A Thanksgiving Reflection: How Private Property and Economic Freedom Saved the Pilgrims

Americans readily accept two opposing ideas about the first Thanksgiving – one bright and highly idealized, the other grey and somber, but closer to the truth. Jean Ferris captured the first idea in a painting completed in 1915, some three centuries after the actual event.

In his First Thanksgiving 1621, we see prosperous, black-clad Pilgrims in the company of new-found friends – bare-chested Indians in feathered war bonnets (one of several historical inaccuracies). The “thanks” here are for a bountiful harvest and the early realization of America as a land of milk and honey.

But how could it have been so easy for the settlers to carve a life out of the wildness in a cold and unknown land far from home?  Simple answer: It wasn’t, as most people instinctively recognize.

Out of 102 passengers on the Mayflower who arrived in Plymouth, Massachusetts, in December of 1620, 51, or exactly half, died from malnutrition or disease within a few months. The bereaved survivors must have been painfully aware of the precariousness of their own existence. They included William Bradford, the author of the classic Of Plymouth Plantation, who went on to become governor of the colony for many years. Gravely ill, his young wife, Dorothy May, either fell or threw herself to her death as the Mayflower lay at anchor in Cape Cod.

The Pilgrims did not build on a record of success.  As Donna Curtin, the executive director of the Pilgrim Hall Museum points out, “Many other colonies (in the Americas) had failed terribly.” Set up in 1607, the original English settlement in Jamestown, Virginia, had all but collapsed three years later – with 80-90 percent of its inhabitants lost to starvation and disease. In Ms. Curtin’s words, “They had murder, cannibalism, you name it – horrific, brutal conditions.”  No fewer than 10 colonies set up before Jamestown by the Spanish and French had also ended in disaster.

The Pilgrim leaders were well aware of this string of failures, as we know from Bradford’s journal. Coming with intact families and a strong sense of community, the Pilgrims bore more than a passing resemblance to the ancient Jews who sojourned in Egypt before going on to find their new home. Having fled religious persecution in England, the Pilgrims spent a dozen years in the Netherlands before fresh troubles there prompted many of their congregation to pin their hopes on the new world.

However, within three years of their landing, Pilgrims faced major problems of their own.   Bradford wrote:  “Famine began to pinch them [the Pilgrims] sore.”

The investors who paid their passage hoped to get an adequate payback on their investment in the founding company.  Fearing that would not be possible if people were free to farm their own land, they insisted upon “a common course and conditions” over the first seven years – under which there were no individual property rights and each member was entitled an equal share of total output.

Bradford recognized the demoralizing aspect of this arrangement. The industrious would subsidize the slackers; the most productive would get no more “in the division of the victuals and clothes” than the least productive. Instead of fostering harmony, communal property led to laziness, envy, thievery, poverty, and social dysfunction – just as it would in the 20th Century through the spread of communism.

In 1623, Bradford and other leaders assigned to every family “a parcel of land” for its own use. With private property came economic freedom and individual initiative. “This had a very good result,” Bradford wrote, “for it made all hands very industrious” – leading to a big increase in corn production and far greater “contentment” for the community as a whole.

That’s how private property and economic freedom saved the Pilgrims. Happy Thanksgiving!

With MoDOT’s Tank Nearly Empty, a Fuel-Tax Increase Might Be the Answer

If you are younger than 36 years old, then Missouri hasn’t raised its gas tax since you started driving. But that might need to change. The Missouri Department of Transportation (MODOT) is arguably underfunded for the job it is being asked to perform. Enter the legislature, where gas tax increases may be gaining momentum as a solution to this problem.

Missouri State Representative Greg Razer, speaking about raising the gas tax, said last week, “That is absolutely, in my view, the way we have to go in the short term. . . . We have to take care of it (transportation). We have lots of state assets that we have neglected over the last 15–20 years, and it’s time that we as a state start living up to our responsibility.”

The state does have some wiggle room to keep gas taxes low even after an increase. Missouri’s fuel taxes—currently 17 cents per gallon for both regular and diesel—are the 4th and 5th lowest of all 50 states, respectively.

A policy study conducted by the Show-Me Institute’s Joe Miller in 2016 listed the following advantages to raising the gas tax:

  1. It would raise revenue that is constitutionally appropriated towards roads.
  2. It would have a low implementation cost.
  3. The money raised would benefit the entire state highway system, along with local road and bridge projects.
  4. It could be enacted without amendments to Missouri’s constitution.

