My love of trains has been discussed before. However, in a recently released study recommending against adding an Amtrak line connecting Saint Louis to Springfield (MO), the State Department of Transportation and Amtrak seem to have sided with common-sense and the free-market. Subsidizing a train connecting your two largest cities with the State Capitol is one thing, but adding to that without the market demand would be poor policy and even worse economics. Not to mention the increased subsidy required might jeapordize the one existing route. Much more important is connecting St. Louis to New Orleans without a required bus ride to Carbondale. Maybe the market would support it, maybe not, but this is New Orleans we are talking about here for christsakes… 

The St. Louis School Board may reconsider its contract to bash the charter schools:

School Board member David Jackson said Wednesday that he would seek to place the contract on the agenda for the board’s June 12 meeting and will change his vote.

"I don’t want to pay $25,000 to dog another entity," said Jackson, one of four board members who supported the contract. He now prefers the money be spent to promote the city schools rather than denounce charter schools.

And here’s the Board Vice President explaining why he favored the contract:

"This is an emergency," Purdy said. "We had to reach out to the parents making the decisions about where to send their children now. By August it will be too late."

The School Board seems to have gotten the message that parents will go elsewhere if they have the choice. What the district doesn’t realize is that advertising alone won’t keep students in the district. Parents aren’t flocking to charter schools because of a few commercials.   

If the St. Louis Public Schools want to retain students, they should improve their product. Public schools in the suburbs don’t have to advertise; everyone knows which ones are the best from word of mouth.

George Orwell famously warned about the use of political terminology to obscure meaning, rather than to reveal or enlighten. It’s a problem that continues today, as I was reminded by an article in the Springfield News-Leader:

Commercial Street business owners are working to improve that area’s image — but to get needed tax help, they may have to put up with the label "blighted."

Mike MacPherson, senior planner with the city of Springfield, supports using tax-increment financing — available only to areas officially designated as "blighted" — to pay for changes on Commercial such as more parking and outdoor stages. TIF uses tax revenue collected from new development to fund projects beneficial to the public in those areas.

MacPherson said Commercial Street is blighted under any definition. About half the buildings on the street are vacant. Most are deteriorating.

But the ominous-sounding label does not mean supporters are wrong to say Commercial Street conditions are improving, according to MacPherson.

An area in which things are improving is labeled as blighted. A quick look at any dictionary will reveal definitions for "blight" such as these: "something that frustrates plans or hopes," "something that impairs or destroys," or "a deteriorated condition." If the vacant buildings on Commercial Street were gradually destroying the area, making things continually worse over time, the area could be called blighted. But even if there are negative aspects, an area can’t be called blighted if it’s improving despite them. That’s the opposite of blight.

The article continues:

Lyle Foster, owner of Big Momma’s Coffee and Espresso Bar at 217 E. Commercial, has worked to change negative perceptions about the street.

At a recent news conference, he listed a number of improvements made in the last two years: over $4 million in investment, "green" building initiatives, 25 lofts now under development and 40 lofts completed and occupied.

This is the sort of development that actual blighted areas would never see. The term is also being misapplied right here in Clayton, as David Stokes noted last week.

It’s an abuse of language to look at a healthy, thriving area and call it "blighted" just because it’s not doing quite as well as you think it could under different ownership. Using that terminology to obscure truth and then take people’s property through eminent domain provisions is an abuse of justice.

The St. Louis School Board has decided to spend more money on:

a) New textbooks and computers.

b) Hiring better-qualified teachers in hard-to-staff subjects like math and science.

c) Repairing old school buildings.

d) A PR campaign to slander the charter schools.

Answer: d. That’s right, the St. Louis School Board has hired a marketing firm for $25,000 to publicize the "negative impact of charter schools."

The St. Louis Post-Dispatch article notes that the School Board didn’t take bids for this contract. Surprise, surprise. It’s not exactly like they’re enthusiastic about the benefits of competition.

In New York City, the value of a taxi medallion, simply a license to operate a taxi cab, is $477,000. That is an amazing sum, but certainly understandable by the law of supply and demand. The demand for taxis is always high in NYC, and with Mayor Bloomberg’s proposal to dramatically increase the tax/tolls to enter Manhattan via car, it is likely to grow even higher. As for the supply, NYC limits the number of licenses available, so it does not take a genius to see why the prices of medallions are outpacing other investments in New York.

