Page 422 – Show-Me Institute

Bring Dead Capital to Life

Posted on October 24, 2014May 5, 2026 by Rik W. Hafer

Think of that spare bedroom left vacant by children leaving the nest. Think of that empty passenger seat in most cars as they clog traffic in our major cities. To an economist, those are unused bits of capital: The room could be rented out, satisfying someone’s need for a short-term stay in town; that car seat could be occupied by someone heading in the same direction as the driver. Such unused sources of production are, simply put, dead capital.

Arthur C. Brooks, president of the American Enterprise Institute, recently argued that significant amounts of such dead capital could be brought to productive life if only local governments would stop protecting vested interests and allow entrepreneurs to invigorate their local economies.

How? There are new, exciting companies that empower individuals to improve their economic condition and, at the same time, improve the productivity of capital. One example is the ridesharing service Uber. Uber brings together those with empty passenger seats and those needing a ride across town. My experience (unfortunately, not in Saint Louis) is that Uber rides showed up faster than traditional taxis and that the drivers were more attentive to my needs. Because Uber drivers are rated by riders even in transit, poor drivers can lose business for inadequate service. Competition drives out poor performers.

Airbnb is a market solution to the problem of underutilized housing capital. With excess bedrooms in the United States, why not allow the owners of those empty rooms to satisfy the needs of individuals seeking a place to stay for a night or two? The needs of those willing and able to pay for a room are served and the owner is rewarded with, especially in these still-difficult times, an extra bit of income.

Unfortunately, a maze of state and local regulations block Uber and Airbnb from operating in many locales. “Governments have their own golden opportunity,” Brooks writes, “to exercise creativity in service of the common good, whether that entails rethinking anachronistic zoning laws or adjusting tax policies that treat someone’s spare bedroom the same as a Marriott suite.”

If bringing dead capital to life is good for the economy, isn’t it time for politicians and regulators to awaken to the potential benefits that such services can provide?

Show-Me Now! Missouri businesses on the Dole

Posted on October 23, 2014May 5, 2026 by Michael Rathbone

Policy Researcher Michael Rathbone notes that Missouri is one of the top 10 states… for corporate welfare. According to Veronique de Rugy of the Mercatus Center, the Show-Me State has given away over $5 billion to well-connected big businesses. A better approach would be across the board tax cuts.

Saint Louis County Municipalities: Should More Consider Disincorporation?

Posted on October 23, 2014May 5, 2026 by Joseph Miller

In the months following the tragic events in Ferguson, there has been increasing scrutiny on the policing practices in small North Saint Louis County cities. The argument, best made by Radley Balko of the Washington Post, is that micro-cities in Saint Louis County are using local police to shake down poor residents in order to support otherwise unnecessary government.

While we would argue that municipality size is certainly not everything, it is undeniable that many cities in Saint Louis County rely heavily on fines and court fees. One way of curtailing this sort of abuse is the rigorous implementation (or strengthening) of the Macks Creek law, which caps the amount of income a city can receive from traffic fines to 30 percent.

Missouri is preparing to audit some North Saint Louis County municipalities (along with cities in other counties) to ensure that they are not violating this law. However, the enforcement (or reform) of the Macks Creek law is up to statewide officials and voters. What’s more, if the law is vigorously enforced tiny municipalities might be forced to turn to large property tax increases or face insolvency. But local residents do not have to wait on statewide actions or accept a parasitic government. Voters can, and in the past did, disincorporate a city.

Under Missouri law, the residents can disincorporate their municipality if they: a. Gather 50 percent of residents’ signatures calling for an election on disincorporation; and b. 60 percent vote for disincorporation. At that point, the city would receive its basic services (including police and courts) from the county, unless they decide to join with another municipality.

Cities in Saint Louis County have disincorporated before, and recently. Just a few years ago, the poster child for a dysfunctional, traffic ticket-financed municipality was actually a middle-class, 95 percent white city in South Saint Louis County named Saint George. Major police scandals resulted in the city disbanding its police force, and residents ultimately voted to disincorporate in 2011. In 2013, the tiny (pop. 447) city of Uplands Park also held a vote on disincorporation, but that bid failed to reach the 60 percent mark.

The strategy of disincorporation is not without controversy. Loss of local representation, especially in areas with high minority populations, might be more worrying to some residents than fine-seeking officers. The approach also has limitations, as a municipality that funds decent public services mostly by fining pass-through traffic may serve voters’ interests while causing wider harm to the metropolitan area.

Most municipalities in Saint Louis County, including smaller ones, do not attempt to run their governments through aggressive police citations and court fees. However, residents should know that a local government that fails to provide for the common welfare (or openly harasses the poor) can be removed. A wider knowledge, if not actual use, of that option may result in more responsible city governance in Saint Louis County.

