As Gov. Chris Sununu moves to undo the state’s overly burdensome occupational licensing regime, legislators are trying to add more licenses. 

On Wednesday, March 22, the House voted 210-166 to require a state license for the practice of music therapy. 

Why? Health insurance.

Supporters said New Hampshire needs to license music therapists to ensure that patients can be reimbursed by their health insurer when they purchase music therapy treatment. 

It’s not that music therapists don’t practice — and practice safely — in New Hampshire. They do. It’s purely a matter of insurer reimbursement.

But as Rep. Carol McGuire, R-Epsom, pointed out, that’s hardly a reason to create an entire licensing bureaucracy for one therapeutic specialty. 

“…it is not the best use of our time and our state resources to create a separate statute, a separate license, a separate registration board, separate rules for each tiny specialization in the therapy field,” McGuire said.

House Minority Leader Matt Wilhelm, D-Manchester, argued that licensing music therapists would increase the supply of music therapists.

“New Hampshire is in the middle of a mental health crisis and the need for therapists is an urgent need,” he said.  People who need this type of therapy “could benefit from additional therapists.”

“…if there were certified music therapists and licensed music therapists,” he said, “it would increase the amount of people that would have access to care and high-quality care….”

But research on occupational licensing finds that licensing requirements tend to reduce the supply of practitioners and drive up prices. 

Only nine states license music therapists, according to the Certification Board for Music Therapists, a national organization that promotes excellence in music therapy.

If House Bill 532 becomes law, New Hampshire would be the only New England state to require a license to practice music therapy. Rhode Island registers, but does not license, music therapists, and Connecticut requires certification, but not a license, for anyone who uses the title “music therapist.” 

National certification through a respected trade organization offers a simple method for consumers to seek outside expert verification of music therapist credentials. 

In fact, supporters did not even make a health or safety argument for the license. There were vague references to “quality” therapists, but no one argued that the public is in danger from unlicensed music therapists, or that consumers are incapable of checking a therapist’s degrees or other credentials. 

In his budget, Gov. Sununu proposed a thorough restructuring of the state’s occupational licensing bureaucracy, complete with a consolidation of numerous boards and the elimination of 21 permanent licenses and 13 temporary licenses.

Other states are moving in this same direction. There’s a growing movement nationwide to remove unnecessary barriers to economic opportunity, particularly after the COVID-19 pandemic exposed just how economically damaging so many licensing restrictions are. 

Creating an additional licensing bureaucracy for a single niche field — when no health or safety reason has been identified — would move New Hampshire in the opposite direction. 

If health insurance reimbursement is the issue legislators want to address, then they could do so through insurance laws.

 

Editor’s note: Do you like the painting used to illustrate this piece? It’s the first AI-generated art we’ve used to illustrate an essay. We asked for a woman listening to music in a therapist’s office. Not bad. And no artist’s license was required.

At Reason.com, Jacob Grier noticed that Massachusetts’ ban on flavored tobacco products has, predictably, created a black market in flavored cigarettes. The smuggling is so prevalent that law enforcement is running out of places to store seized products.

The Massachusetts Department of Revenue reports conducting more than 300 seizures in FY 2022, compared to 170 in 2021 and just 10 in 2020. Many of these involve substantial amounts of products and missed tax revenue. For example, a single search warrant yielded “a large quantity of untaxed ENDS products, [other tobacco products], and Newport Menthol cigarettes affixed with New Hampshire excise tax stamps” representing an estimated $940,000 in unpaid excise taxes.

Revenue officials are seizing so many illicit products, in fact, that they are running out of room to store them. The “Task Force’s increased investigative and enforcement activities during the past year have led to the seizure of large quantities of illegal tobacco products, resulting in a strain on the Task Force’s storage capacity,” says the report. But fear not, they are working on leasing additional space “that will significantly increase storage capacity and allow for continued increased enforcement.”

Official seizures represent only a fraction of the illicit trade, so the actual extent of illegal products and lost revenue is certainly larger. The state’s report notes that tobacco tax revenue has fallen by approximately 22.6 percent over three years. This is partially due to declining rates of smoking, but the authors acknowledge that smuggling of untaxed products may also be a factor.

A recent analysis of sales data by Reason Foundation, the nonprofit that publishes Reason, found that the decline in cigarette sales in Massachusetts coincided with substantial increases in sales in counties bordering the state.

Advocates of flavor bans downplay the potential for criminal prosecutions, but the experience in Massachusetts demonstrates that opponents are right to highlight this concern. The Task Force takes note of multiple criminal investigations leading to indictment or prosecution. Although violating the flavor ban is not in itself punishable by imprisonment, forcing these products onto illicit markets results in sellers violating state tax law. In Massachusetts, this is a felony punishable by up to five years in prison.

