IDEAS - Interactive Database for Economic Analysis & Synthesis

December 25, 2008

State Officials Announce Horse-and-Buggy Task Force

Some of Jay Nixon’s economic proposals, like initiatives to retrain workers, sound like sensible policy to adopt during a recession. But I can’t imagine what good this will do (thanks for the link, and happy holidays, Combest; emphasis added):

Nixon’s six-point plan includes low-interest loans to small businesses, job training tax incentives and the establishment of an auto manufacturing task force.

Nixon defends the task force by predicting that people will continue to drive and new cars will be manufactured in the future. You can’t deny that. Does it follow that we need an auto task force, though? If the demand for cars goes down — because of changes in economic conditions, technology, or whatever — no task force can bring that up again. When auto companies are in trouble, there may be less reason to devote a task force to that industry. We don’t organize task forces around hansom cabs or steamboats. Innovations rarely arise out of state task forces, which are even slower to respond to changing conditions than inefficient auto companies.

December 24, 2008

Check Out the Badge

What do St. Louis police chiefs and the rapper 50 Cent have in common? Honestly, not too much, but they both possess a lot of bling blingApparently, the St. Louis police chief is sporting a $5,900 gold plated badge on his uniform, and his posse (top cops) are wearing $1,987 badges. The news of these superfluously ostentatious badges has spread all around the country — even people in big-government Boston are shaking their heads.

With this type of money, the whole police force could purchase Power Ranger badges and just morph when someone calls 911.

December 23, 2008

Show-Me Daily Gives Out Holiday Props

As we wrap up the second year of Show-Me Daily, it’s time once again to give out our holiday thank yous to the blogs, newspapers, resources, and — most importantly — our readers and commenters, who help us make this blog a must-read site for literally several people a day. (Get it … “wrap up,” like Christmas gifts …?) 

As our web presence grows, there are more sites than we can single out that have linked to us or discussed our posts and studies, so I just want to issue a general thank you to everyone who has participated in the web conversation about the direction Missouri needs to take. But a few websites must be specially thanked. We could not do this blog without the daily headlines at johncombest.com. Every morning, like a CWE rooster, John gets up and sorts through the day’s headlines so that thousands of Missourians don’t have to. Many of the articles we discussed were first found through his site, and because we occasionally forget to give him credit for the links, let it be known that he is the man!

The writers of the Prime Buzz blog over at the Kansas City Star have been tremendous to us this year. Their daily Blog Roll post has linked to our posts several dozen times, and driven a great deal of traffic our way. Just the other day, they gave my post about Kansas City’s budget report the top placement in the Blog Roll, and we saw a nice increase in visits because of it. We can’t thank them enough for the inclusion they give our thoughts on their site.

The other website that deserves our public thanks is Missouri Political News Service. The editors over there are always willing to post our op-eds and policy studies, which we greatly appreciate. In the think tank industry, if a tree falls in a forest and nobody is around to hear it, then it does not make a sound. MOPNS helps to make certain that our work always makes a sound, and we thank them for it.

There are many other sites that deserve our thanks as well. To our regular readers, we thank you the most — and, to our commenters, please keep up the great conversation.

December 22, 2008

Another Productive Legislative Session

Piling waste upon waste, soon that December 25 holiday already recognized by the state will have a name. According to a post on the KY3 blog, of Missouri’s 12 recognized holidays, only four are officially named by the state, and there is a proposal underway to officially name the December 25 holiday “Christmas.”

This unproductive exercise by our General Assembly, like all its activities, can be tracked on Policy Pulse. I found it by searching the keyword “christmas.”

December 19, 2008

I Wanna See My Face in ‘Em

Yesterday, I had the good fortune to join some fellow Show-Me Institute employees in getting my shoes shined. We braved the harsh Clayton, Mo., winter and walked two blocks to Andre’s Shoe Shine Parlor, located at 7818 Forsyth Blvd. in Clayton.

While there, the five of us were able to experience the joys of capitalism firsthand, as we exchanged a small amount of currency for a service that was not only enjoyable, but also improved the value of an asset — in this case, our shoes. Now, while I still feel that buying comic books is the greatest example of free-market capitalism, I still had a great time at Andre’s.

