In this edition of Unlicensed, the MCPP team talks about how we can improve the state's economy.

We have heard a lot of talk in political circles about an Amazon report that many believed showed Mississippi as being the fastest growing state for small and mid-sized business. It sounds great, but this has been grossly exaggerated.

While we are making some gains in business climate rankings, we continue to lag behind our neighbors in the Southeast and most of our competitors in the nation in many categories. There is some encouraging news, but we should not deceive ourselves about the work we have left to do. What does that work look like?

Government regulators have found their newest target: dogs. Specifically, restaurants that allow dogs on their premise, usually on a courtyard, patio, or some other outdoor area.

After the Clarion Ledger ran a story on pet-friendly restaurants in the Jackson metro area, the Mississippi Department of Health fired back saying that is illegal. And that Mississippi code prohibits pets in restaurants, even outdoor areas.

MDH cites the Food and Drug Administration's Food Code model, which is housed in the U.S. Department of Health and Human Services, for the prohibition. That model recommends prohibiting animals in food service establishments, save for service dogs. 

The state doesn't have to follow the FDA model. Indeed, many states have already legalized dogs in restaurants. 

While it may be somewhat tricky to find a formal statistic, there are at least 12 states that explicitly allow dogs to join their owners in restaurants, according to the Animal Legal & Historical Center at Michigan State University. This started with Florida in 2006, and now includes California, Illinois, Maryland, Michigan, Minnesota, New Hampshire, New Mexico, New York, Ohio, Rhode Island, and Tennessee.

These laws generally do two things. They often allow local governments to enact ordinances if they would like and they allow restaurants to choose whether they would like to welcome dogs on their property. 

And with that, consumers can choose to bring their dog to a pet-friendly establishment, just as those who don’t like dogs can opt to go somewhere else. And the owner of the restaurant can decide what is better for his or her business. 

What path a restaurant chooses isn’t as important as the restaurant having the ability to choose. But prohibiting dogs in restaurants are just one of the more than 117,000 restrictions in the state’s regulatory code.  

The biggest regulator in the state? As you would imagine, the same Department of Health that is going after dogs in restaurants. 

And why does this matter?

Regulatory growth has a detrimental effect on economic growth. We now have a history of empirical data on the relationship between regulations and economic growth. A 2013 study in the Journal of Economic Growth estimates that federal regulations have slowed the U.S. growth rate by 2 percentage points a year, going back to 1949. A recent study by the Mercatus Center estimates that federal regulations have slowed growth by 0.8 percent since 1980. If we had imposed a cap on regulations in 1980, the economy would be $4 trillion larger, or about $13,000 per person. Real numbers, and real money, indeed. 

On the international side, researchers at the World Bank have estimated that countries with a lighter regulatory touch grow 2.3 percentage points faster than countries with the most burdensome regulations. And yet another study, this published by the Quarterly Journal of Economics, found that heavy regulation leads to more corruption, larger unofficial economies, and less competition, with no improvement in public or private goods. 

A prescription for lowering the regulatory burden on a state is the one-in-two-out rule, or a regulatory cap. In 2017, one of President Donald Trump’s first executive orders was to require at least two prior regulations to be identified for elimination for every new regulation issued. This is badly needed. We have gone from 400,000 federal regulations in 1970 to over 1.1 million today. 

Many years ago, British Columbia took on a similar mission. And in less than two decades, their regulatory requirements have decreased by 48 percent. The result has been an economic revival for the Canadian province. 

Whether it’s a sunset provision, where regulations expire and must be reauthorized after a period of time, or one-in-two-out policy, Mississippi should move in the direction toward a smaller regulatory state with more freedom. And if a regulation is truly important to our well-being, let the regulators prove why.

A decision by the state to allow dogs in restaurants won’t change the trajectory of the state’s economy, for better or worse. But a deep dive into the unnecessary and outdated regulations of each agency can go a very long way toward removing unnecessary barriers and inhibitors. 

One of the most important goals we have for Mississippi is to get our small and mid-sized businesses growing more rapidly.

We want to see a day in the not too distant future when our state’s economy is driven more by private sector actions than by the public sector ones. That will require a lot of changes, including reducing the heavy role governments, and government officials and politicians, play in our economy. It will require less restrictions, fewer regulations, a reduction in licensing regimes, the elimination of protectionism, a commitment to robust competition, and a devaluing of the favor-seeking component of business in the Magnolia State.