It’s only a matter of time (if it hasn’t happened already) before the first American will be sentenced to prison for selling menthol cigarettes or flavored e-cigarettes. It’s likely to happen in Massachusetts, where two men were arraigned last month on charges including tax evasion, money laundering, conspiracy to commit tax evasion, and flavor ban violation.

As we pointed out in 2020, not only did free-market advocates predict this black market, but the Massachusetts Multi-Agency Tobacco Task Force did too.

It’s fun to point out how New Hampshire benefits from this bad law. But as Grier notes, eventually people will go to prison simply for selling cigarettes that taste different than regular cigarettes. Ruining people’s lives in a misguided effort to control a product you have no hope of controlling is not funny.

A surefire way to suppress already low levels of youth employment is to raise the cost of employing younger workers. Some proposals in the Legislature would do that, in the name of helping these same workers. 

One proposal, House Bill 125, would make it illegal to employ 16-and 17-year-olds after 9 p.m. Sunday-Thursday and after midnight Friday and Saturday during the school year. 

Were this to become law, employers would be subject to fines of up to $2,500 each time a high school student clocks out a minute late. (These fines are seldom imposed, according to the state.)

State law currently caps at 35 the number of hours older teens can work during a five-day school week. HB 125 was intended to fix an oversight in a previous revision of youth employment law that inadvertently let teens ages 16 and 17 work up to 48 hours during shortened school weeks. But this particular attempt at a fix would inevitably trigger unintentional violations of state child labor laws. 

The predictable effect of such a law would be to discourage the hiring of high school students, and to reduce the hours of those who are hired. 

New Hampshire already limits youth under the age of 16 to working between 7 a.m. and 9 p.m. Adding a 9 p.m. curfew for older teens would further depress employment in this age group. Teen employment was declining sharply before the pandemic and fell again in 2020. It has not recovered to pre-pandemic levels. 

With a precise time limit on the books, employers would be in violation of state labor law every time a teen doesn’t punch out on time. To avoid being written up for labor law violations whenever a teen gets distracted at the end of his or her shift, employers would end shifts earlier, hire fewer teens, or both. 

As if intended to depress youth employment even further, House Bill 58 would raise the wage for tipped jobs to a minimum of $7.25 an hour. Currently, New Hampshire employers may pay wages as low as $3.26 an hour to employees who earn tips.

HB 58 would set the regular federal minimum as the floor for all jobs, even those with substantial tip income. Were this to become law, restaurants would have to pay all servers an additional $3.99 per hour. The negative effect on employment would be immediate and predictable. 

A University of California-Irvine study published last August found that raising the tipped minimum wage reduced employment. 

“(O)ur evidence is quite clear and unambiguous in pointing to higher tipped minimum wages (smaller tip credits) reducing jobs among tipped restaurant workers, without enough of an increase in earnings of those who remain employed to offset the job loss,” the authors found.

Other research has found that higher minimum wages reduced teen employment, and that “teens exposed to higher minimum wages since 2000 had acquired fewer skills in adulthood.” 

Well-intentioned regulations such as those in HB 58 and HB 125 would end up worsening New Hampshire’s existing labor shortage and hurting the very people they are intended to help. 

In 2019, the U.S. Bureau of Labor Statistics recorded 67,000 employed Granite Staters between the ages of 20-24. In 2022, that number was down to 52,000. 

In 2019, the state estimated the number of waiters and waitresses in New Hampshire at 12,390. In last year’s report, it was down to 7,260, a decline of 41%, even though the entry-level wage was $1 per hour higher. 

Restaurants, already pressed by rising supply, labor and energy costs, have been raising prices to maintain their meager margins. Add in a state mandate to more than double base pay for wait staff, and some restaurants certainly will be forced out of business. Others will raise prices even further. Restaurant prices rose 8.2% from January of 2022 to January of 2023, according to the National Restaurant Association. That’s higher than overall consumer prices, which rose 6.4%.  

According to surveys of New Hampshire Lodging and Restaurant Association members, servers in New Hampshire earn between $20-$45 an hour when tips are included. Granite Staters do tip generously, ranking fifth nationally and first in New England, according to Toast, a Boston company that provides software for point-of-service tablets used by the restaurant industry.

As New Hampshire employers struggle with a labor shortage, persistent inflation and predictions of a looming recession, artificially increasing the cost of employing younger and lower-skilled workers would add an additional burden. As that burden would be tied to the hiring of those workers, it would likely lead to reduced opportunities for them. 

Hurting both employers and younger workers is not the intent of such regulations, but it would be the predicted outcome.  

