“You’re About 100 Years Too Late”

Posted on by David Stokes

The above title is what Senator Scott told me when I testified Monday in front of his committee about the harm done by occupational licensure in Missouri. Be that as it may, sometimes lost causes are the best ones of all. It’s like a Billy Joel song, but instead of an angry young man in Manhattan, it’s an aspiring economist in Jefferson City.

Whether or not I’m 100 years late (and he is probably right), the issue will always be here, because existing firms will always try to use political muscle to limit their competition from the outside. That is, frankly, what the entire Department of Professional Registration is about: bureaucrats colluding with business groups to form cartels — nothing more.

As an example of how the issue will always be around, I present two articles dealing with it, in different ways, from today’s Post-Dispatch (hat tip to Combest for one of them; I forget which). We have the return of the annual midwifery debate, as discussed in this article. I love how Senator Loudon cuts through the b/s and gets to the point in the debate:

"I’ve come to recognize a turf battle when I see it," Loudon said. "It’s time to call it what it is and decide are you going to protect their turf, or are you going to let the people of Missouri make their choice?"

People should be able to make choices, and if use of a midwife is one of them, then they should be allowed to do so. The other article is about prepaid funerals, which Nick the Intern blogged about the other day. The issue is that sellers of prepaid funerals have apparently not been properly putting the money in trusts, as required. From what I can see, this is a criminal matter — but no doubt the funeral home industry will try to take advantage of it for more regulatory control. If agreements are not being honored, then the companies should be prosecuted. But that should not serve as a jumping-off point for more laws or more control. Prepaid funeral plans are a dumb idea for most people. I like this simple advice from the article:

His recommendation is basic: Consumers should put their money in a savings account or an investment in their own name rather than prepaying for a funeral.

Just because something may be a bad deal (referring to the 20 percent allowed to be kept by the seller in case of cancellations or other changes) should not automatically be a reason for the government to jump in to protect us from ourselves. This is the type of reaction that leads to the ever-expanding role of government in our lives. And I though The Nintern was coming along so well. … 

Bad Ideas, and a Few Good Ones, in Springfield Budget Dispute

Posted on by David Stokes

Today’s Springfield News-Leader has a detailed account of the budget troubles facing Missouri’s third-largest city. The primary cause of the budget problem is very similar to St. Louis’ own (most) recent problem: dramatic increases in the police and firemen’s pension costs. Kansas City has also just recently completed a tense budget debate, though with different causes, so this gives us a nice opportunity to review all three cities together. Springfield now gets to decide if it is going to address its problems in a manner like that of St. Louis, which raised taxes for about the 47th time in the past decade (with voter approval, I grant you, and "47th" is hyperbolic) to deal with its pension shortfall, or like Kansas City, which admirably made tough budget cuts to deal with its problems in a systematic long-term manner.

Springfield is proposing to collect an authorized pension tax that it has had on its books for years but never bothered to collect. University City did essentially the same thing this past year for the very same reason. Anyway, the important thing to me is finding appropriate cuts in government spending. A chart accompanying the article details how Springfield is not making any substantive cuts to its spending. Instead, it is basically just moving money around from one account to the pension accounts. While they are eliminating vacant positions, they are not laying anyone off. I don’t doubt that those vacant positions will be filled just as soon as possible — they have not changed the overall environment, as Mayor Funkhauser is trying to do.

I do like the reduction in outside legal fees, as well as the cut in lobbying expenses for its Washington lobbyist. Springfield needs a lobbyist why, exactly?

Councilwoman Mary Collette questioned the wisdom of cutting in half the city’s funding for a lobbyist in Washington, D.C.

She asked Cumley to find out how much federal money the lobbyist may have helped bring to Springfield.

Carlson indicated it was in the tens of millions.

"If we cut their money in half, does that mean we’ll get half as much back from the federal government?" she asked.

Cumley said he would try to find out.

[ME: Governments hiring lobbyists to get money from other governments is insane and should be illegal. Please don’t take that as an attack on lobbyists — just on government.]

Springfield deserves minor applause for a few things — and the tax hikes are small, truth be told. But really, this is just a shell game that will not change anything in Springfield in the long run. Now, if it wanted some serious change, there is an enormous asset staring Springfield right in it face: City Utilities could be sold off and better run by a private utility. I’m just supposin’…

Instructional Reform Isn’t Failproof Either

Posted on by Sarah Brodsky

Sol Stern responds to Richard Rothstein over at Cato Unbound. He’s titled the essay "A Tale of Two Rothsteins," although he could have called it "A Tale of Two Sterns." Stern used to be a strong supporter of parental choice, until he recently decided that choice programs have been too prone to setbacks and haven’t spread quickly enough. Now, he backs "instructional" reform, like the top-down standards that have succeeded (sort of) in one particularly wealthy place: Massachusetts. In "A Tale of Two Rothsteins," he admits that the strategy in Massachusetts is suffering the same fate he fears for the much-maligned choice programs:

But I doubt that Rothstein is much interested in these real on-the-ground gains for both white and black students. He certainly hasn’t spoken out to protect the gains against the attempts of Massachusetts’ new Democratic Governor Deval Patrick to turn back the reform agenda.

If instructional reform is such a robust course of action, compared with those frail choice programs, why does Rothstein need to speak out about it? And why can’t it build on its own success?

