A key free-market principle is that economic freedom and consumer choice should be the basis for economic policies. Mississippi’s House Bill 833 is a bill that goes against these principles by creating a regulation that vehicle manufacturers must use a third-party franchise dealership to sell their cars. The bill recently passed the House and has been referred to the Senate finance committee.
In the wake of innovative technologies, innovative business models have emerged with them. The car industry is no exception. As electric cars are being developed, manufacturers have sought alternative ways to lower costs for consumers. One way that manufacturers accomplish this is by selling their vehicles directly to consumers instead of using the traditional dealership franchise model.
Why has the government gotten involved in auto dealerships in the first place? To better understand the root of this debate, it is helpful to consider the historical background. Instead of selling their cars directly to consumers, manufacturers have historically sold their cars through third-party franchises.
By the middle of the 20th century, the car market had consolidated to only a few manufacturers. Since there were only a few manufacturers, dealers were concerned that manufacturers would leverage their market dominance as a way to force dealers into one-sided franchise contracts. To push back against this, the dealers successfully lobbied for franchise laws that set minimum standards for the contracts between manufacturers and dealers.
Under current law, a car manufacturing subsidiary is not prohibited from obtaining a license to operate a dealership. Some have argued that this violates the franchise laws that govern agreements between manufacturers and franchisees.
However, the original purpose of the franchise laws was to regulate contracts between manufacturers and actual third-party dealers, not to require that all car manufacturers use the franchise model. Suppose a company does not use the franchise model. In that case, it should not be pushed out of the market by laws that are intended for franchise contract regulation.
Should the government decide that because cars have historically been purchased through franchises, that this must be the case indefinitely? Ultimately, the issue boils down to consumer choice. If a consumer decides that they do not want to have a dealership involved in their vehicle purchase, government policy should not force them to.
Some consumers may prefer the dealer franchise experience over purchasing a vehicle straight from the manufacturer. Yet, it is anti-free market policy for the government to force all citizens everywhere in the state to only purchase a vehicle exclusively from franchisees.
Comparable to the issue of mandating car dealership franchises is a consideration of other goods in the market. For instance, imagine if Mississippi required all restaurant chains to operate as a franchise. Chick-Fil-A, Subway, and other franchise restaurants chains would still be options on the table for consumers. Meanwhile, Mississippians could not enjoy a meal from Cracker Barrel, Chipotle, Panda Express, or other non-franchise restaurants.
Thankfully government overreach has not gone that far yet, but House Bill 833 would impose such a rule on car choices. Mississippians could take the car by the drive-through at as many non-franchise restaurants as they pleased. But buy that new electric car from a non-franchise dealer? No indeed not.
Personal preferences and choices are the lifeblood of a free economy, not a system where individuals are forced to comply with heavy-handed government regulations. House Bill 833 is bad for consumers, the free market, and the state of Mississippi. Free people should have the ability to make free choices without a nanny state forcing them to buy certain items in their state through a third party.
To confront Bidenomics inflation and devalued currency, many citizens have invested in precious metals to protect their investments and savings. Despite this, Mississippi imposes a sales tax on precious metals.
Thankfully, Representative Jill Ford has introduced House Bill 426 to remove this tax, and it passed the House of Representatives today. The bill now moves to the Senate for consideration.
To grasp the importance of House Bill 426, it is vital to grasp the current state of affairs regarding precious metal taxation. The citizens of other states can purchase gold as a protection from “the hidden tax of inflation” without getting a sales tax on top of it.
According to analysis produced by the Sound Money Defense League, Mississippi is one of only nine states in the nation that imposes sales tax on bullion. In addition, of the states that impose sales tax on bullion, Mississippi has among the highest state-level sales tax of the nine states that impose sales tax on bullion.
This means that even when compared to the few states that also impose sales tax on precious metals, Mississippi has the least competitive rates. Furthermore, of the four states that neighbor Mississippi, three of them do not charge sales tax on the purchase of bullion. This means that those seeking to purchase precious metals are far better off with Mississippi’s neighbors.
