Alcohol Regulations Never Cease to Amaze
A week ago, Chip Taylor noted a quirk in South Carolina alcohol law: mixed drinks at bars must be made from mini-bottles. A few days later, the Wall Street Journal noted that "Quirky Laws give Yuengling Edge at Home."

"Thanks to quirky state laws, the brewer has been able to hold its own at home," the Journal reports. Nationally, its market share is less than 1 percent. But in Pennsylvania, the beer's share is 13 percent.

It isn't just home state pride that drives people to reach for a Yuengling, however. It is the result of a state law that eliminates the ability of large companies such as Anheuser-Busch to use their market power.

Pennsylvania beer drinkers can't purchase beer in supermarkets or convenience stores, where the big brewers often squeeze small brewers off the shelves. Instead, consumers have to go to beer distributors or taverns. The beer distributors account for an estimated 70% of the state's beer sales, but by law they have to sell full cases, reducing the effectiveness of the big brewers' discounting tactics.

While company executive Dick Yuengling says that the laws "have enabled small brewers to survive," what they really do is enable Yuengling to survive. Other small companies suffer. A person who may want to experiment by trying another small brewer's products is likely to be put off by the $25 required to purchase a case from a distributor, or the extra costs incurred by purchasing from a tavern, where 6-pack sales are permitted.

It also turns out that this is another chapter from the "Fear Wal-Mart" book. Yuengling warns other small companies to ease off their campaign to change the law, citing possible sales at Wal-Mart as a greater threat. (permalink)

State Regulators to Telecoms: Hide Those Fees!
A few years ago, the Mackinac Center for Public Policy suggested that employers modify their pay stubs to incorporate The Right to Know Payroll Form In addition to itemizing the "employee' share" of Social Security and Medicare, it also includes the costs to the employer of unemployment insurance, workers compensation, and other government-mandated programs. The theory is that at least some of this money would otherwise flow to the employee, and hence, it is part of a broader government tax system.

Do you think that government officials would be happy with this idea? Obviously not. And it's already been used by telecommunications companies, whose bills routinely have separate lines for FCC access fees, "regulatory assessment fees," and other items.

Today, the National Association of State Utility Consumer Advocates, or NASUCA, filed a complaint with the FCC. (NASUCA members are from the offices of various attorneys general.) In the words of the headline writers at the St. Petersburg (Fla.) Times, "Watchdogs yap at phone surcharges."

Their complaint: these fees are simply part of business, and they should be rolled into one fee charged to the customer. "Phone companies should be banned from imposing an array of surcharges that are labeled so as to suggest the government gets the fees or requires their collection, state watchdog agencies complained to federal regulators on Tuesday." The complaint is here in PDF.

It's true that such items are not going to government coffers, and as such, are not taxes. But some of them are definitely costs imposed by government. I'd say "two cheers for Verizon" and other companies that list these fees on their bills. It's one small step towards getting people familiar with the costs of regulation. The cost of government runs far beyond what we pay in taxes. (permalink)

A New Resource in the Outsourcing Debate
The Reason Public Policy Institute has added an Offshore Outsourcing Research Center to their web site. If you are interested in this old-and-yet-new issue, spend a book mark here. (permalink)

Sports Socialism
Last year, the Mackinac Center for Public Policy decided to have fun with the costly taxpayer subsidies given to the Detroit Tigers. It calculated a subsidies per victory ratio. It was an attempt to illustrate the folly of subsidizing sports teams.

Apparently some folks in Wisconsin are taking the idea of "performance for pay" seriously. As Stateline.org reports, the Milwaukee Brewers are benefiting from $400 million in taxes for their new ballpark. Their lousy on-field performance has resulted in pressure for a financial audit of the club. Apparently it's going forward. (permalink)

When Taxes Destroy Community Spirit
If communities are not as strong as they used to be, perhaps it's because government has taken over. Why help out voluntarily if you're paying taxes anyway?

In a February 9, 2004 article, the Toledo Blade says that "Toledo explores other options for funding community assets." While Columbus, Cincinnati and Cleveland and other cities have asked for taxpayer dollars for various arts projects, at least one arts organization knows that it's not always a good deal.

Says Bob Bell, executive director of the Toledo Symphony, "You give them a call, and our usual donors might say 'Well, now you've got this levy, why do you need me? A levy could be very tricky."

Not tricky (though more difficult) would be simply relying on voluntary, rather than forced contributions to the arts and other projects. Then we would know that the money came from truly community-minded people rather than the political process that was hijacked by a few activists. (permalink)

Merit Pay for Teachers: Not a Pipe Dream
One of the best things that could happen to schooling is for teachers to be paid according to their worth--merit pay. One school district in Colorado uses some form of merit pay. Or at least that's what they say they are doing, though it looks a lot like the old "pay for credentials" routine. But at least they're talking the talk, showing that the proposal has some traction.

