Lisa Snyder watches her neighbors’ children for less than an hour every day while they wait for the school bus. She is a stay-at-home mom and she does not accept any money in exchange for doing this. According to the Department of Human Services in Michigan, however, she is running an illegal daycare center. Department officials have notified Snyder that she needs to get a license in order to continue this informal babysitting, or she’ll go to jail for 90 days or pay a $1,000 fine. Even if it is raining or snowing, and even if the arrangement has been agreed upon by the parents, the DHS says that it is illegal for the children to come into Snyder’s home (or even into her garage).

Snyder’s story is getting a lot of attention in the national media. “The Today Show” and Fox News have both reported on it.

By requiring licenses, the government is telling individuals that it knows better than they do. It’s paternalism in another form. The parents in Snyder’s neighborhood know her very well, so they are in a much better position to determine whether her home is a safe environment for their children.

Furthermore, having a daycare license does not ensure that a person is fit to supervise children. Earlier this year, for example, a woman running a licensed daycare in Arkansas accidentally placed windshield wiper fluid in her refrigerator and later served it to children! As a parent, I would much rather leave my kids under the supervision of a person like Lisa Snyder than a person who can’t tell the difference between wiper fluid and Gatorade. The Department of Human Services would feel differently, apparently.

Daycare licensure requirements do not result in better outcomes (e.g., fewer ER visits), nor do they improve the general welfare. In this case, all the involved parties (i.e., Snyder, parents, and children) are happy with their current arrangement. If the DHS gets its way, the parents will either have to stay home from work or pay a licensed daycare provider to watch their children.

Professional licensing has many negative consequences, which contributors to this blog have discussed extensively. The Show-Me Institute has produced scholarly work on this subject, as well.

Alex Tabarrok is blogging about merit pay for teachers. An experiment in India found that incentives for teachers have a significant, positive effect on students’ test scores.

One of the most interesting results of this study is that incentives created a spillover effect. The teachers facing incentives were rewarded if students did well in two subjects, but the benefits weren’t limited to those subjects. This is good news, showing that a little incentive can go a long way. It also indicates that the test score gains reflect real learning rather than cheating, for if teachers were to artificially inflate scores in hopes of a reward, they would have no reason to distort scores in subjects that are unrelated to the incentive.

How do incentives for one subject improve test scores in a separate subject? It could be that students are taking the skills they learned in reading or math class and applying them in other areas; students who are well-prepared in math can go farther in science, for example.

The spillover could also be because of another effect of merit pay: Incentives change the way people view their profession. When teachers are paid according to a set schedule, they may feel, “I’m just like any other teacher with the same amount of experience. We all do the same work, and we earn the same amount. I don’t need to try to be exceptional.”

But when teachers are rewarded for student achievement, they think, “My students’ success depends on my individual effort and creativity. I don’t have to wait years for a pay raise; I can get one immediately if I bring achievement up far enough. We earn bonuses because outstanding teachers are valuable, and I want to be outstanding.” This attitude can motivate teachers across all subjects, not just in the areas linked to a monetary incentive.

For more about why I like merit pay for teachers, see this recent post.

I was quoted this morning in the University of Missouri–Columbia’s student newspaper, The Maneater, as part of a story about a proposal to have a state bond issue for education construction. I briefly want to explain a little further what I meant. The reporter quoted me accurately, but my original quote could have been a little more clear, and because I got a call from a state rep this morning asking me to clarify, I should probably do so.

This is my quote about the bond issue, from the article:

“The legislature shouldn’t just pass this onto the people,” he said. “If they believe the benefits outweigh the costs, then they should pass it, but this is something they should think carefully about.”

When I said they should not just pass it on to the people, I didn’t mean that they should pass the bond issue without allowing Missourians to vote on it — a process that is legally required for almost all bond issues. I am fully aware that bond issues require voter approval. Rather, I meant two things: First, the legislature as a whole should not just use the fact that voters will vote on this as an excuse simply to put it on the ballot without first fully debating the costs and benefits of the proposal. Second, in a related way, individual legislators should not say, “I don’t support this proposal, but I want to let the voters make the decision, so I’ll vote to put it on the ballot.” I want the legislators to consider the issue fully, from all sides, and if the majority of the legislators believe it will benefit Missouri, then — and only then — should they put it on the ballot so that the voters can have the final say.

I generally prefer the traditions of a representative republic over more direct action democracy. I prefer elected officials to make the tough decisions, and to have voters then judge whether to reelect them based on those decisions, rather than having those decisions made through referendums and the like. I don’t prefer that process because I believe elected officials are smarter than the voters, nor because I think elected officials make better decisions than the voters. Instead, I prefer it because I think that, in general, the legislative process is slower and more deliberative than the type of constant voter initiatives they have in California. There are certainly some issues, such as smoking bans and concealed carry, for which the general public intrinsically understands the questions at hand every bit as well as elected officials do, and I think those types of questions are better suited to go straight to the voters. (Let’s leave aside the difficult question of whether people should be able to vote on the fundamental rights of others in the first place.)

I think that a major bond issuance entails enough complications that both legislators and the general public need to give their separate approvals to before it goes forward.

A couple of weeks ago, the Show-Me Institute hosted events in Kansas City and St. Louis at which Jeff Benedict discussed his book Little Pink House: A True Story of Defiance and Courage, the story of Susette Kelo’s fight to save her home in New London, Conn. As most will know, Susette lost her fight when the U.S. Supreme Court ruled that the U.S. Constitution permits cities to take private property on behalf of new private owners, so long as those owners are considered more likely to generate more tax revenue for the city.