So, enjoy this short movie I edited together on our office Mac. It shows, in its purest form, what capitalism truly means.

December 18, 2008

What Will KC Do About Its Budget?

The Kansas City Star has a long story about an even longer budget report that deserves at least a short blog post. I have carefully read the article, and the study itself will be my work-related reading assignment over the holiday break.

In the interest of focusing on the key points, I am only going to discuss the consultants’ seven recommendations that were highlighted in the Star. If you are in such a hurry that you can only read one more sentence, then I will tell you this: Four of the recommendations are very good, one is worth consideration, one might be a good idea, and one is absolutely horrible. But on to the details, with each suggestion followed by my comments. The report suggests that Kansas City should:

  • Consider a new trash fee, consistent with what is charged in many cities in the region and nation. Kansas City residents often resist this idea, saying the earnings tax, in place since the 1960s, is supposed to cover those costs.

Definitely worth considering. Moving toward direct fees for direct services is a move in the right direction. However, this should not be done as just an excuse to create a new fee. Rather, it should be at least partly offset by spending cuts elsewhere, as the revenue moves toward the new trash fee.

  • Consider seeking state legislation for mandatory suburban withholding of that earnings tax to make sure people working or living in Kansas City pay the taxes they owe.

This is an absolutely terrible suggestion. Businesses that operate outside of Kansas City should not be forced to collect taxes for the city. If anything, this could serve as an incentive (albeit a minor one) for companies outside of Kansas City to hire fewer KC residents. Just a stupid idea.

  • Consolidate the Police Department with the rest of city government.

Both Kansas City and St. Louis would like to gain control of their police departments from the state. I am friends with some St. Louis city cops, and I have never talked to one who liked this possibility. Control by the state board means that the police department answers to one board and the governor, not to 28 aldermen and 11 citywide elected officials. However, in Kansas City, with its city manager form of government, local control might work better.

  • Hold the line on city hiring, limit wage increases, and contain health-care costs to a greater degree than the city has done in the past.

Now we are on to the good ideas, so I don’t have much to add. Obviously, this suggestion is imperative for any city.

  • Pursue regional funding for civic and cultural assets, as is done in such cities as Denver, St. Louis and Minneapolis-St. Paul.

Now, here is an idea that might raise taxes for some people but which I still support. The zoo-museum district in St. Louis has been an excellent system for some time, and should be expanded for other counties like St. Charles. I think it should definitely be implemented in Kansas City.

  • Prioritize basic, quality-of-life services over “nice-to-have” amenities.

This is a pretty standard, yet important and worthwhile, recommendation.

And, finally, the best part of the whole report:

  • Hold the line on new taxpayer incentives for development and tax abatement to limit negative effects on city revenues. Also, re-evaluate the number of sports and entertainment arenas such as Kemper Arena that are subsidized by the city, “particularly given ongoing maintenance needs.”

We could not have said it better ourselves.

Penny for Your Thoughts

I’m suspicious when the government sends out arbitrary amounts of money to people in hopes of “stimulating” the economy. But what about sending cash for some other reason? I don’t have a problem with this, although the recipient of $5 quoted in the article sounds pretty mad:

The letter claimed to be from the Department of Transportation and said the $5 was an incentive for personal information about driving habits.

And while it looks like a scam, the DOT says it’s not. [...]

“When you called me back and told me it wasn’t a scam, I got even angrier. For the government to spend this kind of money on a mailer like this just infuriated me even more,” Held said.

Sending out cash with a survey could be worth it. The five-dollar bill grabs the recipient’s attention and makes him or her feel somewhat obligated to respond. And while this gimmick may sound expensive, mailing a survey that no one replies to would itself be a waste of money. Making decisions without information is costly too.

It would be interesting to find out whether a one-dollar bill is as effective in eliciting responses. If so, switching to the lower denomination might be a way to keep expenses down. Anyone at MoDOT want to give it a try?

December 17, 2008

Pop Quiz

Some people are interpreting this reported gain in U.S. student math scores as a victory for central planning. The U.S. has improved on an international math test since implementation of No Child Left Behind; therefore, the thinking goes, we need more federal oversight and national standards.