It is easy and accurate for Mississippi leaders to justly point fingers at Washington for the inflation that has eaten away at American savings and investments. Yet, the state of Mississippi is to blame if its citizens are hesitant to exchange the inflating dollar for gold when the gold is 7 percent more expensive just because of a state-level tax.
When Mississippi imposes a sales tax on gold, this can heavily impact the growth potential of gold as a protection against inflation. Consider the following scenario. A Mississippian might have bought $5,000 in gold in 2018 at the average price per ounce of $1,268. This would have given them a tax bill of $350. This would mean that the total investment cost would be $5,350.
If the sales tax was not there, the entire $5,350 could be used to purchase gold. This would mean that in 2021 the $5,350 investment cost would have been worth an average of $7,089 with the sales tax. Without the sales tax, this $5,350 investment cost would be worth $7,569. That $350 sales tax would ultimately cost the taxpayer $480 in gold value. It’s time for Mississippi to repeal this burdensome tax that discourages investment and places a sales tax penalty on those who seek to protect their money from inflation. Hats off to the legislature for working to remove this tax that works against Mississippians seeking to protect their savings and investments with precious metals.
Agricultural regulations can be among the most burdensome regulations in the entire economy. This is especially true for innovative agricultural technologies and business models. Thankfully, Mississippi legislators are leading the charge for a reduction in red tape. Representatives Jansen Owen and Kent McCarty introduced House Bill 1055 to create a pathway for innovators to be exempt from onerous regulations.
It’s no secret that removing regulatory burdens is a catalyst for economic growth, and this bill seeks to accomplish just that in the agricultural sector. In an interview with Mississippi Center for Public Policy, Representative Owen noted: “Reducing regulatory burdens is key to growing our economy. This legislation will make it easier for farmers across Mississippi to earn their living, feed their families, and feed Mississippi’s families.”
According to the Mississippi Department of Agriculture and Commerce (MDAC), the agriculture sector directly or indirectly employs approximately 17 percent of the state workforce. Thousands of agricultural businesses have seen great success in the Magnolia State. Yet, many of the regulations in the state were written in the 1970s and 1980s and do not quite account for the innovative agricultural technologies and business models of the 2020s.
To address this problem, House Bill 1055 gives agricultural innovators the option to be exempt from certain regulations that do not have an effect on health or safety. Known as a “regulatory sandbox,” this regulatory relief model that exempts innovators from unapplicable regulations has seen success in several states and sectors, including financial technology, insurance, blockchain, property technology, and others.
While the complexity of agricultural regulations is immense, the bill establishes a straightforward and business-friendly program within the MDAC for innovators to test their products in the open market. If an individual encounters an agricultural regulation that is not tied to health or safety, they could apply to the innovation program and request an exemption. If the exemption request is not found to be a threat to public health or safety, the innovator’s request would be granted, and they would be permitted to operate under the exemption.
The agricultural innovations that could benefit from such a program are numerous, but these innovations can be easily summarized into two categories: innovative business models and innovative ag-tech. On the one hand, there are innovative business models that don’t quite fit into the current regulatory structure, such as urban agriculture and direct farm-to-consumer sales.
Agricultural technology also carries promise for the use of an agricultural regulatory exemption program. For instance, under current regulation in the state, a pilot’s license would be required in order for a drone operator to use a drone to distribute pesticides on fields. This is because of an outdated provision implemented in the days when planes were the only way to distribute substances via the air. Mississippi has a chance to show that it is open for business, and become a destination for agricultural innovators. Thanks to the forward-thinking of Representatives Owen and McCarty, the state could see the fruits of agricultural innovation grow and expand, without the impediment of excessive government regulations.
The Mississippi Center for Public Policy approves of this legislation and will continue to update you as the 2022 Mississippi Legislative Session continues, and you can keep up with measures by watching our Legislative Tracker.
