Page 686 – Show-Me Institute

Payday Loan Industry Bad; Mob Racketeering Good

Posted on February 19, 2010May 5, 2026 by David Stokes

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.

Trend of Film Tax Credits Awarded in Missouri

Posted on February 19, 2010May 5, 2026 by Christine Harbin

Using the “Show Me: The Spending” web tool, I mapped the historical line graph of the film tax credits allocated in Missouri during the past decade. The only spike in the graph occurred in 2009, and that was for Up in the Air:

Trend of Film Tax Credits Awarded in Missouri

The total number of tax credits that have been issued since 2000 is 35, for a total amount of $12,927,154. The average amount of a tax credit was only $369,347, which is much less than I anticipated. The smallest amount of credit that was awarded was $19,048, and the largest was $4,131,011. The latter award occurred in 2009, for Up in the Air, and it is represented by the spike in the graph for that year.

Although I disagree that Missouri should offer film production incentives, I am relieved to learn that few productions are taking advantage of it. Only one film has come close to the tax credit cap during the last 10 years. I have heard many of our commentators and politicians call for increasing this cap, but this graph leads me to believe that it would not encourage a marginally higher number of large-scale productions. It would be as efficacious as putting a price floor below the equilibrium price.

Access Missouri Debate Is Silly

Posted on February 19, 2010May 5, 2026 by Abhi Sivasailam

Missouri lawmakers, via Senate Bill 784 and House Bill 1812, have proposed to reform the Access Missouri program. Currently, the program awards need-based grants to Missouri students. Students attending private colleges may receive up to $4,600 of aid, and students attending public schools may receive up to $2,150. Under the reform bills, these amounts would be equalized to $2,850 for all students. The bills perplex me; is the brand of reform they endorse really necessary?

Proponents of reform have made three, general arguments, all of them dubious:

First, they assert that reform would make the distribution of public aid more equitable. It’s atrocious that private school students may receive more than $2,000 in additional funding than their public school counterparts. This is tantamount to pandering to special interests. This argument is very puzzling; do its exponents not remember that the award amounts were carefully derived from two years of collaboration among private and public representatives and financial aid experts in order to meet “just” and “equitable” standards? Do they not understand that public aid is already lavished upon public school students and that the Access Missouri grants constitute the only form of public aid available for low-income students attending private colleges? Would not equalization of AM grants then be tantamount to pandering to public college students at the expense of their deserving private school counterparts? Are taxpaying Missouri citizens choosing to attend private colleges less deserving of the taxpayer dime than those attending public colleges?

Second, they argue that private school students should not receive a higher subsidy because they chose a more expensive education. It is an inefficient use of government funds to confer grants to students who are simply “paying too much” for education that they could receive at a public institution at a much lower cost. Here, too, problems abound. First, this claim once again ignores the state appropriations already going toward public institutions and the students who matriculate there. Second, the claim assumes that private and public schools have homogeneous curricula that can easily be compared. The reality is more complicated. Private colleges offer unique course and degree possibilities, with unique levels of quality and market value relative to public schools. In that light, the value of education at a private college is private and subjective. Even if we were to assume that private and public colleges are perfect substitutes, it is unclear why Missouri should, other things being equal, choose to subsidize one group of students at the expense of another group.

Third, proponents suggest that reform would open access to more students. Some legislators have argued that equalizing the award amounts would result in an increase in the total matriculation of Missouri students. Given a dearth of quality data on the impact of Access Missouri, this claim is utterly unsubstantiated; without appropriate data, I find it very difficult to accept prima facie. To begin, the reform package reduces the maximum amount of private aid by $1,750 and increases the maximum amount of public aid by $750. All else equal, it is reasonable to assume that students would be less motivated to attend private colleges, but not significantly more motivated to attend public universities. Of course, all else would not be equal, and the sum effect of reform is difficult to project. What can be said is that the claim that access would increase as a result of the reform is premature.