Many people at these events asked whatever became of the planned development once the city won the case. Did they ever build the luxury hotels and condominiums, or the high-end retail shopping establishments that were promised? New London’s local newspaper, The Day, has produced a video that lets you see for yourself how the development is faring, four years after Mrs. Kelo’s neighborhood was leveled. I hope the city is satisfied with the Fort Trumbull neighborhood’s new residents.

Dan Pink argues in this talk that extrinsic rewards like bonuses don’t motivate people to do well when charged with complex tasks. His conclusion: Businesses need to change the way they reward employees, by moving away from performance incentives and by emphasizing greater autonomy for each worker.

Does this apply to merit pay for teachers? Here are a few reasons merit pay is still good policy:

1. The experiments Pink cites as evidence involved tasks that took just a few minutes to complete. In each of these tests, one group of people was asked to solve a puzzle in order to get a reward, while another group was asked to solve the puzzle without an incentive. The group facing the incentive took a little bit longer to complete the task. That group might have dawdled for a minute or two at first because the members were distracted by thoughts of what they would do with the reward. For activities that take up a short amount of time, every minute counts, and a few minutes of divided attention can set you back. But it doesn’t follow that people offered larger incentives for work done over the course of a year would spend a sizable chunk of that time dreaming of the reward. Maybe they would be distracted for a couple minutes — and then go on to work really hard for the rest of the year.
2. In real life, people are not randomly assigned to professions the way subjects of an experiment are assigned to control groups. If certain people work harder than others for rewards, and if they make good teachers, an incentive system could attract the best people for the job. It wouldn’t matter if the average person responds better to a different pay structure.
3. Merit pay doesn’t have to come in the “If you do this, then you get that” form that Pink warns against. If tying bonuses to test scores is counterproductive, there are other ways to use merit pay. Schools can reward teachers for their knowledge in subjects like math and science, to prevent valuable teachers from leaving for more lucrative careers. Schools can reward teachers who put in the most effort, or teachers with whose performance parents are most satisfied.

I’m still in favor of merit pay, but it can’t solve all of the education system’s problems. Merit pay alone won’t induce anyone to work hard in a system of few choices. Bonuses can’t outweigh the harmful effects of quashing new ideas, or of assigning teachers to schools based on arbitrary factors like seniority. That’s where Pink’s ideas about autonomy are important. A competitive education market would present teachers with more possibilities, some of which might include merit pay.

Today, we released a new study about the proposed high-speed rail corridor that, if constructed, would connect Saint Louis, Kansas City, and Chicago. The study was written by Randal O’Toole, one of the nation’s leading thinkers on transit and planning. Missourinet covered the study this morning, and I’d like to thank Combest for linking to it. Randal appeared on The McGraw Show this morning on KTRS, and I’ll put a link up to that interview when it gets put online. This afternoon at 2 p.m., Randal will be guesting on the Mark Reardon Show on KMOX, and I encourage you all to listen in.

Be sure also to read the briefing paper and the op-ed that go along with the full study.

As the saying goes, if all of the world’s economists were laid end to end, they wouldn’t reach a conclusion.

Unless, of course, the topic of discussion is federal agricultural subsidy programs. Economists largely agree that agricultural subsidies negatively affect practically everyone except for the farmers who receive them. On Sunday, John Combest linked to an article in the Lebanon Daily Record on this subject.

The program described therein would reward farmers for producing products that consumers don’t want, and then it would give them an incentive to produce even more. In the status quo, there is already a low demand for these products. By shifting the supply curve to the right, these subsidies would drive the quantity of demand even lower. The program’s solution, apparently, is to give the product away for free:

Another point of the program outlined by Hagler would allow those who receive food assistance through the Electronic Benefits Transfer program to receive additional funds each month for the exclusive purchase of meat, milk or dairy products.

This, of course, would be underwritten by taxpayers, at artificially inflated prices.

The agricultural industry already receives a tremendous amount of federal assistance. According to the Environmental Working Group, the USDA awarded $177.6 billion in subsidies between 1995 and 2006. By itself, the dairy industry received $3.6 billion during this period.

Instead of lobbying their friends in Washington for more money, perhaps the farmers’ time would be better spent improving their operations or determining what consumers actually want.

It is a delicious coincidence that the Show-Me Institute is bringing the Antiplanner himself, Randal O’Toole, to St. Louis on the same day that the Post-Dispatch reports on a county renewal plan for Jamestown Mall that involves the recommendations of a number of urban planners from around the country. Seriously, it apparently wasn’t enough just to get terrible advice from planners in our own state. We had to bring planners in from around the country to give us stupid suggestions and offensive recommendations — i.e., that St. Louis County should just use eminent domain to take the mall if the owners won’t sell it.

From the article:

A key first step, the panel said, is for St. Louis County to take over the entire site, chunks of which today are owned by five companies, all from outside the area. It should buy them out, through eminent domain if necessary.

There are a lot of things wrong with urban planning, but the total lack of respect for basic property rights is the most awful. That goes hand in hand with the insufferable condescension that planners demonstrate in their assumptions that people don’t know how to use their own property, and that it takes a panel of “experts” to build places in which other people want to live. In almost every case, the places most people want to live — the suburbs — are exactly the types of places the planners hate. But still they pretend to know what is good for us.

Thank God for the planners who can help the county achieve this:

[I]t’s the only way to create a fresh start, to build something new that is big enough and great enough and unique enough to draw people there, like people go to the Loop or the Central West End now.

I can assure you that urban planners had little to nothing to do with the successes of the West End (where I used to live) or the Loop (where I hang out a lot now, as a U. City resident). Entrepreneurs and residents, not government planners, built those places into what they are today. (Although one can commend the local governments in both places for allowing entrepreneurship to work, rather than getting in the way.)

