After months of blandishments from an eager staff, the Show-Me Institute’s powers that be have given us the green light to open comments on this blog. We’d love to hear from you, and we hope that our comment sections will help Show-Me Daily serve as a forum for vigorous, active debate.

All we ask, really, is that participants keep the tone civil, and try to offer something substantive. We assiduously work to avoid insults and and ad hominem attacks in our posts, and we hope our readers will follow suit. Disagreements are fine, but remember that this is an opportunity to discuss policy — don’t make it personal.

That said, welcome to our now-interactive blog! Let us know what you think.

The inevitable has come to pass. The Missouri Textbook Transparency Act has become law.

I adopted this issue as my pet cause at the beginning of the summer, leading to a critical op-ed that received a little bit of attention.

It’s not surprising that the bill passed. I understand that only one senator opposed it as it glided through the General Assembly. I am, however, satisfied to see that its proponents have already begun apologizing for its inadequacies. From the AP article:

The law’s sponsor, Rep. Jake Zimmerman, D-Olivette, said his measure won’t help the price of new textbooks but could give students and their instructors more ways to save money.

I’d like to emphasize again how unlikely it is that any government mandate will positively affect the marketplace for used books. I contend that the combination of the law’s shortcomings and a vibrant online alternative to school bookstores offers virtually no benefits to outweigh the costs of market intervention. I don’t anticipate seeing an increase in textbook success stories for otherwise cash-strapped students during the coming years. More likely, this law will pass into obscurity, where it may or may not create hidden costs for buyers. If nothing else, it can serve as an example of unnecessary regulation in an area that has and will continue to be well-served by market forces.

It’s just not something you ask: How much money do you make in a year, what exactly do you do to earn it, what insurance does your employer provide, and what’s your allowance for a company car?

Contrast this to: What was the turnout in last year’s school election?

If you ask the first questions of a superintendent, and the second of a county clerk, both are required to answer. But the first is clearly a more invasive question.

In the Show-Me Institute’s Columbia office, my fellow researcher, Audrey Spalding, has been asking the first question of all 522 Missouri school districts. I, in the same office, also using the Sunshine Law, have been asking the second of all 114 Missouri county clerks, plus the city of St. Louis election board, if you’re keeping score.*

So, who’s had more success?

The answer might surprise you.

Continue reading "The Compliance/Resistance Divide" »

"You don’t just file that sort of request without expecting to find something," said one Missouri superintendent when I called to ask for a copy of his employment contract.

A few superintendents have asked about Rex Sinquefield’s involvement (directly, next to none), or how closely these requests are tied to the Show-Me Institute’s apparent support of charter schools (we have sent several requests to charter schools as well). Many simply want to know why I am filing a Sunshine Law request for each and every Missouri superintendent’s contract. I do not need to justify my request, nor does anyone else asking for public information. But the question itself is fair.

The point of these requests is not, as I see it, to publish each superintendent’s name and annual pay and then highlight every six-figure salary as excessive. Yes, perhaps it is fair to scrutinize a contract that pays $8,000 or so to a superintendent for his dependents’ health care, regardless of whether he has any. From here, that looks like a salary bonus for not having children.

But, in general, the contract between a superintendent and a school district can tell us a lot about what a school district values, and where it is struggling.

Continue reading "Motive" »

We’ve added a new tool to our Show-Me Living arsenal.

Check out our new Google map of the Saint Louis metropolitan area. It provides our visitors with the ability to interactively look up the academic rankings for their school and school district on a map, and compare those rankings to other schools nearby. Thinking about moving this summer? See how your new school compares with "Show-Me: The Grades." And, while you’re there, be sure to check out how your taxes might change, too.

We plan to expand this map to cover the entire state, so please feel free to send us your thoughts on how we can make it more useful for you.

I’m a meticulous record-keeper, particularly when it comes to either my car or my finances.

In our recent ethanol case study, Dave Stokes and I argued that the E-10 savings projections reported in the Missouri Corn Merchandising Council’s study were wrong partly because they failed to address the fuel efficiency decrease of ethanol-blended fuel that had been noted in numerous scientific studies, including one by the Environmental Protection Agency.

So, I’ve been curious to see how much the E-10 mandate has affected my car’s individual performance. After filling up my car this morning, I looked through my fuel log and made a back-of-the-envelope calculation of the difference in fuel efficiency this year.