The Post-Dispatch doesn’t seem to like the reform package, and instead suggests that schools compete for funds. As per this view, students would receive aid relative to the “effectiveness” of the institution they attend. It is an interesting idea, primarily because it would involve the development of outcome measures that higher education currently lacks.

I have a better idea, one on which I have previously written: Support students through higher education vouchers, and then use Access Missouri for the rest.

Getting Children Ready for Kindergarten: An Alternative to Home Visits

Posted on February 19, 2010May 5, 2026 by Sarah Brodsky

A Michigan school district is starting a program it calls “Begindergarten.” The idea is to help prepare preschool-age children for kindergarten through monthly sessions. Each month, parents and students will meet as a group for instruction. Parents will receive packets of reading materials and information about how to continue teaching their children at home.

The district is missing some of the advantages of programs like Parents as Teachers, that send educators into homes. It won’t have the opportunity to observe every child’s daily schedule and family environment. It also won’t be able to watch parent-child interactions very closely or make individualized suggestions.

On the other hand, the district won’t incur the cost of paying people to drive out to every child’s house and spend time with them one-on-one. While I’m skeptical of the assertion that Begindergarten “will not cost the district any money” — even if it’s run by volunteers, there’s at least the expense of photocopying all the materials — it won’t call for anywhere near as much funding as Parents as Teachers.

Some Parents as Teachers programs do minimize home visits as children get older, or place greater emphasis on group programs. It would be wise for more of the Missouri programs to move in this direction, because Missouri doesn’t have the resources to give every child the ideal home visiting program through age five. Parents as Teachers will have to consider whether the most costly aspects of its model are truly necessary for all the children it serves, or whether something like Begindergarten would be good enough for older children.

Improving Raw Milk Policy

Posted on February 18, 2010May 5, 2026 by Sarah Brodsky

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.

Missouri Dental Association Promotes Its Agenda

Posted on February 18, 2010May 5, 2026 by Caitlin Hartsell

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.

The Mismeasure of Stimulus

Posted on February 18, 2010May 5, 2026 by John Payne

An article in the St. Joe News highlights the accomplishments of federal stimulus dollars in Northwest Missouri:

Missouri’s 6th Congressional District, only two of whose 26 counties gave electoral majorities to President Obama, got more than $314 million last year from the federal economic stimulus program. […]

In Plattsburg, Mo., a $1 million stimulus grant is paired with a $4.3 million low-interest loan to help build a water treatment plant. “Those two things you can’t be upset about,” said City Manager D.J. Gehrt. “But it’s not as simple as getting $5.3 million and you can go out and start your project.”

The engineering plans were finished and submitted for review 13 months ago. But the reviews stalled while agencies pondered where the funding might flow. Further delays have come from setting up mechanisms to repay the debt incurred from the loan.

If all goes as planned, Mr. Gehrt said, the treatment plant will be completed in the summer of 2011, maybe a quicker timetable because of the stimulus money, but maybe not.

In the long run, he added, “it’s going to save the ratepayers in our service area a good amount of money.”

In St. Joseph, the stimulus program directed more than $31 million to recipients like the school district, Missouri Western State University, the Department of Transportation and Community Action Partnership.

Etc. No doubt some people are benefiting from the stimulus, but because government spending does not face a profit and loss test, there is no good way to determine which projects are worthwhile and which wasteful. The article also ignores all the things taxpayers and bond holders would have done with the money had it not been taxed away or loaned to the government — in other words, it only pays attention to the seen, but not to the unseen, effects of the spending. These recipients of stimulus funds would not have received the money to do what they’ve done, but that money would have been used instead to create something else, if it hadn’t been spent in the stimulus.

