Taking a Chance on Charters

Posted on by Sarah Brodsky

Neal McCluskey comments on a KIPP charter school in New York that is being forced to let its teachers unionize:

But this is the chance you take when you run a charter school: No matter how much you want to act like a private school, sooner or later the public-schooling powers will remind you of what you really are.

I still think it’s worth it to take the chance. Charters introduce choice, competition, and specialization into the public education system and make it a little bit less coercive. When families can choose a charter school, it’s no longer, “You have to go to the closest school building, or else.” And the fact that one KIPP school is being threatened by imminent unionization doesn’t mean that every charter is about to lose its character. I’m sure the unions will try, but charters may be able to stay one step ahead — at least until some other reform gives families more options.

However, this should serve as a warning to parents who want to transfer their children from private schools: Charters are not exactly the same as private schools. There are attendant drawbacks to public financing of any school.

If You’re Going to Harass Drivers, Do It Right

Posted on by Sarah Brodsky

I’m amused by this editorial in the Kansas City Star. It laments the fact that police in Missouri and Kansas can’t pull over drivers just for not wearing a seat belt. Then it says that raising the fine for not wearing a seat belt, from $10 to $100, is uncalled for.

If driving without a seat belt is so bad that the police should pull you over for it, then it should be discouraged with a noticeable fine. If, however, the fine is not worth more than such a paltry amount, then the police shouldn’t stop you for that in the first place.

A Half-Hearted Attempt at Regulating Lion Ownership

Posted on by Sarah Brodsky

This is a scary follow-up to my last post on exotic animals. Missouri has almost no regulations about owning large carnivores? And the requirement that people notify their local sheriff if they own a lion isn’t enforced? I blog again and again about excessive regulations, and now it turns out that in one of the few instances where detailed regulations would be appropriate, there aren’t any.

Something’s wrong when there’s more state oversight of manicurists at the mall than of people who keep tigers in their homes. It must be because cats and dogs aren’t lobbying for the government to erect barriers to entry, to keep out more exotic competing animals.

The Missouri House has passed a bill that would require large carnivore owners to: a) get a permit; b) provide the animal with “adequate” food and care; and, c) put up a sign that they have a potentially dangerous carnivore.

The requirement to feed the animal is meaningless. I’m not worried about the owner feeding the animal, I’m worried about the animal feeding himself. Big carnivores like lions do not eat set portions three times a day — they kill prey whenever they can get it. In other words, they’re always hungry. It’s not like you can make a lion less dangerous by feeding it on a schedule, the way you can make a toddler less irritable by giving him a snack.

Posting a sign is also not enough. Large carnivores do not read signs, are difficult to contain, and may leave their designated premises to go hunting in the surrounding neighborhood, despite the owner’s intentions.

Large carnivores belong in zoos — not in homes.

This Reminds Me of Kindergarten

Posted on by Sarah Brodsky

The Kansas City Star reports on Barack Obama’s first 100 days in office, and the effect on Kansas and Missouri. Didn’t everybody do something like this in kindergarten? Once you’d been in kindergarten for 100 days, you had to bring in 100 pennies or marbles, or whatever, and learn about triple digits.

The Star explains that most of the money that will be coming our way isn’t being spent yet. This illustrates one of the drawbacks of the fiscal stimulus — Washington doesn’t act with the exact timing necessary to step in and avert recessions.

John LaPlante Gets Sarcastic

Posted on by Sarah Brodsky

Anyone who doesn’t yet read State House Call should start, if only for John LaPlante’s awesome reactions to statements like this one. After Kansas’ insurance commissioner declared that sick people should be able to purchase insurance as if they were healthy, LaPlante responded:

Yeah, it would be great if I could walk into Best Buy and come out with a 50 inch TV and not have to pay for it.

Plus, he explains economic principles. Read the whole thing.

The Next Health Insurance Mandate

Posted on by Sarah Brodsky

No insurance plan is going to cover every illness. It would be so expensive that no one could afford it. And no one would want it, anyway. People buy insurance to cover a limited number of potential events, not every possible occurrence. When you get up in the morning, you don’t buy insurance for everything that might happen that day.

Given that health insurance will never cover all ailments, insurance mandates don’t make sense. Whenever the state imposes a new mandate, insurance companies will comply with it by moving away from covering other diseases (and, of course, by charging higher prices).

Legislators should keep that in mind when they consider this mandate for eating disorders. If it becomes law, the mandate will mean that other disorders go uncovered.

