Having both Jackson County and Kansas City build their own new local jail is ludicrous. The Jackson County jail is going to cost $301 million (at least). There was discussion of sharing facilities and some resources (such as food service) but now Kansas City is moving ahead with its own facility at a to-be-determined cost.

In the “up-is-down” government universe, the county’s jail contractor told the city council that:

J.E. Dunn, the construction company working on the new county jail, told city council last week that a shared jail would cost more in the long run, because the city would have to pay for services like food and laundry.

Will Kansas City not have to pay for food or laundry at the new facility they are going to build by themselves? Because I don’t think that is going to be a very appetizing or ambrosial jail without food or laundry.

Local governments sharing jails can absolutely work to save tax money and still provide the necessary safety and justice functions jails are there for. Regional jails are common in Virginia, and the U.S. Justice Department released a very favorable report on this practice a while back.

I don’t know who or what to blame here. Contractors running amok and running the show? Political disputes between the two bodies? Quietly disruptive employees who actively oppose service sharing and cost savings because they reduce the number of government jobs? One local elected official is putting the blame squarely on the latter, and I commend him for his blunt comments:

Jackson County Legislator Manny Abarca IV said it’s ridiculous the city and county couldn’t work out an agreement. “It’s a waste of taxpayer dollars to build two facilities that are naturally gonna have similar shared services that we could’ve combined,” he said. “As a taxpayer I’m very upset that this is the outcome.”

Abarca said it seemed like city and county staffers stalled on the project, “long enough to make this impossible to move forward.”

I am delighted that both Kansas City and Jackson County have all of this extra tax money to throw around. Now I don’t have to take the city seriously when it says it can’t afford to operate without an earnings tax.

The post Kansas City and Jackson County Do Two Things Twice appeared first on Show-Me Institute.

Speaking of the restoration of the centuries-old Bourbon monarchy — following the massively convulsive interlude of 22 years between French Revolution and Napoleon’s defeat at Waterloo in 1814 — Talleyrand quipped, “They [the Bourbons] have learned nothing and forgotten nothing.”

On a smaller scale, the same judgment applies to the lessons learned (or studiously ignored) in a lengthy report released last week into the “underlying issues” behind the riots and looting that erupted in the St. Louis suburb of Ferguson (pop. 21,200) following the shooting death of a young black man by a white police officer on Aug. 9, 2014.

Commissioned by Missouri Gov. Jay Nixon, the report is long on liberal pieties and dogma, including the advocacy of some policies that will only worsen existing problems, but short of practical suggestions for improving economic or social conditions in a close-in, big-city suburb that went from predominantly white to predominantly black in the space of two decades.

For example, the Ferguson Commission calls for expanded job opportunities for black youth. Who can argue with that? As the commissioners point out, for blacks aged 16 to 19, the unemployment rate (nationally) is 30.1 percent, compared with 15.5 percent for whites in the same age group. But then the report endorses calls for almost doubling the minimum wage to $15 an hour.

The adverse impact of a dramatic increase in the minimum wage on teenagers looking for their first jobs should be clear to anyone who stops to think about it. If a business is forced to pay $15 an hour to a worker whose true value to the enterprise is, say, $8 an hour, that amounts to a hidden tax of $7 an hour, or 87.5 percent, on the employment of that person — a tax that does not apply to people making, say, $20 or $30 an hour. Naturally, such a tax would encourage employers to invest in automation and concentrate their hiring on more skilled and experienced workers. As Milton Friedman put it, “The minimum wage law is most properly described as a law saying that employers must discriminate against people who have low skills.”

The commissioners call for concerted efforts to “enhance college access and affordability” through expanded scholarships and other means, but they ignore the biggest problem: poor test scores and a lack of readiness for college. In the Normandy school district — Michael Brown’s alma mater — 93 percent of students who took the standard college entrance examination scored below the national average. Normandy students taking the ACT test had an average score of 16 —not high enough to gain admittance to most four-year state institutions. It isn’t funding that is keeping these students from going to college. It is their abysmal K-12 preparation.

Predictably, the Ferguson Commission urges the state to invest in a universal pre-K program and move the compulsory education age down to 5 from 7. This would become a new (and hugely expensive) entitlement, while adding another layer onto K-12 schools that are not meeting the needs of low-income, African-American students (who make up 80 percent of Ferguson-Florissant students and more than 96 percent of students in nearby Normandy). How is expanding a broken system going to help anyone?