Labels: Education

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ADMIN: Mailing list a possibility
If you would like to receive new entries to the PolicyGuy blog in your e-mail box, drop me a line using this form. There is no guarantee that it will go up, but it is something that we are thinking about doing. (permalink)

ADMIN: On-site search engine
As part of some recent work to the site, there is now a search engine box on the front page of this site. If you have a rough idea of when something was published, or if you have a lot of time on your hands, you can still browse the archive index, which is annotated. (permalink)

ADMIN: Newsreader Support Enabled
If you're one of the digerati who uses news readers (RSS or Atom), I believe that the site now supports those. (permalink)

ADMIN: Please Update Your Links
Thanks to all who have put the PolicyGuy site on your blog roll. Please update the list to reflect this new location. Simply put, we're still powered by Blogger, but have left blogspot for other quarters. For now, the change is more of a behind-the-scenes kind of thing. (permalink)

Welcome to the new site of Policyguy! We have moved to our own domain. Most things work now, but please report any broken links! (permalink)

Choice for This But Not for That
Hand-wringing over so-called suburban sprawl is not just a U.S. phenomenon. It's also the latest social experiment in Canada, country with even more land but fewer people than the U.S. You might think that sprawl would not be an issue there. You'd be wrong.

Brian Lee Crowley, president of the Atlantic Institute for Market Studies in Halifax, Nova Scotia, finds it exasperating that choice is the watchword of the world today, except when it comes to housing. There, all many of regulators and would-be regulators are determined to make sure that other people live in apartments, townhouses, or houses on smaller lots.

He writes in part:

In a world in which you get your medications without prescription over the Internet, in which you can choose your profession, your mate, your sexual orientation, your reproductive timetable, your music, your religion and your political philosophy, the notion that somebody gets to dictate arbitrarily how big a lot you can have for your house or where you can build, is ludicrous and unnecessary. Yes, make developers and their customers pay the costs of the choices they make and services they consume. That done, there is little reason to second-guess their decisions of where to build and live. (permalink)

The Benefits of School Choice Keep Rolling In
In an editorial today, the WSJ says that "Florida has delivered real school choice to more American schoolchildren than anywhere else in the country."

As the editorial outlines, the state has three different options for families seeking the choice that is readily available for other services (even, with tax dollars, food stamps or college tuition). Opportunity Scholarships are available to students in failing schools. McKay Scholarships go to special-ed students, and corporations can get tax credits for contributing to scholarship funds. (Arizona has a similar program).

For his trouble, Governor Jeb Bush gets to see his policies labeled as "racist" by (who else) Jesse Jackson.

Meanwhile, a foundation established by the man who pioneered the simple yet revolutionary idea of school choice, Milton Friedman, recently issued a report card on the climate for school choice. (Here's a press release, in HTML.)

The report measures student eligibility (who can exercise choice); school eligibility (where can families spend the money) and the purchasing power of their school-of-choice option. The full report of the report, "Ranking Vouchers," is available in PDF from the
Milton and Rose D. Friedman Foundation.

Labels: Education, School choice

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States Can Bar Local Telecom Socialism
The Supreme Court has ruled that states can bar local governments from operating commercial phone systems--telecom socialism if you will.

Missouri cities sued the state after it passed a law prohibiting the practice. They argued that the Telecommunications Act of 1996, with the stated goal of promoting competition, enabled them to operate their own systems in competition with the monopoly local operator SBC.

Except SBC isn't exactly a monopoly anymore. If you want a land line, that is true in many cases. But with the growth of cellular service and cable broadband telephony, that's not as true as it used to be.

In any case, the answer to promoting even more competition in communications lies not in having government enter into a commercial enterprise for which there are commercial operators. That's socialism, and beyond the proper scope of government.

As for rural areas (I suspect many of the parties of the suit were rural cities), well, them's the breaks. Tradtionally, living in less densely populated areas means less choice and service in everything from movie screens and restaurants to retail outlets and physicians. To some extent this is changing. Some of my relatives who live in a lightly populated county now have broadband, practically unheard of anywhere 10 years ago. (permalink)

Michigan Lawmaker Objects to Raising Cigarette Tax
Michigan lawmakers hope to fetch more state revenue by raising the tax on cigarettes. Smokers are easy target, but the chairman of an important committee says he's opposed. Here's hoping they actually use the occasion to consider some advice from the Mackinac Center. More in an entry I posted to the Political State Report. (permalink)

Medicaid Scammers: We Told You So
Governments are keen to prevent the proliferation of schemes--except when one level of government is trying to scheme another.

Recently the Illinois Policy Institute warned against a proposal in the Land of Lincoln to game the Medicaid system (PDF link here). In short, the state taxes hospitals, who pass along the cost, ultimately to people with insurance. In turn, the federal government gives Illinois more Medicaid money, which is then turned over to the hospitals. It's all an attempt to keep the creaky government-run program going, rather than change it fundamentally by using market forces.