“Healthy market competition is fundamental to a well-functioning U.S. economy. Basic economic theory demonstrates that when firms have to compete for customers, it leads to lower prices, higher quality goods and services, greater variety, and more innovation.”

— Heather Boushey and Helen Knudsen, “The Importance of Competition for the American Economy,” The White House, July 9, 2021

Competition has been central to American life from the beginning. It’s at the core of the American identity. As the Biden administration has stated (in the quote above), competition has proven its public value by stimulating the innovation that improves quality and lowers prices. 

Libraries full of economic research bear this out. As a paper for the Organization for Economic Cooperation and Development put it in 2002: “Competition has pervasive and long-lasting effects on economic performance by affecting economic actors’ incentive structure, by encouraging their innovative activities, and by selecting more efficient ones from less efficient ones over time.”

This applies to all industries, including education. School choice is expanding in state after state because the data show that it works. And it works not just for students who enroll in alternative programs but for those whose families choose traditional public schools as well.

“We find evidence that as public schools are more exposed to private school choice, their students experience increasing benefits as the program scales up,” a 2020 study of Florida’s tax credit scholarships found. “In particular, higher levels of private school choice exposure are associated with lower rates of suspensions and absences, and with higher standardized test scores in reading and in math.”

That’s not a fluke. 

Of 28 studies that have examined the competitive effects of various school choice programs on students who remain in traditional public schools, two found negative effects, one could find no effect, and 25 found positive effects, as EdChoice details in its compilation of school choice studies titled The 123s of School Choice. 

What about educational outcomes, such as graduating from high school or college? No study has found a negative effect, and most have found positive effects. 

For example, a 2019 Urban Institute study of Florida’s tax credit scholarship program, the nation’s largest private school choice program, found that it generated a 12% increase in college attendance.  

The vast majority of research on school choice finds that the introduction of a choice program tends to improve test scores, educational outcomes, parental satisfaction, integration, and civic values and practices — while saving money. 

The financial effects have been studied the most, and their findings aren’t surprising. Of 73 studies of the fiscal effects of school choice programs, five found a net cost increase, four found cost neutrality, and 68 found that the introduction of choice generated cost savings. 

School choice works because the competitive forces unlocked by the creation of a robust marketplace generate the same positive effects in education that they do in other industries. 

“Students attending schools with more competitive pressure made larger gains as program enrollment grew statewide than did students at schools with less market competition,” the authors of the 2020 Florida study wrote.

Because competition has been proven to generate positive outcomes in education, as in other industries, protecting education from competition can only harm students. 

The fastest way to improve outcomes for New Hampshire students is to give them more options. This can be done with a simple change. 

Eligibility for both the Tax Credit Scholarship and the Education Freedom Account programs is capped at 300% of federal poverty level. Removing the income cap and making both programs universally accessible would stimulate innovation, and match more students with their best educational environment, more rapidly than any other reform. 

Were all students to become eligible for both programs, competition would quickly begin to work its magic. There is no faster, more effective way to improve outcomes for all students. 

As legislators consider more proposals to expand Medicaid eligibility or services to specific populations, they ought to consider that Medicaid is both like and unlike the universe.

Like the universe, Medicaid is expanding faster than it should be. Unlike the universe, there’s no scientific possibility of Medicaid expanding forever. (Maybe the universe can’t either.)

Two bills moving through the Legislature this session are based on increasingly questionable assumptions about federal spending commitments. House Bill 282 would end the five-year waiting period for Medicaid eligibility for “lawfully residing” children and pregnant immigrants. House Bill 565 would extend Medicaid benefits for new mothers from two months after birth to a full year. 

These expansions come as New Hampshire enjoys a temporary, pandemic-related increase in its Federal Medical Assistance Percentage (FMAP), which is the share of Medicaid spending the federal government covers. For the duration of the federally declared COVID-19 emergency, 56.2% of New Hampshire Medicaid spending is covered by the federal government. When the emergency declaration ends on May 11, New Hampshire’s FMAP rate reverts to its normal level of 50%. 

(Incidentally, the additional 6.2 percentage points of additional federal funding during the pandemic emergency was given on the condition that the state not conduct eligibility determinations. That waiver of eligibility requirements will end when the emergency ends, which will affect an estimated 72,500 current enrollees. The pandemic enrollment increase has been so costly to the state that it has pumped additional federal funds into the Medicaid program.)

Legislators tend to assume that the default 50% rate will continue indefinitely. But the federal budget situation could prompt reductions in the federal contribution, something the Congressional Budget Office (CBO) recently suggested. 

