Page 701 – Show-Me Institute

To Market, To Market

Posted on January 7, 2010May 5, 2026 by Sarah Brodsky

I hadn’t noticed a proposal to exempt produce sold at farmers’ markets from sales taxes until I read this column in the Columbia Missourian (link via Combest). The bill in question is S.B. 658.

I’m opposed to exemptions from taxes, be they targeted tax credits or sales tax holidays, because they give the affected businesses an advantage over others. The advantage is the most unfair when the exemption is very narrow.

S.B. 658 certainly qualifies as narrow. The sales tax break would go to goods sold at farmers markets, so an apple sold in a grocery store would be subject to the tax, while the same product sold in a farmers’ market would be exempt. And it wouldn’t even apply to all farmers who sell at markets — the market would have to be a nonprofit or a cooperative.

It gets worse. The bill lists all kinds of products that would be affected, naming them in detail (“flowers,” “maple sugar,” “mushrooms,” etc.). If this bill becomes law, I predict we’ll have to revise it again and again as farmers lobby for additions to the list.

Explaining Teach for America Graduates’ Lack of Activism

Posted on January 7, 2010May 5, 2026 by Sarah Brodsky

A study has found Teach for America graduates to be less politically active than people who were accepted into the program but didn’t complete it. Several newspapers and blogs are reporting the finding as a poor reflection on Teach for America. This is from a New York Times article titled “Gauging the Dedication of Teacher Corps Grads”:

In areas like voting, charitable giving and civic engagement, graduates of the program lag behind those who were accepted but declined and those who dropped out before completing their two years, according to Doug McAdam, a sociologist at Stanford University, who conducted the study with a colleague, Cynthia Brandt.

The reasons for the lower rates of civic involvement, Professor McAdam said, include not only exhaustion and burnout, but also disillusionment with Teach for America’s approach to the issue of educational inequity, among other factors.

The study isn’t online yet, but when it is, I’d like to read how McAdam concluded that burnout and disillusionment account for the graduates’ lower rates of political activity. Were those reasons self-reported by the graduates? Or are they the researchers’ conjecture?

I can think of a few other reasons that graduates might be less likely to vote or participate in campaigns. Perhaps the people who completed the program were the most dedicated to their teaching jobs, and now that they’ve graduated, they’re equally dedicated to the jobs they currently hold. Maybe they’re so busy working that they don’t have time to dabble in the political process.

Another possibility is that their teaching experience convinced graduates that the political process is not the best way to achieve their goals. Maybe graduates remain as idealistic as when they started, but they now want to pursue their ideals through means other than politics.

As for the lower rate of charitable giving, a licensing effect could be at work. Alyssa Curran explained what a licensing effect is in her post about a study that found a connection between purchase of “green” products and a decline in altruism. Researchers don’t think subjects in that study became disillusioned with the products; rather, subjects acted as though choosing a socially-valued product gave them a license to be less generous later on. Similarly, Teach for America graduates may feel that because their service was worthwhile and important, they have already done their part for society and are free to be less charitable later.

Whatever the true reasons are, it’s odd to evaluate Teach for America based on graduates’ behavior. What matters is whether participants in the program are effective teachers. It would make more sense to research students’ test scores after they’ve been taught by a Teach for America participant than to analyze their former teachers’ levels of civic engagement.

I hope residents of St. Louis and Kansas City don’t look unfavorably on Teach for America participants in their cities because of research findings that are beside the point.

In Support of State Symbols

Posted on January 6, 2010May 5, 2026 by Christine Harbin

Legislation has been filed in Wisconsin, my home state, that would make cheese the state’s official snack.

I am sympathetic to Sarah Brodsky’s argument that the role of the state should not include handing out endorsements, and that individuals shouldn’t look to the state for approval. However, I am OK with legislation about state symbols. I feel that the more time the state spends making non-financial endorsements such as for a “state bird” or “state animal,” the less time it spends passing legislation that increases bureaucracy or infringes upon our personal liberties.

Is There Such a Thing as a “Utility Player” in Government Service?

Posted on January 6, 2010May 5, 2026 by David Stokes

I don’t know the answer, but there certainly could be. For those of you — including our intrepid editor — who have no idea what I mean by “utility player,” that is the player on a baseball team who serves as the backup for a number of positions, especially infield. They can be used in many different ways, and that is why they are valuable. (Cardinals fans will always remember Jose Oquendo in that role.) Could there be such a thing for local governments, and would it be a good thing?

I ask because of this article in today’s Kansas City Star about snow-removal efforts in Kansas City. The short answer for why snow removal is taking a long time in Kansas City is simply that there are too many roads and too little staff:

For example, Kansas City plows more than 4,200 lane-miles of main arterials and residential roads, compared with 1,800 lane-miles in Overland Park. During the last round of storms, Overland Park had 125 people involved in snow operations, compared with about 200 to 250 in Kansas City.