But this is not a perfect solution, as the same policy study found the following disadvantages to a gas tax hike:

  1. The revenue base would decline over the long term as cars become more fuel efficient and/or battery powered.
  2. Fuel taxes are regressive.
  3. The tax an individual pays is proportional to the amount of gasoline that they purchase, not to the number of miles driven on the state highway system.

Ideally, I would like any gas tax increase to be revenue-neutral. While our transportation system may need more money, that doesn’t necessarily mean that more money overall should go to government.

Regardless, the sooner we decide how to fund our infrastructure for the next century, the better. In addition to other measures such as toll roads, a gas tax may be an appropriate way to keep Missouri moving.

Political Courage: LIHTC Program Cut to Zero by MHDC

The details are still trickling out, but news is now breaking that the Missouri Housing Development Commission (MHDC) voted 6-2 today to reduce state tax credit spending on the Low Income Housing Tax Credit (LIHTC) to $0 for the coming year. The MHDC is made up of a variety of elected officials and appointees, among them the governor, but to my understanding, Missouri governors have not typically participated in MHDC deliberations. Today, however, Governor Eric Greitens called into the meeting and cast what turned out to be the deciding 6th vote—curbing a tax credit program that regularly costs the state about $150 million annually. Another vote will take place in about a month to reaffirm this decision, but the result is expected to be the same.

It is difficult to describe how important, and courageous, the MHDC’s decision is. Those who profit from tax credits make up a powerful and well-organized lobby that has been successful in protecting its interests in the past, even when the evidence against a given corporate handout is overwhelming. That most members of the MHDC stood firm in protecting the interests of taxpayers is a leap forward for the tax credit reform movement—and a credit to those who took a hard vote on behalf of the public interest. Tax money saved from a program like the LIHTC can be used to better fund existing state services and to cut taxes more generally, but so long as a program like the LIHTC was taking tax dollars and depositing them back with special interests, advancement on those two fronts was always going to be more difficult. Instead, the MHDC’s decision primes the pump for wider and substantive tax reforms in 2018, should the Legislature choose to capitalize on the opportunity.

We’ll talk more about this, and at greater depth, later. In the meantime, congratulations to the committee members, and congratulations to taxpayers. Today is a very good day for policy reform.

Fixing a Blight on Missouri Statutes

We’ve written for years about the failure of Missouri municipalities to focus their development efforts on reviving the moribund parts of their inner cities. Across the state, it seems, leaders in Kansas City and Saint Louis are eager to throw taxpayer cash at developers only to have them build in already-viable neighborhoods. What’s more, studies in Missouri and across the country have noted that these programs do not help create jobs or spur neighborhood investment in the aggregate. Often they simply enrich political cronies. It is time for that to change.

One reform that might make a great deal of difference is in the state’s legislative definition of blight. For the purposes of tax-increment financing, the blight definition is so broad as to be meaningless. One library executive said that under the existing definition, the governor’s mansion could be blighted. There are opportunities for improvement, and we need not look far.

The easiest option is to look at previously considered reforms. In 2002, Missouri Senator Wayne Goode introduced a bill that would have gone a long way in curbing abuses in blight findings. Specifically, Goode’s bill would require that any area subject to a redevelopment plan could only qualify if:

  1. The host municipality—or, for unincorporated areas, the host school district—has low fiscal capacity; or
  2. The census block group or groups (as defined in the most recent decennial census) containing the proposed redevelopment area had high unemployment; or
  3. The municipality, census block group or groups, as defined in the most recent decennial census, containing the proposed redevelopment area was characterized by moderate income.

Goode’s bill defined such terms as “low fiscal capacity,” “high unemployment,” and “moderate income” in ways that were aimed at making sure that development projects only took place in the communities requiring taxpayer assistance and that effectively placed limits on crony capitalism.

