Page 687 – Show-Me Institute

Against the Proposed Toyota Ban

Posted on March 4, 2010May 5, 2026 by Christine Harbin

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.

Maybe When Service Drops to One Day a Week, We Can Eliminate Its Monopoly Protection?

Posted on March 3, 2010May 5, 2026 by Caitlin Hartsell

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.

Two Quick Hits Out of the Post-Dispatch

Posted on March 3, 2010May 5, 2026 by David Stokes

Mayor Francis Slay is once again talking about St. Louis city and county once again considering the idea of reuniting in various capacities. I totally support the readmission of the city into the county, where it would be the 92nd, and largest, municipality. This would have two primary results, in my opinion: lower taxes in the county and fewer employees on the public payroll in the city. Both of those are, obviously, very good things to me. For a bit more detail, check out this op-ed on the issue.

Also in the Post, the county police chief is concerned about police officers within the county being properly licensed. Now, as regular readers know, I hate occupational licensing, but police work is one of the exceptions for me. Doctors (including dentists), cops, and (most) nurses are the main exceptions on my list to keep full licensure. Lawyers, accountants, and some other medical professions could keep some of it, too, but at a reduced level of licensing. (Lawyers should be licensed more like CPAs. Basically, if you can pass the test — in this case, the bar — you are in.) But back to the police.

I don’t necessarily think licensing agencies instead of individual police is the answer, but I’m not sure. If agencies are licensed, rather than the police themselves, that might reduce the ability of individual police to market themselves and change jobs. Also, if the citizens of small municipalities want to get rid of their own police forces, they are fully capable of doing that now via contracting out the service or disincorporation. As much as I would like to see many of those cities do just that, I don’t support forcing them if their citizens don’t want to. I admit I need to research this issue more, but at first review I don’t see positive change coming from just changing the licensing system.

Oregonians Fail to Rally Around Local Food Preferences

Posted on March 3, 2010May 5, 2026 by Sarah Brodsky

Are farm-to-school initiatives a response to parents’ and students’ demand for local food? This program coordinator in the Oregon Department of Education doesn’t seem to think so. In her interview with the Oregonian, she talks about local food as if it were something constituents had to be cajoled into accepting. Regarding students, she said, “We’re going to […] educate students to support those changes in the cafeteria,” implying that students don’t support the changes now and wouldn’t come to support them on their own, even once the new policies are established. This reminds me of the coaching some parents give little kids during holidays: “Tell Grandma how nice the toy is and that you like it soooo much!” If local food preferences bring superior fare to cafeterias, as advocates claim, students should welcome the tastier meals without explicit instructions.

Perhaps their parents are more enthusiastic? From the program coordinator’s description, I don’t think so. She suggests that parents, too, require a lot of education. When asked whether parents are learning about local food, she responds:

Not as much as they could be or should be. […] They need to go to school lunch and share it with their kids […] And then parents and caregivers, if they could purchase, serve and talk about Oregon foods with their family, phenomenal.

She would love it if parents could do those things, meaning that they aren’t doing them already. The parents have to be won over. It’s a far cry from, “They are educating me with their phone calls and petitions begging for more local food” — the reply I would expect if local food preferences really were implemented at the behest of parents.

I don’t blame Oregonians for their indifference. After all, as the program coordinator correctly states, local foods are not necessarily healthier than foods from other places. Parents might be more supportive if schools focused on procuring nutritional meals, without regard to locality.

One policy I especially hope Oregon will abandon is the preference that the program coordinator affirms for canned and frozen foods from local sources. Local canned and frozen foods have no nutritional advantage over canned and frozen foods from far away; you can’t argue that one is fresher than the other.

SMI Research Assistant John Payne on FOX 2 tonight at 10:00

Posted on March 2, 2010May 5, 2026 by Eric D. Dixon

Charles Jaco just finished taping an interview with Show-Me Institute research assistant John Payne, about the Metro mass transit system in the St. Louis area. At least some portion of it is slated to appear in tonight’s FOX 2 news broadcast at 10:00. Be sure to tune in. [UPDATE: The video is now online.]

For more information about St. Louis transit, read Payne’s recent op-ed about MetroLink, which also ran on the Riverfront Times blog and in the St. Louis Business Journal. His commentary attracted some attention from a Metro board member, who responded on our blog, followed by a short rejoinder by Payne.

