On August 7, Patrick Tuohey joined Mundo in the Morning on KCMO to discuss the recent Missouri elections and whether they have any impact on the Kansas-Missouri border war over stadium subsidies for the Chiefs and Royals.
Universal Basic Income Programs Are Guaranteed Failures
Universal Basic Income (UBI) programs (sometimes called Guaranteed Income programs) are expanding around the United States, unfortunately. In St. Louis, the city passed a new pilot guaranteed income program that has been halted by the courts, at least for now.
In a UBI program, lower-income people are guaranteed an amount of money from the government. (In theory, that “guaranteed income” would apply to everyone, but so far most programs around the country have just been enacted for lower-income people.) UBI programs are different from the myriad other welfare programs in that there are generally no rules on how the money is spent and the requirements for admission into the program are easier. Compare this to food stamps and Section 8 housing vouchers, which obviously can only be spent on food and rent, respectively, and the general complexity of many other welfare programs.
Two studies have been released recently that actually tried to properly account for the success or failure of UBI programs in Denver, Texas, and Illinois. The results aren’t pretty. In Denver, the UBI program was focused on finding housing for the homeless. However, there was almost no difference in results between the groups that received significant sums of money and the control group that only received $50 per month. The control group did just as well at finding housing as the other two groups over the course of a year. While supporters of the program are trying to paint it as a success, the fact is that many homeless people eventually find housing, and the UBI payments made no difference in the results.
In Texas and Illinois, a UBI program gave some people $1,000 a month and a control group $50 per month. After the period of the program, the control group—who received less money—had a higher employment rate and were in better financial position:
The study, which began during the COVID-19 pandemic when unemployment was high, found that employment rates fell in the second and third years among recipients compared with the control group. On average, incomes rose significantly for all groups, though slightly higher for the control group. Incomes for recipients of the $1,000 rose from just under $30,000 to $45,710, while incomes for the control group started at a similar level but grew higher, to $50,970.
People responded to receiving free money by working less, which is exactly what you might expect. It’s also exactly the wrong way to help address poverty. The pilot program in St. Louis should be ended. The Missouri Constitution prohibits gifts to private individuals, and that is exactly what a UBI program is. But this would be a bad idea even aside from the legal issues. UBI programs just don’t work.
Reduce, Reuse, Recycle Spent Nuclear Fuel?
Did you know that the United States could be powered only by nuclear waste for 100 years? After fuel rods are spent in a reaction, only 4 percent of what is left over is genuine, nonreusable waste. These unusable byproducts are called “fission products.” The rest can be recycled to produce energy again.
In Missouri, the Callaway Plant has been operating reliably since 1984. With 40 years of operation, a decent bit of radioactive waste has accumulated. Could Missouri use nuclear recycling in the future to put that waste to use?
Oklo Inc. is a developer attempting to create a commercial-scale nuclear recycling facility. Recently, with Argonne and Idaho National Laboratories, the firm successfully demonstrated its fuel recycling process, capable of capturing 90 percent of remaining potential energy in the spent fuel. This is a huge step for the practice.
The federal government is also backing the development of nuclear waste technology. In the recently signed ADVANCE Act, one of the grant awards is for the first developer to build a reactor that runs off spent fuel or depleted uranium.
This would be a change of pace, as American nuclear facilities have used the “once-through” fuel cycle where waste is not reused. France and Japan use a “closed-fuel cycle,” which recycles nuclear waste and continues to use the recycled fuel until it is not useful anymore.
Reusing nuclear fuel also reduces the required time to securely store radioactive waste, as each subsequent reaction reduces the half-life of the Uranium atoms.
You might be asking yourself why we don’t do this already. The answer: history and cost. In the 1970s, this practice was emerging in the United States. The Cold War still loomed over the world, and during this time, there was a fear of nuclear proliferation. In 1977, President Carter halted the use of recycling nuclear fuel, as the process had the potential to be diverted to extract weapons-grade plutonium—a material used in making atomic bombs. By the time President Reagan lifted the ban in 1981, new nuclear projects had fallen out of favor since the Three Mile Island Incident occurred in 1979.
Not all nuclear reactors can use spent fuel at the same level of efficiency—light-water reactors—cannot use it as many times as other reactors—and those reactors make up the lion’s share of our fleet. To recycle nuclear fuel, the United States would need to construct more “fast” reactors, which use liquid sodium, lead, or other coolants as opposed to water.
There is momentum in the private sector and federal government to create these fast reactors. Will Missouri take advantage of this opportunity?
