Page 646 – Show-Me Institute

Compare and Contrast: LRA and LCRA

Posted on August 25, 2010May 5, 2026 by Christine Harbin

I attended my first Land Clearance for Redevelopment Authority (LCRA) board meeting in Saint Louis yesterday. I couldn’t help but notice stark similarities and differences between the LCRA and the Land Reutilization Authority (LRA) board.

One stark difference is the amount of information that each board expects from the petitioners. When presenting before the LRA board, an individual has to demonstrate financial ability and provide the written endorsement of an alderperson, as contributors to Show-Me Daily have communicated previously. When presenting before the LCRA board, apparently, the presenter provides neither. He only has to cite the dollar amount that the developer is spending on the project, as well as the projected number of jobs that will be created.

As a related point of contrast, committee members of the LRA board pose probing questions to petitioners, whereas those of the LCRA members ask few, if any.

As a point of similarity, both the LRA and the LCRA promote policies that remove properties from the tax base and therefore reduce the amount of property tax revenue received by the city. Each has a different way to accomplish this, however — the LRA board denies proposals from individuals to buy properties that are ~~with~~held by the city, and the LCRA board approves proposals from private corporate developers to abate property taxes.

I encourage you to compare the number of suits in the first photo below to the number in the second photo.

To me, it begs the following question: Whom is Saint Louis City government serving: taxpaying individuals or corporate developers?

Land Clearance for Redevelopment Authority (LCRA) Meeting, August 24, 2010

Photo Credit: Thomas Duda

Land Reutilization Authority (LRA) Meeting, June 30, 2010

Photo Credit: Thomas Duda

Selective Sales Taxes, Sliced Bagels

Posted on August 25, 2010May 5, 2026 by Christine Harbin

The Wall Street Journal ran an article about how the state of New York is assessing taxes on sliced or prepared bagels — but not on unsliced bagels — at around $0.08 per bagel. The article illustrates the fact that selective taxes come with high costs of compliance.

It also shows the way in which high selective taxes negatively affect businesses — in this case, bagel stores. This tax could cause customers to patronize restaurants that are not subject to a higher marginal tax rate, instead of frequenting bagel stores. (This leads me to wonder whether the pizza or sandwich industries were behind this measure.)

What is the rationale of taxing sliced bagels over non-sliced bagels? Over other breads? Over other food products? Is consuming sliced bagels a behavior that should be deterred?

There are many calls to tax “sinful” products such as soda, cigarettes, alcoholic beverages, fatty food, and tanning because their consumption is linked to health conditions like obesity and cancer. Is consuming sliced bagels, as opposed to non-sliced bagels, similarly linked to a negative health condition?

I wonder whether restaurants in states that border New York are benefiting from increased sales of sliced bagels.

This is a teachable moment for the state government in Missouri. Instead of assessing a complicated myriad of selective taxes, like New York is doing, Missouri should implement a tax climate that is broadly based.

Government: Ruining Everything Functional One Program at a Time

Posted on August 24, 2010May 5, 2026 by John Payne

Santiago, Chile, is a city of more than 5 million people, with one of the highest standards of living in Latin America. In the latest episode of EconTalk, host Russ Roberts of George Mason University talks to Mike Munger of Duke about the city’s mass transportation system. In the middle part of the last decade, Santiago featured a flourishing system of private buses, with more than 3,000 companies offering quick and inexpensive transportation all over the city and mostly managing to turn a profit. The system was not without its flaws, however. The buses emitted a great deal of pollution, and overzealous bus drivers often caused accidents or hit pedestrians in efforts to pick up passengers before their competition.

Such problems led the government to scrap the private system in favor of a public one in 2007, and Munger explains how this led to far worse outcomes on pretty much every measure. The average commute for a mass transit rider immediately skyrocketed from 40 minutes to an hour and 40 minutes. This encouraged more people to drive or use small taxi services, feeding a vicious cycle. Furthermore, because bus drivers are paid based on how often they are on time, they have no incentive to stop for passengers at bus stops if they are running late. The extremely lengthy lines for buses routinely lead to pushing and shoving to board and fights often break out. Although the public system was specifically designed to solve safety problems in the private system, the number of wrecks actually increased because the city purchased extra long bendy buses, which require two lanes to turn, so cars frequently crash into them. Finally, the system as a whole went from running a profit of $60 million to requiring a government subsidy of $600 million — more than $100 for every resident of Santiago.

Munger argues that the problems with the private buses could have been solved relatively easily without resorting to socializing the system. A very minimal licensing requirement could ensure that the buses do not emit excess levels of pollutants, and the enforcement of property rights in private bus stops has been shown to prevent buses from driving recklessly to swipe passengers out from under the competition. Although Saint Louis and Kansas City do not have the same level of demand for bus services as Santiago, the city has shown that government ownership is not necessary for a decent mass transportation system.