Here in St. Louis we have the Metropolitan Taxicab Commission. While I don’t like all the regulations it has for cabs (the dress code for drivers is particulaly stupid), it is certainly preferable to the system in place before its establishment in 2003. Before then, the county and city each regulated their own cabs and prevented crossover, so a county cab could pick someone up in the county and take them to the city, but then was not allowed to pick up a fare in the city. So the current system is at least a little better. 

Unlike NYC, St. Louis does not, as far as I can tell, set a numerical limit on the number of licensed taxis. This is a good thing from a free-market perspective, but the commission does have broad powers to deny new licenses if it feels the market is currently being met with existing licenses. As the commission is largely composed of people with direct involvement in the taxi industry, the potential for limiting the number of competitors by limiting new licenses is certainly there. 

The cost for a taxi license in St. Louis is $55 per year. Judging by how hard it is to get a cab in St. Louis, I’d say there is not exactly a line forming (pun intended) to drive that value up. In NYC it is $477,000 for a medallion. That is an 867,172-percent greater value. Based on my perceptions of the cab industries in both towns, I’d say that sounds about right.

An editorial in the Joplin Globe titled "Good Use of Incentives" praises the proposed Missouri Quality Jobs Act:

Without the additional funding, local leaders say, Missouri can’t run with the big dogs — namely other states that offer more incentives to employers. Meanwhile, folks looking to make a decent wage are looking or moving elsewhere. According to the U.S. Department of Labor, of the 77,760 jobs in the Joplin metropolitan area, more than 50,000 of them paid less than $10 an hour in 2005.

The editorial portrays economic growth as an auction in which states bid for a few companies that pay well. The lucky residents of those states then benefit from higher wages.

The real economy doesn’t work that way. Any company can afford to pay its employees well if they’re productive enough. But first, employees need to invest in their own education and skills, and their employers need to train them.

A tax incentive program requiring companies to pay high wages is at best a temporary fix. The jobs will probably go to the most productive Missouri residents, who already earn high wages. And most businesses that come to Missouri for a special tax break will leave as soon as some other state offers a better deal.

A better idea is a tax cut that treats all businesses equally, which would give existing companies the chance to spend more on job training or to hire new employees. It would also make life a little bit easier for imaginative entrepreneurs who are dreaming of creating some well-paying jobs from scratch.

There’s a great column in the Post-Dispatch today about the midwife legislation:

Every mother has a particular way in which they want to give birth and their reasons are motivated by their interests and those of their children. Until a week or so ago, Missouri had a knee-jerk rejection of home birthing — it is a felony to practice midwifery without a doctor’s oversight[...]

Opponents say the bill lacks penalties for bad midwives. Why have they not addressed the matter previously? It’s not like they didn’t have the opportunity. Do they think that nothing bad ever happens at a hospital and there is never any negligence, ever? Ever hear of the soaring 30% cesarean rate? Apparently, a medical mistake is only criminal if you aren’t a doctor. There are bad doctors just as there are bad midwives.

And here’s an interesting article about the legislation’s diverse supporters. It’s remarkable how people with different opinions and lifestyles can join together to lobby for more freedom in health care. This is an advantage of allowing people to make their own decisions: There’s less arguing when people are free to be different.   

An editorial in today’s Post-Dispatch says:

Almost half of the 23 school districts in St. Louis County have slammed their doors in the faces of kids who want to transfer out of the beleaguered St. Louis Public Schools after the district loses its accreditation. The rest are undecided.

Sadly, not a single district so far has agreed to take more kids from the city schools. That’s bad news for parents desperately searching for educational options, bad news for kids and bad news for the future of our work force.

We already know that Missouri parents support school choice by huge margins. The Show-Me Institute has been staying on top of this issue with recent op-eds from Steve Bernstetter and Sarah Brodsky.

Continue reading "School Choice Would Provide Incentives" »

I highly recommend Bryan Burwell’s column in today’s Post regarding the ludicrous lawsuit filed by the Hancock family over the death of their son.

