Florida fight shows how ridiculous many regulations are
Florida is one of just a handful of states that require a state license to become an interior designer. The law requires six years of education and hundreds of dollars being paid to the state.
But the law provides no public benefit and lawmakers are trying to repeal it. However, the people who benefit from teaching those mandated classes and the practitioners who benefit from locking out their competition are not happy. In fact, 90 people showed up to argue the state should keep the regulations.
Amazingly, supporters of this anticompetitive regulation argue that eliminating the license will lead to more fires and even deaths. Yes, seriously. The Tampa Bay Times reports:
"Buildings do not burn. Interiors do," Gail Griffin, a professor at Miami Dade College's School of Architecture and Interior Design, told the House Appropriations Committee on Wednesday.
She scolded the panel for their ignorance.
"Do you know the color schemes that affect your salivation, your autonomic nervous system?" she said. "You don't even have correct seating. And somebody chose that for you."
Others highlighted the potential for bad design to result in materials being used for weapons in prisons, flooring that causes falls and fabrics that lead to death.
"Part of my job is to ensure the finishes that I select cannot be made into weapons," Terra Sherlock, a licensed interior designer from Tallahassee, told lawmakers. "We do that in jails, and we do that in schools."
A couple of weeks ago, Tampa interior designer Michelle Earley told the House Business and Consumer Affairs Subcommittee that her expertise means she knows to avoid fabrics that contribute to the spread of hospital-acquired infections.
"By not allowing interior designers to be specialists and focus on the things they do, what you're basically doing is contributing to 88,000 deaths every year," she said.
Like many arguments against repealing licensing laws for occupations that do not have a clear connection to public health, these arguments, on their face, seem absurd. If consumers want to hire an interior designer who has endured six years of training and paid some agency to certify his or her skills, they are free to do so. But if they don’t want to, they shouldn’t have to. There’s no empirical evidence that there are more interior design-related fires or deaths in states that choose not to artificially protect this occupation from competition (which is most states).
Michigan beat back a 2009 law that would have mandated an interior design license and repealed its registry in 2013. There’s no evidence that Michiganders are more at risk of fires and death despite there being no mandated interior design license here as there is in Florida.
Michigan likely to join 16 states with uniformity laws
Michigan may be on its way to joining 16 states with a “uniformity” law that would stop a patchwork of local taxes on plastic and paper bag use. Michigan Senate Bill 853 was sent to Governor Snyder December 8 for his signature. If he signs it then Washtenaw County will be prohibited from enforcing a 10-cent fee it is poised to impose on each bag given at restaurants or store checkout lanes. Other counties, such as Muskegon County, are looking to follow suit.
While the arguments in favor of the fees may have been fueled by noble intentions, penalizing consumers and business is not the best way to promote sensitivity toward the environment.
A patchwork of local taxes could catch consumers without reusable bags off-guard. Of those who are aware of the fees, some may choose stores in areas without them. But consumers with no transportation, likely those with low-incomes, would be stuck. Businesses, too, would be hurt. Not only might they risk losing customers to fee-free areas, but they face having to absorb costs their competitors in other parts of the state would not.
Voluntary cooperation is the best way to meaningfully change societal behavior. Even where bag fees or bans are not in place, consumers already willingly choose to use reusable bags. And a lot of people already reuse plastic bags too. There is no reason to believe this practice won’t continue to grow. More often than not, coercive measures, such as bag fees, create negative unintended consequences that mitigate the potential good the rule meant to achieve in the first place.
School district leaders reportedly threatened
A recent Lansing spat suggests that some school bureaucracies are inextricably bound together in a type of forced marriage. Unforeseen tensions bubbled to the surface at the Capitol last week while the Legislature considered a bill that would allow local school districts to stop receiving services from an intermediate school district.
As reported by MIRS News, Sen. Rick Jones, R-Grand Ledge, claimed that local school districts backed away from testifying in favor of SB 553, which he sponsored, after facing threats of financial retaliation from their ISD. Jones made the claim in front of the Senate Education Committee on Dec. 6.