FOR IMMEDIATE RELEASE
(Jackson, MS): On Thursday, Federal District Court Judge Carlton W. Reeves handed a first-round legal victory to a Jackson physical therapist in his challenge to Mississippi laws that are preventing him from opening up a new home health care business in Jackson. Charles “Butch” Slaughter filed his lawsuit in December 2020, after a 40-year-old moratorium on new home health agencies prevented him from expanding his clinic to offer in-home physical therapy to homebound patients. Even if this ban didn’t exist, he still might not be able to provide in-home services, since his competitors could use Mississippi’s Certificate of Needs (CON) laws to force him to battle them in court over whether the community really needs a new home health agency. The Mississippi Justice Institute, a non-profit, constitutional litigation center and legal arm of the Mississippi Center for Public Policy, is representing Slaughter.
In his order denying the state’s motion to dismiss the suit, Judge Reeves notes that “It is no secret that significant financial interests are at stake when it comes to CON laws.” Judge Reeves explains that “Rent-seeking businesses make a sort-of ‘extra-legal’ contract with politicians: money and votes for the politicians, regulations that ensure a monopoly for the interest group. Meanwhile, consumers lose out. Without the market competition that normally regulates businesses’ behavior, the monopoly can charge otherwise unsustainably high prices for otherwise unsustainably mediocre products.”
“The home health moratorium and CON program are unconstitutional laws designed to protect health care monopolies from competition,” said MJI Director Aaron Rice. “We are thrilled that the court recognized that the government shouldn’t be in the business of reducing access to health care to line the pockets of powerful industry insiders, especially during a global pandemic.”
Slaughter saw a critical need for Mississippi patients to receive care in their homes, especially during the pandemic when many people are seeking alternatives to nursing homes and other care facilities that have been prone to outbreaks. His dream, though, was ended by the state’s moratorium and CON laws, which say that there is no need for new home health agencies in Mississippi, despite the fact that the number of patients seeking home care in the state has at least tripled while the moratorium has been in place. Rather than encouraging new businesses to respond to this increased demand, Mississippi’s laws allow large health care companies to monopolize home health services in the state.
Numerous studies have shown that CON laws do not reduce health costs and can serve as a barrier to patients getting the care they need. In 2004, the Federal Trade Commission and the United States Department of Justice issued a joint report, concluding, “CON programs are not successful in containing health care costs, and that they pose serious anticompetitive risks that usually outweigh their purported economic benefits.”
“No one should be banned from offering safe, cost-effective, and needed health care services just because other businesses don’t want competition,” said MJI volunteer attorney Seth Robbins. “Health care costs are already out of control and these laws only make that worse. Mississippi’s home health moratorium and CON laws are unconstitutional, and we’re looking forward to proving it at trial.”
For media inquiries, please reach out to Stone Clanton, [email protected].
In recent years there has been an increasing call to expand Medicaid in the state of Mississippi, with assurances of “free money” and a boost to the state economy. Despite such rosy pictures, recent events have demonstrated the danger of inviting an increasingly hostile federal government with open arms.
In November 2021, the Centers for Medicare & Medicaid Services (CMS) issued a rule that required staff members of the facilities that participate in Medicaid or Medicare to be vaccinated, with limited religious and medical exceptions. While the mandate was challenged in court, an opinion issued on January 13th, 2022, the United States Supreme Court ruled that the facilities must comply with the CMS vaccine order to continue to receive CMS funding, with the reasoning that Congress had already granted CMS such authority.
The legal doctrines surrounding the challenge to the mandate are outside the scope of this article. But ultimately, the bottom line is that the Mississippi nurses and doctors who have served on the front lines of the pandemic for months will now be subject to the whims of Washington. Instead of making personal choices regarding vaccinations, those in the hospital system have had the decision made for them by federal bureaucrats.
Granted, most of those in the hospital system are already vaccinated. However, the hospital system across the nation is already seeing an exodus of staff as they grapple with long hours, hazardous conditions, and demanding workloads. This has led to a staffing shortage and higher demand. Many hospitals have to pay exponentially higher pay rates just to keep staff in place. This has pushed many hospitals in the nation to the brink of bankruptcy.
