Want Better Hotels? Then Support a Free and Open Market

Posted on by Patrick Tuohey

One accomplished hotelier believes that “Airbnb is a mortal threat to the U.S. hotel industry. The only way you can compete with a strong idea is by having another strong idea.” While the hotel industry seems to believe the first part, they are using their political influence rather than good ideas to stamp out Airbnb and other short-term rental (STR) companies. That battle is coming to Missouri.

The author of the quote above is Ian Schrager, creator of boutique hotels and nightclubs, including Studio 54. In a recent Wall Street Journal piece, Schrager talks about the threat and how he is designing hotels to maximize efficiency and deliver a superior service to modern customers. Unfortunately, rather than innovate, some hotels are seeking to use the power of government to thwart competition. And governments are too often willing to do their bidding.

According to The New York Times, the American Hotel and Lodging Association trade group has launched a “multipronged, national campaign approach at the local, state and federal level.” One document shows that the group seeks to work with “a broad coalition of affordable housing advocates, community groups, neighborhood associations, labor, and other progressive entities.” The entire document is worth reading.

We’ve already seen some of this play out in Missouri, although the AHLA document does not cite efforts in the Show-Me State. Some neighborhood association activists have raised unsubstantiated fears about increases in crime. Kansas City’s own Planning and Development Department is exaggerating complaints against short-term rentals such as Airbnb. If Kansas City wants to present itself as a tech-friendly millennial magnet, it ought not keep fighting tech innovations such as Uber and Airbnb. Yet fight them it does.

In the 2017 legislative session, HB608 was an effort to pre-empt the current hodge-podge of municipal regulation that is being driven by the hotel industry’s concerns. The bill kept political subdivisions from imposing fees or prohibiting short term rentals outright, while permitting those subdivisions to impose “reasonable regulation” to “protect the public’s health and safety.” It may have been this last part that doomed the effort, as supporters of STRs feared that “reasonable regulation” was too broad a concession. As of this writing, January 4, there does not appear to be a similar bill proposed for 2018.

More recently, Airbnb announced a deal with Missouri in which it would start collecting and remitting state and local taxes on behalf of their owners. In their statement they estimated this would amount to $1.1 million in tax revenue.

New internet platforms such as Airbnb and VRBO (Vacation Rentals by Owner) offer great opportunities for consumers and for business innovators like Schrager who are up to the task. The churn of the free market—although sometimes ugly in the short term—is the reason why our country enjoys so many technological advantages and conveniences. Allowing big business to use its influence over government to thwart innovation by protecting existing markets isn’t just bad for Airbnb, it’s bad for hotels, government revenue, and consumers.

What Is the Cost of ‘Raising the Age’?

Posted on by Emily Stahly

On December 1, legislation was prefiled that would raise the age of criminal responsibility to 18 years old rather than 17 in Missouri. Currently, our state is only one of five where 17-year-olds are automatically prosecuted as adults no matter the crime. This new legislation would place them in the juvenile justice system unless—due to their history or the nature of the crime—they are certified as an adult by a judge.

Giving judges this discretion should reduce concerns that offenders will be let off the hook too easily. Repeat offenders, or those whose crimes are especially serious, could still be dealt with appropriately. Meanwhile, the juvenile justice system could handle the others, which could benefit both the teens and the state.

One concern about this policy is the cost. Based on the fiscal note for similar legislation introduced during the last legislative session, placing more teens in the juvenile system would cost an additional $6.715 million per year. Dr. David Mitchell, an economics professor from Missouri State University, used an alternative cost calculation in a paper he presented at a recent Raise the Age panel discussion.

He argues that even though the per-person/per-year cost is higher in the juvenile system than in the adult prisons, 17-year-olds sent to adult prison spend more time behind bars, on average, than they would if they were in juvenile detention centers. Thus, the cost savings would be higher for the Department of Corrections than originally estimated and the net burden on the state would be closer to $2.432 million per year. He also points out that this amount is only .008% of the state’s budget.

So the cost of this policy to the state would be less than previously assumed. The benefits, however, could be large according to Dr. Mitchell’s estimates. Based on several factors, there could be long-term economic gains from placing most 17-year-olds in the juvenile system.

First, teens convicted of crimes have better earning potential if they go through the juvenile system. Studies have found that teens who have been in adult prison have a 20 percent lower chance of being employed after they are released and work 25 to 30 percent fewer hours if they do manage to find a job. On the other hand, teens who were convicted of a crime but did not go to an adult prison had almost as good a chance at finding a job as teens who did not commit a crime at all.

Second, there is a large disparity in recidivism rates between the juvenile system and the adult system. In Missouri, the recidivism rate for youthful offenders coming out of the adult prison system is about 67 percent, whereas the rate for those coming out of the juvenile system is 15 percent.

