Last year, at the height of the drought in Missouri, I wrote about Missouri Gov. Jay Nixon’s Executive Order authorizing government assistance for water sharing and distribution to farmers affected by the drought. I argued that the government should not be spending public money to assist those who already have (publicly subsidized) crop insurance.

Fast forward to today. One might think that due to the drought, farm incomes would be seriously hurt. However, that is not what happened. According to a recent survey (hat tip: St. Louis Post-Dispatch) that the St. Louis Federal Reserve released, farm income for the last quarter of 2012 was either on pace to match that of the previous year or even increase. A Kansas City Federal Reserve report had similar findings. The reason incomes did not fall: “Many bankers cited the effect of crop insurance in alleviating the expected negative impact of the drought.”

So, these farmers did not really need all that extra help last year. Their insurance was enough to cover their losses. I am glad that was the case. However, if many farmers are making more money after the drought than before it hit, couldn’t they afford to pay a bit more for their insurance premiums? Currently, taxpayers heavily subsidize crop insurance premiums.

I am not advocating eliminating crop insurance. However, cutting back on public support for crop insurance is a good idea. According to one Government Accountability Office report, a 10 percent reduction in government subsidies would have saved the taxpayers $1.2 billion in 2011. Buying insurance is meant to help prevent catastrophic losses, it is not meant to make you money. The government should reduce its commitment to paying for insurance subsidies; it seems the farmers can afford it.

A few weeks ago, I wrote about the United States Postal Service’s (USPS) intention to cut Saturday delivery. I argued that this proposed cutback is consistent with the Postal Service’s status as a government-sanctioned monopoly: Instead of finding innovative ways to cut costs without sacrificing customer service, the USPS simply opted to strengthen its bottom line at the expense of the latter. By law, no other entity can deliver first-class mail, so why worry about keeping your customer base happy?

It now seems the proposal will not materialize. Congress passed legislation last month, which President Barack Obama signed, that obligates the USPS to maintain six-day delivery. The USPS may still alter the kind of mail it delivers on Saturday, with plans to eliminate first-class mail delivery and pick-up service while continuing delivery of packages and pharmaceutical drugs on Saturdays.

Officials with the USPS have warned that a $47 billion bailout, which taxpayers would fund, may soon be necessary if it is not given more freedom to change course. Everybody knows that the Postal Service needs to cut costs (or increase revenue), but Congress is standing in the way. This is all part of a broader pattern: It is precisely this inability and/or unwillingness to confront economic reality that made the sequester necessary.

One of two scenarios seems likely: Service will be cut to avoid bailing out the USPS or Saturday service will continue at the price of funding a bailout. This is a false alternative, one that the free market would not present. The proper course of action — privatizing and abolishing the monopoly status of the USPS — would yield a twofold benefit. Companies would compete with one another to not only keep their costs sustainable, but to continually improve their services. Moreover, if one such company failed to maintain financial solvency, it would simply go out of business. In short, these forces would function to keep customers satisfied without putting their property at risk (through taxpayer-financed bailouts).

The dilemma about the USPS is totally unnecessary and such situations can be solved if we keep the government out of business and out of our pockets.

Things seem to be moving very quickly in the debate about the future of the North Kansas City hospital. Lawsuits, amendments to bills, new trustees, late-night rule changes . . . the only thing missing is the Turk trying to finish off Don Corleone. This is unfortunate, because the discussion about the potential future sale, transfer, or privatization of the hospital is extremely important.

Needless to say, rushed changes to the board rules and amendments added to bills after public hearings are completed does not make for good public policy. A judge upheld the right of the city to add new members to the hospital board, but I have heard that the current board members changed the board rules to require a super-majority vote on certain actions before the new members could be appointed. That might be clever, but it is hardly admirable.

Legislation taking the hospital away from the entity that has owned it for decades would be a very dangerous  precedent, terrible policy, and wrong, all combined. Maybe it is just me, but I think taking away ownership of the hospital from the city is, you know, a bad idea. The city owns the hospital. It has always owned the hospital. The city should be able to do what it wants with the hospital, be that sale, privatization, closure, expansion, whatever. (Let’s be clear, however: under every legitimate scenario, the hospital is going to continue operating.)

I am no lawyer, but I have to imagine the courts will continue to side with the city here. That makes legislative changes the best option for hospital activists opposed to any structural changes. It would be extremely unfortunate if a pro-free- market legislature made an exception in this case and blocked the city from even considering something such as privatization, which most members of the legislature would usually support.

Usually, food on trains is nothing to brag about. A quick Google search showed that Amtrak actually has a chicken menu item called “Choo-choo Chewies.” They say it tastes like chicken. I hope they are correct.

