Downtown Subsidies Forever

Posted on by Patrick Tuohey

The economic development subsidy regime downtown has become a policy paradox.  If previous subsidies successfully created a vibrant economic center, then why are they still needed? If previous policies failed, why are we doubling down on an economic development regime that doesn’t work? The reason seems to be that corporate welfare is sought not because it is needed, but because the money is there for the taking.

Developers, who are no fools, don’t have any reason to believe that the City won’t say no to them. And any developer with common sense can look at everyone else getting sweet deals and reason, “why not me?” We were reminded of this once again in a story in The Kansas City Star earlier today about the plans to build a 13-story extended stay hotel downtown. According to the paper,

Owner Scott Pedersen said he would seek property tax abatement for the project, which he said would cost more than $36 million.

“Most of the new hotels downtown have applied for and received certain incentives to help the revitalization of downtown, and we’re doing the same,” he said.

Remember, this was also the case when the Intercontinental Hotel on the Plaza sought a blight designation so it could create a Community Improvement District to charge guests an additional sales tax to be used to replace carpets and wallpaper. Once other hotels learned of what the Intercontinental was seeking, they planned to seek the same.

We don’t fault businesses for seeking every advantage they can get. But we’d like to see city leaders recognize that until they say “no,” the requests will keep coming.

Chesterfield Should Protect Taxpayers in Mall’s Redevelopment

Posted on by Graham Renz

In the age of Amazon, only fools, tricksters, or geniuses invest in malls.

To which group the new owner of the Chesterfield Mall—Hull Property Group—belongs, we’ve yet to see. Hull acquired the mall earlier this month and, even though it currently has no plans to redevelop it, Hull is already asking taxpayers for a handout.

In a statement, Hull said the mall is “too important to fail,” and that, without community support (read: your money), “the marketplace may dictate an unfortunate and unforgiving future.”

Those don’t sound like a fool’s words to me.

Hull has an impressive portfolio of dozens of malls and redeveloped retail centers across the southeast. It didn’t purchase the mall without a plan, or from some sense of benevolence. Hull knows what it’s doing.

Trickster? Maybe.

“All communities need their enclosed mall and the surrounding retail corridor to succeed as it is a symbol of a thriving community,” Hull’s website reads. Really? Is the entire Chesterfield Valley not such a symbol, with its dozens and dozens of retailers and other malls? And in Chesterfield, where the median household income in Chesterfield is over $97,000—tens of thousands more than most of the region and country—does anyone really believe that the mall—sitting lonesome atop a hill—is the lifeblood of Chesterfield?

Genius? Perhaps.

Hull purchased the property for a cool $13 million, less than 5% of what it was valued at in 2006. For acres and acres of land, replete with infrastructure and a massive improvement, directly adjacent to the interstate, that isn’t a bad deal. Whether because of changes in broader economic trends or a creative repurposing, the mall could become incredibly valuable again. Perhaps the mall is repurposed for retail or a mix of uses, razed and platted for a subdivision, or just sat on and later sold. Whatever happens, the property has a huge upside potential.

Whether fool, trickster, or genius, Hull shouldn’t be given a handout. If its plans are foolish, taxpayers shouldn’t have to bear the risk. If it’s a trickster, the public shouldn’t pad its bottom line. And if it’s a genius, no public money should have to be involved at all. Plus, given how much taxpayer money has already been doled out to developers and landowners in the Valley (especially to the outlet malls, one of which is already slated for redevelopment a mere five years after opening!), now is as good a time as any for officials to turn the spigots off.

Fortunately, Chesterfield officials have intimated that incentives won’t be forthcoming. Given that it is was just last year that other city officials suggested a special taxing district be created to help subsidize the mall, this is very welcome news.

Let’s hope that policymakers in Chesterfield stick to their guns and continue to stand up for taxpayers.

How and Why Prop A Will Boost Jobs and Growth

Posted on by Andrew B. Wilson

Outside of Missouri, the most closely watched contest in the Aug. 7 elections here will not be any of the political races; it will be the resolution of an important policy question. In the referendum known as Proposition A, voters will have the final word on whether Missouri becomes the nation’s 28th state to enact right-to-work (RTW) legislation.