Furthermore, although the $314 million that the 6th district received may seem like a lot of money, it amounts to less per capita than the national average. During the last year, $334 billion in stimulus spending has been allocated with $119 billion going toward tax cuts and another $14 billion in individual benefits like additional unemployment insurance payments. That leaves $201 billion in spending projects awarded during the last year. According to Wikipedia, the population of Missouri’s 6th district is 621,690, and the estimated population of the United States is 308,705,000, which means that the district contains just barely more than 0.2 percent of the national population. Given that 0.2 percent of $201 billion is $402 million, the district falls under the national average for stimulus spending by $58 million dollars.

Maybe the 6th district’s underwhelming support for Obama during 2008 is in some way related to the underwhelming amount of stimulus funds it has received.

The Sales Tax and Catholic Schools

Posted on February 18, 2010May 5, 2026 by Charis Fischer

The Missouri Catholic Conference (MCC) has come out in opposition to the proposal to implement a statewide sales tax that would replace all corporate and individual income taxes. One of their major concerns is the effect that such a change would have on Catholic schools. By taxing Catholic school tuition, they argue, fewer families would be able to afford it, thus decreasing enrollment and forcing those children into public schools. This is a legitimate concern, but the MCC fails to take into account that with the repeal of the income tax, families would have more money to spend on discretionary expenses in the first place. This money could be devoted to educational expenses, thereby increasing the demand for Catholic school education.

In the chart to the right, the y axis represents the price of parochial education, and the x axis represents its quantity (P and Q represent the status quo price and quantity). The line labeled S1 shows one likely effect if the state income tax were replaced with a sales tax: An increased cost for parochial education would lead to a shift in the supply curve, wherein quantity demanded and supply provided would settle at a lower equilibrium. But the line labeled D1 shows another effect of the replacement of the income tax with a sales tax: Because families would have more money to spend that would have previously gone toward paying taxes, the demand curve for parochial education would shift, as well, leading to a higher equilibrium point for both supply and demand. We can’t predict which one of these effects will dominate, but the point is that replacing the income tax with a sales tax would not necessarily lead to a reduction in the amount of parochial school enrollment demanded by education consumers.

Another concern raised by the MCC is that because poor families already do not pay income tax, they would only be harmed by the implementation of a sales tax and would not benefit from greater income levels. However, as this blog post by Abhi Sivasailam notes, lower corporate and personal income taxes help fuel growth by attracting people and investment funds to the state. This results in higher employment levels and higher incomes, which benefit everyone. Furthermore, the bill as proposed in the Missouri Senate also includes a sales tax rebate for low-income families that may otherwise struggle to pay the sales tax.

The concerns brought forth by the Missouri Catholic Conference are not unfounded, but as my colleague Abhi Sivasailam reminds us, tax changes do not happen in a vacuum. The switch to a sales tax has the potential to greatly benefit Catholic schools in Missouri.

Something Must Be Done!

Posted on February 18, 2010May 5, 2026 by John Payne

As many residents of Saint Louis are aware, there has been a coyote wandering through Tower Grove Park for more than a week. As someone who lives very close to the park, I demand the city of Saint Louis take swift and drastic action to drive the beast from our midst. The city should establish a Coyote Patrol, similar to the Bear Patrol created after a bear wandered into Springfield in The Simpsons episode “Much Apu about Nothing.” No expense should be spared to protect us from the solitary predator: We need round-the-clock surveillance of the park, and patrols of all nearby wooded areas to ensure that no more coyotes sneak in.

While some might say that the risk of coyote attack is still very low — negligible, even — and that therefore we shouldn’t spend lavish amounts of money guarding against it, I respond that the risk can’t be much lower than some other risks the government pours billions into thwarting. And when Tower Grove Park is once again free of coyotes, we will have the government’s Coyote Patrol to thank — just as Homer knew to credit the Bear Patrol for keeping bears out of Springfield:

The work of the Show-Me Institute would not be possible without the generous support of people who are inspired by the vision of liberty and free enterprise. We hope you will join our efforts and become a Show-Me Institute sponsor.