The bill would allow school boards to “in-house” services previously delivered by their local ISD. ISDs typically levy taxes for special education and vocational education programs that they administer, and receive federal and state funding for them as well. School districts in many other states operate without this extra layer of support and the inevitable bureaucracy that comes along with it.
Under Jones’ proposal, a school district voting for independence would receive 90 percent of the ISD’s state and federal funds directly. The local district would also receive 80 percent of the tax revenue the ISD collects within the local district’s borders. The ISD would retain 10 percent of all dollars it receives from the seceding district, either from its own levy or from federal and state funds. Also, it would have to refund 10 percent of the taxes it levies from taxpayers in the district.
Taxpayers spend about $2.6 billion on ISDs each year. Nearly half of ISD revenues come from local tax collections, while state dollars make up 30 percent and federal dollars most of the rest.
The groups that represent local school districts and ISD administrators sent their leaders to testify against the legislation, saying that there’s no feasible way to redirect federal special education dollars. They also complained that giving local school boards greater freedom might harm smaller districts that more heavily rely on ISD services. Taking away most of the funds collected through one district, they said, would “greatly decrease or eliminate” an ISD’s capacity to serve the remaining students in their charge.
But legislative fiscal analysts concluded that it’s “impossible to accurately estimate” the statewide fiscal impact of SB 553. By no longer consolidating some administrative services, a local district might have to pay more, but an ISD might also gain efficiency “through increased motivation due to threat of districts’ ceasing to participate.”
And ISDs need to become more efficient. The long-term trend of a hiring spree among ISDs continues. According to the U.S. Department of Education’s National Center for Education Statistics, since 1993, the number of full-time ISD staff in Michigan has grown by 80 percent, from about 9,300 to 16,700. Over that same time frame, statewide student enrollment has fallen 4 percent, from 1.6 to 1.54 million. There used to be one ISD staffer for every 173 students in Michigan — now there’s one for every 92.
While ISD officials might truly be concerned with the impact of this legislation on smaller districts, it’s odd that they’d be so opposed that they threaten local district officials for speaking out. After all, on its face, this bill should be a boon for ISDs. If a district withdrew, the ISD would keep a portion of the money and not have to provide that district with services. It could then presumably focus on better serving the remaining districts.
Finally, a strong case can be made that local school boards should have the authority to say “thanks, but, no thanks” to ISDs. After all, local districts, at an ever-increasing rate, contract out for all kinds of services for students. Why should they be stuck with just one vendor for certain services?
Cotter and Chatfield hold the line on cronyism
When the state’s big business, media and government establishments all clamor for huge new taxpayer-funded giveaways to well-connected firms and developers, the path of least resistance for state legislators is go along to get along.
Examples are commonplace: A since-repealed state program that gave nearly half a billion dollars to film producers was opposed by exactly one legislator when it was approved in 2008. Scores of similar giveaways have been authorized by the Michigan Legislature in the past decade, many with lopsided and bipartisan support.
So it is worth noting when two influential lawmakers respond to the idea of more giveaways with, “Not on my watch!”
In the current lame-duck legislative session, House Speaker Kevin Cotter, R-Mount Pleasant, and House Local Government Committee Chair Lee Chatfield, R-Levering, have earned the gratitude of Michigan families and small business owners for taking just that stand. Thanks to their backbone, schemes were halted in the past week that would have handed hundreds of millions of dollars annually to large companies in the state, and tens of millions more to large developers.
While taxpayer-paid gifts are promoted as job programs, the record shows they are much better at creating press releases about jobs than actual jobs. They also invite corruption, and they don’t justify their costs.
Indeed, it is almost ironic that new taxpayer giveaways are being considered just when Michigan’s economy is showing it doesn’t need such artificial respiration: The state had the fastest-growing economy in the Midwest during the second quarter of this year, according to the most recent figures available.
