The Consequences of Bad Policy

Posted on by Patrick Tuohey

The Kansas City Star recently reported that Urban Summit activists have turned in petition signatures requiring a citywide vote for an additional sales tax to support development on the east side of town. While this effort is the logical conclusion of years of urban neglect and crony capitalism, it will likely do little to help the East Side.

The Show-Me Institute stands arm-in-arm with those decrying the decades of neglect suffered by the East Side. In fact, we authored the chapter that exposed the fact that city economic development policy favors wealthy developers in the Urban League’s “2015 State of Black Kansas City.” Kansas City leaders have for years turned a blind eye to the economic decline suffered by our urban core. Worse still, city leaders have actively pursued development policies that diverted important resources away from schools and libraries in that same community.

Just as Kansas City’s shameful past of red-lining and block-busting a generation ago aided and abetted racial segregation, subsidies for today’s wealthy developers have diverted property taxes away from important city services on the East Side and toward the millionaires and billionaires at Burns & McDonnell, Cerner, and VanTrust.

Kansas City has so hollowed out its tax base through these diversions that the city must borrow money to provide basic services like tearing down dangerous buildings and repairing roads. While Kansas City suffers a two-year spike in homicides, our cash-strapped police force has fewer uniformed officers than it had in 2011.

Desperate for the basic services that the city government should be providing, communities on the East Side have resorted to community improvement districts (CIDs). The Independence Avenue CID charges a one-percent sales tax in order to provide security and beautification—things residents feel they cannot get from the police or the parks department. As a result, families living in the urban core are paying a higher tax rate on food just to feel safe while they shop.

Vernon Howard Jr., senior pastor of St. Mark Union Church, was correct when he told the Star, “City, county, state and federal jurisdictions have not, to date, focused upon the inner city with the kind of zeal, investment, intentionality and creativity as have been vested within mostly white and wealthier neighborhoods and communities.”

I empathize with East Side leaders, but their solution may only make matters worse. Adding another sales tax means poorer residents will be forced to pay more out of their pockets to get services they should already be getting for their earnings taxes, property taxes, (already high) sales taxes, COMBAT taxes, and all the rest.

If Kansas City is to thrive, it needs to dramatically overhaul its taxing and spending policies. We need to limit our profligate spending on touristy frou-frou and focus on providing services quickly, efficiently, and compassionately; we need to stop subsidizing wealthy corporations and luxury high-rises; and we must focus on developing the things that make Kansas City great—rather than merely mimicking Portland or Denver or Dallas. Because as jobs and population numbers attest, we are losing that game.

Analyzing Amendment 3

Posted on by Michael Q. McShane

On November 8, Missourians will be asked to vote on Amendment 3, an initiative that looks to increase tobacco taxes to pay for early childhood education.

At first glance, I can see why folks might want to support such an effort. Smoking is bad, so we should tax it. Preschool is good so we should provide it.

Oh, how I wish it were that simple!

In my new essay, Amendment 3: The Good, the Bad, and the Ugly, I break down all of the intricate issues involved in this proposed constitutional amendment. What is the impetus for this proposal? Is there really a need to be met here? Is pre-K as big of a deal as supporters say it is? Do tobacco taxes have any downside?

I hope that the essay will increase understanding about the possible consequences of this amendment (intended and unintended) and help Missourians cast more informed votes as a result.

About That New Home Addition . . .

Posted on by Rik W. Hafer

Before adding a room onto your house, wouldn’t you ask yourself if the expected benefit of the addition will be greater than the projected cost (in monthly loan payments)? Most rational homeowners would. So why is this simple justification often missing when it comes to public projects such as new bridges or new roads?

The Show-Me Institute has weighed in on such public projects, from the Stan Span to trolley systems in University City and Kansas City. In each instance we asked, just as you would before taking out that home-improvement loan, whether the projected benefit of the project was greater than the projected costs borne by taxpayers. And even if we make the somewhat dangerous assumption that the costs won’t increase as the project goes on, the answer too often is “no.”