Milton Friedman Celebration 2010 featuring Michael Podgursky, Susan Feigenbaum and Daniel Thornton

Posted on August 24, 2010May 5, 2026 by Michael Podgursky

On July 30, 2010, the Show-Me Institute joined many other think tanks around the nation by hosting an event in celebration of the life and legacy of the influential economist Milton Friedman.

At this event, Dr. Michael Podgursky spoke of the benefits of school choice, Dr. Susan Feigenbaum spoke of the negative impacts of discrimination in a free market, and Dr. Daniel Thornton spoke of the dangers of irresponsible monetary policy. Dr. Joseph Haslag moderated, and Dr. Bonnie Wilson introduced the event.

All Businesses Are Equal, but Some Businesses Are More Equal Than Others

Posted on August 23, 2010May 5, 2026 by Christine Harbin

Many problems in public policy are government-created, and the best solution is not more government. Unfortunately and predictably, solutions involving more government will be supported by groups that are short-sighted and will benefit directly from them.

As the latest illustration of this, biodiesel producers in Missouri are calling for extending the $1-per-gallon biodiesel blender’s federal tax credit. In its Friday issue, the St. Louis Business Journal published two articles that profile a struggling biodiesel plant as it waits for extended handouts from the government.

Meanwhile, there exists a lack of demand for biodiesel in the market, and the government has responded by setting a mandate to create an artificial level of demand. From one article:

Environmental mandates that require oil companies to blend petroleum-based diesel with minimum levels of biodiesel […] have increased demand, and therefore prices, for biodiesel and helped offset the loss of the expired tax credit.

The problem with mandates and production subsidies like those for biodiesel is that the government is encouraging energy producers to invest in an infrastructure that is neither efficient nor cost effective. Residents of Missouri and other states could achieve higher levels of utility if government stayed out of the market and allowed the profit-and-loss system to allocate resources. As another positive consequence of eliminating handouts to biodiesel producers, fewer resources would be distracted from the development of other alternative energies that are perhaps more viable.

The Blogosphere Is Having an Unlicensed Conversation About Occupational Licensing!

Posted on August 23, 2010May 5, 2026 by David Stokes

There has been some great talk in the blogosphere about occupational licensing over the past week. Matthew Yglesias began the discussion, and Conor Friedersdorf, guest hosting at Andrew Sullivan’s Daily Dish, has joined in. I may be a few days late to the discussion, but I can ascribe that to two words: State Fair.

While some of the larger national think tanks regularly take on this issue, we here at the Show-Me Institute cover occupational licensing more than most other state-based groups. It is great to see people engaged in the conversation, and I hope they enjoy getting punched in the face as much as I enjoy throwing the punches.

There really isn’t a more accurate example of democratic failure than occupational licensing. It is public choice economics at its most concise. A small group of people stand to gain financially from a very narrow policy action, and passionately advocate for it. A large group of people stand to be harmed very marginally from that same issue and so don’t care about it enough to spend time and effort becoming informed and fighting back. Politicians measure the gains for them to be made from satisfying the small group (campaign contributions, union support, etc.) versus the fallout from harming the larger group (there’s generally no fallout), and — voilà! — an entire industry becomes regulated with a few votes and the stroke of a pen, while the only person who shows up to complain about it is some jerk like me. You grandfather in the existing practitioners (or exclude only a small portion of them), and put the screws to future practitioners and the general public, neither of whom realizes at the time that anything is going on.

The purpose of licensing is always the economic gain of those practicing the occupation to be licensed (the regulatory push never comes from the outside — always the inside), but advocates are usually smart enough not to say that. Instead, the arguments actually advanced in favor of licensing are twofold: safety and search costs. The safety argument might be legitimate for a few professions (i.e., drug testing for school bus drivers) but very quickly devolves into a love of the nanny state — unless you really believe that the threat of a bad haircut actually involves your “safety.”

The search costs argument was always wildly overstated. It assumes that we need the state to license heart surgeons, for instance, so you don’t have to check references on your own while you are having a heart attack. (This is sort of a bad example, given that I think doctors and nurses may be one field in which the benefits of licensing outweigh the costs, but stick with me.) This general argument fails in that the employer is unlikely to have hired an unqualified person in the first place (the hospital probably confirmed that the doctor graduated from medical school), and how often do people really hire someone cold? You get references for plumbers, electricians, pediatricians, etc., from family, neighbors, or friends who have used those people before, and who are willing to recommend them. License or no license, reputation and referrals are what keep people in business, or drive them out of it.

The scam artists who successfully operate in the underground economy and show up at your house to do the roofing right after the straight-line wind blows the shingles off won’t be stopped by licensing laws. Even if I thought licensing laws protected consumers by limiting scams, I still don’t favor giving the government more power over our economic lives and taking the responsibility away from individuals to make better choices by checking references, calling the Better Business Bureau, etc. Others might disagree, but the evidence that licensing improves quality and protects the public is lacking.

I could go on, but this post is long enough. It is great to see people participating in this debate. Now, as they told me during my very brief boxing career, keep your hands up. …

An Economic Bill of Rights?