Cotter emphasized those gains in a statement rejecting new handouts for developers:
"Over the past six years, we have made great strides improving Michigan's economy and creating a system where the best businesses can compete and win on a level playing field, instead of relying on the state to pick winners and losers. And it worked. This new way of doing business has resulted in hundreds of thousands of new jobs, higher incomes, and unemployment that is now better than the nation as a whole. Dan Gilbert has done great things for Detroit, and he has shown that he is a competitor and a winner. If he can't make a deal work without state aid, then it is not a deal worth doing, and Michigan taxpayers should not be forced to invest."
Chatfield told Gongwer News Service about these bills: “I didn’t feel like it was the best direction for our state to take.” He’s right.
Thank you, Reps. Cotter and Chatfield and the other legislators who recognize that creating a fair field with no special favors is the best way to bring jobs to Michigan.
West Michigan Policy Forum holds panel discussion on pensions
Throughout Michigan, local governments are trying to come to terms with a ticking time bomb: the underfunded plans for their employee retirement benefits. Over the years, government employers failed to set money aside to pay for these benefits and now the plans are hundreds of millions of dollars in arrears. The longer local governments fail to address the problem, the bigger the bill gets. And this problem can develop quickly.
The city of Port Huron is a good example. James Freed, the city manager who came on board two years ago, notes that in 2001 the city's pension fund was overfunded. This year, it's $150 million in the hole. For the most part, the problem came because officials failed to make adequate contributions over the years, relying too much on overly optimistic assumptions about the fund’s health.
In Norton Shores, the city's pension problems went mostly ignored until a private citizen who was also a retired financial planner started acting like the Paul Revere of fiscal doom. James Riley was startled when he read a Mackinac Center analysis showing that his seemingly stable community ranked sixth from the bottom in pension funding. Worse, the city had set aside less that 5 percent of the $38.1 million it had promised for retiree health care. Combined with pensions, those obligations exceeded $58 million.
Fortunately, some city administrators are seeing the light.
"We have to take responsibility as an organization for what we should have done differently," Grand Traverse County Executive Tom Menzel told the West Michigan Policy Forum in a panel discussion on municipal pensions.
Menzel said that the Michigan Employment Retirement System needs to change its focus from employees, which is required by statute, to employers. He says the current law conflicts with some local government charters with missions to meet the needs of taxpayers. Lawmakers may need to revisit the statute so that local government can address the needs of both taxpayers and employees.
Taking a hard look at investment assumptions is another important step. He criticized the 7.5 percent investment return assumption the system uses to project fund growth, saying it is not realistic. Closer to home, the county’s portfolio lost $491,000 last year and paid out $187,000 in investment and administrative costs to the retirement system.
"I paid them about $200,000 to lose one-half million of my principal. That cannot continue," he said.
At the same panel discussion, Port Huron's Freed pointed out the bill is taking a huge toll on government services and will only get worse. For every dollar the city pays an employee, he said, it has to pay 80 cents for fringe benefits — and more than half of that goes to paying off the city's pension liability.
"Revenue (for government) is stagnant. We have one tool and that is to cut," said Freed.
There are two steps city leaders can take quickly. First, they can close defined-benefit plans to new employees and put them in a 401(k)-style, defined-contribution plan.
"Sooner or later, the problem goes away," said Doug Roberts, state treasurer under former Gov. John Engler, told the audience. During the Engler years, the state closed the retirement system to new state employees.
He remarked that Michigan State University, a very large employer, is paying pensions for only 385 employees because it closed its defined-benefit program to new workers years ago.
The next immediate move should be to end “full-ride” retiree health care plans — which provide retirees the same level of health benefits current employees get — especially if these plans have not been funded responsibly. Unlike pensions, municipalities have no constitutional obligation to honor retiree health care benefits, which can get extremely expensive given that many government employees can retire more than a decade before Medicare subsidies start to pay for some of their care. Few local governments have set aside money for retirement health benefits. Each year, they pay this bill out of their general fund, the same fund that pays for public safety, parks and infrastructure.