I have two questions about that reasoning:

  1. If central planning improves math performance, why does it have no effect on science?
  2. If the U.S. does better in a subject as a response to competition from other countries, doesn’t that say more in favor of competition than planning? Maybe we should have a contest between states, instead of more federal directives.

You may use a calculator.

A Law Requiring All Ducks to Wear Long Pants

The Kansas City Star is reporting about a unique law in Missouri — a ban on all yellow margarine. Now, it was only recently that I discovered the difference between butter and margarine, and I couldn’t believe that anyone might actually try to ban margarine in Missouri. Now, imagine my shock in learning that such a law has been on the books since the 19th century.

Luckily, this law has never been enforced. Even so, a Kansas City lawmaker is trying to have the law repealed, giving Missourians the smooth yellowy freedom they deserve. And yet, I ponder, who really cares? I mean, the law hasn’t been enforced and yet this lawmaker is taking the time to have it repealed. Is the inert I-Can’t-Believe-It’s-Not-Butter ban causing so much damage as to warrant such attention? Are there not more urgent issues to deal with? So, which is worse: having a useless uniformed law on the books, or having an elected official waste time and money to repeal it?

This seems like the kind of thing they deal with down in Springfield.

She Blinded Ethanol With Science

Frequent visitors to this blog know that I have a thing or two to say about renewable energy, specifically ethanol. I don’t care for ethanol, even if my friend Willie Nelson loves. It drives up the costs of gasoline and food and makes our cars less efficient. It attracts large government subsidies, and those new corn commercials are starting to get very annoying.

I figured it was only a matter of time until some sort of scientist would muster proof that ethanol = bad. Finally, the Royal Society of Chemistry’s Energy & Environmental Science journal has published a study ranking alternative energy sources in terms of their relative abilities to address problems with “global warming, air pollution mortality, and energy security,” and “other impacts of the proposed solutions, such as on water supply, land use, wildlife, resource availability, thermal pollution, water chemical pollution, nuclear proliferation, and undernutrition.”

Surprise, surprise — ethanol finished dead last.

Hopefully, these findings will not fall on deaf ears. And, if you haven’t read it by now, here is the Show-Me Institute’s ethanol study. Still looking for more ethanol fun? Why not try searching for “ethanol” on Policy Pulse and seeing what pops up?

Oh, and if you didn’t already know, today’s blog title comes from Thomas Dolby’s classic ’80s hit “She Blinded Me With Science.”

Assessment Declines May Not Lead to Tax Cuts (In Case You Thought They Might)

The Post-Dispatch has a front-page story today with tremendous statewide applications. It corrects assumptions about next year’s reassessment process that many people, according to the story, might have. First, the Saint Louis–area assessors that were interviewed don’t seem to think the assessment declines will be that substantial, but the article’s second point makes this moot — taxing districts are protected (a poor choice of words, I admit) from revenue decreases that result from lower property assessments. Any taxing district can increase its rates to make up the difference.

The part about assessments declining only 3 percent, according to most of the assessors the Post spoke with, is probably going to frustrate and upset many people, but in the end it does not mean much. What difference does it make if your assessment declines by 3 percent or 15 percent (on average for a community) if taxing districts increase rates by the same amount, to make up the difference? The answer is that it will make no difference, and your best hope in the assessment lottery is to see your property value decrease more than average. In that case you may actually see a lower tax rate.

I have written many times about how the Saint Louis County assessor actually does a good job on aggregate, but with so many parcels, there is almost no way to avoid the element of chance that comes with the process when you look at one individual home’s assessment. It is that element of chance that infuriates so many people. My own thoughts about how to change the system include eliminating the individual assessment and averaging everything. There are other reasons that people so viscerally dislike the property tax when compared to others taxes, the two main reasons are the fact that the process feels like a lottery, and the fact that this tax is the only one for which most people sit down and write a check to the government.

In conclusion — and to you young bloggers out there, it is poor form to end blog posts with “in conclusion” — the most that average Missourians should expect from reassessment next year is that their property taxes probably will not rise. After the increases that many have seen during the past decade, a leveling-off for a couple of years might not be so bad.

Supply and Demand … What a Novel Idea!

According to Sports Illustrated:

Next season, San Francisco Giants fans buying single-game tickets for an April game against Milwaukee might pay half as much as they would for a weekend game with the rival Los Angeles Dodgers later in the year.