Now the federal government is questioning state schemes, in a report carried by the Birmingham (AL) News. Among the practices under question: diverting federal money intended for health care to other purposes. (Wouldn't this be called a case of fraud if a non-profit organization did this?)

Each state has some unique problems with Medicaid, but there are some interesting proposals in Ohio that could be adapted by other states.

Labels: Health care, Medicaid

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To Protect a Few, Make Everyone Pay More. A Lot More.
30 million Americans have hearing loss, and it's the third-leading chronic condition among the elderly. Hearing aids cost an average of $2,200, putting them out of reach for some. Why so expensive? Blame government regulations and private interest.

Hearing aid sales were largely unregulated until the mid-1970s. A U.S. Senate committee found some shysters who sold people some aids that were not working, or inappropriate. The result was the Hearing Aid Rule of 1977. The Rule, a regulation imposed by the FDA, makes the sale of hearing aids conditional on a visit to a doctor (hearing loss is common in aging, five percent of cases stem from a medical problem), or a consultation with a state-licensed hearing-aid dispenser.

The result of the requirements? It costs a lot more to get a hearing aid, since the state-empowered specialists have to spent a lot of money to get certified. Says one specialist recently retired from Harvard: "The technology can be made for hundreds of dollars; the rest is distribution."

And what sweet distribution it is. The requirements have proven to be quite useful to audiologists, who must have at least a master's degree.

Dr. Mead Killion, who holds a patent for circuitry used in most of today's hearing aids. He believes there is a place for the high-priced models, but says that the consultation requirements are inappropriate for most people. A Stanford professor agrees, saying "IF the FDA does not require the public to see a doctor to rule out glaucoma or other diseases before getting reading glasses, why does it do so for hearing aids?"

Killion petitioned the FDA to waives its rule. He argues that warning labels will suffice, and that people are smart enough to make the decision on their own. What's more, he argues, the rule is regressive, pricing the devices out of reach for low-income people. (Left untreated, hearing loss is linked to depression, anxiety, and paranoia.)

For his trouble, Killion has been assaulted by his fellow audiologists. Some ask why he wants to destroy their line of work; one has said he is filled with "money hungry folly." Bear in mind, of course, that these objections come from people whose income benefits not from the freely-made choices of people who wish to consult a professional for a hearing aid fitting, but from a government regulation that effectively creates demand for their services.

Professional self-interest and a desire to regulate every possible transaction that could ever go wrong. What a combination. (permalink)

Family Doctors Prescribe Antipsychotics: More Trouble for Drug Companies?
Three years ago, general physicians, rather than psychiatrists wrote 17 percent of prescriptions for drugs known as atypical antipsychotics. Today it's slightly over 30 percent. Two drug companies encourage the practice by funding educational seminars for doctors, a practice one academic psychiatrist calls "not good medicine." (Wall Street Journal, paid access only)

This brings about the classic dilemma of our health care system, especially its third-party payer orientation: increased treatment of previously treated illnesses is generally a good thing. But who's going to pay for it? (Remember, he who has the gold makes the rules.)

Another question: will this trend bring an overall increase, or decrease to health care spending? There may be some slight decrease in spending on professional visits, if consumers get their scripts from the family MD during a routine visit (rather than make a separate trip to a psychiatrist).

It's also likely that this trend will encourage spending on this class of drugs. This spending may, however, save money down the road if it allows more people to live more economically productive lives or avoid other medical care caused by illness-induced behavior. (permalink)

Tobacco Settlement Money Diverted
The states went after Big Tobacco, claiming they needed more money for health care programs, as well as to discourage smoking. Pardon the pun, but the General Accounting Office has put those claims up in smoke.

As the GAO says in this summary, "The Master Settlement Agreement allows states to use their tobacco settlement payments for any purpose." And "any purpose" is right; over one-third went to general spending purposes in 2003, and that number is expected to reach over one-half in this fiscal year.

The percentage spent on health, meanwhile, is expected to decline from 24 percent to 17 percent for the same two years.

It would seem that the GAO has confirmed the cynicism of critics years ago, who warned that the tobacco raid was simply a plan to get more money, and avoid the hard tasks of doing less with less. (permalink)

California: Insurance Mandate May be Repealed
A new initiative measure to repeal government-dictated health insurance is underway.

Last year, the California Assembly enacted a proposal to require employer-sponsored health insurance for all companies with over 50 employees. (Guess how many businesses with 49 employees will try hard to avoid having to hire that 50th employee?)

Costs of the measure range from $1.5 billion to $11.5 billion, depending on whom you believe. Here's a hint: advocates of increased mandates and programs tend to overstate the benefits and understate the costs of their plans. Naturally, opponents do the opposite, but my money is with them.

Health Care News reported back in January that Governor Schwarznegger will lend his support to terminating the law.

This classic brief from the National Center for National Analysis explains why such a mandate is a job-killer.

Labels: Health care

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Air Quality: It's Getting Better
With traffic congestion a regular topic of complaint in metropolitan areas, it's easy to assume that air quality is getting worse. Wrong.