Eating inside a cargo container sounds even less appealing than Choo-choo Chewies. (Unless it means I get to hang out with the Boxcar Children.)

As difficult as it may be to believe, there is a new project in Saint Louis that could make dining in cargo trendy and charming. Washington University in St. Louis and the City of Saint Louis named Bistro Box, “a small business incubator that transforms surplus cargo containers into a compact restaurant and culinary destination,” as one of the finalists in Washington University’s Sustainable Land Lab competition.

The Sustainable Land Lab competition invites teams to design innovative projects that transform vacant lots into assets. The City of Saint Louis owns more than 8,000 vacant lots that are just sitting there, deteriorating and underutilized. Show-Me Institute policy analysts have offered suggestions in the past about how the city can work to get more of those lots back into productive use. The Sustainable Land Lab competition is a great method to put these vacant parcels in the spotlight, and proves that innovators and entrepreneurs have exciting ideas to utilize this vacant land.

This is the first year of the competition. I hope that it will be successful in transforming vacant land and will shift the way Saint Louis treats that land. The best outcome of this project is that it would not only help improve blighted areas of the city, but encourage others to take on similar projects. Revitalization lies in the hands of eager residents who care about the community. In the past, the Saint Louis Land Reutilization Authority (LRA) has not been willing to allow development to occur organically, preferring to hold land for development that the agency chooses. But the government cannot predict what will be the best use of the land (remember Pruitt-Igoe?), nor will it come up with the most creative solutions.

Anything — including eating train-track chicken in an abandoned cargo container — is preferable to the city holding the land for decades.

The United States Postal Service (USPS) recently announced that it will cut Saturday delivery in August. The post office has been in the financial doldrums over the last few years, not least because of onerous pension obligations and a reliance on an increasingly obsolete service. The USPS is a government-sanctioned monopoly, largely insulated from competition. Its decision is consistent with this privileged status; in the face of financial difficulties, it simply reduces the quality of its service.

There is nothing wrong with a business manipulating its prices and practices when it is confronted with a budgetary dilemma. But there is something wrong when it fails to adequately serve customers while the state prohibits competition. In the private sector, businesses compete to provide the best for the least. In the case of the USPS, however, customer satisfaction can simply be sacrificed for financial health. After all, why worry about quality customer service when a competitor cannot put you out of business?

The least weak argument in favor of public mail delivery is that private enterprise could not profitably serve rural areas. For example, my grandfather often patronizes the post office in Centertown, Mo., a small town in Cole County. He prefers it to the one in Jefferson City, as there is never a wait. My guess is that the privatization of the USPS would spell the end of the Centertown branch, as well as countless other small town post offices across the state. Or perhaps they would remain, but mail delivery to and from such remote locations would be significantly more expensive.

Public support is likely necessary if many rural areas are to maintain their post offices, but this is not a justification for such support. Many things are relatively expensive for rural dwellers (e.g., Internet, gas to get to the grocery store); others are comparatively cheap (e.g., land).  The reverse is true for urbanites. What sense does it make to subsidize something simply because it is comparatively expensive in a given area?  The bottom line is that living in a particular locale comes with its unique set of costs. The most sensible route to take is to stop artificially reducing the cost of mail service in rural areas; let those who remain in these areas face the commensurate costs.

Privatizing the USPS, in short, makes both practical and moral sense.

If you regularly follow the blog, you know that officials in Columbia, Mo., offered a revenue guarantee to American Airlines to entice the company to start flying into mid-Missouri. Delta, which has serviced the Columbia market for four years, was offered no such deal during that time. Columbia Mayor Bob McDavid announced on Tuesday that the city offered Delta a $3 million deal. This was an attempt to quell Delta’s negative response to American’s financial aid from the city.

Well guess what happened. Delta declined the offer, and announced it will exit the Columbia market in February 2013.

I said it before and I will say it again: what were Columbia decision-makers thinking?

They interfered with the market by offering American a revenue guarantee, which is essentially a subsidy. Delta officials had to step up and say “hey wait a minute — this isn’t fair if we are competing with an airline whose flights are subsidized by the government. We cannot compete with that.”

Columbia then found itself in a lose-lose situation. The city would have been out another couple million dollars if Delta accepted a deal that matched American’s, forcing taxpayers to spend even more. Or, Delta would decide to leave an unfair market and the city would lose the options they worked hard to grow at the airport, which is what happened.

What happens in two years, when the revenue guarantee for American ends? Will the city extend the deal, or just hope that the market suddenly becomes profitable? It is not prudent to subsidize a market that would not survive on its own just because someone likes the idea of it. I hope this will serve as a memorable example of the damaging consequences of government intervention in the free market.

