri: Stay away from the payday loan industry; the vast majority of the time, it is a terrible financial decision to make use of it. Here is my advice to the government: Stay away from the payday loan industry; it is not your role to interfere in private contracts and prevent people from making poor financial decisions.

Then there are the unintended consequences that would result from eliminating, or severely restricting, the industry. It is not as though the people who now use payday loans would suddenly no longer have any need for a loan. Some would move into receiving loan services from the banking system (a good result), some would entirely lose the ability to obtain credit (a mixture of both positive and negative results), and some would turn to the loan shark industry with all of its attendant risks, violence, etc. So, if you want to improve the climate for loan sharking and enforcing collections with baseball bats, then by all means legislate the payday loan industry out of existence.

This set of arguments about payday loans has also been covered by Show-Me Institute op-eds superior to this blog post.

A proposal in Wisconsin would allow dairy farmers to sell raw milk, with a few conditions:

Under the bill, farmers with a grade ‘A’ dairy farm permit would be allowed to buy a permit to sell raw milk.  They would have to meet certain sanitary conditions for bottling milk and have a sign to let consumers know raw milk doesn’t provide the same protection of pasteurized milk.

The proposed change in law would give farmers greater freedom to sell their milk. And consumers would be able to make their own decisions about whether to purchase unpasteurized dairy products. Everybody would win.

The bill’s restrictions should be enough to protect the public. We don’t station a policeman by every cow to prevent farmers from drinking raw milk, and we needn’t impose that level of surveillance on other people, either. Regulators ought to concentrate on stopping fraud and deceptive advertising, like if a farmer were to display a sign saying “Buy pasteurized milk here!” when he’s really selling raw milk.

If Missouri adopted a similarly free milk policy, it would be a welcome end to the bizarre law that says exchanging cash for milk in a barn is legal, but the same transaction in a parking lot is prohibited.

Two op-eds, attributed to different members of the Missouri Dental Association (MDA), appeared in the Columbia Missourian and the Examiner in response to my op-ed about dental therapists (which appeared in both the Columbia Missourian and the Examiner). Although these responses were textually the same, they have different credited authors: In the Missourian, the op-ed is attributed to Dr. Rob Coyle, DDS, and in the Examiner, the authors are  Matt Niewald, DDS, president of the MDA, and Scott Roberson, DDS, trustee of the MDA. One can only wonder why the same piece is attributed to different authors, but a reasonable conclusion may be that the MDA asked its members to submit a pre-written op-ed to these newspapers. The MDA’s purpose is not secret, given that the last line of both pieces reads:

We would encourage others, both inside and outside of the profession, to contact your legislators and ask them to support the MDA agenda. Working together, we are confident we can bring common sense solutions that will improve the oral and overall health of our state.

The MDA suggests other factors, like Medicaid reimbursements, that may be contributing to the problem of providing access to dental care for Missourians. These are valid points, but they do not provide an adequate reason for their offhand dismissal of the value of dental therapists. The MDA implies that dental therapists “would compromise the safety” of patients. I’ve addressed the issue of the quality of dental therapists in the comment section of previous posts, and within the op-ed itself. The studies of dental therapists, from New Zealand, Australia, the UK, and Alaska, have so far shown that they provide quality in patient outcomes that is comparable to that of professional dentists, and studies show that altering licensure rules to allow dental therapists to practice could improve access to care for children in the United States.

This opposition by the dental lobby despite the lack of evidence to support their position, evidenced in op-eds like these from the MDA, or in legislation to prevent teeth-whitening in kiosks, is an attempt to keep market share by using government power rather than by providing a better service at a better price. Artificially protecting a profession from competition — especially high-quality competition — does not help keep patients safer. Arbitrary rules that prevent qualified mid-level professionals from entering the market only hurt the people they are purporting to help: the patients.

You knew this was going to happen sooner or later. Ten years ago, when HVAC contractors in St. Louis County succeeded in significantly increasing the licensing requirements for HVAC work in a way that would benefit union firms and workers, they focused on the commercial aspect of the work and left out the residential work. The naked power grab for commercial work was enough for them in 2000, and the political price they paid prevented them from reaching for any more, until now.

If you are not familiar with the story of how the pipefitters union and their allied contractors tried to knock non-union contractors out of the HVAC business 10 years ago, then you just have to read this awesome Riverfront Times story about the pipefitters plan. To paraphrase Berkely Breathed’s comment about how Caspar Weinberger’s poetic request to him provided a template for how to “get something from someone who is not inclined to give it to you,” if you are interested in knowing the real reasons that occupational licensing laws are passed, “all you need to know is here.”

