Springfield May Be Ready for Uber, But Its Regulations Aren’t

Posted on by Joseph Miller

Recently, an editorial in the Springfield Business Journal promoted the benefits ridesharing companies like Uber could bring to Springfield residents. The author of that article wrote about how he had used the service many times in other cities and enjoyed the experience. He also felt that demand in Springfield is there for Uber and companies like it to be successful. However, while the author and city residents might be ready to embrace new transportation options, the city’s regulations are out of date and, as written, could block ridesharing companies.

                The sections of Springfield’s municipal code that deal with for-hire vehicles (which are likely to encompass Uber) were not written with ridesharing in mind. The code is primarily concerned with the operation of taxis, limousines, and hotel courtesy vehicles, and has no language for companies like Uber. It also envisions an industry consisting of taxi/limo companies (which own and license the vehicles) and drivers (who are hired to contract to drive the vehicles). However, ridesharing companies do not own a set amount of vehicles that they let out to professional drivers; instead, they merely connect potential passengers with people driving their own personal vehicles.

                This means that as things stand, if Uber attempted to open up in Springfield, it would be unclear who had to register the vehicles and how they would be registered. Either option—taxi or limo—would create awkward requirements for part-time drivers, as the code requires that vehicle owners:

  1. Maintain a business address with telephone service.
  2. Maintain a daily log of all trips.
  3. File a balance sheet and income statement prepared by a certified public accountant that shows the “business” has not less than $5,000.00 in liquid assets.

The code also requires that drivers:

  1. Follow a dress code (slacks and a collared shirt).
  2. Complete first-aid training.
  3. Take a physical exam.
  4. Present evidence of previous taxi or driving experience.

Additionally, regulations regarding fares would block Uber’s surge pricing practices, an integral part of their business model.

Springfield’s for-hire vehicle regulations were written for a purpose, but times and market realities are changing. States and cities across the country have changed regulations so that Uber and companies like it can operate. This is a chance for Springfield to be proactive and write sensible regulations now, so that its residents will be able to enjoy ridesharing as soon as possible. 

Using Technology to Provide Low-Cost Union Elections

Posted on by John Wright

Once a government union comes to power, it can stay in power for an indefinite length of time. Public employees such as teachers and firefighters are trapped by labor laws that unionize a workplace after a one-man, one-vote, one-time election. In our newest study, The Low Cost of Labor Reform, we show how Missouri can provide public employees the ability to replace or retain their union every few years with union elections.

Last year the Missouri legislature considered a few bills that would’ve done this. Unfortunately the fiscal notes associated with these bills (basically a price tag for a new law) indicated that the elections would cost taxpayers hundreds of thousands of dollars. One of the problems with these analyses was the assumption that elections would have to be conducted by traditional ballots, manned by hundreds of temporary employees hired just for elections. Modern technology makes this unnecessary.

With traditional voting, paid or volunteer workers need to be on location working polls. Moreover, specialized voting equipment needs to be at every polling location. Telephone- and internet-based voting solve these issues. With telephone and internet voting, personnel do not need to be at every polling location, and the voting equipment is nothing more than a telephone or personal computer. A voter just dials a number or goes to a website, enters a PIN or password, and votes at his or her convenience.

Telephone- and internet-based voting give voters greater flexibility. Not only can you vote from anywhere with an internet connection or mobile phone reception, but polls can remain open longer without significantly increasing costs. Imagine having a week to vote and being able to vote late at night or early in the morning. Much better than heading to a poll, parking, standing in line, and then rushing back to the office.

Security is an issue with telephone- and internet-based voting, just as it is with traditional voting, but internet voting can be encrypted. 256-bit encryption, the same encryption many major banks use, is as cost effective as it is secure.

Price doesn’t have to stand in the way of a policy that would empower government workers. If we’re forward thinking and embrace technological innovation, union elections can held at a reasonable cost.

Government-Run Obamacare Co-ops Begin Their Downward Spirals

Posted on by Patrick Ishmael

When the details of Obamacare were being ironed out, some in Congress wanted a “public option” in health care—a massive, government-run, single-payer health insurance system that liberals had dreamt about for years. When political realities made that a non-starter, many legislators threw their support behind the idea of government-backed nonprofit health insurance cooperatives that would be able to compete directly with private insurers in the insurance exchanges. The idea was that these essentially public cooperatives, run side-by-side with private insurers, could operate more efficiently while they simultaneously picked up poorer enrollees.

 

Well, it’s 2015, and of the 23 co-ops created, ten have already shut their doors. As PBS News Hour reports, the failure of the cooperatives came down to dollars and cents.