I have written about how Kansas Citians living in a newly-created streetcar district will be casting ballots by mail to determine if a special tax will be levied to pay for the city’s proposed trolleys. Those ballots were mailed out on Tuesday, and the voters who received them have until Dec. 11 to return the ballots to the court administering the election in order to have the votes counted. As I said, the method of voting chosen here, hoops and all, virtually guarantees that the tax measure will pass, and likely with only a tiny fraction of the eligible voters participating. The vote creating the district passed by a 2-to-1 margin . . . but with a pathetic participation of 8 percent of registered voters. That is a tiny sample for an issue as major as this one.

Of course, just because the tax will likely pass does not justify it as good policy. The Kansas City Star — which is located in the streetcar district and, therefore, will bear some of the brunt of the new taxes — has real concerns about the proposal.

But the pluses are outweighed by the risks that would come with the new taxes imposed only in the special transportation district created to support the streetcar system. The district encompasses the core of downtown […]. That includes the Kansas City Star which is willing to pay more for a streetcar system that offers a better financed plan.

Within the relatively narrow area, the sales tax would rise by a full percentage point. Property taxes would go up as well — residential by nearly 9 percent and commercial by 5 percent.

Supporters are gambling that the higher taxes — and higher rents that would follow — won’t unduly retard downtown’s growth. However, the risk is real that the increased taxes could do just that.

Kansas Citians are among the most heavily-taxed people in the Midwest. For business owners in the proposed district, the streetcar tax is just another burden job creators will have to shoulder. As long as they remain in the district, of course.

The Star’s Lewis Diuguid was right to say back in May that private funding should be playing a far more central role in the streetcar project. Private donations were a driving force behind the building of the Kauffman Center for the Performing Arts. Why can’t it be so with the Kansas City streetcar as well?

I recently attended a St. Louis Rams football game at the Edward Jones Dome. The Rams were playing the Green Bay Packers and much to my dismay, the visiting Packers fans seemed to outnumber the Rams fans (if the Packers fans in attendance were not a majority of the crowd, they were at least a significant minority). This fact was distressing in and of itself, but after watching the Rams get shellacked, I remembered something worse. The Rams want the public to help finance upgrades to the Edward Jones Dome.

The Rams want to massively upgrade their stadium, and have the taxpayers pay for a large part of it. Yet the Rams struggle to even fill more than half the stadium on game day with their own fans. I oppose public subsidies for sports stadiums on principle and it makes even less sense to give public subsidies to a team that struggles to fill the stands.

There is no economically compelling reason that the public should subsidize sports stadium construction, whether or not the team sells out every home game. It is also hard to see, with the Rams at least, that there is a quality of life case to be made. If the Rams want to risk their own money to renovate their stadium, they should be free to do so, but the only way I am willing to help Stan Kroenke, the Rams’ owner, foot the bill is to shop at Wal-Mart.

Recent news of the United States Postal Service’s debt problems has brought the agency’s mounting business troubles back into the spotlight. Many post offices were shut down last year (20 in Missouri), as the USPS used one if its few tools to respond to changing business conditions.

This is an example of an industry where there are strong private alternatives to a government-provided service. USPS has a monopoly on first class mail, but UPS and FedEx provide consumers with many other options to meet shipping needs.

As I read James Shuls’ blog post “What is Public Education?” it occurred to me that traditional public schools and the postal service have more in common than one might expect.

Public schools and post offices obviously provide different services, but they are both trailing behind their private counterparts. These government services are highly regulated, in what I assume is an attempt to make them well-run. But the opposite is true. Under these conditions, the postal service cannot adapt to the changing marketplace as easily as UPS and FedEx. Similarly, public schools cannot respond to changing school and student needs as swiftly as private and charter schools.

The success of UPS, FedEx, charter schools, and private schools shows us that people often prefer non-government services and (gasp) receive a better product.

Traditional public schools are not always able to attract and retain the best teachers, nor can they remediate or remove the worst. Bad schools stay open when they should close. And regulations prevent students from using technology to learn at their own pace.

I am certainly no anarchist, but I am rational enough to see when markets are better than government. Businesses thrive when they are able to adapt and compete. Just as restrictive burdens on the USPS have hindered the organization’s performance, government regulations are stifling education. In Saint Louis, for example, it often takes more than 100 days to remove a low-performing teacher.

We need to take a clue from the postal service: freedom, not regulation, produces better results.

Last week, the St. Louis Post-Dispatch published a staff editorial doubting the idea that the dynamic effects of reducing taxes encourage economic growth, suggesting that “simple solutions” like tax cuts do not always bear fruit.