Needless to say, the proposal for new restrictions on HVAC contractors is a sick twist on capitalism. It is just a joke to hear that the supporters of licensing requirements for residential work are once again promoting their arguments as increasing “safety.” As my friend, “D” (I’ll err on the side of caution and not use his name — he can claim credit in the comment section if he so chooses), who sent me the link to the Post-Dispatch article, said:

Isn’t the more likely story that the bad economy has created a greater incentive for established contractors to try to protect their territory by establishing barriers to entry?

My friend has hit the true story on the head. It would be shameful if this were passed by the various local governments to which the proposal is being brought. I hope to be a part of the fight against it.

The Missouri Chamber of Commerce conducted an interesting survey of business owners back in December about their thoughts on the proposals for health care reform. This article in the Springfield Business Journal details some of the responses to the survey questions, as well as some of the concerns shared by restaurant and hotel owners in particular. These industries typically have a lot of part-time workers, many of whom one hotel owner said would have to be laid off in the event of a mandate requiring that employers provide health care for their employees. If an 8-percent payroll tax were charged as a penalty to employers who did not provide insurance, 47 percent of the businesses surveyed would pay the fine and 51 percent said they would provide insurance. So barely half of these businesses would provide insurance, while the rest would be unnecessarily crippled with a higher tax burden and leave their employees without health insurance — not to mention the employees who would lose their jobs as a result. All this would follow from a benevolent attempt on the part of the government to help more people obtain health insurance.

An individual mandate would be similarly counterproductive. The Wall Street Journal reports on an analysis by the Heritage Foundation showing that “roughly 93 percent of uninsured households under age 35 who face a penalty for remaining uninsured would rather pay the penalty than buy health insurance.” As the article points out, paying this penalty would require money that would have otherwise been spent or saved, causing an unnecessary drain on both the economy and the individuals who are forced to pay this fine.

This is a perfect example of the unintended consequences that so often occur as a result of well-intentioned legislation. It seems like legislators are usually more focused on how their proposals sound, rather than on the actual results of those policies. Unfortunately, this never ends well; we all know the saying about the road that’s paved with good intentions.

While anti-texting laws may be ineffective attempts to deal with a real problem, the most charitable thing I can say about this is that it is a solution in search of a problem:

A bill heard in committee Monday would prohibit felons from commercially using fireworks.

The bill, sponsored by Sen. Brad Lager, R-Maryville, would prohibit anyone guilty of a felony or anyone without proof of liability insurance from getting a permit to sell, make or ship fireworks. It would also allow the state fire marshal to examine sales records to make sure businesses buy and sell only from those with a permit.

I can understand the liability insurance requirement and fire marshal oversight, but is there really a serious problem in Missouri with felons selling fireworks? The article does not mention any reason it should be illegal for felons to sell fireworks. Even if there are a great many felons going into that line of work, that is not in itself cause for alarm. In fact, we should be glad those individuals are reintegrating themselves into productive society. I suppose the concern is that felons are more inclined toward violence and could use the fireworks for that end, but fireworks — although dangerous if mishandled — aren’t terribly effective weapons. They are hard to aim and are usually designed to minimize damage to people and property if they are misused. Let’s not go making it even harder for felons to get jobs outside of crime just because it sounds kind of scary to have them around gunpowder.

For too long, legislators have been avoiding the 800-pound gorilla in the back seat. In the interest of safety, legislators throughout Missouri and across the nation have mandated seat belt use, outlawed alcohol use while driving (obviously, we all agree with that one), banned talking on cell phones, and required children to sit in car seats or booster seats until they are 19 years old (OK, not quite that old). Now, they are banning texting.

All of these laws merely skirt around the edges of the real problem, which is that far too many people are rocking out to music or yelling back at the talk show host while they are driving. This carnage must stop. In the name of safety, and to fully protect the children — whom, as you may have heard — are the future, our leaders must finally take the necessary step to protect us from ourselves by banning the outrageous practice of listening to the radio while driving. It is only right.

(Thanks to Missouri safe-driver-of-the-year John Combest for the links.)

Last night, the Columbia City Council passed its urban chicken measure by a 4-3 vote. The meeting was well-attended, and spirited public comments preceded the decision. If you missed it, you might want to watch the archived video here.

Opponents of the proposal brought up two arguments against urban chickens: First, that chickens would be dirty, noisy, and wild; and second, that chickens would lower property values. Urban chicken supporters answered both objections very well.

