Just before the Christmas break, the St. Louis County Council passed a new ordinance that changed the definition of what a “responsible bidder” is with respect to county construction projects. The idea of having a government choose the “lowest responsible bidder” for construction projects is to ensure that taxpayers get a conforming product at the best possible price. I think we would all come up with fairly similar definitions of what a “responsible bidder” looks like. But from a legal perspective, the term is intended to capture the idea that those bidding on a government project (1) can reliably perform the services needed, and (2) can do so at the price promised.

As articulated in the legal treatise Antieau on Local Government:

[L]ocal government officials are not limited to the quality and suitability of the article to be provided but can consider the bidder’s experience, skill, ability, business judgment, financial situation, integrity, honesty, possession of the facilities necessary to perform the contract, previous conduct in similar contracts, reputation and record for reliability, as well as any other factors reasonably relevant to a bidder’s successful performance if awarded the contract.

Antieau notes that at least one court has found that “discretion exercised in choosing the lowest responsible bidder must be based upon substantial difference in quality or adaptability.” Taken altogether, these observations make clear that contractors of similar talent, reliability and quality should be considered on basically even terms in a “responsible bidder” legal construction. If a contractor can do a job reliably and well, the real distinguishing mark should be the price.

But in Saint Louis County, this may no longer be the case. The county’s new ordinance requires that for a construction contractor to qualify as a “responsible bidder,” he or she must “participate in or maintain their own Department of Labor-approved apprentice program for each craft which the firm employs and have active, registered apprentices for each program.” The law further requires that “all on-site employees on the project will be employees and that there will be no use of independent contractors or ‘leased employees’ for on-site work.”

“Apprenticeship programs” are almost always an artifact of union membership. Very few non-union shops “participate in or maintain” such programs, let alone always have “active, registered apprentices for each program.” The latter requirement of “active apprentices” has nothing to do with responsible bids, but it does have everything to do with keeping non-union contractors out. Which, of course, is why it was included. The county’s move will affect all sorts of small businesses, as the St. Louis American’s Adolphus M. Pruitt noted last month.

The bill restricts non-union contractors from bidding on County projects, thus prohibiting any minority-owned general or prime contractor from County construction work. The bill restricts contractors who don’t have active apprentices. The strange thing about this is that most unions will profess that they are not accepting apprentices. … And the number of minority apprentices active in their programs is dismal.

That is especially bad news in today’s terrible economy. I will explore the “independent contractor” aspect in Part Two tomorrow.

24/7 Wall St., a financial news and opinion website, recently released its latest version of the best and worst run states in the country. You will be heartened to know that we are not California, which to our surprise (not really) ranked dead last. On the other hand, neither are we North Dakota, which ranked No. 1 in 2012. Missouri ranks 25th overall (down from 20th the previous year).

Here are some key points the study found regarding Missouri:

• Perfect credit rating from both Standard & Poor’s and Moody’s (ratings from ratings agencies are not always perfect, see: sub-prime mortgage crisis)
• Unemployment rate for 2011: 8.6 percent (national unemployment rate: 8.9 percent)
• State spending has been reduced in areas such as higher education for the past three years (fiscal years 2010-12) and Missouri residents refuse to change course.

This is not the first time the Show-Me Institute has analyzed a study that ranked Missouri in comparison to other states. These rankings depend on the weights the authors assign to the different measures they analyze. It is difficult to judge these rankings one way or another because they are partially subjective.

However, while Missouri might be in the middle of these rankings, on unfiltered measures such as real GDP (the measure of all the final goods and services that are produced within Missouri’s borders) it is among the worst economic performers in the country. In fact, based on more recent measures, Missouri is barely growing and is placed firmly in the bottom quintile of states for growth.

If it hopes to improve, Missouri should consider implementing Education Savings Accounts, eliminating the state’s corporate income tax or even eliminating the state’s income tax, and reforming occupational licensing.

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.”