The CBO this month projected that the federal deficit will nearly double from $1.4 trillion to $2.7 trillion in the next decade, and the federal debt held by the public would reach a record 118% of Gross Domestic Product. 

This record debt is driven by historically high federal spending, which is projected to increase from 23.7% of GDP to 24.9% of GDP by 2033. Federal spending has exceeded 24% of GDP only during World War II, the 2008 financial crisis, and the COVID pandemic. The CBO projects it to reach this level again within the next decade simply due to regular budget outlays. 

Federal revenues, meanwhile, are projected to remain around 18% of GDP through 2033. 

That unsustainable course will put pressure on Congress to cut costs or raise taxes or both. Anticipating this, the CBO in December offered suggestions for reducing the federal deficit. In the area of health care spending, the CBO suggested that Congress “establish caps on federal spending for Medicaid” and “reduce federal Medicaid matching rates.” 

Such actions are not out of the question. As the Congressional Research Service puts it, “Medicaid was designed to provide coverage to groups with a wide range of health care needs that historically were excluded from the private health insurance market.” But the program has grown over the years to cover people who could find coverage in the private market. 

By routinely expanding Medicaid benefits and eligibility, lawmakers have grown the program’s outlays from $206.2 billion at the turn of this century to $748 billion in federal fiscal year 2021. Medicaid accounts for 17% of U.S. health care expenditures. 

These expansions are unsustainable for both the state and federal governments. Eventually, some level of financial discipline, however small or limited, will have to be imposed. Clawing back Medicaid spending is politically easier than touching Social Security or Medicare. That is especially true after Medicaid has grown to cover people who could find alternative insurance coverage. Given those realities, current levels of federal Medicaid spending cannot be taken for granted.

Any discussion of expanding Medicaid coverage or eligibility should start with the understanding that current spending levels are unsustainable, and increasing those levels just accelerates the date of reckoning.

In the midst of an acute labor shortage that has pushed wages to new highs, a few legislators have opted to introduce another bill to raise New Hampshire’s minimum wage. 

House Bill 57 would raise the minimum wage to $15 an hour by 2025, then tie it to the inflation rate, ensuring regular, automatic increases. 

New Hampshire has about 48,000 job openings, according to U.S. Bureau of Labor Statistics data, and only about 20,000 unemployed persons. 

This imbalance between job openings and available labor has persisted for years. And that has driven wages in New Hampshire higher. New Hampshire Employment Security put the mean average wage at $30.12 an hour in last year’s report (based on 2021 data). In 2019, it was $25.94. 

The average entry-level wage in the 2022 report was $14.36, up from $11.80 in 2019. 

Competitive pressure is pushing wages up to the point that dishwashers have moved out of the list of the 10 lowest-paid occupations in the state. The lowest average wage in the 2022 report belonged to gambling dealers, at $11.59 an hour. Food preparation workers were above that at $12,10 an hour. 

With a booming economy and a severe labor shortage combining to raise wages naturally, the market is already moving compensation in low-paying occupations toward the $15 an hour goal. House Bill 57 would mandate a $13.50 minimum wage by this September. Fast food restaurants regularly advertise jobs well above that rate now, and food prep workers on average are quickly approaching that level. 

Into this discussion, researchers last month dropped yet another study showing that minimum wage increases have costs that can make people who work in the lowest-paid occupations worse off. 

Researchers at the John Hopkins Bloomberg School of Public Health and the University of Minnesota-Twin Cities School of Public Health found that minimum wage increases reduced the number of employers who offered health insurance. 

“We find that a $1 increase in minimum wages is associated with a 0.90 percentage point (p.p.) decrease in the percentage of employers offering health insurance, largely driven by small employers and employers with more low-wage employees. A $1 increase is also associated with a 1.80 p.p. increase in the prevalence of plans with a deductible and three percent increase in average deductibles.”

Though minimum wage hikes led to reductions in employer-sponsored health insurance, they did not lead to increases in uninsured rates, the authors found. That is “likely explained by an increase in Medicaid enrollment,” they wrote.

This study comes on top of decades’ worth of research that, on the whole, tends to find a negative effect on employment — particularly for younger workers and those with less education — from minimum wage increases. 

The preponderance of research on minimum wage increases shows that government-mandated compensation increases are not cost-free. Forcing employers to raise wages in ways that are unrelated to productivity tends to result in shifting resources from other parts of the business. That can include eliminating hours, positions or benefits.

Advocates for high minimum wages seem to assume that employers, including small businesses, simply have troves of cash reserves lying around and pay what they do out of stinginess. But employers generally aren’t sitting on piles of treasure like Smaug in his cave under Lonely Mountain.

