Wisconsin’s Foxconn Deal is Bad Public Policy

Posted on by Patrick Tuohey

President Trump is heralding the news that a Taiwanese high-tech manufacturer is building a factory in Wisconsin. For him, it suggests that his successful deal-making is reaping rewards for Americans and reviving our manufacturing industry. But the cost to federal, state and local taxpayers is significant.

According to Reid Wilson at The Hill,

The incentive package passed by Wisconsin’s GOP-controlled legislature, during a special session last August, will offer the company $1.5 billion to offset payroll costs and another $1.35 billion for capital expenditures. The state will give Foxconn $150 million in sales tax exemptions on construction materials, and it plans to spend a quarter of a billion dollars on road improvements near the new factory.

The town of Mount Pleasant, where the factory will be located, will offer $763 million to help pay for the project, and Racine County gave the company $50 million to acquire the land.

In total, Wisconsin, Racine County and Mount Pleasant gave the company nearly $4.8 billion in tax breaks, incentives and taxpayer dollars for improvements. If Foxconn delivers all 13,000 jobs it has promised, that works out to about $370,000 per job.

This is reminiscent of a similar deal for Carrier manufacturing plant for Indiana, of which my colleague Patrick Ishmael wrote in 2016,

I certainly hope the Carrier “deal” doesn’t presage future deals the President Elect will be cutting over the next four years. The reason is straightforward. In return for not following through on its threat to move, Carrier will receive $700,000 per year from the state of Indiana, for at least 10 years. If that kind of cronyistic deal sounds familiar to you, it should; the Carrier agreement is like many of the “deals” to “save or create jobs” that have been made, and that we have criticized for years, here in Missouri.

Across the country, those hungry for increased economic activity seem to understand that taxes are too high to spur development. Whether it is Foxconn in Wisconsin, Carrier in Indiana, Boeing in Missouri, or Amazon everywhere, legislatures are bending over backwards to give special treatment to those they deem worthy. Better public policy demands that government stop picking winners and instead lower taxes for everyone.

Right to Work Commentary Misses the Point

Posted on by James V. Shuls

A recent op-ed in the Columbia Missourian calls Right to Work “an attack on our entire community.” If Missouri passes Right to Work, the author warns, we will see “a negative ripple effect on their communities financially, politically, socially and spiritually.”

And over the past few months in Missouri we’ve seen claims like this made repeatedly in anti–Right to Work advertisements. Show-Me Institute chief economist Joe Haslag recently wrote about one such ad that claimed that in Oklahoma, passage of Right to Work caused wages to fall while simultaneously encouraging businesses to leave the state. That just doesn’t make any sense!

Suffice it to say, I’m used to seeing this type of over-the-top claim in opposition to Right to Work, so I wasn’t surprised by most of the arguments in the Columbia Missourian piece. That is, until I got to the part where the author argued against Right to Work because it would make it harder for unions to engage in political activity. She writes, “weaker unions mean less organized ability to advocate for social justice issues and progressive campaigns.” That’s exactly the point! Conservatives, libertarians, and many other Missourians do not want to be forced to support “progressive campaigns” and policies they don’t agree with. That’s why they want out.

As stated in the Show-Me Institute’s 2018 Blueprint, “Right to work ends forced unionism and lets workers decide whether joining a union best serves their interests.” The economic arguments for and against Right to Work are important, but the fundamental issue here is worker freedom. Should someone be forced to support causes they disagree with as a condition of being employed? The answer seems obvious.

Could This Be a Win for Parents?

Posted on by Susan Pendergrass

The debates have only just begun, and they’re sure to be loud and contentious. But one result of the confirmation of President Trump’s pick for the Supreme Court could be more options for parents when it comes to their child’s education.

Judge Brett Kavanaugh has not had the opportunity to rule on many education cases, as there is only one school district in the DC Circuit Court’s jurisdiction. However, he has written essays and amicus briefs on school choice cases. He clearly supports the notion that religious schools and institutions should be able to receive state funding provided that “the funding was pursuant to a neutral program that, among other things, included religious and nonreligious institutions alike.”

