Paging Doctor Meth

Imagine you wake early one morning with severe sinus congestion and a throbbing headache. You wobble down to the local Walgreens for some medicinal relief, only to be denied your Sudafed by the pharmacist for lack of a doctor’s prescription. What do you do? Lug your bloated, throbbing head to the next county where prescriptions are not required? Or schedule a doctor’s appointment for next week? That is hardly timely relief. What will St. Charles County residents do?

The St. Charles County Council voted on July 25 to require a doctor’s prescription when purchasing cold and allergy medications that contain pseudophedrine. Unfortunately, the ordinance imprudently inserts doctors into meth makers’ raw material supply chains. It is difficult to imagine, much less believe, that this ordinance will effectively diminish meth production in Missouri. With a sufficient profit motive, meth makers will seek out alternative arrangements for the procurement of pseudophedrine, perhaps by recruiting doctors as critical prescription suppliers.

In essence, the ordinance will turn otherwise law-abiding doctors into accessories to crime, unwittingly or not. Some will no doubt embrace the temptation to write fraudulent prescriptions, thereby corrupting the practice of medicine.

But this is only the tip of the iceberg. With the resulting increase in the demand for prescriptions, the ordinance further taxes an already over-burdened medical reimbursement insurance system. In an era when concerns for healthcare costs predominate, why should St. Charles County compound the problem by dumping a multitude of cold and allergy sufferers onto the bloated calendars of busy doctors?

And what about consumers? Certainly, the monetary and inconvenience costs of traveling to — and paying for — doctor’s visits and the time exhausted circumventing the ordinance by purchasing medications in non-regulated jurisdictions are substantial. The St. Charles County Council has voted, in effect, to shift meth-related law enforcement costs onto the backs of innocent cold and allergy sufferers.

This cost shift acts much like a tax on the purchase and consumption of cold and allergy medications. As with a tax, the “effective” price for these medications rises for consumers. Similar to a tax, the result is a deadweight loss as consumers ultimately consume less than the optimal amount of medications.

Seriously, is the real purpose of the “prescription mandate” to engineer a local law enforcement database to better monitor the activities of private citizens? If so, shouldn’t someone conduct a detailed cost-benefit analysis comparing the expected benefits with the known costs? After all, pharmacists are already required to request and to enter personal information into a database tracking consumers of pseudophedrine-based medications.

And what can be done to alleviate the competitive disadvantages and inherent inequities dogging those pharmacies who happen to be located wholly within a prescription mandate jurisdiction? They will certainly lose business to competitors fortunate enough to be situated in non-mandate counties and municipalities. Although a statewide mandate would address this latter concern, it nevertheless would still give rise to the corruption of medicine and tax-imposed deadweight losses, as discussed above.

The war against meth is not a free task. The costs associated must ultimately be borne by taxpayers. The issue is whether the selected means for conducting that war are wise and efficient, implying that all costs and benefits have been carefully weighed and compared.

Grandview to Vote on Hotel Tax Tomorrow

Residents in the Kansas City suburb of Grandview will vote tomorrow on imposing a hotel tax of five percent in order to promote tourism. The city estimates that the vote will net an additional $120,000 in revenue from those staying overnight in the town.

Take a moment to check out the two commentaries my colleague David Stokes has published on hotel taxes: here and here.

The Mayor, the County Executive, and the RCGA All Likely Have Vested Interests in the ‘Aerotropolis’ Legislation: It Could Enhance Their Power

If the Missouri legislature calls a special session and passes the so-called “Aerotropolis” legislation, it will award a great deal of power to the Saint Louis mayor and the nearby county executives. It should come as small surprise that some of the strongest voices arguing for the Aerotropolis legislation come from the very individuals who stand to benefit from it.

The Aerotropolis bill (as written during the 2011 legislative session — we’re still waiting on updated text for the special session) would give the authority to the mayor of St. Louis or the executive officers of nearby counties the power to designate “gateway zones.” While this power sounds innocuous, it has important ramifications.