One planner from L.A. is excited about the potential:

“We need to be brave,” he said. “We need to be bold. We need to have a sense of urgency.”

Unfortunately, I am pretty sure we will also need taxpayer dollars as incentives for the planners to create their “livable space.” I can pretty much guarantee that if the county trusts the urban planners too much and leaves too little room for the risks and rewards of the free market to operate, anything they do for Jamestown Mall will fail even more than it is failing now.

Combest today links to a great editorial in the Kansas City Star advocating that we pay for the proposed truck-only lanes on I-70 with toll roads. Not surprisingly, I agree with every word in it. I’m excited that the Star is supporting such ideas and suggestions as this:

That’s why this plan cries out for a different approach — namely, a toll road. It’s time for Missouri to get over its traditional aversion to tolls.

Or:

Tolls are user fees in their purest form. If you don’t use the road, you don’t have to pay.

I highly recommend the editorial, and look forward to the Show-Me Institute’s own work on transportation and tolling being a part of the debate.

Today’s Springfield News-Leader has a rebuttal to a prior op-ed that quoted some information from the Show-Me Institute. The topic is Springfield’s pension problem, and the rebuttal questions how the Show-Me Institute writer (me) came up with a value of $75 million for Springfield’s water utility. From today’s piece:

- Neither the city staff, nor City Utilities, has any idea how the Show-Me Institute arrived at a $75 million valuation for CU’s water division. Regardless, there are two larger points here. First, the Show-Me Institute is not an unbiased source. Its mission statement is to promote free-market solutions for public policy. Maybe selling off some or all of CU’s assets is a good “market solution” for the buyer, but it would not be in the best interests of the CU consumer.

We may not be unbiased, but at least we are not lazy. As in, too lazy to do one minute’s worth of work to answer your own question. About three weeks ago, the Springfield Business-Journal ran my op-ed that cited the $75 million figure. I can’t link to the SBJ’s version of the piece online, but I can link to our copy. It very clearly states how I arrived at that estimate:

It is difficult to estimate the windfall Springfield might receive, because public utility valuations are very complicated, but Webster Groves, which has one tenth the population of Springfield, received $9.5 million in 2002 just for its water system. Using a rough per-capita calculation and adjusting for inflation, a similar sale might bring more than $75 million for Springfield’s water division alone.

I clearly stated that this was a rough estimated value, but as to how I came up with it, the answer was right there in black and white.

There’s an article in the Chicago Sun-Times about the state of the taxi industry in the Windy City, and how cab drivers are presently working to change it. Rates are capped there by the city, and any rate hike requires prior approval by the City Council. The last such hike happened in 2005, when rates rose by 11.7 percent. Drivers are currently petitioning for a hike of 22 percent, as well as requesting a $1 fee for each additional passenger, $1 for trips dispatched over the phone, a $1.50 credit card “convenience” fee, and a $50 fee for “clean-up” in case a cavorter gets sick in the back of a car.

The additional passenger fee is an industry standard; I’m surprised they don’t charge this already. The other fees seem like ways to internalize the cost of doing business. That is, the cabbies will have to pay for these things anyway, in the form of cell phones, fees to a credit card company for having access to credit card billing machines, and professional cleaning services. They either take a hit when these types of situations arise, and are thus marginally less likely to provide service to those sorts of customers (credit card users, people who order by phone, and the inebriated), or else they lobby to raise their rates even higher, thereby dispersing the costs onto customers who don’t force the cabbies to bear them (those who pay in cash and hold their liquor). The legislators who are voting on the cabbies’ petition profess to have a sympathetic ear for the working drivers, but aren’t sure if cab riders can face the increased costs, especially what with “this recession that we’re in.”

Perhaps it is the case that taxicabs should be licensed by someone — I would argue that this should be a private, professional agency like the AICPA (which certifies accountants) rather than a local or state government board — but even if we grant the necessity of things like a criminal background check and a driving competency rating (perhaps this is what a driver’s license is for), why regulate the amounts that can be charged? The “moral” and “social” arguments for limiting what drivers can charge are endless, as well as baseless. What would happen in the total absence of taxi rate regulation in a large city?

First, let’s see what happens when prices are regulated. Economics 101 tells us that if regulators set the prices too low, there will be a shortage of cabs; more people will want a ride at that price than there will be drivers willing to take them. Similarly, if regulators set the price too high, there is a possibility that the market will approach equilibrium, but the restriction on supply brought about by the presence of limited “taxi licenses” will likely result in increased revenue for cab drivers above market levels, and fewer people riding in taxis than would do so in the absence of such a limited number of licenses. In addition, there are other adverse effects that such restrictions have on the market, similar to the negative effects of rent control, such as a decreased incentive to improve product quality, or to distinguish your company or cab as having better quality, through branding or other similar behavior.

In the absence of price controls, some cabs would charge more, but there is every reason to believe that many — or even most — would charge less. Competition drives down prices and improves quality, because customers demand low prices and high quality. Sufficiently competitive circumstances allow the best to rise to the top. Restrictive licensing and legislating the rates that taxis can charge are both bad ideas for Chicago, and they’re also bad ideas right here in Missouri.

The definition of rent-seeking behavior:

The expenditure of resources in order to bring about an uncompensated transfer of goods or services from another person or persons to one’s self as the result of a “favorable” decision on some public policy.

