Last night, I was privileged to attend an advance screening of Waiting for Superman with my colleagues Dave Roland and Bill Kay. The documentary takes on the problems of America’s educational system, and — given that it is directed by Davis Guggenheim of An Inconvenient Truth fame (and also a native son of Saint Louis) — you could be forgiven for thinking that the film would offer nothing but liberal platitudes about the need to support public schools with ever more money. You would, however, be wrong. Guggenheim strongly suggests that education has been hijacked by teacher unions, and the best ways to change the system would be to inject some degree of competition through charter schools, institute merit pay to attract and retain the best teachers, and eliminate — or, at least, strongly limit — tenure so that bad teachers can be fired, if necessary.

During the question and answer session afterward, a questioner who identified herself as a longtime teacher took issue with the merit pay suggestion. She argued that teachers do their jobs because they love their work and are passionate about it, and are not motivated by “greed” like people on Wall Street. There is some truth to this. Certainly, no one goes into teaching expecting to become fabulously wealthy. Still, I was reminded of what my cooperating teacher used to say when I was going through student teaching: “I’m doing it for the money … if they stopped paying me, I’d stop showing up.” Unless someone is independently wealthy, the money matters, and if school districts could pay more to the best teachers, they would likely attract and retain more highly skilled individuals to the profession.

In Superfreakonomics, Steven Levitt and Stephen Dubner argued that one of the major factors for America’s falling educational achievement over the last half century is the movement of educated women into fields outside of teaching, such as law and medicine. That is not a reason to lament women entering the wider workforce, but if there were more upward mobility possible in teaching, far more qualified people — both men and women — would have opted for teaching. Teaching can be an inherently satisfying profession, but it would be foolish to pin the hopes of our educational system on pure altruism.

Quick answer: of course not. But let’s try to move beyond the anger many of us likely feel when reading this story in the Kansas City Star, and instead discuss the question. To sum up quickly, the Missouri Department of Social Services removed a newborn from her parents — both of whom are blind — two days after her birth. Yesterday, after 57 days in state care, the state placed the baby back with her parents.

Did the state make the right decision to return the baby in the end? (I certainly think so. I’d be interested to hear from anyone who disagrees.) Should the state have taken the baby away in the first place? (I don’t think so, although some might think the question of the baby’s safety required some type of action.) Should the state have the power even to consider doing what it did in the first place? In other words, should the state have the power to take a child away because of the fear of potential harm (let’s assume it is a legitimate fear), but absent any actual harm?

I think the third question gets tougher. That is not to say I agree with anything the state did here; I am merely posing the question. Should the state have any power whatsoever to remove a child from its parents because of the potential of harm, but before any real harm occurs? The problem here is that we can all come up with hypothetical situations that would probably lead to an answer of “yes” (i.e., the parents are meth addicts), but as soon as you say “yes” you are granting the state the right to make judgment calls. Inevitably, they will at some point use that judgment improperly, just like they did in this example. Let’s discuss this in the comments.

I have a few points I want to make — and I write all of this as a fairly new parent, myself. I think this statement by the mother is one of the most honest statements I’ve read in a while:

“I needed help as a new parent, but not as a blind parent,” Johnson said.

Being a new parent is tough. It was certainly tough for me, and I am about as perfect a physical specimen as you will ever lay eyes on. I can’t fathom being a parent in the situation these parents are in, but I feel certain that the sense a parent has for the well-being of their children will trump the issues those children may face. Practically speaking, I would bet that a home designed for the blind would be just as well baby-proofed as anywhere. If other parts of their lives are a little trickier than they are for the sighted, those are the challenges of life. For example, letting a two-year old Mikaela run around at the park will be hard for parents who can’t see the child. Do they use one of those child leashes? Only go to parks with fully enclosed fencing, like DeMun park in Clayton? Take family or friends along with them?

I don’t know the answers to those questions. I do believe that the family’s love will overcome all these obstacles, and I think the involvement of the state here has been an outrage.

A few months back, I merely joked that after we had banned texting, phone calls, shaving, and more while driving, the next logical step — to protect the children — would be to ban listening to the radio while driving. Somebody didn’t get the memo that it was a joke, because a study just came out claiming that listening to your favorite sports team can be distracting and dangerous while driving. This is not a joke. The Kansas City Star has an article on the deadly radio epidemic here.

As absurd as this may be, I think we all know that some nanny-state politician somewhere will read this study, want to make the world a safer place, and attempt to implement some type of radio ban. And, sure enough, it will be met with ridicule at first, and go nowhere. But a few years after that, somebody will cause a major accident because they overreacted to a Tigers touchdown, or, worse yet, because they tried to change the radio station, and suddenly it will become a serious issue — one that must be dealt with because “public safety” demands it. And then, the next thing you know, radio controls will be mandated for the steering wheel, and internal car radio volumes will be legally controlled (we already have noise ordinances for the external volume), and sometime around 2025 I predict an outright ban on car radios. This study is just the start of an entire process.

