Paralysis (of progress) by analysis (of what we already know)

Posted on by Susan Pendergrass

Parents in Missouri who want to choose a high-quality school for their children, regardless of where they live, were dealt yet another potential setback last week. The Chairman of the House Elementary and Secondary Education Committee introduced House bill 2531, which proposes a 17-member Charter School Task Force to study charter schools, with a December 31, 2019 deadline to present their findings. This bill, if passed, will result in over a dozen professionals—all but two of whom have no connection to Missouri charter schools—taking nearly two years and spending time and resources, to write a paper that doesn’t need to be written. Charter schools have been around for nearly 30 years and enroll over 3 million students. They are not exotic new things that must be studied for the next 22 months.

Researching the issues described in the bill isn’t a job for a “task force.” It’s a job for Google:

  1. What is the mission of charter schools? Actually, there was originally more than one.
  2. How are charter schools funded? Here is a detailed state-by-state breakdown of charter school funding compiled by the Education Commission of the States.
  3. What is the “overall functioning” of charter schools? I’m not clear what this means, but charter schools function like all public schools, except they use time, talent, and technology in more innovative ways.
  4. What is the academic performance record and what are the accountability standards for charter schools? Here is some information on charter school academic performance, including charter school students in St. Louis and Kansas City. And charter schools are held to the same accountability standards as traditional public schools, except that they are also accountable to their sponsor and to their parents.
  5. What are the demographics of students attending charter schools? Here they are, including the enrollment and retainment of students with disabilities and students who are English language learners.
  6. What are the governance, management responsibility, oversight responsibility, and sponsorship for charter schools? Fortunately, there is an outstanding organization, the National Association for Charter School Authorizers (NACSA), that can provide volumes of information on each of these topics.
  7. What fiscal responsibility do charter schools have? The National Conference of State Legislatures has already done substantial work on this.  

Twenty years ago, charter schools were new and untested, but since then, they have been studied exhaustively. Now it’s time to give more parents in Missouri a chance to choose them. In fact, in a 2014 survey, one in six Missouri parents indicated that a charter school would be their first choice for their children if they had access to one. Do those families and students really need to wait another two years for this latest delaying tactic to run its course?

A cynical person might think this is no more than an effort to avoid political responsibility. If the Chairman is determined to deny parents the ability to choose a charter school—which this bill is clearly designed to do—time and resources could be saved by simply stating that position. A lengthy study of things we already know won’t provide anything except political cover for those whose hostility toward charter schools wouldn’t yield to evidence anyway. Parents and students in Missouri should at least be respected enough to be told the truth.

Would Trump Banish Sunlight to Protect American Jobs?

Posted on by Andrew B. Wilson

As president of the most powerful country in the world – and a man with the utmost confidence in his own judgment – would Donald J. Trump dare to tell the Sun, that fiery ball at the center of our solar system, “You’re fired”?

It seems so, if we take him at his recently tweeted word (“Trade wars are good, and easy to win”) and take the liberty of injecting him into the center of the argument found in the “Candlemaker’s Petition,” a satire of protectionist tariffs written by the great French economist, Frédéric Bastiat (1801–1850).

In this classic economic parable, published in 1845, the manufacturers of “candles, tapers, lanterns, and street lamps” join forces with the producers of “tallow, oil, resins, and alcohol” in demanding protection against a powerful foreign competitor – namely, the sun. They ask for a law ordering their countrymen to keep all windows and doors covered during the day. Their petition states:

We are suffering from the intolerable competition of a foreign rival, placed, it would seem, in a condition so far superior to ours for the production of light that he absolutely inundates our national market with it at a price fabulously reduced.

Even in pre-electrical days, if a government were to order everyone to switch from sunlight to candlelight, it might create a number of jobs in candlemaking and related industries. However, it would also impoverish a far larger number of people by forcing them to replace a free and plentiful resource with an inferior yet costly product. In this case, the money people would spend on additional lighting products would raise profits for candlemakers – but as a needless expense for everyone else, it would lower disposable incomes and reduce productivity across the board (forcing even candlemakers to work in poorly lit conditions).