Posted on August 23, 2010May 5, 2026 by Vince Smith

Are people inherently born with the right to an important and well-paying job? How about a decent house? The author of a recent article in the St. Louis Beacon certainly thinks so. He advocates a larger government role in job creation and cites Franklin D. Roosevelt’s “Second Bill of Rights,” or a similar economic bill of rights, as the prism through which the entire economy should be viewed.

FDR’s Second Bill of Rights includes:

The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;

The right to earn enough to provide adequate food and clothing and recreation;

The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;

The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;

The right of every family to a decent home;

The right to adequate medical care and the opportunity to achieve and enjoy good health;

The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;

The right to a good education.

The framers of the Constitution saw the need for a Bill of Rights as a means of protecting the people from an overbearing and oppressive government. They drafted a bill of negative liberties, or protections that define what the government cannot do. They gave no guarantee of housing, food, or employment because they saw the dangers that the notion of positive rights pose as a potential threat to liberty — the idea that, just by being born, people are entitled for others to provide them a comfortable life.

Because the government does not produce any wealth, even the most basic obligation to one individual must be paid for by taking from another. In order to guarantee one person a profitable job, a decent home, or adequate food, wealth must first be taken from those who have rightfully earned it, infringing on their liberty to do as they wish with their own money.

Unfortunate individuals who receive assistance do not receive those benefits because it is their inalienable right, but because it is irresponsible to let them starve or freeze in the streets. No one is entitled to anything that is not their own, no matter how basic of a necessity; however, it is the responsible duty of able individuals to help those in need through their charitable impulses.

Although the end result may be the same, in terms of the needy receiving necessary aid, there is a stark distinction between an unalienable right to something and the responsibility of an able man to care for their fellow man. The difference can be summed up in one word: liberty. The liberty of every individual to do as he pleases with his own money and resources. Although it is repulsive — and, at the very least, irresponsible — for an able individual to let those less fortunate starve, I have no right to infringe upon their liberty to do as they please with their own money.

This is by no means an argument against all government assistance. Obviously, the government cannot allow its citizens to starve or children to live on the streets, homeless. Rather, my objection is with the larger issue of entitlements justified through a notion of positive rights. When fully implemented positive rights lead to socialism, a concept that has been tried and found ineffective at growing economies, raising standards of living, or even helping the very poor. To paraphrase Margaret Thatcher, “The trouble with Socialism is that eventually you run out of other people’s money.”

Message to Missouri: Please Don’t Retaliate With Tax Incentives!

Posted on August 20, 2010May 5, 2026 by Christine Harbin

According to the Saint Louis Business Journal, the Illinois state government pledged a $2.3 million business investment package to help Boeing open a manufacturing plant at MidAmerica Airport in Mascoutah, Ill.

Additionally, the article reports that “Boeing is Missouri’s largest manufacturer.”

I worry that this fact will mean that the Missouri state government will offer retaliatory tax incentives to Boeing in order “to keep these jobs in Missouri.” Economic development is not a zero sum game, and states should hesitate to view each others’ economic growth with antagonism. Both Missouri and Illinois will be better off if they specialized and engaged in mutually-beneficial trade instead of spending taxpayer money to compete over the same activities. Government intervention in interstate trade hurts business and discourages economic growth, defeating its ostensible intended purposes.

I also want to point out that Illinois is spending $2.3 million for 75 jobs, which is an expenditure of nearly $31,000 per job. This means that the project is already in the hole by this amount, plus deadweight loss.

Furthermore, Boeing and the state government may say that these 75 jobs are new. However, even if they are created as a consequence of the subsidy, they are not really new. This is because they represent the jobs that were destroyed by the $2.3 million that was taken from the taxpayers of Illinois.

“What Is the Smallest Town in the State?”

Posted on August 20, 2010May 5, 2026 by Thomas Duda

Last Friday, I travelled to the 108th Missouri State Fair in Sedalia, for my shift at the Show-Me Institute’s booth, fully prepared to engage in conversation with Missourians about how state and local governments create barriers to the free exchange of goods and services. I expected to field some tricky questions about whether the Show-Me Institute has partisan affiliations — we have none — or about pending, unaffiliated ballot initiatives, but I did not meet a single Missourian who wanted to know about either of these matters. Instead, I got tripped up by a seven-year-old’s query, “What is the smallest town in the state?”

Had the child asked which of Missouri’s 115 counties has the highest rate of tax abatement as a percentage of total real property assessed valuation, I could have provided an answer. Had he inquired about the intricacies of state supplemental tax increment financing, I would have jumped at the chance to describe its function and effects. I certainly would have had something to say about state spending for historic preservation or the myths of downtown “revitalization” in St. Louis. But I did not know the answer to the question, “What is the smallest town in the state?”

I promised my questioner that I would get back to him after consulting the Census, so, without further ado, here is the answer to the trickiest question from Sedalia:

Goss Town, population one, in Monroe County, population 9,311, is the smallest town in the state.

If you have a question for the Show-Me Institute, please feel free to stop by our booth in Sedalia for the remainder of the fair, or place a comment on the blog.

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