And employers can’t simply manufacture more money whenever they want to spend more. Only the government can do that. Employers have to make trade-offs. If the government makes them pay more for low-skilled labor, they’ll take that money from somewhere else. And the results won’t necessarily be net positive for the low-skilled workers legislators intended to help. Usually, the opposite is true. 

New Hampshire’s view of national politics is distorted by the presidential primary. The distortion is so strong that sometimes we fail to see broader national trends until they become part of a narrower story about presidential ambitions.

Gov. Chris Sununu’s 2023 inaugural address is a perfect example. The speech stands on its own as a statement of what we might call New Hampshire exceptionalism.

“Over the last six years, New Hampshire has become an island of freedom surrounded by highly taxed, highly regulated states.

“We are a harbor for citizens fleeing the states they once called home in pursuit of our Live Free or Die way of life.

“We continue to open up doors of opportunity, giving families the freedom to choose the path that best suits their needs.

“We have provided leadership that puts ‘The Individual’ ahead of ‘The System.’ Ensuring that everyone — regardless of income, gender, race, or religion – has the same opportunities to succeed.”

The speech drew immediate comparisons with Florida Gov. Ron DeSantis’ 2023 inaugural address, delivered two days before.

Both governors cited studies that rated their states high in measures of economic and personal freedom, and quality of life. Both portrayed their states as refuges for free people fleeing the grip of heavy-handed government in neighboring provinces.

DeSantis and Sununu are being discussed as potential rivals for the 2024 Republican presidential nomination. So the similarities in their speeches were taken by many as evidence of their ambitions.

There’s obvious merit to such observations. And yet presidential ambition can’t entirely explain these speeches. Something larger — and more important — is at work here.

Governors listing their state’s accolades is nothing new. Maggie Hassan touted New Hampshire’s national rankings in her 2013 inaugural address. What’s most noteworthy this year is how similar Florida’s and New Hampshire’s ratings are.

As we’ve written before, Florida and New Hampshire have become rivals for the top spot in the Fraser Institute’s Economic Freedom in North America report. (In 2021, New Hampshire ranked No. 1, Florida No. 2. They switched places in 2022.)

That’s not an accident. Florida’s elected officials have spent many years striving to improve their state’s economic position relative to rivals such as New Hampshire, Texas, Tennessee and North Carolina.

This is how Rick Scott began his inaugural address in 2011:

“We gather today to talk about Florida’s future.

“To assess where we are . . .

“To define where we want to go . . .

“And to plan how to get there.

“Clear goals and hard work can achieve amazing things.

“The giant oak trees that surround us here

“ARE what they ARE

“Because acorns had a plan.

“Once we take the right steps, I am absolutely convinced that Florida will become the most exciting place in the world to live and work.

“Let’s begin by facing squarely the challenge of our time-a stalled economy.”

Scott said moments later, “job creation is a MISSION.”

He proposed to cut taxes and regulations, reform the bureaucracy, and expand educational opportunities.

Four years later, in his 2015 inaugural address, he touted the 700,000 jobs Floridians had created.

National rankings of the kind Sununu and DeSantis cited are metrics by which governors increasingly finding themselves measured — by themselves, their rivals and voters.

It’s difficult to say how much these rankings guide governors and legislators. As college rankings have been shown to influence university administrations, it’s likely that these now constant state rankings do help to shape policy.

And they appear to be focusing state leaders on policies that stimulate economic growth, and for good reason. Policies that lead to growth lead to better economic and social outcomes, which then lead to higher rankings.

Economic growth creates jobs, raises incomes and improves health and well-being. As Veronique de Rugy wrote last week:

The economy grew at an average of 3.5% between 1950 and 2000. Since 2000, that rate has slowed to 1.7%. The cost of lower growth is real. John Cochrane does the math for us: “If the U.S. economy had grown at 2% rather than 3.5% since 1950, income per person by 2000 would have been $23,000 not $50,000.”

What policy other than economic growth has the power to double the average American’s living standard in a generation? None. And here’s the cherry on top: All the stuff an advocate anywhere on the political spectrum claims to value—good health, clean environment, safety, families and quality of life—depends on higher growth.

Faster economic growth is likely to engender even greater benefits for the bottom 50% of the income distribution, which contains young people just starting their careers, retirees trying to stretch their fixed incomes with part-time work, and those populations that are caught in intergenerational cycles of poverty. And this is true everywhere in the world. As Harvard University’s Dani Rodrik rightly sums up, “Historically nothing has worked better than economic growth in enabling societies to improve the life chances of their members, including those at the very bottom.”

Governors have caught on. Because they want to end their terms with wealthier, happier people, they’ve become more aggressive in their pursuit of growth-focused economic policies.