The same logic applies today if the president proceeds with plans to slap a 25-percent tariff on steel imports, along with a 10-percent tariff on aluminum imports. Above all, such duties would hurt a thousand or more people for every one they help – limiting choice and pushing up prices for most consumers, while imposing a significant burden on steel-dependent industries that employ 6.5 million people, or close to 50 times the number of U.S. steelworkers (140,000).

In the opening words of his essay, Bastiat paid mocking tribute to politicians opposed to free trade, saying:

Gentlemen: You are on the right track. You reject abstract theories and have little regard for abundance and low prices. You concern yourselves mainly with the fate of the producer. You wish to free him from foreign competition, that is, to reserve the domestic market for domestic industry.

Free markets and free trade come down to the same thing: voluntary exchange for mutual benefit. It makes no difference whether that happens within a country or across national borders. In the absence of job- and growth-destroying government coercion, the buyer or consumer holds the upper hand. In a competitive marketplace, unless buyers agree to part with some of their money for someone else’s product, there is no trade and there are no transactions.

With his recent tweet, President Trump seems not (or pretends not) to understand that basic idea. Let’s hope it is pretends.

Car Wars II: Revenge of the Cronies

Posted on by Patrick Ishmael

Back in 2014 I wrote on this blog and at Forbes about a legislative attempt to force companies like Tesla to sell cars through a middleman in Missouri. At the time, I wrote that “Missouri should not be out protecting businesses and business models, especially when doing so is clearly against the interests of consumers.” And so it remains today, as a new effort is afoot to force car manufacturers to hire middlemen to sell their vehicles.

As famed economist Milton Friedman (and others) have emphasized again and again, being “pro-business” is not the same as being “pro-market” or, in this case, pro-consumer. If consumers want a more personal touch with their car buying decisions, then there will be a market for the car dealership experience. And if they just want an electric car direct from the manufacturer, shouldn’t they have that option, too?

I won’t belabor the point too much since this is well-trod ground, but I do want to highlight this video featuring Friedman, and the Friedman quote below, to reiterate the problem here of playing favorites against consumer interests.

You talk about preserving the free market system. Who has been destroying it? The business community must take a large share of the responsibility. You must separate out being pro-free enterprise from being pro-business.

Missouri should take Friedman’s point to heart and let consumers decide for themselves what they want from their car-buying experiences.

 

Helping Ex-offenders

Posted on by Patrick Tuohey

I recently had the opportunity to testify on behalf of SB900, a bill that would remove some barriers to hiring ex-offenders. As with the Ban the Box initiative—which may not actually be helping people—this is an effort to make sure that those who have been convicted of felonies are given a real opportunity to become productive, tax-paying citizens. Unlike the case with Ban the Box, the barrier is the government itself.

Under current law, the Missouri Lottery Commission is prohibited from licensing anyone who has been convicted of any felony from selling lottery tickets. This means that these men and women—regardless of the type or severity of their crimes—are effectively barred from working at many convenience stores and gas stations. If this bill is adopted, employers have more flexibility in hiring. While they are not required to hire convicted felons, they are not barred from doing so either.

Research shows that ex-offenders who are unable to find employment are more likely to re-offend. A 2014 study by the Indiana Department of Corrections concluded that the ability of an offender to find work after prison was “significantly and statistically correlated with recidivism, regardless of the offender’s classification.” A 2016 study conducted by the Center for Economic and Policy Research concluded that:

In 2014, overall employment rates were 0.9 to 1.0 percentage points lower as a result of the employment penalty faced by the large population of former prisoners and people with felony convictions. For men, their employment rate was 1.6 to 1.8 percentage points lower.

These barriers to employment are significant. A survey of The National Inventory of Collateral Consequences of Conviction database, a project of The Council of State Governments’ Justice Center, shows 221 mandatory barriers to employment in Missouri due to a criminal conviction. While some of these make sense, others do not.

Common-sense reforms can remove unnecessary legal barriers to ex-offenders becoming productive members of our communities. What’s more, they amount to the government cleaning its own house rather than trying to pass the buck on to businesses.