Ladies and gentlemen, I present to you the modern ethanol industry. The Kansas City Star has a story about how industry representatives now want to require some type of “nation of origin” sticker on all the gas we buy — in an effort to appeal to patriotism, I guess. “Buy American corn instead of evil, foreign oil,” or something like that. Of course, here in Missouri, we are forced to buy gas made with American corn in a 10 percent ethanol blend, because of our state’s obscene ethanol requirement.

I love the response from the oil companies, who know how difficult this proposal would be to implement — and how stupid it is, anyway:

“Growth Energy (the pro-ethanol group) clearly doesn’t understand fuel markets, consumers, supply or demand,” Charles T. Drevna, president of the National Petrochemical and Refiners Association said in a prepared statement.

There is a new gas station not too far from my house that chooses to sell higher ethanol blended gas at lower per-gallon prices. This is not because of the law — rather, it is the market at work. I have not yet chosen to purchase that gas, even though one of our cars can run fine on higher ethanol blends. I may one day choose to buy it; I may not. That is how free markets are supposed to work, rather than passing government mandates to tell everyone they have to put ethanol blends into their engines whether they want to or not.

Here is our case study about the economic effects of the ethanol requirement in Missouri.

This statement, attributed to a woman who posted a video online of kindergartners chanting praises to the president, is unbelievable:

“Alteredbeat” told FOXNews.com that he reached out to Carney-Nunes, who insisted that the program had been filmed in June as part of a Father’s Day tribute to President Obama. “The kids made up the songs on their own,” she wrote, according to the YouTube user.

Here is the video, with the lyrics written out in the description on the right side of the page. I don’t think little kindergartners are capable of writing rhyming couplets that allude to global economic issues and legislation passed months earlier. Not to mention the big words like “accomplishments.”

It is possible that the students brainstormed ideas for the songs, but some of the content was obviously provided by an adult. This reminds me of the activities that the Department of Education recommended classrooms engage in leading up to the presidential address to students a few weeks ago. The ostensible purpose of the writing exercises was for students to express their own ideas, but the writing prompts all started with the assumption that students would find the speech inspiring and would want to support the president.

Furthermore, Father’s Day seems like an odd time for schools to celebrate the presidency; it implies that the president is somehow a father to all schoolchildren. That’s not the way to view elected officials in a democracy.

How would you like it if the governor watched you fall off your bike and then told you, “You really should not enter a bicycle race, because you might fall down and hurt yourself. Your bike-riding skills are inadequate, and you should get training wheels?”

Jessica Watson, the 16-year-old who wants to sail around the world, heard something similar from state officials in Australia:

Acting Premier Paul Lucas last night said Jessica should abandon her attempt to become the youngest person to sail solo non-stop and unassisted around the world. [...]

“I’ll say this much – just because our maritime safety experts may not have any powers to stop her, it doesn’t mean they don’t have a duty to talk to her parents about any concerns and how they could be addressed.”

No, the government does not have a duty to counsel the parents of every teen who wants to participate in potentially dangerous sports. However, I’m glad the Australian government is leaving the decision up to Jessica and her family.

Combest has a number of links to articles today about Sen. Claire McCaskill’s repeated targeting of the earmark process in Congress.

Defenders of earmarks, which include Rep. Ron Paul and his fans (of which I am one, although I didn’t support him in the GOP primary in ‘08), like to state that earmarking gives elected officials the power to distribute money instead of bureaucrats. For example, if Congress appropriated $10 million for widgets, it can either trust bureaucrats to determine who gets which widget, or the elected officials can decide themselves how to spend the $10 million on widget-related projects. Either way, $10 million is spent on widgets. With earmarks, they argue, voters can more easily render judgments upon the choices that were made.

That argument is valid, but only in a short-term sense: It holds true for the market day of whatever bill is being voted on. In the long run, however, the power to earmark a bill — which involves taking appropriated money and directing its use in a manner that does not get specifically debated or voted on — is a big part of the continuing pressure to spend more and more money every year. If members of Congress did not have the power to direct money quickly and easily back to their constituents, some of them would undeniably have more of an incentive to reduce expenditures. If they could not earmark, they would have to go through the longer and more transparent process of getting individual approval for each of their pet projects, with up and down votes for all of the various amendments and proposals. No doubt much of the spending would remain. At some point, though, when it becomes more difficult to get projects approved, there would be less spending. If the process became more open and obvious, some members of Congress might think twice about how self-serving their projects appear.

Earmarking is one of the central issues in the problem of targeted benefits and dispersed costs that is central to the phenomenon of pork barrel spending.

Once again, I commend Sen. McCaskill for her efforts in this regard.

The above quote is from a post on Diner’s Journal about the federal government’s endorsement of locavores. Actually, it’s more than just an endorsement — we’re not talking about a little pat on the back or an official designation, like the honor that Missouri conferred on crayfish. It’s a concerted effort to impose the locavore ideal on unsuspecting taxpayers.

Public school districts, which have long been bastions of rent-seeking, play a key role in the plan. School districts buy lots of food to serve at lunch time; the federal government will give them more money, for the express purpose of buying local food. In case some district doesn’t get the hint, officials from the Department of Agriculture will visit its cafeterias and help it get with the program.

Federal support for locavores goes beyond public schools. It includes hefty subsidies for farmers:

This week, the top people at the U.S.D.A. announced they would be handing out almost $65 million to help connect small farmers — especially those using sustainable practices — with people who want to eat local food.

Does the government merely intend to create a market, to link sellers and buyers? I don’t think so, because that market already exists. Take a look at this instructive comment, which was posted in response to a YouTube video from the U.S. Department of Agriculture:

I am a local poultry and egg producer in Missouri. [...] I think the biggest problem I am facing and others here in my community is. There are a lot more people who would love to be able to buy locally but it is too expensive compared to the big producers.