In his 2015 inaugural address, Arkansas Gov. Asa Hutchinson proposed cutting taxes and improving public education to “compete and win in this global marketplace.”

In his 2021 State of the State address, Texas Gov. Greg Abbott boasted of his state’s top national rankings and said the government had a duty to “keep Texas the freedom capital of America.”

Even governors of states that are losing population and businesses are finding ways to claim the title of most free state. California Gov. Gavin Newsom last week claimed his was the “true freedom state.”

In some states, legislators are leading the way. Last year, North Carolina celebrated its CNBC ranking as “America’s top state for business” after a decade-long push to reform the tax code helped create “the nation’s strongest economy.”

The big story here is not the 2024 presidential primary. It’s that state-level elected officials, particularly governors, are thinking an acting as if they’re engaged in a national competition to achieve the greatest economic, educational and social welfare gains for their populations.

They’re pursuing not just results, but results that can be measured.

In that pursuit, they’ve learned that creating a climate conducive to economic growth produces the best results.

New Hampshire learned this decades ago. Our growth-based policies created the New Hampshire Advantage, which made us the economic marvel of New England.

Now that so many others have caught on, New Hampshire can’t afford to slack off. Being an island of liberty in the Northeast has dramatically improved our quality of life here. But the field of competition has expanded well beyond New England.

States all over the country are working every day to lure our young people and poach our businesses. If we stop pushing for competitive advantages by keeping taxes low, improving educational opportunities, budgeting more efficiently, and removing barriers to entrepreneurship and economic opportunity, we risk undoing the massive gains we’ve made since the middle of the last century.

It’s a mistake to view the Sununu and DeSantis inaugural addresses purely through the lens of the presidential primary.

These governors have become part of the presidential conversation because of their policy successes. And those successes are rooted in an older, ongoing competition among many states (often led by governors) to improve measurable outcomes for their residents.

That ongoing, and progressively more intense, competition is the bigger story.

The legend of Santa Claus is based on the actual St. Nicholas, and all tales of jolly old St. Nick share the same beginning. 

Nicholas, born in 280 AD, was orphaned when his parents died in an epidemic. He went to live with his uncle, a Christian bishop. Strong in his faith, the young Nicholas chose to devote his life to serving others. In pursuit of this mission he began giving away his family fortune.

Wait, his what?

Nicholas’ parents were, depending on the version of the story, either wealthy or at least very prosperous. When they died, the boy is said to have inherited quite a lot of money. 

Somehow, this detail often gets left out of the Santa story. Think of all the Christmas stories you’ve heard. How many times have they mentioned that Santa was rich?

Our tradition of hanging stockings at Christmas is rooted in the legend of St. Nicholas tossing three bags (or balls) of gold through the window of a poor man’s house to provide a dowry for each of the man’s three daughters. The gold is supposed to have landed in the girls’ shoes or their stockings that were hanging by the fireplace to dry. Nicholas perpetrated this good deed at night in obedience to Matthew 6:1, which warns against performing works of charity in front of others. 

Nicholas’ charity became the stuff of legend, and tales spread of a saint who gave money to the poor and helped children (even bringing some back to life through prayer). 

All of this was miraculous in the third century. Today, bringing people back to life through prayer is still miraculous. But people giving away enormous sums of money happens every day and we don’t consider it remarkable at all.

In the centuries since St. Nicholas tossed his inherited gold through the poor man’s window, economic growth has created millions of Santas. And we can create more. 

An obvious but overlooked lesson in the Santa Claus story is that the one necessary precondition for the existence of Santa Claus is wealth. 

Had Nicholas been poor, he’d have had no gold to give away. 

(Yes, Santa’s got a brand new bag, and it’s full of money.) 

When you think about it, having more than you need for survival is the foundation of all charity. And so the key to stimulating more charitable giving is to create more wealth. 

Research on charitable giving bears this out. When the economy grows, charitable giving increases. When it shrinks, charitable giving also shrinks.  

In 2021, Americans gave away $484.5 billion. And that’s just in official donations that can be tabulated. It’s doubtful that St. Nicholas could’ve comprehended a sum so large. 

But there’s another, even greater, benefit of economic growth. It reduces the need for charity in the first place. 

This chart of global hunger vs. GDP per capita shows how economic growth feeds the poor.

This chart of child mortality by level of prosperity shows how economic growth saves children’s lives. 

This chart of world GDP during the last two millennia shows the power of growth to lift people out of poverty.

Simply put, economic growth has created millions of Santas who give away billions of dollars a year. And the economy itself has become a sort of super Santa, enriching humanity and keeping children alive on a scale that St. Nicholas would envy. 

