One District’s Competition Is Another District’s Poaching

Posted on by Sarah Brodsky

A member of a school board in Madison, Wis., has noticed that it pays for districts to set up online schools. The board member deplores the fact that these schools enroll students from outside districts (an act he refers to as “poaching”):

The legislature has created a system that sets up very strong incentives for a school district to contract with some corporate on-line operation, open up a virtual charter school, and set about trying to poach other districts’ students.

He then compares the ACT scores of his district’s students with the scores of an online school’s students. Fewer of the online school’s students took the ACT, and the average score of those who did was about one point lower than the district’s average.

The board member’s use of the word “poach” brings to mind hunters entering a forest illegally and shooting deer. That can’t be what he means, so lets look at the second definition. According to Dictionary.com, “poaching” can also mean “any encroachment on another’s property, rights, ideas, or the like.” Unless the board member has his own definition of the word, it seems that he views students as his district’s property and thinks other schools need permission to educate them anywhere else.

I’m sure the students who attend online schools don’t see themselves as being poached. They know they don’t belong to any school district. Taking online courses is their decision. And while the board member won’t acknowledge that online schools give students a choice, if it weren’t true, there would be no point in comparing test scores as he does in his essay. Telling people that your district has better scores than a competitor makes sense only if students can act on that knowledge and choose for themselves.

The complaints about poaching make the district look defensive and vulnerable. Districts that are doing well don’t panic when someone else offers online education. St. Louis County districts aren’t accusing SLPS of foul play because it enrolls a few of their students in its Virtual School. It would be silly for the districts to get upset when the vast majority of families prefer their brick-and-mortar schools to the SLPS Virtual School.

The board member’s emotional response may indicate that his district is threatened by the online option. Instead of pointing fingers, the Madison Metropolitan School District should consider opening an online school of its own.

Two Subsidies Don’t Make a Free Market

Posted on by Sarah Brodsky

The billions of dollars that the federal government doles out in agricultural subsidies each year — most of which go to a few large corporations, influential politicians, and wealthy landowners — do a lot of damage to the economy. The subsidies insulate businesses from the market forces that would, if left unfettered, force them to innovate and improve. They encourage overproduction and irresponsible farming practices: As farmers try to increase their yields in reaction to artificially high crop prices, they expand their farms into less-fertile land that must be blasted with chemicals if it’s to grow anything at all. And the subsidies make it harder for small farmers to enter the market and compete against the corporations that are propped up by price supports and shielded from risk.

Agricultural subsidies are harmful, no doubt about it. But is there a way to mitigate them? Activists say yes. They contend that new laws would counter the subsidies’ damage. To open the agricultural sector to competition, activists suggest — among other ideas — enacting preferential food policies that require school districts to purchase a set percentage of their cafeteria food from local sources. This, it is argued, would take power away from the corporations and undo some of the subsidies’ bad effects.

As much as I oppose subsidizing corporate agriculture, I can’t support the local food mandates. Ordering schools to buy local food is a poor antidote to corporate subsidies, for these reasons:

  • There’s nothing to stop corporations from farming near school districts and touting their produce as “local.” Remember, a farm doesn’t have to be small or unsubsidized to count as local; it only has to be nearby. Just as agricultural corporations have stepped up to claim a large share of direct payments and other kinds of farm aid, they’ll also be eager to sell local food — at a premium, because districts won’t have the option to walk away from the sale and buy from businesses located farther away instead.

  • Preferential treatment for local farmers could cause as much environmental damage as traditional subsidies. It would lure farmers to grow food near school districts, whether or not the land is suitable for crops. A district’s closest farmer might not always be the most responsible with pesticides and fertilizers. Even if you look around and see that your local farmers are environmentally conscious today, the situation might change when new businesses move in to be near a school district and have a guaranteed customer.

  • Local food mandates place an unfair burden on school districts. District administrators didn’t engineer the mess in the agricultural sector, and fixing it shouldn’t be their job, either. They should be free to focus on their main goal — educating children. Let’s not take money that could go toward teachers’ salaries or building repairs and instead use it to pay a higher price for local food, when healthy food is available at a lesser expense from somewhere else.

