Most Americans (perhaps as many as 85%) are happy with their health care and their health insurance. The vast majority of Americans, however, are concerned with the economy, jobs, and the federal budget and deficit. Rasmussen and Schoen argue that the majority or people in this county feel the Administration's health care reform proposals will make the economy worse, will increase the federal budget and will enlarge the deficit.

Consequently, no matter how many speeches Obama gives nor how vigorously the Democrats argue for health care reform, the American public isn't buying it. Expanding the government's involvement in health care while claiming to not increase taxes or add to the deficit does not pass the credibility test with the American public.

The Congressional Research Service (CRS) just released "The Proposed Comcast-NBC Universal Combination: How it Might Affect the Video Market." Prepared early last month, the now-public CRS report takes no overall stance on the proposed merger itself. Rather, it notes that the U.S. Department of Justice and the FCC will likely approve the Comcast-NBCU deal. Nor does CRS report make any hard predictions about the likely effects of the merger, if approved. But the report does provide an overview of some of the arguments that recently have been advanced from different quarters about the perceived benefits or perceived harms that the merger would bring.

Although the CRS report purports to summarize claims being made about the proposed Comcast-NBCU merger made by others, the report does seem to offer an overly sympathetic treatment to claimed vertical integration threats to programming access. The report reads:

Perhaps the greatest danger that a vertically integrated company poses to a non-integrated competitor is to deny the competitor access to must-have programming that it owns or controls. Lack of access could even foreclose competitors from the market. Inferior or more expensive access to that programming also could place non-integrated rivals at a competitive disadvantage.

The report then discusses disputes over cable company ownership of regional sports networks (RSN) as a situation that "[t]he FCC has identified…where a vertically integrated cable company is likely to benefit from exclusivity, to the detriment of competition and consumers." The report points out that Section 628 of the Communications Act and the program access rules adopted by the FCC to implement that section, among other things, prevent vertically integrated cable operators from discriminating in the prices, terms, and conditions at which it makes its satellite-delivered programming available to its competitors. The CRS report insists those same rules "prohibit a vertically integrated cable operator from having exclusive access to the programming in which it has an attributable interest." (Whether the statute permits application of the program access rules to terrestrially-delivered programming as the FCC concluded in a recent rulemaking order is a matter of debate and will likely be litigated.)

All of what the CRS report says in this regard may be true, or at least mostly true. But taken in a vacuum, it can also be somewhat misleading and thereby exaggerate the potential competitive harm. Vertical mergers do not typically present the kind of competitive harm to consumer welfare characteristic of horizontal mergers. As the FCC observed in the Adelphia Order, "vertical transactions, standing alone, do not directly reduce the number of competitors in either the upstream or downstream markets."

FSF Distinguished Adjunct Senior Scholar Richard A. Epstein addressed some of these issues in his recent FSF Perspectives paper "The Comcast and NBCU Merger: The Upside Down Analysis of Dr. Mark Cooper." Describing the potential harm from merger transactions as "increase in market concentration to the extent that it allows the new firm to raise its prices above the competitive level," Professor Epstein wrote: "As a matter of basic theory, this risk may materialize in horizontal mergers, but rarely will appear in vertical ones, which involve the integration of two facilities or services at different levels in the chain of production." And, " the vast bulk of this transaction lies on the vertical side of the line, which involve the linkage of a transmission company — Comcast — with a content company—NBC Universal."

Absent contextual emphasis on the contrasting competitive dynamics of horizontal and vertical mergers, one can easily read too much into conceivable harms posed by a vertical integration like Comcast-NBCU. The CRS report, however, puts vertical integration threats to programming access more in the context of "big-is-bad" concerns. The report's opening line reads: "The proposed combination of Comcast, the largest distributor of video services in the United States, and NBC Universal (NBCU), a major producer and aggregator of video content, would create a huge, vertically integrated entity with potentially enormous negotiating power." But reduction of transaction costs and technology economies resulting from vertical mergers that make a merged entity bigger typically benefit consumers.