My car has a 13-gallon tank, but I typically fill up about 12 gallons on average. In 2007, my car averaged 308 miles between fill-ups (25.67 miles/gallon). This year, my car has averaged 281 miles between fill-ups (23.42 miles/gallon). That’s a drop in fuel efficiency of 8.77 percent.

Now, admittedly, this is a little bit of an ad hoc calculation and other variables clearly impacted my car’s gas mileage. But Missouri’s E-10 mandate has obviously played some role.

So, how much has the drop in fuel efficiency cost me? Let’s say I fill up my car twice a month (24 gallons). With $4-per-gallon gas, the 8.77 percent drop in fuel efficiency will cost me nearly $100 this year.

So much for E-10 savings.

This is a "Read it all and make up your own mind"-type post. The Show-Me Institute’s Dave Roland just wrote a new op-ed about the issue of zoning and property rights in Missouri. To put the op-ed into today’s context, here are two ongoing major zoning disputes in Missouri, neither of them related to the "Village Law." In Kansas City, the Star is reporting on a dispute involving the proposed expansion of a prominent museum. Just north of there in Platte County, the St. Joseph News-Press reports on a subdivision dispute — the kind typical in many fast-growing areas. (Or, at least, areas that were fast-growing before $4-a-gallon gas, but that’s another issue.)

Not to put words in his mouth, but Dave Roland would say that both the museum and the subdivision developers have the right to develop their property however they want to, and no city or planning commission or neighbor has the right to prevent that. Subsequently, if those developments harmed the neighbors’ property values, the neighbors should be compensated for that harm via civil action. I encourage you to read it all (particularly the op-ed), and come to your own decision.

So just how much does it cost to hold an election?

Well, obviously, that depends on the election. If you’re like me, you’ve heard the figures for high-profile, national elections, but the general focus there is campaign costs. What about the cost of renting polling places, printing ballots, and even paying postage on absentee ballots? For a Missouri municipal election, at least, Andrew and Hickory counties were able to shed some light on that question.

Continue reading "Just How Much Does It Cost?" »

According to the Post-Dispatch, experience is not the sole factor to consider when hiring teachers:

That’s the conclusion of a new study released Wednesday that looks at the quality of public school teachers in Illinois.

The 44-page report from the Illinois Education Research Council found the highest percentage of academically talented teachers were at schools in the Champaign area, with those in suburban Chicago and west-central Illinois close behind.

I know this isn’t really shocking news for anyone who has given the subject serious thought. It seems fairly obvious that experience is only one of many factors that need to be taken into account when hiring mechanics, doctors, financial analysts, stock brokers, farmhands, dishwashers, sales clerks, and, yes, even teachers. So, surprise! This study confirms the obvious.

The reason this study is necessary at all is that unions have strong incentives to favor policies that benefit current workers at the expense of future workers. The result is an overemphasis on experience relative to other merits in the workplace. So it really shouldn’t be surprising when teacher unions favor experience-based pay and oppose merit-based pay — even when both common sense and science contradict them.

The St. Louis Public School District is looking for a new superintendent. If you think you’re up for the job, keep in mind that this is the only school district in the state where the superintendent is required — by law — to post a $50,000 bond to be hired. (It should be noted, however, that posting a bond generally costs only a fraction of its full value.)

Why would a school district, let alone Missouri legislators, require such a thing?

In general, having a person post a bond is done to encourage something. It all depends on the wording. For example, the St. Louis district could use the bond to encourage the superintendent to stay (she could get it back after five years with the district), to work toward an academic goal (she could get it when the district’s drop-out rate decreases by a set amount), or simply to lower the school district’s costs.

The bond required of Dr. Diana Bourisaw, and every other St. Louis superintendent hired by the district during the past 40 years, encourages none of those things. In its entirety, the bond requires the superintendent to "Faithfully perform the duties of his (her) office as provided by law."

How did this happen?

Continue reading "What Does $50,000 Get You? (A St. Louis Story)" »

"Rains clog sewer system, residents asked to limit toilet use," the Kansas City Star reports. The hilarity of this headline should be apparent to anyone with a bit of schooling in economics. According to the article:

The Kansas Department of Health and Environment issued a statement Wednesday urging Sublette residents to curtail water usage and use toilets as little as possible. The statement said sewers will remain shut down until further notice.