PIRG (the group started by Ralph Nader) is wrong about many things, including the desirability of automobiles. Their latest report calls on governments to "curtail the growth of vehicle travel," citing pollution concerns.

Joel Schwartz dissects PIRG's report here. My favorite parts: "even with a tripling of driving [since 1970], technological improvements in vehicle emissions control reduced total emissions by 70 percent.... PIRG's fanciful claims not withstanding, technology will continue to win the battle against air pollution without the need to restrict people's travel choices."

Schwartz also takes on PIRG's advocacy of mass transit: "Rather than pursue the "public interest," PIRG seeks to override Americans' preferences."

Labels: Transportation

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Google is Great, but ...
More than a few people could have saved themselves some trouble caused by a con artist had they did more than google him. So says a story in the New York Post, which reports that Shamoon "Sam" Rafiq snared nearly $3 million in ill-gotten gains. People who searched for information on him on Google came up with no dirty laundry. Only when you searched for him with other engines, such as Teoma and All the Web, did you find information that may have raised some red flags. (permalink)

Mass Transit Doesn't Move Me
The Illinois Department of Transportation says that the next stage of transportation improvements in the far western suburbs of Chicago is three to five years away. It expects the area (US 59 to I-39) to double in population by 2030. One of the most sensible steps is one of the mostly hotly contested (by a minority of anti-auto activists): building a new road between I-88 and I-80. (Take a look at a map and you'll see a space just crying out for a road, especially given the population growth in the region.)

Of course, some will want more money on mass transit. But, as the Daily Herald notes, "though the Chicago area has the second highest usage of public transportation in the nation, over 90 percent of traffic is passenger vehicles."

Meanwhile, bus drivers in metropolitan Minnesota are on strike, and have been for over a week. (It's the usual culprit: disputes over pay, including health insurance plans.) The Taxpayers League of Minnesota has run a brief fact sheet/commentary on mass transit during the strike. Some examples:

Low income individuals, for whom transit is often seen as a vital service, make less than 5 percent of their trips by transit.

Mass transit wastes energy. Per-passenger mile, autos are 16 percent more efficient.

How about "social costs" of pollution, noise, and so forth? Cars win again, with a cost of 7 cents per passenger mile. A bus costs 40 cents a mile, and light rail--what captures the most imagination of transit advocates--costs up to $1.09 a mile.

American cities have nowhere near the population density required to make transit cost-effective.

Labels: Health care, Transportation

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Cheap Drugs, Here!
Being on the popular but wrong side of an issue has served Minnesota's governor, Tim Pawlenty, pretty well. A robust proponent of importing price controls (excuse me, prescription drugs) from Canada, Pawlenty has gotten favorable press, including this article carried on the AP wire. Meanwhile, Senator Norm Coleman is attacking the idea of drug importation on safety grounds. Fair enough. But even more important than the short-term danger of buying bogus Vioxx from Venezuela is the threat to the health of pharmaceutical companies, who don't work for free. Gradually imposing price controls, as we have done in various ways (including attempts to help in the illegal importation of drugs) is shaping the incentive structure of the pharmaceutical industry in ways we can't fully understand. But it's not going to be good.

It's issues like this that take me to moments of despair; it's a lot easier to say "Why yes, Mrs. Smith, it's outrageous that your drugs cost $600 a month. Let's do something about it" than to explain the abstract yet real principles of economic incentives that (for the moment) make such wonder drugs possible. (permalink)

Politicians Discover Blogs
Howard Dean's 15 minutes of fame (before the scream) hinged a lot on his use of blogging to attract attention and build a community of supporters. Now state legislators are getting into the act.

A story in Stateline lists several state legislators who are using blogs. But unlike most things hyped on the Internet, their usefulness is limited. At least that's the view of one reporter who got semi-famous for being one of the first newspaper journalists to write these quickly-published web sites.

“Blogs are best when they are chatty and casual and spontaneous,” says Daniel Weintraub, a columnist for the Sacramento Bee. "Politicians are none of the above.” Still, they may be of use to some people. One legislator in Maryland reports "I’ve heard more from constituents on these journals than anything else I’ve done in public life." (permalink)

Word for the Day: Statist Quo
In the previously mentioned article I wrote for OCPA (Oklahoma Council of Public Affairs), the editor changed some of my text from "status quo" to "statist quo." I had not thought of that expression. (It appears to be fairly new; a google search found fewer than 300 uses of the term.) That's why there are editors. (permalink)

Medicaid Expansion: Up in Smoke?
Here's a rule that guides government programs: once it's started, a program will expand in scope beyond all initial promises. Such is the case with government health care programs. States have added to Medicaid by two means: increasing the number of people in the program (by lowing income thresholds and adding new categories of people who qualify) and by increasing the number of services covered over time (chiropractic, etc.)