The club is trying something new with ticket sales in a few tough-to-sell upper-deck outfield sections of its waterfront ballpark for 2009: cost based on demand.

The walk-up sales price for up to about 2,000 seats could even go up or down on game day.

Granted, this is only an experiment in San Francisco, but what if the St. Louis Cardinals decided to do this as well? I would love for you to comment.

Get ‘Em While They’re Young

Tell me, which is worse: a cartoon camel that encourages kids to smoke, a creepy clown that encourages kids to eat unhealthily, or an anthropomorphic letter “e” with a green mustache that encourages kids to use an inefficient fuel source that drives up the costs of food and fuel?

Sure, the latter of the three isn’t pure evil, but he still makes me uneasy. Edgar the “E” Man is the new mascot for EPIC, the Ethanol Promotion and Information Council. With a round short body, an inflatable mustache, and a hat that looks like it was stolen from Luigi, Edgar travels the land promoting ethanol to all the impressionable little minds that need molding. Yes, there is a form you can fill out to have Edgar appear at your party. He even has a Facebook account.

Is it possibly taking things to far to use an inflatable letter “e” to promote ethanol by manipulating children? Before you know it, we’ll see Eli the Eminent Domain Eagle and Karl the Tax Kredit Kangaroo. I just pray that Chester Cheetah, Captain Crunch, and the Stay-Puft Marshmallow Man can form some sort of mascot union, and keep Edgar the “E” Man out.

December 16, 2008

Merry Christmas, Attorneys!

In a new report, The American Tort Reform Foundation has placed St. Louis and St. Louis County on the “legal hellhole watch list.” I think Philip Corboy Jr., the head of the Illinois Trial Lawyers Association, stated it best: ”The report is just a Christmas gift for the insurance industry and the big business lobby.”

Although we are only on the watch list, this report still indicates that we have a lot of work to do in Missouri to achieve meaningful tort and lawsuit reform. It would be a nightmare if our region went back to the days when Madison County was unanimously ranked #1 on the list. If things get any worse, we might have to refer to my colleague’s previous blog post.

Chiefs Miss the Extra Point …

Right now, I am a little disappointed in the Kansas City Chiefs. Not because of their 2-12 record, or for them being at the bottom of the AFC West. After receiving $50 million in tax credits from the state two years ago to assist with stadium renovations, the Chiefs had the nerve to ask for another $25 million.

According to the St. Louis Post-Dispatch, ”The professional football team’s owners are seeking the new subsidy to upgrade Arrowhead Stadium in Kansas City and finance an indoor training arena in St. Joseph.”

Given the financial climate of our state, money is tight. Plus, our governor-elect is already having trouble in his search for money to fund future projects. While the working poor and retirees can barely afford tickets to go to a game, we are asking them to pay the tab for building new restaurants and luxury suites in the stadium. I think this is terrible. It’s also economically unjustified. Despite the development arguments of those who support government funding for stadiums, the theory and practical research both demonstrate that this type of appropriation is a net loss to society:

Households face budget constraints; they must meet their unlimited wants with a limited amount of income. The arrival of a professional sports team in a city provides households with a new entertainment option. Households that choose to attend games will spend less on other things, perhaps going out to dinner, bowling, or the movies. If the impact of each dollar spent on these forgone alternatives has a larger effect on the local economy than the impact of each dollar spent on professional sporting events, the local economy will contract and income will be lower. Why would the impact of each dollar spent going to a professional basketball game be smaller than the impact of each dollar spent on bowling?

But this is what happens when government throws out tax credits like rice in a wedding.

Come on, Chiefs — time to draw up another play. If you were at least .500, maybe we could talk.

December 15, 2008

David Stokes Talks Occupational Licensing in Joplin Tomorrow Morning

I am going to be appearing with Mark Kinsley on the KZRG 1310 AM morning show on Tuesday (that’s tomorrow) morning at 7:10 a.m. Mark has graciously agreed to put little ‘ol me on for the whole hour, to discuss my recent case study of occupational licensing. You can listen in online from the link above. Because the station broadcasts to both states included in the study, I think this is a great opportunity to talk about the points I make.