I sincerely doubt that this statement will have much of an effect on water usage. A much more effective way to curtail water usage would be to simply raise prices, much like a private provider would do when the costs of supplying water temporarily but dramatically increase. In response to the higher price, water consumers would cut back on consumption. Only when the benefit to the consumer outweighed the cost to the water producer would water be consumed.

Admittedly, this is an imperfect solution because, as the article alludes to, the primary problem is not in water usage per se, but in the sewers. Ideally, sewage companies would be able to charge for each flush independent of how much water it uses, but this may be impractical. If these services were privatized, they might be provided by different companies, but the sewage company would have a strong incentive to pay the water company to raise prices.

Under the current system, both Kansas and Missouri get bureaucratic proselytization about when they can and can’t flush, rather than actual results, and that just stinks.

Dr. Philip Anderson, Dean of the St. Louis University School of Medicine, calls for tuition assistance for students studying to be primary care physicians over at the St. Louis Post-Dispatch. His rationale is that there aren’t enough primary care physicians, and tuition assistance would provide an incentive for young bright minds to move into the field.

I suspect that the supply of doctors is relatively inelastic, and thus tuition assistance woouldn’t have much of an effect on the number of primary care physicians available. The problem is that the supply of doctors is fundamentally limited by occupational licensing laws. It’s no secret that it costs an enormous amount of both time and money in order to become a doctor in the United States. As a result, there are fewer doctors than there would be otherwise, and those who do become doctors enjoy much higher wages. In the end, this hurts the average family who has to pay more for medical services — particularly low-income families who are already strapped for cash.

The standard argument for requiring doctors to be licensed is that this protects the public from fly-by-night operations that only endanger the public’s health. There may be some merit to this argument when it comes to invasive surgery. When it comes to things like treating a cold or giving birth, however, the argument loses much of its force. You simply don’t need an M.D. to effectively do many of the things doctors do. What this argument ignores, though, is that fully functioning adults are capable of making their own decisions. It may be a useful service to warn the public about the dangers of not using a doctor for any given medical need, but requiring the public to use a doctor only limits the options available.

Speaking of midwifery, as Justin Hauke notes, the Missouri Supreme Court has just upheld a law to legalize the practice. Midwifery provides a textbook example of how occupational licensing hurts both the consumer and the competition. The Post-Dispatch reports:

Doctors’ groups have fought efforts to loosen the regulations, arguing that midwives lack training and that pregnancies can quickly become dangerous.

Even if this is correct — and it probably isn’t — this issue is fundamentally a matter of personal choice. We don’t allow the government to treat us like children when we decide what to wear in the morning; why shouldn’t we insist on autonomy when it comes to health care?

My fellow bloggers  have written quite a bit more about midwifery in Missouri — for example: here, here, here, and here.

Clearly, Eric Dixon played an influential role in yesterday’s Supreme Court decision.

Missouri now becomes the 38th state to legalize the use of a midwife, certified by a private entity.

In the Post-Dispatch’s coverage, the state’s medical lobby provided a statement:

Tom Holloway, who lobbies for the Missouri State Medical Association, said the new law jeopardizes public safety because it allows midwives to "provide unlimited services related to pregnancy: C-sections, drugs, epidural anesthetic, even abortions, without any state regulation or oversight."

This clearly misses the point. The state’s oversight and regulations haven’t changed. Any expectant mother can still choose to use an “approved” nurse/doctor and receive the same care as always. But they don’t have too. And that is the point.

We were all over the airwaves of Missouri yesterday, talking about ethanol and our recent case study. Justin, sitting at a very impressive desk, appeared on Columbia’s KMIZ-TV as part of a well-done sort of point-counterpoint piece. The ethanol supporters admitted that ethanol has a lower energy content than ordinary gasoline, but said this difference is too small to measure — as though math can’t measure small numbers, which add up to millions of dollars a year statewide, or $29 a year in added costs for the average Missouri driver. That ain’t so small anymore.

I, myself, was a guest on the Mark Reardon show (to listen, click on the podcast at the right side of that page) on KMOX radio in St. Louis. We both appreciated the opportunity to discuss the issue, and thank both KMIZ and KMOX for the invites.

Often, when a county clerk changes the computer system used to report election results, information gets lost. Sometimes it’s temporary — the clerk can find the information on hard copy — other times, it’s never found.