The hallmark of a strong and durable economy is a high level of competition, a high number of start-ups, and acknowledgement that pursuing customer delight is more valuable than pursuing legislative support.

An integral part of the motivation to change any person, policy, or action is first to recognize a problem exists in the first place. That requires honesty. It also requires humility. Only after the recognition can we actually commit to making the changes required. Once we make the commitment, then all that remains is the courage to change. Mississippi has no shortage of courage, so I’m very confident in the ability of the free market and capitalism to help us drive small and mid-sized business growth.

Nothing can produce long-term economic growth like a commitment to unfettered capitalism – the kind that has produced thousands of examples of unplanned, unpredicted, and unprecedented private sector success. 

However, we are not always honest about our current situation. Too often our elected officials and government employees expend much effort claiming success, cheerleading isolated reports, and denying systemic problems.

A ribbon-cutting or a groundbreaking announcement doesn’t indicate success, unless you work in the Department of Economic Development, it indicates a partnership whereby government has agreed to invest a portion of taxpayer money to a particular company in a particular industry. I’m happy when we convince companies to move to Mississippi or to build a facility here, but I’d rather see us celebrating the unprecedented growth of companies that were born here and managed to grow here without asking the taxpayers for assistance. We can do both, and we should do more of the latter.

A good example of our leaders’ penchant for hyperbolic celebration of economic news is the creative way an Amazon-produced, small business report has been turned into something it is not. If I’ve heard it once, I’ve heard it a thousand times from politicians, business leaders, and media members, “Amazon, the world’s largest company, just ranked Mississippi as the fastest growing state for small and mid-sized business.” That is simply not true.

What Amazon actually did was produce a report focused on its own small and mid-sized business partners in the U.S. (SMBs) that sell products directly through Amazon’s stores. Of the SMBs selling within Amazon’s digital platform, Mississippi was ranked first of the 10 fastest growing states.

While that is certainly good news, it has been grossly exaggerated and used to suggest Mississippi is one of the fastest growing states for small and mid-sized businesses. The data does not support such a statement. 

While we are making some gains in business climate rankings, we continue to lag behind our neighbors in the Southeast and most of our competitors in the nation in many categories. There is some encouraging news but we should not deceive ourselves about the work we have left to do.

Here is a sampling of the most recent business-related rankings.

From a public policy standpoint, I could make a very strong case, as did Milton Friedman and William F. Buckley, that our decades-long war on drugs has been a failure.

No different than our previous government prohibitions, major criminal enterprises are the big winners. In essence, our government drives up illegal drug values by interfering with the market in the name of protecting people from their own choices. The benefactors are often the largest cartels who benefit from the lack of competition that results from our actions. Prohibitions on legal alcohol sales, for example, did not reduce the supply of alcohol. It was just as readily available in times of prohibition.

The difference was that bootleggers and speakeasies, essentially criminal entrepreneurs, did the supplying and U.S. consumers were made into criminals by seeking a drink. The same economic law applies to drugs.

I am not, however, trying to make the case for the legalization of recreational marijuana. Instead, I am using the prohibition example to demonstrate the absurdity of opposing the legalization of medical marijuana.

The gubernatorial debate on Tuesday night revealed the unanimous policy viewpoints of the three Republican candidates. To my surprise, each candidate clearly opposed the legalization of medical marijuana. They did so for various reasons, none of which I thought were compelling. For candidates who should be in favor of limited government, liberty, and personal responsibility, the responses were perplexing.

One opposing argument was essentially that Mississippi has no right to make legal the use of medical marijuana and must defer to the federal government on the classification of drugs. In fact, the federal government has no legal authority to prevent states from changing their laws to remove state-level penalties for medical marijuana use and we have at least 34 examples of this.

There was, of course, the claim that using medical marijuana will be a “gateway” to other drugs. Medical marijuana is not the same as recreational marijuana and trying to conflate the two is an insult to the citizens of Mississippi and comes at the expense of patients who should be free to choose a legal option to opiate-based painkillers, with the guidance of their doctor.

Rather than trying to turn this issue into a “law and order” one and attempting to convince us that patients suffering from debilitating illnesses and the doctors caring for them are either criminals or fledgling addicts, our politicians should focus on removing this unnecessary barrier and letting people make choices about their own health care.