 

They had basically had solvency issues, financial solvency issues.

 

If they were the lower price point, that tended to attract sicker beneficiaries. That would drive up their costs. They had anticipated fairly large payments from the federal government to help offset the cost of those sicker folks.

 

But, of course, as we mentioned earlier, there was a change and their funding was cut early on in inception of the co-ops. And then, secondly, there was another legislative change that adjusted the amount of money that the federal government could pay them.

 

So the cooperatives attracted enrollees whose health was (in general) poorer and who couldn’t pay very much—a disastrous mix for an insurer—and then the cooperatives couldn’t survive after the government refused to give them the bailout they were expecting.

 

We’ve said it before, but it bears repeating: coverage is not care, and that fact is especially salient in the case of these cooperatives. Indeed, these government programs are failing the very vulnerable beneficiaries who they were specifically designed to attract. There are other, better ways forward on health care policy. More government is not the way.

Kansas City Obamacare Insurance Premiums Expected to See Double-Digit Hike

Posted on by Patrick Ishmael

Earlier today I wrote about how government-backed insurance cooperatives around the country have begun to fail. The reason? Dollars and cents. The cooperative plans were not financially sustainable, and since they could neither substantively raise prices nor get the government bailout they expected, these plans—predictably—folded.

 

Missouri doesn’t have a “cooperative” plan, but it does have what amounts to for-profit equivalents experiencing adverse selection problems nearly identical to those of the co-ops. How are these Missouri insurance plans dealing with these financial problems? Rate hikes, of course.

 

New data for the 37 states that use the federal HealthCare.gov marketplace, rather than run their own exchanges, suggest that premiums for next year will be going up far more in the Kansas City area than in many other large cities.

 

The monthly premium for the benchmark silver plan will increase by an average of 6.3 percent for the 30 cities included in the new data from the Department of Health and Human Services. But in the Kansas City area, premiums for that plan will jump by 20.1 percent next year.

 

. . . Rates appear to have escalated in Kansas City because Coventry, which had the second-lowest-priced silver plan this year, raised its rates for 2016 by an average of more than 25 percent, said Ron Rowe, vice president for sales of Blue Cross and Blue Shield of Kansas City.

 

Simply telling people they have coverage is not the answer to America’s health care policy problems—a fact the ever-growing list of failed and failing Obamacare insurance plans bears out. Until we get a handle on the cost of health care as a country, it will be very difficult to substantively guarantee access to care to the people who need it most, whether in the private market or in a welfare program like Medicaid. We can, and must, do better.

Census Data Does Not Reflect Saint Louis City Claims of Business, Tech Company Growth

Posted on by Joseph Miller

Leaders in Saint Louis have touted the city for its efforts to attract new businesses, especially high-tech startups. Square’s decision to locate in the city has been held up as evidence that the city’s tech incubator (T-Rex) and its innovation district (Cortex) are having the desired effect. Speaking about the new Square office, Mayor Francis Slay said:

We have made a conscious decision as a community to build the infrastructure to retain, attract and grow tech companies here and support entrepreneurship. It’s one of our strongest economic drivers.

While few would dispute that many great tech companies are starting in, and coming to, Saint Louis, the data show that in terms of companies and jobs, Saint Louis is losing as many as it is gaining.

To see this, we can look at Census Data that tracks Saint Louis City business establishments from 2008 to 2013 (which excludes government employees and self-employed persons). The period starts just before the recession and ends three years into the “recovery.” Over that time, Saint Louis City’s total business establishments rose by 866, or about 10%. That may sound good, but the problem is that over the same period the city’s total paid employees decreased by more than 25,000 (as shown in the chart above). 

The increase in business establishments and decrease in employment seem counterintuitive until one notes that all the city’s net establishment gain came from the smallest businesses (from one to four employees). Total businesses with more than four employees decreased in the city over the period examined.

Contrary to the popular narrative, growth in small companies did not come primarily from tech fields. Instead, the main growth sectors were health services and education (meds and eds):

Sector

Business Growth (2008–2013)

Employment Growth

Healthcare

1,399

1,653

Education

20

2,471

Information/Professional, Scientific, and Technical Services

–10

–2,883

All Other

–543

–26,492

The Saint Louis economy has performed better in 2015 than in previous years, so it is possible that future data will show greater business and employment growth. However, the latest census data strongly suggest that:

1.       In recent years city has failed to retain or increase medium- and large-sized businesses of nearly every type.

2.       The business and job growth there has been is mostly attributable to health services and education, not tech startups. 

