At Cato-at-Liberty, Andrew J. Coulson and Neal McCluskey respond to Chester E. Finn, Jr.’s criticism of free-market education reform. This criticism takes the form of a quick blog post replying to a book review, rather than a developed argument, but his contention has been brought up by many people so it’s worth addressing. According to Finn, free-market reformers are trying to destroy public education based on crazy philosophies, with no regard for evidence.

As Coulson points out, free-market proposals like tuition tax credits are not incompatible with the ideals of public education, such as preparing children for citizenship. And Coulson has done extensive research on education markets around the world. I’m guessing that one reason people like Finn discredit that evidence is that it’s from other countries. Here in the U.S., the public education system has a tight hold on the education sector, and the only experience we have with a free-market system are a few limited voucher programs. People are then left to make judgments about free-market education from these programs (which are a good start, but not big enough to transform the education sector the way universal parental choice would).

Caroline Hoxby’s research on charter schools presents evidence that’s a bit closer to home. Although charter schools are still public schools, they face incentives more like the ones private schools face. Consequently, they do things differently from the traditional public schools. Here you can watch Hoxby explain why incentives matter.

In short, there’s evidence that free-market reforms work. And there’s evidence that the traditional public system is failing — as Finn himself writes, the nation is "still at risk." That doesn’t look like a crazy philosophy to me.

I know Internet polls are just for fun, and one should not read anything into them, but that does not mean the people who design the polls should actively promote ignorance and errors. The poll today at stltoday.com does just that. If you go to the poll they have on the main page now, you’ll see that the question is, "Who do you blame for the economic slowdown?" They give you five choices: Congress, the president, the Federal Reserve, private business, or all of the above. This is just absurdity, and promotes a lack of understanding of economics. At least they could have given a sixth choice, along the lines of: "A series of events, often beyond the control of American policymakers, and including the natural movements of the business cycle, leading to a general slowdown in our economy."

This is not to say everyone is blameless. I blame the president and Congress for overspending on programs of all types (particularly entitlement programs) that have us in such debt. Many private businesses and banks have made obvious mistakes with poorly researched loans. Left unmentioned in the poll is the responsibility of individual Americans who took out substantial loans they could not afford, certainly a prime cause of the housing problems we face. I don’t know why the banks get all the blame there. But to attempt to lay blame teaches people that the government controls the economy, which it does not, could not, and should not.

Look here for a story that ought to get any taxpayer’s blood boiling. The Post-Dispatch reports that the Foundry Art Centre in St. Charles wants $100,000 to help it pursue some of its programs. Rather than, say, earning the money based on services provided to consumers, and rather than raising the money from appreciative patrons, the Centre’s first priority was to ask the city government for the desired funds. As Dick Sacks, the head of the Centre’s board, put it, "The obvious thing is to go to your daddy[.]" Sacks also said that the request for taxpayer funds was not because the Centre was "broke" or "in trouble," but rather the move was just "good fiscal planning."

I’m sure that many people (and businesses!) would be thrilled if they could figure out how to pursue their pet projects by having their government forcibly extract the funding from their neighbors. But to suggest that this sort of extortion represents "good fiscal planning" is especially sick at a time when so many of the people who would be compelled to bear those costs are already struggling to avoid foreclosure, or fill their gas tanks or grocery baskets.

The good, the bad, the depressingly ugly, a fistful of dollars, just a few dollars more, and once upon a time in Missouri.   

P.S. — Thanks to Combest for the links, MOPNS for the videos, and all the newspapers for the articles!

P.P.S. — Just to be clear, the "bad" refers to biodiesel mandates, not KY3, the latter of which I’m a big fan of.

Preschool education has been in the news lately, so I was interested to find this article in the Chicago Tribune. Here’s a word of warning about "universal" versus targeted preschool programs:

Bruce Fuller, a professor of education and public policy at the University of California-Berkeley, said he feared focusing on universal prekindergarten—making preschool a middle-class entitlement—could divert help from low-income families that need it most.

"Why would we use scarce public dollars to subsidize all families if we know the biggest impact is with poor kids?" he said.

The article quotes James Heckman, too; Heckman is a Nobel laureate in economics who’s found that early childhood education has a large positive effect on social and academic outcomes when kids get older. I was disappointed that the article doesn’t mention Heckman’s support for voucher programs that would allow parents to choose between competing preschools. Just because the state subsidizes preschool for low-income children, that doesn’t mean it needs to reinvent the wheel and actually operate preschools, too.

If you are a fan of our blog you may not have seen some of the latest op-eds and other articles we have released lately on the main site. Sarah Brodsky has just sent out an article on the benefits of tuition tax-credits for children with autism.

Dr. Joe Haslag and Rex Sinquefield have written quite extensively on the Bombardier proposal before the Missouri General Assembly now, and have been among the few to actually run the numbers and question the deal’s assumptions.