Opponents told horror stories about disgusting chickens, but they failed to show that chickens are any worse than the birds that already live in Columbia. If chickens harbor pestilence and filth, then so do all the sparrows and pigeons that fly around unmolested. Chicken supporters pointed out that other pets like dogs can carry disease or leave waste, and Columbia has no trouble regulating dog ownership so that most people are satisfied. No one is asking the city to ban all dogs for sanitation reasons; chickens should be equally tolerable.

The Columbia ordinance prohibits roosters, which should go a long way toward preventing noise disturbances. One Realtor who spoke predicted that wild roosters will find a way into the coops despite the owners’ best intentions. I find it hard to believe a rooster could break into a coop that, by law, is made of sturdy fencing with a wire net on top — unless the rooster had access to power tools.

Then there’s the possibility that escaped chickens will flock in the streets. Again, the opponents haven’t shown that chickens are more likely than other animals to cause problems; owners of any kind of pets can be irresponsible. As one councilman said, chickens aren’t the nuisance — people are. Those people are the exception, and Columbia can deal with them on an individual basis. Urban chicken supporters have lots of ideas for reducing the number of wild chickens: A private organization has offered to teach people how to care for chickens, and it’s volunteered to help place abandoned birds in new homes. One graduate student pointed out that unwanted chickens can be sold on Craigslist.

It’s clear that chickens are no more of a nuisance than dogs or cats. However, some Columbia residents — namely, Realtors — say that chickens are uniquely harmful because people think of them as farm animals. They claim that the chicken ordinance will lower property values, and that chickens next door to homes on the market could quash sales. These Realtors overlook the fact that the ordinance doesn’t override neighborhood associations’ covenants or landlords’ policies, which can exclude chickens. Chickens are not about to move into a community of mansions and destroy the value of the surrounding estates. And, as several commenters indicated, some people would actually prefer to buy a house in a city that allows chickens.

The only time chicken enthusiasts lost me was when they appealed to “sustainability” and “food security.” I can’t imagine how building a chicken coop could be fun, either. But whether I agree with the chicken owners’ ideology is not the point. People should be free to pursue their ideals and passions so long as they aren’t hurting anyone else. Chicken raising meets that criterion.

Tonight, the Columbia City Council will vote on an urban chicken proposal. If it passes, Columbia residents will be free to keep up to six hens on each property.

The text of the proposed ordinance anticipates concerns about sanitation and possible nuisances, and it includes regulations to prevent problems. I hope that those clauses satisfy the critics. Cities like Columbia should not allow anyone to pack unsanitary numbers of poultry into city plots, but residents who raise a few hens in their backyards without harming their neighbors should be left alone.

If you’d like to learn more about urban chickens in Columbia, supporters have created a blog and a series of YouTube videos.

In an article about Massachusetts’ new law requiring certain preschools and day care centers to teach children how to brush their teeth, the New York Times quoted a teacher who opposes the regulation:

“I don’t want someone’s hand in my child’s mouth,” said Sarah Brodsky, a teacher at First Path Day Care in Watertown and mother of 4-month-old Noah. “It’s a little too much” government intervention, Ms. Brodsky added.

I’m not the Sarah Brodsky in this article, although we do have the same name and her quote is basically what I would have said. She’s right; the decision of whether to incorporate teeth brushing into the school day should be left to preschools and day care centers.

The new law is an intrusion into preschool management, and the fact that parents can opt out is little consolation from a preschool director’s point of view. Every preschool now has to set up sinks and take time away from other activities in order to brush teeth, all while keeping track of which students’ parents opted out. Preschool teachers are sure to hear complaints from parents if one child sticks someone else’s toothbrush in his mouth, or if an opted-out child inadvertently gets into the toothpaste. Those kinds of mix-ups are unavoidable when you have a bunch of little kids brushing their teeth at the same time.

I hope Missouri won’t follow Massachusetts’ lead and mandate teeth brushing in day care centers. But now that I think about it, I don’t know whether the in-school dental care policy would catch on in Missouri — people would probably demand taxpayer-funded home visits!

Missouri’s law against young people sending text messages while driving is only the beginning. Regulators want to make sure drivers can think about nothing but the road in front of them:

Transportation Secretary Ray LaHood called distracted driving a “hot button” issue for state legislatures and said he’s against all distracted driving, not just cell phone use.

“I don’t care what the distraction is,” he said. “We’re going to set the highest bar possible. There should be no distractions.”

An obvious problem with outlawing all distractions is that we could never enforce such broad controls on drivers’ behavior. That doesn’t dissuade the texting ban’s supporters, who say that whether anyone is ever found to be in violation of a law doesn’t matter. Here’s how an AAA spokesman puts it:

“The benefit of having it in the statute is voluntary compliance, sort of like every other law.”