And here’s another YouTube video, in which the Department of Agriculture interviews a consumer and asks her whether she knows where her food comes from and whether she knows her farmer. She says she would shop at farmers’ markets more often — if they weren’t so pricey! Farmers and consumers are already able to connect with each other. The reason we don’t see more transactions between local farmers and fresh-food eaters is that the price of local food is higher than the amount that most people want to pay.

By the way, “Do you know your farmer?” isn’t the most relevant question in a complex economy. It’s like asking, “Do you know the factory worker who supervised the production of your No. 2 pencil?” or “Do you know the computer programmer who wrote the word processor you’re using?” We can’t possibly trace the origins of all products we use.

When we were still dating, my wife once said to me: “I don’t like to be told ‘no.’” “No” is a word that a lot of people dislike — we don’t like hearing it, and many of us also have a hard time saying it. From a free-market perspective, however, it is a word that can have tremendous power, especially when large numbers of people use it at the same time and in the same way.

Back in June, I heard a conversation on “Bob Edwards Weekend” with the filmmakers behind Food, Inc., in which they made a point about the power that food consumers can wield by virtue of the fact that they make choices every day about where and what they will eat. Consumers tell companies what they like and dislike by the way they spend. We don’t have to look to state or federal governments to accomplish change in the food industry. If consumers let companies know that it’s important enough for them to maintain certain standards for the way their food is raised or prepared that they will favor businesses that conform to their preference, eventually even corporations as large as Walmart or McDonald’s will take notice.

Just a month or so ago, this principle was on full (and ironic) display. Many patrons of Whole Foods shop there because of the company’s commitment to high-quality natural and organic products. But when the company’s CEO published an op-ed advocating a free-market approach to health care reform and opposing President Barack Obama’s proposals, many previously loyal Whole Foods shoppers decided to take their money elsewhere to communicate their displeasure. This sort of revolt can be incredibly effective, although bringing these issues into such high profile might also inspire (as it did in the case of Whole Foods) new patronage from a group of people who had otherwise been disinterested in a company’s goods or services.

Utilizing such a “boycott” strategy, however, means that those saying “no” must be willing to give up goods and services that they would really prefer to have — at least until the market responds to their demands. And, because these consumers don’t want to give up those goods and services, they all-too-frequently utilize the coercive power of government to force providers to offer those goods and services on the consumers’ chosen terms.

Examples of this mentality leap from recent headlines. Don’t like the limitations offered by insurance companies, but you’re worried about going uninsured? Get your state government to mandate the kind of coverage you want. Wish that your favorite restaurant didn’t permit smoking, but you can’t bear to go without their signature dish? Get your city or county to pass a smoking ban. Want to build a corporate headquarters, but you can’t get the current property owners to sell at the price you want? Get your city to use eminent domain. Want an iPhone or a Blackberry Storm, but you don’t want to sign a long-term contract with AT&T or Verizon? Demand that Congress outlaw exclusive service agreements.

In every one of these examples, consumers have the power to change the market as long as they have the willpower to say “no.” Think health insurance premiums are too high? Refuse to carry insurance until a company offers a deal that you think is reasonable. Want to enjoy your meals without a smoky environment? Tell that restaurant owner that you won’t be back until his establishment has gone smoke-free. Don’t think that a property owner’s asking price is reasonable? Choose a different location or figure out a way to build around them. Prefer to stick with your favorite wireless service provider? Tell Apple or Blackberry that you won’t purchase their products until you are free to use them with a carrier of your own choosing.

The challenge here is that realizing the power of “no” in this context requires a willingness to sacrifice having something that you like in the short term so that in the long term you will be able to enjoy it under more favorable circumstances. Our nation still has a fast-food mentality when it comes to our desires, which is why it is so tempting to use the government as a shortcut to get what we want. But giving the government the authority to destroy someone else’s liberty — to the extent that they must give you what you want on the terms that you demand — is a double-edged sword. That same power can (and almost certainly will) be turned back against you.

On Monday, in “Let Them Drink Water!,” Daniel Engber talked about the regressive nature of selective taxes on soda and junk food.

Then, on Tuesday, William Saletan discussed his unease about the growing ambitions of the food police:

You can ban the Marlboros, tax the Cokes, and zone the Whoppers. But you’ll get [my] Fresca when you pry it from [my] cold, dead hands.

He argues that paternalistic tax policies concern the left and the right, except in different ways. While the right wants to regulate what you do in the bedroom, the left wants to regulate what you have long been allowed to do in public (e.g., smoking clove cigarettes).

Saletan observes that, in the context of the fat tax debate, the left and the right have swapped their usual talking points:

To justify taxes on unhealthy food, the lifestyle regulators are stretching the evidence about obesity and addiction. [...] Liberals like to talk about a Republican war on science, but it turns out that they’re just as willing to bend facts. In wars of piety, science has no friends.

Both are interesting editorials, and they relate to my previous pieces about these taxes.

“This earth imposes no additional taxes.” So wrote the prescient Franklin P. Adams.

The proposed soda tax is all over the media; here is a good summary article in the New York Times.

It’s interesting that no one suggests a soda buyback. Buybacks, I’ve been told, get guns off the streets. So, why not sodas? Because people would just go out and buy more sodas? Maybe they could do that with guns, too …

The buyback thought experiment illustrates that a soda tax is not really about saving people from the dangers of soda, power drinks, and fruit juice. If that were the goal, there are many possible avenues to reduce soda consumption other than buybacks, such as public service messages (like the ads in New York City) or soda-free zones around schools. The main purpose of a soda tax is to generate revenue.

