Gary Wolfram

This report analyzes the role small-dollar credit as payday loans and other short-term loans in providing Americans with needed financial services. It argues that these loans meet a legitimate demand for cash liquidity for millions of Americans, especially those with poor credit and those who are essentially shutout of the conventional banking system. Despite this, small-dollar, short-term loans are regularly criticized for being "predatory" and harmful. The report argues, however, that from the perspective of the consumers of these loans, these products meet an important need and limiting their availability through regulation would harm millions of Americans, especially low-income households.

Michigan auto insurance premiums are among the highest in the nation. The American Association of Retired Persons, in a recent survey, found that Michigan's premiums were the second highest in the nation, behind only Louisiana. This, combined with a statutory requirement to purchase insurance, has led to legislative attempts to keep premiums down. Unfortunately, state lawmakers have pursued an approach that includes price controls, regulation of how premiums may be set, and requirements for insurance companies to provide specific types of coverage. As the famous Austrian economist Ludwig von Mises pointed out decades ago, this kind of government intervention, while well-intended, leads to unintended consequences that then lead to further government interventions, further unintended consequences, in a lengthy cycle with results that no legislator would have expected at the beginning.

"The Retrenchment of the State Employee Workforce in Michigan," a paper by Charles Ballard and Nicole Funari, is basically a summary of a lengthier report by the Michigan House Fiscal Agency.1 As such, it provides some useful information. However, the conclusions drawn by the authors and attributed to the paper in the media are not substantiated by the data presented, and the use of the data is in some cases misleading.

As Congress debates the reauthorization of the Higher Education Act (HEA), it should heed Friedrich Hayek's warning that democracy is "peculiarly liable, if not guided by accepted common principles, to produce over-all results that nobody wanted." One result of the federal government's student financial aid programs is higher tuition costs at the nation's colleges and universities. Basic economic theory suggests that the increased demand for higher education generated by HEA will have the effect of increasing tuitions. The empirical evidence is consistent with that--federal loans, Pell grants, and other assistance programs result in higher tuition for students at the nation's colleges and universities. Also, when large numbers of students begin to rely on the federal government to fund their higher education, and the federal government uses this financing to affect the behavior of state and private institutions, everyone should be concerned about how the resulting loss of independence of colleges and universities affects the ability of voters to form opinions about public policy that are independent of the government's position. Rather than expand the current system, Congress should consider a phase-out of federal assistance to higher education over a 12-year time frame. As the federal government removes itself from student assistance, everyone should expect several things to happen. First, sticker tuition prices should decline. Second, the private market should respond to the phase-out of federal assistance. That response would likely take three forms: additional private-sector loans, additional private scholarship funds, and perhaps most importantly, the expansion of human capital contracts. Human capital contracts, first suggested 40 years ago by Nobel Laureate Milton Friedman, would allow students to pledge a portion of future earnings in return for assistance in paying their tuition. (Contains 2 figures, 2 tables and 68 notes.)

Parental choice in education -- whereby parents have the freedom to choose the school their children attend -- is seeing explosive growth in popularity and implementation. Instead of sending children to an assigned school based on residence, Michigan parents have asked for and received the ability to send their children to public schools outside their home district and to create new charter schools to meet special needs and interests. This study from the Mackinac Center for Public Policy presents a path-breaking approach to expanding parental choice in Michigan education. It embodies a proposal to amend the Michigan Constitution and establish a Universal Tuition Tax Credit (UTTC). In addition to improving public education, the UTTC will save the state $3.4 billion in education expenses in the first ten years of implementation and over $500 million each year thereafter. These savings could be used to support additional educational programs, address other budget priorities, or reduce taxes on Michigan citizens or businesses.