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March 6, 2017 12:00 am
From Cherokee to current and the largest city to the smallest and from the statehouse into the schoolhouse Carolina Journal radio your weekly news magazine discussing North Carolina's most of public policy events and issues welcome to Carolina Journal radio live Ashoka during the next hour Donna Martinez that I will explore some major issues affecting our state craft brewers in North Carolina hope to change a state law, it forces them to work with an outside distributor. Once they grow. The learned details of this campaign dubbed craft freedom now that a Democrat is back in North Carolina's Gov.'s mansion there could be a greater chance for Vito's your debate about efforts to close the statehouse's so-called Vito garage, Duke University professor recently helped address the question what killed Middle East liberalism.
Learn why he attributes the answer more to history than religion and will feature the surprising lessons of academic learned by working for four months in a check-cashing store.
Those topics are just ahead.
First, Donna Martinez joins us with the Carolina Journal headline, Gov. Roy Cooper says that he wants to give public school teachers a big raise and he also says that tax increases would not be necessary to pay for it, but the governor's plan has drawn a pointed response from legislative leaders here to tell us all about it is Dr. Terry stoops. He is director of research and education studies for the John Locke foundation Terry welcome back. Thank you. What is the governor's proposal for teachers. More pay and if there's anything that's inevitable this time of the year. It's a blanket of pollen on my car and discussions of giving teachers more money.
And here we are the governor proposing an increase in teacher pay that would cost around $800 million. That would get the regional get North Carolina up to the regional average and then to the national average, and in a few years, with a total 10% increase. We talk about averages a lot. Is there any way to put a number on that for the average teacher how much money a year with this mean this would increase their pay up past the $60,000 points are right now. Teachers make just shy of $50,000 a year and that doesn't include any benefits. Assessor's salary and that's just the statewide average.
This would increase up to the national average, which would surpass $60,000 per teacher.
All things considered, that would get us to the national average because it's important to realize this is a moving target. Other states are increasing teacher pay and are also having effects on teacher pay, such as an aging workforce and attrition in the teacher workforce.
There are lots of factors at play here like guessing here about how much it would take to get us up to the national average, and how much money would take for North Carolina's teachers to get up to the national average, and with the national average would be if we get there. I'm so glad you brought this up because some people listening or thinking now wait a second, and a question or understand that it's using issue and so I guess my question Terry is why we constantly hearing elected officials talk about this national average. If it's really hard to figure out because it's a moving target so is invalid at all, it's not. It's one of the worst data points in education research to be completely honest, because if you think about the differences in education systems across the states.
Their considerable you have states that have unionized workforces and you have those that don't. You have schools that are mainly district led small district led and some that are county led you have vast differences in the way that education is governed in the states. The way that the teacher workforce is paid, the age of that teacher workforces can have a huge impact on this average because we pay teachers according how many years they've been in the business and the more teachers that have more experience.
The higher the pay will be just because the way we pay teachers. Not only that North Carolina doesn't provide additional salary for Masters degree teachers many other states do, and so that's also going to bump up the pay and some of the other states compared to North Carolina which is a relatively young teacher workforce when you try to get all that take that all and in consideration. It's hard to say that you can come up with something called an average teachers pay across the nation and then once you even get that number you start coming to the realization that it's meaningless because of cost-of-living.
The average teacher in California is making well over $70,000 a year, but I can tell you that in some parts of California that does not get you very far in North Carolina. The average teachers making around $50,000 a year in some places in the state that get you very far and that action makes a big difference when talking about these issues, but rarely does the media ever talk about not only what goes into calculating the average, but whether it's a meaningful number with cost-of-living taken into consideration. So, after listening to your description of all the different things that can be thrown into the national average. Do I guess guess will call it. I didn't hear a whole lot of components that have much to do with efficiency of teaching ability or student achievement. That's right. And that's the other part of this and when we talk about raising teacher pay at their usually across-the-board raises him and that does a couple things it does raise the base pay for teachers in North Carolina. It will increase our starting teacher pay beyond the $35,000 a year that it is now, and more experienced teachers will get paid more, but what it also does. It incentivizes low achieving teachers to stay in the system who figure that because it's an across-the-board increase they can stand and still reap the benefits of this across-the-board pay increase when in reality their higher achieving counterparts are asking the question, why do I stay in when my low performing friend down the hall gets paid the same sort of race that I'm going to get in and sometimes more, depending on how much experience they have. So there is no connection student achievement.