Our conclusions are shared by Harvard economics Professor Edward Glaeser. In a recent article that appeared in the City Journal, Glaeser exposes the fairy tale of infrastructure investment as an economic cure-all. It isn’t that he (or we) believes that well-thought-out investment in roads and bridges is unimportant. Quite the contrary. The problem is that the way in which policymakers decide which project goes forward often leads to costly miscalculations that in the end simply do not deliver the promised improvements.

A couple myths about infrastructure that Glaeser dispels are:

  • Infrastructure spending stimulates economic growth. Japan, which spent over $6 trillion on “construction-related public investment” between 1991 and 2008, and has arguably one the world’s best train systems, has not experienced sustained economic growth in over two decades. Will building more highways in areas with little population improve economic conditions in U.S. States? It seems unlikely.
  • The public benefits, so funding should be done with general tax revenues. It is a near fact of life that funding a project from afar reduces the discipline needed to make sure it is done in a cost-efficient manner, and—perhaps more importantly—makes it less likely that the project will actually benefit the public (and not just those proposing it). Ill-advised, federally funded projects such as Detroit’s People Mover Monorail and Alaska’s Gravina Bridge (a.k.a. “the bridge to nowhere”) serve as cautionary tales. Spending federal funds on local projects like Kansas City’s trolley system is similarly likely to yield little or no economic benefit.

There is much more to Glaeser’s article, and I cannot do it justice in this space. I think you will agree, after reading his article, that maybe that new road or light rail extension being peddled by the local mayor or city council isn’t as critical to the region’s economic vitality as some might have you think.

Unionization-the Wrong Solution for UMSL Faculty

Posted on by James V. Shuls

Vicarious embarrassment—it’s the feeling you get when you watch someone else in an awkward situation. It’s the best description of how I feel when I hear my colleagues at the University of Missouri-St. Louis explain why faculty members should unionize. Squirming, stomach churning . . . you get the idea. 

It’s not that I’m anti-union—I’m simply anti–bad ideas.

I grew up in a union household.  My dad was a union carpenter until the day he retired.  The union helped secure a good income for him, along with great benefits and a healthy pension. It also provided many wonderful memories for me. I can vividly recall the union picnics where the RC Cola flowed like wine and my brother and I cleaned up at all of the games. 

It wasn’t until later that I realized what a union was or why unions were formed. For my dad and other laborers working on rooftops, in factories, or in situations where working conditions were hazardous, unions provided a means for increasing safety and improving working conditions.  As I sit in my air-conditioned office, I see little in common between my father’s work environment and mine.  Moreover, I see little reason to believe unionization could cure any of the ills we see at UMSL.

It is no secret that times have been rough on our north St. Louis County campus.  Student enrollment is down and state appropriations for operating expenses have yet to rebound to pre-recession levels. These circumstances helped to create a multi-million-dollar budget shortfall that forced university officials to lay off dozens of staff and adjunct faculty members.

My colleagues who wish to organize point to this and a host of other issues as reasons for unionization. They argue that salaries for adjunct instructors are too low, salaries for non–tenure track professors are too low (and such professors don’t get tenure), faculty salaries are too low, and we haven’t been able to hire new faculty for two years because of a hiring freeze.  Regardless of whether these things are true, unionization is hardly the answer. 

Unionization doubles-down on rigid policies that will not work, and it stifles the type of creativity we need.  It would create more bureaucracy through collective-bargaining processes and stifle the entrepreneurial spirit by locking individuals into rigid pay structures. This system will not help us, because faculty members and adjuncts are not widgets; we are not interchangeable.  The various members who make up the faculty and adjunct ranks at the university are unique professionals with varying skill sets.  We are professionals and our individual interests can hardly be represented by a single bargaining entity.

Don’t get me wrong: we do need to rally together as faculty—we need to rally in support of innovation. We need to organize in favor of creativity and efficiency.  The problems we face at UMSL are not unique.  Throughout the country institutions of higher learning are experiencing the same crisis.  While we complain about our salaries, college tuition costs continue to rise faster than costs for medical care. Meanwhile, technology is creating competitors we never dreamed of.  We cannot continue to do business the same way and expect the same—let alone better—results. 