"This is a piñata I'd be willing to swing at all day," said Freed. He added that 30 percent of Port Huron employees have contracts written years ago that say they will get exactly the same health care as retirees as they did when they were employed.
Some municipal governments have gotten in front of the problem by offering retirees a stipend for health care and having them shop for their own plans. Another option is to restrict the age at which retirees can start collecting retiree health care benefits if they retire before they are eligible for Medicare.
Union contracts could be a challenge for city reformers, but governments could pave the way by starting to cut benefits for nonunion workers. When union contracts come up for renewal, union negotiators will be hard pressed to say no when other staff members have said yes. Ditto if the issue goes to court.
State legislators can do their part to embolden local governments to fix the problem. They can pass legislation that could set limits on the multipliers used to calculate pension benefits and eliminate cost-of-living adjustments. State lawmakers could also ban so-called pension spiking arrangements in which employees exploit overtime pay provisions to boost salaries right before retirement.
"State regulation is needed because it is hard for local politicians not to cave to employee demands. Just take it off the negotiating table," said Freed.
Two other solutions, selling bonds to pay off the liabilities or raising local taxes, are nonstarters for municipal managers, like Freed.
"It is very difficult to go back to the people and ask for more money because we couldn't manage our house. We need to talk about reform and restructure. We are competing with other states. No one will come here with high taxes," said Freed.
Grand Traverse County's Menzel concurred.
"Grand Traverse County attracts many retirees. If we have to move to an emergency manager, our brand will be negatively impacted. People will leave and they won't move here," he said.
As local governments can attest, spreading the debt out over the future is no longer a sensible strategy. The future is here, and these issues need to be addressed now.
Speed limits, corporate subsidies, ‘photo-cop,’ Israel and more
House Bill 4423, Increase speed limits: Passed 28 to 8 in the Senate
To increase speed limits on rural freeways to 75 mph where engineering studies and traffic patterns indicate this is safe. General speed limits elsewhere would be 70 mph on other freeways, 65 mph on state trunkline highways with light traffic, 55 mph on county roads, and 55 mph on unpaved roads except in Oakland and Wayne Counties, where they would be 45 mph. The speed limit on subdivision streets would remain at 25 mph.
House Bill 4426, Lower drivers licence points for barely speeding: Passed 35 to 2 in the Senate
To reduce the drivers license points imposed for exceeding speed limits. The bill would prescribe: Four points more than 15 miles per hour over the limit; three points between 10 and 15 mph over; two points for between five and 10 mph over, and one point for less than 5 mph over.
Senate Bill 1163, Give multi-million dollar subsidy to AK Steel owners: Passed 30 to 7 in the Senate
To revise a state business subsidy program in a manner that would allow the current owner of the former River Rouge steel plant (AK Steel) to collect refundable tax credits (which are often paid as cash subsidies). According to the House Fiscal Agency this could result in the state giving tens of millions to the company's owners.
Senate Bill 852, Let Detroit issue automated "photo cop" school bus tickets: Passed 34 to 3 in the Senate
To allow the Detroit public school district to contract with a private vendor to install and operate an automated traffic citation system to ticket motorists who illegally pass a stopped school bus, based on images collected by cameras attached to school buses. Fines would start at $300, rising to $1,000 for a third offense, and the money would go to the Detroit public school district (less the amount collected by the private vendor).
House Bill 5484, Authorize “hunters pink” alongside “hunter’s orange" for safety: Passed 36 to 1 in the Senate
To revise the law that requires hunters in the field to wear some high-visibility “hunters orange” apparel for safety purposes. The bill would also permit “hunters pink” as an alternative, and possibly other colors, but only if the state Natural Resources Commission determined a color is effective at enhancing safety.
Senate Bill 332, Reduce minor-in-possession of alcohol sanctions: Passed 105 to 1 in the House
To remove the misdemeanor penalties for a first violation of the minor-in-possession of alcohol law, but not on second or third violation, which carry potential 30 and 60 day jail sentences. First-time offenders would instead be subject to a $100 civil fine. The bill also revises certain permissible police actions such as requiring a minor to take a chemical breath test. Senate Bill 333 also removes drivers license suspension as a first-offense sanction.