The recent requirement from CMS adds to the existing strains. Right from the outset, hospital staff that have made the personal decision to remain unvaccinated will now be subject to discipline and/or termination. But furthermore, even the staff that might already be vaccinated now have clear signals from the federal government that the hospital staff could be subjected to increasingly draconian measures. Instead of waiting for the next round of edicts that might put them on the blacklist, many within the hospital system may simply choose to head for the exit and look for other opportunities. After all, the tyranny that comes for your neighbor today can just as easily come for you tomorrow.
This state of affairs hinges back to the fundamental question before Mississippi when it considers Medicaid expansion. Of course, there are strong arguments against Medicaid expansion from fiscal and policy angles, and such arguments absolutely stand true. But the recent actions CMS shed light on another angle of the issue.
In the case of vaccine mandates for hospital employees, the state is forced to comply against her will. This particular mandate applied to expansion and non-expansion states. However, can the state really complain if it further invites this same federal agency with open arms through Medicaid expansion and freedoms are infringed on some other way at a later date? States that have expanded Medicaid have seen far more federal control than non-expansion states. And naturally, one shouldn’t be surprised. The “power of the purse” is very real, and the more the federal government funds something, the more it controls it No matter the lofty promises of Medicaid expansion, no one can calculate the value of the freedom of Mississippians into a spreadsheet. Even if the federal government made Medicaid expansion seem more enticing, the question of tradeoffs must be asked. At the end of the day, is there any price tag that would justify Mississippi handing over even more control to a federal government on a trajectory that is all but disconnected from the interests of the people of the state? If the price of “free money” from Washington is a reduction in freedom itself, then that is a price tag far too high to pay.
The Mississippi Legislature has recently gaveled back into session, and unfortunately, not all bills are in the best interest of the state. One such bill, House Bill 206 introduced by Representative Robert Johnson, proposes raising the minimum wage to the arbitrary amount of $10.00 an hour. Such a proposal could threaten thousands of jobs and ultimately lead to economic hardship for many.
In order to understand the effect of minimum wage laws on actual wages and employment, it is important to consider the effects that such laws have had in states that raised the mandatory minimum wage. Fundamentally, when the heavy hand of government attempts to arbitrarily determine what employers must pay their employees, the effects can be devastating for employers and their employees.
Mississippi does not currently have a state-mandated minimum wage. Instead, employers in the state are subject to the federal minimum wage of $7.25 an hour. The federal minimum wage has a disproportionately high effect in Mississippi versus other states. This is because the dollar has more purchasing power in Mississippi than in any other state. Furthermore, it is harder for Mississippi businesses to generate a dollar of capital than other states. For instance, the federal hourly wage of $7.25 in Mississippi has the same purchasing power as $8.12 in Utah, where the federal minimum is the standard as well. Despite this, Mississippi is required to follow the same federal minimum wage as Utah.
While the federal minimum wage already has a disproportionate effect on Mississippi, House Bill 206 proposes raising the state minimum wage to $10.00 an hour, $2.75 above the federal standard. Because individual dollars have a high purchasing power in Mississippi and are harder for businesses to earn, such legislation could have an even-higher burden on workers and businesses than what has been seen in other states that have raised the minimum wage.
Consider the state of California. California has raised its minimum wage steadily over the last several years, which has ultimately led to a steady decrease in employment growth for certain industries. For instance, a Harvard Business School study found that a $1 increase in the minimum wage requirement led to a 14 percent increase in the likelihood of the closure of 3-star restaurants in the San Francisco area. Needless to say, when businesses close, it leaves many of the employees without employment at all.
California stands as a cautionary tale, and its minimum wage currently stands at $14 an hour for small businesses with less than 25 employees. The current proposal to raise the minimum wage to $10 in Mississippi might seem to be distant from the $14 wage in California. However, a $10 minimum wage in Mississippi could have the same negative effects as a $14 minimum wage in California. Because the dollar's purchasing power is higher in Mississippi, $10 in Mississippi is the equivalent of $13.30 in California -which is not too far from the damaging $14 minimum wage that has plagued California. Mississippi needs economic expansion, and the state should not handcuff businesses from providing employment. Rather than using the power of government to force businesses to follow arbitrary increases on the minimum wage, the state should reduce heavy-handed taxes and regulations that burden businesses and workers. The free market provides the tools for workers and businesses to grow. Mississippi should let its people work. A key way to do that is to avoid arbitrary minimum wage increases.