In its 198 pages, the Ferguson Commission Report calls for the expansion of a broad mix of other programs at multiple levels of government — ranging from food stamps and public transit to Medicaid and housing assistance — and it recommends a panoply of new programs to raise the awareness of police officers, teachers, and other public officials of the danger of unconscious or unintentional racial bias.

“In the 2011-12 school year,” the report notes, “14.3 percent of black elementary school students in Missouri were suspended, compared to 1.8 percent of white students.” It then adds, “Research suggests that some of the discipline gap may be attributed to teacher bias, which predisposes them to expect less of minority students and to discipline them more frequently and more harshly.”

However, the report makes no attempt to assess, or discuss, what part of “the discipline gap” — if any — may be due to other reasons — including the high incidence of low-income black children growing up in single-parent homes, with no live-in, working fathers.

Among the 189 “calls to action” contained in the report, one of the more startling recommendations is the complete elimination of all school suspensions and expulsions for disruptive behavior from kindergarten through third grade.

At the outset of the report, the commissioners give themselves a broad pass in describing their work as “a study of underlying issues — not an investigation of an incident.” They write:

This report is not in any way an investigation of what happened between Michael Brown Jr. and Officer Darren Wilson in Ferguson on August 9, 2014, nor is it an investigation of the response to the uprising that followed. Other bodies have been responsible for those investigations.

For the record, it should be noted that Officer Wilson was twice cleared of charges of any wrong-doing in the death of Brown: First, by the Saint Louis County grand jury’s decision not to bring murder or manslaughter charges against him, and second, in an 86-page report by the U.S. Justice Department in early March which supported that decision.

Over the past 12 months, numerous newspaper and magazine articles have called attention to the widespread misuse of local police and courts in Saint Louis County (including Ferguson) as de facto tax collection agencies — imposing heavy fines and fees for minor traffic violations and other municipal code infractions while often jailing people for failure to pay tickets.

The Ferguson Commission report rightly condemns such practices (as did the U.S. Justice Department in a separate investigation of Ferguson Police Department procedures). In July, Gov. Nixon signed a bill into law that greatly limits the extent to which municipalities can rely on fines and fees to fund themselves.

On balance, however, the Ferguson Commission fails in its stated purpose of “outlining a (new) path to racial equity.” For the most part, it is a compendium of tried-and-failed liberal policy recommendations.

The post The Liberal Solution To Ferguson, Mo? More Liberalism appeared first on Show-Me Institute.

The essence of the dispute is that Tesla, uniquely among U.S. car companies, does not use middlemen (dealerships) to sell its cars. MADA, which represents those middlemen, wants it to be illegal for a car company to directly sell its vehicles to consumers. They claim it already is illegal, under the Missouri Motor Vehicle Franchise laws. But the Missouri Department of Revenue disagrees, claiming the laws are only applicable to manufacturers that have dealerships in the state and are not designed to enshrine dealerships as the only method of selling cars.

Along with their legal and legislature maneuvering, MADA is publicizing why Missouri should create more regulations to enshrine the dealership model as the only way to sell cars. They argue that without car dealerships the state’s economy would suffer and that consumers need the type of long-term car care that only they, and not the manufacturer, can provide.

Without a doubt, using car dealerships as a sales and maintenance unit has many advantages for manufacturers and consumers. After all, it became the dominant mode of selling cars for a reason. However, it is not an intrinsically superior way to buy and sell a car and certainly should not be afforded new legal protection.

For example, according to a report from the Department of Justice, dealerships can raise the costs of selling cars. Experiences from General Motors sales internationally have shown that manufacturer-direct sales can lower the cost of a car by 8.6 percent. Furthermore, consumers may prefer manufacturer-direct sales over the uncertainty of haggling with car dealers, if they are given the choice. One poll conducted in the United States found that half of respondents would prefer to buy from the manufacturer even if they were not offered a lower price.

MADA’s efforts would take that choice away. They claim that buying a car is an important financial decision and that dealers provide the long-term care customers need. But there is no shortage of ways consumers could choose to service their vehicles if they buy directly from Tesla, including agreements with auto-repair shops. Car buyers are no less capable of looking after their assets than homebuyers, who somehow manage to purchase and maintain houses without house dealerships.

As for the economy as a whole, protecting a certain way of selling cars is no way to increase jobs or increase competitiveness. Business models change constantly and create new opportunities and products even as they replace older ones. That sentiment underlined the Federal Trade Commission’s (FTC) criticism of Missouri’s legally entrenched franchise system. They stated, “[C]onsumers are the ones best situated to choose for themselves both the cars they want to buy and how they want to buy them.” That may not always be to the benefit of car dealers, but it’s good economics and good for the state.