Perhaps the roads are safer because drivers willingly cooperate with texting bans, but, if so, texting bans are the exception. Most laws are effective because we can prosecute people for breaking them, and thereby deter people from breaking them in the future.

The more laws we write restricting drivers’ activities, the less we’ll be able to depend on their voluntary compliance. Drivers won’t pay attention to a laundry list forbidding every activity they could engage in while behind the wheel.

Be sure to check out this article by John Eskew of the Competitive Enterprise Institute, about the unionization of home health care workers in Missouri. It is well worth your time. I recall being part of the 24 percent that voted against this measure. Unfortunately, we were 27 percent short.

Jefferson City has grudgingly lifted its ban on tattoo parlors. They are now legal, but subject to several regulations: The shops can’t open before 9 a.m., and must close by 8 p.m. They can’t display any neon lights. And they can’t stand out:

The Jefferson City News-Tribune reports that another stipulation requires the businesses to aesthetically blend in with their surroundings.

That last requirement is the least reasonable. No store can look just like the establishments surrounding it while simultaneously advertising itself to customers. And the burden of this regulation will only increase over time, for if neighboring businesses come and go, a tattoo shop will have to continually redesign itself to blend in with the changing scene.

I can’t imagine what tattoo shops will look like under this ordinance. Will a tattoo parlor next to an office building have to masquerade as corporate headquarters?

The new policy doesn’t satisfy all tattoo shop critics; some would prefer that tattoo shops stayed out of Jefferson City. One council member explains why he opposed ending the ban:

“Many times these things are done randomly without much forethought and individuals do regret this,” said Pope.

I would expect people who share this opinion to call for waiting periods before anyone can get a tattoo, rather than bans. Completely banning tattoo parlors prevents people who do exercise foresight from getting tattoos — and why should they be punished for someone else’s lack of judgment? This council member should at least be happy with the new policy’s regulation of operating hours, because whoever decides to get a tattoo after 8 p.m. will have all night to reconsider.

Here’s some good news for consumers: Schnucks is dispensing free prenatal vitamins to women with prescriptions. The offer builds on Schnucks’ free antibiotics program, which brought positive publicity and new customers to Schnucks pharmacies.

This is an example of market forces lowering health care costs. Schnucks wants to draw people to its stores, and to do that it has to stand out from its competitors. Other pharmacies will probably follow suit — if not with the same promotions as Schnucks, then with discounts on other medical services or products.

In the policy debate over the cost of care in hospitals, much of the discussion deals with putting medicine under regulatory control. Instead, we should be asking: How can we make hospitals operate more like Schnucks?

It does not get much more exciting than this in government (and I honestly speak here with no hyperbole or sarcasm). The governor’s office has announced plans to eliminate numerous boards and commissions. This is great, for a number of reasons. It will save the state some money, but, more importantly, it will reduce the number of people who have some say — no matter how small — in regulating our lives. Gov. Jay Nixon and the legislative sponsors of this proposal, Sen. Delbert Scott and Reps. Steve Hobbs and J.C. Kuessner, deserve a great deal of credit for doing this. In a small but important way, the freedom of Missourians will take a step forward with this act.

Eliminating the Interior Design Council would mean five fewer people with the potential to direct how we can live and who can be an interior designer, and modifying the Head Injury Advisory Council would reduce by 10 the number of people who have some type of authority to demand that we wear helmets from the moment we wake up until the moment we go to bed. I admit, it may be a small step — but it is a worthy one.

I am so excited about these proposals that, after my son goes to bed tonight (my wife and other son are out of town visiting relatives), I am going to stay in the hot tub for longer than the recommended time period — and I no longer have to give a damn what the state’s Medical and Technical Advisory Committee has to say about 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.

The Central Missouri Humane Society is alarmed by a proposal to allow urban chickens in Columbia. It anticipates trouble caring for and finding homes for the chickens that would end up in the shelter:

Shelter Relations Coordinator Allison Toth said a chicken was brought in during the summer. The staff named it Tyson, after the food manufacturing company.

[...] It was a small inconvenience until Tyson was finally adopted by board member Ann Korschgen, who owns a farm.

But staff cannot rely on such acts on a regular basis.

The argument that no one should be permitted to keep chickens because a few of them will probably be abandoned is unpersuasive. By that reasoning, the city should ban cats and dogs, too, because some owners leave them at shelters. And, although it’s inconvenient for a shelter to build new coops, the city’s animal population changes over time and shelters need to evolve.