In Oklahoma, Medicaid has been customized as SoonerCare, and it's a problem with a long history of trouble. Now, the governor, Brad Henry, has proposed raising the state's cigarette tax to bring in new money--and people--into SoonerCare. To his credit (on both policy and political grounds) he has talked of using a chunk of the money to subsidize private-sector insurance plans rather than dump new people into Medicaid.

(Cliche alert). The devil's in the details, and they don't look good. Steve Anderson says that the plan would lead the state down the path of every-increasing costs, supported by an ever-shrinking revenue base. He makes a very smart point that the rate of uninsurance--often quoted as nearly 20 percent--is grossly overstated. Of course, some people without insurance are young and reasonably healthy, and so it's not surprising they choose to forgo insurance. But a more Sooner-specific fact is that nearly 8 percent of the state population qualifies for treatment by Indian Service Units. Take out the Native American population--its percentage of the population is higher in Oklahoma than anywhere else--and the state's uninsured percentage drops below the national average.

Of course, the fact that some people can qualify for a government program isn't necessarily a good thing, a point I make in a companion piece for the Oklahoma Council of Public Affairs. I call for revisions to the tax code, the promotion of Health Savings Accounts, and greater use of vouchers for Medicaid patients.

Labels: Health care, Medicaid

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I Like that Old Time Rock 'n' Roll
You may have missed it, but in Michigan, yesterday was Bob Seger Day. What would we do without government proclamations? (permalink)

Middle Class Says: We Want Our Medicaid
There are many ways in which health care is already socialized in this country. There are, for example, two very large government programs that threaten to consumer the national budget, as well as all state budgets. They are Medicare and Medicaid.

Medicare, which gets all the press, is for people aged 65 and older. Then there's Medicaid, which is for low-income people, as well as some other individuals who fall into certain categories.

It's easy to confuse the two. If you're over 65, Medicare (that is, taxpayers) pays for a lot of your expenses, except if you go into a nursing home for an extended time. If you're going to need that, then Medicaid picks up the tab.

But there's a catch. You have to be poor to get Medicaid benefits. And after a lifetime of working hard, saving, paying off mortgages and accumulating pensions, many people can afford to pay for their nursing home care (at least for a while) by drawing down their assets.

Naturally, this is an unpleasant prospect, both for parents (who would like to have something left over to give heirs) and children (who would appreciate the boost of a tidy inheritance check).
Given current tax laws, we rely on employers to provide health insurance, but there is little incentive to purchase the kind of insurance that would pay for long-term care. Given the fact that Medicaid is out there, there's a strong temptation to think that anyone who pays for his own long-term care is a sucker. A small (and growing) industry has grown up of accountants and lawyers who will help the elderly, and their children, hide assets from the government. It's all an attempt to ensure that taxpayers pay for Mom and Pop's nursing home care rather than the family.

Many states try, with much futility, to stop this practice, with "look back" periods and other techniques. One such technique is "asset recovery," or going after the estates of people after their die, in an attempt to partially repay taxpayers with the proceeds of the estate. Sounds cruel, of course, but the alternative is a financially unsustainable system that breeds a culture of dependency.

The Detroit Free Press reports the incredible news that Michigan is one of two states that do not use "asset recovery." Governor Granholm is hoping to start that up, as a way of getting some revenues to plug an expected budget deficit.

State Sen. Toni Harp, a Democrat, puts the issue this way:

It has become an entitlement. The problem is, we have this huge bubble in the baby boom generation that's growing older . . . I don't know if we, as a country, can continue thinking about this in this way.

She's got that right.

Labels: Health care, Long-term care, Medicaid

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Will government-organized online drug purchases increase drug addiction?
The Daily Herald of suburban Chicago runs an article affirming the ability of the Internet to increase consumer choice and deliver a wider pool of suppliers from which people can make purchases. In this case, the product in question is prescription drugs, often from outside the U.S.

My chief concern with drug importation is its affect on the economics of pharmaceutical research in the U.S. Since Europe, Canada, and just about everyone else imposes price controls on prescription drugs, importation of drugs--especially if done as official policy--threatens the health of research in this country. (The U.S. is almost alone in producing breakthrough drugs these days.)

But the Daily Herald article takes a different angle. Here, they're talking about the potential for drug abuse. When web sites advertise "No prescription needed!," it's easy to see how someone addicted to pain killers, for example, could order bottle after bottle of pills.

"Today's addicts don't fear recognition or being caught in a lie. Gone is the barrier to addiction for the timid or time-pressed," says staff writer Tona Kunz. A member of Pills Anonymous tells Kunz 'Thank God I got sober before [easy access to web-based pill dispensers.]" Given the nature of the activity, it's hard to say just how widespread it is; an official from the Drug Enforcement Agency simply says that it's gaining ground.

That's certainly a problem for the people involved, and perhaps for health care consumers as a whole. But does government bear any responsibility for encouraging this trend? With a bipartisan push for state agencies to allow residents to meet up with foreign-based drug sellers, government is encouraging the public to purchase on-line. By getting people used to the idea of buying drugs anonymously, perhaps it will also indirectly encourage web-based drug abuse.