In addition, it's worth remembering that although the FCC has previously concluded in the Adelphia Order and NewsCorp-Hughes Order that a vertically integrated cable or DBS provider might have incentive to temporarily foreclose RSN access to its competitors, it has not so held that cable or DBS providers have the incentive to engage in permanent foreclosure. Regardless, Comcast will not be acquiring any RSNs in the proposed merger.

Of course, the CRS will hardly be the last word out of Congress on Comcast-NBCU. The Senate Commerce Committee will continue the ongoing examination of the merger with a hearing Thursday. FCC Chairman Julius Genachowski will testify about the Commission's license transfer approval process. DOJ Antitrust Division Chief Christine Varney is also set to speak. But all such testimony and discussion of the proposed merger should be considered in the context of a vertical integration.

1. Payday Holiday: How Households Fare after Payday Credit Bans (ungated), Donald P. Morgan and Michael R. Strain.

   “Compared with households in states where payday lending is permitted, households in Georgia have bounced more checks, complained more to the Federal Trade Commission about lenders and debt collectors, and filed for Chapter 7 bankruptcy protection at a higher rate. North Carolina households have fared about the same. This negative correlation—reduced payday credit supply, increased credit problems—contradicts the debt trap critique of payday lending.”

2. The Economics of Payday Lending (ungated), John P. Caskey, Swarthmore College.

   General overview of payday lending industry and basic issues. Written for a lay audience.

3. Do Payday Loans Cause Bankruptcy? (ungated), Paige Marta Skiba and Jeremy Tobacman.

   “Though the size of the typical payday loan is only $300, we find that loan approval for first-time applicants increases the two-year Chapter 13 bankruptcy filing rate by 2.48 percentage points.”

4. Factors Affecting the Location of Payday Lending and Traditional Banking Services in North Carolina (ungated), Mark L. Burkey and Scott P. Simkins.

   Explores the geography of payday loan institutions. “A key finding is that after controlling for many covariates, race is still a powerful predictor of the locations of both banks and payday lenders.”

5. The Profitability of Payday Loans (ungated), Paige Marta Skiba and Jeremy Tobacman.

   “Despite charging effective annualized rates of many thousand percent, we find lenders’ firm-level returns differ little from typical financial returns. The data are consistent with an interpretation that payday lenders face high per-loan and per-store fixed costs in a competitive market.”

6. Quantifying the Economic Cost of Predatory Payday Lending (ungated), Keith Ernst, John Farris, Uriah King:

   “Our analysis of quantitative data reveals that payday lenders collect the vast majority of their fees from borrowers trapped in a cycle of repeated transactions, where borrowers are forced to pay high fees every two weeks just to keep an existing loan outstanding that they cannot afford to pay off.”

7. A Comparative Analysis of Payday Loan Customers (gated), Edward C. Lawrence and Gregory Elliehausen.

   “By analyzing the data collected in a national survey of payday customers, this research allows policymakers to better understand what type of consumer borrows from payday lenders, for what purpose, and what the true benefits and costs are. The results confirm a strong demand for payday loans that satisfy a real financial need within a certain segment of the population.”

8. Mayday Payday: Can Corporate Social Responsibility Save Payday Lenders (ungated), Carmen M. Butler and Niloufar A. Park.

   “In this article we ask what the best ways are to maximize the wealth of the payday lending industry while limiting the industry’s harmful impact on consumer communities? We assert that payday lenders will likely demonstrate greater corporate social responsibility only after there is a change in the laws that govern the industry coupled with industry-wide reform in corporate governance.”

9. Restricting consumer credit access: Household survey evidence on effects around the Oregon rate cap (ungated), Jon Zinman.

   “Borrowing fell in Oregon [after interest rate caps] relative to Washington, with former payday borrowers shifting partially into plausibly inferior substitutes: bank overdrafts and late bill payment. Additional evidence suggests that restricting access caused deterioration in the overall financial condition of Oregon households. Overall the results are consistent with restricted access harming, not helping, consumers on average.”

10. Consumers’ Use of High-Price Credit Products: Do They Know What They Are Doing? (gated), Gregory Elliehausen:

    This paper asserts that consumers of payday loans are sufficiently rational. A caveat, however, is that rationality is a just a process and does not imply that “good” decisions are made.