Recently, the Cato Institute released their yearly index for personal liberty and economic freedom in the fifty states. Sadly, Mississippi ranked at an underwhelming #40.
“Mississippi is a typical Deep South state in that its economic freedom far outstrips its personal freedom. But the state’s worst dimension is actually fiscal policy,” wrote Cato. The think tank continued, saying Mississippi’s overall tax burden is a bit above average at 10%. Debt is much lower than average, too, but government employment and GDP share are far higher than average – State and local employment is 16.2% of private-sector employment.
Personal liberty in the Magnolia state is described as sub-par, with it imprisoning its population at a rate of 1.5 standard deviations above average and allowing hardly any school freedom. On the economic freedom side, Mississippi’s monopolization of alcohol sales, the lack of statewide cable franchising, strict regulation of health insurance, and certificate of need (CON) laws don’t make things any better.
With it being the end of the year, folks normally begin to create their new year’s resolutions to better themselves, whether that be by learning a new skill or hobby, exercising more, or spending less and saving more. Mississippi should look at its horrendous ranking and aim to better itself in 2022.
The Mississippi Center for Public Policy is looking forward to the new year as we take on many of the challenges laid out in the Cato report, including expanding school freedom through open enrollment and creating multiple charter school authorizing boards, repealing the awful CON laws that plague our healthcare industry, and abolishing the income tax. We believe that doing these things will, of course, make Mississippi freer. It will also, though, ultimately make Mississippi more prosperous and a happier place to live, work, and raise a family.
We talk more about this in our 2022 Freedom Agenda, which you may read HERE.
In just a few days, a new legislative session will begin. Our state representatives and senators will be considering a range of bills that could have a major impact on our lives.
While some entrenched interests fight to protect their own industries and pocketbooks, our aim is quite the opposite. We seek to defend and expand freedom and ensure that the rights and liberties of each Mississippian are defended under the dome of our capitol building.
Recognizing this, we are launching a coordinated strategic press to advance a range of policies that we believe will empower free markets and free people in our state.
Here’s a look into what we’ll be fighting for this session:
Bills to Combat Critical Race Theory:
1. Combat Critical Race Theory
Having published a paper highlighting how Critical Race Theory is being advanced in our state, we are supporting legislative efforts to ensure that no public money be spent to promote this divisive ideology.
2. Promote Academic Transparency
A key way to combat the presence of toxic ideologies in the classroom is to require schools to publish details of what is actually being taught to our young Mississippians. We support legislative efforts to do exactly that.
Bills to Extend Economic Liberty:
3. State Income Tax Abolition
A number of Southern states like Texas, Florida, and Tennessee have already eliminated or are working to eliminate the state income tax. This policy proposal may be the best way to bolster the Mississippi economy and make us more competitive in the region.
4. Red Tape Reduction
Mississippi is burdened by far too many boards, commissions, and states agencies that are constantly pushing new regulations onto the people. Big businesses can navigate this minefield of market obstacles, but small businesses and entrepreneurs are often stifled. We want to mandate a significant scaling back of the existing regulatory landscape.
Bills to Improve Education:
5. Open Enrollment in Education
To improve public schools in Mississippi, we need to give moms and dads more control. We seek to allow parents who are dissatisfied with their current school systems, the ability to send their child, and their tax dollars, to a different school of their choice.
6. Cap School Board Administrative Costs
Too much of our education budget is spent on administrative costs and bureaucratic salaries. We support efforts to ensure that more money goes into the classroom instead.
7. Establish Multiple Charter School Authorizers
Charter schools are meant to offer families a better future for their kids. But a decade since they were allowed to be authorized in Mississippi, there are still far too few of them. We want to streamline the authorization process and encourage the expansion of education freedom.