If the tax passes, I wonder how long it will take before legislators call for a soda tax holiday?

Twenty two states have already enacted selective taxes on soda. In two of these states, Virginia and Illinois, this tax is in addition to the general food tax.

Missouri doesn’t have a soda tax yet. We Missourians are fortunate to enjoy some of the most permissive sin tax policies, compared to other states. For example, Missouri has the second lowest state cigarette tax — it’s $0.17 per pack, compared to a national average of $1.30. Additionally, Missouri is tied with my home state, Wisconsin, for the second-lowest state beer tax — $0.06 per gallon, compared to to a national average of $0.28.

According to this revenue calculator for soft drink taxes from the Rudd Center for Food Policy and Obesity at Yale University, if Missouri slapped a $0.01 tax on sugar-sweetened beverages, the state would generate more than $285 million in 2010 alone. If this $0.01 tax were expanded to include diet beverages, this number would balloon to more than $460 million.

How high does the tax have to rise in order for consumers to be responsive (i.e., drink less soda)? Is the government legitimately trying to change consumers’ behavior, or is it simply trying to raise extra tax revenue?

A commentary in the Springfield News-Leader today cited a recent op-ed of ours (OK, of mine) about city utilities in Springfield. The commentary noted how, despite its pension issues, the Springfield city government is far from broke, and offered as one piece of evidence the value of its utility holdings. That is where we came in:

Further, the Show-Me Institute estimated that City Utilities’ water division alone could be sold for $75 million.

That was a very rough estimate, as I readily admitted in the piece on Springfield and City Utilities that this figure came from, but it is nonetheless based on reasonable calculations that I discussed in detail. The author of today’s piece is right on: Springfield is not broke, and it does have options in fixing the city’s pension problems. Those options may or may not involve a tax increase, but selling the municipal utilities is a very realistic option that has already been done by Florissant and Webster Groves here in Missouri, to give just two examples.

I wrote in my last post about BASIS that the schools haven’t yet demonstrated the potential to scale up to a level that would change the education system. BASIS has helped small classes of motivated students excel, which is a praiseworthy accomplishment. But if the United States is to compete with India and China, the education system will have to find a way to reach the students who are several grades behind, who don’t speak English, or who aren’t on the lookout for accelerated schools that don’t advertise. And they will have to succeed with more than a few hundred students.

With that said, I agree completely with Bob Compton’s statement in the comments: “My conclusion is every community should have at least one BASIS Charter school.” I would be very happy for this choice to be available to parents everywhere. Even if BASIS fails to have a broad, transformational effect on American eduction, it’s still a good school, and the option should be there for people who want it.

These are some things BASIS does that I hope other schools will emulate:

1. BASIS pays teachers according to their performance. This system attracts good teachers and rewards them for teaching well. Here, BASIS is a bright spot in U.S. education; the vast majority of schools instead reward seniority or other factors that are irrelevant to student learning.
2. BASIS teachers are knowledgeable in the subjects they teach. Although I find the requirement that teachers have a graduate degree in their subject to be somewhat arbitrary — the most important qualification is that they have expertise, not a diploma — these teachers are better prepared than their counterparts in other schools, who often earn degrees in education theory without bothering to study the information they’re supposed to convey to students.
3. BASIS doesn’t require a test for admissions, nor does it ask entering students to prove “giftedness.” BASIS reminds me of a gifted-and-talented magnet, with one important difference: The students don’t have to be gifted. Undoubtedly, the admissions process involves a lot of self-selection, but that’s a better form of selection than the one practiced by traditional accelerated schools. It’s unfair when a high-level middle school education is limited to those who passed intelligence tests. At BASIS, it may be that not all students can keep up, but at least the lottery winners can give it their best try.

Last month, the St. Louis Post-Dispatch published an editorial critiquing the Show-Me Institute’s study of earnings taxes. It rejected both the type of study and its conclusions — which is unwarranted, on both counts. In taking issue with the model, the Post-Dispatch mentioned an alternate study as “proof” that the institute was wrong:

In 2005, the East-West Gateway Council of Governments actually asked area residents (what a research concept!) about their most important considerations in deciding where to live over the next eight to 10 years.

My graduate research methods class this semester allows me to apply some knowledge: The Post-Dispatch is referring to a qualitative research study, which is typically an initial model for a topic that has not been well studied, or something that cannot be captured with numbers. (One might conduct a qualitative study to get an idea of what needs to be studied more rigorously.) Qualitative studies are subjective, and are influenced by the researcher, the wording of questions, the population interviewed, and how honest the interviewee chooses to be.

Quantitative studies — manipulating data, like in an “abstract model” — are considered higher-tiered studies. That is not to say that quantitative studies are strictly better than qualitative; both have their purposes and their flaws. However, for something like a tax and housing decision, which involves both people choosing whether to live or not to live in an area, a model is better able to predict and explain phenomena. An interview study given to people living in St. Louis city excludes the data points of those people and businesses that have already lived there and chose to locate elsewhere — people that may be difficult to find.

There are some people who would choose to live in the city whether it has a 10-percent earnings tax or no earnings tax at all — but these are not the people at issue in an economic model. A model studies the people on the margin, the limited subset of people for whom that 1 percent is a tipping point between opportunity sets that otherwise have equal attractiveness. Some marginal group of people who weigh the pros and cons of each jurisdiction and find they add up to similar opportunities will choose to live or create a business in a suburb instead of the city, in order to capture that extra 1 percent. (And, although it may seem small, a 1-percent tax over the lifetime of a career adds up significantly.)