We already have a RTW law – passed by the Missouri Legislature and signed by the governor in early 2017. It was supposed to take effect on Aug. 28, 2017. However, on Aug. 18, organized labor groups collected enough signatures to give voters the choice of implementing the law (with a “yes” vote on Prop A) or rejecting it (with a “no” vote). A simple majority wins.

At a labor rally in St. Louis on June 23, AFL-CIO President Richard L. Trumka joined with other labor leaders in proclaiming that RTW would set off a “race to the bottom” for all workers, not just union members. He said: “Proposition A will lower wages, destroy jobs, (and) increase poverty.”

Naturally, no union boss who can limit the supply of labor to members of his own union wants to give up that ability. Who wants competition – when you are in the cushy position of not having to compete? But the idea that competition is bad for growth and job creation is complete nonsense.

In fact, RTW states have consistently outperformed forced-union states in job growth, personal income growth, and economic growth. That’s not a matter of opinion; it comes from hard data provided by three federal bureaus (Census, Labor Statistics, and Economic Analysis) over the ten-year period from 2004 to 2014.

During this period, average job growth in the 22 states with RTW laws in place for most or all of that time was more than twice as fast (at 9.1 percent) as in the 28 forced-union states. The RTW states also had considerably faster growth in personal income (at 54.7 percent compared to 43.5 percent), and a much stronger economic growth (50.7 percent compared to 38.0 percent).

And there were other ancillary benefits, including faster population growth (more than double that of forced-union states). From 2004 to 2014, many Americans voted with their feet in moving into RTW states and out of forced-union states.

The devastation that befell the U.S. auto industry during and after the 1980s exemplifies what happens when companies are kept from responding to market forces as a result of compulsory unionization, forced to pay an artificially high price for labor, and forced to absorb “legacy” costs (health care and pensions) they cannot possibly afford over the long run.

During the Great Recession of 2008–2009, two of the three big automakers – GM and Chrysler – would have collapsed but for government bailouts totaling billions of dollars of taxpayer money. Meanwhile, Toyota and other foreign manufacturers that had opened plants in RTW states continued to perform well without bailouts.

In 2012, Michigan – the state that gave birth to the United Auto Workers union – became the 24th state to adopt RTW. Gov. Rick Snyder said that he believed that the legislation would lead to “more and better jobs for Michiganders.”

It is not just employers who benefit from right to work. It is anyone and everyone who seeks employment. Compulsory unionization represents an unfair and counterproductive abridgement of the freedom of people to offer their services to the highest bidder; they should not be locked out of an opportunity because a union with political clout has been granted a broad monopoly over the supply of labor.

If Business Owners Want a More Skilled Workforce, They Shouldn’t Forget about Charter Schools

Posted on by Emily Stahly

Last week in Columbia, business and education stakeholders expressed their concerns over the preparedness of Missouri’s future workers. As part of an initiative called Talent for Tomorrow, a task force will present recommendations intended to “align the education system with workforce needs,” the primary focus being on higher education.

While it may be true that Missouri’s 2-year and 4-year colleges have room for improvement, business leaders should not overlook the potential to shape high school education to better meet their needs. In particular, the flexibility of the charter school model and ability to focus on career and technical education (CTE) should appeal to businesses and students throughout the state.

Bucking the traditional high school model, Robert Schwartz with the Thomas B. Fordham Institute explains that charter schools could “be co-designed by charter leaders in collaboration with regional employers and community college leaders. This would ensure that its programs were focused on preparing young people for careers in high-growth, high-demand industry sectors like IT, health care, and public services.”

In Fresno, California, a career technical education charter school—the product of coordinated effort by community and business leaders and the Fresno County Superintendent—is opening this fall. Not only does the charter high school’s curriculum align with what industry leaders want, but students can also take college courses at a local community college. In Wisconsin, the Green Bay Area Public School District received a grant from the state department of education to open an innovation charter school that would prepare at-risk students for high-tech jobs.