Please join the Show-Me Institute and the John Cook School of Business at Saint Louis University in the fourth annual Friedman Legacy of Freedom event. The event will take place on Friday, July 30, from 11:30 a.m. to 1:30 p.m., and will feature a panel of economists from the region who will discuss Friedman and his lasting impact on economics. Economists Dr. Michael Podgursky from the University of Missouri–Columbia, Dr. Susan Feigenbaum from the University of Missouri–Saint Louis, and Dr. Daniel Thornton from the Federal Reserve Bank of Saint Louis will convene to discuss Dr. Friedman’s contributions and their continued relevance to our economy and our lives.

Click here to register online.

One hundred ninety years ago, on July 19, 1820, Missouri’s founders signed the state’s first constitution. It was far from a perfect document — it permitted the abhorrent practice of slavery and prohibited free blacks from moving into the state, among other deficiencies — but the Missouri Constitution of 1820 represents the beginning of self-government and constitutional protections for liberty in this geographical region. As such, it is a critical milestone on the path toward liberty for all Missourians. And, at roughly 9,400 words, it makes for far easier reading than our current 70,000-word monstrosity. I hope you’ll consider looking it over, or — at a bare minimum — that you’ll take a few moments to consider the words of Article XIII, section 16, which provides in part: “That the free communication of thoughts and opinions is one of the invaluable rights of man, and that every person may freely speak, write, and print, on any subject, being responsible for the abuse of that liberty.”

The Post-Dispatch recently published a letter to the editor that applauded the passage of the $150 million Ford Claycomo tax incentive package (link via John Combest):

The GOP should take positive action to keep jobs in Missouri. Look at Michigan. It offers numerous incentives to corporations to move to Michigan. And it works.

[...] With unemployment in Missouri at more than 9 percent, what exactly does the GOP have to offer?

From this letter, it is apparent that the writer measures success in terms of job growth. However, the writer ignores the fact that Michigan boasts the second-highest unemployment rate in the union — certainly higher than the rate in Missouri. According to the Local Area Unemployment Statistics (LAUS) from the Bureau of Labor Statistics, the unemployment rate in May 2010 is 13.6 percent in Michigan and 9.3 percent in Missouri.

Moreover, the unemployment rate in Missouri is historically much lower than Michigan’s. Using the Show-Me Institute’s IDEAS application, I produced the following graph:

Trend of Unemployment Rate In Michigan and Missouri

Why are there calls to emulate the public policies in Michigan? Its economy is in terrible shape! To paraphrase Catherine Aird, Michigan would be better viewed as a horrible warning than as a good example.

Furthermore, targeted tax credit programs do not work in Michigan. The Mackinac Center for Public Policy in Michigan has produced many studies that demonstrate this. As Audrey Spalding recently wrote on this blog, tax credits fail to deliver on their promises — particularly in terms of job creation, and particularly in Michigan.

I sure hope not. For starters, I think he’s only 60 and in perfectly good health. But ever since the Red Sox did it with The Kid, and the Cards repeated it last year with The Man (although I don’t recall Stan Musial using a wheelchair last year, and, yes, I did attend), celebrating your city’s greatest baseball player is just what you do when you host the All-Star Game now.

I think it is terrific that Kansas City gets the All-Star Game in 2012. All sports fans know that baseball’s All-Star Game is the only one in which the players legitimately compete. (This is mainly because of the lower marginal risk for injury in baseball than in other sports.) But the Freakonomics blog has a post up today that could give Kansas City pause and Saint Louis some statistical revisions.

The post is about the economic impact of major sporting events. Needless to say, they generally don’t live up to the hype. From the entry:

The gist of it is that you can make an economic impact study say pretty much whatever you want, since it’s an exercise in speculation, and that the economists hired by bid committees make sure the numbers say yes.

The entry goes on to quote economist Dennis Coates:

Few analysts who aren’t in the employ of the event boosters have ever found such events to pay for themselves in a purely dollars and cents view.

A study on this issue published in the Southern Economic Journal reported :

In March 2005, Denver, Colorado, tourism officials predicted 100,000 visitors for the NBA All-Star Game. Considering that the Pepsi Center, the game’s venue, only holds 20,000 fans and taking into account that Denver has only about 6000 hotel rooms, it is not clear exactly how such an influx of basketball fans would be possible.