Another point of contention for the Post-Dispatch is the amount of money that the tax generates annually ($153.1 million in 2008). The article pointed out that this is similar to the size of the Metropolitan Police Department budget, and then conflated removing the earnings tax with getting rid of the police department — something that the Show-Me Institute never argued. At any rate, the Post-Dispatch seems unaware of our follow-up earnings tax study, which outlined a viable way to replace revenue lost from eliminating the earnings tax — a land value tax that would provide much less distortion of natural economic growth and development in the city, because of its fixed value.

St. Louis County and the entire metropolitan area is proportionally much larger than the city itself; in 2006, the city ranked 51st-largest in the United States, while the entire metropolitan area ranked 19th. People are not avoiding the St. Louis area in general, they are avoiding St. Louis city in particular — and with good reason. Good economists recognize that some people consider finances and tax rates to help them make rational decisions when choosing a residence or a business location. This confidence in people’s ability to weigh the incentives they face is well supported by actual data.

On July 31, the Show-Me Institute hosted a luncheon celebrating the life and ideas of Nobel laureate economist and school choice advocate Milton Friedman. Those who attended were able to experience dynamic presentations from both Kevin Chavous, a former D.C. city councilman and current school reform leader, and Dr. David Levine, a well-known economist at Washington University.

For those who didn’t attend (or those who would like to relive the event), the video has been posted on the Show-Me Institute’s website. I encourage anybody who has even a passing interest in educational quality to watch and learn more about the issues that are facing U.S. schools today.

The video, which is also embedded below for your convenience, is a playlist consisting of eight separate parts. After each individual part has finished playing, the playlist should automatically load the subsequent part until the sequence has finished.

You may also choose to view any individual part on its own:

Part 1 (10:01) | Part 2 (9:59) | Part 3 (10:02) | Part 4 (9:53) | Part 5 (9:53) | Part 6 (9:50) | Part 7 (9:16) | Part 8 (1:47)

Last night, I attended the latest NorthSide Regeneration, LLC, community meeting, along with Policy Pulse reporter Audrey Spalding (be sure to read her excellent article.) I was impressed with the presentation; the NorthSide development team has obviously spent a lot of time working on the logistics of the more than 4,000 parcels of land involved in their proposal. (You can read more about those plans on Policy Pulse.) However, aside from the generalities, many questions were left unanswered about how the development might affect the future of current area residents.

Meeting organizers requested that nobody record the proceedings, and had a few confrontations with some zealous bloggers. Arguments became heated a number of times, as community members questioned how their own properties fit into the proposed plans. Some people had seen the areas in which their houses and businesses currently stand designated as “green space” on the projected plans. Although the developer and city officials responded to some questions, others were left unanswered. The portions of the plans that are publicly available are still vague and general enough that a standard answer was that no one yet knows what will happen to a specific house or business in question, because the plans are not yet finalized.

A PowerPoint presentation provided some revealing before-and-after statistics about college education. Currently, only 3.4 percent of north side residents have a college education, compared to 15.5 percent nationally. According to NorthSide Regeneration’s presentation, they envision that 75 percent of area residents will have a college education. Not included alongside that 75-percent figure was the likelihood that such a drastic increase in college attendance figures will result not from a greater number of existing north side residents attaining higher education, but from a largely new population of better-educated residents populating the area and displacing many current residents.

Parts of the north side area are undeniably blighted, and do need work. The plans as presented showed the possibility of an attractive new community that might work well for upper-middle class residents who are looking for new parks, transit, and grocery stores within walking distance. However, although the presentation seemed designed to reassure area residents about their community’s bright future, it skirted the fact that many of the people who live there now have the most to lose from the new development, and will likely not be able to afford to continue living there if the plans proceed.

Last night, Jenifer Roland (that is not a typo, she really just uses one “n”) and I were honored to be invited to address a meeting of the Meramec Township Republican Club in Southwest St. Louis County. (Think of the area around Fenton and Eureka if you are wondering where Meramec Township is.) It was a great opportunity to talk to a very large crowd about the Show-Me Institute and some of our studies. Jen gave an excellent talk about our recent health care study and touched on cap ‘n crunch trade.

I provided background about the Show-Me Institute and spoke briefly about property taxes and assessments. There were a number of Republican local elected officials there, and representatives of federal officeholders like Rep. Todd Akin and Sen. Kit Bond.

This was a township forum, not a tea party protest, but it quickly became clear that a number of tea party protesters also attended this event in order to have an opportunity to talk to some of their representatives. Here, though, the elected officials predominantly agreed with them, and the term “preaching to the choir” was used several times.

I love the tea party movement. I love that people are getting involved in their democracy. I appreciate that many tea party activists used to participate in real-world civics only through voting once — maybe twice — every four years, and now they are becoming more fully involved in the process. I would personally like to have heard a little less lecturing and condescension in some of the comments by the tea party activists last night, but you never get everything you want in life.

All in all, it was a terrific meeting and we thank Meramec Township for inviting us. Remember, Show-Me Institute staff and scholars are always available to speak about public policy to your political or civic group, of any party or affiliation.

In the debate about health care reform, a lot of jargon and acronyms have been thrown around as potential solutions for the complex problem of health care reform. Some have argued that the left has focused on coverage but not cost reduction while the right has focused on cost reduction but not coverage. One thing that would address both has not been emphasized enough in the debate: health savings accounts (HSAs). The Show-Me Institute has long written about how HSAs can be an effective part of reforming health care insurance.

A recent Show-Me Institute policy study about the health care debate highlighted the benefits of HSAs:

HSAs empower individuals to monitor their health care costs and create incentives for individuals to use only those services that are necessary.