Despite the challenges we face, many great things are happening at UMSL.  The campus itself is being rejuvenated with new buildings at every corner. The new Recreation and Wellness Center is top notch.  The Science Learning Building and Anheuser-Bush Hall will provide wonderful learning opportunities, and the new Optometry Patient Care Center will allow us to serve our community better than ever before. 

All of this construction has brought new life to campus. Our challenge is to do the same thing for our programs.  Unionization can’t do that, but we can. 

Making Health Care Better Through Licensure Reform

Posted on by Patrick Ishmael

Today the Show-Me Institute released our latest health care policy paper, "Demand Supply: Why Licensing Reform Matters to Improving American Health Care." The paper looks at supply-side health care reforms, particularly those dealing with physician licensure.

Making health care more available and affordable requires attention not only to health insurance and care demand; it requires that we also take a hard look at provider supply, and try to find ways to expand the care opportunities available to patients that are currently obstructed, unnecessarily, by government.

Physician licensure reform is an important step toward that end. There are over 900,000 state-licensed physicians in the United States, and yet today only about 3% of those doctors can substantively see Missouri-based patients, thanks to the way our current physician licensure system works. The paper's argument is straightforward: if you are a medical doctor who is licensed and in good standing in your home state, Missouri should not be stopping you from practicing in our state and helping Missouri-based patients.

With the maldistribution of primary care physicians we see both nationally and at the state-level, there are many underserved communities in Missouri that would benefit from the opportunities of interstate licensure, especially in the telemedicine context. Importantly, rather than pursue a system like the Interstate Medical Licensure Compact promoted by many state medical boards, policymakers should look at the Nurse Licensure Compact as a guide to making care by a physician more available and affordable to Missouri patients.

The paper builds on our previous work with the direct primary care and Medicaid reform issues. 

The Unscientific Claims of Streetcar Boosters

Posted on by Graham Renz

Let’s play a game. It’s called “Pick the scientist,” and here’s how you play: I’ll provide two quotes, and you try to guess which is from a scientist and which is not.

Quote 1: “Trolleys are a proven catalyst for residential, commercial and recreational development in cities like Memphis, Little Rock, Tampa and Portland.”

Quote 2: “The evidence for the streetcar’s development effects is limited, controversial, and yet widely believed among many streetcar proponents.”

. . . Well?

If you guessed Quote 2, you’re right. It’s from a recent report by the Mineta Transportation Institute at San Jose State University. Quote 1 is from rail proponents on the Delmar Loop Trolleys’ website.

Despite the lack of empirical evidence, boosters of the Trolley—a 2.2-mile vintage streetcar line slated to begin service this spring—claim it will spur economic development. But as the authors of the Mineta report (and this one) explain, there is no solid link between streetcars and development.

And the development prospects look especially grim for the Loop Trolley.

Research shows that of all kinds of mass transit, ‘vintage’ or ‘heritage’ streetcar lines like the Loop Trolley are the least likely to generate development. That’s because of their low ridership and limited service. If the trolley doesn’t effectively serve as a transit amenity—for example, by getting people to work or school—it won’t attract economic activity. But the trolley is only projected to carry a paltry 800-1,200 passengers a day and won’t even start running until the lunch hour! To put that in perspective, a busy Metro bus route can carry anywhere from 5,000-9,000 passengers a day, and operates nearly 24 hours a day.

Trolley boosters might respond that the streetcar has already spurred development, including a new residential tower. But this response ignores the point driven home in the scientific literature: subsidies, relaxed zoning, and other perks do more of the spurring than the rail does. (In the case of the new East Delmar residential tower, the project received a 16-year tax abatement.) As a recent paper in the Journal of Public Transportation states, “The real explanation for Portland’s apparent redevelopment success is most likely a combination of these factors [namely, financial incentives and regulatory inducements], combined with a desirable location and a vibrant local real estate market” (p. 44).