The Show-Me Institute ran a trio of pieces in October 2008 about transit funding in St. Louis, considering the problem from different angles. We’ve also been fortunate enough to publish a few pieces analyzing Kansas City light rail plans, by transit scholar Randal O’Toole and policy analyst David Stokes. Although these latter pieces considered the issue specifically as it relates to the Kansas City area, many of the broad observations about light rail costs and efficiency apply just as well to St. Louis.

April Ford-Griffin on Proposed “Open Space”

Posted on March 2, 2010May 5, 2026 by Audrey Spalding

I wanted to note that Alderman April Ford-Griffin called me today to discuss the proposed open space map that NorthSide Regeneration Regeneration LLC submitted as part of its plan for a $8.1 billion development of the city of Saint Louis.

I have written about how owner-occupied homes appear to be slated for open space, as are some area businesses.

When I asked Ford-Griffin about the fate of Fehlig Brothers Box & Lumber, a 137-year-old area business that, according to NorthSide’s plans, will become open space, she said that much detail can’t be read into the company’s plans.

“That is a concept,” she said. “That is not a document where you take it and say this is what’s going on this block and this is what’s going on that block,” she said.

You can read the updated report, with Ford-Griffin’s comments, here.

Fun With Guns

Posted on March 2, 2010May 5, 2026 by Dave Roland

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.

“I Didn’t Break It, I Was Just Testing Its Durability”

Posted on March 2, 2010May 5, 2026 by Christine Harbin

I used the “Show Me: The Spending” web tool to determine how much money that government agencies in Missouri spent on “Property Damage Settlements” during the last decade. From the resulting graph, we see that the Office of Administration (in blue) and the Department of Transportation (in purple) are responsible for most of the expenditures. In fact, together they account for 98.92 percent of the total — $10,113,764.76, adjusted for inflation.

Trend of “Property Damage Settlements” by Government Agency (2009 Dollars)

The Office of Administration consistently spends $437,964.86 per year on average. The Department of Transportation’s trend of spending, however, is more volatile. It spent $77,637.71 on property damage settlements in 2007, $2,282,899.37 in 2008, and $6,500.00 in 2009. MoDOT made the largest single payment to a vendor in this category in 2008, in the amount of $1,920,556.60.

“Property Damage Settlements” for MoDOT in 2008

Why are these state agencies spending so much on property damage settlements? What property are they damaging, and why do Missouri taxpayers have to cough up $10,113,764.76 for it?

Homeschooling Family in the New York Times

Posted on March 2, 2010May 5, 2026 by Sarah Brodsky

The homeschooling family I wrote about here and here is now featured in the New York Times. The article recounts the events that led the family to leave Germany and seek political asylum in the United States:

Working with a curriculum from a private Christian correspondence school — one not recognized by the German government — they expected to be punished with moderate fines and otherwise left alone.

But they soon discovered differently, he said, facing fines eventually totaling over $11,000, threats that they would lose custody of their children and, one morning, a visit by the police, who took the children to school in a police van. Those were among the fines and potential penalties that Judge Burman said rose to the level of persecution.

Reading these details of their story reminds me how fortunate homeschooling families in the United States are today. Some states impose more regulations than others; depending on where they live, parents may need to hold college degrees, to submit their curriculum for approval, or to agree for their children to take standardized tests. But it’s unheard of for the government to remove children from their homes forcibly and send them to school.

A sign of U.S. homeschoolers’ freedom is that when legislation is introduced that would affect them, the right to homeschool is usually not at question. And, secure in their ability to homeschool, parents can ask states for more than the right to be left alone. For example, homeschooling parents in Utah are currently lobbying for public schools to include homeschoolers in extracurricular activities. In Germany, parents fight to take their children out of the public schools; permission to bring them back for activities is the least of their concerns.

Supporters of homeschooling might point out that homeschooling can become an issue in divorce cases like this one in Missouri that Caitlin Hartsell discussed. It’s true; divorce courts do sometimes order a parent to send his or her children to school instead of teaching them at home. However, these decisions are not comparable to the harassment homeschoolers face in Germany and other countries. If divorced parents disagree about their children’s education, whatever the court ruling is, one parent will end up better satisfied and the other unhappy. Parents who want to send their children to public or private schools can be disappointed by these orders, and parents who want to homeschool are not immune from unfavorable divorce court rulings. What matters for homeschoolers in general is that divorce decisions apply only to individual families, and do not create new policies for everyone else.

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.