Like many states, Missouri has a Blaine amendment in its Constitution. These amendments, originally intended to discriminate against the waves of Catholic immigrants coming from Europe, are used as cover to prevent parents from spending their children’s state education dollars anywhere other than their assigned public school. (For more on Blaine amendments and some additional thoughts on the Kavanaugh nomination, see my colleague Mike McShane’s recent Forbes piece here.) Ironically, the U.S. Supreme Court took up a case in 2017 that focused on a Missouri church-affiliated preschool’s access to public grant money for playground resurfacing. While the court found in favor of Trinity Lutheran Church, the finding was narrow and Missouri’s Blaine Amendment still stands.

Judge Kavanaugh has spoken approvingly of Justice William Rehnquist and the impact that his writings on the Establishment Clause had on Trinity Lutheran and other cases. He was also part of the defense team when Governor Jeb Bush was sued over the Florida voucher program. It will be interesting to see how this son of a public school teacher contributes to court decisions on education, particularly those that involve private school choice.

School choice will likely take a back seat to other issues in this confirmation process. As Missourians consider a Constitutional Convention in 2022, however, we may be faced with either ditching our Blaine Amendment ourselves or having it done for us.

Who Do These Florida Parents Think They Are?

Posted on by Susan Pendergrass

Florida parents are just fancy people who think their kids are special and need a customized education that’s tailored to their children’s needs. Missouri parents, on the other hand, are okay with their kids being ordinary and getting an off-the-shelf education at their neighborhood school like they themselves did when they were young.

Does anyone really believe that? Of course not. Which is why I’m always surprised that Missouri parents don’t demand access to educational programs like those that choice-rich states like Florida offer.

Last year, nearly half of all Florida parents chose something other than their child’s assigned public school. And they have a wide range of options, both public and private. One of their newest programs gives parents of public school students who are struggling to learn to read $500 per year to use on tutoring. The nearly $10 million price tag for this program could have gone to grow reading budgets in districts, but the folks in Tallahassee operate from a place that the folks in Jefferson City do not. According to the chairman of their House Education Committee, “The parent is the most influential person in the child’s life.”

And guess what? While Missouri’s scores on the Nation’s Report Card have been flat for the last decade, Florida’s have shown improvement across the board. We’re seeing similar results in other vibrant education market places. How long are Missouri parents—especially those who can’t afford to spend a sizeable chunk of the family budget on private-school tuition—willing to wait to have some say over how their children are educated?

Key Question in Lindbergh: What Does Your Evidence Say About Full-Day Kindergarten?

Posted on by James V. Shuls

There is a debate going on right now in the Lindbergh School District regarding kindergarten. Lindbergh, one of the top performing school districts in the state, provides students only half-day kindergarten at no charge. If parents want their children to go full-day, they have to pay $3,500 in tuition. According to the Post-Dispatch, Lindbergh is the last district in the state to charge for full-day kindergarten. Some parents in the district want full-time kindergarten to be offered free of charge.

The debate among parents and school administrators, as far as I can tell, has been all about money. But there is more to education policy than just dollars and cents. Both the district and parents should ask a fundamental question: Is this better for our students?

On the whole, research is not entirely clear as to whether full-day kindergarten is better than half-day kindergarten for students. There is evidence that suggests that the academic benefits fade over time (Example 1, Example 2).

But Lindbergh has an advantage. The Lindbergh School District has decades worth of student-level data on students who have and have not attended a full-day Kindergarten program (because some Lindbergh students have gone to full day while some have gone to half day). They have the attendance data, behavioral data, test scores, grades, you name it. They have everything they need to evaluate the effectiveness of their full-day kindergarten program. That should be the first step before launching a new program that will cost millions of dollars in operating expenses and construction costs for new facilities.

The district shouldn’t offer a full-day kindergarten program just because everyone else is doing it. Remember what your mom asked you about jumping off a bridge? Nor should they decide to do it simply because parents want it for free. They should offer full-day kindergarten if it is the best thing for the students—and they alone have the data necessary to make that determination. Yet, they haven’t.

If the evidence indicates that Lindbergh students who attend full-day Kindergarten are significantly better off than students who attend for a half-day, then the district should commit to finding a way to put the program in place. If it turns out that there is not a difference between the two groups, however, the decision should be based solely on costs or cost-savings for the district.

The Lindbergh district is fortunate to have access to data tailor-made to help them make an important decision for their students and for the community that supports the district. Parents and taxpayers should demand that the data be used.

(Disclosure: The author attended half-day kindergarten.)