We all know the old saying, “if you give an inch, they’ll take a mile.” Cities seem to skip the “inch” part and give commercial developers a mile right away. What if they thought about ways to only give an inch? Better yet, what if they did not “give” anything, but simply performed the necessary roles of government as quickly and inexpensively as possible?

Many cities conduct economic development with offers of tax incentives to commercial developers in hopes of bringing them to their neighborhoods. Offering these subsidies is often bad practice for many reasons.  Discounted taxes for the select few means marginally higher taxes for everyone else.

Last week, the Kansas City Star reported about property developer Nathaniel Hagedorn’s success in placing a tenant in a 200,000-square-foot building in Riverside, Mo. Riverside did not provide subsidies or incentives to attract this business. The city’s government simply did its job in an efficient and business-friendly manner.

Hagedorn reported that Riverside was the only city in the metro area that took just two weeks to provide all permit approvals for the building project — a valuable feature for businesses. Very few businesses want to sit around and watch the leaves turn while they wait to open a new space. Time is money.

A few months ago, the Society for Industrial Office Realtors (SIOR) and a group of real estate students at the Bloch School of Business at the University of Missouri-Kansas City completed a study of the typical time and cost of having a commercial real estate building project approved. They analyzed 17 municipalities in the Kansas City metro area and found that the average length of time to approve a project is about nine and one-half weeks. This study is very interesting and I hope someone does similar work for Saint Louis.

Shortening the time it takes to approve developments is a simple fix cities can make to improve their business climate. Instead of pulling out the big guns with popular programs like TIF (Tax Increment Financing), TDD (Transportation Development District), and Community Improvement District (CID), municipalities could make small changes that would benefit all new businesses, not just a select few.

Recent news of the United States Postal Service’s debt problems has brought the agency’s mounting business troubles back into the spotlight. Many post offices were shut down last year (20 in Missouri), as the USPS used one if its few tools to respond to changing business conditions.

This is an example of an industry where there are strong private alternatives to a government-provided service. USPS has a monopoly on first class mail, but UPS and FedEx provide consumers with many other options to meet shipping needs.

As I read James Shuls’ blog post “What is Public Education?” it occurred to me that traditional public schools and the postal service have more in common than one might expect.

Public schools and post offices obviously provide different services, but they are both trailing behind their private counterparts. These government services are highly regulated, in what I assume is an attempt to make them well-run. But the opposite is true. Under these conditions, the postal service cannot adapt to the changing marketplace as easily as UPS and FedEx. Similarly, public schools cannot respond to changing school and student needs as swiftly as private and charter schools.

The success of UPS, FedEx, charter schools, and private schools shows us that people often prefer non-government services and (gasp) receive a better product.

Traditional public schools are not always able to attract and retain the best teachers, nor can they remediate or remove the worst. Bad schools stay open when they should close. And regulations prevent students from using technology to learn at their own pace.

I am certainly no anarchist, but I am rational enough to see when markets are better than government. Businesses thrive when they are able to adapt and compete. Just as restrictive burdens on the USPS have hindered the organization’s performance, government regulations are stifling education. In Saint Louis, for example, it often takes more than 100 days to remove a low-performing teacher.

We need to take a clue from the postal service: freedom, not regulation, produces better results.

Missouri gets a high five from me today. (Or maybe a pound. That seems to be the cool thing these days.) Over the weekend, I read in Reason magazine about the repeal of an oppressive licensing law for home moving companies in Missouri.

Before the law was repealed, any potential new moving company had to submit an application to the state government to start the company. Existing moving companies then had the opportunity to say, “No thanks, we don’t want any more competition. You can’t start your business here. Sorry I am not sorry!”

Essentially, existing home moving companies were protected against fair competition from outsiders. By restricting competition, companies had more control to set prices for their services. They unfairly cast off competition that would allow Missourians to have more choices. And, entrepreneurs were excluded from making a living in their preferred occupation.

Unfortunately, this piece of legislation did not pass the first time around. Show-Me Institute Policy Analyst David Stokes wrote in 2011 about Missouri reducing home mover licensing requirements. However, the governor vetoed that particular bill in 2011.