The shelter’s contract for 2010 excludes chickens, and the city is thinking of other ways to deal with abandoned chickens this year — perhaps paying a farmer to take care of them. That means the shelter would have a whole year to prepare for the chickens’ arrival.

And I don’t buy the argument that no one will adopt chickens. When urban chickens are illegal, the shelter has to wait for someone from a farm to take a stray chicken. But if city residents could keep chickens, there would be many more potential chicken owners. Finding homes for abandoned chickens would be easier.

Jim Gallagher over at the Post-Dispatch had a nice column about the question of whether to license tax preparers, as was proposed recently by the IRS and mentioned on this blog. The best thing about this article is that it at least poses the question of how the licensing costs will affect the industry. Other recent stories about licensing that I have seen fail to even consider the idea that licensing can cause costs to rise at all. The only bad part of the column is the insulting title:

“No skills needed to be a tax preparer”

But it may be that the editors chose the title, so we can’t necessarily blame Gallagher for that.

Not surprisingly, current owners of tax preparations companies support the proposed nationwide licensing:

“It’s a great thing. It will hold accountability to tax preparers,” says Salah. “They’ll know what they’re doing. There are lots of tax preparers who are not qualified.”

Of course, it is always those who currently hold an occupation who support licensing that occupation, because it helps prevent future competition. The vast majority of licensing laws are enacted as a result of lobbying pressure from current practitioners of the occupation in question. Recent successful efforts to license interior designers and massage therapists in Missouri are examples of that phenomenon.

But at least Gallagher understands that these types of plans entail costs and harms that might not be obvious at first:

The story may be different for the bookkeeper-turned-homemaker who does tax returns on her (or his) dining room table. Some may find another way to earn money.

People who find themselves in a similar situation to this example should be allowed to do this type of work for as long as people voluntarily choose to hire them. If they do a poor job and their customers keep getting penalized as a result, people will stop hiring them. What’s more, just because you hire a tax preparer does not mean you don’t bear the responsibility of your return being accurate. I like the comment by the CPA at the end of the article:

“I am a retired CPA. It is amazing the number of people who could prepare their rather easy return choose not to. Usually their answer is I may make a mistake. The mistake that we have all made is electing people who have given us a tax law that is impossible to comply with. This is not a political statement but a fact.”

Well said.

Regarding raw milk regulations, the Springfield News-Leader reports:

Most commercial dairy producers are against the unregulated sale of raw milk because they fear if anyone got sick from it, the pasteurized milk industry would suffer from the bad publicity and confusion.

Fear of bad publicity can’t fully explain why Missouri law allows farmers to sell raw milk from their farms but not from makeshift stands in parking lots. Nor does it justify other states’ stricter controls, such as Oregon’s ban on advertising raw milk. If avoiding negative publicity were the only object, it would be sufficient to keep raw milk out of grocery store aisles. There would be no need for fine distinctions between customers ordering milk ahead of time or paying for it on the spot.

In fact, commercial producers who truly hoped to prevent a public relations disaster would want raw milk to be more visible, not less. Confusion might arise if people heard that someone got sick from raw milk, but they didn’t know what raw milk was or where people got it. They might erroneously assume they were buying raw milk themselves. If raw milk were widely advertised and many people saw it available at independent stands and distribution centers, they’d understand that raw milk is not the same product as the milk they find at the store.

The plethora of raw milk regulations are more effective from the point of view of avoiding competition. When consumers can’t hear about raw milk sales because advertising is forbidden, or when there’s no convenient way to pick up raw milk because it’s sold on a distant farm, most will buy pasteurized milk at the store. Producers stand to lose from easy access to raw milk.

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.

Urban chickens are up for debate in Columbia. I hope the city decides to allow people to keep at least a few chickens. Ideally, the law should allow a certain number of chickens for anyone who wants them, without a lot of fine print.

When laws include too many qualifications, they lead to absurd predicaments like this one in Sacramento. Chickens are legal there, but only on large plots of land. So, a family that’s renting a smaller property will have to get rid of its chickens — despite the fact that the landlord is happy for the birds to be there, and that bevies of quail, wild turkeys, and wood ducks move through the neighborhood on a regular basis.

There are wild turkeys running down the street but residents can’t raise a few chickens in an enclosed yard? All because the property isn’t spacious enough by an arbitrary standard? If someone were trying to cram hundreds of chickens into a tiny parcel, I would be the first to say the government should step in. But the family in Sacramento keeps just four hens. That’s the kind of case local governments should let alone.