An Idea for Kansas City Schools: Give Principals Power

Posted on October 23, 2014May 5, 2026 by Patrick Tuohey

Kansas City Public Schools (KCPS) is seeking input from parents, school staff, and the community about how it might regain and sustain full accreditation and retain and attract students. To that end, it is forming a School Improvement Advisory Committee (SIAC) and has been seeking applicants to serve in that capacity. We have a few ideas we’d like to share about strengthening administration and staff, rewarding teachers, and empowering parents.

First, it is noteworthy that the stated purpose of the advisory committee is seemingly small ball. Their email soliciting participation asks only,

What’s it going to take for Kansas City Public Schools (KCPS) to regain full accreditation? What’s it going to take for your school to regain/sustain full accreditation? How can we retain and attract students?

In other words, “What do we have to do to provide the minimal state-required level of service?” We’re also suspect that they are looking toward parents and the community for ideas when there is an entire industry of specialists who have researched, written, and talked about what to do to improve schools. We at the Show-Me Institute have our own suggestions, and they aim at rebuilding world-class education in Kansas City. All our ideas have a common theme: Move power away from centralized school districts and toward students and parents.

For his 2003 book Making Schools Work, UCLA Professor and Author William G. Ouchi studied more than 200 schools in six cities and found that a school’s educational success may be most directly affected by how it is managed. The way to increase successful management, he argues, is to give schools more control over their own budget.

While schools may boast large budgets, Ouchi’s research uncovered that very little of it is controlled by the principal or the school itself. In one anecdote, he relates that a Los Angeles principal said her school had a budget of $21 million but added, “It doesn’t really matter because I only control $32,000.” Ouchi’s further research indicated that in New York, Los Angeles, and Chicago the local schools only controlled 6.1 percent, 6.7 percent, and 19.1 percent of the budget, respectively.

In school districts that have seen tremendous improvements in their urban school performances, such as Seattle, Houston, and Edmonton, Canada, the percentage of the budget controlled by the local schools was 91.7, 79.3, and 58.6, respectively. This should be no surprise. Administrators, teachers, and parents at the school are best able to identify and address the specific needs of their students.

Here in Kansas City, better school management means moving the power of the purse away from the top-down centralized control at 12th and McGee streets and out to the principals at Paseo, Lincoln Prep, and elsewhere. Ouchi offers this warning to parents:

Control goes with the money. If your superintendent smiles, invites your group into his office, and tells you that he agrees with you and that he’s going to roll out a new school-based decision-making program that includes parent involvement—smile sweetly and ask him who will control the school’s budget. Don’t let him off the hook. Don’t let him think that you can be so easily fooled.

Remember, the author was chief of staff to Los Angeles Mayor Richard Riordan. He has academic credentials, but he has weathered political fights as well. And the Kansas City district appears to be doing exactly what he describes: They smile, invite people to discuss the district, but surrender none of the control that is necessary for success.

Missouri’s Medicaid Program Striking Out Intended Beneficiaries

Posted on October 22, 2014May 5, 2026 by Patrick Ishmael

In baseball, getting a hit three out of 10 at-bats could make you an All-Star, and maybe even a Hall of Famer if you do it consistently enough. But while batting .300 is pretty good for the National Pastime, in most other contexts succeeding only three out of 10 times won’t get you accolades.

That point was hit out of the ballpark over the past few days.

Last week mid-Missouri’s ABC 17 reported on the story of a pregnant woman who had been trying to sign up for Medicaid benefits, only to have her paperwork lost and her calls unreturned by the Department of Social Services (DSS). When the issue came up at a House hearing, the DSS admitted it had to do better, but it also admitted something astonishing (emphasis mine).

The Department says thirty percent of its callers are having their needs met, which Campbell acknowledges is too low. She says staff are being reassigned to taking calls and other changes are being made to improve that percentage, but [State Rep. Sue] Allen says the situation remains frustrating.

“In a company, in a private business, people would be gone,” observes Allen.

Missouri’s Medicaid program is deeply broken, and yet some of our politicians think now is the time to expand it with Obamacare. It isn’t. In baseball and business, step one would be to fix what is wrong and then build upon successes, not to double-down on a bad system and bad players. That’s what Missouri should be doing: fixing Medicaid, not making an already bad situation worse—especially for the patients the program was supposed to help.

Missouri’s Medicaid system is institutionally well below the Mendoza line. It’s time to rethink the program.

ESAs Empower Families in Arizona

Posted on October 22, 2014May 5, 2026 by Brittany Wagner

All students have unique educational needs, which is why Salima’s parents chose to participate in Arizona’s Empowerment Scholarship Accounts (ESA) program. The ESA is an education savings account that allows parents to use a portion of their public school’s funding and deposit it into an account. The account can be used to pay for private school tuition, online education, private tutoring, or future expenses like college. This makes a world of difference to kids like Salima, who is one of 400,000 people living with Down syndrome in the United States.

This inspiring story is just one example of how school choice can transform lives. Because Salima’s parents were empowered through Arizona’s school choice program, their daughter’s needs finally are being met.