This is a key difference between instructional reforms imposed from above and choice reforms driven by what parents want. If parents can choose between private schools, charter schools, and traditional public schools, then the best schools will attract lots of applications and hold on to satisfied families. But if the state mandates a new curriculum, that reform is forever at the whim of the political process, no matter how successful an outside observer judges it to be.

Autism and Tuition Costs

Posted on by Sarah Brodsky

The Post-Dispatch reports on the challenges that parents of autistic kids face:

Symptoms typically begin before age 3, and experts including those at the National Institutes of Health, say early intervention is critical. This is where the costs begin to mount.

Autism treatment falls under four broad categories: behavioral, speech and language, neurosensory such as music therapy, and biochemical such as medication and dietary changes.

Unfortunately, the article doesn’t mention tuition tax credits for autistic kids — instead, the focus is on insurance companies that don’t cover all the treatments. Some parents are lobbying for state mandates to force the insurance companies to pay.

Insurance mandates are a bad idea in general, and in this case they clearly don’t make sense. If a kid has a learning disability that affects his reading skills, no one would expect a health insurance company to pay for extra help. That’s an educational issue, not a medical one.  Likewise, when autistic kids need 30 hours a week of music therapy, help with learning communication and social skills, and personal attention, that means they need a special school environment. Now, no one would expect a public school to be able to do all those things for one or two autistic children. That’s why there are private schools that specialize in treating autism. We should focus on giving autistic kids access to those schools.

How can we do that? Insurance companies aren’t set up to be tuition scholarship organizations. And leaving the problem for school districts to deal with on a case-by-case basis leaves many kids without help; right now, only a few of the most affluent suburban districts help send kids to private autism centers like Judevine. A tuition tax credit program would benefit autistic kids throughout the state, without overwhelming individual districts. But in the absence of such a program, people are demanding that insurance take up the slack.

I hope legislators will take responsibility for gaps in the state’s education system without getting the insurance sector involved.

Pre-Grave Robbing

Posted on by Nicholas Loyal

I suppose that this is what I get for having free time and watching local news, but last night this report caught my eye. However, my attention was dragged toward the closure of the Ted Foster & Sons funeral home — not because of the story’s touching emotional appeal or the horrendous nature of the actions taken by all those involved, but because of this one last bit:

Authorities say, by law, money collected for pre-arranged funeral plans has to go into a trust. […] Other homes should gladly accept the business.

A trust, you say? By law? Because of my infatuation with a certain HBO series (with the best ending you’ll ever see on television) I was already vaguely familiar with the concept of pre-need funerals, and was sure that the law cited in the report probably had some form of corruption that would make the lives of Mr. Foster’s customer’s worse.

And guess what? There is!

According to RSMO section 436-021, funds accepted from the sale of a pre-need funeral service must be placed into a trust, which (in the event of the closure of the original establishment of sale) can be transferred elsewhere, as stated in the report.

What wasn’t mentioned, though, was that funeral directors in Missouri, according to section 436-027, can retain up to 20 percent of the initial payment for the ceremony, regardless of circumstances. Thus, for every $5,000 funeral that Mr. Foster sold before he went out of business, he can legally keep $1,000 — no questions asked. This provision was likely included in order to assist funeral homes in maintaining facilities for a rush of business that they cannot  reasonably plan for, but it also allows the proprietors of failed businesses to run away to Mexico with the funds that families set aside to make a terrible time less difficult for their loved ones.

Surprisingly enough, the General Assembly has a pair of bills that have already been proposed this session, attempting to correct this problem. However, as described quite well in this analysis, certain consumer advocates feel that the bills themselves are still not doing enough to protect the final wishes of many funeral home customers.

The pre-need funeral is an aberration in the marketplace, as it is the one product that you know you’ll need, but also (presumably) the one that you can in no way predict the timing of. As such, it differs from insurance and other preventative investments not only because of the associated emotional weight, but also because of its unusual economic certainty. Because pre-need funerals are so unique, they require a unique amount of consumer protection to be provided by the state government itself.

While we advocate free-market solutions here at the Show-Me Institute that shy away from extensive government interference, I don’t think anyone can reasonably claim that a market with a definite and defined end is truly free, and I hope stronger legislation can be put in place to protect consumers of these unique services.

Politicking Revisited

Posted on by Justin Hauke

A legislator responds to the addendum(s) added to his teacher pay bill (see my previous post) in today’s Kansas City Star.

“What was substituted out is a plan that requires us to rank teachers and only the top 20 percent are eligible for a bonus. That fosters competition and an every-man-for-themselves atmosphere. You would have teachers trying to get ahead of one another.”

Oh my goodness! Perish the thought that quality should be rewarded!

Why has capitalism been so successful in this country? Because it encourages competition, which fosters an environment of innovation and an incentive structure that aligns supply and demand. Rewarding good teachers ensures that those teachers are driven to constantly improve quality, adopting lesson plans that work and abandoning those that don’t. Under the current system, teachers have little incentive to invest time and effort in improving their curriculum, or tweaking it from year to year to meet student needs, because they won’t be recognized for their efforts.

This is about helping good teachers to earn the higher pay that they deserve. This is about bringing the public school system up to speed with every other facet of the American economy, and aligning incentives with positive results.

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