I appeared on the morning show with Mark and Kara once before, in February, to talk about tolls and transportation. I am delighted to be appearing again. I encourage you to listen in. They have a great show and we are honored to be a part of it.

Red Light Cameras Fail to Watch the Watchmen

Whether you like red light cameras or hate them (although if you’re visiting this site, I’ll guess the latter), no one can argue the fact that they do not discriminate. Whether you’re driving a Pinto, a Hummer, or a Ford Ranger, red light cameras will catch you if you are running those yellows. In that aspect, they were fair — until now. According to this St. Louis Post-Dispatch article,* many policymakers who pushed for these cameras in the first place are failing to pay their fines when they are photographed breaking the law.

I don’t know how I’m expected to follow this law when even the lawmakers don’t. Apparently, civil liberties are something to worry about only when your own are threatened.

*If you squint hard enough at the top right corner of the photo in the article, you can kind of see my apartment.

The Quarterback Problem

I highly recommend an article in last week’s New Yorker magazine for anyone interested in a deeper understanding of the challenges facing our education system. Or just for anyone who cares to read about how difficult it is for professional football scouts to predict which college quarterbacks will perform well in the National Football League. You’ll be surprised to see how the two topics are related.

Malcolm Gladwell, the bestselling author of The Tipping Point: How Little Things Can Make a Big Difference; Blink: The Power of Thinking Without Thinking; and Outliers: The Story of Success, begins with a scout trying to determine whether Mizzou quarterback Chase Daniel has the tools to be a successful pro quarterback. Of course, the answer is that nobody knows, but despite this ignorance, NFL franchises guarantee tens of millions of dollars to untested signal callers in hopes that they have found the proverbial needle in the haystack.

How does this relate to education? It is just as impossible to predict which aspiring teachers will turn out to be effective in the classroom, yet public schools across the nation are similarly forced to make long-term commits to teachers before they have any idea of whether they have what it takes to help kids learn. As with the NFL, the stakes are very high because research has shown that the quality of a student’s teacher has an enormous influence on that student’s learning — far more than factors such as class size or facilities, or even a school’s overall reputation. But because of agreements struck with teachers’ unions, most public schools find it very difficult to terminate teachers that prove to be ineffective. Thus, a few poor hiring decisions can cripple a school’s efforts to teach its students.

Gladwell’s article offers amazing insight into these challenges, and even proposes a few novel solutions that might make it easier for our nation’s schools to identify and retain the talented teachers who are vital to our children’s educational success. You owe it to yourself to give this article a read.

Happy Bill of Rights Day!!

On this day in 1791, the United States ratified the first 10 amendments to its new Constitution.  These provisions were adopted to ensure that the federal government would be limited in its ability to infringe upon its citizens’ liberties. Later, the addition of the Fourteenth Amendment meant that state and local governments were also prohibited from violating the liberties to which citizens of the United States are entitled. Just in case you haven’t read them in a while, here are the amendments:


Amendment I – Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.


Amendment II – A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.


Amendment III – No Soldier shall, in time of peace be quartered in any house, without the consent of the Owner, nor in time of war, but in a manner to be prescribed by law.


Amendment IV – The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.


Amendment V – No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.


Amendment VI – In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence.


Amendment VII – In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.


Amendment VIII – Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.


Amendment IX – The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.


Amendment X – The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

December 14, 2008

Buy Back the Criminals

The St. Louis Police Department recently performed a service to residents who don’t want to spend time trying to pawn their old weapons for less than $50. How’s this for logical analysis:

“It’s certainly worth the effort,” said Lt. Col Tim Reagan, the department’s chief of detectives. “You can’t give a scientific evaluation of how many crimes it solves or prevents by doing this. But you can say if a gun is not on the street, then it can’t be used. You can say that if a gun is in our possession, then it can’t be used in an unlawful act or cause an accident.”

Well, that’s true. Although it does make you wonder why there’s a limit of five guns per person. If buying back five guns per person gets them off the streets, why not buy back 20? Those guns would be in police hands so they couldn’t be used on the street in 20 hypothetical crimes!

The detective makes it sound like crimes occur because a gun just happened to be in the wrong place at the wrong time. So, the department buys some guns, and those particular guns won’t be used in crimes. But a buyback doesn’t stop criminals from procuring more weapons (in fact, it helps them out with some cash).