Some op-eds include:

• In Defense of Usury (gated), by Dean Karlan and Jonathan Zinman
• Congress Takes Aim at Payday Loans (ungated), by Robert DeYoung
• Payday Loan Reform Bad for Borrowers (ungated), by Justin Hauke

The last of those op-eds was written by a former employee of the Show-Me Institute. Perhaps unsurprisingly, my views on payday loans are fairly similar to his. Taking an economic view, I’m concerned that regulatory reform will be unable to limit payday loan harms effectively without driving the market underground. Taking a political view, I view payday loan consumers as sufficiently rational and believe that a government (at least in this arena) has more of an imperative to maintain free, private contracts than to protect the politically weak.

Dora didn’t discover the connection between Census data and federal spending on her own. The Census Bureau is itself emphasizing the link between counting kids and spending:

“The adults among themselves sometimes forget the census is about everyone, and kids should be counted,” said Census Bureau director Robert Groves. “If we fail to count a newborn that is born this month, that newborn misses all the benefits of the census for 10 years.”

If you forget to count your newborn on this year’s form, does that mean your baby won’t get to attend a publicly funded daycare or school for the next decade? Obviously not. So, what “benefits of the Census” are the uncounted babies missing out on?

I’m impressed by the reading list. Based on the wishy-washy math questions that the initiative holds up as paragons of rigor, I expected the recommended texts to fall somewhere between comic books and Goodnight Moon. In fact, the selections are excellent. I attended a couple of public school districts as a kid, and I was never assigned classics like The Secret Garden or “The New Colossus.” Lots of schools could give their literature programs a boost simply by substituting these texts for whatever they currently ask students to read.

However, the trouble with any national standards, no matter how good, is that no one curriculum is right for everyone. Much as these texts appeal to me, I can imagine situations in which they might be inadequate. For example, an all-boys’ school would have a hard time interesting its students in some of the selections, such as Little Women and Cowgirl Kate and Cocoa. And a magnet school for the gifted would surely need more challenging reading material for second- and third-graders than the works on this list.

The standards’ authors insist that the list won’t cause problems, because it merely provides examples of which kinds of texts are appropriate in general — these particular titles won’t be mandatory reading. That answer is unsatisfactory. Many schools will ignore the authors’ disclaimer and adopt the reading list without modification, either because they don’t want to go to the trouble of finding comparable titles or because they don’t want to risk straying from the standards. When you include a reading list in a national standards document, you have to assume that some schools will follow it blindly — even if their students would have been better served by a different list.

But accepting the authors’ statement that these texts won’t be required for everyone, how will the standards improve education? If schools are free to deviate from the list for good reasons and choose books that would better suit them, then they’re also free to deviate from the list for the wrong reasons and keep their curricula unchanged. Standards that are forced on everyone are too rigid, but standards that schools can dumb down are worthless.

Standards supporters might argue that schools would be free to choose the content of their literature programs, but that guidance from this list would ensure that their selections are complex and challenging enough. The thing is, this list is so good exactly because of the great content of the readings. If a school finds a bunch of books that match the list in reading level, but that make no mention of the American Revolution or the Civil War, then its students don’t gain much from the standards.

It’s impossible for standards to bring schools up to a higher level of academics and allow for individuality at the same time. That’s why I still think Missouri should not adopt the Common Core Standards. But I must commend the initiative for writing up a great list of books.

Unemployment insurance also extends the time a person stays off the job. [Kim] Clark and I estimated that the existence of unemployment insurance almost doubles the number of unemployment spells lasting more than three months. If unemployment insurance were eliminated, the unemployment rate would drop by more than half a percentage point, which means that the number of unemployed people would fall by about 750,000. This is all the more significant in light of the fact that less than half of the unemployed receive insurance benefits, largely because many have not worked enough to qualify.

HT to David Henderson at Econlog.

Note: The Chilean unemployment system, based on self-insurance, individual control, and better economic incentives, is far superior to ours.

According to SB 6883 - Restricting the payment of legislators' expenses:

As we previously discussed, if a special session is called it should be done by the Legislature and not the Governor to ensure that it is limited to only the budget.