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It seems as if the folks in Washington don’t have enough to do with taking over the American financial, automobile, and health care industries. The talk now is about creating a new consumer protection agency to “protect … the financial well-being of American consumers.” While this may sound like a good cause, a review of the recently adjourned 81st Texas Legislature raises the question whether government “protection” helps or harms the financial well-being of consumers. The big news this session was what didn’t happen. Politics in the waning days of session killed hundreds of bills. So-called consumer groups bemoaned the loss of many of them, also assigning blame to big business. One advocate crystallized the perspective of these groups when he said that this session amounted to “nibbling around the edges without making any fundamental changes that will really improve the lives of Texas consumers.” The truth of the matter, however, is that consumers fared pretty well this session. And the reason for this is because all the Legislature did was “nibble around the edges.” Continue reading Consumer Protection Usually Doesn’t Live Up to its Name “Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place.” – Frederick Bastiat (The Law; 1850) “Some scholars believe that the spread of democracy, which then put land ownership and wealth in the hands of many, and the Industrial Revolution, which made the mass production of goods possible and spread wealth throughout society, are at the root of the environmental crisis,” and “By destroying paganism, white Christianity helped to exploit nature.” – Environmental Science: Creating a Sustainable Future, a high school textbook published in 2001 by Jones and Bartlett We tend to have lots of discussions about public policy at my office—after all, that is what we do. As part of that dialogue, an intern recently asked: Is government regulation never a good thing? Even if regulations are designed to reduce pollution or cut down on secondhand smoke in restaurants (nominally good goals, although the regulations may be flawed/designed incorrectly), is it always better to allow individuals/corporations to make their own decisions and enjoy or suffer the consequences? Or in the case of unemployment insurance or a more-limited form of welfare, is it better to make individuals responsible for themselves rather than helping them get back up on their feet? My principal exposure to these types of discussions comes from my microeconomics and public finance classes from this past year. The classes emphasized using taxes and subsidies in the case of externalities and other market failures (information asymmetry, natural monopolies, etc.), but I would like to have further discussion on these topics from other perspectives. Here is my response: Your questions are all very good. And all very challenging. In fact, they are at the very heart of what a conservative involved in public policy must come to grips with. I recently mentioned that I do believe that government was given to us by God for a reason, mainly to help us live in freedom. We can’t be free if we can’t own property because someone bigger and stronger than us is always taking it away from us. Or we certainly can’t be free if we are running in fear for our lives. It is not high finance, but short-term lending helps a lot of consumers out of tight places. This session, multiple bills would have significantly reduced or banned short-term lending. Banks and credit unions generally won’t make short-term loans, so people in need of quick access to funds have to turn higher cost alternatives. While critics claim these higher fees harm consumers, many short-term borrowers could have been devastated if the Legislature had banned these loans. The higher fees are necessitated in part by the small size of the loans but also driven by consumer demand. This post was first published by the Texas Public Policy Foundation. The good news about telecom taxes is that they won’t be going up this session. The bad news is that they won’t be going down. Texas has some of the highest telecommunications taxes in the nation. We’ve made progress recently in reducing those taxes, but there is still plenty of room for improvement. Our recent policy perspective, Telecommunications Taxes in Texas, explains where we should go next to reduce these taxes and improve the competitiveness and efficiency of the telecommunications market in Texas. Texas still needs to: reduce not only the local telecommunications franchise tax, but also franchise taxes for electricity, cable and natural gas lines; eliminate sales taxes on telecom manufacturing equipment; change the way property taxes are appraised on many of the legacy telecom providers; and reduce the overall taxes on consumers’’ telephone bills. This post was first published by the Texas Public Policy Foundation. There were numerous attempts this session to reverse the achievements of the last ten years or so that have reduced abuse of Texas’ civil justice system, reduced excessive litigation costs, and increased access to the courts for those who are truly injured. These included: reducing access to workers compensation (the Entergy bill); lessening causation standards in mesothelioma cases; allowing recover of phantom damages in medical cases (paid or incurred); diminishing use of highly effective multi-district litigation panels; and interfering with indemnification agreements. However, none of them passed—making this session a big win for consumers and citizens in need of access to justice through the court system. This post was first published by the Texas Public Policy Foundation. Most of the electricity bills this session had one thing in common—they were going to make electricity more expensive for Texas consumers or taxpayers. Fortunately, most of them didn’t pass. The major bill that did pass provided incentives, i.e. subsidies, for electricity generation plants equipped with carbon capture technology. But it may not wind up costing consumers anything, since the technology for carbon capture is so expensive that even subsidies may not make such a project feasible. Consumers were saved from at least tens of millions of dollars in increased electricity rates when several renewable energy and energy efficiency bills died at the end of session. Though there is talk of including solar subsidies on the call for the upcoming special session—the Center will be releasing a paper on this issue detailing the high cost of solar. This post was first published by the Texas Public Policy Foundation. Eminent Domain reform moved forward for the first time since 2005. HJR 14 will stop local governments from using blight designations to condemn blocks of perfectly good homes and businesses for economic development projects. That is good news—El Paso and other cities may be out of the downtown redevelopment business when it comes to using eminent domain. However, local government opposition weakened public use language in HJR 14, meaning more work needs to be done in 2011. Legislators should push for statutory changes that ban Kelo-style transfers of taken property from one owner to another, further reform blight laws, and end government land speculation by allowing original owners to repurchase any condemned property that hasn’t been used within five years. When it comes to regulatory takings—which probably has a bigger negative impact on the Texas economy—nothing was accomplished. Cities are still free to take property by restricting its use with few limitations. This post was first published by the Texas Public Policy Foundation. The windstorm insurance bill fixed the symptoms without solving the underlying problems with TWIA. General revenue is no longer at risk, but coastal policy holders are still stuck with the most expensive windstorm insurance possible and taxpayers and policyholders statewide will still have to pick up the bill That will especially be true if we get another big storm, since the legislation this session punted how to handle storms with over $2.5 billion of claims to a future Texas Legislature. This post was first published by the Texas Public Policy Foundation. |
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