Page 894 – Show-Me Institute

Jumping on the Sub-Prime Bandwagon

Posted on January 11, 2008May 5, 2026 by Justin Hauke

The General Assembly is out to "protect" consumers once again, this time from unscrupulous mortgage brokers.

I’ve written before about why usury laws are a bad idea. While I sympathize with what legislators are trying to do (I like to believe that most of them are well-intentioned), regulating mortgage brokers is not going to help sub-prime borrowers or protect home ownership rates.

The Post-Dispatch’s coverage of the bill has one particularly revealing quote about the motivations behind such legislative "protection":

Rep. David Pearce, R-Warrensburg, a banker and the bill’s co-sponsor, said most subprime loans are not offered by local banks or credit unions.

"It’s from out-of-state firms that are coming into Missouri and preying on our consumers," he said.

Wow, talk about playing up the "us and them" fallacy. Now, from my cynical point of view, here’s how I interpret that sentence (emphasis obviously added):

"It’s from out-of-state firms that are coming into Missouri and preying on our consumers. And because they offer more competitive rates, I have been unable to compete and am losing business. Therefore, we need to pass legislation that will ensure Missourians face stricter lending limits that will insulate me from competition, at the expense of consumers."

Good, I feel safer.

Amazing Statement From a Federal Judge

Posted on January 11, 2008May 5, 2026 by David Stokes

I usually leave comments about the educational field to the other bloggers, what with their ivory-tower smarts and all, while I had to complete my GED during a stint in prison for a crime I didn’t commit in the manner the cops said I did. But that is another story entirely…

Today’s Post-Dispatch has an article on a ruling in a case of "educational larceny", which is, simply put, attending public school in a district you don’t live in. Now, while I, along with the others here at SMI, favor complete school choice, until that is implemented I understand that the rules of residency are going to be enforced. I don’t disagree with the ruling in favor of the district, per se, but I just wish to point out some of the over-the-top language the judge uses in his opinion. Do you think this judge supports the status quo in education? (Emphasis added, as usual.)

He added: "Were each child entitled to choose where to go to school, regardless of where that child lives, the structure of the public school system of the State would collapse into chaos, thereby resulting in an actual deprivation of the right to a free public education."

Imagine substituting words live "work" or "live" for "go to school" and see how that sounds. "Were each person allowed to choose where to work," or "Were each person allowed to move to wherever they wanted." One of the nice things about not being a lawyer is that you get to criticize judges when they say absurd things like this without worrying about ethical violations. Does Judge Autrey really believe that if people were given more freedom for their own lives that our entire school system would descend into chaos? Unbelievable.

State of the State

Posted on January 10, 2008May 5, 2026 by Justin Hauke

The 2008 legislative session kicked off yesterday, and among the General Assembly’s initial priorities are increases to minimum teacher salaries and the expansion of property tax relief for senior citizens.

I don’t really have a problem with expanding the property tax credit, because it mostly entails leveling the income eligibility limit between single and married taxpayers. The revenue hit would be pretty small, and it probably costs the state more when seniors are forced to sell their homes because they can’t meet their property tax obligations.

But I’m opposed to the mandatory increase in minimum teacher salaries. The proposal would increase minimum salaries from $23,000 to $31,000, which would be a boon for rural districts, where teacher salaries are generally lower than the proposed new minimum but are comparatively well paid, but would do very little for teachers in urban and suburban districts, where minimum salaries are already well above the new state minimum. For example, the lowest paying district in St. Louis County, Hancock Place, has a minimum starting teacher salary of $30,900.

And, of course, there’s no mention of merit pay, which I think would be a far better solution to increase teacher salaries. Let good teachers be rewarded for their work. Why should they only receive a raise if every other teacher does, too?

High-Tech Pigs in a Cellular Trough

Posted on January 9, 2008May 5, 2026 by David Stokes

While the growth of the federal government gets most of the attention from people who care about things like that, the size and budgets of local governments are growing rapidly as well. While this is probably true around the nation, there is an article in today’s Post-Dispatch (link via Combest) that unintentionally illustrates this fact for Missouri quite well.

The article regards the recent settlements of the tax disputes between cell phone companies and local governments in Missouri. We have written about this before, and I will repeat that it seems sensible to me that a tax on land lines should also apply to cell phones. To sum up quickly, the cell phone companies have now agreed to collect the tax and pay back taxes, too, which will result in both a temporary windfall and a new revenue stream for many local governments in Missouri.

The Post-Dispatch interviews seven different officials from the St. Louis area as to what they plan to do with the new money. All seven are eager to spend it in various ways, easily demonstrating why local government grows as it does. Not one of the seven officials interviewed even mentions lowering taxes in their community as a response to the increase in tax money available. Not a friggin’ one of them! And we wonder why government keeps growing, and why it is so hard just to get a simple reassessment rollback? Apparently, our local officials like to spend money just as much as the national officials.