Local food mandates, by guaranteeing customers for some farmers through public school policy, are themselves a form of subsidy. Neither the market nor the environment will be well served by adding yet another subsidy to the already over-subsidized farming sector. The real solution is to end government aid for agriculture. When farmers are free to compete on their own merits rather than on their political influence, we may see the market change in favor of farmers who were previously overlooked — including, possibly, farmers near your home or school.

The Jobs Fallacy

Posted on by John Payne

A number of people turned out in Columbia on Monday morning to call on Congress to pass a clean energy bill, which the activists claimed would create 36,000 jobs in Missouri. That sounds nice enough, but it would actually be a bad thing. Jobs are not goods; they are what people do to pay for goods. If people want work to do, they can come over to my apartment, and I can have them clean the place, cook meals, and start running errands for me. I’m not actually willing to pay more than, say, $5 an hour for those services, but it would be a job.

What these activists are saying is that with a clean energy bill, we will get the same amount of energy, but it will take 36,000 more workers to create it, which means much higher energy costs. An economy is more efficient when it employs fewer resources (e.g., energy, labor, and steel) to make the same amount of a good or service, but the economic argument these activists are trying to advance is that we can get rich by doing less with more.

There are environmental arguments for supporting clean energy, and some of those may have merit. If you want to advance those arguments, there is a productive discussion to be had, but this jobs argument is completely specious and should be buried once and for all.

Gridlock and the History of Light Rail in Saint Louis

Posted on by Christine Harbin

I’m currently reading Gridlock: Why We’re Stuck in Traffic and What to Do About It by Randal O’Toole, the Antiplanner. Although the book discusses the problems in America’s transportation system in general, certain parts of it are specific to light rail in Saint Louis and the debate surrounding the proposed MetroLink expansion. I’d like to share some passages from Gridlock that communicate why expanding MetroLink is unnecessary and cost-inefficient.

First, O’Toole provides evidence that expanding MetroLink hasn’t historically increased ridership in Saint Louis:

When St. Louis opened its first light-rail line in 1993, it was hailed as a great success because system ridership, which had shrunk by nearly 40 percent in the previous decade, started growing again. But when St. Louis opened a second line in 2001, doubling the length of the rail system, rail ridership remained flat and bus ridership declined. By 2007, total system ridership was no greater than it had been in 1998.

Second, O’Toole describes how Saint Louis experienced a reduction in energy efficiency after launching a light-rail line. He explains that this is because the city ultimately uses more fuel on buses that carry smaller average loads than it did before building the line.

For example, in 1991, before Saint Louis built its first light-rail line, St. Louis buses averaged for than 10 riders and consumed 4,600 BTUs per passenger mile. In 1995, after opening the light-rail line, average bus loads declined to less than 7 and energy consumption by bus and light rail together increased to 5,300 BTUs per passenger mile. CO2 emissions also climbed, from 0.75 pounds to 0.88 pounds per passenger mile.

Third, MetroLink’s revenues add up to less than its expenses, and an expansion would exacerbate this deficit:

The transportation plan for St. Louis […] notes that the transit agency’s projected revenues could not even cover its operating costs, much less the cost of light-rail expansion. The plan adds that county voters rejected a tax increase needed to support transit operations and that, even with that tax, the agency’s revenues would be insufficient to support the proposed expansions.

O’Toole has written several pieces on the subject of high-speed rail for the Show-Me Institute. His most recent study for the Show-Me Institute, “Why Missouri Taxpayers Should Not Build High-Speed Rail,” was published in September.

Adding New MetroLink Lines Too Costly, Inefficient

Posted on by John Payne

It is odd to hear serious discussion of expanding MetroLink when the Metro system faces a $50 million shortfall and has been forced to cut back on existing services. Nevertheless, Metro is pressing ahead with a plan to expand services dramatically in the long term, including new light rail lines that would span Saint Louis city from north to south and reach all the way to Interstate 270 at four different points. Although the expansions would no doubt benefit some commuters, they would also prove exorbitantly expensive and likely attract few new riders. Rather than planning fanciful new light rail lines, Metro should implement more fiscally sound solutions to the area’s mass transit woes, such as expanded and improved bus service.