Going Dutch on School Choice

Posted on by Michael Q. McShane

Most people don’t know this, but the Netherlands has had a universal school voucher system since 1917.

I know what you’re thinking: “Wait a second, all of these people tell me that if we have school vouchers, they will drive wedges in our communities and lead to intolerance and social turmoil. From what I know from my kids’ trips to Amsterdam, the Netherlands is a . . . tolerant place.”

Even though school vouchers were initially proposed in the Netherlands so that different religious communities could essentially segregate themselves in response to centuries of strife between Catholics and Protestants, over time they have been part of a country that is growing less sectarian. While I have no direct proof, I would wager that decreasing the number of fights over what gets taught in school has helped folks get along better.

But in addition to facilitating social cohesion, the voucher system in the Netherlands has helped create a really solid education system. On the 2012 international PISA exam, the Netherlands ranked 4th in the world in math, 8th in science, and 10th in reading. It isn’t necessarily fair to compare the Netherlands with a country that is 20 times larger and substantially more diverse, but for reference, the United States ranked 27th, 20th, and 17th on those tests, respectively.

Specifically, access to private schooling has helped Dutch students. A 2013 study in Education Economics used some nifty statistical footwork (an instrumental variables analysis to account for the selection bias that would otherwise make comparisons between private school and non–private school students inappropriate) to reveal strong positive effects for students using the voucher program to attend private schools. The effects were anywhere between 0.2 and 0.3 standard deviations, which would move a student at the mean of the standard bell curve of student performance up 10 or so percentile points (from a 50 to a 60).

Given these large effects, it shouldn’t be surprising that in a system where two thirds of the schools are private, we see strong academic performance. What’s more, according to the National Center on Education Statistics, Dutch schools spend on average $1,500 less per student per year than American schools do.

The Netherlands is more than canals and bicycles. It is a multi-ethnic and pluralistic society with an education system with parental choice at its heart. While it would be impossible (and even if possible, unwise) to try and import the Dutch education system to America, it does shed light on key concerns that Americans have with a system driven by school choice. Far from underperformance and balkanization, we see tolerance and success—two things we can always use more of around these parts.

Riverfront Stadium Deal May Be Worse for City than Dome Lease

Posted on by Joseph Miller

After significant delay, Missouri and Saint Louis City residents finally have a proposal on how much the public will be expected to pay for a new football stadium. And while it looks as if the city won’t be paying more in upfront costs for a stadium than they are now, the fine print shows this may be a worse deal than the notorious lease the city used to get the Rams in the first place.

                Before diving into the numbers, it is important to note once again that the proposal before city leadership is not the end result of a negotiation with the Rams or Stan Kroenke. The Rams organization has remained completely silent on what, if anything, the city can do to keep the team in Saint Louis. The NFL, which could possibly block a move, has also failed to make firm commitments to the city. With the caveat that nothing is final, if the stadium funding plan goes through the city will likely be financially worse off than it is now, for the following reasons:

1.       It will cost the city more than last time. In building the Dome, the city agreed to make $6 million a year in bond payments for 30 years. For the new stadium, Saint Louis will add remaining Dome debt to new stadium debt, to make payments that start at $4.5 million and escalate to $9 million over the course of 36 years. That does not include the millions that city residents have paid already through sub-municipal governmental bodies.

2.       It has hidden, unaccounted-for costs. Stadiums cost millions of dollars every year to maintain and operate, little or none of which is covered by NFL teams. The current plan does not account for these costs, aside from proposing adding new taxing districts. But if the future stadium costs and Ram’s tax revenue is anything like it is now, those districts will be wholly unable to cover costs. And speaking of revenue…

3.       It means less tax revenue than before. The city plans to give the vast majority of taxes (sales and otherwise) collected at the new stadium, which the city would normally collect, back to the Rams. Saint Louis City only collects about $4.2 million in total from the Rams right now, and this plan would likely mean the city gets even less in the future.

4.       It diverts needed money from the Dome. For the Edward Jones Dome to operate into the future, it reportedly needs about $100 million in capital improvements and continued maintenance. The revenue stream that currently funds the Dome would be diverted to pay for a new stadium, with nothing to take its place.

The bottom line for the city is that with this deal, to which the Rams have not agreed, the city is likely to pay more and earn less than it has for the last 20 years. Worse yet, maintenance for the new stadium and on the Dome are not accounted for, virtually guaranteeing that someone (not the Rams) will need to pay more later on. Is football so important to Saint Louis residents that they would mortgage their city’s future to give millions of dollars to an uninterested billionaire?

Unfortunately, the government sued itself to prevent a public vote, so we have no way of knowing the answer to that question.

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