Now, I really don’t have a problem with officials spending the back-tax windfall; I object to the basic assumption that all future money from the tax will also be spent without even considering lowering the tax in question. Most of the planned expenditures from the windfall seem to be in the area of transportation, which is honestly as good an area as any to use it. How about this statement from Mayor Slay’s office (emphasis added in all below quotes):

Ed Rhode, a spokesman for Mayor Francis Slay, said repairing bridges was a likely priority although that would be up to budget deliberations with aldermen and the Estimate Board for the fiscal year beginning in July. He said future revenue from the 10 percent tax, one of the highest in the area, could shore up city pensions.

And they wonder why more people don’t want to move into the city? On top of a local income tax, you get the highest telephone utility tax in the area. And when the tax base is expanded, officials don’t even consider lowering the overall rate to benefit everyone. But when a large corporation wants to move in, officials give away the entire store to them in the hope of potential long-term returns. Its just insane.

I don’t mean to pick on the city here; others are just as bad. I can sense the Wildwood city administrator frothing at the mouth over the new money:

Wildwood’s city administrator, Daniel Dubruiel, says the fact that cell phone firms will pay the tax from now on is more significant than the city’s $1.2 million settlement payout. "I’m much more interested in the long-term effect," he said.

Perhaps now they can give a pay raise to Wildwood’s SIXTEEN members of the board of aldermen. That works out to one member of the board of aldermen for every cul-de-sac in Wildwood. Articles like this make me wish that local officials also ran in partisan elections, so at least we could have an idea whether one of them cared about lower taxes and smaller government. (Note: I don’t really wish for partisan local elections — just for one person on a city council somewhere in St. Louis County to care less about local government and its employees, and more about the taxpayers.)

Berkeley Bob on Health Care

Posted on January 9, 2008May 5, 2026 by Justin Hauke

There is an op-ed in this morning’s Wall Street Journal by Robert Reich — President Clinton’s former Secretary of Labor and a current professor of public policy at UC-Berkeley — on the Democratic presidential candidates’ plans for national health care.

The article amazed me, not for its blatant disregard of economic logic, but rather for its presupposition of controversial facts about what universal health care coverage would be like. Reich accepts (without justification) that national health care will be affordable, universal, and comprehensive, offering excellent service for which every American will be free to choose the doctor of his or her choice without an automatic opt-in mandate. Well, by golly, if it isn’t Uncle Sam Santa. How crazy we’ve been to bicker about this.

I’m surprised the Journal let this go to print, particularly without a rebuttal. But for argument’s sake, let’s accept what Reich imagines and focus on what the article says instead. Reich argues that the Democrats should “think bigger” about national health care and ignore the petty issue of mandates (that is, whether or not uninsured Americans will be forced to participate). Reich recognizes correctly that mandates (and their big government connotations) are the most sensitive part of the health care debate, so he argues that they’re just a smoke screen. But mandates are the most important part of any universal health care plan.

Ostensibly, national health care would rely on younger, healthier participants’ contributions to subsidize the high costs of older, sicker Americans. That’s a non-partisan fact, as it’s the same rationale for Social Security and Medicare. How else can a system that offers universal coverage without distinguishing premiums remain solvent? Uninsured older Americans are the most expensive segment of the population to insure, yet we are supposed to believe that this wouldn’t pose a problem without a mandated influx of healthy Americans who contribute to the plan without utilizing its benefits?

Reich ignores this fact, and — presumably to appease the naysayers — argues instead that high-cost participants would be subsidized by the general revenue obtained from allowing the Bush tax cuts to expire. Please. Even if we were to assume that allowing the tax cuts to expire would increase revenues (it might not), address the alternative minimum tax problem (it won’t), and not push the country into recession (it probably would), there’s still the issue of how the additional revenue can even hope to offset the enormous cost of health care for millions of high-risk Americans — particularly when fixed premiums encourage health care abuses. Ironically, Reich provides his own counterargument to the importance of mandates when he cites Republican Mitt Romney’s Massachusetts health care plan (a plan which currently exempts about 20 percent of the state’s uninsured population and has left policymakers contemplating either universal coverage or insolvency). Oh, but “big government” mandates aren’t important.

Reich’s article is purely propaganda, ignoring the real argument by dismissing the bureaucratic mess of “big government” mandated coverage as the “least important aspect of what [the Democrats] are offering,” in order to appease Americans who want to believe that universal health care can be achieved without cost or government intrusiveness.

But it’s not “The Road to Universal Coverage” that Mr. Reich is offering; it’s the “The Road to Serfdom.”

“&#$* No!”