Our soon-to-exit intern Nick Loyal and I co-wrote a piece on one of Missouri’s silliest and least defensible taxes: the local pool table tax. Ironically, the supervisor of the largest pool hall in the state of Missouri (as mentioned in the article), Fr. Hagan at St. Louis University High School, died a few days ago after decades of dedication to educaton and SLUH. "Nickel!"

I meant to write about this a few weeks ago when I first heard about it. Earlier this month, a Senate panel endorsed a bill to repeal Missouri’s mandatory helmet law.

This is one of those examples of a law designed to “protect Missourians from themselves.” Would I ride a motorcycle without a helmet? Absolutely not, are you crazy? But should I be allowed to? Yes.

Opponents argue that the law’s repeal will result in more highway deaths, possibly increasing taxpayer-funded health care costs and driving up insurance premiums.

I used to hold that insurance belief as well, until I looked into the evidence a little more. From what I’ve read, there is only weak evidence that seat belt and helmet laws decrease highway fatalities, and mixed evidence that safety device laws actually cause more erratic driving (potentially offsetting the decrease in premium costs).

The insurance argument is evoked a lot, and several state supreme courts have upheld the argument. To the best of my knowledge, however, there is no empirical connection between helmet laws and insurance premiums absent some circumstantial studies about long-term effects. I would also argue that the numbers most often cited are one-sided, focused on the cost of helmet repeal alone. They don’t address the cost borne by society for enforcement and installation of “mandated safety devices” — such as airbags, etc. — that taxpayers and individuals incur already (think of all those seatbelt law commercials and the amount of time police officers are forced to spend enforcing such laws rather than, say, preventing violent crimes).

So I could go either way on this. If the law does in fact lower taxpayer costs, then I might find it justified. I tend to believe, however, that the law’s primary intent is simply to “protect us from ourselves.”

State and local economic development officials, whom one might think would ostensibly be strong supporters of capitalism and markets, are far too often just rent-seeking enablers who are so neck-deep in the muck of the government-developer complex that tax credits, abatements, etc., become the normative features of their economic model. Imagine a Missouri economic field that involved low and consistently applied taxes, limited and reasonable regulation, a fair legal system, and an educated workforce. Sounds pretty good, huh? Well, not to economic development officials, who would no longer be needed in such a system. If taxes are low, they have nothing to give away except their own purpose for employment.

Lest you think I am being too harsh, I point you to these absolutely ludicrous comments in today’s St. Joseph News-Press:

“(Legislators) didn’t step up to the plate to get the race track. I don’t think they saw the real potential in it … They will have missed another opportunity. One of the biggest challenges we face is getting our legislators to think outside the box.”

So that is the worldview of at least one official, and probably many more. According to this worldview, it is the job of elected officials to direct who, what, where, when and how a business operates; it is the job of legislators to recruit and reward favored businesses, because only legislators and economic development officials know what is best for a community; and Missouri’s legislators were stupid several years ago when they did not give away enough taxpayer money to lure a favored business. There is no room here for market forces to be making these decisions — economic development officials and their largess have replaced markets as the deciders of what goes where, and they believe that is a good thing.

It should be clear to all that within the past decade or so tax giveaways have become the norm in Missouri and the rest of the country, rather than an exception to be used in truly dire cases. Now that tax credits, abatements, exemptions, etc., are the norm, every business figures them into its calculations. Businesses didn’t demand this from government. It was offered and accepted, the natural result of having government and business involved too closely for too long. The most indispensable people in this system are, of course, the government development officials — but now I’m getting out of economic policy and into philosophy.

I have no idea how to get out of this system. Of course, I want Missouri to stop — but in the interest of fairness, I want everyone to stop at exactly the same time, which will never happen voluntarily. Perhaps a federal constitutional amendment requiring that tax rates be consistent across districts is the only way to end these current practices. I would hope people see the insanity for what it is long before that.

And a shout out to Combest for the link! Congrats to he and Monica for their solid performance at trivia night on Saturday, where I believe they came in a very respectable third. As for which team won — well, that answer should be obvious. …

Well, not necessarily everywhere, but cash-strapped local governments across the country seem to be pushing significant property tax increases at a record pace.

This is particularly damaging to homeowners whose homes have lost significant value during the past two years (in some places by 20 to 30 percent, according to the Case-Schiller Index) but have not yet been reassessed.

In other words, a home that was worth $200,000 when it was last assessed might now be worth only $140,000. Not only are the existing homeowners paying property taxes on a property with an assessed value higher than the market would bear, but they are also due for a tax increase. Again, however, people only seem to clamor for reassessments when their homes have declined in value — not when they have appreciated (see David’s op-ed for some thoughts on Missouri’s rollback provisions).

The Wall Street Journal has a nice little image detailing median property taxes across the country.