When Metro began planning the Cross-County MetroLink Extension in November 2001, it projected the cost at $550 million, with $43 million included for contingencies. However, according to a state auditor’s report in 2008, by that point the expansion had already cost $676.8 million, with total expenses expected to reach as high as $686 million. Although some of these extra costs were unique to the project — such as the extraordinary expense of building rail lines underground near Washington University — government projects are incessantly dogged by these kinds of unexpected expenses. It would be nearly miraculous if such a large undertaking as the proposed expansion were completed on budget.

Furthermore, the expanded lines will likely have lower rates of ridership than those serving the central city. In his groundbreaking 2005 book Sprawl, the historian Robert Bruegmann estimated that in order for public transportation to be used extensively, a city needs a population density of at least 10,000 people per square mile. Saint Louis city is well below that mark, with fewer than 6,000 people per square mile, but at least at this density, the MetroLink can operate at a manageable loss. Saint Louis County is barely a third as dense as Saint Louis city, at 1,950 people per square mile. With ridership levels roughly correlating with population density, we can expect to see far fewer passengers on the new lines than those serving the central city. This will force down the percentage of Metro’s operating expenses paid through fares, which already stands at a dismally low 25 percent, according to the auditor’s report, and will increase the system’s dependence on tax dollars.

In the heyday of urban Saint Louis in the 1920s through the early 1950s, the city boasted an impressive network of streetcars that ran all the way from downtown to Clayton and Washington University. The city was still very densely packed — almost 13,000 people per square mile at its height — so the streetcars provided an efficient means of getting around, and the system even turned a profit most years. However, as every level of government called for the construction of an increasing number of parkways and highways, the population of the city spread into the suburbs, and private automobiles and buses replaced the streetcar. It might be possible to make convincing counterfactual arguments that the political and business leaders of the past should have pursued a more balanced approach to transportation, instead of one that focused almost entirely on automobiles. Regardless of the virtue of those decisions, however, we must now live with the city and infrastructure that they left us, and no matter how much money is poured into new light rail lines, the population densities necessary to support them are not coming back.

The question then becomes: What is the best method of serving the transportation needs of area residents, given area dynamics as they already exist? Light rail suffers from high construction and maintenance expenses without the flexibility of automobiles or buses. Light rail is well-suited as a method of transport for traveling to large attractions such as Busch Stadium and the airport, but it will never be able to serve efficiently the multitude of smaller locations found throughout such a sprawling metropolitan area as Saint Louis. We would obtain a much greater benefit at a significantly lower cost if we instead focused our public transportation dollars on new, higher-speed bus lines, which are cheaper and far more adaptable than light rail. Although the expansion of light rail into every reach of suburbia may promise an end to traffic congestion and the revitalization of the city, it will ultimately entail spending huge amounts of money in order to transport far fewer additional passengers than are served by the lines already in existence.

John Payne is a research assistant at the Show-Me Institute, a Missouri-based think tank.

 

NorthSide Trial on Tuesday

Posted on by Audrey Spalding
NorthSide Map
Click to Enlarge
Interactive NorthSide Map
Interactive NorthSide Map

Another round of challenges to the $8.1 billion development of the city of Saint Louis’ north side will be heard in court tomorrow.

If you’re about to skip reading this post because the word “development” seems boring, hold on a moment. The project, put forward by developer Paul McKee, is contentious because it’s enormous — about two square miles — and because it has been approved for a large amount of public financing. McKee has asked for about $380 million in city tax increment financing (TIF), received approval for more than half, and will likely receive the rest in a few years. In late December, the state granted the development company, NorthSide Regeneration LLC, more than $19 million in tax credits (which can be used dollar-for-dollar to pay off taxes). Interestingly, the Department of Economic Development did not issue a press release, which it generally does when it issues tax credits.

One of the issues that will likely be raised at trial tomorrow is whether NorthSide unfairly characterized the area as being blighted. In its TIF application, NorthSide submitted a blighting study that systematically categorized more than 4,600 properties within the redevelopment boundary as being blighted. Along with its classification of properties as blighted for being dilapidated, unsafe, or unsanitary, the company also included blighting factors for properties with excessive vegetation, properties that had neither increased or declined in assessed value between 2003 and 2005, and properties with an increase in assessed value that totaled less than the city average from 2003 to 2008.