This time around, it looks like there is real change for the home mover business. Markets and customers can now make the decision of who will provide services. The government may think it is doing a good service by imposing certain restrictions, but occupational licensing often results in harmful effects to citizens and the economy.

Officials in the city of Chesterfield recently approved an ordinance that will allow an overnight surgery center to operate on property at North Outer 40 Road and Boone’s Crossing. At first glance, this seems like a simple business response to a market demand.

There is just one problem. Area hospital leaders argue that the overnight surgery center (the potential site for Regeneration Orthopedics) is a hospital under Missouri law and should follow specific licensing, staffing, and safety standards.

This is a complicated issue and I am not an expert. Like most people, I tend to believe that the area’s leading hospitals are genuinely concerned about patients. But making an overnight surgery center, with approximately a half dozen overnight patients, follow the same regulations as BJC HealthCare, SSM Health Care, Mercy, and St. Luke’s is about business, not patients.

I understand that hospitals face complicated regulations, moreso than many other industries, but we must remember that hospitals are businesses. And as businesses, it is in their best interests to limit the entry of other firms into their field. So, when a business claims a new or emerging competitor has an unfair advantage, we must question their allegations and motives. I recognize that Regeneration Orthopedics is in a unique situation, but just because it provides similar procedures as hospitals does not mean it is a hospital.

What is next? Are we going to make test preparation or tutoring centers follow the same regulations as public schools or universities? I mean, they also “skim off” paying individuals and “leave the poor” ones. Like most licensing debates, the Chesterfield “hospital” debate is best left to the free market to decide instead of the government.

There are 7,700 fewer people working in Missouri in July than there were in June. Think about that for a moment. That is 7,700 people who could be bringing home paychecks who now have to find some way to pay the bills. That is 7,700 people whose lives have been disrupted because a once solid thing on which they could count, their jobs, has gone. This figure tells a story that a .1 percent jump in the unemployment rate cannot tell.

Is this drop in employment an anomaly for Missouri? Sadly, it is not. From 2010-11, total employment in Missouri fell from 2.651 million to 2.632 million. This is the second worst performance in the country, just slightly better than Wisconsin. In fact, Missouri’s total employment declined from 1997-2011. This performance is not a blip, it is not an anomaly nor a fluke. This is a sad trend for a state that can and should do better. At the Show-Me Institute, we have released an essay that details other ways Missouri has underperformed economically when compared to the rest of the country.

However, it does not have to be this way. The Show-Me Institute has discussed various ways that Missouri could improve its economic situation. These are proposals that will benefit the state.

That question is asked a lot these days. The answer really depends on which figures are examined. If one looks at Missouri’s April unemployment rate (the latest figure from the Bureau of Labor Statistics), Missouri’s 7.3 percent looks pretty good compared to the country’s unemployment rate of 8.1 percent. Yet Missouri’s total economy actually shrank from 2010 to 2011. The value of all the goods and services produced in Missouri was a billion dollars less than the previous year. Total employment (that is, the total number of people actually working) also declined. Based on the weight of the evidence, Missouri is falling behind.

Considering this, it is pretty fair to say that there is considerable room to improve Missouri’s economic performance. For example, people on both sides of the aisle have called for tax credit reform. My colleague Patrick Ishmael and I have called for eliminating Missouri’s corporate income tax and making up the lost revenue with the elimination of economic development tax credits. Despite calls in the legislature for reform, the status quo remains.

It is easy to understand why different people have differing views on Missouri’s economic performance. However, the weight of the evidence supports the contention that Missouri is under-performing. Eliminating the corporate income tax is one way to make things better. State officials can do other things to improve as well (such as reforming occupational licensing).

This morning, the U.S. Supreme Court affirmed the constitutionality of the Affordable Care Act (a.k.a., ObamaCare.) In a twist, rather than finding that the law’s mandate was constitutional under the Commerce Clause (as both the government and plaintiffs asserted) the majority determined that the government’s power to tax — here, to tax not having insurance — saved the law.

