July 22, 2011

Local Government Strikes Down Yet Another Tasty Innovation

Working at the Show-Me Institute, located in the highly walkable Central West End, my colleagues and I often take short walks to lunch. Recently, food trucks have entered the competition for our dining dollars.

Given the large crowds that form around these trucks, they seem to be a hit, but apparently this is not the case for everyone. This week, police have cracked down on food trucks in the area — allegedly in response to a complaint.

A regulation in the city code forbids street vending within the Central West End, but until recently the restriction had not been enforced. Earlier this week, officers and inspectors issued warnings to multiple food trucks asking them to leave the area or face fines for violating vending regulations.

Christine Harbin, a former SMI policy analyst, wrote numerous times on these restrictions on private enterprise. First spotting food trucks in the Central West End back in March, she later followed up on the issue in a video interviewing both food truck owners and their customers. The verdict is still clear: there exists a strong consumer demand for these food trucks. Why should government inhibit healthy competition and growth of consumer choices?

Some people worry about the safety and health concerns associated with food trucks, but like any other restaurant or food provider, they must undergo government health and safety inspections to obtain permits for legally selling their goods.

Another common concern is the potential increase in street congestion. In Dr. Donald Shoup’s book, The High Cost of Free Parking, he explains the best way to manage street traffic is to introduce market determined parking fees.  Parking is not a free good, and should not be treated as one. Busy streets with more traffic and higher demand would have higher parking fees, while quiet less crowded streets with lower demand would cost less. This would force food trucks to internalize the externality of over consuming street parking.  If the trucks wanted prime location they would have to pay extra for it.

These trucks may be “technically illegal” in the area, but clearly there is a demand here that the government is barring. Originally, the downtown area had this same restriction, but now it benefits from many popular street vendors and food trucks. Why should the Central West End or any other area be treated differently?

Consumers would benefit if this restrictive ordinance was repealed throughout St. Louis, allowing their preferences — not the preferences of bureaucrats — to dictate food trucks’ placement and success.

To follow this issue further, watch Christine’s other video on the subject in which food truck owner Jeff Pupillo and a number of customers weigh in on food trucks and the unwanted competition they provide for some local restaurants.

July 13, 2011

Should Teachers Get Grades, Too?

Tennessee has recently taken an important step toward ensuring that its public schools provide a quality education by setting up a system for grading teachers. Missouri should follow suit and go one step further, streamlining teacher termination policies.

Starting this fall, all public school teachers in the state of Tennessee will be receiving yearly grades, which will play a role in decisions for termination as well as tenure attainment.  Half of the evaluation will come from principal observations, with the remainder based on student academic performance and other factors.  The new system will also require that all teachers, tenured or not, be evaluated each and every year.

Collecting more detailed data on teachers, and therefore school performance, will help to bring much needed competition to the public school system.  Given access to this information, concerned parents will be able to make better decisions as to where their children should attend school.  With renewed pressure to perform, however, schools and districts will need to be able to remove teachers found to be ineffective.

Here in Missouri, even for schools or districts that choose to implement an evaluation system, the removal of bad teachers is a slow and cumbersome process. Missouri law sets out detailed procedures that must be followed in terminating an under-performing teacher.  These include a list of the only acceptable reasons for termination, in addition to a requirement for a thirty-day warning period prior to the hearing. In the event of a successful termination, Missouri teachers can still appeal to the district court, possibly reversing the decision.

Given the power to more easily terminate bad teachers along with an effective evaluation process, principals and superintendents could much more successfully manage their schools and districts.   Furthermore, if school administrators had the ability to fire poor teachers, less education spending would be wasted on prolonging the careers of bad teachers held within the schools by the promises of pension plans and tenure agreements.

Public school districts’ primary concern should be providing a quality education to students. In fact, this quotation is found in many district’s policies:

“Because the school district exists for the students, and the main obligation of the Board of Education is to provide an education for the district’s students, and not to provide employment, the Board will, through procedures carried out by the administration, determine which employees can best serve the needs of the students.”

Employing ineffective teachers until they reach retirement age hurts every student the teacher fails to teach. Tennessee has given us a strong example to follow, but to see true success here in Missouri, school administrators should be given the power to more easily remove bad teachers for the sake of both our tax dollars and the students’ education. The legislature cannot possibly foresee every situation and prepare for it accordingly.  Control over the system should be decentralized and placed in the hands of those that live and work within it every day.

June 20, 2011

Gooooooaaaaaaaallllll!!!!! Supply-Side Economics, 1; Missouri, Nil

As Americans, we often don’t enjoy hearing how some country in Europe is doing something better than the United States. We certainly don’t like hearing how European football stars are better athletes than our own players. All grudges aside, though, an interesting study detailed in the June 20 edition of the National Review suggests that American government could learn a thing or two from studying European soccer leagues.

In his article “Supply-Side Soccer,” economist Kevin A. Hassett describes the findings of a new study published by the National Bureau of Economic Research, “Taxation and International Migration of Superstars: Evidence from the European Football Market.” The report, by economists Henrik Kleven, Camille Landais, and Emmanuel Saez, studied the top soccer clubs in 14 European countries from 1980 to the present, exploring how changes in tax rates affected players changing teams, and to what extent player mobility affected club performance.

To break the results down simply, countries such as Spain, which lowered income taxes for the highest tax brackets, ended up attracting the best players. This, in turn, led to higher performance in the European soccer leagues. In order to compete with the lower-taxing countries’ offers, high-tax-bracket countries would have to offer much larger salaries for the players to obtain equal standards of living.

At the end of his article, Hassett points out that this same principle stays true for business climates between political jurisdictions. This is a point that Missouri should take under advisement, for businesses often follow the same trends between states.

As seen in the Show-Me Institute case study examining the differences in tax policy between Tennessee and Missouri, while Missouri instituted and then raised an income tax, our southeastern neighbor remained income-tax free. The study found that this difference in policy is positively correlated with Tennessee, historically our economic lesser, rising above us in terms of population and economic prosperity.

Attracting new business is a crucial part of ensuring future economic prosperity, and revitalizing the economy. Instead of offering giant multi-million-dollar tax credits to developers or specific businesses in efforts that rarely if ever deliver on their hoped-for success, why not cut taxes across the board to create a climate conducive to all businesses?

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