Earlier, in January 1999, the Washington University Law Review published a piece by Julie A. Goshorn titled “In a TIF: Why Missouri Needs Tax Increment Financing Reform.” At the end Goshorn advocated for a new definition of blight that, like Goode’s, incorporated requirements for unemployment and poverty. While Goshorn’s reform dealt specifically with the definition of blight—a move favored by this author—she allowed wiggle room by permitting a blight finding if a building in the area was merely unsanitary. Given the lengths that developers, economic development staffers, TIF commissions, and city leaders have gone to broaden the standards of blight, it is likely that they will continue doing so in the future. Based on Goshorn’s original suggestion, the following terms and definitions might be considered for use in statutes and regulations:

(1) “Blighted area,” is an area that satisfies both (a) and (b) below:

(a) Buildings in the area are:

1. Unsanitary, unsafe for living or working;

2. Substantially vacant; or

3. Subject to a crime rate significantly higher than that in other surrounding areas; and

(b) The area in general is characterized by:

1. Pervasive poverty, unemployment, and general distress, as evidenced by

a. At least seventy-five percent of the residents living in the area have incomes below eighty percent of the median income of all residents within the state of Missouri; and,

b. The level of unemployment of persons within the area exceeds one and one-half times the average rate of unemployment for the state of Missouri over the previous twelve months.

Legislators will undoubtedly wrangle over definitions and thresholds for income and unemployment. That debate is welcome. But legislators, whether conservative or liberal, urban or out-state, should recognize by now that the lax language in Missouri statutes regarding blight is draining municipalities of much-needed resources and providing little if any economic benefit.

Restoring Trust through Transparency

On Tuesday, the voters in Boone County, Columbia, Ashland, and Harrisburg went to the polls to decide whether or not to impose new use taxes to fund more government services. As you can see here, voters rejected each proposed tax.

Those decisions are newsworthy on their own, but there was an interesting quote from a Columbia council member regarding the failed proposals. Councilman Matt Pitzer said voters have a natural tendency to reject use-tax measures because voters don’t trust government to spend their tax dollars responsibly. How might trust be restored? According to Pitzer,

We do that by making smart financial and fiscal decisions . . . and being open and transparent in our spending and where the citizens’ tax dollars are going.

I could not agree more, which is why we started the Checkbook Project, which is intended to track the expenditures of each Missouri municipality over the past five years. Notably, when we requested data for the project from Columbia, the city was more than accommodating in providing the data we requested. At no cost to us, we got the information in an easily searchable Excel file. Also notable is that when we made the request of Ashland, the city was going to charge $20.00 for their records—still a pretty reasonable figure, in stark contrast to some of the responses from other municipalities we’ve received to date. (More on those interactions in a later blog post.)

When government asks for more money out of our pockets, we have every right to know what that money will be spent on. Even when policymakers are conscientious in their management of tax dollars, we should remember (per H.L. Mencken) that conscience is merely “the inner voice that warns us that someone might be looking.” When municipalities commit to transparency, they introduce that very possibility, and the expectation of public scrutiny should result in better policy. 

Think Parents Won’t Get the Information They Need To Choose Between Schools? Think Again.

A common concern about school choice is that parents, especially low-income parents, will not have enough information to pick the school that is the best fit for their child. Perhaps this is true in the absence of school choice programs—after all, what’s the point in seeking out information when your only option is the neighborhood school?

New research confirms, however, that school choice gives parents an incentive to become more knowledgeable about different schooling options. A study by Michael F. Lovenheim and Patrick Walsh found “clear evidence that the availability of public school-choice options under NCLB [No Child Left Behind] increased demand for information on school quality.” When parents had the option to transfer their child to another school, internet searches about the schools in their area increased; conversely, when there was no longer a transfer option, searches dropped.

When people say that parents are not informed enough decide among school options, they fail to recognize that school choice can actually encourage parents to gather information and shop around for the best school.

Moreover, state agencies and third-party organizations can help make information on school quality more accessible. Louisiana’s Department of Education launched a website that allows families to compare schools and child care centers via customizable searches.

Show Me KC Schools is a nonprofit organization that helps parents navigate all of their options—public, charter, and private schools—in Kansas City and provides them with the information they need. In an article for US News & World Report last month, Mike McShane described what the organization does to assist parents:

They have an online school finder that allows users to compare and contrast the offerings and performance of different schools. They host a school fair that had over 700 attendees last year. They offer guided school tours that begin with a discussion of what parents are looking for and end with a debrief and conversation with other parents whose children attend the various schools they have visited.

Sure, there will be a learning curve if new school choice programs are introduced, but organizations like Show Me KC Schools can help with the transition.

The bottom line is that school choice empowers parents—it creates an incentive to find out which school will meet their child’s needs and it provides parents with an opportunity to send their child to that school. We should not underestimate parents’ desire to give their kids a better education or the time they are willing to devote to that effort if given the opportunity. 

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