I really appreciate the fact that the Gen. assembly in recent years has been moving toward that direction finding ways to compensate teachers based on their performance. One the pilot program for example that was instituted recently was increasing third grade pay pay for third grade teachers who excel at making sure that students in third grade are reading at or above grade level. I think initiatives like that small pilot programs to see how their working should just be the start for the legislature. And they should continue to look to compensate teachers based on their performance so that those great teachers stay in the classroom and that of course is what we want and it is curious, we have this discussion at this time of year budget time that there seems to be a narrative that we that we should try to retain every single teacher. You have a different view that that's right. I want the bad ones to go quickly. The idea that we that attrition is always bad, is unfortunately something a lot of people were convinced of, because they hear the teacher turnover numbers. Teacher attrition numbers and they say to themselves. It's terrible. The teachers are leaving but if you ask me the bad teachers cannot leave fast enough because they are doing real harm to kids that will last for years.
So we want good teachers to stay we want to incentivize them to stay through not only pay by giving them additional leadership roles in other ways that they can find meaning in them in their teaching, but we want the bad ones to go and if we continue to provide large across-the-board pay increases to teachers.
We are going to see our Christian radar turnover rate go way down. But that may also mean that those bad teachers stay in the system. The exact opposite of what we should want. Now the governor, Cooper has made his proposal for this latest round of the increases for teachers.
He's gotten a very swift reaction from the leaders in the Gen. assembly tell us about that. Will the Gen. assembly points out that they've been raising teacher pay significantly over the lead of the years in fact and in the last year there's a 4.7 average increase for teachers 4.7% average increase for teachers and over the last few years they have increased teacher pay by between 10 and 15% depending on where the teacher lands on the teacher salary schedule, but they've done a tremendous amount of work in raising teacher pay, especially for those entry-level teachers going from $30-$35,000 a year entry-level and that's just the baseline. Of course, districts can add more if they choose. They've done a lot of work and they point out that they're going to continue, and had planned to raise teacher pay in the next two years. Now what I think the Republican legislature should do is to why not out to the governor, why not institute a 5.2% increase which would be politically astute would make the governor look like he was lowballing it, and make the general simile look like heroes. Now, I would prefer that from a research standpoint body from a political standpoint, it would seem like the governors came in at a point that was fairly low.
Surprisingly, given that his budget is going to be dead on arrival. Talking with Dr. Terry stoops. He is director of research and education studies for the Locke foundation stay with us much more Carolina general radio to come in just a moment when you hear the word crime you probably think about murder, assault or robbery, but what about crimes linked to obscure government rules so obscure. Most people wouldn't even know they're breaking the rule North Carolina has too many crimes like that crimes that can lead to convictions just because a person runs afoul of rules and regulations. Most people don't even know exist.
It's a big problem, a problem the John Locke foundation at Texas Public policy foundation are tackling. You can join in.
Monday, March 13 at noon at the Campbell Law school in downtown Raleigh and expert panel explores North Carolina laws that turn bureaucratic mistakes into crimes. That's right and honest mistake that leads to criminal conviction that's noon on Monday, March 13 at the Campbell Law school. The $10 price includes lunch. Sign up online email@example.com click on events that John lock LOC KE.org welcome back to Carolina general radio. I Michiko got government regulations can block entrepreneurs from doing what they do best, growing their companies to meet customers demands. One area in which the scenario has played out in North Carolina involves craft beer in our next guest to see the impact of government regulation firsthand why himself is director of sales at the old Mecklenburg brewery in Charlotte.
Thanks for joining us were going to get into how rules in North Carolina have forwarded your efforts to expand, but first of all as a craft brewer. What are some of the rules North Carolina has in place that govern what you do. What is a funny state because the depending on which side of the issue thereon. You'll hear some folks crow that we have among the most liberal laws in the South East for four craft brewers and therefore RRR one of the best.