The $50,000 would be better spent on tracking down criminals and getting them off the streets. A person who is seeking to harm others is far more dangerous than a machine with no brain or volition of its own. The next time the department wants to spend money, it should “buy back” the criminals.

December 12, 2008

ArchPundit Is “U Plamenu” — That’s Serbian for “En Fuego”

This is off-topic for us, and not even related to Missouri — but it’s close to Missouri and very, very interesting. So I feel the need to throw a major recommendation for my buddy, the ArchPundit, who has been kicking (bleep) in covering a certain story taking place across a big river in a bordering state that does not have personal property taxes. …

Smoke-Free KC

We probably didn’t give enough coverage on this blog to Kansas City’s ban of smoking in public places. Needless to say, the policy was enacted and is now being challenged in court. The Star has the story here. I will try to do a better job of following the case from here forward, although we did have an excellent general write-up on the issue at the beginning of the year.

I have always seen both sides of the issue, but because I worked to pass a smoking ban in the St. Louis County when I worked for Kurt Odenwald, I am not going to be a hypocrite now and come out against them. Especially because I see very good arguments for smoking bans — and if it were up to me, and me alone, I would institute a loose one in the county (i.e., some bars could opt out, cigar clubs could still exist, that type of compromise). Pretty much everyone else here at the Show-Me Institute will disagree vehemently with me, but, heh, this is one of the examples of why I am not a libertarian.

So, it will be interesting to see the result in Kansas City, because the issue will return to St. Louis at some point, and probably soon. You can put that in your pipe and smoke it.

No Taxation Without Ambulation

Missouri’s budget crisis is certainly in the news, so some legislators are trying to innovate their way out. According to an article in the St. Louis Business Journal (snippet from the online version), a tax on Internet-based sales will be proposed in the Missouri General Assembly in January.

The bill is called the “Streamlined Sales and Use Tax Agreement Act,” and has already been pre-filed, so it can be found on Policy Pulse in a search with keywords from the bill’s title. Why can’t it be found by searching the keyword “Internet” or “e-commerce?” Well, this bill doesn’t only tax Internet sales. It is a complete overhaul of the Missouri sales tax system, in which tax becomes assessed at the point of delivery, rather than at the point of purchase. As pointed out in the Business Journal’s article:

Missouri currently has a total of 2,173 local sales taxing jurisdictions. The only other state with a higher number of such bodies is Louisiana.

The article is not too friendly to the idea proposed in the bill, and points out the difficulties of administering such a tax system.

This proposed legislation is also an attempt to bring Missouri in line with a larger movement, the Streamlined Sales and Use Tax Agreement; here’s a list of current participating states. In the Business Journal, Sen. Joan Bray, the bill’s sponsor, said, “Kansas went through the process and Washington state is going through the process.” Here is a decent article that discusses Washington’s recent change, and the SSUTA. From the article:

In 1992, the U.S. Supreme Court ruled states could not force businesses to pay a sales tax unless the company has a physical presence in the state.

This federal ruling means that membership and participation in the SSUTA is voluntary, and 22 states have already joined in at least some capacity.

I am opposed to this proposal for Missouri not only because of the high cost of implementing and enforcing the measure, but also because of the limitation that this represents on the free choice provided by the Internet. It is currently possible to buy many things you need or want on the Internet at prices that are competitive with local stores, even after shipping costs are considered. This is a tremendous boon for people who don’t happen to live near a major metropolitan area, and a nice opportunity to comparison shop from far and wide. A tax on Internet sales is yet one more way that legislatures are attempting to restrict the wonderful boon that Internet commerce represents, for buyers and sellers alike.

December 11, 2008

Musing About Shoeshines, and the Free-Market Question of the Week

One of our two terrific interns, Calvin, and I had a great talk on the way back to the office from City Hall today. (We were there to distribute copies of our recent studies to the Board of Aldermen, the mayor, etc., but that does not relate to this post.) Calvin and I share very similar beliefs about questions like social capital and interaction, best described in the famous book Bowling Alone.

