Online Learning: When More Is More

Posted on by James V. Shuls

In higher education, distance learning has been around for a very long time. In fact, the University of London began offering degrees through a correspondence program in 1858. Modern technology is allowing the spread of distance learning programs at a rapid pace. Universities across the country are developing programs to compete in the growing online learning market. In K-12, however, traditional public schools have been much slower to adopt distance learning programs or to use technology to transform how they deliver instruction. Rather than using technology and distance learning to change how schools operate, many programs targeted at K-12 students are used to supplement traditional learning that a student’s local school offers.

One such program is the University of Missouri-Columbia’s (Mizzou) K-12 online learning program. Yesterday, the Columbia Daily Tribune reported that the program is adding additional courses for the 2012-13 school year. The university now offers 11 online courses for Missouri high school students at a cost of $350 each. This program will certainly be beneficial to many students throughout the state, but it is just one way to use technology to improve options for students.

For more information on digital learning in Missouri and how technology can help transform education, check out former Show-Me Institute Policy Analyst Audrey Spalding’s case study.

Making The Most Of The Weekend

Posted on by Daniel Ritter

Missouri’s annual back-to-school sales tax holiday officially started last night at 12:01 a.m. Until midnight on Sunday, thousands of fashionistas, shopaholics, and back-to-school shoppers will be out in force capitalizing on the opportunity to purchase certain items without paying state sales tax.

Items exempted from the sales tax include school supplies under $50, clothes less than$100, software under $350, and computers and devices less than $3,500. There is no limit to the amount of items that can be purchased, but each item must be under the price threshold. For instance, if one purchases five shirts that are each under $100, then the discount is available for all five shirts.

This appears to be a win-win situation for everyone. Parents, students, and teachers can save money on most things that they need for the school year. And local businesses will experience an increase in sales as shoppers come over from Illinois, which is not participating in a sales tax holiday.

But as prior posts have pointed out, the sales tax holiday is far from perfect. First, it does not necessarily lead to more consumption because consumers often postpone certain purchases until the tax holiday weekend.  Second, some governments, including the state, lose out on millions in revenue because people wait to purchase certain items on the tax holiday.  Third, it puts some vendors within certain municipalities at a disadvantage because their cities opt out of the tax holiday, which means they still have to collect the local sales tax. Savvy consumers will shop at stores in municipalities where there is both a state and local sales tax exemption.

But do not feel bad.  Go out and buy what you need. It is your money and you have the right to take advantage of the sales tax weekend.  It would be great if the tax holiday led to more spending, but in tough economic times like these, I would rather see people keep more of their money than have the state waste it on some ridiculous economic development project. Just make sure you make the most out of this weekend by avoiding the cities, counties, and special districts that have opted out of the sales tax weekend.

Kansas City Should Expand, Not Remove, Land Taxes

Posted on by David Stokes

The Missouri Record just carried an op-ed on land taxes by Prof. Joe Haslag and me regarding the choice next Tuesday in Kansas City. It is not our place to tell people how to vote — that is your decision, not ours. But it is important for people to know that this is not a revenue-neutral switch. The proposed elimination of the land tax and increase in sales tax will result in more total tax collections — at least in the short-term. Also, economists almost unanimously endorse land taxes as a way to raise public funds while limiting the economic harms that taxation creates. Anyway, we say it better in the op-ed. From the piece:

Almost every economist sees the advantage of land taxes. The general welfare calls for taxes that do the least harm in the form of affecting the quantities of goods or services that people ultimately care about. Nearly all economists agree that a land tax is one of those policies in which taxing land affects the value of the parcel, but does not affect the quantity of land. Henry George, Milton Friedman, Paul Samuelson, and Joseph Stiglitz all recognize the desirable properties associated with land taxation.

Those four famous economists come from very different angles, if labeled politically (which they would probably object to, but I digress). The Show-Me Institute has conducted analysis on the benefits of land taxation. (Please see pages 5-11 of Haslag’s study on how Kansas City can replace the E-tax.) It is poor public policy to get rid of an effective tax in favor of expanding other taxes. Why doesn’t Kansas City heed the lessons of the past and reduce more harmful taxes, like the earnings tax, in favor of increased land taxes? There is a wide body of economic research supporting that position.

Minimum Wage Initiative Cost Estimate May Mislead Voters

Posted on by Mary Hopkins

The Missouri Supreme Court has ruled that the state auditor can prepare an estimate of how much a ballot initiative will cost the state. The court also ruled that the language of an initiative to raise the minimum wage from $7.25 to $8.25 is fair and sufficient, so it will be on the ballot this November. Though this initiative has been given the court’s stamp of approval, some of the language in the ballot summary is suspect and may mislead voters into believing that a minimum wage hike does not present a significant cost to the state.

Although the case raised many issues, the most interesting was the government’s cost estimate that will accompany the ballot title in November. Here, the voters must be especially diligent in their research if they want to make an informed decision. The estimate suggests that “increased state and local government wage and benefit costs resulting from this proposal will exceed $1 million annually.” This summary, which was highly contested throughout the court hearings, is technically correct — the cost will exceed $1 million — but it does not give an accurate picture of the probable cost, which may be closer to $16 million annually. How can that be? To arrive at the conclusion that the cost to the state would “exceed $1 million annually,” the auditor sent requests to 25 local public employers (such as Linn State Technical College and the City of Columbia) requesting an estimate of how much the wage increase would cost them annually. The auditor landed on the $1 million total because only seven entities responded with an actual estimate. Just seven of the hundreds of public employers in Missouri were counted to come up with this fiscal note summary. Because the auditor cannot force entities to respond with such estimates, it would not be prudent to blame that office. That being said, voters should know that the estimate they will see this November does not provide even a close estimate of the cost. In fact, the expert witness for those challenging the initiative suggested the true cost would exceed at least $16 million annually.