House Bill 5821, Ban state contracts with entities boycotting Israel or other trade partner: Passed 99 to 8 in the House
To prohibit the state from contracting for products or services from a person, company, agency or other entity that boycotts a "strategic partner" (like Israel), unless it is done in a non-discriminatory manner and based on "bona fide business or economic reasons."
Who Voted "Yes" and Who Voted "No"
Senate Bill 291, Authorize wrongful imprisonment compensation: Passed 104 to 2 in the House
To authorize payment by the state of civil damages to a person wrongfully imprisoned for a crime he or she did not commit. The damages would be $50,000 for each year of wrongful imprisonment.
Who Voted "Yes" and Who Voted "No"
Senate Bill 510, Restrict commercial use of student data: Passed 83 to 23 in the House
To prohibit websites or apps designed for K–12 school purposes to sell, share or use for targeted advertising any information in a student’s educational record.
Who Voted "Yes" and Who Voted "No"
House Bill 6066, Require voters with no ID to prove identity within 10 days: Passed 57 to 50 in the House
To require a person who does not have a photo identification card when voting to verify their identification with local election clerks within 10 days or the vote will not be counted. Related bills facilitate poor individuals obtaining free IDs and necessary documentation.
Who Voted "Yes" and Who Voted "No"
House Bill 4643, Establish legal recourse for target of illegal union picket: Passed 57 to 50 in the House
To revise a law that makes it illegal to picket a business for purposes of blocking access to individuals doing or seeking work there. The bill would allow an employer to ask for a court injunction to stop the picketing, and a union that disobeyed the injunction could be fined $10,000 per day, and $1,000 for individuals.
Who Voted "Yes" and Who Voted "No"
SOURCE: MichiganVotes.org, a free, non-partisan website created by the Mackinac Center for Public Policy, providing concise, non-partisan, plain-English descriptions of every bill and vote in the Michigan House and Senate. Please visit http://www.MichiganVotes.org.
The trouble with doubling down on anti-DeVos criticism
In a recent New York Times op-ed, economics professor and Brookings Institution fellow Douglas Harris declared that Secretary of Education-Designate Betsy DeVos “devised Detroit’s [charter] system to run like the Wild West.” He interpreted the best available research on Detroit charters to say they “performed at about the same dismal level as [the city’s] traditional public schools.”
Critics, including the Manhattan Institute’s Max Eden, sharply challenged the claim. The 2015 CREDO study actually cites Detroit as one of four urban charter sectors that “provide essential examples of school-level and system-level commitments to quality that can serve as models to other communities.”
Impelled to respond to the criticism, Harris revised and extended his remarks. He conceded in the second piece that, according to the 2015 CREDO study, Detroit charters “do look somewhat better than the comparison traditional public schools.” He then sought to explain why the empirically tested finding should not be trusted.
The University of Arkansas’s Dr. Jay Greene wasted little time in thoroughly exposing most of the assumptions in Harris’s follow-up piece. But a couple points deserve further elaboration.
First, not only does Harris speculate Detroit charters “cherry-pick” the best students from the local district with no evidence, but that speculation assumes charters are willingly breaking the law. No Michigan charter is allowed to “discriminate in its pupil admissions policies or practices on the basis of intellectual or athletic ability, measures of achievement or aptitude.” Meanwhile, traditional schools in Detroit can and do: four DPS schools have selective admissions based on academic ability.
Second, Harris suggests that not operating under a proposed system that would have given city leaders the power to restrict choice means Detroit charters operate without accountability. In fact, the legislative package that accompanied bailout dollars to Detroit requires the adoption of an A-to-F school grading system, national accreditation for authorizers to open charter schools in the city and more stringent closure guidelines for failing charter schools.