Chart Correction on Show-Me Institute Essay

Posted on October 21, 2014May 5, 2026 by Michael Rathbone

An astute reader brought our attention to an error in one of our charts. The chart in question was in the foreword that I co-wrote with David Stokes to Professor Howard Wall’s essay discussing the negative effects of earnings taxes on city population and employment growth. There was an error in calculating one of the averages. The corrected chart is below:

Instead of losing population between 1990-2000, the cities without an earnings tax gained population over that period. This new result strengthens Professor Wall’s conclusion that earnings taxes negatively impact a city’s growth.

The Teachers’ Union Cycle

Posted on October 21, 2014May 5, 2026 by Brittany Wagner

Last week, Time Magazine released an article titled “Teachers Unions Are Putting Themselves On November’s Ballot,” which reported that the National Education Association (NEA) and the American Federation of Teachers (AFT) will spend a combined $60 million to $80 million this election cycle. What does that mean for education stakeholders in Missouri?

The graphic below represents how teachers’ unions influence local school districts.

The first path of influence is through national and state political activity. At both levels, teachers’ unions make contributions to candidates that are likely to represent their platforms. The NEA, for example, takes strong positions on national education issues such as Common Core and school choice.

Unions also back issues at the state level—the Missouri NEA is reported to have donated $20,000 to campaign against Amendment 3, an initiative to end teacher tenure in Missouri, while it’s PAC, the Committee in Support of Public Educators, raised almost $90,000. Although there is money spent on the opposite side, monetary contributions are not the only way teachers’ unions influence policy.

Involvement in school board elections is the second route of influence. In Missouri, teachers’ unions have the right to collectively bargain with school administrations. These agreements include a range of items such as workplace rules, teachers’ compensation, and personnel decisions. According to union guru Myron Lieberman, collective bargaining was initially seen as a check on the power of school boards, who are democratically elected by residents within a school district.

However, a study by Stanford Political Scientist Terry Moe showed that within the 253 school districts examined unions supported school board candidates in 92 percent of the districts,”made phone calls in 97 percent, campaigned door-to-door in 68 percent, and provided mailings and publicity in 94 percent.”

If Moe’s study holds true in Missouri, then teachers’ unions have influenced school board elections, helping to elect candidates with similar views—nine Missouri school boards have passed resolutions against Amendment 3.

Through these two paths, the teachers’ union cycle perpetually strengthens itself. By limiting the power of parents, influencing the hand of local school district officials, and mobilizing state and national efforts to keep the status quo, the teachers’ union is able to protect the people the system was designed to serve—teachers.

Protecting the interests of teachers is not necessarily a bad thing. The problem is that within the teachers’ union cycle the interests of teachers often outweigh the needs of students.

Where the Buses Don’t Run

Posted on October 20, 2014May 5, 2026 by Joseph Miller

Recently, a study from the University of Minnesota calculated how many jobs could be reached by transit in major U.S. cities during peak travel times. The results showed that, even in dense metropolitan areas, relatively few jobs can be reached quickly. For example, in New York City the average worker can only access 2.5 percent of the city’s employment opportunities in fewer than 30 minutes using transit and walking. Only 14.6 percent of jobs can be reached in fewer than 60 minutes.

The case with Saint Louis and Kansas City, with only around 10 percent of the job market density of NYC, is considerably worse. In both cities, less than 1 percent of job opportunities in the city can be reached within 30 minutes of transit travel. Only around 5 percent of jobs can be reached within one hour. A chart of percentage of jobs available by transit travel time is below:

As a result, moving from suburban residences (where most Saint Louisans live) to suburban workplaces (where most Saint Louisans work) is not well served by transit. Furthermore, large employment centers in exurban areas are difficult to reach via transit at all. Despite significant investment and operating costs—usually more than $300 million per year in Saint Louis—it is clear that very few workplaces can be reached quickly via transit in Missouri.

What accounts for this disconnect? One factor may be that cities like Saint Louis and Kansas City are polycentric urban centers with employment clustering in different nodes across the metropolitan area. Focusing on Saint Louis, while virtually all of Saint Louis City and much of Saint Louis County has reasonable access to transit, much of the system is focused on bringing people in and out of the downtown core. A map of MetroBus accessibility is show below:

A second problem is that transit is time-costly even where it regularly operates, putting work locations outside the 30- or 60-minute transit range. Again taking Saint Louis as an example, it takes 30 minutes to travel from the Chase Park Plaza (in the Central West End) to City Hall via walking and transit. That is about as transit-friendly a route that exists in the city. Traveling from the Central West End to Monsanto headquarters for work (around 8.5 miles apart) would take an hour or more via transit, necessitating a commuter to leave at 7:38 a.m. to get to work by 8:55 a.m. The drive, depending on traffic, is less than 20 minutes.

These realities likely contribute to the very low share of commuters who choose transit in Saint Louis and Kansas City. And unfortunately, it is unlikely that any feasible increase in transit spending or service extension will meaningfully alter these realities. Without significantly rethinking how transit is provided, there is little chance the mode will be able to provide timely transportation for labor pools in Saint Louis and Kansas City.

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