Why Markets Matter in Education with Mike McShane
In this episode, James V. Shuls speaks with Michael Q. McShane, Director of National Research at EdChoice and Senior Fellow of Education Policy at the Show-Me Institute, about his latest paper, ‘Why Markets Matter in Education.’ They explore the growing role of market forces in education, the benefits of choice and competition for schools and students, the impact of educational marketplaces on innovation and quality, the challenges of government intervention in schooling, and the long-term advantages of allowing parents to shape their children’s educational journeys.
Read the essay here.
Produced by Show-Me Opportunity
CON-sanity
Much of Missouri is suffering from a healthcare shortage, and unfortunately, the state’s hospitals are helping keep it that way. In recent years, two hospitals in northern Missouri have proposed plans to expand the services they provide in the region. Both expansions would represent meaningful improvements in healthcare access for their patients, yet neither expansion is likely to happen. But why not?
In short, the answer is Missouri’s Certificate of Need (CON) laws. These laws give the government power to manage competition in the healthcare industry by requiring permission before providers can open certain facilities, expand certain services they offer, or even install certain medical devices.
While being required to ask for governmental permission may sound bad enough, what makes CON laws even worse is that the healthcare facilities that are covered by the state’s CON laws help decide whether new competitors are allowed to enter their healthcare markets. It shouldn’t be surprising that when given the choice, incumbent businesses prefer less competition nearly every time. Competition means more choices—which in turn lead to lower prices. Artificially limiting supply, which CON laws do, has often been shown to result in higher prices.
So how does this apply to what’s happening in northern Missouri? According to a recent article in the Missouri Times, the Hannibal Regional Medical Center asked the state legislature this year for money to build a new radiation oncology unit in Kirksville, which is approximately 100 miles away from its Hannibal location. The Northeast Regional Medical Center (a hospital located in Kirksville) opposed the funding on the basis that the creation of a new medical campus would “cause a duplication in services that could produce a financial hardship for both hospitals.”
Apparently, this story goes even further back than this past legislative session. Two years ago, the Northeast Regional Medical Center submitted a CON application for permission to replace a linear accelerator (a machine used for radiology treatments) for its Kirksville hospital. In response, the Hannibal hospital filed an opposition under Missouri’s CON laws, effectively barring the hospital from purchasing the device that would allow it to offer better cancer treatments for its patients.
While it’s still too early to know what the result of the fight in northeast Missouri will be, it’s important to recognize what’s happening. As a result of the veto power afforded by Missouri’s CON laws, instead of Missourians having greater access to valuable cancer treatments in northeast Missouri, neither the hospital in Kirksville nor the one in Hannibal will be allowed to offer expanded services. In other words, Missouri patients lose.
Unfortunately, sometimes it takes a real-world example to illuminate the costs that Missouri’s CON laws impose on the state’s patients. It’s long past time for Missouri to repeal its CON. As long as the state’s incumbent healthcare providers are allowed to pick who their competitors are, Missouri patients will continue to suffer.
Exempting Childcare Facilities from Taxes Is a Bad Idea
A version of this commentary ran in various newspapers across the state, including the Springfield Business Journal.
On August 6, along with voting in party primaries, Missouri voters are being asked to vote on a constitutional amendment to exempt all childcare facilities outside of homes from property taxes. While we all want more affordable childcare, this proposal is a terrible idea. Any small benefit to families with young children will be more than offset by higher property taxes on everyone else.
Many childcare companies are for-profit businesses. Nonprofit childcare facilities, like those in churches, are already tax exempt. I see no reason why for-profit childcare companies deserve a tax exemption, but for-profit auto repair shops don’t. Yes, childcare is important. So is having a functioning car to safely get to work. The argument that something should be tax exempt because, as the ballot language states, it “supports the well-being of children, families . . . and society,” is essentially meaningless. Nearly anything could be made tax exempt by that logic.
Furthermore, this proposal does nothing to restrain government spending. Any reductions in the property tax base will result in higher property taxes on other entities that don’t have the special exemption, such as your home, your farm, and other businesses. The overall effect may be small, but it will be real.
The property tax base should be set as wide as possible so that the tax rates can be as low as possible for all taxpayers. Shrinking that tax base does real harm, no matter how sympathetic the cause may be. Missouri voters should keep that in mind when they choose in August.
A Policy That Could Help Lower Missouri Electric Bills
While summer is actually my favorite time of the year, it’s also hard on my wallet. As air conditioning use ramps up around the country, so do electricity bills. But there is one policy that could help lower Missourians’ electricity bills all year round: retail competition.
Throughout the United States, retail competition has helped to lower the electricity rates for residential, commercial, and industrial consumers.
Between 2008 and 2022, the 14 states with retail competition saw an inflation-adjusted 18.3 percent decrease in average price for all sectors—whereas the 35 monopoly states saw an average price increase of 3.6% in the same time period (these numbers include Washington, D.C., but not Alaska and Hawaii).