Collecting voter turnout data from Missouri’s 114 counties and the city of St. Louis has proven difficult. If you read my first post, this might surprise you. After all, I reported a success rate of more than 50 percent in obtaining records from county clerks. But getting the records is just the first step.

The Sunshine Law is meant to promote transparency in Missouri government, but the voting records I have received are anything but clear. Although I only requested the last nine years’ worth of data for school district elections, numerous county clerks struggled to fulfill my request. In fact, some didn’t even come close. Many times, information was missing because of a new computer system.

Continue reading "Sunshine Requests, Cloudy Responses" »

In November, St. Louis County voters likely will decide whether to enact a half-cent sales tax increase for the expansion and upkeep of Metro. Passage of this increase will also result in a one-fourth-cent tax hike in St. Louis city, which was approved several years ago, but never actually implemented in the city because county voters rejected the same proposal. Now, with Metro wanting to expand and increase
its budget, it’s again under consideration.

Those who support the increase cite its relatively low cost, while those who oppose it label it as unfair. Other revenue-generating possibilities are also being discussed, such as a transit ticket price increase and a crackdown on free riders — both of which may be viable options. For the purpose of this post, I will only focus on the proposed tax increase and its expected revenue.

As a disclaimer, I am not a frequent MetroLink rider, only using it when attending various events downtown. I grew up in a rural area where there was no public transportation, so I am not accustomed to using MetroLink as a primary mode of transportation. With that said, my own experience has no bearing on my conclusions about the tax increase.

The proposed increase, assuming that the demand for goods is completely inelastic, would generate around $87 million annually in additional funding for the expansion and operation of Metro. The majority of this funding, around $78 million, will come from St. Louis County because of its larger half-cent increase, and because of its much larger tax base. St. Louis city would generate around $9 million from its one-fourth-cent increase. While it is true that demand is most likely not completely inelastic, these numbers give us a general idea of how much revenue could be generated.

As I said earlier, I’m not a frequent MetroLink rider and I don’t know whether a tax increase is the best way to fund an expansion. Some people are advocating a use tax (taking the form of increased ticket prices), while some of my coworkers have suggested a sales tax specifically for business areas that benefit from mass transit. One point of contention about increasing ticket prices is that those who use mass transit the most have no other means of transportation. They depend on transit for their everyday travel and have no other alternatives. Also, higher ticket prices may decrease the number of riders, negating the need for an expansion in the first place. However, a sales tax increase has its own faults — not everyone who shops in targeted areas uses mass transit, so why should they have to pay for something they don’t use? This is a valid point, worthy of consideration.

Mass transit is a useful tool that can further enhance a city’s development. There is little doubt that public transportation is a key component to boosting growth, but the best means of funding that transportation is open to debate.

James Fussel has an excellent article in the Kansas City Star detailing some of the potential avenues for combating rising fuel costs in the long term. If you take just one thing away from the article, it’s that there has been a flurry of innovation as gas prices have risen. From plug-in hybrid cars to pure electric cars to hyrdrogen fuel cell cars, small breakthroughs have been made across the board in attempts provide cheaper alternatives to conventional gas-powered cars.

This is precisely what we should expect from a well-functioning market. As the price of gas increases, it becomes more profitable to both conserve and seek out alternatives. The practical result is exactly what we’ve seen. Consumers are buying more fuel-efficient cars while producers are looking for ways to make cars more fuel-efficient, as well as seeking alternatives to gasoline.

This is all occurring despite misguided political efforts, such as Missouri’s E-10 mandate. I shouldn’t have to point out that ethanol was not mentioned in the Star’s article as one of the promising new technologies. A better strategy for lawmakers would be to cultivate the competitive environment that is necessary for the innovation we are seeing. In other words, enforce property rights and that’s it. Any attempt to "fix" the market is apt to cause worse problems than it solves.

I will be appearing on KMOX’s Mark Reardon Show today from 2:10 to 2:30 p.m. to discuss our recent ethanol case study. Please go to kmox.com to listen in.

There is no universally applicable definition of "rural." But there are some consistent images: few people in a large area, fairly low levels of education, higher rates of poverty, a tight-knit community, and — let’s just say it — farmers.

The Census Bureau has come up with some criteria. To simplify, a place is "rural" if it has fewer than 500 people per square mile. The census can, and will, classify a place as partly rural and partly urban.