However, the course makes us were the worst in the country and really being the worst of a bad lot is is not anything thinking of us strive for North Carolina.
You can open a temporary considered regular consumer you can substrate your beer to appoint as we discussed, but in other states you can do that at all, which will limit your growth as a brewer from day one reason or no get demand your product to sell your brand to a third-party third-party wholesaler so you were not scribbled some states but but on the flipside, I don't even want our state to be again the best about lots of the two main things we deal with is you being the Southeast is always some of that taboo around alcohol know how far we come there's always some degree of reselling alcoholically problematic will try to put in our part Of spaces which it either plays the close it 2 o'clock, 11 o'clock at night and weekends were up till three in the morning. It will serve liquor. These are not either nightclubs or nightclubs by any stretch but it can try to get approval for zoning and and other things. The city you must get treated like you know your your late-night nightclubs were spot and so that the taboo that surrounds alcohol in general still always haunt you a little bit as far as folks up ability to to see the kind of a positive influence provided the business of the default order shall be for use in and what were fighting for right now is there is a a distribution In North Carolina basically says once you make a certain amount of beer we lose control of our aftermarket yeah and and that is really the issue that has drawn most of the attention because what you're talking about. For those who panel followed very closely.
Basically a very small brewer doesn't run into this problem.
But once you get past a certain size that the huge size well gets past a certain size you have to involve someone else in your business whether you want to or not. Tell us about what involves a very word also very small is a very real is very relative term. We were the largest British Charlotte will do something in the range of 22,000 barrels of beer this year so give or take power that makes less than 2% of the beer sold just in Charlotte, North Carolina, city of us as some sort of major player is having a seismic impact on the market at large is is is sort of laughable would like to be there Sunday were Rosie facing some some nurses that mimic you from getting there, but we don't consider ourselves a major player at all.
We consider ourselves a very small, very compact company. Despite the growth that we seen so far that number 22,000 is is getting very close 25,000 25,000 that sort of magic number. Where is you invariably involve someone else in our business were in fact happens is we are required by law, by state law to turn over our our brand rights are our brand rights in this market to a third-party description company wholesaler and that company doesn't doesn't produce any goods, they merely act as a logistics company and they under franchise law they own up aftermarket as a right now are selling beer one city short North Carolina and through the surrounding suburbs only build up aftermarket in the entire area and and and we really have no recourse. As far as if were happy with the work you're doing for us to feel like they're probably resenting our brand. We have no recourse to to undo that contract, so it signed were in their portfolio were there for 100 other brands and portals brand with either beer sold as well and socio-natural flooding effect on the rebrand or how much natural organic demand for products in the market. We created the letter brands Roosevelt malls to be fed.
There also be sold and distribute as well. You see a a a depressing of our of our impact in the marketplace we are chatting with Brian Silva, who is director of sales at the old Mecklenburg brewery in Charlotte. So for folks who hear this and say I'm not really conceptualizing what this means. Right now, how does your beer get to the market and if you hit that milestone now with the exchange so it was so big the market is the beer never leaves our hands until it arrives at the at the restaurant or bar bar is reselling the beer to the end user customer. We have our own coal trucks which is something of an anomaly in the beer business you know for a fact that unpasteurized craft beer is is best fresh its best is kept cold all the time luxury companies. In fact, the vast, vast majority use of a room temperature, which is known Charlotte is 90+ truck starter trucks and we have our own truck your own tradition team. We were on sales team and we were in a bar, restaurant buys a beer from us going hundred number. They don't call reject a phone tree they'll call third-party company they call my cell phone number directly is onerous is our sales team we reach out to them and and and get them what they needed our salesman is in the restaurant or bar missing a week checking on it are delivery drivers in the restaurant or bar missing a week make sure they have beer fresh the kegs are rotated so your customer walking will bar there's no model. The company out there for to service all 40 of the draft beer lines. There's us serving our lives in checking to make sure there the public served every time you get to the spear and if you get 25,000 how to change.
Well, it would make is no different then a company out of California Bishop and the beer across the country to sell.