The truth is, the Loop real estate market is doing just fine. Delmar is not blighted, and didn’t need a $51 million vanity streetcar to grow. And if our community wants to drive development east of Skinker, it will have the most success by lowering tax and regulatory burdens, not because it has a vintage trolley creeping by. 

Just How Expensive Is “Free” Tuition?

Posted on by Michael Q. McShane

I have to give some serious credit to the Campaign for Free College Tuition. They are unapologetic advocates for making college tuition free, but rather than rely on some rosy projections about how much it might cost to make that a reality, they commissioned an impeccably credentialed and skeptical researcher to make a full accounting of what exactly free college would costs states.

The numbers he found were large. Very large.

If Missouri were to make all public 2-year and 4-year colleges free to in-state students, the total yearly price tag would come in at a staggering $808 million—on top of everything the state already spends. And if growth in college costs continues at its current rate, this number should only increase.

The paper also estimates the need for additional appropriations should the enrollment patterns of students switch as a result of this policy change. That is, students who might otherwise attend a private school in the state might decide to switch to a public school because tuition there would be free. If just 5% of each cohort switched from private to public, and thus got their entire tuition covered, Missouri would spend an additional $5.5 million per year. If 10% did, it jumps to an additional $11 million.

So what does roughly $815 million look like in the context of the state’s budget? Well the entire general revenue request for higher education from the Governor’s 2016 budget was only $913 million, so free college could essentially double that. The instructional budget of the whole University of Missouri system is only $650 million, so free tuition would cost substantially more than that as well. Absent massive federal subsidies, providing free college to Missouri students would require radical reallocation of state resources, resources currently spent in K-12 education, healthcare, infrastructure, and a host of other causes.

The Campaign for Free College Tuition deserves praise for their honest accounting, but the numbers their study produced makes it hard to support their goals. A more fruitful path to expanding college opportunity would be to work to drive down the cost of college and make it more affordable for more students.  Stay tuned for some research we have cooking on this very topic!

Breaking Out of the Public Education Box

Posted on by James V. Shuls

What does student success look like to you?  That was one of the questions asked last week at the eighth Regional Meeting on Education hosted by the Missouri Department of Elementary and Secondary Education at Pattonville High School.  The school’s cafeteria was packed with parents, community members, teachers, principals, and superintendents, all of whom were asked four guiding questions by DESE officials. They were then given an opportunity to discuss with others sitting at their table and later share their thoughts with the audience. 

The attendees at the meeting described an education system I think all of us would want for our children: a system that meets the unique needs of every student and prepares each one for college, careers, and life. The attendees wanted students who are prepared to be engaged citizens, programs that offer arts and cultural enrichment, and work that equips students for the real world. Hard to argue with any of that.

The problem is that you can’t get there from here.

Think about it for a minute. In a room filled with people heavily invested in education, there was almost universal agreement that what we are doing isn’t working.  Participants at the meeting repeatedly spoke out about the need for less rigidity in the education system; less reliance on test-based accountability systems.  They spoke about innovation, creativity, and the need for thinking outside the box. I suspect DESE officials have heard similar responses at every one of these regional meetings. 

So why aren’t we there already? Our education system isn’t the one we envision because it can’t be. And it can’t be that ideal system because it wasn’t designed to be. We wall off schools with artificial boundaries, and we assign students to those schools. People have no way to hold their school accountable for delivering the type of education they expect, so we regulate through rules, regulations, and laws.  There is no other option.  We will never get the type of schools that you or I envision through this system.

The only way to get there is to fundamentally reorganize the system. If, instead of centrally determining which students attend which schools, we were to empower parents with school choice, we could replace centralized accountability systems. Teachers would be free to teach, school leaders would be empowered to lead, and parents would have the ability to choose. No need for cumbersome regulations or stifling standardized tests. If you want the schools that we all envision, that’s how you get there.

For some reason educators and politicians have been taught to fear school choice. But it is only through school choice that we will ever create the type of schools that educators and parents want; schools that are responsive to the needs of students and where teachers are empowered to use their creative abilities.

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