The gubernatorial responses also indicated a lack of knowledge about how their fellow Americans and Mississippians feel about the issue. Recent polling demonstrates that citizens are ahead of politicians and legislators across the county on this issue, with anywhere from as low as 65% to as high as 94% of Americans supporting the legalization of medical marijuana. In Mississippi, 77% of voters support it, including 75% of Republicans. It spans all ages, races, and party affiliations. It even includes 69% of frequent churchgoers. 

A vast majority of Americans recognize the legitimate medical benefits of marijuana, as well as a large number of medical organizations. It is less harmful and poses fewer negative side effects than most prescription drugs – especially opiate-based painkillers – and patients often find it to be a more effective treatment.

Licensed medical doctors, already heavily regulated by the state, should be allowed to prescribe solutions to deal with debilitating medical conditions, no matter the derivative of such solutions. If marijuana can provide relief to those suffering from terrible illnesses like cancer and HIV/AIDS, it is unconscionable to prevent it, much less to criminalize patients for using it. People who would benefit from medical marijuana should have right to use it legally. As I outlined in the opening paragraph, legal prohibitions on commonly accepted behavior has never produced positive results. It is simply bad public policy.

Government is already regulating the health care industry at an unprecedented level. The federal government has grown into an unwieldy and unresponsive beast – increasing its paternalism over us all.

I believe Mississippi should join the other states who value federalism and respect the rights of patients and licensed doctors to decide what is best. Based on the progress thus far, I think it is highly likely the 2020 referendum on medical marijuana will pass.

For liberty-minded conservatives, this is an easy decision. It should have been the same for the gubernatorial candidates.

At Tuesday’s Republican gubernatorial debate, all three Republican candidates for the top office in the state said they oppose the medical marijuana initiative that is ongoing and may be in front of voters in a little over a year. 

For various reasons ranging from federal prohibitions to the belief that this is a gateway, Lt. Gov. Tate Reeves, former Supreme Court Justice Bill Waller, Jr., and state Rep. Robert Foster all agreed they were opposed to the initiative.

Waller referenced his time on the court saying, “The last thing we need is another substance that could provide issues.” 

He added, “Even in medical use, reports show an increased aggressiveness with the use of it as a gate to other drugs. I am not interested in introducing another drug unless it can be shown there is a void that couldn’t be filled in any other way.” 

Reeves is also a no. 

“The reason I am is because I have three daughters and see this as a potential gateway drug,” Reeves remarked. “In many areas of our society, drugs are killing people, drugs are ruining people’s lives. They lead to a life of criminal activity. I will personally vote no.” 

Foster said he couldn’t support it at this time “because it has not been unscheduled by the federal government.” 

While that is true, the U.S. Congress passed a law five years ago that prohibits federal agents from raiding medical marijuana growers in states where medical marijuana is legal, effectively allowing states to legalize medical marijuana as they have done since 1996. 

“I don’t want what they have in California and Colorado where they have pot shops on every street corner. If the federal government were to allow it to be sold through pharmacies after a doctor has written a prescription for certain things, then that would be a totally different scenario.”

Medical marijuana is now legal in 33 states and Washington, D.C. And much of the movement has been in the past decade. Just eight states legalized medical marijuana by 2000. But 21 states have acted since 2010. The most recent states to legalize medical marijuana were Missouri, Oklahoma, and Utah, each doing so last fall. 

To make Mississippi the 34th state, proponents of a ballot initiative, Medical Marijuana 2020, are hoping to collect enough signatures to have the question on the ballot in November, 2020.

The petition faces a September 6 deadline to submit 86,000 signatures to the Secretary of State. Jamie Grantham, a spokesman for the campaign, said they have collected more than two-thirds of the necessary signatures.  

Mississippi has seen a drop in government jobs over the past two months and the government workforce in the state is now smaller than it was one year ago.

In June 2018, Mississippi had 241,200 government employees according to the Bureau of Labor Statistics, and that number had increased to 242,100 this past April. But after declines the past two months, preliminary numbers show Mississippi has 240,400 government employees as of June 2019. This includes federal, state, and local government employees. 

Government jobs in Mississippi, June 2018 through June 2019

At the same time of the loss in government jobs, the private sector has grown. Employment rolls grew by 2,500 in May and another 2,000 in June. Mississippi employers have added 14,000 jobs over the past year. Payrolls in Mississippi now sit at 1,168,100. 