In short, North Carolina what you get, then, is a bottleneck, no pun intended, of brands that are both local, national, international, that are trying to sell through under tradition, portfolio and exhibition team as a salesman goes in the bar entrance of the bar any one of 100 hundred brands so it would be my silly walks into a bar and says I wish they will be and they say what I want on the we continue pounding wife that we we we we up our efforts.
When sugar walks in the cellar so you a Sierra Nevada keg. They say what I want. That is a whelp than you. You want the spring.
Instead, they don't care as long this a one of those hundred brands is all the sudden we go from a dedicated sales force focusing on our brand a very small territory our backyard to competing with some national international brands, some of which are even incentivize the distributor to push their brand. Above all other brands and weekly good loss of a bully with a point sensitive state government is not only playing favorites to help these distributors, but also standing in the way of a company that would like to expand and keep its current model in place, absolutely real. We will he say that what we distributor cells in the keg Budweiser, a keg of that CSA founders beer of Michigan or rebels beer out of Michigan in a craft brand very little money, and she stays in the state, distributors, local company, but the beer course is imported from out of state and that money is back to that brewery at state in which wind up with is a massive wealth transfer. How could the state law change that would make things better for a company like yours. You know all really looking for is a state to recognize the market is changed the whole idea of franchise laws, distributors, and having his binding agreement between distributors and breweries start in the fact of the tiny little local distributor who is based in the backyard state trampled by Budweiser.
The massive international conglomerate that is selling them beer to me to tie those two parties together to do now is recognize that the market is changed 25,000 barrels is a pittance in this day and age of craft beer sales less than 100,000 number, but that by the time were big enough that we may want to go selling Wilmington and Raleigh, Potomac of the table distributor and have a conversation about a business arrangement that suits both parties will be another working trampled by bigger estate brands by itself is director of sales at the old Mecklenburg brewery in Charlotte. Thanks much for joining up on Carolina journal radio in just a moment at the John Locke foundation where leading the effort to clean up the mess left behind by big government liberals for decades. The powerful left in our state had piled on rule after rule, regulation after regulation never really caring about the people whose lives are caught in the nightmare of complying. In other words, you their handiwork had made it tougher to get a job even increase the legal risk of operating a business. We say enough is enough that it's just not fair to you. That's why reform minded lawmakers have turned to the Locke foundation for answers and acted to lighten your burden were proud that our intellectual firepower has improved lives. You can count on the John Locke foundation to watch out for your interests. The special interests. We would be honored to have your help in this fight. John Lott.org and make a tax-deductible donation. Right now the John Locke foundation where fighting for you where fighting for freedom North Carolina lawmakers head back to Raleigh.
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So now not only will you enjoy what you buy will also support freedom. Don't forget log on to smile.amazon.com today by something nice and help defend freedom. Support the John Locke foundation will connect Carolina journal radio I Michiko kind after four years of Republican control of both the North Carolina Gen. assembly and the governor's office. The status back to the situation that existed in 2011 and 2012, a Democrat, is governor and Republicans running the legislature that could be more conflict and more gubernatorial vetoes early in this year's legislative session state House Democratic leader Darren Jackson proposed the house rules change. Dealing with vetoes. This particular amendment has to do with what is known as the veto garage that was made popular during the 2011 2012 session and what it would say is that once a bill is put on the calendar for the first time for consideration of the veto. It can only remain on the calendar for five days and it would avoid the situation where Bill stayed on the calendar daily every day for month after month after month they were actually we had several other special sessions that were set up during that time period to come back and possibly deal with redistricting if we had to do something some special sessions we have schedule. We didn't really have bills to consider the day he remained on the calendar and then lo and behold one night if I think about 1 AM. We did veto override. I tried to avoid that Republican House rules Committee Chairman David Lewis had a response for his Democratic colleague. I have the following concerns one has Revson Jackson and the members of this meeting those if a deal is passed and sent to the governor and receives a veto. The veto is returned to the chamber that originated the bill so if it is a Senate bill, it would not come to the house and we really have no control over what they did with the beetle so to the extent we can we try to conform our rules to be as close to the sink to make this a functional general. Secondly, as we can so with that in mind, and the fact that the Constitution on this issue is silent, does that mean that I personally think that the situation that Revson Jackson described is the best way to go.