There is no good reason why similar opportunities are not available to Missouri’s students. Even now, industry leaders could work with local school districts to open a CTE charter school. Better yet, Missouri could allow charter schools to expand throughout the state and authorize universities to sponsor charter schools anywhere, not just in Kansas City and St. Louis.

Instead of just concentrating on higher education or writing off charter schools as only for urban areas, business leaders should seriously consider the role charter schools could play in developing a more skilled workforce.

Teachers’ Union Recruitment Thrives on Fear

Posted on by James V. Shuls

As a 19-year old college student studying to be an elementary school teacher, I was given a heavy dose of fear. Not the kind of fear that challenges you to think about whether you have chosen the right career path. Nor the kind that challenges you to rise to the occasion. No. I was given the kind of fear that says you must join a union.

I was, after all, a male entering elementary school teaching. There was a chance that I’d give a child a hug or have them sit on my lap and someone would leap to the wrong conclusion. Before I knew it, I’d be falsely charged with some crime. Or, heaven forbid, a student would get hurt while under my supervision and I’d be sued for negligence. Still more likely was that I could be discriminated against, harassed, or targeted by a reckless administrator. Whatever the situation, the message was clear—I needed to join a union for the protection it offered. A union, I was told, would watch out for my interests; it would have my back.

My professors, whom I believe were well intentioned and likely just following the advice they had received, prodded and pushed me to join a student chapter. So, I did. Having spoken with many teachers over the years, I’m fairly confident this is the number one recruitment strategy of teachers’ unions in the state. If I was ever told that a union would help me grow professionally or become a better teacher, it was only an afterthought.

When I began teaching first grade in southwest Missouri, I went from student membership to a full-fledged membership. Over the next two years, however, I began to realize that my beliefs were not in line with the union’s agenda. I supported limited government, individual responsibility, and free-markets. The union, I discovered, did not.

At the same time, I also began to realize that the fear that led me to join a union was based on erroneous information. Lawsuits against teachers are not that common. In a 2009 article in the Journal of School Leadership, Diane Holben, Perry Zirkel, and Grace Caskie noted, “Empirical research on school litigation frequency suggests a decreasing, rather than increasing, basis for fear of litigation, contrary to the common conception.” The likelihood of a teacher getting sued independent of the school is miniscule, and the school district wins these cases nearly 90 percent of the time. Even if I was worried about lawsuits, I found I could get liability insurance through other means. The union wasn’t the only option for watching my back.

Fortunately, I was a public-school teacher in Missouri, where I had the right to work without joining a union. This meant I could not be compelled to join the union or forced to pay dues to support collective bargaining. It also meant that I did not have to financially support causes that violated my conscience. All workers should be so lucky.

Socialism: The Slouching Beast on our Campuses

Posted on by Christine Talent

Socialism has come a long way since 1917. Socialist regimes ruled half the world—at a terrible cost—during the Cold War. Then, with the collapse of the Soviet Union in the 1990s, socialism fell like a rocket crashing back to earth. Yes, China, North Korea, Cuba, Venezuela, and other countries were still ruled by socialists, but, in general, socialism appeared to be a dying ideology.

To be sure, there were different degrees of socialism. The totalitarian socialism of Mao and the Soviet Union killed people, ruined economies, and snuffed out freedoms critical to both political and personal life. The democratic socialism common in the West, softer and therefore less destructive, merely specialized in overregulating the private economy and extreme redistribution of wealth.

But even in the West, socialism manifestly failed. The democratic socialism of Great Britain reduced that country from a leading economic power to the “sick man of Europe,” and was firmly rejected by British voters during the Thatcher years.

Unfortunately, socialism has come slouching back onto our college campuses, settling itself comfortably among the students. A 2015 Reason-Rupe poll showed that 58 percent of 18- to 24-year-olds viewed socialism favorably. By contrast, only 28 percent of seniors ages 65 and above were favorable toward socialism. Several other polls say the same thing: A majority of young adults support socialism, and in fact prefer it to capitalism.

