David Nicklaus has a new column on Speaker Jetton’s proposal to exempt Social Security benefits and various other forms of retirement income from the income tax:

f you’re concerned about economic efficiency, this is the wrong kind of tax policy. It’s true that high tax rates make people less motivated to work, save and invest. The best way to stimulate the economy is to cut tax rates, not treat some forms of income differently than others.

Proponents of the senior-citizen tax break have said it will entice retirees to settle in Missouri. That might be true in a few cases. But if we’re trying to entice people to move in, shouldn’t we cut taxes instead on working people and the businesses that employ them?

Sometimes it’s desirable to trade efficiency for other social goals, such as helping the poor. But the senior citizens who would benefit from this tax cut aren’t poor. The Institute for Taxation and Economic Policy estimates that 72 percent of Missouri’s Social Security recipients already pay no tax on their benefits. The benefits of Jetton’s proposal would go overwhelmingly to the wealthiest 3 percent, those earning more than $132,000 a year.

Quite so. I’m always sympathetic to tax cuts, and there are good arguments for Jetton’s proposal. Certainly, I’d rather cut taxes for seniors than have the legislature spend the money. But It’s bad economics for elected officials to be playing favorites, cutting taxes for certain groups while leaving taxes high for others. What this state really needs are broad tax cuts that lighten everyone’s tax burden. Retirees deserve a tax cut, but so do working families and entrepreneurs.

An ongoing court case pits the state of Missouri against a coalition of Missouri school districts who are seeking court-ordered funding increases. The districts allege that their inability to perform is directly linked to the state’s inability to adequately fund them. This approach is typical of public school systems incapable of providing their students with the necessary education to succeed: complain about money while carrying on with the same failed methods of instruction and administration. This leads one to ask: whose well-being is this lawsuit really about, education professionals or the students?

According to expert testimony, Missouri’s education funding procedure was rewritten in 2005 to reflect changing students needs across the state’s districts. This should be what matters most to these districts. Their solution for fulfilling those needs: more money, same programs, same teachers, same administrators. If more money always meant better results, their request wouldn’t seem so egregious, but further expert testimony asserts that money isn’t always the solution. Here’s one possible solution: Instead of tying the money to the districts and their ineffectual administrators, lets give the money to the student and their parent’s (it’s their money anyway, right?), and let them decide for themselves where they want to get their education. Educators often work to preserve the status quo, except when it involves their paychecks. True education reform will change this unfortunate arrangement.

One of the most popular canards in politics today is the notion that we need to reduce our dependence on “foreign oil.” Governor Blunt repeated this chestnut at an address to (who else?) the Missouri Corngrowers Association.

I don’t blame Blunt for pandering to a powerful constituency. Lots of politicians—Democrat and Republican—have used the alleged problem of foreign oil as part of their justification for providing more welfare to corn farmers. But just because everyone says we need to end our “dependence” on foreign oil doesn’t mean it’s true.

The most fundamental thing to understand about oil economics is that oil is that it’s an interchangible global commodity. (It is, in economics jargon, fungible) if we stopped buying oil from Iran or Saudi Arabia, they would just turn around and sell their oil to China, France, or Japan instead. Oil-exporting countries, by and large, don’t care who they sell their oil to, and the laws of supply and demand ensure that they’ll be able to sell their oil to somebody, albeit perhaps at a somewhat lower price.

It’s sometimes argued that all the oil in the Middle East requires us to get involved in foreign conflicts like the war in Iraq. But this doesn’t make a whole lot of sense either. Obviously, there are lots of good reasons to prefer a peaceful, democratic Middle East to one ruled by erratic despots. But despots seem just as willing as anyone else to sell us oil. Foreign countries don’t sell us their oil as a personal favor. They sell us oil because we have the money to pay for it. No matter who’s in charge in Iran or Saudi Arabia, they’ll most likely be interested in the revenues that come with oil exports. And as the richest country on Earth, we’ll have little trouble outbidding other nations for the oil we need.