However, I don't. But the fact the Constitution is silent as to the Pacific process processes and procedures that we use and the fact that the Senate rules would be in conflict with this and therefore I think would make it largely unenforceable.
I would ask you to vote this on the down to Republican state House rules Committee Chairman David Lewis is explaining why he opposed a democratic measure would've limited the number of days the house could spend considering whether to override a gubernatorial veto overture with more Carolina journal radio in a moment when you hear the word crime you probably think about murder, assault or robbery, but what about crimes linked to obscure government rules so obscure.
Most people wouldn't even know they're breaking the rule North Carolina has too many crimes like that crimes that can lead to convictions just because a person runs afoul of rules and regulations. Most people don't even know exist. It's a big problem, a problem the John Locke foundation and Texas Public policy foundation are tackling. You can join in. Monday, March 13 at noon at the Campbell Law school in downtown Raleigh and expert panel explores North Carolina laws that turn bureaucratic mistakes into crimes. That's right and honest mistake that leads to criminal conviction that's noon on Monday, March 13 at the Campbell Law school.
The $10 price includes lunch. Sign up online email@example.com click on events that John lock LOC KE.org will connect Carolina journal radio I Michiko kind. You don't have to be much of a scholar to know that political life is much different in the Middle East than in the United States or Europe, but why it's a question of Duke University economics professor tried to help answer during a recent forum at Dartmouth professor tomorrow.
Quran addressed the question what killed Middle East liberalism is answer lies in the region's history. The roots of the weaknesses of contemporary liberalism in the Middle East lie in Islamic institutions specific Islamic institutions not in Islamic theology or in the Islamic belief system. I want to emphasize that Islamic beliefs of been quite flexible over the past four things that centuries they remain quite flexible today. Part of the reason is that Islam is a religion is decentralized is no Islamic Vatican to keep beliefs homogenous Islamic liberalism has remained weak because institutional checks and balances in the region are are weak and their week four historical reasons crime first addressed something called a walk spelled W a QF it was a type of trust set up under Islamic law to provide a public service. Given that the walks came to control vast resources securely. They might have become powerful political players they might've constrained the states in the Arab world in Iran in Turkey elsewhere. By resisting actions harmful to their constituencies.
The resulting decentralization is walks thousands of walks all across the region were founded independently and controlled independently by different families. They might've placed the Middle East on the road to liberalism in the marketization in Western Europe, cities and gills and universities organized as nonprofit corporations or charitable corporations served exactly that function that the walks might have served in constraining central governments. They became agents of the marketization. However, for all their wealth walks remained politically powerless, absolutely powerless for several reasons. They had to deliver specified services and use resources. According to fixed instructions. Unlike corporations, they had no standing in court as an organization walks could not use very important could not use resources for political ends. This is unlike an incorporated European city or an incorporated European church European cities churches guilds were free to participate in politics. A walk was not.
And finally, where is the constituents of a corporation could replace a poorly performing leader citydwellers replacing a poorly performing mayor, the constituents of the walks had no say over the caretaker and the caretaker was not accountable to them if he was monitored at all was by the states. The bottom line is that in the Middle East. The suppliers of social services and these were walks. These were not municipalities were no municipalities in the region until the second half of the middle of the 19th century. They did not constrain sultans, nor did they foster political movements or ideologies.
That's the voice of Duke University economist tomorrow Quran is explaining white middle eastern countries have not developed the same type of liberal democratic institutions as Western countries. In addition to the Islamic trust known as a walk Quran focused on the commercial sector until the 20th century profit-making enterprises in the region were tiny and short-lived commercial enterprises in the region.
The surprise many people when they hear it until the 20th century commercial enterprises with five or more members were rare, and none of them live for more than the more than a few years for centuries. However, Europe had been forming trading companies and banks as perpetual organizations through capital for provided bike hundreds of investors or large profit-making companies in the Middle East that existed at the beginning of the 20th century were either foreign founded or or they received substantial foreign help, and often they were hit. They were headquartered not in the region but in Europe.
Why did businesses remain small to Islamic institutions laws that are part of what is known as the sharia accounted for the pattern and its persistence. First, resources were pooled through Islamic commercial partnerships, a partnership member could pull out that any time unilaterally. The partnerships premature dissolution which is possible at any time impose costs on other partners.