In “A Christmas Carol,” why isn’t Scrooge poor? Because a poor Scrooge could do nothing for Bob Cratchit and Tiny Tim. The spirits save Scrooge’s soul, but Scrooge’s wealth saves Tiny Tim’s life.

The stories of St. Nicholas and Scrooge both focus on their hearts. Their desire to help others is central to their transformation into folk heroes. But their charitable acts are made possible by their wealth.

The best way to spread Christmas cheer might well be singing loud for all to hear. But the best way to spread Christmas giving is to make everyone prosperous.

In the opening of “The Muppets Christmas Carol,” Gonzo and Rizzo the Rat are selling apples in a dingy London market. Gonzo scolds Rizzo for eating the inventory. 

“Hey, I’m creatin’ scarcity,” Rizzo replies. “Drives the prices up.”

Rizzo is a clever rat.

Later in the movie, the ghosts of the Marleys tell Scrooge how they enjoyed overcharging the poor for rent. (In the Muppets version, there are two Marleys.)

Rizzo didn’t comment on those lines, but he might’ve dead-panned, “maybe someone ate the apartments and drove up prices?”

As Dickens’ classic tale is retold and rewatched this Christmas season, many Granite Staters face a harsh reality that Rizzo — and Scrooge — would understand. Scarcity keeps driving up prices for homes and apartments. 

You don’t need to be visited by the ghosts of housing markets past to see the problem — and why Scrooge would love it. You just have to compare the markets for short-term and long-term rentals.

Demand for short-term rentals has surged nationwide. The number of nights booked in short-term rentals rose 15.8% from October of 2021 to October of 2022, The Wall Street Journal reported last week. 

Investors in short-term rental properties expected prices to rise along with demand. But something happened on the way to sipping daiquiris on the beach as the rent money poured in. A lot of other people responded to the high rates by offering their properties for rent too.

“However, while the absolute number of bookings has risen, there has also been a sharp rise in supply of available short-term rental listings in the U.S., up 23.3% in October 2022 compared with October 2021,” the Journal reported. 

A woman who rents her California home on Airbnb told the Journal, “I’ve felt a massive drop” in rents she can charge. A holiday weekend at her home fell from more than $1,000 per night during the pandemic to around $275 now. Why such a collapse? Demand rose, which drove up prices, and those higher prices prompted investors to increase supply, which brought prices back down. That’s how a market would normally function. 

But it’s not how the market for long-term rentals works. 

In October, median rents were up nationwide by 7.8 percentage points, year over year, according to rent.com. In New Hampshire, the median rent was up 14.12%, by the website’s measure. 

Would-be home-buyers have experienced similar price increases. The median single-family existing-home price was up 8.6% in the third quarter, according to realtor.com. The Union Leader reported Tuesday that the median single-family home price in New Hampshire rose by $34,000 from last November to this November. It’s now $435,000.

For homes, apartments and short-term rentals, demand remains strong. But prices have fallen in only one of those markets: the one where supply faces the fewest constraints.  

“My reaction is that the growth in short-term rentals has come about because people are converting their own homes, or parts of them, into short-term rentals,” said Jason Sorens, director of the Center for Ethics in Society at St. Anselm College and author of the Josiah Bartlett Center’s 2021 housing report. “Rarely do people build units specifically for short-term rental. And that’s where the real housing supply bottleneck is: it’s become harder to build. Without more building, we aren’t going to see a similar supply increase for long-term rentals. But the other point this news shows us is that if we did increase supply, it would reduce rents.”

As we documented last year, overly restrictive local regulations are a significant barrier to new development in New Hampshire. These regulations make it difficult to build new housing, which prevents developers from meeting demand. That creates scarcity, which drives up prices. Rizzo would be proud. 

And Scrooge would be thrilled. Scrooge, don’t forget, was a landlord as well as a money lender. He could get away with charging outrageous rents for decades only if his renters had no cheaper options. So Scrooge would be no fan of loosening land use regulations to allow more apartment and home construction.

If Granite Staters want to avoid turning our existing housing shortage into a Dickensian nightmare, the only solution is to loosen the restrictions and let developers create more supply.   

Newly elected lawmakers meet Wednesday to elect officers for the legislative session that starts in January. The House is divided 201-198, with one seat open, as the race ended in a tie. With such a narrow majority, leadership votes could get contentious quickly, and the opportunity for drama is higher than usual. 

How dramatic could things get? It turns out that we have some precedent to look to for answers. And we looked at it. And, well, the words “uh-oh” come to mind. 

Only once in New Hampshire history has the House of Representatives been more closely divided than it is for the 2023 session. That was in 1871, a time not renowned for its civility.