Let’s assume you have an electric bill of $200. In a state with retail competition, that bill would have dropped to $178. In a state with total monopoly, your bill on average would have risen to $211—a $33 difference.
Of the 23 states that saw the highest price increases in the 2008–2022 period, only one of them had retail competition (New Hampshire, which was 12th). The 14 retail competition states clustered near the bottom, with seven in the bottom ten.
Here’s an example of Texas’s retail competition website. When searching for a provider, consumers can use a number of different filters, including estimated electricity use, share of renewables, fixed rate versus variable rate (a fixed-rate provides a stable rate for the duration of one’s contract, while a variable rate fluctuates with market conditions), and company rating.
powertochooseorgen-usPlanResults
During the period from 2008 to 2022, Missouri saw the sixth-largest percentage increase in electric prices on average. While Missouri still has relatively low electricity prices, things are moving in the wrong direction. Shouldn’t the Show-Me State consider opening up the energy sector to market forces?
The Moral High Ground and the Minimum Wage
Proponents of raising the minimum wage like to try to take the moral high ground. “Workers deserve a living wage!” they shout. They couch their arguments in terms of fairness and justice for workers. Their high ground, however, is built on a foundation of sand, and it is slipping out from beneath them.
As free-market economists have long explained, raising the minimum wage prices the most vulnerable workers out of a job. It can lead to reduced hours, less full-time work, layoffs, and increased prices for consumers. There is nothing moral about advocating for policies that produce these results.
A new survey from the Employment Policies Institute (EPI) highlights the negative impacts of California’s recent increase in the minimum wage. California passed a law that raised the minimum wage for most fast food restaurants to $20 an hour beginning April 1, 2024. EPI surveyed 182 restaurant operators to assess the effect of the increase in wages.
Here are some of the key findings of the report:
- A majority of restaurants say they have already raised menu prices (98%), reduced employee hours (89%), have limited employee shift pick-up or overtime opportunities, (73%) and reduced staff or consolidated positions (70%).
- Many (75%) say the number of employees will decrease (somewhat decrease, 50%; significantly decrease, 25%).
- Nearly all (99%) say prices will increase, with 73 percent saying they will “significantly increase.”
- A majority (74%) say there is an increase in the likelihood of shutting their restaurants down (somewhat increase, 38%; significantly increase, 36%).
Fast food jobs are entry-level jobs. They are well suited for individuals entering the job market for the first time or individuals who struggle to gain employment elsewhere. As such, they are a stepping stone to further career advancement. I say this as someone who began his career working minimum wage fast food jobs. Raising the minimum wage may help some workers earn more per hour, but it also leads to fewer job openings, diminished hours, and fewer opportunities for less skilled workers.
Does the Minimum Wage Impact Crime Rates?
Missourians may soon be voting on whether to increase the minimum wage from $12.30 to $15 by 2026. Before making that decision, they should consider the broader impact of such a wage increase. To begin, a minimum wage increase negatively affects low-income and low-skilled workers, causing them to suffer a disproportionate loss in hours worked or, unfortunately, the loss of their jobs. This reduction in hours worked or loss of their job not only reduces their income and makes it harder to learn skills, but may also make those affected more likely to commit crimes.
In recent years, several studies have also suggested a positive correlation between an increase in the minimum wage and property crime (such as burglary, larceny, and auto theft) committed by young adults, who are disproportionately impacted by an increase in the minimum wage. But why would a minimum wage increase lead to an increase in property crime?
The hypothesis is that when minimum wages increase, low-income and low-skilled workers experience a reduction in hours worked or increased unemployment, which often means a loss of income. The authors conclude that this decrease in earnings, reduction in hours worked, and increase in unemployment contribute to increases in property crime rates.
The effects of raising the minimum wage are particularly felt by workers who are younger, have a lower income, and are less skilled. The Journal of Economics study finds:
. . . using data from the 1998–2016 Uniform Crime Reports, we find that a 10 percent increase in the minimum wage led to increases in property crime arrests for those between the ages of 16-to-24 of approximately 2 to 3 percent.
Intuitively, this makes sense—losing your job or losing hours at your job could increase economic desperation, leading people to commit property crimes such as theft. In addition, jobs help give people structure and keep them on the right track. The Journal of Public Economics study mentions that more labor market opportunities for younger workers reduce criminal behavior because it increases the opportunity cost of crime. If you have a job, you have more to lose if you get caught committing a crime.
What does this all mean for Missourians? Raising the minimum wage can not only lead to fewer hours and jobs, but also more crime. To actually benefit low-income and low-skilled workers, shouldn’t we instead pursue policies that foster an environment enabling businesses to create more jobs, such as tax cuts or eliminating unnecessary occupational licensing?