The post Don’t Ban Tesla to Protect Middlemen appeared first on Show-Me Institute.

However, MADA’s claims hold little merit. The Motor Vehicle Franchise Law bans manufacturer-direct sales for franchisors (meaning those with franchises in the state). Tesla does not use the franchise model to sell its cars, and hence is not banned from direct sales. And this is not a loophole. The Franchise Law was designed as a series of protections to prevent large car companies from undercutting their own franchisees. It was not written to enshrine the independent car dealerships as the only method to sell cars in the state.

That is an important distinction, because whether or not Missourians believe car companies need to be legally prohibited from cannibalizing their own marketing and sales outlets, there is no economic justification banning a manufacturer-direct car sales model. As I wrote in a recent op-ed:

. . . vehicle distribution through dealerships can be costly to the consumer. The 2009 Department of Justice paper “Economic Effects of State Bans on Direct Manufacturer Sales to Car Buyers” reported that as much as 30 percent of the cost of a new car is due to auto distribution. Enshrining the car dealership model in law has limited the ability of car manufacturers to both reduce inventory costs and increase customization, practices common in other markets. In Brazil, where GM can engage in direct sales, cost savings from order to delivery averaged 8.6 percent through direct sales.

Car buyers . . . might prefer directly buying from manufacturers for lower prices, customization, or simply to avoid bargaining at a dealership. A J.D. Power and Associates poll found that half of Americans profess a desire to buy manufacturer-direct, even if the prices are equivalent.

While that does not mean the dealership model would or should disappear, the government should not stop Tesla or any other car company from trying something different. That freedom to innovate is essential for a competitive market.

The post Don’t Ban Tesla, Let It Compete appeared first on Show-Me Institute.

The last time I bought a MacBook I made the purchase from an electronic goods store, but I could have bought it from one of Apple’s retail locations. In fact, millions of Americans purchase products directly from manufacturers rather than through a local storefront under independent ownership. Should Missouri pass a law barring Apple from directly selling computers? Such a prohibition would strike many people as an abridgement of freedom of choice, but that sort of policy is exactly the approach some lawmakers want when it comes to selling cars.

In Missouri, like other states, it is illegal for any car manufacturer with franchises to sell directly to the public. Dealerships fought for that regulation, implemented in the 1980s, under the argument that they needed to be protected from predator car companies.

Tesla, a new electric car company that has no dealerships, is selling cars directly to Missourians. Instead of welcoming a new business model to the state, car dealers and politicians like Mike Kehoe (himself a former dealership owner) want to ban direct-manufacturer car sales entirely.

Supporters of direct sales bans claim dealerships just want a level playing field, and that Tesla is getting special treatment. They claim, as all middlemen have, that their position is necessary, that allowing direct competition from manufacturers could allow car companies to destroy the dealership model. That would be bad for Missourians, they assert, because dealerships protect consumers and provide competitive markets. Having many dealers supposedly creates competition, leading to the lowest possible price for consumers.

In reality, vehicle distribution through dealerships can be costly to the consumer. The 2009 Department of Justice paper “Economic Effects of State Bans on Direct Manufacturer Sales to Car Buyers” reported that as much as 30 percent of the cost of a new car is due to auto distribution. Enshrining the car dealership model in law has limited the ability of car manufacturers to both reduce inventory costs and increase customization, practices common in other markets. In Brazil, where GM can engage in direct sales, cost savings from order to delivery averaged 8.6 percent through direct sales.

Car buyers in Missouri, and in America, might prefer directly buying from manufacturers for lower prices, customization, or simply to avoid bargaining at a dealership. A J.D. Power and Associates poll found that half of Americans profess a desire to buy manufacturer-direct, even if the prices are equivalent. If dealerships cannot lure customers the way they operate now, why should Missourians be forced to buy their new cars only from them?

Allowing manufacturer-direct car purchases does not necessarily mean the death of dealerships, as long as they can be of service to both buyers and car companies. From the manufacturer perspective, dealerships allow the company to devolve responsibility for advertising, selling, financing, and maintaining a car, which allows the company to focus on car production.

I bought my MacBook from a store, but I wouldn’t force that choice on others in the market. The next time you purchase a computer, you will have the choice to buy from many types of stores or even directly from a manufacturer—business models that meet the needs of customers in different ways.

That’s a vibrant marketplace, and there is no reason the same type of market cannot exist for cars in Missouri. Indeed, if the playing field between Tesla and other car companies needs to be leveled, we should do so by scrapping the ban on direct car sales. There is no reason manufacturer-direct sales cannot exist side-by-side with competitive dealerships.