The few times we do talk about public education in rural areas, the census is not the be-all-and-end-all. The definition used depends on the author. Is Missouri rural? As someone who grew up in a large Michigan city, my knee-jerk reaction has been, "of course."

In reality (rurality?), about 25 percent of Missouri’s student-age population is rural. That’s the 15th-largest percentage of the 50 states, according to a 2007 study by the Rural Schools and Community Trust.

In fact, much of the United States itself is rural. In any given state, a fairly large percentage of students attend rural school districts.

Continue reading "Rural, Ruralness, Rurality" »

In a Joplin Independent op-ed, Missouri Rep. Ed Emery has a familiar concern with the state’s ethanol mandate. He has noticed a 10-percent decrease in his car’s fuel efficiency since gas stations began switching to a 90/10 gasoline/ethanol blend in anticipation of the E-10 mandate going into effect.

The Show-Me Institute recently took this decrease in efficiency into account in a study on the impact of the ethanol mandate. The key conclusion of both Emery’s piece and the study is that consumers are getting the shaft both because of the subsidy and the loss of fuel efficiency. We should expect no less when government actors intervene in the marketplace.

Emery sums up the empirical evidence nicely:

Historically, government mandates do not represent good compromise; they violate market forces, pick winners and losers, and frustrate technological progress-all bad for the consumer.

On June 23, 2005, the U.S. Supreme Court dealt a devastating blow to our Constitution, ruling in a 5-4 decision that Americans only have a right to keep their homes, businesses, and houses of worship until their government decides a new owner would generate more tax revenue.  As Justice Sandra Day O’Connor pointed out in her dissent, the majority’s ruling in Kelo v. New London means that "[t]he specter of condemnation hangs over all property. Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory."

The public’s reaction to the Kelo decision was immediate and impassioned, making the case one of the most reviled Supreme Court opinions in recent history. Citizens throughout the nation demanded that their state governments act to make sure their property rights were secure. As a result, 42 states passed at least one bill in response to Kelo, although some bills (such as the eminent domain "reform" passed in Missouri) were far less effective than others.

Regrettably, the Supreme Court marked this anniversary by announcing today that it will not consider a case that might have given them the chance to scale back some of the damage done by Kelo. Suzette Kelo, on the other hand, is helping to spearhead the continuing effort to see property rights protected in this country, and she was present for the grand reopening of the little pink house that was at the center of the controversy. It has been relocated to another part of the city, where it will stand as a monument to the struggle that she and her neighbors shared with hundreds of thousands of their fellow citizens who are threatened with eminent domain. And, perhaps unsurprisingly, three years after New London won its case by persuading five justices that the displacement of these tax-paying property owners was necessary to complete the city’s revitalization, the "redevelopment site" remains a wasteland.

The Southeast Missourian reports that the potential ban on casino construction might cost local developers a promising opportunity in Cape Girardeau:

Because companies already operating casinos in Missouri are sponsoring the ballot measure through an initiative petition and have refused to negotiate for a share in the Cape Girardeau project, [businessman David] Knight said he must attract an out-of-state casino operator to take part. He intends to have an application ready if the ballot measure fails to make the ballot or if voters reject the proposal.

“We’ve got nobody left in Missouri to talk to,” Knight said. “We are proceeding on in the meantime and getting a gaming partner.”

Thanks to the rhetoric-charged protectionism of the initiative and the short-term moratorium it spawned, Missouri stands to lose a large development to out-of-state builders. It appears that although no one in-state is willing to begin a project that faces considerable risk of being legally prohibited in November, Mr. Knight will be able to find someone else who will help him build his casino. If the initiative never materializes as law, Missourians will watch as recent regulatory debacles negatively affect the state’s businesses. If ballot issue is passed, we will never know the damages caused to state revenues, recipients of casino taxes, and entrepreneurial individuals like Mr. Knight.

John McCain has proposed a $300 million prize to the first person who can develop an automobile battery that "far surpasses existing technology." In addition, U.S. automakers will receive a $5,000 tax credit for every zero-carbon-emissions car that they can develop and sell.

Well this is pretty vague. But more importantly, it’s really silly.