The Post has a great article today in the business section on recent successes in luring businesses to locate in downtown St. Louis.  Although I type this from Clayton, I love downtown and hope it thrives.  I lived there for three years in a loft at 11th and Pine in the late ’90s. Then the whole place started to get trendy and I had to flee, ’cause that’s just how I roll. But anyway, there are two main parts to the article on why businesses are moving downtown. The first is that the convergence of highways, architecturally significant buildings, and being part of a larger business community all give downtown a lift over your suburban office-park. To this I say, hell yes! The buildings are gorgeous, it is easy to get there from anywhere, parking is affordable (except for the meter maids), and downtown is great fun — now moreso than ever (or at least the last forty years). Clayton has many of the same qualities, except the architecture, but you don’t find any of those qualities, other than parking, in your standard office park.

The second major thrust of the story states:

"However, low-interest loans, tax abatements and tax credit programs are helping owners mitigate the impact of the income tax."

I felt like Homer Simpson screaming at the TV while reading this, but instead of yelling "It means he gets results you stupid chief!" I was yelling about just getting rid of the damned earnings tax, and you don’t need all the other things to mitigate it! SMI has done a great study on a way to do just that. This is the insanity of modern government. We keep taxes high and then implement hundreds of programs, credits, deductions, earmarks, etc., to allow people and projects to get around the taxes. How can it not be economically more successful to keep tax rates broad and wide, but as low as possible for everyone?      
 

I have weighed in on my absolute hatred of red light cameras before.  Now my own hometown, University City, in which I am extremely proud to live, is considering installing them right by my house.  University City, which was the only (I think) municipality in the area to pass one of those ‘don’t-cooperate-with-the-Feds’ anti-Patriot Act ordinances, is now getting into the very same act itself, or at least considering it.  As I said previously, red-light cameras are not about safety, they are about new revenue collected under the guise of safety, and the last thing in the world that should be contracted out to private companies is law enforcement.  And I say that as someone who thinks government should contract out lots of things to private industry.

I may have to take the radical-yet-strangely-whimsical act of speaking before my city council about this at the next meeting.  By the way, the cameras at Big Bend don’t even make any sense to me as it is a T-intersection, not a 4-way, and my experience with it is that traffic goes very slowly around the intersection.  I admit there can be a problem at Hanley, but U. City should have its police enforce the intersection more closely, not hire a company to snap photos of me as I walk my dog.  I shall keep you all informed as this issue progresses…      

David Stokes has been doing a fine job covering the potential legalization of ticket scalping. There’s no question legalization is a good idea here, both for sellers and consumers. There are also some other economic points to consider.

The price of an item isn’t just what you pay for it in cash. The true price, to you, of a bag of groceries includes things like driving to the store, time spent browsing the shelves, waiting in line, effort expended pushing the cart, etc. The more difficult it is to get the thing you’re buying, the higher the real cost — regardless of what it says on the price tag.

Ticket-scalping policies are usually adopted out of a desire to keep prices down. If scalpers buy all the tickets for an event at face value, then turn around and sell them at a high markup, consumers are worse-off, right?

Not quite.

The real price of a consumer good is just a measurement — an intersection of supply and demand. If a baseball team sets the price of its tickets much lower than the real price that the market will bear, it hasn’t made the extra cost vanish. The team has simply shifted the cost in some way, perhaps by giving people an incentive to camp out all night in the rain so they can be first in line. The time and effort spent waiting in line is all part of the price of the ticket.

There was an excellent example of this sort of cost (which I linked to earlier this month) when a county in Virginia tried to sell several iBooks at $300 below market price. The result? "Mothers clutched their children for protection, people screamed as they were knocked to the ground, a stroller was demolished, cars inched through the crowd…" Economist Alex Tabarrok noted:

You can get rid of the market but you can never get rid of competition.  Goods not allocated by market prices have to be allocated somehow and so long as goods are scarce there will be competition to obtain them, if not by outbidding competing buyers with money then by outbidding them in time spent waiting in line, doing political favors or some other method.

What happened in Henrico county is the same type of thing that happens when there is a price control.

Controlled prices rise above the nominal price tag, despite all efforts to keep them low. Tabarrok goes on to point out:

It’s very important to notice that that the shop owner gets your money but does not get your time. Thus, money expenditures are a transfer but time expenditures are a waste.

The best way for our hypothetical baseball team to keep real prices low is to sell tickets for what they think the market will bear. And the best way for politicians to keep real prices low is to get out of the way — let people trade, sell, give away, or destroy the tickets they’ve legally purchased.

Continue reading "You Don’t Count the Cost" »