Gold Medal for Sentiment, But a Wipeout on Policy

Posted on by Patrick Ishmael

The State of Missouri has a long history of excellence in athletic competition on both the domestic and international stages. And thanks to St. Louis in 1904, Missouri is also one of the few states in the country that can lay claim to having been a host for an actual Olympics. The state’s bona fides in terms of promoting and welcoming athletic competition and achievement are, in other words, unassailable.

On the other hand, the state’s track record on good tax policy is not nearly as strong, which is why a proposal to exempt Olympic winnings from state taxation is both unsurprising and disappointing. 

I should reiterate once again that Missouri needs to move away from growth-destroying income taxes, but special tax carveouts like the ones currently being debated for Olympic athletes make it ever more difficult to provide much-needed relief to all Missourians. Creating a tax incentive for excellence in one profession disadvantages high achieving Missourians in other fields who are not afforded similar deference by the state.

On what basis is it wrong to tax Olympians for their achievements and yet right to tax others for theirs? If it is wrong to tax Olympians’ income, what does that say about a tax system that relies heavily on income taxes?

I reject the idea that any tax incentive that reduces an individual’s tax burden is a net benefit to taxpayers or is even preferable as a matter of policy, in much the same way that I don’t see “pro-business” legislation as necessarily “pro-market.” Exempting Olympians’ winnings from taxes is certainly pro-Olympian, but it isn’t “pro-taxpayer,” nor is it good policy.

All the while, I understand the sentiment. We all want to be supportive of our high achievers, especially those achieving in a public way on the international stage. But legislators should focus on reforming taxes for everyone—athletes included, but not specially preferred.

Short-Term Medical Insurance Proposal Offers Opportunity to Get People Coverage

Posted on by Patrick Ishmael

There are a lot of reasons health care costs in the United States continue to grow. One is that we don’t really have a market for many of our health care products, and in important ways we are disincentivized to price shop. But another important factor is that much of what Americans consider health “insurance” nowadays is really mostly a maintenance agreement, not insurance. And often the most expensive features in those maintenance agreements are forced onto plans by state and federal officials

Imagine if cars had to be sold this way. Say that I just need a cheap car to get to work every day, but the law prevented dealerships from selling me a car without gold rims, tinted windows, and free oil changes for life—in other words, all the bells and whistles. My budget may be $5000 for the car, but the dealership may only be able to sell cars that start at $30,000 because of all the mandates. The result isn’t that I end up getting the more expensive car with the mandated features—but that I might have to go without a car entirely.

That’s the problem in American health care in a nutshell. Some people may find themselves overpaying for a product they don’t want, and others may end up going without a product that they really need because it’s so expensive.

There’s a wrinkle in that health care paradigm, though. While longer-term insurance plans typically fall under the auspices of federal regulation and often have state coverage mandates tacked on, “short-term medical insurance” (or STM) can often sidestep the mandate layers and offer a product that is insurance first and a maintenance plan second, if at all.

That may sound a bit jarring if you’re used to health insurance as maintenance, but imagine how much homeowner’s insurance would cost if government required insurers to include a grass-mowing benefit, or if a car owner’s insurance had to include an oil change benefit. STM generally avoids those additional costs by focusing  on the financial backstop that insurance is actually supposed to be.

Having greater latitude in finding a plan that fits your medical needs (and your budget) is an important step in fixing the health care cost problems we see in America today, and that’s what one proposal from the House appears to offer. The legislation would expand the duration that an STM plan can last from six months to a year in Missouri, and it would also make clear that the STM plan a consumer might purchase is different from the insurance plans they might be used to. Specifically, the plans would have to state plainly in their documents that,

This policy may not cover preexisting conditions, including conditions you may currently have and are unaware of but are not diagnosed until the policy’s term. This policy may not cover certain essential health benefits, including prescription drugs, preventative care, and emergency services. Before you realize benefits under this policy, you may be responsible for a deductible and/or coinsurance. Be sure to discuss these items with your insurance broker before purchasing a short-term medical policy.

In other words, a consumer may not have every medical condition covered—the maintenance plan would be limited—but if they were hit by a bus, they’d have a financial backstop because they’d at least have the STM’s insurance protecting them.

And as the name suggests, STM is generally used for shorter periods of time than more fully-featured health maintenance plans. Some people may need it to fill a temporary gap in employer-sponsored coverage, and others may prefer it as an alternative to vastly more expensive Obamacare plans, even though STM plans are “skinnier” in terms of benefits and were generally non-compliant for purposes of the mandate penalty. 