Staffing cuts and shortages haven’t helped. Since 1998, Kansas City’s street maintenance staff has dropped from 174 to about 110.

For the record, the reasons they give are entirely acceptable to me, and I have no reason to believe they are not all doing the best they can. Anyone who loves political history like I do knows how much local officials can be judged by these things, though. Just ask Jane Byrne.

This leads me to an open question about local government staffing. Cities and counties in Missouri could have at least a few workers who are trained in multiple fields, and can move from department to department as the needs change. Here is a possible schedule:

December–February of each year: Streets/highways, primarily as snow plow and salt truck drivers.

February–August of odd-numbered years: Assessment divisions, though not as primary assessors. (This has been done by St. Louis County in the past, although mostly just to get lots of people to physically eyeball properties that computers determined rose in value by more than 15 percent.)

Memorial Day to Labor Day every year: Parks Department, while the pools are open and the parks and golf courses are busy.

November–December every year: Revenue Department, collecting checks as everyone pays their property taxes.

Other potential opportunities include working for the Revenue Department on the delinquent tax sale day, the Police Department for parades, protests, etc., and the Health Department for emergency preparedness procedures.

I predict everyone will hate this idea. Libertarians and unions would finally agree on something. I don’t actually support it, because it would be turned into an excuse just to hire more government employees in total, but it would not be a bad thing if we could have a small number of government employees able to assist in multiple fields as seasons and needs change.

Tax Dollars and the Census

Posted on January 6, 2010May 5, 2026 by Sarah Brodsky

A Springfield News-Leader article about the Census doesn’t mention the Constitution. Nor does it characterize the Census as a medium for your life story, as the Census Bureau would like you to believe. Instead, it makes participating in the Census sound like a great opportunity to express your dependence on government.

As David Stokes pointed out in the comments to my previous post, local governments want as many people as possible to mail back their Census forms, because Census data determine the allocation of federal funds. A manager in the Springfield Census office puts it bluntly:

“We have to show that there is a need and that there are people here in the community,” she said.

Here’s another quote from her, this time referring to those who don’t participate in the Census as if they were no better than recalcitrant drug addicts:

“We’re trying to be very genuine about how we help the community, and we can’t help them unless they help themselves by cooperating.”

To this manager, civic duty and the Constitution’s directives take second place (if they factor in at all) to grubbing for cash — an effort that will succeed only if you prove that a lot of people in your area need the money. I don’t think this is going to resonate with people. I expect that more people will be enthused about submitting their autobiographies than about begging for handouts.

The “let the government help you” theme reminds me of something from a campaign in 2000. As part of his bid for lieutenant governor, Wendell Bailey ran an ad on the radio that went like this: First, the announcer said, “Seniors have problems.” Then you heard the distraught voice of a senior crying, “We need help!” The announcer came back on with the slogan, “Wendell will work.” Bailey ended up losing the election, and I don’t think the tone of his radio advertising made the campaign any easier for him. People just don’t rally around the idea that they’re helpless.

I’d prefer that officials stress the constitutional source for the Census, but if they’re not going to do that, they might do better to focus on the stories rather than the tax dollars.

More on Restricting Credit for Poor People

Posted on January 6, 2010May 5, 2026 by Christine Harbin

John Payne’s post today, “Restricting Credit for Poor People,” relates to an editorial in the Wall Street Journal from earlier this week, “Mandatory Usury in One Lesson: How Congress dictated a 79.9% interest rate.”

From the editorial:

Banks that lend money to customers with poor credit histories have to charge more to cover the extra risk. If Congress makes this impossible, banks will respond by refusing to lend to such customers, so that it will be harder for them to re-establish their creditworthiness.

Restricting poor people’s access to credit is often an unintended consequence of regulating lending. Ce qu’on ne voit pas.

Parenthetically, in the context of regulating lending, the intended consequences turn out to be very small. Ce qu’on voit. In the instance described in the WSJ editorial, the amount that a consumer would actually pay decreased only by $6. Furthermore, whether the credit card company calls it “interest rates” or “fees,” it still comes out of consumers’ pockets.

Restricting Credit for Poor People

Posted on January 6, 2010May 5, 2026 by John Payne

I’m sure that “restricting credit for poor people” is not the phrase supporters of capping interest rates on short-term loans would use to describe their proposed policy, but that is the effect it will have if enacted. State Rep. Mary Still (D-Columbia) will try again this year to limit interest rates on loans of $500 or less at 36 percent, and prevent borrowers from renewing their loans. No one is likely to argue that payday loans are an attractive option, but when a person has no other options to turn to, they still beat a loan shark.