The Missouri House of Representatives rejected a bill yesterday which would have cut the minimum wage rate for tipped restaurant employees from its current rate of $3.32 to $2.13, the same as the federal minimum wage.

When considering legislation, lawmakers should first address the following two questions: 1) Does the legislature even have the power to pass this law; and, 2) Will the law have the effect that it’s intended to have?

I would argue that most politicians don’t even consider the first question. But for the sake of argument, let’s say that they do and consider the second question. Will the higher minimum wage help or hurt restaurant employees?

The Wall Street Journal happened to profile the struggling restaurant industry the other day. Here’s what they found (emphasis added):

Adding to the pressure is a big jump in the minimum wage starting this summer, which will boost wages by 12% in some states.

That’s sent the industry into its worst slump in decades. Many chains have scaled back expansion plans or cut costs by skimping on things like extra sauce and free sour cream. Some are shuttering sites and laying off workers.

It’s tough to make the minimum wage when you don’t have a job in the first place. Studies have repeatedly found that minimum wage laws are harmful to employers and employees alike. And those that are hit the hardest are generally the least-skilled and least able to afford losing their jobs, rather than the teenager in suburbia saving up for a car. And let us also not forget that Missouri has one of the highest minimum wage rates among its state neighbors, making labor much more expensive in Missouri than, say, Tennessee.

Like everybody else, I wish that the government could be Santa Claus and magically give things out for free. But, unfortunately, they can’t be — which means that every piece of legislation has unintended consequences. In this case, it’s increased costs to a struggling industry amid a slowing economy. Are we helping or hurting restaurant employees?

An op-ed in the New York Times brings up the question of why the U.S. economy has done so well after years of public-school decline. Here’s the conclusion:

Indeed, a consensus seems to be emerging among educational experts around the world that American schools operate within the context of an enabling environment — an open economy, strong legal and banking systems, an entrepreneurial culture — conducive to economic progress.

To put it bluntly, American students may not know as much as their counterparts around the Pacific Rim, but our society allows them to make better use of what they do know.

This op-ed makes some important points, but it’s not the whole story. Yes, America’s free markets and stable legal environment can make up (to some extent) for a poor education system. That’s not because knowledge doesn’t matter in our economy like it does in the rest of the world. Instead, the best-educated make lots of money, bringing up average income statistics. And they spend some of that money on services provided by their less-educated citizens. So, when some kids are stuck in a failing education system, it doesn’t bring down the entire economy — but it’s unfortunate for them. They’ll have to spend the rest of their lives working for the people with knowledge.

Our education system hasn’t killed the economy. Is that the best we can do? Surely our goal is to share the pleasures and opportunities of learning as widely as possible — not just to avert market collapse.

The governor gave a series of speeches yesterday about the results of tort reform legislation that was passed in 2005. Combest has links to several articles about it. In my opinion, that legislation was the most important reform the state has made during the past 20 years, which luckily corresponds with my basic frame of reference.

Not surprisingly, the trial lawyers they quote in the article (actually, it’s the same one in each) don’t agree. And, even less surprisingly, the trial lawyers respond to facts and economics with a plea to the heart. From the article Southeast Missourian (all emphasis below is added):

Blunt said 2007 numbers were not available, but that from 2005 to 2006, average settlement costs fell nearly 14 percent, and total claims against Missouri doctors dropped by 61 percent.

Costs and claims falling is a good thing for our economy and health care system.  Let’s remember that, can we please? From the Columbia Daily-Tribune:

Dr. Jeff Thomasson, who spoke at the news conference, said that before the new law, his radiology group’s premiums rose 88 percent one year and 94 percent another year. Over the past two years, the premiums declined slightly, Thomasson said. As a result, he believes recruiting and retaining good doctors is easier.

That is extremely important. I specifically remember that during arguments I had about tort reform with trial lawyers (generally either my dad or my stepdad), they claimed doctors’ premiums would never actually go down because the entire reform was just a scam by the insurance companies, etc. (They probably said it much better than that, but that was the gist of it.) So, here we have specific evidence that tort reform legislation has lead to a decrease in insurance premiums, just as basic economics indicated it would.

From the MATA people, we get this:

Vuylsteke said the number of cases are declining because the elderly, the poor and parents of young children "can’t find lawyers to handle their cases because the lawyers can’t afford to represent them." For many lawyers, who must invest substantial costs in expert witnesses and in hours preparing for the trial, the risk simply isn’t worth it, he said.

If someone has a good case, they will find a lawyer to take that case. Guaranteed. What is being admitted to above, unintentionally, is that before tort reform many bad cases went forward because the system so favored the plaintiffs. Even in less-than-stellar cases, a St. Louis city venue alone was good enough to scare at least some type of settlement out of the defense. So now we have lower costs, lower premiums, and fewer meritless lawsuits moving forward. As I said, it’s been great for Missouri.