Remember the old adage, buyers beware? Here, it is voters beware.

The language you will see in the voting booth may suggest that Missourians will get a lot of change for a little price, when the reality is quite different.

For more information about the effects of the minimum wage, check out other Show-Me Institute publications on the subject.

Yes, There Is A Problem, But The Prescription Is Wrong

Posted on by Michael Rathbone

The St. Louis Post-Dispatch recently published a guest commentary by Daniel C. Willingham that, among other things, decries the explosive growth in government spending and the lack of economic recovery that has followed. Willingham discusses how federal spending has exploded and the national debt has increased enormously. What does the country have to show for it? Gross Domestic Product (the output of goods and services produced by labor and property located in the United States) grew by a meager 1.5 percent last quarter and the unemployment rate is still stuck above 8 percent.

Willingham should be commended for recognizing the results of this spending binge. However, the author then advocates increasing the New Markets Tax Credit (a credit that goes to taxpayers who make a qualified equity investment into a qualified community development entity). This is going in the wrong direction. Expanding the government’s power to pick winners and losers through the tax code is not the way to move forward.

In fact, many bipartisan tax reform plans have called for moving in the opposite direction. Plans like the Simpson-Bowles Commission and Congressman Paul Ryan’s Roadmap for America’s Future call for eliminating most credits and deductions while lowering tax rates.

Missouri has issued billions of dollars in economic development tax credits and yet its economic performance has been dismal. If issuing more and more in tax credits really is the answer, Missouri should be booming. Why should the federal government follow Missouri’s example?

Donnybrook: Brenda Talent Returns to KETC

Posted on by Brenda Talent

Show-Me Institute Executive Director Brenda Talent was a
guest
on Saint
Louis local roundtable discussion show Donnybrook on July 26, 2012.
Among the topics covered this time were: The tragic shooting in Aurora, Colorado, and what impact if any the event should have on gun policy, the recent Post-Dispatch coverage of the Clay vs Carnahan congressional race, Governor Nixon’s new television ad’s omission of his party affiliation, U.S. Olympic Team uniforms manufactured in China, and the GSA convention locating (or not) in Saint Louis.

Click here to watch the program online.

Missouri Stagnation! In Color

Posted on by Michael Rathbone

This is not the first time that I have lamented about Missouri’s economic performance. However, the U.S. Bureau of Economic Analysis released a map that shows just how well Missouri does when compared to the rest of the country:

Chart 1, showing growth in real GDP by state

As you can see, Missouri is in the bottom 10 in terms of economic growth. From 2010-11, the latest year for which data is available, Missouri also ranked second to last in terms of employment growth.

What are Missouri officials doing to catch up with the rest of the country? They expanded a small business tax deduction, but compared to Kansas cutting its personal income tax rates, Missouri’s actions seem . . . underwhelming.

My colleague Patrick Ishmael and I have called for eliminating the state’s corporate income tax and replacing the lost revenue with the elimination of economic development tax credits. This would serve to both a.) make Missouri more economically competitive with other states, and b.) get Missouri out of the business of picking winners and losers. The state would also benefit from other solutions such as reforming occupational licensing.

Missouri’s economic performance has been abysmal. It needs to change course. Repeating the same things over and over again will not somehow miraculously turn the state around.

School Choice And Individual Liberty

Posted on by James V. Shuls

Nobel Prize-winning economist Milton Friedman once remarked: “The true test of any scholar’s work is not what his contemporaries say, but what happens to his work in the next 25 or 50 years. And the thing that I will really be proud of is if some of the work I have done is still cited in the text books long after I am gone.” Though he has not been gone long, Friedman’s work will undoubtedly be included in the annals of academia for many decades. However, Friedman’s legacy is not just in textbooks. His legacy lives on in the hearts of thousands of students who enjoy educational options they would not have if not for his revolutionary ideas.

In 1955, Friedman introduced the concept that school choice via the use of vouchers could improve the quality of education. Yet, a quality education system was not his ultimate goal. Rather, he believed individual freedom was, or should be, the ultimate goal of a society. And by giving families the freedom to choose for themselves the best educational options for their children, Friedman theorized the market would respond with an improvement in the quality of education delivered.

The current body of research supports this theory. Random assignment experiments, which are the most rigorous type of research study, tend to find positive effects for students using vouchers, and none have found negative effects for voucher students. There is even some evidence that local public schools improve, and no evidence they are worse off, when they face voucher competition. The most promising evidence of voucher success, however, may be in terms of graduation rates. Students attending voucher schools tend to graduate at much higher rates than comparable students in nearby public schools. For example, students participating in the Washington, D.C., Opportunity Scholarship Program were 20 percent more likely to graduate from high school if they attended a voucher school. To rephrase a line Friedman often used, “the society that puts freedom before [educational] equality will end up with a great measure of both.”

Friedman believed the idea of a public education for all children did not necessitate that government be the sole provider of that education. He believed families should be free to choose from a variety of schools operated “by private enterprises operated for profit, nonprofit institutions established by private endowment, religious bodies, and some even by governmental units.” It has taken some time, but Friedman’s ideas of individual freedom through school choice are taking root in the American psyche. Indeed, the Wall Street Journal dubbed 2011 “The Year of School Choice.”

Though we have made progress in increasing school choice, Missouri has a long road to haul before families are able to enjoy the level of freedom that Friedman envisioned. We must continue to work until all families are free to choose the best educational options for their children. As Friedman said, “Freedom is not a natural state of mankind. It is a rare and wonderful achievement.”

James V. Shuls is an education policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

The Institute is participating in Friedman Legacy for Freedom Day on July 31, an international event celebrating the late Milton Friedman.

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