Show-Me Institute authors have previously written a few blog entries and op-eds pointing out that, for the vast majority of borrowers, payday lending is a useful service in a tough time. As Katherine Mangu-Ward argued in an indispensable discussion of the industry in Reason magazine:

As horrifying as 400 percent annual interest sounds, it doesn’t reflect the experience of the typical borrower. No one keeps a payday loan for a year; that’s not how these things function. Payday lenders charge about $15 per $100 on a seven- or 14-day loan, plus another $20 or so in fees. They check your paperwork and then give you $100 in cash. You leave a post-dated personal check as insurance and promise to come back in two weeks with $135. If you show up empty-handed, or not at all, they cash your check. If the check bounces, the firm sends debt collectors after you—not the knee-breaking kind, but the same guys who interrupt your dinner when you miss a couple of credit card payments. If you miss your deadline to repay, the lender refuses to deal with you again. Nine out of 10 customers pay on time. […]

What happens when a rate cap is imposed statewide? Dartmouth economist Jonathan Zinman looked at the payday lending industry in Oregon, where in 2007 an effective cap of $10 per $100 borrowed was imposed along with a minimum borrowing term of 31 days. (In neighboring Washington, by contrast, the standard is $15 per $100 and there is no minimum term.) Oregon’s Consumer and Business Services Department reported 346 licensed payday lending outlets at the end of 2006, six months before the cap kicked in. Seven months after the cap took effect, that number had fallen to 105. In September 2008 it was 82. In a December 2008 working paper, Zinman concluded that former payday customers in Oregon ended up using less desirable alternatives such as overdrafts and utility shutdowns, and that “restricting access caused deterioration in the overall financial condition of the Oregon households.” In summary, “restricting access to expensive credit harms consumers.”

A February 2008 study for the Federal Reserve Bank of New York found similar results: “Compared with households in states where payday lending is permitted, households in Georgia [after a May 2004 ban on payday lending] have bounced more checks, complained more to the Federal Trade Commission about lenders and debt collectors, and filed for Chapter 7 bankruptcy protection at a higher rate,” wrote Federal Reserve research economists Donald P. Morgan and Michael R. Strain. In North Carolina, where payday loans were banned in December 2005, “households have fared about the same. This negative correlation—reduced payday credit supply, increased credit problems contradicts the debt trap critique of payday lending, but is consistent with the hypothesis that payday credit is preferable to substitutes such as the bounced-check ‘protection’ sold by credit unions and banks or loans from pawnshops.”

Two weeks before I got my loan, new restrictions took effect in Virginia, including a rate cap of 36 percent. As predicted, payday lending chains are now fleeing the commonwealth. Check ’n Go stopped originating loans in Virginia and will soon close its 68 storefronts and fire its 100 employees. The State Corporation Commission counted 630 payday lending stores in April, down from 786 in December.

As well intentioned as I’m sure Still is, Virginia’s experience shows that a 36-percent ceiling on interest rates will force lenders to shut down and consumers to turn to even costlier alternatives.

There Once Was a Dog From Newfoundland …

Posted on January 6, 2010May 5, 2026 by Sarah Brodsky

I believe there’s a connection between the state poet laureate and official state symbols — and someone else agrees! Writing in the Suburban Journals, Charles Mosley remarks that the governor honors animals and plants by designating them as official symbols, and that he likewise honors poets by conferring the title of poet laureate on them.

Mosley writes that these honors do less damage than other actions that elected officials could take. I agree that symbols and laureates don’t mess up the economy like some policies do, but the attitude they engender can still be harmful. We shouldn’t look to the state for approval of our accomplishments and opinions, nor should we ask the state to validate our favorite natural phenomena. If we give too much credence to state recognition, we may allow honor-seeking to distract us from more productive endeavors.

I recommend reading Mosley’s essay in full, especially his poem about sneezing. Even if it doesn’t inspire you to sympathy with ragweed sufferers, you’ll certainly come away with a greater sense of reverence for the English language.

“Missouri First”: Tax Credits Go From Bad to Worse

Posted on January 5, 2010May 5, 2026 by Sarah Brodsky

As Christine Harbin has convincingly argued, targeted tax incentives for businesses are a poor use of resources. When the state gives a tax credit to a particular company or industry, that recipient gains at the expense of everyone else.

Now here’s a worse idea: Fiddling with tax credit programs so that a larger percentage of available credits goes to companies that were located in Missouri to begin with (as opposed to out-of-state businesses that came here to get the tax break). If all companies in an industry have a chance at getting a tax credit, it’s possible that the most productive one will win it. It would still be a wasteful use of tax dollars, but the waste would at least be kept to a minimum. If, however, the tax credit program is rigged so that it favors preexisting Missouri companies, the state ends up picking a winner once, in singling out an industry for the subsidy, and then it makes yet another arbitrary choice based on location rather than merit. That compounds the inefficiency.

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