It's a fanciful theory, and not a very good one at that. But given what passes for logic in political discourse these days, not such a horrible one after all. (permalink)

Cool Cities Aren't So Hot
The latest fad in urban planning and economic development theory is the idea that the creative class is the cultural and economic salvation of cities and states. Michigan's governor, Jennifer Granholm, has embraced the idea under the rubric of "Cool Cities." Among the themes: it's important to attract and retain the under-40 crowd in urban areas, "walkable" communities, attention to the arts as a development tool, and 24/7 entertainment options. In short, Manhattan.

The always-useful Mackinac Center for Public Policy has been cool to the idea, however, arguing that competitive bidding for city services, cutting back on the weeds of the regulatory state, and increasing educational choice would do more to improve the attractiveness of the urban core.

Now, the Boston Globe introduces the entrepreneur-cum-author of the notion, Richard Florida, as well as critics from the left and right. A leftist magazine, for example, says that the idea "reads like satire." The author of that article, Paul Maliszewski, likens Florida's recommendations to class-based urban renewal. Over on the right, a writer for a group based in the place that serves as a putative model--the Manhattan Institute--criticizes it as "plain wrong."

Sigh. It's so much easier to be flashy and come up with "paradigm-shifting" fads than address the entrenched obstacles to improved urban life, such as teachers unions and a culture of corruption.

Labels: Cool cities fad

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Vouchers Save Money
A common complaint against vouchers for K-12 education is that they will "drain money from public schools." (Odd, I never hear that for Pell Grants and other scholarships that are available to students in private as well as public universities.)

The Flint Hills Center for Public Policy points out, however, that a voucher plan can actually benefit the finances of government owned-and-operated schools.

Labels: Education

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Missouri to Consider TABOR
Missouri is the latest state to consider a constitutional amendment to slow the growth of government spending. Like recent efforts in Minnesota and Wisconsin, it is modeled (but does not necessarily replicate) Colorado's measure called the Taxpayers Bill of Rights. TABOR, as the measure is sometimes called, restricts the growth in government tax collections to that required to cover the previous year's collections, plus adds on some extra to account for increased population (people demanding government services) and inflation.

The Missouri proposal would limit spending from the general fund.

The state already has the Hancock Amendment, which limits growth in state government revenue to personal income growth. But that's a rather generous standard, one that has been gutted by courts and the legislature. If this new measure had been in place, taxpayers would have enjoyed refunds of $1.8 billion since 1994. Click here to look at the bill's status and text, courtesy of the state assembly's web site.

The Colorado-based Independence Institute offers this analysis of TABOR and other tax and expenditure limitations.

Thanks to Greg Blankenship's A New Can of Worms for the tip. (permalink)

Health Care Policy: Don't Make More of the Same Mistakes
The Illinois Policy Institute has come out with a new report on what's wrong with health care policy in the Land of Lincoln, and indeed, much of the country. (It's in PDF format, available here.)

Among the most interesting arguments: the biggest problem with health insurance is not the number of insured. In fact, says Randy Pozdena, the report's author, "Americans with health insurance have too much of it."

Also useful: a brief history of how payment for health care has changed over time.

If you think more government involvement in health care is a good thing, remember, our problems stem in large part from increasingly relying on bureaucracies (public and private) for health care.

Labels: Health care

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Repealing the Laws of Economics
The more I read about off-shoring, outsourcing, hand-wringing about changes brought by Wal-Mart, the more I think that Virginia Postrel was right when she argued that the most significant political conflicts will be between those who wish to freeze culture, commerce, and life in general at a given time, and those who are willing, and even eager, to respond to change. (I have serious reservations with some of her work but that's another day.)

If the cover stories of a leading business magazine are any indication, there's a lot of anxiety about the future. Fast Company, one of the cheerleaders of the New Economy during the dot-com bubble, should now be re-labeled "Slow Company," for its embrace of economic principles that resist change. Its December 2003 cover story, "The Wal-Mart You Don't Know" gave comfort to advocates of a mythical past when everyone loved Mom and Pop stores (with high prices and little selection).

Now, the April cover abandons economic logic altogether and goes right or the ethic of pathos: "Look into their eyes," reads the headline, mixed in with over two dozen photo of "people [who] lost high-tech jobs to low-wage countries." Further, it dares the cold, rational soulless economist to "try telling them that offshoring is a good thing in the long run."

OK, so mass-market publications are by nature sensationalistic. Still, it's a troubling sign. On the other hand, we survived the despair that accompanied the end of the horse-and-buggy industry as well as steamboat shipping.

As a friend of mine, a doctoral student in history, put it, "If there's anything I've learned from the study of history, it's this: throughout human history, each generation is convinced that the world is going to hell in a handbasket."