Partners want to stay in so merchants and investors minimize these risks minimize the risks of premature dissolution of enterprises by keeping their partnership small short-lived. What was the second institution second institution that is mattered enormously that mattered was it kept enterprises, small short-lived is the Islamic inheritance system Islamic inheritance system is eager libertarian by premodern standards. Because of this utilitarian is him sudden death of a member of the partnership forced remaining partners to deal with a large number of errors tended to be numerous, typically not a single air like the oldest son of the deceased partners would been the case typically and in Europe so merchants and investors Partnership small and short-lived also to minimize the probability of dealing with many errors jointly. These institutions play the role in the Middle East economic Middle East economic underdevelopment. But it's the political consequences that is relevant here tiny and ephemeral Middle Eastern businesses could not bargain with the state as large firms in the Middle East in Western Europe did in the centuries leading up to the Industrial Revolution and their lack of permanence inhibited the formation of business associations that to hinder the development of society. If you look at the history of the second millennium of the marketization of liberalization Western Europe you will see the business associations played an important role. He didn't have analogous associations in the Middle East so there were no commercial organizations that could bargain with sultans and effectively constrained Quran recapped the two main factors that limited the development of liberal institutions in the Middle East. The two problems are that the provision that social services were provided by politically powerless organizations, not by nonprofit corporations as in Europe. Historically and secondly, historically the private commercial sector in the Middle East consisted of tiny, ephemeral companies. There were no large companies until the 20th century or or profits making corporations. Why is this important cause didn't have economic players that could constrain the state. That's Duke University's tomorrow Quran helping to answer the question what killed Middle East liberalism returned with more Carolina journal radio in a moment at the John Locke foundation where leading the effort to clean up the mess left behind by big government liberals for decades.
The powerful left in our state had piled on rule after rule, regulation after regulation never really caring about the people whose lives are caught in the nightmare of complying. In other words, you their handiwork had made it tougher to get a job even increase the legal risk of operating a business.
We say enough is enough that it's just not fair to you. That's why reform minded lawmakers have turned to the Locke foundation for answers and acted to lighten your burden were proud that our intellectual firepower has improved lives.
You can count on the John Locke foundation to watch out for your interests. The special interests.
We would be honored to have your help in this fight. John lock.org and make a tax-deductible donation. Right now the John Locke foundation where fighting for you where fighting for freedom, welcome back to Carolina journal radio Donna Martinez after she worked in a check-cashing store for number of months. University professor has concluded that there are rational reasons that people choose to use something like a check-cashing service rather than a traditional bank now this conclusion is no surprise to John Sanders. He is the John Locke foundation's director of regulatory studies, but it is a surprising conclusion to those folks who crusade against services like this because they say they pray on poor John Sanders joins me now to talk about this really interesting story John, welcome back. Thanks, Meagan say you blogged about this at the locker room, which is the blog of the John Locke foundation and as soon as I saw your headline first about maybe want to read it because you said. Prof. worked for months for check-cashing store. You won't believe what she found out so I had to borrow from click made headlines to see if it were written sir. So first of all, explained to us, what's the difference between a check-cashing service and a bank all. Essentially, it's a service where someone can take their paycheck and for fee get cash for themselves and not going into the bank and they don't have a banking relationship with this company. That's what they do so they don't have a checking account or anything like that. They just going to a storefront basically and and taken a check and come out with cash and they don't have to worry about hidden fees. If they make a mistake or something like that so that's one of the reasons why they prefer that service.
When you read this story about this Prof. white catch your attention in the first place. Always like stories like this anyway, but it catches my attention because of the work that I did on payday lending which is illegal in North Carolina and it's illegal based essentially on what I consider economic paternalism, payday lending, check-cashing services.
These are things that people of of upper middle income or higher incomes. We don't really would want to do something like that doesn't seem like a very good idea to us and because of that we think that it's not a very good idea for other people.
For people of lower incomes with less options and we worry about, for example with the payday lending. It's been it's usually used to say that the, the and the APR for those things are effectively 100% but these are loans that usually are 2 to 4 weeks.