To older adults, this fact probably seems disturbing and inexplicable. How could anyone support a philosophy that has spawned evils ranging from economic stagnation to mass killing? Speaking as a 21-year-old college student, I believe that the explanation boils down to two things—discontent and ignorance. Most of today’s college students grew up during the Great Recession. They are graduating with large debts and, for many, bleak prospects for employment. They feel cheated, and believe that something is deeply wrong with our current system. Since that system is capitalist, they see socialism as an alternative.

At the same time, however, most young adults misunderstand socialism. In one study only 16 percent of millennials could define socialism as a government-managed economy. And who can blame them for their ignorance, considering what they’ve learned—or haven’t learned—in the classroom? In my experience, professors may not espouse socialism, but they seldom challenge its tenets. Most of my history classes in college have focused on the many ways America has victimized the poor and downtrodden. Professors equated capitalism with imperialism while failing to even mention the evils committed by totalitarian socialist countries or the economic destructiveness of democratic socialism. One of my professors dismissed the atrocities committed under Mao Zedong’s regime by saying, “While there were certainly many failures with Mao’s reign, during his rule China’s literacy rate went up, as did migration to cities.”

“Failures”—that is how my professor referred to the 45 million who starved to death under Mao.

I believe this same indifference to truth is what turned so many college students into enthusiastic supporters of Bernie Sanders during the last presidential campaign, giving him more youth votes in the primary than Clinton and Trump combined. While Sanders is no totalitarian, he certainly supports the same democratic socialism that emaciated Britain in the postwar years. Students loved the promises he made (free college, free healthcare, and forgiveness of debt) and were perfectly willing to believe that big and benevolent government could make almost anything “free” simply by raising taxes on the very rich.

It should be said that this support for socialism isn’t necessarily permanent. Studies find that support for socialism drops after college and goes down as people earn higher salaries. Young people aren’t stupid; they are just young, and some economic truths cannot be truly appreciated until experienced.

Of course, some college students don’t make it easier for themselves. Many refuse to listen to conservative voices and cannot stand correction—or argument. Nothing strengthens a lie quite like an echo chamber, so the lie of socialism has grown into a powerful force on campus that threatens competing (and worthier) ideas. Yes, most students are just young and will outgrow their revolutionary fervor. But right now, students are being cheated out of the best opportunity most will ever have to test competing political and economic ideas against one another. And until our colleges have the courage to break through the echo chamber, students will get—at best—only half the education they’re paying for.

Please, Just Give Us All a Break

Posted on by Graham Renz

It almost isn’t funny anymore; actually, it hasn’t been funny for a long time. The roll out of the Delmar Loop Trolley line has been, for at least the 6th time now, delayed. The project, originally slated to operate in 2016, was threatened by the Federal Transit Administration and has hit other snags too.

Trolley officials “hope” their project will be up and running within the next month or two.

It feels as if I’ve written or said this more times than the project has actually been delayed, but: it’s hard to see the Loop Trolley as anything besides a policy disaster. Not only is there little evidence that the Trolley will accomplish all that its proponents promise, like increased transit-oriented development, but its leadership has rolled things out so poorly that it seems hard for the public to take the project seriously at all (see Exhibit A). It’s also hugely over-budget.

So, at this point, what do we do? How can we, or policymakers, try to make the current, regrettable situation any better? My suggestion is this: Spare us all the misery and simply admit you’ve got no clue when the Trolley will be up and running. Maybe you (Loop Trolley officials) have an idea of when it will be up and running, and maybe this time that idea is based on reliable information—who knows? Even so, the public has been toyed with so much that the best thing to do—the least damaging, that is—is to just say, “We don’t know when the Trolley will be up and running.”

As an academic and researcher, I’ve learned that sometimes (a lot of the time, actually) you need to admit that you just don’t know the answer to a question. Sometimes you can do far more damage by providing an answer that you’re unsure of than admitting you just don’t know the answer. Officials involved with the Loop Trolley project should, more than many others, understand this point.

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