And yet thanks to our God-given creativity, we somehow manage to press on, alternately improving and coarsening the human condition. (permalink)

Bring Voter Referenda to Pennsylvania
File this next item under "I never knew that ..."

In every state in which I have lived, when K-12 school administrators want more money beyond that increase available under the current tax system, they've got to ask the voters for it. I thought that was the pattern everywhere, a sensible way of promoting fiscal responsibility and making sure that government serves the public, not itself.

Not so in Pennsylvania, writes Byron Munday, a member of the Southeast Delco School District, who supports legislation to require voter approval for all tax increases used to operate government-operated schools.

Munday says that it's no surprise that when adjusted for different cost of living numbers, Pennsylvania spends more money on teachers than anywhere else. (Want to be that its schools are not the best?) He argues "voter referendum will actually assist school boards in negotiating contracts that are reasonable and bearable for taxpayers." That's got to be one reason why teacher unions are hostile to the idea. In a go-along-to-get along attitude, the state's school board association is working hand-in-hand with the unions.

(Here are his comments, in PDF format.)

Labels: Education

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School Vouchers are Constitutional
One of the strongest arguments against school vouchers for K-12 education (a policy choice not too different from state and federal financial aid for college students) is the "separation of church and state" argument.

That argument has been dismissed in several high-level cases. In 1998, Wisconsin's highest court used Jackson v. Benson, to uphold the Badger State's school voucher program. (The Supreme Court did not grant an appeal to the program's opponents.)

In 1999, the Arizona Supreme Court upheld that state's tuition scholarship program, in
Kotterman v. Killian.

In 2002, the U.S. Supreme Court upheld Cleveland's program in Zelman v. Simmons-Harris.

In all three cases, the legal objection was that taxpayer dollars were flowing inappropriately to religiously based schools.

But as lawyer and voucher advocate Clint Bolick argues for the Goldwater Institute, such programs are not designed to benefit religious schools. Rather, they are designed to benefit children's education, and as such, are permissible. Here's a link to the Goldwater document, which responds in large measure to a constitutional prohibition in Arizona and other states (a so-called Blaine Amendment) against vouchers.

Labels: Education, School choice

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When they pry that coffee cup from my cold, dead fingers
First it was prohibition (subsequently repealed). Later came big tobacco. And big food, with McDonalds, under public pressure, announcing that you won't be able to supersize your orders anymore.

Now government officials (perhaps with trial lawyers not far behind) are after a new target: Big Joe.

Mike Johanns, governor of Nebraska, isn't content with overseeing that state's multi-billion dollar budget and thousands of employees. No, he wants to serve as chief .... uhm, advocate of caffeine awareness, announcing Caffeine Awareness Month.

This is a great illustration of the perils of public health programs. Like any government function, they are prone to mission creep. Eradicating communicable diseases is a great thing, and compared with some third world countries, the U.S. has done a great job. That's one lesson that Oklahoma's health commissioner found on his trips to Ghana, Peru, and other countries.

Now he wants the state to encourage "youngsters to eat more fruits and vegetables and consume fewer vending-machine products, such as soda and candy." More fruits and vegetables? Less soda pop? All good ideas. But the emphasis on the consequences of voluntary, relatively benign choices is a far cry from preventing the spread of viruses by providing a clean water supply.

Says the new commissioner, "Our challenge is to maintain what public health accomplished in the last century -- including great strides in infectious disease control, immunizations, and sanitation issues -- while tackling the public health challenges of this century, such as new and re-emerging diseases, bioterrorism and emergency preparedness issues, and"-- [this is the part where the state nags you about your diet] "behavioral health issues." (permalink)

Computers Not a Great Gift to Schools
One of the most useful classes I ever took, in any educational institution, was "personal typing" in the ninth grade. It was a one-semester introduction to the manual typewriter. The most innovative (or so we thought) part of the class was the fact that the teacher played music while we were doing our drills. Oh yes, and we also had to type with a sheet of blank paper over our fingers. That helped me develop into a touch typist (wpm: 70 or so) rather than a practitioner of the hunt-and-peck method.

Since then, I've typed reports, training materials, e-mail, newspaper op-eds, magazine articles, and all sorts of other printed material. Since I have always used a keyboard in my work, you might say that this was the extent of my vocational training.

I have no idea how people learn how to type these days. Last time I checked, there were various software programs available for the purpose.

All of this is a long introduction to a short Q&A with a technology columnist for the Detroit Free Press. Mike Wendland receives an e-mail from a suburban teacher who warns against the widespread adoption of computers in the schools: "Our school district is faced with decreasing funding from the state, and we are having to make choices regarding repairing plumbing or buying books. Computers are not like textbooks that last 20 years. They need to be replaced. It becomes a huge burden to the districts receiving the computers, and a potential financial time bomb for the Michigan educational system."