Just six years after the Civil War ended, New Hampshire elected a legislature evenly divided between Democrats and Republicans. The Senate consisted of six Democrats and six Republicans; the House sat 165 Democrats and 164 Republicans.  

When the House session opened on June 7, the stakes were not just high, they could hardly have been higher. Not only was House leadership up for grabs, but two Senate seats were unfilled, and filling them fell to the House. Oh, and the governor’s race that year also fell to the House. Control of the entire state government was on the line.  

That was the situation when members gathered in the morning to elect officers. Election of a speaker was the top order of business, and it was conducted without a fight. On the first ballot, Rep. William Gove of Weare was elected speaker 164-162. 

Rep. Gove was escorted to the chair by two members, whereupon he addressed the divided body as “gentlemen” and delivered a short and conciliatory speech. 

“It may not, perhaps, be amiss for me to express the hope that we shall approach the duties and responsibilities of this session with that careful deliberation and earnest forethought which are so necessary to wise and impartial legislation,” he said. 

And so the members of the House did proceed with careful deliberation and earnest forethought to deploy the diligently memorized rules, norms and customs of the people’s House in service of the most public-spirited effort to effect the destruction of their political opponents.  

The first order of business after choosing a speaker was to elect the House clerk and assistant clerk. This simple task took the next two days. In the process, names were struck from motions, the speaker was challenged, votes miraculously changed overnight, and members tried to pass resolutions to expel their colleagues.  

The initial motion to elect James Jackson of Littleton as clerk and James Colbath of Barnstead as assistant clerk was hit immediately with an amendment to scratch the names and “proceed by ballot to the choice of a Clerk.” The vote on the amendment was 160-159, so Speaker Gove had to cast his first vote to create a tie. The partisan maneuvering had begun. 

An attempt to replace the clerk slate with two other names was killed 161-162, and it was followed by a motion to adjourn, which also failed, followed by a motion to table, which also failed. Then a member questioned the legality of the original motion, asserting that a special rule was needed.

Speaker Gove ruled that a special rule was not needed. In the ensuing series of votes, a motion to uphold his ruling failed 162-164. This was quickly followed by a vote to adjourn, which passed.

When Day 2 of the session opened at 10 a.m. on Thursday and a prayer was said, a member moved to draw seats, and another member moved to declare the drawing of seats null and void. Things went downhill from there.

A motion to adjourn until the next day was defeated, followed by a motion to lay the drawing of seats on the table, which was also defeated. Unable or unwilling to get anything else done, the House then adjourned until 3 p.m.

Upon returning, representatives drew their seats, then sustained the speaker’s ruling from the previous day. How? The majority claimed to have discovered overnight that the previous day’s 162-164 vote against the speaker’s ruling was in fact a 162-154 vote to sustain the speaker’s ruling. 

The question was then moved to vote by ballot on the clerk and assistant clerk. The speaker ruled the motion out of order and refused to hear an appeal. A member from Somersworth asked to be excused from the voting but the speaker would not excuse him. A vote on whether to put the main question (of electing a clerk) was moved, and the vote was 163-163. The speaker broke the tie. 

Then the gloves came off.

A member rose to offer a resolution to expel another member from the House on the grounds that he hadn’t lived in the state for at least two years, as required by the state constitution. The speaker ruled the resolution out of order. A motion to adjourn was made, but failed to pass. 

Finally, the first half of the original motion, to elect Jackson as clerk, was brought to the floor and passed 164-162. A motion to adjourn was offered, ruled out of order, and the vote for Colbath as assistant speaker followed and was passed 163-162. The House adjourned, having accomplished the election of its three key officers over two days.

The representatives had obviously ignored Speaker Gove’s request in his acceptance speech that members conduct their business “with as little consumption of time as is consistent with due diligence and careful consideration.”

On Friday, June 9, the House reconvened, and members from both sides began bombarding the speaker with resolutions to expel other members for not being qualified to serve. A member from Milford was called to order for violating House rules by stating that Democrats had behaved poorly in former years and he was “going to give them some of their own medicine.”

On Saturday, members elected two senators and Democrat James Weston of Manchester (namesake of Weston Observatory, and pictured above) as governor.

With a one-seat House majority, Democrats managed to get their governor and a Democratic president of the evenly divided Senate. The hard-fought victories lasted only for that session, though.

The next year, voters elected a Republican governor, an 8-4 Republican Senate, and a 210-150 Republican House. Which could be a good reminder that, in politics, victories — and losses — are not always as high-stakes as they often feel.

(Editor’s note: The House records from back then are not as orderly as they are today. If any reader finds a minor error in the narrative of these votes, please let us know and we’d be happy to correct it.)