In terms of raw scores, too many students in the Motor City still lag behind. But CREDO’s measures show that enrolling in a charter school on average yields two to three months of extra learning in math and reading. By the time Detroit school district leaders expect to see any academic progress, a student who opts to enroll in just an average-performing charter today should expect to be years ahead of their peers by the time they’re ready to graduate.
Forthcoming publications from the University of Michigan’s Charter School Research Project may shed further light on the results of educational choice in the city. But for now, the current evidence gives every reason to believe that charter schools provide a net benefit for children and families in Detroit.
‘TIF on steroids’ legislation dead for now
As Michigan continues to recover economically, a Michigan House committee rejected bills that would have taken us back to the “lost decade” way of doing business.
Legislation that would give private developers taxpayer cash died in Lansing today. Senate bills 1061 through 1065, which had passed the Senate, found opposition in the House Local Government Committee. While it is common practice to resurrect lame-duck legislation in a new year, these bills should remain buried.
The reasons are multiple. These bills are unfair to those who are not lucky enough to obtain such a deal and are ineffective as economic growth generators. They also take revenue that might be put to better use somewhere else in government and make it harder to roll back taxes for everyone who is not part of the favored few. Members of the House were clearly unimpressed with the legislation.
The bills were designed to mimic Tax Increment Financing (TIF) programs that traditionally have allowed some units of government to capture new property tax revenues purportedly generated from some new development. That revenue can be used to pay off bonds floated on behalf of a private, for-profit business by, say, a city.
The obvious first use of this law, had it passed, may have been a new soccer stadium and related construction in southeast Michigan. Detroit developers were particularly big backers of the legislation.
Lee Chatfield, chair of the committee, told Gongwer News, “I didn’t feel like it was the best direction for our state to take.”
Fortunately, he wasn’t the only House member to oppose the legislation in what could be a called a ‘profiles in courage’ moment. Speaker Kevin Cotter and other House members did too despite enormous pressure from a non-profit group and well-heeled business interests to vote for the bills.
Chatfield told the Michigan Information Research Service, a Lansing-based newsletter Chatfield believes that “low-tax, low-regulation environment are the tools he would propose to use to attract industry, business and talent to Michigan.”
The bills died on a day of great news about Michigan’s growing economy, underscoring just one reason that such bills are unneeded. The Bureau of Economic Analysis reported that Michigan had the fastest economic growth (as measured by its gross domestic product) of any Midwest state in the second quarter of 2016.
This type of legislation does not necessarily foster economic growth, and academic literature has painted an unflattering portrait of its effectiveness. A 2015 study out of Indiana’s Ball State University, as one example, reported that “TIF districts in Indiana were actually associated with less employment, less taxable income and slightly higher tax rates.”
The deals are also unfair. Those developers not lucky enough to strike such deals are put at a competitive disadvantage. Their own tax dollars, paid on income generated from their unsubsidized investments, are used against them.
The end to this legislation is Christmas come early for most taxpayers and developers alike.
Editor's note: This column was updated with additional comments.
Draining the swamp by creating new ones
President-elect Donald Trump took a victory lap earlier this month after convincing Carrier to keep more than 700 jobs in Indiana instead of moving them to Mexico. Trump’s unique style of braggadocio and tough-sounding talk lends itself to such exercises.
But Trump should beware of making special corporate “incentive” promises lest he trigger a flight to the border by other companies seeking handouts from Washington — or from Lansing and Michigan taxpayers.
A prominent warning came not from a free-market think tank but from the Vermont socialist who nearly captured the 2016 Democratic presidential nomination. Writing about Trump, Sen. Bernie Sanders said, “He has signaled to every corporation in America that they can threaten to offshore jobs in exchange for business-friendly tax benefits and incentives.”
Sanders is right that America will only be great when state and national policies promote a fair field with no special favors for particular firms or industries.
Moreover, while corporate favors from Washington were the focus of news stories, Carrier itself suggested that state taxpayers would be the ones shelling-out. “The incentives offered by the state were an important consideration,” said the company in a statement. A Fortune report suggests Indiana taxpayers are on the hook for $700,000 a year to Carrier.