Joseph Miller is a policy researcher at the Show-Me Institute.

The post Give Tesla and Missourians a Fair Deal appeared first on Show-Me Institute.

A 2004 report by the U.S. Department of Justice and Federal Trade Commission found that CON programs “pose serious anticompetitive risks that usually outweigh their purported economic benefits.” So far, I have written about how CON regulations can limit access to care and have been shown to not effectively control costs. CON regulations have the potential to stifle competition and grant existing hospitals monopolies over certain regions. Some existing hospitals may even attempt to use these regulations to prevent competition from entering the market.

How does this play out in Missouri?

In the past, any time a new hospital wanted to open up in Missouri, it had to apply for a CON – irrespective of its size and cost. A revision to Missouri’s CON rules changed the criteria for review from every new hospital to every new hospital whose cost is at least $1 million.

In April 2010, Patients First Community Hospital expressed its intent to build a small hospital in Saint Louis County that did not meet the new threshold for certificate of need review. Shortly thereafter, a regional rival, St. John’s Mercy Health System, filed a lawsuit against the Missouri Health Facilities Review Committee and Patients First. St. John’s challenged the legitimacy of the new $1 million amendment and construction of the new hospital. In 2012, the Missouri Supreme Court ruled that the new criteria for review was perfectly legal, thus giving Patient’s First the green light for the project.

Despite the ruling against St. John’s, this is an excellent example of a hospital using the legal system in an attempt to stomp out the competition, all under the pretense of CON regulation. It took about two years for Patients First to have its plan approved. These sorts of delays can deprive patients of new, much-needed medical facilities.

The state should not allow such an environment to exist.

The post Show Me Better (Part 4): Certificate Of Need And Market Power appeared first on Show-Me Institute.

On the 50th anniversary of Martin Luther King Jr.’s March on Washington, the U.S. Department of Justice (DOJ) announced that it is suing to block the Louisiana school voucher program. The Louisiana program provides mostly poor, minority children with access to private schools. The DOJ claims the voucher program may be in violation of desegregation orders, essentially claiming that the voucher program is hurting desegregation efforts. This is an empirical claim, but the claim is false.

Using student-level data, Anna Egalite and Jonathan Mills, Doctoral Academy fellows at the University of Arkansas, examined the impact of each student’s “switch” on the racial composition of each school in a recent article in Education Next. They concluded:

Our analysis of the Louisiana Scholarship Program reveals that the vouchers used by the subset of recipients for whom information is available have supported public-school desegregation efforts. By leaving schools in which their racial group was overrepresented relative to the surrounding communities, voucher users have improved integration in Louisiana public schools….Based on this evidence, we conclude that the LSP is unlikely to have harmed desegregation efforts in Louisiana. To the contrary, the statewide school voucher program appears to have brought greater integration to Louisiana’s public schools.

In response to the DOJ lawsuit, Louisiana Gov. Bobby Jindal remarked, the “Department of Justice is attempting to use old rules designed to prevent discrimination against minority children to try and keep these children trapped in failing schools.” Egalite’s and Mills’ research demonstrates that those “old rules” most likely are not being violated, because the data actually show that the voucher program is improving racial integration.

The post Louisiana Voucher Program Improves Desegregation Efforts appeared first on Show-Me Institute.

The controversy in the Boone County case involved several issues: The bonding agent lacked a license to work in Boone County (not a big deal, in my opinion); the bonding company itself did not have the assets to guarantee such a large bond (a very big deal, obviously); and the unusual structure through which the family of the accused agreed to pay the bonding company (I have no idea whether this is a big deal). To sum it up quickly, the court rejected the bond after the accused was released, and he was taken back into custody at a higher bond. Because the suspect is accused of a heinous crime — murder — I have no problem with the higher bond requirement.

The Times article focuses on the big scheme of things in the bonding world, and contains a number of quotes that could have been written by somebody at a free-market think tank. Here are a couple:

The system costs taxpayers nothing, [Professional Bail Agents of the United States spokesman Bill] Kreins said, and it is exceptionally effective at ensuring that defendants appear for court. […]

“Here’s what everybody forgets,” [bail bondsman Wayne Spath] said. “The taxpayers have to pay for these programs. Why should they pay for them? Why should they? When we can provide the same service for free.”

Sounds good to me. But this is the key question: Does the system work? From the article (emphasis added, for all quotations throughout this post):

According to the Justice Department and academic studies, the clients of commercial bail bond agencies are more likely to appear for court in the first place and more likely to be captured if they flee than those released under other forms of supervision.

Why does the system work?