They might have a high service fee to go along with them, but it's not like a 400% annual APR because it doesn't go annual so these are the types of services. Whether it's check-cashing or whether it's time payday lending where black folks may not be attracted to it. But there are some people find it useful.
You've got this group of folks John in society and you are not among them. But this group of folks that thinks that these shouldn't be legal services because they prey on the poor but this Prof. decided to test this out what she find.
Well, she found that the poor and the people that use the service that had rational economic reasons for doing so. One they liked the cost they thought that overall it was saving the money they knew the cost upfront so they like that it was transparent and by saving the money it means they weren't hit with any surprise cost after the fact. They were hit with his fee if they made a mistake or or you know sometimes you get these banking fees which are not expecting or maybe you just for paying attention to the fine print that sort of thing. Are they like the fact that it was you understand exactly what you're going to cost upfront and also they like the service those services.
Check-cashing services tend to be very helpful tend to be very friendly services. They understand their clientele and they appreciate that they may be suspicious of banks I thought was interesting in this story that was part of your blog on this that that issue of relationship with the check-cashing teller and the store itself seem to be a really important one to folks who operate in that industry. Yes and and I think that's something that people of upper and higher incomes don't really think about that that sort of relationship can be quite important and I think there was that.
In fact, one CEO of a company who commented in the story that you linked to something about time we work on volume. So it's really important to us to have a relationship where customers are coming back again and again and again versus someone maybe his using traditional banking and seeing things as more of a commodity transaction rather than a relationship right and it also kind of I think bespeaks a suspicion of the type of person who would get into that business thinking about it from the aspect of your trying to take advantage of the poor and pray on the poor know they are trying to have a business relationship so they want to invite them then they want to be good at what they're doing and and some encouraged more and more business so they they're helpful they're not hurtful. John, do we know if this Prof. is planning to publish any material about tell what experience was, I believe the article suggested that she was not was one of the reasons why she she did that was that. She's working on a larger research project.
Interesting. I know that the person were talking about and I'm I'm using a cheat sheet hears you and I are talking looking at your blog.
Her name is Lisa serve on I believe is how you pronounce it Prof. of city and regional planning at the University of Pennsylvania, former dean at the new school and she has a new book it's called the earned banking of America how the new middle class survives what you perspective on the fact that she has now written a book about this subject. The so-called un-banked people who don't who are not a member of the traditional banking system is very interesting and it's a good topic for sociological survey sojourn. We have a lot of folks that adopt this theory and use the phrase economic paternalism. Why is that why are there people who think that they know better than someone else on think it makes you feel smarter. First of all think that and I think people actually are compassionate and trying to look out for their fellow men, but they're doing it. Sometimes, in a way that doesn't take into account that there are options that maybe you don't like that are still rational. When I mentioned the effective APR of a payday loan that doesn't even know it's a very high effective rate which state the normally calculate about 400% button in my research, it still better than if you have bounced check fees. It could be 3000 over 3000%.
If you've got overdraft protection still be 704%, doing the same math if you end up not paying your electricity bill would get a utility disconnect fee, which using effective APR math would be something like 244, and 20% credit card late payments could be 965%. So again it may not seem like a great option. But it is still an economically rational option if you are in a position that most of us would rather not be interesting to you that I think we can all agree that one service that you may not prefer to get involved in or I may not. But someone else may it somehow or another. Some folks want the government then to step in and to prohibit anyone from actually using that service pretty heavy-handed it is and like all things like that where the government ends up banning something it doesn't take away the option.
It just pushes them underground. Then you start looking at other kinds of lenders and loan sharks and they have course really bad options. That is why their legal. What I'm really looking forward to more of your writing on this issue. I suspect were going to hear more from you about this Prof.'s book called the end banking of American John Sanders as Dir. of regulatory studies for the Locke foundation. Thank you John.
Thanks to all the time we have for Carolina journal radio this week.
Thank you for listening on behalf of my cohost Mitch. Okay I'm Donna Martinez hope you'll come back again next week for more Carolina journal radio Carolina journal radio is a program of the job. To learn more about the John Locke foundation donations support programs like Carolina journal radio sending email to development John.call 1866 GLS info 16655466 airline is nearly formation foundation airline sponsored radio again