When looking just at the state workforce, this continues a trend over the past 15 years even though numbers may fluctuate month-over-month.

According to a 2018 report from the Office of the State Auditor, the number of state government employees has decreased by more than 5,200 dating back to 2004, largely through attrition and voluntary separations. The bulk of the reduction, about 4,500 employees, occurred in the past seven years.

Even with the declines, approximately 56 percent of Mississippi’s economy is controlled by the public sector, putting its reliance on government fourth worse in the nation. To continue to generate sustainable, long-term growth, we need to continue to grow the private sector through lower taxes and a lighter regulatory burden.  

Few things could be better on a hot Mississippi summer day than a refreshing glass of ice, cold lemonade. And, if you’re lucky, you might just find a smiling face selling lemonade during your travels. 

Lemonade stands are one of the great American traditions. For generations, boys and girls turn into aspiring entrepreneurs making and selling lemonade. The young children are able to earn money, whether it’s for a special toy they have been wanting or to save for a future purchase.   

Without even realizing it, the children simultaneously learn valuable lessons. They learn that money comes from work. That you have to plan, and then produce a stand, signs, and lemonade. Introducing kids to the valuable concepts of marketing, costs, customer service, and profit motive.

That’s why the lemonade stand has always been celebrated in our society.

But lemonade stand entrepreneurs began to meet a force that strikes fear in the hearts of even the most seasoned professionals: the government regulator.

By now, you have probably heard the stories, but they bear repeating because of the sheer lunacy of feeling the need to shut down a lemonade stand operated by kids. And because these stories highlight the over criminalization of our society - thanks to laws we have adopted to fix every supposed issue or problem.

In Colorado, three young boys, ages two to six, had their lemonade stand shut down by Denver police for operating without a proper permit. The boys were selling lemonade in hopes of raising money for Compassion International, an international child-advocacy ministry. But local vendors at a nearby festival didn’t like the competition and called the police to complain. When word of this interaction made news, the local Chick-Fil-A stepped up as you would expect from Chick-Fil-A. They allowed the boys to sell lemonade inside their restaurant, plus they donated 10 percent of their own lemonade profits that day to Compassion International.

In Texas, two sisters, seven and eight years-old, had their lemonade stand shut down by the local police, also for lacking the proper permit. The city, kindly, for lack of a better word, agreed to waive the $150 “Peddler’s Permit,” but the young girls would still need an inspection from the health department before they could proceed. The girls were hoping to raise money so they could go to a local water park with their dad, who is often away from home because he works in the oil field, for Father’s Day. The water park and a local radio station donated tickets after hearing the story. 

Since these stories, and others like it, we have seen a shift away from the ludicrous. The lemonade stands are fighting back. Common sense seems to have prevailed. 

Texas and Colorado have now become two of the first three states to legalize lemonade stands for children. Utah became the first state to pass such a law in 2017. These laws, which have passed with overwhelming, bi-partisan support, allow minors to run “occasional” businesses, such as a lemonade stand, without needing a permit. 

If you run into a regulator in a state that doesn’t enjoy such lemonade friendly laws, Country Time Lemonade has launched “Legal-Aide.” For those who receive a fine for operating an unlicensed stand, they will cover your fine up to $300. They also have a handy website that will help you contact lawmakers and get engaged in the fight to legalize lemonade stands in all 50 states.  

At the same time, Lemonade Day is national program that has grown considerably in the past several years. Participating cities, including Jackson and cities in the Golden Triangle, give children in the area the opportunity to run a business during a community-wide Lemonade Day. 

What these stories have shown is that when the government has overreacted, the private sector has stepped up and provided opportunities for children. 

Hopefully, these stories raise more than a few eyebrows. Perhaps they will cause people to recognize the downside of our regulatory burden and maybe even cause legislators to review more than a few of the laws, rules, and licensing regimes that are stifling growth, innovation, and capitalism.

If we want a thriving and growing economy, we’ve got to have more entrepreneurs – including those future ones who sell lemonade in their neighborhoods today.

Tucked quietly in a non-descript beige building in Flowood is one of Mississippi’s best-kept secrets.

Zavation is a company that specializes in design, engineering and manufacturing of spinal hardware and other medical equipment that allows for minimally invasive surgery.