Either employers or employees can place money into an HSA before taxes, and that saved money can then be used to pay for any out-of-pocket medical expenditures. Typically, these accounts are used with high-deductible insurance policies that have low monthly premiums, so consumers of health care have an economic incentive to spend wisely. The money in an HSA rolls over every year, so there is no rush to spend the money by a certain date. Once a person has covered medical expenditures up to the amount of the yearly deductible on the policy, the insurance company begins to cover expenses instead.

A health savings account brings health insurance back to its original purpose, as a backup plan to hedge against catastrophic health care costs, like cancer or a car crash, rather than as an insulator from routine, expected health care costs. Part of the problem with health care, as Chrissy mentioned in a recent blog post, is the lack of personal responsibility that the current system fosters. The incentive structure is not aligned to reward people for healthy behaviors. Because health insurance plans pay for every doctor’s appointment or procedure, there is little accountability from patients to monitor their own health and conserve their use of health care resources. This results in what the Show-Me Institute’s study by Arduin, Laffer & Moore Econometrics called a “health care wedge” that drives up costs.

The type of high-deductible policy that generally accompanies an HSA gives customers a fiscal incentive to look for good prices and to stay healthy. When customers have control of their own health care money, doctors and hospitals who hope to attract business must respond in kind by reducing inefficiencies and unnecessary costs. Health savings accounts are also independent of employment; they follow customers even after the loss of a job, which addresses a major flaw of the current employer-based system.

There are many other issues to consider when it comes to health care reform, but HSAs would go along way toward realigning incentives and putting health care decisions in the hands of the patients. Missouri is lucky to have H.B. 818, the Missouri Health Insurance Portability and Accountability Act passed in 2007, which encourages HSAs. Hopefully, national reform will follow the Show-Me State’s lead and incorporate HSAs into the new plan.

A post on the Two Million Minutes blog reveals the subject of the newest documentary: the BASIS charter school in Arizona. Bob Compton describes the school as “low-cost, high performance, easily replicable.”

I’ve read some BASIS publications and parents’ reviews online, and it sounds like BASIS offers a challenging curriculum that most parents are very happy with.

The catch? It’s tiny. There are about a dozen students in each of the highest grades. More students attend the middle school, but there are fewer than 100 students in almost every grade. Based on the information available at publicschoolreview.com, only three percent of students are black or Hispanic.

I don’t want to imply that those facts detract from BASIS’s achievements; schools vary in size and demographic makeup. But I don’t see BASIS as an easily replicable model to improve U.S. education. The gap in test scores between whites and minorities is one of the most pressing issues education reformers grapple with, and a school that teaches few minority students doesn’t look like a promising model — unless it can show that its approach works with a diverse student body. Not only has BASIS failed to demonstrate success in closing that gap, but the school’s small size suggests that kids who are already doing well are self-selecting in. This is a common argument against lending too much credence to the high test scores that some charters achieve, and although I disagree with the argument in most cases, it’s hard to defend a school against that charge when it has only 13 kids in a grade.

In addition, BASIS’s small class sizes can’t be replicated across the U.S. school system without hiring many more teachers, which would be anything but “low cost.”

It could be that I just don’t know enough about BASIS, and that Two Million Minutes is on to something. I’ll keep following the coverage of Two Million Minutes, in case I’ve missed any evidence that the BASIS model has been scaled up.

Bill Maher and I can agree on something: Americans are fat and lazy.

Yesterday on the Huffington Post, Maher posted an editorial,  “New Rule: You Can’t Complain About Health Care Reform If You’re Not Willing to Reform Your Own Health.”

President Obama has identified all the problems with the health care system, but there’s one tiny issue he refuses to tackle, and that’s our actual health.

The best thing that a person can do to improve for his or her health is to abandon unhealthy habits. These are lifestyle changes that are simple and inexpensive. If a person quits smoking, he or she will even save money.

This week, the British Medical Journal published a study showing that men who stopped smoking and switched to a low-fat diet elongated their lives by an average of 10 years. The researchers followed 19,000 men, starting in the late 1960s. PLOS-Medicine published a similar study in 2008 that demonstrated a 14-year increase in longevity, not just 10, with four items only: non-smoking, daily exercise, eating vegetables and fruits, and weight control.

There is a farrago of other lifestyle changes that can positively affect a person’s longevity, such as flossing and moving to a rural area.

If Americans do not stop shirking personal responsibility for their own health, any effort at health care reform will be inefficacious.

But I suppose that it’s easier to blame fast food restaurants or the government.

They are alike because the smaller counties in Missouri choose not to tax themselves to pay enough for their sheriff deputies, so the state then taxes all counties, including the larger counties that already pay their deputies a decent salary, in order to make up the disparity.

As a former St. Louis County deputy sheriff, I am uniquely qualified to comment on this story. The Political Fix has a post here about the decision in a lawsuit brought by St. Charles and St. Louis counties. Now, my own post is not a comment on the decision in the lawsuit. I have no idea whether the specific legal claims have merit. I just know that this is one more example in which the taxpayers in our larger counties have to pay higher taxes (or, in this case, a higher fee) for something because the smaller counties refuse to tax themselves enough.

I have absolutely no problem with smaller counties choosing to tax themselves less, but I do have a problem with taxing the larger counties more in order to pay employees in smaller counties more. I do not know whether this could be considered “socialism” or not, as County Executive Steve Ehlmann said, but I do know that it is terrible public policy, and blatantly biased as well.  Both county executives Ehlmann and Charlie Dooley deserve credit for fighting this new law.