Somehow, the talk turned to shoeshines, and we began to think of the many great things about getting a shoeshine. When you get your shoes shined at a place like Andre’s in Clayton, you: A) improve the value of an asset, in that your shoes will look more professional and better handle wear and tear; and, B) have a very pleasant time in the process, because shoeshine proprietors tend to be good conversationalists, like bartenders, or perhaps you’d just quietly enjoy the newspaper; and, finally, C) get both of these things for what we all consider to be a very inexpensive price — about $7.

So, I ask you, before I leave to go get a shoeshine, what are some other things that have these three qualities? There are lots of serves with which you spend a little money to improve the value of something you own, but it is usually not fun to go to the dry cleaners. There are countless ways to have a pleasant experience for a little money, like going to a nice bar, but they generally don’t improve the value of anything. Lastly, there are clearly things that improve the value of an asset, and are fun, but are not considered inexpensive — like golf lessons.

My initial inclination is that a car wash is the closest thing to a shoeshine. For people who enjoy yard work, gardening might fit here, too. A small investment in seeds and hand tools can lead to hours of enjoyment in your yard, improving the value of your property. Haircuts could almost make it — but for women, at least, a trip to the stylist is not cheap. Let me know your thoughts. …

The Next Big Thing

The state-appointed Special Administrative Board that currently oversees St. Louis’ unaccredited public school district will be announcing today a new plan to improve student performance in the city’s schools. The plan appears to include efforts to close underutilized facilities and to increase the accountability of teachers and principals for their students’ academic performance, among dozens of other proposals.

Even if the board manages to implement these changes effectively, the solutions proposed seem to avoid the most direct solution: Let parents choose which schools their children will attend. Despite the district’s lack of accreditation, there are some good public schools in St. Louis — and parents who pay taxes to support them ought to have at least a chance to send their children to those schools!

The parents will recognize (far better than the district’s bureaucrats) which principals and teachers are doing the best work for their children. If any given school cannot retain a critical mass of its students, the district can close that facility and focus on — and perhaps increase capacity at — the schools with excess parental demand. In addition to offering parents the best chance to find schools that will work best for their children, giving parents this sort of opportunity means that the district won’t have to spend nearly as much money paying “experts” to come in and decide which teachers, principals, and schools are effective and which should be fired/closed.

December 10, 2008

Voting in Schools

Maybe I would be more sensitive to this issue if I were a parent or principal, but I don’t see why voting in schools is such a big deal. In the worst-case scenario, a school cancels classes. Then parents have to find alternative child care — an inconvenience, but no different from cancellations for professional development or snowstorms.

I’m not convinced that it’s such a security threat, either. Students go on field trips all the time, on which they encounter crowds of strangers. If teachers can handle field trips to public museums, why can’t they supervise students on election day? And is it really so traumatic for students to eat lunch in their classrooms one day a year?

Furthermore, the suggestion that voting take place in firehouses instead is a terrible idea. Imagine all those people lining up outside the firehouses and blocking fire trucks. Inconveniencing firefighters who are trying to save lives would be far worse than inconveniencing teachers who are trying to escort their classes to a computer lab.

December 9, 2008

Picking Favorites

Reserved Parking - Hybrid VehiclesAccording to the St. Louis Post-Dispatch, a bill is being pushed that, if passed, would give tax breaks up to $2,000 for owners of hybrid vehicles. This move would serve as an incentive for Missourians to buy these greener cars and help out the environment. But do people really need another incentive to buy a hybrid? It’s already the cool thing to do. All the celebrities drive hybrids, and who wouldn’t want a car with much better gas mileage?

I fear there are political motivations behind this tax break idea, and that the well-being of the environment is not the primary concern. A tax break to buy hybrids does two things: First, like so much green legislation, it gives the policymakers a green image in the eyes of the public. With green policies being so popular, especially with young voters, they have a political incentive to pass it. I’ll just call this a positive externality, regardless of whether the intentions are positive. The new law would act as a Pigovian subsidy, encouraging individuals to reduce the emissions they might otherwise create by, in this case, buying more hybrids. The second result is obvious: Creating an additional incentive to purchase new, American-made cars will cast policymakers as heroes to automakers — companies that are more than willing to fund future campaigns if it will lead to legislation that increases their sales.