The company was started in 2010 by a pair of University of Mississippi graduates and made its first sale in 2012 despite not receiving any state or local tax incentives. The company released 10 new products in 2018 and recorded its first international sale this year.

Now, Zavation has moved to its third building as its business continues to expand and it employs 60 in its 30,000 square foot facility. Its products are being distributed in 40 states by more than 150 distributors.

Zavation is vertically integrated, meaning that design and manufacturing are all in house. Zavation is also in the process of adding a clean room to its Flowood facility, which will enable it to expand its business to new areas.

Dee Hillhouse, the company’s national sales manager, says vertical integration allows the company to have full quality control and not have to wait on suppliers to ship needed components.

Many of Zavation’s engineers once worked in the aerospace industry, which gives them a unique perspective. The company is able to prototype their new designs in house, as they have their own milling machine reserved solely for prototypes. Using computer-assisted design software, they can feed the specifications to the milling machine so they can start testing and quickly deal with any problems.

The approval process by the U.S. Food and Drug Administration can vary on new products, but a simple product can take up to a year, with a couple of years needed for more complex devices. In June, Zavation received approval to market its new pedicle screw system to immobilize and stabilize spines in patients as part of fusion surgery.

Once the FDA allows Zavation to sell new products, the company uses highly automated milling machines to produce both plastic and metal components for the new product. The Flowood facility has a costly laser etching machine to put serial and lot numbers on every component for quality control purposes and the in-house anodizing machine ensures that the metal is more wear and corrosion resistant.

After automated quality control checks, the components are assembled by workers and boxed for shipping to surgeons nationwide. 

Zavation recently acquired a Tampa-based company, Pan Medical U.S. The new combined company will be able to bring a larger range of surgical products to market. The most important of these is the Curveplus kyphoplasty system for spinal procedures. 

In a kyphoplasty, a surgeon injects bone cement into fractured vertebra to relieve back pain. Pan Medical has developed the Curveplus that allows both the balloon and cement to be sent through a curved needle, which decreases the number of steps and the overall procedure time.

Never heard of Zavation? That’s because no political photo ops, ribbon-cutting, or silver shovel events were held to celebrate the company’s start-up. Instead, the founders, investors, and early employees went to work to create unique and valuable products to serve a market of need. Rather than rely on government subsidies, contracts, or tax incentives in the name of job creation, Zavation created jobs as a result of creative disruption, innovation, marketing, and sales. 

After touring the impressive facility, it’s clear the company is well-run with a strong focus on process management. In short, Zavation is a great example of the kind of economic growth that can come from small, private companies and entrepreneurs. 

This is what happens in healthy economies. Entrepreneurs and capital find each other and a small company grows into a big one, without the direct aid of government. We need more examples like Zavation in Mississippi. 

If we want long term, sustainable economic growth in Mississippi, we need the private sector to blossom and government’s role should be to create an environment that allows the free market to function at maximum capacity.  We don’t need our government to pick our winners and losers for us. They are not equipped to outperform the market, no matter how noble their intentions.

Mississippi Center for Public Policy has joined a diverse coalition in publishing a set of seven principles to guide conversation about amending Section 230 of the Communications Decency Act of 1996.

The coalition includes civil society organizations, academics, and other Internet law experts.

In its current form, the law holds those who create content online responsible for the content they create, while protecting online intermediaries from liability for content generated by third parties, except in specific circumstances.

Maintaining that fundamental arrangement is vital. As the principles statement declares: “We value the balance between freely exchanging ideas, fostering innovation, and limiting harmful speech. Because this is an exceptionally delicate balance, Section 230 reform poses a substantial risk of failing to address policymakers’ concerns and harming the Internet overall.”

As civil society organizations, academics, and other experts who study the regulation of user- generated content, we value the balance between freely exchanging ideas, fostering innovation, and limiting harmful speech.

The seven principles are:

1. Content creators bear primary responsibility for their speech and actions.
2. Any new intermediary liability law must not target constitutionally protected speech.
3. The law shouldn’t discourage Internet services from moderating content.
4. Section 230 does not, and should not, require “neutrality.”
5. We need a uniform national legal standard.
6. We must continue to promote innovation on the Internet.
7. Section 230 should apply equally across a broad spectrum of online services.

Read the full letter here.