At the very least, we should question numbers thrown around without any supporting documentation, as in this article:

Major League Baseball estimated that last year’s All-Star Game in St. Louis had an economic benefit of $60 million on the city. The game a year earlier at Yankee Stadium had a positive fiscal impact of $148.4 million on New York — while San Francisco’s estimate in 2007 was $65 million.

I recognize that there is a big difference between hosting an event for which you have to build facilities, like the Olympics, and hosting an event for which you already have the requisite facilities for other purposes. The All-Star Game fits into this later category, which means it is far easier to make money — or, at least, limit any losses. I am sure that the 2012 All-Star Game will be great for Kansas City in many ways, but I hope people don’t believe the financial projections and hype without any evidence to back it up.

I have no idea whether the 2009 All-Star Game in St. Louis actually resulted in the $60 million impact that all of these articles cited. The consistency of the number does not make me more likely to believe it — rather, it tells me that someone came up with a preliminary estimate and everybody else likely repeated that number after Googling it.

The New York Times recently featured a micro-lending website, Kickstarter, that connects filmmakers to private individual donors. The initiative has been so successful, it is planning to host its first film festival.

From the article:

Kickstarter is a concept: a Web site that puts together creative types seeking money with backers willing to chip in micro- and macro-payments, a way to crowd-source the financing of ideas. Started last year, the company has become an unexpected influence on indie culture, a new model for a D.I.Y. generation.
[...]
Matthew Lessner, the director of “The Woods,” made his directorial debut with a viral video starring Michael Cera and has worked on videos for of-the-moment bands like Dirty Projectors and Fools Gold. He had already shot the film, his first feature, financing it on credit cards two years ago. But then the economy collapsed, and Mr. Lessner, 26, was left without money to finish it.

Enter Kickstarter, where Mr. Lessner was able to raise more than $11,000 from 95 backers to complete the film. “One of the things that’s most exciting about Kickstarter to me, it really provides an opportunity for films that otherwise would not have a chance,” Mr. Lessner said.

This demonstrates that a vibrant film community can emerge in the private sector, and that it doesn’t require financial assistance from the state government. I have argued, admittedly obsessively, against the use of film tax credits in Missouri on this blog.

Furthermore, this is evidence that in the unrestricted market, individuals that have a demand for film will voluntarily pay for it. In the status quo, state tax credits coerce individuals who do not possess a demand for film to pay for it through a marginally higher tax rate. This practice is particularly harmful to taxpayers, because they end up paying for something that they do not want. It is also harmful to businesses and individuals who operate outside of the film industry, because it forces them to compete at a competitive disadvantage.

Saint Louis’s Paideia Academy, a charter school, is set to close its doors following a recent defeat in a court battle with Missouri’s Board of Education, which rejected the school’s charter application earlier this year. The Post-Dispatch reports that the Board of Education, in rejecting the application, and the Cole County Circuit Judge, in upholding its decision, cited poor management, the lack of a sponsor, and low test scores as reasons to revoke the charter. Although I am not in a position to speak about the quality of management, or about the lack of a sponsor (which certainly seems like a valid reason to revoke a charter), I do, however, object to the “low test score” argument on two grounds.

First, although it is true that Paideia’s test scores rank among the lowest in the state, absolute measures of test scores are not a very meaningful measure of school quality. The production of education is similar to the production of anything else in the economy: Poorer quality inputs, in the form of poorer students from historically disadvantaged ethnic backgrounds, translate to poorer quality outputs, in the form of test scores. It’s not only a mistake, then, to compare Paideia’s students to those of high-performing districts, but also to an arbitrary benchmark determined by the state. Taking a snapshot of test scores is not enough, because a reliance on mere glimpses into time discourages an understanding of the underlying trends at work. The more important measure is the longitudinal one: Are Paideia’s students learning more now than they were before the school existed? Perhaps the answer is no, but it doesn’t look like this question was considered by either the Board of Education or the Cole County Circuit Judge.

Second, I am willing to believe that we may overvalue test score measures of all kinds. One-size-fits-all models don’t work in schools, where abilities and interests vary greatly between student populations. Schools that produce less significant test score gains but more significant “creativity” gains may still be cultivating meaningful human capital.

A recent article in the St. Louis Beacon posed a question to local economists that is being tossed around globally:

Given the current state of the economy and the deficit, is this the time to pull back on stimulus spending and pay more attention to the deficit, or should Washington worry more about the short term and let the long term take care of itself?

The Paul Krugman camp, consisting of those economists wanting to stimulate the
recovery through expansive government spending, are — like the spending they are advocating — lost in their own arguments.
In the article, Steve Fazzari, a professor of economics at Washington University in St. Louis, states, “One person’s spending is someone else’s income.” I absolutely agree. But then, in a quick turn of events, he goes on to say, “When the government cuts spending, it’s cutting income to someone.” This is also true, strictly speaking, but the implications of his first statement are more important.