Expanding the scope of STM coverage would help to resolve both of the problems I articulated at the beginning of this blog post—the limited incentive to shop around for coverage, and the multi-layered onion of mandates—that drive up the cost of the average health “insurance” plan.

This STM expansion idea is an excellent one that helps to meet the needs of people who really want coverage but don’t want or can’t afford what the government is trying to impose on them. I hope the idea receives increasing attention as the session continues.

Charter Schools 101: Are Charter Schools Public or Private?

Posted on by Susan Pendergrass

As I wrote last week, even after 30 years charter schools remain a mystery to many people. Often, even the people who understand the basics about how charters operate are confused about whether they are public or private schools.

For the record: Charter schools are public schools. In fact, they’re commonly referred to as “public charter schools” by supporters and detractors alike. But misunderstanding about the issue has been surprisingly stubborn. In fact, a former Secretary of Education and current head of the U. S. Senate Education Committee said just two years ago, “There are some private charter schools, are there not?”

Charter schools have much more in common with traditional public schools than many people realize. Charters receive the same state and federal funding that any public school receives. In most cases, they also receive the local funding per student for the students who attend. Unlike traditional public schools, charter schools must pay all of their costs, including the cost of buying or building the school, from their annual revenue.

The students in charter schools are public school students whose parents have chosen to send them to a charter school rather than send them to the public school to which they are assigned based on their address. They participate in all state testing and have all of the same rights and responsibilities of all public school students. It is illegal for charter schools to discriminate against any student who chooses them, to charge tuition, or to teach religion. If there are more parents who choose the school than there are seats, students must be selected through a public lottery. Parents are free to have their child return to their assigned public school at any time if they aren’t satisfied with the charter school.

The teachers at a charter school are public school teachers, although not usually required to be members of a local teacher’s union or collective bargaining agreement. The administration and board of each charter school has substantial discretion when it comes to hiring, paying, and firing their staff. In Missouri, charter school teachers are required to participate in the public pension plans for teachers.

Unfortunately, myths about charter schools abound, leading to serious misunderstandings. And because they’re not typical public schools and don’t answer to the local school board, opponents sometimes refer to them as private schools. But saying it doesn’t make it so.

Enhanced Sunshine Law Enforcement A Good Idea

Posted on by Patrick Ishmael

Show-Me Institute readers probably know about some of the difficulties we’ve had in getting municipal spending information for our Municipal Checkbook Project. From cities’ bad record-keeping to being told it would cost us tens of thousands of dollars for them to provide the information, we have heard a lot of excuses for why Missouri municipalities can’t tell us how they’re spending the public’s money. And while some of these answers were arguably in compliance with the letter of Missouri’s Sunshine laws, many of the excuses are, in my estimation, far afield from the laws’ intent of fostering meaningfully open and transparent government.

But those excuses may have to get more creative if one proposal becomes law. Among other things, the reform would create a “transparency division” in the attorney general’s office to focus on transparency matters. It would also put some teeth into the statutes to ensure that agents of the state are in compliance with Missouri’s Sunshine laws. While the legislation itself was only recently filed, the idea has been percolating for at least a few weeks.

Creation of a transparency division, Hawley said, will ensure that questions about conflict of interest won’t interfere with enforcement of the Sunshine Law. And enumerating penalties for violation of record retention law will help ensure enforcement.

Hawley said many improvements could be made to the Sunshine Law to get it in line with modern technology. But discussion of a large-scale review of the law shouldn’t stand in the way of his proposals aimed at improving enforcement of the existing law, he said.

Comprehensive reform is always welcome. For example, we’d like to see cities regularly report their spending rather than forcing taxpayers to instead chase cities and their excuses ad infinitum. But incremental reforms that move toward those larger ends are also welcome, and it seems like this proposal is well within that track.

Support Us

The work of the Show-Me Institute would not be possible without the generous support of people who are inspired by the vision of liberty and free enterprise. We hope you will join our efforts and become a Show-Me Institute sponsor.

Donate
Man on Horse Charging