Posted on January 8, 2008May 5, 2026 by Dave Roland

If you ever find yourself in a bar in St. Charles, you’d better watch your mouth. Despite a recent study touting the potential benefits of cursing, the Post-Dispatch reports that St. Charles’ city government may ban "indecent, profane or obscene language, songs, entertainment, and literature" from the town’s drinking establishments.

For beginners, such a law would be a flagrant violation of constitutional principles. Everybody knows that the First Amendment protects the freedom of speech, even when some might find that speech offensive. But even more importantly, Article I, section 8, of the Missouri Constitution declares that "every person shall be free to say, write or publish, or otherwise communicate whatever he will on any subject[.]" Missouri’s free speech protections are also guaranteed to apply to all forms of communication, whether spoken, sung, danced, filmed, or written.

Our nation’s history is littered with official attempts to stifle words, books, songs, and ideas that many at the time considered "wrong," "naughty," or "immoral." At one point, James Joyce’s masterpiece, Ulysses, was banned from the United States as "obscene." It is now widely regarded as one of the most important literary works in the English language. As the Supreme Court of the United States pointed out in Cohen v. California, "one man’s vulgarity is another man’s lyric," an observation that led the court to reject "the facile assumption that one can forbid particular words without also
running a substantial risk of suppressing ideas in the process."

St. Charles’ consideration of this "cussin’ ban" is the perfect example of why these constitutional protections are so necessary. The Founders recognized that, given the opportunity, people in power will eventually try to limit words, books, expressions, and ideas that they disfavor. If we, as citizens, allow one group the power to silence those who disagree with them, or whose thoughts and opinions may seem to be distasteful, we sacrifice one of the most important, defining elements of a free society.

Judicial Smackdown in Jefferson City

Posted on January 8, 2008May 5, 2026 by David Stokes

Missouri Political News Service has a story on the decision by Judge Callahan in Cole County to throw out the ballot language chosen by Secratary of State Carnahan on the Missouri Civil Rights Initiative — which may or may not be accurately named, depending on your perspective. Whether or not you support this initiative, with its proposal basically to end affirmative action in Missouri, you would be hard-pressed to argue reasonably that Sec. Carnahan’s inclusion of highly biased language in the ballot wording was appropriate. What her office wrote for the ballot was (emphasis added):

"ban affirmative action programs designed to eliminate discrimination against, and improve opportunities for, women and minorities in public contacting, employment and education."

The new wording, as written by the judge, is much more even, yet still accurately descriptive as to the effects of the vote:

Ban state and local government affirmative action programs that give preferential treatment in public contracting, employment, or education based on race, sex, color, ethnicity, or national origin unless such programs are necessary to establish or maintain eligibility for federal funding or to comply with a court order?

You would have to by very, very partisan to argue that the latter is not a much more fair way of phrasing the question to be put before the voters.

The New I-64, Y2K, and the Pope

Posted on January 7, 2008May 5, 2026 by David Stokes

Well, it is pretty much official. The final test has been passed (this morning’s commute) and the traffic nightmare that was supposed to be the I-64 shutdown will officially join the year 2000 computer digit scare and the traffic jams from the Pope’s visit here as catastrophes that never materialized in St. Louis. As I understand it, traffic was certainly slow this morning, but nowhere near the nightmare everyone predicted.

What should we make of this? I have no idea, other than to give credit to both drivers and transportation planners who seem to have handled everything very well. The more I think about the tipping point ideas I discussed last week, the more I think they point in the right direction. Enough people have adjusted their schedules, or switched to different routes, that the entire system has been able to handle the changes without gridlock. It’s probably that simple. And thank God for it.

The Coronation of Big Corn

Posted on January 7, 2008May 5, 2026 by Justin Hauke

An editorial in this morning’s Kansas City Star details some of the negative consequences of Missouri’s new ethanol fuel standards, which went into effect on January 1.

In 2006, the General Assembly passed a bill that required all gasoline sold in Missouri to contain a 10-percent ethanol blend beginning January 1, 2008, making Missouri only the third state in the country to impose such high standards.

In doing so, as the Star correctly documents, the General Assembly overlooked several problems with the “new brew”:

Fuel with 10 percent ethanol has about 3 percent less energy than gasoline made from petroleum. Fuel mixed with ethanol gets fewer miles to the gallon.

Ethanol is subsidized with a 51-cent federal tax credit. Increased consumption of blended gasoline leads to higher taxpayer funding for the ethanol industry.

It takes a lot of water — as well as fertilizers that create pollution — to produce corn-based ethanol. As a result, ethanol has some negative effects on the environment.

Missourians can debate whether ethanol is an effective solution to Missouri’s energy needs and whether its costs are justified. But it is important for voters to be aware of these costs and recognize that ethanol is not the “free lunch” panacea that some pretend it to be. And what Missourians especially don’t need is a political coup that only replaces “Big Oil” with “Big Corn” for “Big Bucks.”

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