Prop A Facts

Posted on by Joseph Haslag

If you’ve turned on your television lately, you may have seen an ad in which a gentleman from Oklahoma tells viewers that after Oklahoma adopted right-to-work, everybody “lost.” Specifically, he says he lost his job because of it, and he claims that tens of thousands Oklahomans lost their jobs, too. To make matters worse, in the ad’s telling, wages in Oklahoma even fell for those who kept their jobs because of right-to-work.

Hard-luck stories are a common feature in election-year advertisements, and I hope the gentleman from Oklahoma has found his way out of his job loss—which, based on Oklahoma’s right-to-work timeline, may have happened nearly twenty years ago. But that doesn’t alter the underlying facts about Oklahoma’s economy and the effects of right-to-work laws generally—facts which the ad either ignored or mischaracterized.

First, let’s look at the employment facts for Oklahoma. Oklahoma voters passed a right-to-work law in 2001. In March 2001 (before the recession that year and before the passage of right-to-work) there were 1.53 million people employed there. As of May 2018, there were 1.68 million Oklahomans employed. Simple arithmetic reveals that 150,000 more people are on Oklahoma’s payrolls now compared with payrolls before right-to-work passed, so since 2001, tens of thousands of jobs have actually been added in Oklahoma, not lost.

Could the gentleman be referring to what happened to employment between December 2001 and July 2002, when Oklahoma payrolls declined by 40,000 workers? Maybe, but that decline was unlikely to have been related to right-to-work legislation. The recession of 2001 is a much better explanation for why employment fell in Oklahoma during that period, as payrolls were declining in many places at the time.

But the issues with the ad don’t stop with the numbers themselves. The ad essentially claims that right-to-work laws lower employment and lower wages, but economically speaking (and, as seen in practice,) that claim is highly suspect. Here’s how it works in terms of old-fashioned demand-and-supply: When the cost of labor is no longer driven up by the bargaining power funded by compulsory union dues, it becomes less expensive for employers to hire new workers. The less expensive labor is, the more of it employers can buy.

Claiming broadly that “wages will fall” as a result of right-to-work is grossly misleading. Employers are not going to slash the pay of the current workforce. Without union interference, newly hired workers will be paid what they are worth, and there will be more of them.

Somehow, our ad-man argues that both wages and employment will decline. He doesn’t explain why making it less expensive to hire workers will lead businesses to hire fewer of them.

Unfortunately, the ad conceals a great deal in its depiction of Oklahoma and of facts in general, cocooning a host of dubious conclusions inside a hard-luck personal story. That might be politics, but it ain’t economics.

Luckily, people throwing numbers at Missourians also need to show us why their explanation is better than the one suggested by basic economics. I look forward to an exchange of ideas rather than thirty-second sound bites.

Gratuitous “We Told You So” on KCI Airport Vote

Posted on by Patrick Tuohey

City leaders were surprised to learn the other week that things were amiss with planning the new airport terminal. As a result, the completion was delayed about a year and the price increased about 50 percent.

First, on June 14, The Kansas City Star reported that the opening would be delayed six to twelve months. A week later, the delay was confirmed to be eleven months. Among the reasons for the delay: The contractor, Edgemoor, hasn’t finalized labor union contracts, the FAA had yet to approve environmental analyses, and the previous cost estimates relied on dated information and were for fewer gates than the current plan envisions.

In a November 8, 2017 press conference recorded by the Star, City Manager Troy Schulte said, “our goal is to deliver a new terminal to this city by the end of 2021.” But on June 27, 2018, Schulte tweeted, “November of 2021 was never a realistic date.”

The problem—as I have argued repeatedly, and as the video above documents—was that the ballot measure voters approved was so bereft of details that it amounted to a blank check. Before the election, it was disheartening to see that the Star editorial board was so eager to endorse a new airport that it misrepresented the facts, possibly because it was relying too heavily on pro-terminal talking points. Now, of course, the same editorial board is dismayed city leaders aren’t delivering what was promised.

What I wrote in September 2017 remains true today,

Process is important in public policy, and while the Star editorial board and others may be relieved that Kansas City finally has a vendor and we’re cleared for a November vote… to advocate for this plan simply because the process is over amounts to letting policymakers off the hook for years of bad behavior. Kansas City deserves much, much better.

No one should be shocked that the voters of Kansas City are not being given what they were sold. Those we expect to represent the public interest—civic leaders, pundits, and the Star’s editorial board—lose their credibility in calling balls and strikes if they root too eagerly for one side. This was an unforced error.

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