8. Free Speech on Campus
We need to protect freedom of speech for college students on our state campuses. We want to ensure that peaceful assembly, protests, lectures, petitions, and literature distribution will be allowed.
Bills to Improve Healthcare Provision:
9. Repeal Certificate of Need
Mississippi has some of the worst health outcomes in America. One reason for this is that we have some of the most severe restrictions on the expansion and creation of healthcare facilities. Certificate of Need (CON) laws mean that no new health care provider can come along and offer services without the express permission of competitors. This makes as much sense as allowing a Pizza Hut to block the building of a Papa John’s because of the potential for competition. We aim to get rid of this incredibly outdated policy.
10. Repeal of Moratorium on Home Health Agencies
With more folks than ever seeking to get medical care from the comfort of their own homes, we support legislation that would make it easier to offer medical access directly. Our system currently makes this almost impossible.
Bills to Encourage Technology & Innovation:
11. Agricultural Incubator
A major portion of Mississippi’s economy is comprised of agriculture. We would like to empower innovators and small businesses to bring new technology to market with reduced regulatory burdens that could allow for Mississippi to become the nation’s leader in the field.
12. Reduce Barriers to Telemedicine/Telepharmacy
In an age of unprecedented integration between digital technology and daily life, we believe that Mississippians should be allowed to access their healthcare systems and doctors using modern devices.
Thanks to inflation and other factors, gas prices have been on the rise over the last several months. In Mississippi and other Gulf Coast states, the gas prices have been traditionally lower than in other parts of the country. Nevertheless, the price rose in November up to about $3.05 per gallon. This puts gas prices on track to be the highest holiday prices in nearly ten years.
Gas prices play a significant factor for people seeking to travel during the holidays. It also places a burden on farmers and those dependent on machinery for a living during the regular seasons. Gas prices play a significant part in the United States economy, which is why government policymakers have to make it a top priority when considering the issues they face with inflation.
When considering this issue, one may wonder how the price of gas fluctuates so much over time. Only a couple of years ago, during the Trump administration, the gas prices had dropped to under $3, sometimes under $2. Now, it has skyrocketed to a record-high in some parts of the country. How can there be such a difference?
According to the U.S. Energy Information Administration, gas prices fluctuate based on four different factors: the cost of crude oil, refining costs and profits, federal and state taxes, and distribution/marketing costs. The “weight” of those factors also changes over time. Compared to the average price in the last ten years, federal and state taxes, for example, make up a much higher role in gas prices in 2021. In fact, the percentage of the gas price comprised of federal and state taxes rose from 16 percent to 22 percent.
Robert Rapier of Forbes seems to suggest that the biggest factors contributing to the price of gas are outside of the government’s control, such as the international price for crude oil, limitations on refining, and the seasonal element of supply and demand. While these certainly can be contributing factors, the analysis avoids the ultimate issue that government administrations have a significant ability to change the prices of gas, based upon their policies.
Elizabeth Warren recently blamed the issue of gas price inflation on corporate greed. The reality is that a system of highly complicated factors influences the price of gas. No one company is going to be able to raise the prices singlehandedly. Rather, free-market principles of supply and demand promote the true prices that gas is worth. The problem is when other factors step into the picture and negatively influence the natural price of gas. Such factors can include international markets, supply chain issues from bad government pandemic restrictions, and government policies heavily regulating the energy sector, as Brad Polumbo with the Foundation for Economic Education has noted.
The rapid increase in gas prices can ultimately be attributed to a rapid transition in government policy. Biden represents this transition from the Trump administration, saying that America does not need to boost its domestic production of oil and gas. Unfortunately, the outcome of this kind of transition can only mean an increase in prices. Thus, while some attempt to explain away the rapid rise of gas by blaming external factors that are outside of the government’s control, such discussions are merely a smokescreen to cover the root causes.
What then should be done in Mississippi? Mississippi has an opportunity to lead the charge in this area. State taxes and regulations play an additional factor in the price of gas that only compounds the problem into a much greater issue. Counteracting the federal government’s role in the price of gas would greatly help manage the inflation that is so rampant throughout the United States -even during the holidays.