The incentive for alternative fuel technology already exists, and the first person to develop and market a practical alternative to the standard combustion engine will be rewarded much more than a mere $300 million. McCain argues that this would amount to about one dollar per U.S. citizen, and is "a small price to pay for helping to break the back of our oil dependency." I, personally, would be willing to pay a lot more than $1 for a practical alternative to fossil fuels. But no politician has the right to make that decision for me (or for any other taxpayer). The government shouldn’t be in the business of deciding good and bad business ideas. We already have a pretty good system in place to do just that.

A letter in the Springfield News-Leader urges the state’s congressional representatives to vote for the adoption of the Fairness in Nursing Home Arbitration Act, which would allow the families of nursing home residents to litigate disputes. This law would invalidate many of Missouri’s existing nursing home contracts, which require families to sign a mandatory arbitration clause in order to insure them against a lawsuit in the case of an injury or death.

I’ve written an op-ed about nursing home regulations before. In that article, I argued that nursing home abuses are very much a reality, but that additional regulation will only make long-term care coverage worse. Saint Louis currently enjoys having the second-lowest nursing home costs in the country, averaging $42,877 annually. Nationally, the average annual figure is $65,200, with costs as high as $191,385 in some states. This is a tremendous bill to foot for 10 or 15 years of potential care.

It’s very obvious why nursing homes require an arbitration clause. They are charged with ensuring the safety of residents who often are suffering from dementia or Alzheimer’s and may be largely a danger to themselves. The costs of litigating every potential event (whether or not it results from negligence by the nursing home) would be prohibitive, and would force many nursing homes out of business — only driving up the costs of long-term care.

This doesn’t mean that we should exonerate negligent health care workers. Many nursing home contracts are already in violation of existing laws. We should concentrate first on enforcing the laws on the books before driving up costs to the industry with little guarantee of improvement in service.

The Kirksville Daily Express reports that there are two main reasons why Missouri’s gubernatorial candidates are reluctant to make any transportation proposals:

First, any plan will require money.

This is dead wrong. If we assume that MoDOT has to build and maintain the roads, sure, any plan requires money. But why should we assume that? Another option would be to sell off some of Missouri’s roads to private developers who would be more responsive to market demand. Note that this would generate revenue rather than cost the state money. Although there are state constitutional issues that would need to be resolved before this could happen, it would generate some competition in the road market — which, if I recall correctly, has served the computer industry rather well in recent times.

Second, as even the Missouri Department of Transportation notes, there is no consensus on which transportation projects have both the greatest need and public desire — much less how to pay for them.

More of the perils of operating without a market system. Someone should read their Hayek. Nobody knows what the public wants because everyone in the road market — both state and local governments — can fail to meet consumer demand and get away with it. There is no incentive to find out what consumers want, so no one has the relevant information. Real live markets, on the other hand, have handy mechanisms for solving this problem — what Hayek called the knowledge problem. Prices convey all of this information in one neat aggregate number … in the absence of government intervention, anyway.

Perhaps reform is needed to get some of the government out of the transportation system so that prices are set free.

How available is public information? I have been putting this to the test by requesting voting records from Missouri’s 114 counties and the city of St. Louis. Under Missouri’s Sunshine Law, this information should be available to anyone who asks.

Specifically, I’m asking for school district election results from the past nine years — school board elections, special school elections, bond issues, and tax levies — in the hope of creating a publicly available database detailing turnout in those elections. While some county clerks have been forthcoming, others have come up with creative ways to avoid giving me the information.

A Jasper County employee, after covering the receiver, said something along the lines of "they’ll just use it for political reasons," before refusing my request for any and all election results.

Continue reading "High Costs, Low Turnout" »

Criticism of the Anheuser-Busch deal has grown increasingly ridiculous. In a particularly glaring example of one-sided electioneering, the Post-Dispatch reveals (as if this were a shock) that Cindy McCain holds more than $1 million in Anheuser-Busch stock and stands to reap a significant windfall if the InBev deal goes through.

Shocking. You know who else stands to benefit? Me, probably you, and just about everyone else.

Who actually owns AB? The Busch family? Its employees? The city of St. Louis?

Let’s take a quick look at AB’s latest financial statements. The largest individual shareholder of Anheuser-Busch (owning about 5 percent of total shares) is Warren Buffet. Well, he’s from Nebraska, so obviously he’s an outsider. But what about institutional investors? Well, a British conglomerate owns about 6 percent. And Mr. August Busch? A whopping 0.2 percent (though I believe he has about 4 percent of the voting power)!

