Hairbrained Licensing Of Hair Braiders

Posted on by David Stokes

Today, the Institute for Justice (IJ) filed suit in federal court in Saint Louis to overturn Missouri’s awful licensing system for women who wish to perform African-style hair braiding. Why is this particular licensing rule so objectionable? Because, while there are many other unnecessary occupational licensing regulations in Missouri, at least the others usually require you to do things that at least relate to your future professions. With African-style hair braiding, the required cosmetology coursework, training, etc., has absolutely nothing to do with hair braiding. It would be like requiring dog walkers to get an electrician license before they can walk dogs. It simply makes no sense.

Watch a clip from today’s press conference about the issue, and check out some of the Show-Me Institute’s prior work. I applaud IJ for taking up this cause in Missouri. More importantly, I applaud the two plaintiffs, Tameka Stigers and Joba Niang, for standing up for their chance to pursue their dream of owning their own business without unnecessary government interference.

Power Play In Southeast Missouri

Posted on by David Stokes

Ameren is one of the state’s largest electrical utilities. Noranda is an aluminum company in Southeast Missouri that, due to the nature of making aluminum, uses an enormous amount of electricity. This is a tricky post to write because it is certainly complicated stuff and I don’t have a Ph.D. in electrical engineering like my father-in-law does. Noranda and Ameren have several cases before the Public Service Commission (PSC) that are being considered. In an effort to simplify things, it all basically comes down to two issues:

1) Claims that Ameren has been overcharging its customers from what the PSC allows it to receive in profits, and

2) Demands for mandated lower rates for Noranda itself, the state’s largest electricity consumer.

As to claim No. 1, if that is correct, then the PSC will take appropriate action. While rates themselves don’t directly compare to returns, in fairness to Ameren, the most recent annual electricity rate survey just showed Saint Louis as having the second-lowest residential electricity rates in the survey (which included much, but not all, of the country). The same survey showed Ameren having among the lowest commercial rates as well. So, while it may be possible to over-earn while charging comparatively very low rates, Ameren is hardly holding its customers (at least its Saint Louis customers) over the barrel.

As for Noranda’s demands for even lower rates, they already pay the lowest rates in the state. Furthermore, the Missouri General Assembly has already given Noranda the unique right to shop for electrical providers, unlike any other person or business in the state. I don’t begrudge Noranda any of this. As the largest user, I understand why their bulk discount is so high. Also, while I may want to give more customers the same right to shop that Noranda has, I certainly don’t want to take that option away from them.

That said, there has to be a limit on having the state solve Noranda’s electrical cost issues. If they can’t negotiate an even better deal from Ameren, Noranda does have the right to switch providers. Indeed, that is how they switched to Ameren in the first place. That is more than enough special treatment from the state.

Noranda’s efforts to curb its power costs goes back years. Noranda used to purchase electrical power from the rural cooperative by its smelter. But with the help of a law passed solely for its benefit by the Missouri General Assembly, Noranda was allowed to switch electricity providers. As of 2005, it has purchased electricity from Ameren at a cheaper rate than the cooperative had offered.

It is the role of the PSC to regulate private utilities, but it is not the role of the PSC to fix Noranda’s bottom line. We all want Noranda to successfully continue operating in Missouri, but it is not the role of state government to aggressively interfere in an attempt to guarantee that.

 

User Fees Are A Better Way To Fund State Roads

Posted on by Joseph Miller

In his latest Kansas City Star column, Dave Helling argues that it might be correct that everyone should pay for Missouri’s highways and bi-ways, not just the people using the roads. His argument is that we all benefit in some way, therefore, all of us should pay.

This argument is doubly flawed. First, in a user-pay system, the individual who doesn’t drive still pays for the road through the cost of the products he or she buys. This is factored in as companies have to take into account the cost of gas used to ship their goods; that cost varies based on the amount of highway required to move that good. Paying for the highway through user fees places a large direct cost on shipping companies and frequent drivers (who benefit greatly) and a tiny cost on those who do not drive but purchase shipped goods. Additionally, by paying for the shipped good based on its actual transport costs, user fees promote long-term economic prosperity because they encourage local products and efficient supply chains.

Second, all goods, services, and factors of production have indirect benefits. Take the example of a sandwich shop. Sure, those who eat the sandwiches benefit the most from the shop, but we all benefit from the new employment, the productivity of well-fed customers, and neighborhoods with vibrant businesses. So why make shop customers pay? Missouri could open sandwich shops, give the food away, and support the stores with general taxes.

Auto Icon

The logical conclusion here is a planned economy, which Helling and others making this argument would not support. But placing aside the polemics, there are good economic reasons that disconnecting the user of a good from the cost of that good is bad policy. Governments will have no way of ascertaining the economically efficient supply of highways for drivers (much less indirect benefits), likely resulting in a highway system that is simultaneously wasteful and inefficient. The lack of user fees on driving will subsidize the activity, leading to more waste and negative externalities such as congestion, more urban sprawl, and ultimately higher costs for the Missouri Department of Transportation (MoDOT).