First, those chief executives would become gatekeepers in the distribution of millions of taxpayer dollars. The Aerotropolis legislation would create $300 million in tax credits that would subsidize warehouse construction. That tax credit money could only be awarded only to warehouses built in gateway zones.

Even if motives are pure, the ability to determine which areas are eligible for hundreds of millions in tax credits would be an incredible power. The legislation does not say anything about monitoring such designations. Nothing in the legislation would prevent one of these chief executives from using such power as an indirect way to acquire campaign contributions or other untoward benefits.

A simple way to stop any such abuse of power would be to take the city and county chief executives out of the equation. If legislators — despite a lack of substantive empirical evidence that these tax credits will do any economic good — really want to subsidize warehouse construction, at least let all owners of vacant land compete equally for tax credits. There is no need to give special powers to city and county executives to achieve this (questionable) goal.

Second, this legislation would allow city and county executives appoint a three-person board to oversee millions in special tax revenues. That board could impose a special tax on the warehouses receiving the Aerotropolis subsidies, and then would oversee how those tax revenues are spent. Of those special tax revenues, 50 percent would go to the St. Louis airport. But the other 50 percent would be given to a “tax-exempt regional economic development association or associations…” The three-person board would select which association(s) would receive the money.

This, too, represents increased political power. The chief executives of Saint Louis and nearby counties will be in a position  to appoint the people who determine what agency gets part of those special tax revenues. Nothing in the Aerotropolis legislation would prevent them from appointing individuals who have a vested interest in where those special tax revenues go.

Interestingly, it seems that the St. Louis Regional Chamber and Growth Association (RCGA), the organization that pushed hard for the Aerotropolis tax credits, is a “tax-exempt regional economic development association.” There are others, such as the St. Louis County Economic Council. It appears that these organizations could qualify for the Aerotropolis special tax revenues. Awarding a steady stream of tax revenue to organizations that argued for the legislation that created that tax revenue is exceptionally poor public policy.

There’s a simple answer to all of these problems. Remove the possibility, however remote, of using the Aerotropolis subsidies and tax revenue as a political tool. There doesn’t seem to be a practical reason to include these mechanisms in the Aerotropolis legislation. They do, however, invite corruption into the process. The economic merits of the Aerotropolis tax credits are questionable as it is, but if the legislature insists on enacting them, they should not allow that money to be controlled by political figures.

Republic, Missouri Has Come Unstuck in Time

When I was a freshman in high school, I read Kurt Vonnegut’s classic novel Slaughterhouse Five. I didn’t fully understand the book at the time, but it introduced me to non-linear narrative and opened me up creatively to more innovative fiction. Pretty soon, I was devouring Catch-22, On the Road, and One Flew over the Cuckoo’s Nest (among others), and it was Vonnegut who first set me on the path to my favorite writers, without whom I doubt I would be where I am today.

So I was distressed to hear that the school board of Republic R-III in Republic, Missouri voted unanimously to remove Slaughterhouse Five from its curriculum. According to the Christian Science Monitor, the decision was “based on the complaints of Republic resident Wesley Scroggins, a professor of management at Missouri State University, and the father of several home-schooled children,” who “complained that the books advocate principles contrary to the Bible.”

This is paradoxical. Scroggins home-schools his children, presumably because his values conflict with those he believes the public school instills. He is exercising his right to choose how his children are educated. I’m sure he would object if the state board of education told him what books were suitable for his children to read. How then can he justify restricting what other students can study in school?

The real solution to this problem is more choice, not less. If we had a real market in education, parents who disapprove of Vonnegut and other authors like him could send their children to schools that don’t teach their works, while other schools could offer a more contemporary curriculum.