And you know who else owns AB? Me, along with several hundred thousand of my closest friends at Vanguard. And probably Barack Obama, Francis Slay, and Matt Blunt, too.

Saint Louis has no “right” to AB when only one percent of the entire company is owned by AB insiders. And more than that, how do Missouri governmental officials have a right to have any say in a shareholder decision whatsoever?

One comment in the Post-Dispatch article is particularly misguided:

[H]ow ridiculous to say that Barack Obama wants the brewery to remain American while Republicans want it to go. Hello!?! Republican (Ex Chief of Staff to Matt Blunt) Ed Martin is behind the “SaveAB.com” along with SEVERAL other Republican operatives.

I don’t see all of these Democrats in the city doing much to stop the deal.

As well they shouldn’t, because it’s none of their business. This is a decision for the 99 percent of the company owned by outside investors. That’s how a free-market economy works. As voting shareholders, we can each choose to vote however we please. But what we cannot do is ask our government to step in and force a decision on our behalf. There is nothing less American than that.

When it comes to K–12 issues, we tend to neglect small school districts. For journalists and researchers, it’s just easier to follow the St. Louis Public School District and its 32,000 students, or, say, Kansas City, with about 24,000.

Those districts are fundamentally structured to get information to you: Missouri school districts with several thousand students have "Custodians of Record" on staff and post school board minutes and budgets online.

Smaller districts are an entirely different frontier.

Continue reading "How Do They Do It?" »

The Wall Street Journal ran an interesting article today about the new “urban renaissance," which has been fueled by baby boomers and “millennials” fleeing the suburbs for chic urban living and lower gas bills.

This is good news for Missouri’s urban areas, which have made important strides in improving livability over the past several years.

But the article fails to address a third demographic noticeably left out of the equation. What about the 30- and 40-somethings raising young families? Why aren’t they moving into the cities?

We all know why. It’s the schools. And this is still the big elephant in the room regarding why cities remain less desirable than suburbs for many parents.

The article also attributes much of the recent urban growth to "New Urbanism" and the trend toward light-rail commuter trains. While I love commuter trains (particularly in cities where they work), research suggests that they do little to spur urban growth. Most cities (unless they have an extremely dense urban center) would be better off expanding existing bus lines (which we discussed in our review of Kansas City’s light-rail proposal) — but I guess buses aren’t as “sexy” as trains. 

It’s a shame that the Journal fails to understand this.

But at least one thing is true. Economic incentives always correct market imbalances. Think about it. Is it government fiat that is changing Americans’ attitudes toward public transportation and energy policy, or is it the market’s forces at work?

It’s a shame that environmentalists fail to understand this.

Apropos my last post, the Ste. Genevieve Herald reports:

Under Missouri law, customers must purchase electric power from the utility that owns the service territory in which the customer is located. The Holcim cement plant site lies in CEC’s [Citizens Electric Corporation] certificated service territory. However, Holcim wants to buy its power from nearby AmerenUE (a portion of the plant site lies in Ameren’s territorial boundary) because the cement company says there would be very significant cost savings due to Ameren’s considerably lower rates.

This is an example of one of the many ways in which the regulation of natural monopolies can create undesirable outcomes. Allowing Holcim to purchase its power from AmerenUE would increase competition in the energy market and thus put pressure on CEC to find ways to cut costs. In a normal functioning market, this is exactly what would occur. However, the state government has granted CEC an exclusive right to sell electricity within it’s geographic area — exactly the opposite of what would be beneficial for consumers. Do you smell perverse incentives? I do.

CEC defends itself, claiming that:

[...] the electric cooperative has the exclusive right to sell power to customers in its certificated service territory, adding that the contract signed by Holcim in 2002 binds the cement manufacturing firm, and that allowing Holcim to purchase power from someone else will jeopardize the utility and raise costs for other customers.

Part of the problem is that CEC is never jeopardized. In a market, firms must be efficient and innovate or cease to exist. CEC doesn’t have that problem, and thus can get away with inefficient operations and high prices. A consequence of the exclusive territorial right granted to CEC (and other utility companies in Missouri) is that the loss of one customer raises prices for other customers — but this is the symptom, not the disease. Treating the disease will almost always do a better job of solving the problem than treating the symptoms. In this context curing the disease entails removing state-enforced territorial monopolies and allowing competition at least the chance to break down natural barriers to entry.