Some goods and services (police, public parks) that the government provides may require general taxes for support. However, where possible, it is both fair and economically efficient for users to pay. That is the basis for Missouri’s state road spending right now. To change this model away from user fees will unfairly subsidize heavy road users and damage Missouri’s economy in the long run.

Teacher Tenure: Good for Teachers, Bad for Students

Posted on by Brittany Wagner

“Wait ‘til you have tenure, then you can do that,” was my former colleague’s favorite line. Although the tenured teacher referenced here is an outstanding educator, this axiom is more often used as a justification for poor behavior than a co-worker’s quip.

Missouri teachers are tenured, or become permanent teachers, once they have taught for five consecutive years within the same district. According to the American Federation of Teachers, a Missouri tenured teacher may be fired only in the following circumstances:

(1) physical or mental condition unfitting him to instruct or associate with children;

(2) immoral conduct;

(3) incompetency, inefficiency or insubordination in the line of duty;

(4) willful or persistent violation of, or failure to obey, the school laws of the state or the published regulations of the board of education of the school district;

(5) excessive or unreasonable absence from performance of duties; or

(6) conviction of a felony or a crime involving moral turpitude.  

This law is meant to protect Missouri teachers, but does it provide Missouri students with protection from bad teachers? A Los Angeles Superior Court Judge recently considered this question.

Judge Rolf Treu found on Tuesday that teacher tenure protections “disproportionately affect poor and/or minority students.” The ruling cited Brown v. Board of Education, the landmark Supreme Court case that declared segregated schools are not equal. Judge Treu said:

All sides to this litigation agree that competent teachers are a critical, if not the most important, component of success of a child’s in-school educational experience.  All sides agree that grossly ineffective teachers substantially undermine the ability of that child to succeed in school.

California’s teacher tenure laws may differ from Missouri’s, but the problems are the same. One Missouri superintendent reported, “Teacher tenure is the greatest restraint to student performance!” If we hope to provide all students with at least a chance at success, we must consider Missouri tenure reform.

School Choice – As American As Individual Liberty

Posted on by James V. Shuls

Bald-eagle-school choice

Peter Greene is at it again. Previously, he argued conservatives should not support school choice. Now, he is arguing that school choice is un-American. I explained why he was wrong before and I did so again last Friday on the Friedman Foundation for Educational Choice’s blog.

One of his main arguments is that private schools may teach objectionable content. I respond with this:

For as long as anyone can remember, there have been disagreements about what is being taught in public schools. That is because parents are compelled to send their children to public schools—if they can’t afford something different—and taxpayers are compelled to support public education through their tax dollars.

However, individuals have different values and beliefs. Of course, when parents disagree with their child’s public school they can pay for private school tuition, accept the school’s actions, or seize control and make the school change its position. Still, in all three of those scenarios, some people are being compelled to fund a school that teaches material with which they disagree.

There is simply no getting around the fact that someone’s beliefs or conscience will be compromised in the levying of taxes to support education…

Therefore, do those who oppose private school choice for this reason believe their rights are more important than others who object to content in public schools—but are compelled to support them anyway?

When the district where I taught banned Slaughterhouse-Five and Twenty Boy Summer, few progressive thinkers applauded the district for acquiescing to a parent’s wishes. They deemed the district backwards and lampooned the individual who led the effort to ban the books.

Peter Greene and other opponents of school choice programs might not mind Philadelphia’s decision to include A People’s History of the United States—a highly controversial book written by socialist Howard Zinn—in the public school curriculum, but many people do mind.

Greene does not seem interested in protecting all citizens from being compelled to fund schools that violate their beliefs, only the ones that think like he does.

Rather than compel students to attend schools that violate their convictions, school choice allows individuals to choose the school that aligns with their ideals. That is why I say, “School choice is about promoting individual liberty, and it doesn’t get more American than that.”

Ballpark Village Crushing It . . .

Posted on by Michael Rathbone

It seems that state and local development officials hit a home run when they decided to subsidize the construction of Ballpark Village. Yet, as I mentioned in my post last month, other local businesses feared that while Ballpark Village would do well, they would suffer losses. Their fear is now turning into reality.

As reported in the St. Louis Business Journal, bars and restaurants are taking serious hits to their sales. For example, Paddy O’s, a popular bar for pre-game and post-game activities, is expecting to draw $1.3 million in revenue this baseball season, a far cry from the $2.5 million they received last year. The Flying Saucer, another restaurant located near Busch Stadium, is looking at a 20-25 percent drop in business. These reports are anecdotal, but they fall in line with what economists find when they examine subsidies for similar types of developments, such as sports stadiums. While the subsidized development might do well, in many cases, it comes at the expense of other businesses in the area. Little to no actual wealth is actually created.