But doesn’t our dependence on foreign oil make us subject to blackmail from those countries? Jerry Taylor and Peter Van Doren, two economists at the Cato Institute, explain why this is silly:

Even if you think that OPEC has the means and motive to use this alleged oil weapon, there’s not a thing we can do about it. First, even if every drop of oil we consumed came from Oklahoma, Texas, and Alaska, a cutback in OPEC production would raise domestic oil prices as high as if all our oil came from Saudi Arabia. That’s because there are no regional markets for oil — only global markets — and because prices always reflect opportunity costs in free markets, regional prices invariably rise to the world price. In 1979, for instance, Great Britain was “energy independent” — virtually all the crude oil it consumed came from the North Sea. But the oil price spike of 1979 hit Great Britain as hard as it hit Japan, a country dependent upon imports for its oil. No country can wall itself off from the world market.

Private firms have a place in public education after all. From PubDef:

Dr. Martin said that SLPS has evidence that the district has met the sixth standard, a measure of the percentage of high school graduates that go on to college.

Martin said the district contracted with a private firm, for a fee of just $450 per high school, which tracked down recent graduates and confirmed their enrollment in institutes of higher learning.

It is now up to the state board to accept this new data, or instead ignore it and move on with stripping the district of its provisional accreditation.

Notice how efficiently the private firm was able to provide this service. There are 17 high schools in the district. So the firm must have been paid $7,650–just $39.03 per administrator employed by the Saint Louis Public Schools.

The question we should be asking is: How many of those kids in college have to take remedial courses?

Today’s announcement by Wal-Mart got me thinking about this study by the Show-Me Institute.  Wal-Mart is opening 9 new stores in economically depressed areas around the country.  Did local earning’s taxes have an effect on where Wal-Mart chose to locate?  Here is am important nugget from the report:

East Hills, Pennsylvania, is a community just outside of Pittsburgh.

So Wal-Mart is locating just outside of Pittsburgh.  What does Pittsburgh have that East Hills almost certainly does not?  Besides the Steelers and Pirates…An Earnings Tax of 1%.  On the other hand, Wal-Mart is locating within the city limits of Indianapolis which has an earnings tax, although at 0.7% it is the lowest such tax in the country.  Wal-Mart appears to have located new stores in suburbs just outside of major cities, such as Atlanta, San Francisco and Washington, DC.  While those last three cities do not have earnings taxes, they very likely do have higher taxes in general than the chosen suburbs outside them.

Wal-Mart is also opening a store that appears to be within the city limits of Cleveland, which has a high earnings tax of 2%.  However, the new Cleveland store appears to be a part of a major revitalisation project, Steelyard Commons, which likely has substantial tax incentives that would offset the earnings tax.  Chicago, the other major site for a new Wal-Mart within municipal limits, does not have any earnings tax.

The final store count is two out of nine in cities with earnings taxes. One in a large city without an earnings tax.  Three in suburbs without earnings taxes located just outside major cities, and three in more distant suburban areas without earnings taxes.  I must conclude that earnings and other local taxes were a significant, but not the decisive, factor in where Wal-Mart has chosen to open these new stores.

The Missouri Department of Elementary and Secondary Education is working on a plan to create virtual classes for Missouri students. This program would serve three basic purposes: first, it would give students, particularly rural ones, access to classes they might not otherwise have access to; second, it would enable students to retake courses at any time, rather than having to wait for that course to become available the following school year; third, it would grant further access to Advanced Placement courses, as only about a third of Missouri’s districts currently offer such classes.

Some educators are understandably wary about such a program: it could threaten their jobs significantly. If students find their needs are better served through an online program, as opposed to a traditional public school classroom, they may decide against attending public schools at all, and instead switch to homeschooling supplemented with online classes. While this prospect bodes ill for those schools and districts that do not meet student needs, it gives those schools a positive incentive to improve their services to compete with the new program. This can only lead to better schools and educational options for Missouri’s students.

Some logistical concerns do apply as well. The new program presents challenges in conforming with current No Child Left Behind laws, and the requisite testing for that program. Presumably all Missouri students would still be required to take the Missouri Assessment Program test, and those taking online classes could conceivably lower the states overall score on that test if the online classes do not include the relevant material for the test. There are also concerns about enrollment; demand has already grown beyond supply, and some kind of lottery system will likely be implemented to deal with the overruns. These concerns aside, any program that creates choice for Missouri’s students and puts pressure on schools and teacher to perform can only prove beneficial to public education in Missouri.