The district model for schooling is outdated. If it was ever a sensible model for educating students (I have my doubts), it was when the country was primarily rural and the technology to deliver the world’s information to every household did not exist. We have long since progressed past the need for these archaic bureaucracies that limit parental, student, and teacher choice. One district removing a single book from its curriculum may seem insignificant, but it illustrates how the current educational system limits rather than facilitates access to knowledge.

For any Republic High School students who want to understand the headline — or just spite their board of education — click here.

The Future is Here Today

Computer-based education is the wave of the future. Virtual schooling offers a suite of options for students not fully served by traditional, brick-and-mortar public schools. Students can access lectures and course materials online from anywhere with internet access and learn on their own time. Missouri public schools offer a number of virtual schooling options for interested students, some of which are discussed in this video.

 

 

Related Links

Show-Me Institute case study on virtual schools.

‘Where’s the Beef?’ A Reminder That American Beef Products Are Ineligible for Export to China

It seems that a bipartisan set of politicians are set on pumping this “send more beef to China” theme in the media. Gov. Jay Nixon did it last week (emphasis mine):

“If we want to sell more beef to Asia, we need more refrigerated warehouses. If we want to sell more pharmaceuticals and aerospace equipment, we need safe and secure transport facilities,” he said. “I am a strong supporter of this initiative.”

Missouri Speaker of the House Steven Tilley did it (emphasis mine):

Tilley said while the cargo hub would bring in planes filled with imports, the returning flights will open new markets for Missouri agricultural exports, specifically beef.

And former U.S. Senator Kit Bond did it, too. (Audio: Fast-forward to 14:45.)

Yet no matter which way you cut it, beef is — according to the Department of Agriculture — ineligible for export to China. If you loaded American beef onto an airplane tomorrow, it seems pretty clear that it could not go to China under these regulations. So every time a politician touts this beef angle, taxpayers should keep this important fact in mind.

We noted the beef prohibition in our Aerotropolis case study, specifically citing internal emails from Jason Van Eaton, the current China Hub executive director and a former high-level staffer to Sen. Bond. The relevant part (emphasis mine):

Bottom line, pork is officially open between the US and China. Beef is not but the word is that it will open soon … but that’s been the word for months. Many other trade issues keeping this tied up right now.

“Beef is not.”

Kudos to Sen. Jason Crowell, then, for telling his constituents in southeast Missouri how the beef export aspect really plays out (emphasis mine.):

“It will help the job market in St. Louis and our neck of the woods as well,” [Speaker] Tilley said, noting that many people in Perryville, Farmington and Cape Girardeau County drive to work in the St. Louis area. The increased tax revenue from about 20,000 jobs created by the Aerotropolis project would also provide more money for schools and transportation statewide, he said.

“Things that make St. Louis thrive spill over to help the rest of Missouri,” Brandom said.

But Crowell called Aerotropolis a “boondoggle for St. Louis” and said it will not help Southeast Missouri cattle producers because China has a ban on imported beef.

“We’re not stupid down here,” Crowell said. “We can see when politicians who want to take St. Louis money speak down to their constituents.”

As the old Wendy’s ad asks, “Where’s the Beef?”

Much more soon.

Veto by Nixon Secures Transparency of MO Government

Early in July, amidst a much cooler climate, Gov. Jay Nixon vetoed a measure that sought to limit the openness and transparency of public and governmental entities.

Specifically, the vetoed legislation aimed to shelter public entities from disclosing minutes, votes, and records; it also allowed for closed meetings.

Without public access to important information — whether it is school district board minutes or the budget of fire protection districts — injustices may go unnoticed and our public officials may be tempted to act in unethical and elusive ways.

Take, for example, a recent embezzlement scandal in Brentwood. As Chad Carson reported, the city administrator of the suburban municipality was found to have stolen nearly $30,000 of city funds. That money, largely from tax receipts, was thrown away at a riverboat casino. Increased government accountability is the only effective solution Missouri citizens have to prevent such abuses in the future.