The government should not be subsidizing private developments. Even the ones that actually do well, such as Ballpark Village, just end up shifting consumer spending from one location to another. Instead, the government should be focusing its spending on areas that can benefit the public at large, such as public safety.

Lake Of The Ozarks To Waste Sales Tax Monies On Passenger Rail

Posted on by Joseph Miller

As Missourians consider whether or not to vote for a transportation sales tax, localities and regions are writing up their wish lists for how the new money will be spent in their areas. The Lake of the Ozarks is no exception. Some of the projects that area counties have proposed have merit, including reasonable road and sidewalk improvements. Others do not, such as what is at the top of Camden County’s list: passenger rail from Jefferson City to Camden County.

While a detailed plan has yet to surface, it is certain that any passenger rail extension from Jefferson City to Camden County would be incredibly expensive. How expensive? The distance from Jefferson City to Camden County is more than 50 miles, and new rail construction can cost up to $25 million per mile, more if they need to acquire right-of-way or build new bridges. Even simple rehabilitation of existing track can be very expensive, as the Missouri Department of Transportation’s (MoDOT) recent $48 million expenditure to improve 10 miles of track demonstrates.

Railway Point

What would be the demand for this line? The Missouri River runner, which connects major Missouri population centers along the Missouri River, has had difficulty gaining passengers and runs a significant operating deficit ($8 million to $9 million per year). If a link between Saint Louis, Jefferson City, and Kansas City has insufficient demand to cover costs, what are the chances for a rail line that simply connects Jefferson City to Camden County?

To get a sense of the ridiculousness of the project, consider how one might go about using this rail line. If one were planning to go from Saint Louis to the Lake of the Ozarks via this route, there would be two options. First would be to drive to Jefferson City, get out of the car, and take the rail the last 50 miles. The second option would be to go to the St. Louis Civic Center, catch one of the two daily River Runner trains to Jefferson City, and then transfer to the rail line. With both options, given the spread out nature of the Lake of the Ozarks, it is likely that anyone taking the train would have to rent a car upon arrival. It is immediately obvious that no one would consider this a reasonable transportation solution; the only market would be rail enthusiasts.

This rail project demonstrates the folly of using a sales tax to pay for transportation in Missouri. When users of highways are the ones paying for highways, the amount available to spend on new construction and maintenance is controlled by underlying demand for those assets. When everyone pays a sales tax for anything that can be called transportation, the money gets spent on politically popular projects, regardless of feasibility or demand. So it goes that if the sales tax passes, shoppers in Saint Louis will fund an empty train to Camden County.

Breaking: New Study Supports Old Show-Me Institute Study

Posted on by Michael Rathbone

I admit that I like to spend a good portion of my spare time at the casino. I gamble even though I know that the odds favor the house. At least I’m gambling with my own money. Public employee pension systems, on the other hand, make bets with other people’s money. Increasingly, they are taking riskier bets in the hope of hitting the jackpot. That’s what the Pew Charitable Trust found in their  new study. As the study’s authors show in the figure below, public pensions are shifting away from safer investments (e.g., U.S. Treasuries and Corporate Bonds) and toward riskier assets (such as equities and commodities) that are expected to deliver higher returns on investment.

Pension Asset Allocation

This behavior is taking place in Missouri. For example, in the late 1990s, the Missouri Department of Transportation and Highway Patrol Employees Retirement System (MPERS) had 42 percent of their assets in fixed income and cash. Equities and alternative investments such as real estate made up the rest. Now, MPERS has 22 percent of its assets in cash and fixed income.

The pensions are doing this “to deliver higher long-term returns in order to keep funding costs low . . .” In fact, in one of our previous policy studies, Andrew Biggs noted this phenomenon when examining how Missouri’s public pensions value their liabilities: “U.S. public sector plans, by contrast, have taken on greater investment risk, because doing so allows them to lower the accounting value of their liabilities and put off difficult decisions such as raising contributions or lowering benefits.”

I don’t have a problem with a pension plan seeking higher returns, but if these investments don’t deliver as hoped, then Missouri taxpayers will be on the hook to make up the shortfall. That is why I favor retirement plans such as defined contribution plans or cash balance plans that limit the exposure of the taxpayers to investments failing to generate expected returns. Hopefully, we can make a shift before one of these risky bets fails to pay off.

U.S. public

sector plans, by contrast, have taken on

greater investment risk, because doing so

allows them to lower the accounting value

of their liabilities and put off difficult

decisions such as raising contributions or

lowering benefits
Support Us

The work of the Show-Me Institute would not be possible without the generous support of people who are inspired by the vision of liberty and free enterprise. We hope you will join our efforts and become a Show-Me Institute sponsor.

Donate
Man on Horse Charging