Now, you may say, computers are important for research purposes. Well, yes, a computer can be very useful for that purpose, especially if it is tied into the world wide web and online databases. But really, what we're talking about here (for students) is learning how to do library research. No need to spend millions of dollars for that. Send the kids to the library, let them take a whirl around the keyboard, and then send them back to class.

Labels: Education

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Guaranteed Issue: Guaranteed to Raise Insurance Premiums
One of my latest publications, from the Maine Public Policy Institute. Click here for the PDF file. (permalink)

Changing the Financing of Higher Education
Now this is exciting. Colorado and South Carolina are considering a form of privatization for state universities. Virginia and Wisconsin may give universities less money, but more autonomy. Washington may turn to specific performance goals, such as graduation rates.

Universities in Colorado are subject to a constitutional amendment, and are thus limited in their abilities to raise tuition. So they're in favor of a proposal that would shift the focus of state subsidies from universities to students. Universities would be free to raise tuition as much as they would like--but then, they would have to find ways to compete for students. Just possibly, this could lead to the end of some superfluous programs and staff; even with a customer base receiving amped-up financial aid packages from the state, universities would have to take some steps to make sure they don't price themselves out of reach of their customers.

The Independence Institute advocated such a switch a few years ago. The link to their policy paper is broken at the moment, but you can read the proposal in these three Acrobat files: part 1, part 2, and part 3. (permalink)

The Morass that is Campaign Finance Reform
Writing for The Weekly Standard, David Tell takes a stab at explaining the current mess of campaign finance reform.

He starts out with two headlines on the same day from two leading newspapers. Says the NY Times: Advocacy Groups Permitted to Use Unlimited Funds . . . Ruling Favors Democrats.

From the Washington Post: FEC Moves to Regulate Groups Opposing Bush

It gets more complicated from there, as Tell deals with the latest in the regulation of "527" groups. If you're so inclined, go read the article. The short of it all, though, is another lesson in the unintended consequences of government policy, as well as hypocrisy in both major parties.

For the latter point, 527s were popular with Republicans when Newt Gingrich ran GOPAC. They're opposed to them now that Democrats are using them, big time. And for the former point, Democrats, who were the major force for the most recent federal restrictions on free speech, now face a ruling from the Federal Elections Commission which implies that some of their favorite 527s are engaging in illegal activity. (permalink)

The Dangers of Expanding Medicaid
Oklahoma's governor, Brad Henry, has proposed raising cigarette taxes and adding up to 200,000 more people to SoonerCare, the state's Medicaid program. Some of those people (or actually, their employers) will receive subsidies to buy private insurance, though it's not clear what the ratio of employer-coverage versus SoonerCare enrollment would be.

Even if you don't live in the Sooner State, the ensuing debate is worth watching if you are interested in health care policy. The Oklahoma Council of Public Affairs has published two viewpoints on the subject. In the March 2004 of Perspective, I give support for superiority of premium supports over increased enrollment in SoonerCare. Even better, though, would be giving refundable tax credits to the uninsured, as well as loosening regulations that drive up the cost of insurance.

Steve Anderson calls the governor's plan "very bad, and details how the cost of Medicaid programs have historically far outstripped initial projections.

Labels: Health care, Medicaid

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Giving Property Owners Protection Against Downzoning
Say you own a parcel of land in anticipation of one day selling it to someone who will develop it into an apartment complex or shopping center. Then the local government comes along and changes the zoning so that the land becomes less valuable, a process called "downzoning."

What happens then?

In many states, you're out of luck. And potentially out of lots of money.

The Arizona-based Goldwater Institute proposes vesting property rights by state law.

"The statute provides that a landowner is guaranteed an exemption from all subsequent zoning changes upon approval of a plat or site plan. If Arizona adopts similar vesting legislation, it should provide that a vested right is established upon the submission of a plat or site plan to the appropriate government entity so long as the plat or site plan conforms to zoning requirements in place at the time of submission. This would allow a landowner to secure vested rights without relying on an act of the municipal government. (permalink)

The Non-Poor You Shall Have Always
Jesus said "the poor you shall have always." A derivative of that saying may be "the non-poor you shall have always--in your state programs for the poor.

Michael Bond writes briefly for the Buckeye Institute about Ohio's Medicaid program, which threatens to consume much of that state's budget.

"As the State struggles to deal with a serious budget problem a reasonable question is why a program for the poor covers far more than the total number of impoverished in the State?"

The answer, he writes, lies in the programs continued expansion of the program beyond its original intent. First, the income level to qualify for the program was increased, so that you didn't have to fall under the federal poverty level. Second, eligibility was not limited so single parents; you simply had to fall within the income guidelines.

Some people consider the expansion of government programs a sign of success--more people, in this case, are getting health coverage. But as Bond points out, it's a less sanguine situation: 50 to 75 percent of new Medicaid enrollees dropped their private insurance coverage. In other words, by design or accident, Medicaid expansion has contributed to the decline of personal health insurance and the rise of bureaucratic, socialized medicine.

Labels: Health care, Medicaid

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