That may be because bail bond companies have financial incentives and choose their clients carefully.

Wait a minute … are they saying that incentives work? There are, of course, critics of the industry:

“The bail bond system is rife with corruption,” said Joshua Marquis, the district attorney in Clatsop County, Ore. Since bond companies do not compete on price, they have every incentive to collude with lawyers, the police, jail
officials and even judges to make sure that bail is high and that
attractive clients are funneled to them.

Mr. Kreins, the industry spokesman, acknowledged scandals in Illinois, where “basically all the agents were in collusion with the judges,” and in Louisiana, where sheriffs were also in the mix.

The first part is a legitimate critique, if it’s true. While the amount of bail set should not be a matter of debate or competition, the fee percent charged by various bail bondsmen can certainly fluctuate, unless governments regulate that fee as part of the licensing requirements? If that is the reason agents don’t compete on price, it’s the regulation that should be gotten rid of — not the industry. As for the second critique of corruption in Illinois and Louisiana, those two states have corruption even in the kindergarten industry, along with everything else. Corruption in those two states (plus Rhode Island) is a problem with the entire system, not just one industry.

Since the critique comes from Oregon, what does the article say has happened since Oregon banned the bail bond industry?

Mr. Marquis, the Oregon prosecutor, said doing away with commercial bonds had affected the justice system in a negative way as well. “The fact of the matter is,” he said, “that in states like Oregon the failure-to-appear rate has skyrocketed.”

What does the rest of the world do (except for the Philippines, which uses our system, certainly a leftover from colonialism)? Please trust that the inserted sarcastic comments in brackets below are mine, and were not in the original article:

Some simply keep defendants in jail until trial [oh, that’s a much better solution for someone who is poor and genuinely innocent]. Others ask defendants to promise to turn up for trial [’cause a criminal would’nt lie]. Some make failure to appear a separate crime [I am sure someone facing 20 years is very worried about the addition of a failure-to-appear charge]. Some impose strict conditions on release, like reporting to the police frequently [I can’t see any possible way around that, like stopping at the police station while on your way to the bus station]. Some make defendants liable for a given sum should they fail to appear but do not collect it up front [see above comment on separate crime]. Others require a deposit in cash from the defendant, family members or friends, which is returned when the defendant appears. [Because taking money from a poor family is preferable to taking it from a for-profit business? What the hell?]

There are very good, historical reasons why our system evolved as it did. The Times article is outstanding, and it goes through those reasons. But it only hints at the fact that our bail system — like our overall criminal system — is much more favorable than the systems in the rest of the world toward people accused, but not yet convicted, of a crime. The rights to counsel, the presumption of innocence, the bail system itself, and many more aspects are all indicative of a system that favors the rights of the people, until those rights are abrogated by a conviction in court — not the other way around.

Plus, Charles Grodin was lying when he said he wasn’t able to fly. That part was funny.

The post Stokes Posts Bail appeared first on Show-Me Institute.

The NSA, President Bush, and the other intel agencies argue that attaining this private communications information is crucial to preventing another terrorist attack, and that the process of “data mining” has worked to catch terrorists and prevent such an attack by finding terrorist cells based on their communication patterns. They further assert that such “wiretapping” actions are justified under the Patriot Act and the broad authority granted the president as commander-in-chief to prosecute the ongoing “war on terror” in whatever manor he finds most suitable.

The issue here is efficacy. If the procedure of “data mining” works, and the associated right to privacy being surrendered is made up for with real added security and effectiveness against terrorists, and the information being gathered is being used solely for that purpose, then it’s reasonable to surrender some privacy right in exchange for that security. Commissioner Steve Gaw sums it up nicely:

“We have tried to be sensitive on not delving into issues that could cause a security issue,” Gaw said. “At the same time, if we give up rights and freedom in order to be secure, what have we gained? And what have we lost?”

Our friends over that the Cato Institute have published an interesting paper calling into question the very efficacy of “data mining,” or the systematic combing through of billions of bits of information for communications patterns likely to be attributable to terrorist activities. They essentially argue that the process is flawed, largely ineffective, and that the benefits it conveys are not worth the tradeoff in security gains. I am no expert on anything, much less computer science or national security, but I do know that I’m not a terrorist,  nor is there any reason for the gov’t to assume that I am. Until they have probable cause to believe otherwise, my phone records should remain nobody’s business but my own. If my telephone company has circumvented that right to privacy I deserve to know, and will most assuredly switch to another provider more respectful of my civil liberties.

The post Data Mining: Security Measure or Privacy Invasion? appeared first on Show-Me Institute.