Like so many green ideas out there, hybrids are seen as flawless vehicles, but there are drawbacks, some of which do not apply to standard cars. For instance, materials used in hybrid car batteries are known carcinogens, and some materials in these batteries are quite rare; an increase in demand will drive up the costs still further. Of course, standard car batteries aren’t exactly safe for consumption either, being composed primarily of lead. But that is neither here nor there. What is surprising is that throughout the lifespan of both types of vehicles, including production and disposal, hybrids require more energy than traditional vehicles. This is reflected in their higher production cost. People are still willing to pay this extra cost if means staying green, and that’s the beauty of choice. But the proposed subsidy takes only one set of externalities into account, and so may not be promoting real efficiency.

Just to make the issue personal, signs like this are popping all over the place — including down the street from the Show-Me Institute’s office. Where will this end? I, for one, am tired of being villainized because I drive a regular vehicle. Where’s my reserved parking spot and tax break? I blame all of this on Stan Marsh’s stupid little song.

Stokes Massages the Post-Dispatch

The Show-Me Institute’s very own David Stokes was interviewed by David Nicklaus of the St. Louis Post-Dispatch for an article discussing the topic of licensing in the state of Missouri. While Missouri has been ranked to have the least amount of licensing restrictions, Stokes was still able to show how regulation can affect the economy by focusing on the massage therapy industry, which is a licensed profession in Missouri but not in Kansas.

His latest case study compared the prices of the metropolitan Kansas City market on both sides of the state line, and compared Springfield to Wichita. Unsurprisingly, the data show that Missourians pay a higher cost for massage services, a situation likely caused by market regulation. Stokes is quoted in the article as saying:

“This is a system designed to limit competition for the people who have the current licenses,” Stokes asserts. “That’s the only reason. Everything else is a smoke screen.”

I agree with David Stokes 100 percent. It baffles me how people try to argue for occupational licensing by saying that it is a form of consumer protection. Although his study demonstrates some of the ancillary benefits that licensing can provide, such as reduced search costs when trying to find a competent practitioner, government officials aren’t in a position to determine whether those benefits are worth the higher market costs that reduced competition brings. Ultimately, the primary thing being protected is the income of a particular set of licensed professionals.

I could easily prolong this post, but interns at the Show-Me Institute don’t get that long of a break. So excuse me while I go to Kansas to get a massage — it’s been a loooong day!

December 8, 2008

Attention All Ears (of Corn): Ethanol Mandate Could Be Repealed*

Although a few free-market ideals have been coming from Jefferson City recently, one in particular caught my eye — a bill having to do with ethanol. The Richmond Daily News reports on a bill in the works that, if passed, would remove the ethanol mandate from Missouri law. The article makes many great points, the best of which is its citation of the Show-Me Institute’s ethanol study.

Ah, now there’s a thought — living in Missouri without a ethanol mandate. Already, Missourians are getting a glimpse of this eventuality every time the price of gasoline prices drop below the price of ethanol. Hopefully, we are on our way to having a choice of whether or not we want ethanol in our engines.

*Former Show-Me Institute intern Pat Eckelkamp contributed this terrible pun of a title.

December 7, 2008

Charter Schools for Columbia?

Janese Heavin of the Class Notes blog asks whether bringing charter schools to Columbia would be a good idea. (Missouri currently allows charter schools only in St. Louis and Kansas City.) It seems unfair that Columbia residents aren’t able to take advantage of the innovations that charters bring. And as regular readers of Show-Me Daily know, I love charter schools.

With that said, expanding charter schools across the state does present one concern. Some charters, like KIPP, attract students who have no other option but their assigned public schools. Then there are charters that sound much like private schools — the Montessori charters or language-immersion charters, for example. If those charters pull students from existing private schools, they could crowd private schools out of the market.

One possible solution to the problem would be for charters to charge tuition on a sliding scale, based on ability to pay. They would be like private schools that provide scholarships to some students. Obviously, this arrangement is unlikely to be implemented any time soon in Columbia.

I would love to see charters spread for the sake of all the students they help, but I hope Columbia’s private schools can stay afloat.

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The views expressed by each contributor to this blog are those of that contributor alone, and do not necessarily represent the views of the Show-Me Institute.

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