Another issue that could be raised at trial is that of eminent domain. McKee, along with the city aldermen who backed the project and pretty much every other public proponent of the project, have sworn repeatedly that eminent domain will not be used on owner-occupied property. What that means for the fate of non-owner-occupied properties within the boundary is less than clear.

Publicly available court documents also reveal some interesting details:

  • NorthSide is curious about how the plaintiffs’ court costs are being financed, and requested that Sheryl Nelson and Elke McIntosh (two of the plaintiffs) reveal how they’re paying for litigation. Judge Robert Dierker did not grant the request.

  • Both sides have taken deposition from Michele Boldrin, an economics professor at Washington University.

  • NorthSide submitted a letter of interest from the Bank of Washington (in Missouri) as evidence of financial backing of the development. However, NorthSide has not submitted evidence of a contract with the bank, which has less than $800 million in total assets.

  • According to NorthSide’s application for state tax credits, the company has spent about $25 million to purchase property in the redevelopment area.

The trial will start at 11 a.m. in Division 18 of the city’s Circuit Court. Judge Dierker, who quoted economist F.A. Hayek when rejecting the plaintiff’s request for a preliminary injunction, will hear the case. You can read that ruling here.

Ridiculous Licensing Proposal in St. Louis

Posted on by David Stokes

You knew this was going to happen sooner or later. Ten years ago, when HVAC contractors in St. Louis County succeeded in significantly increasing the licensing requirements for HVAC work in a way that would benefit union firms and workers, they focused on the commercial aspect of the work and left out the residential work. The naked power grab for commercial work was enough for them in 2000, and the political price they paid prevented them from reaching for any more, until now.

If you are not familiar with the story of how the pipefitters union and their allied contractors tried to knock non-union contractors out of the HVAC business 10 years ago, then you just have to read this awesome Riverfront Times story about the pipefitters plan. To paraphrase Berkely Breathed’s comment about how Caspar Weinberger’s poetic request to him provided a template for how to “get something from someone who is not inclined to give it to you,” if you are interested in knowing the real reasons that occupational licensing laws are passed, “all you need to know is here.”

Needless to say, the proposal for new restrictions on HVAC contractors is a sick twist on capitalism. It is just a joke to hear that the supporters of licensing requirements for residential work are once again promoting their arguments as increasing “safety.” As my friend, “D” (I’ll err on the side of caution and not use his name — he can claim credit in the comment section if he so chooses), who sent me the link to the Post-Dispatch article, said:

Isn’t the more likely story that the bad economy has created a greater incentive for established contractors to try to protect their territory by establishing barriers to entry?

My friend has hit the true story on the head. It would be shameful if this were passed by the various local governments to which the proposal is being brought. I hope to be a part of the fight against it.

The Will of the People, Revisited

Posted on by Dave Roland

Today, I’m going to Jefferson City to testify on bills related to the initiative and referendum powers that the Missouri Constitution secures to this state’s citizens.  One of the points that I hope to make plain is related to an article that ran last week on the Kansas City Star‘s Prime Buzz blog, which quoted the president of the Greater Kansas City AFL-CIO as saying that the organization would work to prevent citizens from being able to vote on whether Kansas City or St. Louis should replace their earnings taxes, claiming, “This is not the will of the citizens.”

The irony, of course, is that nothing demonstrates “the will of the citizens” more than, say, letting them vote for themselves!

This is yet another example of a problem I have noted several times before: Powerful interests can (and do) game the system to prevent Missouri citizens from voting on issues of great importance. The most prominent example is the way that the Missouri Municipal League has for years been engaging in litigation strategically calculated to keep eminent domain reform off of the ballot. The most damning element, in my mind, is that at least in the case of the Missouri Municipal League, the opponents acknowledge the virtual certainty that eminent domain reform would be approved if the citizens were allowed to vote on it.

If an organization or some other group of citizens is concerned about the wisdom of any given ballot initiative, they are well within their rights to communicate their concerns to voters and to try to persuade Missourians not to approve the proposition. But to manipulate the system in such a way that citizens are denied the opportunity to adopt what they believe to be valuable changes to their laws is reprehensible.

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