In a surprise conclusion to a constitutional showdown, Chief Justice John Roberts joined the Supreme Court’s four liberals Thursday to uphold the linchpin of President Barack Obama’s health plan, the individual mandate requiring citizens to carry insurance or pay a penalty.

By a 5-4 vote, the court held the mandate valid under Congress’ constitutional authority “to lay and collect Taxes” to provide for “the general Welfare of the United States.” The penalty for failing to carry insurance possesses “the essential feature of any tax,” producing revenue for the government, Chief Justice Roberts wrote.

It is difficult to understate the importance of this ruling, now and for the future. In the short term, the core of the Affordable Care Act stands, meaning Americans will still be subjected to one of the most coercive and leviathan government programs enacted in recent memory. Tens of millions will likely lose their current insurance plans, and young people will be especially affected by the law’s provisions. But the Court has also found that the mandate is a tax, meaning that repeal of the law could be as easy as passing a budget bill without the mandate, or the law, in it.

The long-term effects, however, are not irrelevant here. The Supreme Court also found that there was no constitutional basis for the mandate under the Commerce Clause. There are, as it turns out, limits to what the government can regulate under Article I Section 8 of the Constitution. That is a positive thing. Also, the provisions that forced states to expand their Medicaid programs were deemed impermissible under Congress’s spending power, meaning states will not have to choose between expanding their Medicaid eligibility or losing federal funding for their entire Medicaid programs. Those two findings from a policy standpoint are successes, although under the current disappointing circumstances may not seem all that apparent.

This outcome stands as a huge disappointment, but this is not over. Now the solution for turning ACA back has moved in a decidedly legislative direction. Elected officials will have plenty on their plates to consider over the next year when it comes to keeping or spiking the health care law.

After all, according to the justices, Congress enacted a gigantic tax when they implemented ObamaCare. The question now is whether Americans want to pay it.

This is a day of tremendous concern for the American people. It truly is a lose-lose decision by the U.S. Supreme Court.

For the vast majority of Americans, if you have health insurance that you like, you are either going to pay more for it or lose it. If you do not have it, you will have to buy insurance even if you do not want it or pay an excessive penalty (tax).

We are also going to add almost $2 trillion to our already staggering federal debt.

This ruling does not change the fact that the Affordable Care Act (a.k.a., Obamacare) is bad law and is going to hurt the American people. It needs to be repealed.

The St. Louis Post-Dispatch reports that the Maplewood City Council voted Tuesday night to ban food trucks from operating within city limits. Additionally, the City Council moved forward with a redevelopment plan for the Deer Creek Center, approving the area as a Community Improvement District (CID) and giving a stamp of approval to the redevelopment agreement. In one fell swoop, the City Council managed to limit competition in the food service business and pave the way for yet another development project that will use Tax Increment Financing (TIF).

Policy analysts for the Show-Me Institute have written extensively about food truck regulations, and now Maplewood has jumped on the regulation bandwagon. City Council members who voted in favor of the ban said they were concerned that the food trucks would “cannibalize” existing businesses in the area. I think they are confusing cannibalism with another “c” word that is vital to any market-driven society: competition. Protectionism is bad for new vendors in the short term, but also bad for consumers in the long run because competition improves choice and helps keep prices reasonable. Yet, in Maplewood, because a new food concept is creative, mobile, and relatively inexpensive, it has brick-and-mortar restaurant owners running to the City Council crying foul. Government should not be putting limitations on ingenuity and entrepreneurship.

As if the food truck prohibition was not enough, Maplewood officials moved forward with the plan to redevelop the Deer Creek Center, likely to be paid in part with TIF. Although the Saint Louis County TIF Commission rejected the request for $8.5 million in public funding in January, it would only take a 5-2 vote from the Maplewood City Council to approve the funding. According to the Post-Dispatch, that is expected to happen when the City Council meets later this month. This is yet another example of a city overriding a county TIF commission so that the city can impose its will on the entire county.