The Columbia Daily Tribune has a story on a new proposal for tax credits to direct more money toward failing public schools:

The bill would allow Missouri’s 13 unaccredited or partially accredited school districts to apply for grants to implement proven intervention programs such as early childhood education or tutoring programs. Corporations would receive tax credits on 50 percent of their contributions to that fund, with a cap of $20 million in state tax credits offered annually.

Baker, D-Columbia, said her proposal is an alternative to tuition tax credit bills that would use tax credits to set up scholarship funds for students transferring out of struggling school districts.

“I say, let’s put our money toward those types of interventions that really work,” Baker told members of the Missouri Parent Teachers Association Thursday night at Smithton Middle School. “We all acknowledge we have a problem, and we all want to address the problem, but I want to address the problem within public schools.”

What’s revealing about this program is who the money would go to. The tuition tax credit bill puts money in the hands of parents, and gives them the freedom to use the money to send their kids to the school of their choice. That puts parents in the drivers’ seat: if a public school isn’t meeting the needs of a particular family, parents have the power to send their kids to a new school that will do a better job.

In contrast, notice how Rep. Baker’s legislation leaves the public school bureaucracy in charge. Those “proven intervention programs” will be implemented by the same bureaucrats who have repeatedly failed to educate the children entrusted to their care. Why we should have any confidence that another $40 million will be more successful than the billions of dollars already spent is not explained.

But maybe Baker is right that these “proven intervention programs” are effective at helping low income kids. What’s really weird about her proposal is that she considers it an “alternative” to tuition tax credits. Given the serious problems in our schools, why should we limit ourselves to one reform at a time? If Baker were sincerely interested in helping kids, rather than scoring cheap political points, she would support trying both strategies. That’s what Democratic Senator Dianne Feinstein did in 2003 when she brokered a compromise that provided more money for private school vouchers, charter schools, and traditional public schools in the District of Columbia. Maybe you think school choice won’t work, but given the high stakes, shouldn’t we at least give it a try?

Sen. Bill Stouffer (R – Northwest Missouri) his introduced a bill to increase the state sales tax by a penny to fund expansions of Interstates 70 and 44.  The act will sunset after 10 years, and while I am sure Sen. Stouffer genuinely wants it to sunset, he will be term-limited by then and can easily foresee an attempt to keep the tax going after ten years, something along the line of, "Its not a tax increase, it is just continuing a current tax, the children are the future, etc" 

This is not a terrible idea.  Our highways are indeed in poor shape, just ask the Governor of Kansas. She’ll tell you.  Expanding 70 and 44 and limiting trucks to certain lanes would no doubt improve transportation in Missouri, but there is an alternative to spending hundreds of millions of public dollars to expand these roads.  We can amend the Missouri Constitution to allow toll roads in our state and let the market and private business address the needs instead of taxpayers.  We would then have the choice between the free (sort of) current highways or the new toll roads.  More choice and better roads without taxpayer investment.  Seems like a good idea to me.

Everybody loses from minimum wage increases like the one just passed in Missouri. David Nicklaus comments on the effects of Arizona’s law:

The Arizona Republic reports that some employers “say payroll budgets have risen so much that they’re cutting hours, instituting hiring freezes and laying off employees.”

Teen-agers often are the ones who feel the effects.

Arizona’s minimum wage went from $5.15 an hour to $6.75 last month. Missouri’s went from $5.15 to $6.50. I wonder how many teen-agers here are getting the same kind of bad news?

Nicklaus is right that minimum wages hurt teenagers, but the bad effects don’t stop there. First, an employer who has to layoff someone is probably going to let go of a poor single mother with few skills, rather than a better-educated teenager from a middle-income family (as many minimum wage earners are).

Second, minimum wages hurt the people who get to keep their jobs, too. Minimum wages keep people from getting the training they need to move up on the career ladder. And minimum wage increases can lead workers to expect larger and larger raises. When these workers start earning more than the minimum wage, they’ll be poor bargainers because their expectations are unrealistic.