No governor or legislature wants to see employers leave. But making them want to stay with across-the-board tax and regulatory reforms is hard work, so too many elected officials instead pursue a self-serving shortcut. They leave the hostile business climate in place and just offer taxpayer-funded handouts to bribe a few high-profile companies to stay.
Corporate executives have become skilled at playing the game. Former auto industry executive Lee Iacocca described it this way, as captured in the book “Poletown: Community Betrayed.” Iacocca said, “We would pit Canada versus the U.S. We’d get outright grants and subsidies in Spain, in Mexico, in Brazil — all kinds of grants. ... I have played the states against each other over here.”
Giveaways, whether granted to Iacocca’s employers in decades past or to companies today, rarely get even the minimal media scrutiny Trump’s involvement in the Carrier deal generated. Yet scholars who have examined such programs find they are largely a waste.
The state of Michigan runs a number of such programs before and it may soon create another for well-connected developers including, but not limited to, Dan Gilbert of Quicken Loans.
One set of newly proposed subsidy bills would transfer $250 million a year or more from Michigan families and small businesses in just 15 deals a year.
One old program still costing us money is called the Michigan Economic Growth Authority. Even after being replaced with a different corporate welfare programs in 2011, it is still shelling out hundreds of millions of dollars annually to a handful of corporations granted long-term subsidies.
There is no free lunch: The taxpayers from whom the MEGA loot was taken probably would have generated more economic growth and jobs with those resources than the handful of big players who collected the boodle.
The programs are also expensive to run. The agency in charge of granting those huge MEGA subsidies had 31 individuals on its payroll who collected more than $100,000 a year.
Then there’s what Nobel economist Friedrich Hayek dubbed “the fatal conceit,” that government central planners can accurately pick economic winners. Unlike real investors who put their own money at risk, such officials have no skin in the game and their dismal record shows why that fact matters.
Finally, even an unconventional politician like Trump is not immune to trading short-term political gains for long-term economic damage. The risk is even greater for the younger and less affluent political careerists who populate Michigan’s legislature. Approving handouts to a class of potential employers is an attractive nuisance for term-limited pols with an eye out for post-legislative opportunities.
In contrast — and where socialists like Bernie Sanders are utterly wrong — broad-based supply-side tax cuts and regulatory reform would be a boon for every company, worker and aspiring job-seeker. Trump and state politicians alike will see faster economic growth and development if they just leave everyone alone instead of chasing a few corporations with bags of taxpayer cash.
Uber, Lyft and taxis to play by the same rules
Update: The package of bills has passed the House and Senate.
On December 1, the Michigan Senate passed a package of bills that would dramatically improve the ability of Michiganders to get around.
The package was originally written to provide a statewide regulatory framework for ridesharing companies like Uber and Lyft, which have been operating in Michigan in a legal gray area. Some cities embraced the services, others banned them. The uncertainty has made it difficult for ridesharing companies to expand beyond a handful of areas in Michigan, and has caused major headaches for drivers, who have received tickets for not having commercial licenses.
The latest bills provide not just a solution to this problem, but to another wrinkle the expansion of ridesharing presents: competition with taxis and limousine services. These traditional transportation companies are understandably threatened by the disruptive innovation of Uber and Lyft, but they are right to object to any regulatory advantage state law might have provided ridesharing companies. Because Uber and Lyft are not traditional transportation companies, it doesn’t make sense to force them to operate under the same rules and regulations placed on taxi companies, some of which are onerous and irrelevant to ridesharing.
The bills recently passed by the Michigan Senate address this problem by extending the new rules not just to Uber and Lyft, but to taxis and limousine services as well, significantly lessening their regulatory burden and leveling the playing field.
The House is expected to pass the package, which will provide reasonable standards for insurance, driver qualifications and vehicle inspections. The standards will apply equally to taxi companies, limousine services and ridesharing companies. Perhaps most importantly, the bills apply these rules evenly across the entire state, which means no municipality will have the option to create more burdensome regulations or restrict choice by banning a company altogether.