I used to mow lawns, and if my employer had told me that he would give my payment to my brother after I finished my work so that my brother could do some weeding, I would have immediately walked away and taken my labor elsewhere.

If that same employer had given me $10 the week before I was supposed to mow the lawn, two things might have resulted: (1) With cash already in hand, my attention to detail would have suffered considerably; and, (2) I would not have been in any hurry to finish the job.

Historically speaking, capital evolved before credit, and for most of the real world, that is how personal finance is understood — you largely only spend what you have. The problem that got us into this recession was egregious spending beyond our means. If mortgage lenders hadn’t been so eager to hand out money — apart from the fact that home loans were implicitly backed by the federal government’s approval — this last recession most likely could have been avoided.

Without the possibility of high default rates at the micro level, the financial instruments that impregnated the system with risk may never have been implemented on such a large scale. Now, after the crisis, we see the world’s top economists trying to formulate a plan to fix the system. In practice so far, that has involved injecting liquidity into the economy through massive government spending. The Krugman camp claims this is more responsible than private investment, because the Fed can print more money to increase the flow of capital rather than bearing the risks of default. There’s no need to worry about the deficit now, they say; we can take care of that later.

Yet few are buying the empty promises of the government. And why should they? With an aging population and massive health care overhauls on the way, everyone can see that entitlement spending is about to skyrocket. Higher taxes are almost certain. Increasingly larger numbers of the American people are holding onto their money in an effort to maintain liquidity in anticipation of the expiring tax cuts at the end of the year. Stimulus money is falling into the same trap; it’s not multiplying the way Keynesians had hoped because investors are wary of the uncertain economic conditions that may be brought about by still more government spending and higher taxes.

We cannot extricate ourselves from the hole we are in until we stop digging. Americans need to see the sunlight before they are willing to buy an expensive ladder to climb out.

New Jersey’s governor is pushing for the privatization of numerous public services as a means to trim the state’s budget. These services include car inspections, state parks, psychiatric hospitals, and turnpike toll booths. Furthermore, preschools would no longer be constructed on the public dime, public employees would be required to pay for their own parking, and the cafeteria, education, and health care programs in prisons would be handled by private vendors.

Some estimates project that the proposal will save New Jersey $210 million annually in taxpayer funds. From the article:

“The question has to be, ‘Why do you continue to operate in a manner that’s more costly and less effective?’ rather than, ‘Why change?’ ” said Richard Zimmer, the former Republican congressman who chaired the task force.

By and large, privatization lowers costs and raises quality. Unlike the government, which can continually operate in the red, a private firm must turn a profit to stay in business, a fact that makes private service providers much more accountable to consumers. The unresponsiveness of public service providers is especially evident when spending hours in line at the DMV or post office. A private firm with a similar service record would either have to take steps to become profitable, by increasing service and lowering costs, or face going out of business.

Missourians would benefit if state officials followed New Jersey’s lead by finding ways to privatize services and save taxpayer money. The efficiency gains that privatization bring would provide a means to cut costs without cutting services. Missouri could do well for itself by entrusting responsible private businesses to help carry some of the state’s fiscal load.

LeBron James recently announced that he will be moving to Miami. This is great news for Miami, but terrible news for the rest of the cities courting him.

An economic impact study commissioned by the mayor of New York City concluded that the LeBron effect would likely inject $60 million per year into the local economy. Not surprising, given that ticket sales, advertising revenues, and team retail in Cleveland had increased dramatically since James’ rookie year.

Because of the way the free-agent landscape worked out, and overall team salary cap requirements, Miami was not able to offer James a competitive contract, while both New York and Cleveland were. But Miami did possess a wild card that the other suitors couldn’t match: tax-relief. No, not in the form of direct incentives, in the form of a healthier tax climate.

Interestingly, Florida does not impose a personal income tax, whereas both Ohio and New York levy personal income taxes of 6 percent and 12.6 percent, respectively, in their highest brackets. On a deal said to be worth around $100 million, that 12.6 percent tax on income wipes out the economic comparative advantage that New York may have had. However, the 6-percent income tax would level the playing field for Miami and Cleveland were it not for Cleveland’s pesky earnings tax. The 2 percent of James’ income that the city of Cleveland could claim was enough to give Miami the fiscal residual it needed to land its new money-making machine.

What can Missouri learn from all this?

Simply put, our current economic development plans may not be able to compete against states with lower taxes. New York may offer James lots of incentives to coax him to the state, but the simple ability to keep the money you’ve earned is a strong incentive in itself.