In the race for ‘Dumbest electoral proposal of the new century,’ the 21st has an early favorite and its right here in North St. Louis County.  Kinloch has a proposal on the ballot to make being mayor of Kinloch a full-time job.  If this passes, Kinloch would join Florissant (population 53,948) and Bellefontaine Neighbors (population 11,088) as the third city in St. Louis County with a full-time mayor.  How many people does Kinloch have, you ask?  According to ‘Price is Right’ rules, if you said 450, you lose!  (Note, that last sentence is best said while doing an impression of Warner Wolf.)

That’s right, somebody in Kinloch, population 449, thinks it needs a full-time mayor, who will, presumably, be paid a full-time salary by the other 448 taxpayers of Kinloch.  The Honorable Keith Conway of Kinloch would be well advised to study what happened in the past few years to Tom Brown in St. Peter’s and Sandra Sobelman in Frontenac, both of who maneuvered to significantly raise their part-time pay while in office and quickly found themselves out of office.  Although, after the Shawn Brown debacle in St. Peter’s, maybe Tom (no relation) Brown would have been worth the extra money. 

The Columbia Tribune reports on a debate over legislation that would allow parents more freedom to transfer kids between schools:

Allowing children to transfer between school districts would only leave the neediest students behind in struggling districts, veteran Columbia Board of Education member Chuck Headley told Missouri lawmakers yesterday.

Headley and Columbia Public Schools Superintendent Phyllis Chase were among about a dozen education officials who testified against an open enrollment proposal at a hearing of a special House committee on student achievement. A bill, sponsored by Rep. Brian Baker, R-Belton, would allow students in unaccredited or partly accredited school districts to enroll in neighboring districts.

"My experience in intra-district transfers is that it is the students whose parents are the most informed about school policy or involved in their student’s life that ask to transfer to what they believe – and I emphasize ‘believe’ – to be a better school to serve their child," Headley testified. "The ones behind get left behind."

Headly gets the effects of school choice precisely backwards: the prospect of losing students (and with them, funding), would spur failing districts to improve the quality of instruction. Hence, not only would this plan benefit the kids who are able to transfer to a better district, but it would also benefit the kids who are "left behind," as the old district will redouble its efforts to improve its services to ensure that they don’t lose any more children.

We all know that competition benefits customers in other areas of the economy. Dierbergs and Schnucks work hard to provide the best food at the lowest prices, because they know that if they don’t, their customers will switch to a competitor. If a new grocery store wanted to come to town, would it make any sense to complain that customers who continue to shop at Schnucks or Dierbergs would be "left behind" by customers who patronized the new grocery store? Of course not. More competition means that each grocery store needs to work even harder to keep their customers happy.

Right now, public schools don’t have to work very hard at all to keep their "customers." Some parents are wealthy enough to send their kids to private schools, but for the rest of the parents, they’re stuck with a single option. Allowing parents to switch between public schools would be a much-needed step toward increasing competition in education. To paraphrase a widely-aired commercial, "when schools compete, kids win."

The Saint Louis Post-Dispatch reports on the raging controversy over liberalizing laws that now bar midwives from delivering babies without the supervision of licensed doctors:

Missouri has one of the most restrictive laws in the nation, allowing only certified nurses to become midwives, in partnership with doctors. The bill would allow so-called direct-entry midwives to also practice, provided they meet certain certification requirements.
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Currently, direct-entry midwives in Missouri can face felony charges for assisting in births. In most states, including where many of Grisamore’s children were born, that’s not the case.

“This is about giving families a choice in the direction of their health care,” he said.

On Wednesday, Grisamore joined an unusual coalition of legislators, Mennonites, Amish and advocates of home birthing to push for the bill.

Doctors raise concerns about the patient safety, but these aren’t fly-by-night midwives we’re talking about. The legislation would require midwives to either have 2 years of training and experience with 20 births, or have been a practicing midwife for five years. It’s possible that giving birth with a midwife is a little bit riskier than giving birth with a doctor, but in a free country, an expectant mother should be allowed to assess the risks and make a choice for herself.

The big effect of the midwife bill that medical associations don’t talk about is that opening up the market will increase competition and reduce the salaries of doctors. Although doctors might not like that, it would be a good thing for the rest of us. The United States has millions of patients who are unable to see a doctor at all due to soaring health care costs. If midwives can deliver babies nearly as well as doctors at a fraction of the cost, it makes sense to have doctors tend to more patients who really do require the services of doctors, while midwives deliver more babies.