With these two factors in mind, placing most 17-year-olds into the juvenile system could be fiscally beneficial to the state. They would be more likely to have a job and be paying taxes (money gained for the state) after serving their sentences, and less likely to end up back in jail (less money being spent by the state).

It’s impossible to know exactly how much raising the age could save the state, but Dr. Mitchell’s analysis indicates that it would be a worthwhile investment. With such a small upfront cost and  potentially large long term gains for the state—not to mention positive impact on these teens’ lives—shouldn’t Missouri join the vast majority of states with this sensible reform?

A New Year’s Resolution for Education Reform

Posted on by Emily Stahly

A new year and a new legislative session are upon us, and with them, most likely the same old debates over school funding. A new study from EdChoice, however, could help reshape conversations in Missouri by showing that in general, people greatly underestimate how much we spend on education.

So just how much do we spend per student each year? This survey found that only 11 percent of people selected the correct range of $8,000 to $12,000. In fact, the national average is a little over $11,000, while Missouri spent on average $10,899 per student for the 2016–2017 school year.

Nevertheless, 31 percent of respondents thought America spends less than $4,000 on each student every year, while 29 percent did not know or did not want to answer.

Then the survey asked if people thought we spend too much or too little on education. For this question, however, half of the respondents were given the actual spending figure and half were not. Here are the results: 

Respondents were asked if current levels of spending on education are too high, too low, or about right.
  Too high About right Too low Don’t know/did not answer
Split A: Without information 11% 28% 54% 7%
Split B: With information 19% 32% 38% 11%

Source: EdChoice, “2017: Schooling in America.”

When presented with the real numbers, the proportion of those who think spending is “too low” fell significantly. So when people say that our schools are underfunded, it seems that many base their opinion on estimates of actual spending that are too low.

Too often, our debates over education policy get hung up over funding even though many of us lack a clear picture of how much we are spending now, let alone how much should be spent. If we want to accomplish meaningful education reform in 2018, resolving to have informed discussions about spending would be a good place to start.

What’s in a Name?

Posted on by Patrick Tuohey

A prefiled bill that is only 49 words long may go a long way to deter politicians from spending public funds on personal legacy projects.

House Bill 1235 simply adds the following language to Missouri statutes:

No state land or building shall be designated in honor of an individual unless such person has been deceased for more than two years. This section shall not apply if money is donated to a state entity in exchange for the right to name state land or buildings.

If former U.S. Senator Christopher “Kit” Bond wants to give his own money to Missouri to build a bridge, or former Governor Jay Nixon wants to reach into his own pocket to build a state park, that’s fine. But spending taxpayer dollars is different, and rewarding individual politicians for doing their official duties by naming public assets after them—at least  while they’re still alive—seems a questionable practice at best.

In fact, why not extend the same restriction on all political subdivisions. To me, Emanuel Cleaver II Boulevard is just . . . tacky. Shouldn’t  taxpayers  be confident that those who spend their money are not seeking fame and self-aggrandizement? House Bill 1235 helps get us there.

This is a revised version of the original post.

In Arkansas, 80,000 Ineligible Medicaid Recipients Removed from Rolls

Posted on by Patrick Ishmael

Since as far back as 2015, we have talked about the idea of performing regular audits of the state’s Medicaid rolls. The purpose of such audits is several-fold: not only to ensure that taxpayer money is going to qualified beneficiaries and to detect malfeasance, but above all else to ensure that the state’s limited resources are making it to the most vulnerable members of our society. 

Arkansas has an auditing program similar to the one we’ve talked about, and it appears the state just turned up a lot of ineligible beneficiaries.

Nearly one-third of those cases involved people who did not report changes of address as required by the state. More than 25,000 people were removed from the program because they were receiving public benefits from more than one state. [Emphasis mine]

DHS says more than 16,000 people were removed because of unreported employment. Others were removed from the program because they were eligible for Medicare, while another 4,100 cases involved inmates who still had Medicaid coverage.

In all, about 80,000 Arkansans ineligible for Medicaid were removed from the program’s rolls. 

As we’ve noted before, there are lots of non-nefarious reasons that someone may be on Medicaid but ineligible for it, including unfamiliarity with its rules and regular fluctuations in their own income. But whatever the reason for that ineligibility, the more efficiently the state can steward funds and direct them to needy beneficiaries who actually qualify for the program, the better the results will be for the program, its beneficiaries, and the taxpayers who fund those benefits.

Patrick Tuohey Discusses Airport-and Sidewalks-on KCPT’s Ruckus

Posted on by Patrick Tuohey

On Thursday, December 21, the Show-Me Institute’s Patrick Tuohey appeared on KCPT’s Ruckus to discuss the latest twist in the Kansas City International Airport plan, the Kansas gubernatorial race and the controversial push to privatize sidewalks in Westport which has set up a debate over public safety and civil rights.

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