It is improbable to assume that the general public will suddenly besiege public entities with information requests — commonly known as Sunshine Law Requests. Therefore, the protection of this right is critical to policy analysts and journalists statewide who, in their endeavor for truth, rely on accountability. After all, your government cannot be accountable without transparency.

We often chastise our elected officials’ performance — ironic, since we elect them. However, when they strive to bolster the sense of public duty, as Gov. Nixon illustrated here, some praise and an attaboy are due.

So now, even as the mercury seems to higher and higher each day, Missourians can feel good about greater openness, transparency, and accountability in government.

Local Government Strikes Down Yet Another Tasty Innovation

Working at the Show-Me Institute, located in the highly walkable Central West End, my colleagues and I often take short walks to lunch. Recently, food trucks have entered the competition for our dining dollars.

Given the large crowds that form around these trucks, they seem to be a hit, but apparently this is not the case for everyone. This week, police have cracked down on food trucks in the area — allegedly in response to a complaint.

A regulation in the city code forbids street vending within the Central West End, but until recently the restriction had not been enforced. Earlier this week, officers and inspectors issued warnings to multiple food trucks asking them to leave the area or face fines for violating vending regulations.

Christine Harbin, a former SMI policy analyst, wrote numerous times on these restrictions on private enterprise. First spotting food trucks in the Central West End back in March, she later followed up on the issue in a video interviewing both food truck owners and their customers. The verdict is still clear: there exists a strong consumer demand for these food trucks. Why should government inhibit healthy competition and growth of consumer choices?

Some people worry about the safety and health concerns associated with food trucks, but like any other restaurant or food provider, they must undergo government health and safety inspections to obtain permits for legally selling their goods.

Another common concern is the potential increase in street congestion. In Dr. Donald Shoup’s book, The High Cost of Free Parking, he explains the best way to manage street traffic is to introduce market determined parking fees.  Parking is not a free good, and should not be treated as one. Busy streets with more traffic and higher demand would have higher parking fees, while quiet less crowded streets with lower demand would cost less. This would force food trucks to internalize the externality of over consuming street parking.  If the trucks wanted prime location they would have to pay extra for it.

These trucks may be “technically illegal” in the area, but clearly there is a demand here that the government is barring. Originally, the downtown area had this same restriction, but now it benefits from many popular street vendors and food trucks. Why should the Central West End or any other area be treated differently?

Consumers would benefit if this restrictive ordinance was repealed throughout St. Louis, allowing their preferences — not the preferences of bureaucrats — to dictate food trucks’ placement and success.

To follow this issue further, watch Christine’s other video on the subject in which food truck owner Jeff Pupillo and a number of customers weigh in on food trucks and the unwanted competition they provide for some local restaurants.

Where Not to Go on the Sales Tax Holiday

This time last year I was considering buying a laptop for my first year at college. I decided to wait until the sales tax holiday. Normally, I would have purchased the laptop at Best Buy in St. Peters. Because St. Peters opted out of the holiday and charged the full local sales tax, I decided to cross the river and purchase my laptop in Saint Louis.

The Department of Revenue (DOR) announced that 169 cities, 50 counties, and 62 special districts will opt out of the sales tax holiday this August 5-7. The opt-out will require consumers to pay local sales taxes as enacted by the municipality or county but will leave the exemption on the 4.225 percent state sales tax in place.

But what’s the point of a sales tax holiday if municipalities can opt out?

The resulting dissimilarity in tax rates among Missouri’s municipalities distorts consumer behavior and impacts local vendors unequally. For example, vendors in municipalities that have enacted local sales taxes and have opted out will suffer because local consumers will purchase goods in neighboring municipalities that offer the full exemption. In my case, the local Best Buy lost my business due to no fault of its own.

For all price-conscious college students, we offer the following lists of cities, counties, and special districts to avoid.

Be sure to check out previous Show-Me Institute opinions about the sales tax holiday.

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