Investors can, and often do, choose to invest their tax savings elsewhere, either overseas or in financial products that churn money but don’t create many jobs. Individuals amass great fortunes without becoming great industrialists. Companies today are sitting on $2 trillion in cash, which is a lot of oats.

The literature is mixed on the extent to which tax rates alone affect economic growth, but it is bizarre for the Post-Dispatch to assert later in its editorial that “[i]f cutting taxes doesn’t yield growth, increasing them is not likely to do so, either.”  That is an understatement. Ask those in Illinois whether raising taxes is helping that state’s economic growth. The Post-Dispatch suggests that the effect of the government cutting or raising taxes is comparable in effect but ultimately immaterial to whether an economy grows, which any business owner will tell you is absurd. Tax competition affects where capital pools and where businesses set up shop.

What the Post-Dispatch mistakes as a problem of tax rates is in fact a problem of tax structures. Companies do not hold onto money because they like taking the savings they gain from lower taxes to a Scrooge McDuck-style vault. If companies are sitting on money, they are probably doing it for a good reason. One reason might be that the economic environment is so uncertain that companies simply do not want to expose their capital to the risks inherent in the market at that time.

But another reason companies may sit on money is that the costs the tax structure imposes may outstrip the benefit of spending that money. If a company is going to get taxed one, on money that could otherwise be productive in the market place and two, at a confiscatory or otherwise burdensome rate, the company will probably try to protect that capital from taxation for as long as possible.

Therein lies the problem. Taxes on capital are among the most destructive in terms of growth. Among them, taxes on corporate income are possibly the worst. They remove from the economy money that otherwise could have been productive and siphon it away to pay for government programs that oftentimes grow nothing other than themselves. That is a tax structure problem, not a greedy business problem. To grow, an economy needs low, stable rates that do not punish productivity. The Post-Dispatch’s editorial fails to even briefly address this reality.

But maybe that was not the point. As I have noted before, it seems that the Post-Dispatch is always looking for ways of generating new revenues to the government. For example, from earlier this year:

A lot of folks purchased Mega Millions lottery tickets last week dreaming about what they could do with $640 million. Imagine what $4 billion would do for Missouri.

The point is that the way to pay for government services is not to try to more vigorously shake cash free from the money trees of free enterprise. The solution is to not punish the planting of new trees — to encourage productivity, not chop it down in a quest for revenue. Tax hikes are not the answer; fundamental reform to the structure of taxes is.

Last month, the Missouri state auditor’s office released its audit of the Department of Economic Development’s (DED) Division of Business and Community Services (BCS). Among other things, the audit found that in regards to Mamtek, the BCS:

. . . failed to perform adequate due diligence on the startup company, its officials, and information provided by the company.

This is not the first time that the Show-Me Institute has written about Mamtek. Clearly, the BCS did not do a good job managing the entire Mamtek project, but that is not the point. The main point is that the government should not be engaging in economic development projects in the first place.

It would be bad enough for a private entity to fail to perform adequate due diligence on a project; however, at least a private entity would be using its own money when it invests in a project. A government entity, on the other hand, risks the taxpayers’ money in these development projects. People do not have to invest in a private company, they do have to pay taxes.

The government has a few core functions. Picking favorite economic development policies is not one of them. The state should leave economic development to the private sector and let people choose with their own money which project is worthwhile; the decision should not be up to some bureaucrat in Jefferson City.

What is happening, you ask? Work is about to begin on Ballpark Village, the commercial development around Busch Stadium in downtown Saint Louis. According to reports, the Missouri Development Finance Board approved buying its share ($5 million) of Missouri Downtown Economic Stimulus Authority (MoDESA) bonds. Total government aid will amount to $17 million for the first phase of construction. It appears that the government is, once again, in the development business.

Why is Ballpark Village receiving public subsidies? The government, whether local, state, or federal, is the steward of taxpayer money. Yet, the government is spending taxpayer money to help build shops and restaurants. Isn’t there anything else a bit higher up on the public’s list of priorities on which the government can spend money? There are legitimate roles for government, being a developer is not one of them.

It is possible the government sees that helping to finance the construction of Ballpark Village will boost economic growth. However, it should be noted that while these new shops and restaurants may do well and attract customers, other shops and restaurants located in the city may lose business. The disposable income of the average citizen is limited and by spending money in one place, they may be declining to spend money in another. If you are a private investor, this is not something to worry about as long as it is your business attracting the customers. However, what is the net benefit to the economy as a whole and why is the government in the position to favor one business over another?

A lot of people might enjoy Ballpark Village once it is built. However, that does not mean I support Ballpark Village being built with the aid of public money. There are legitimate things on which government should spend money; Ballpark Village is not one of those things.