Location, Location, Location

Posted on by Sarah Brodsky

Daniel Hamermesh at Freakonomics writes about the silliness of “local” production and employment restrictions. Like the “locavore” consumption enthusiasts, the proponents of these policies think that if you just confine yourself to a small geographic area, scarcity and other facts of life don’t apply to you. Hamermesh points out that when places thus tie their hands, they forgo gains from trade and specialization. Then he turns prophetic:

Even worse, if it were to spread so that national governments helped to “protect” local companies and employees even more than they now do, we would be headed rapidly down the protectionist road that helped produce the Great Depression. I hope this truly stupid idea is localized and does not spread.

Let’s accentuate the positive: Nowadays, almost nobody is truly local. Look at this locavore blog, which chronicles the local food movement in all its obsessive-compulsive glory — by posting lists of stuff people ate, where it came from, etc. This is from the “About This Site” description:

Spanning the United States, the group is committed to challenging themselves to eat mainly local food during a specific period of time during the year.

First, if eating local is good, why do they do it only during a specific period of time? is that because during other periods of time, no food is grown in their areas and they would starve? It gives new meaning to the term “fair-weather fan.”

Second, it says the bloggers come from all over the United States. That doesn’t sound very local to me. I think the locavores intuitively understand that it’s counterproductive to restrict the exchange of information. Now, if only they could apply that concept to the food supply. …

Move Over, Payday Loans

Posted on by Sarah Brodsky

We periodically hear calls for the state to tighten its payday loan regulations and to keep interest rates down. Such restrictive caps on interest would result in fewer people getting access to payday loans at all — or they might have to pay even higher rates of interest on the black market. Fortunately, ineffectual regulations aren’t the only answer to the problem of high interest rates. Free-market competition can give borrowers other options and better deals. For example, see this Post-Dispatch article about credit unions that offer short-term loans on better terms than the payday lenders.

Why do the credit unions offer lower interest rates? Because they’re nicer? Not quite. Actually, the credit unions have found a way to lower the risk that borrowers will default. They require borrowers to deposit their paychecks with the credit union, and to place part of their loans in a savings account there. The benefits of the practice for the credit union and its borrowers are manifold: the credit union gets to hold on to some of the cash; it establishes a relationship with the borrower; and the borrower hopefully builds up savings and reduces his dependence on payday loans.

The payday lenders offer better rates on certain loan amounts, and there will still be a place for them in the market, serving customers who can’t or won’t abide by the credit unions’ policies. But there’s now an alternative.

Besides the credit unions’ model, another way to reduce the risk of default is to ask borrowers to pay back a loan in several installments, rather than as a lump sum. I hope more lenders will enter the market, using that or other ideas to offer lower interest rates.

The Best of Bad Alternatives

Posted on by Dave Roland

As many different Missouri outlets have been reporting (links via Combest), the state government is trying to sort out what it will do with $1 billion in stimulus funds allocated by the federal government. Show-Me Institute commentators have largely stayed away from this issue, in part because there really is no good answer. Even to the extent that the stimulus was well-intentioned, it was a poor decision on the part of the federal government to plunge the nation even deeper into debt. The borrowing and money-printing that are making the stimulus package possible are almost certain to hobble our future economic growth, because of the higher levels of taxation that will be necessary to pay for it, but also because of the government’s backward policy of propping up failing businesses rather than encouraging the growth or expansion of new and successful enterprises.

But, for now, the die has been cast and we must decide how to make the best of this bad situation. A number of politicians have suggested that the best course of action would be just to refuse part of the money, sending it back to Washington as a symbolic disapproval of the policy that led to the stimulus package. This definitely has a certain appeal, seeing as how spending the money might well be perceived as encouragement for similar federal action in the future, but there is another unpleasant truth to be considered: Missourians are going to be on the hook for the use of that money, regardless of how it is spent. And it will be spent, even if Washington has to send it to another state. So, Missouri’s free-market thinkers have to decide whether it is wiser to take a principled stance that will effectively donate our future tax dollars for other states’ benefits, or whether it is wiser to figure out the most effective way to use these dollars in our own state.

So, what might we do with this $1 billion in federal stimulus funds? While I can’t speak for my colleagues here, I’m intrigued by Gov. Jay Nixon’s plan to promote loans for small businesses. One of the great challenges we face in this recession is the contraction of available credit just at the time when many out-of-work people will be interested in starting their own businesses. I can’t speak to the details of the governor’s plan, because I haven’t reviewed it closely, but the central idea strikes me as a very, very good one in terms of jump-starting innovation and growth in our state. If private non-profit agencies are helping to ensure that small businesses have the funds they need to get off the ground, it just might spur the banks to start lending more freely, as well.

Of course, if the state government is really serious about spurring entrepreneurial growth in Missouri, the perfect compliment to this sort of a lending plan would be an effort to lower some of the regulatory barriers that make it difficult to start new businesses.

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