Missouri’s Unemployment Compensation Problem

Posted on by Christine Harbin

The Washington Post recently published an article that describes how states’ unemployment compensation funds are running dry in the recession. When a state has more unemployment claims than it can pay, it borrows the difference from the federal government. In all, 25 states — including Missouri — have already borrowed to make their payments, $24 billion in total.

If unemployment continues to rise in the near future, then Missouri will have to borrow even more money from the federal government in order to extend benefits. According to preliminary data from the Bureau of Labor Statistics, the seasonably adjusted unemployment rate for Missouri in November 2009 is 9.5 percent, which is an increase over recent months.

What can a cash-strapped state like Missouri do? From the article:

State unemployment-compensation funds are separated from general budgets, so when there is a shortfall, only two primary solutions are typically considered — either cut the benefit or raise the payroll tax.

Talk about being between a rock and a hard place. Although I hesitate to encourage cutting benefits, I think that that raising the payroll tax would be a particularly bad idea. Raising the payroll tax would raise the cost of labor, causing employers to stop hiring and/or further shed employees. When you tax something, you get less of it, after all. The state would have to find a way to support an ever-increasing unemployment population with an ever-decreasing employment base.

I also want to point out that employers pay more in unemployment taxes in Missouri than they do in most other states. Missouri employers already have to pay 3.510 percent of payroll in state unemployment taxes. For those in the construction-related industries, the rate is 3.600 percent. (According to the article, the average tax across states is about 0.6 percent.)

Individual Health Insurance Mandate Would Violate Constitutional Liberties

Posted on by Dave Roland

 

Among the elements of the health bill currently being considered by Congress is a requirement that every adult would have to obtain health insurance coverage or face large fines. Legal scholars have been debating whether the U.S. Supreme Court would find such a requirement to be constitutional.

Why are so many Americans uninsured in the first place? It is true that, for many of us, insurance is just unaffordable. But many more voluntarily choose to forgo health insurance. Some follow religions that prohibit the use of modern medicine. Others prefer nontraditional treatments. Still others are confident enough in their propensity for health that they are willing to risk the costs of illness or injury in order to direct their money to concerns they believe to be more pressing. And there are some who, recognizing that most people pay insurance companies far more than they are ever likely to need for their own treatment costs, prefer to self-insure by creating their own health fund.

So, does the U.S. Constitution protect these citizens who might object to the health insurance mandate? Possibly. The Supreme Court has previously recognized that the Constitution protects citizens’ rights to associate with others of their choosing, to enter into contracts, to make their own decisions regarding whether or not to receive health care, and, of course, their right to privacy. The court has also recognized that a constitutional right to do something implies a complementary right not to be forced to do that same thing — the freedom of speech, for example, means that the government may not compel you to speak.

For America’s voluntarily uninsured, a congressional directive to purchase health insurance would mean not only sacrificing a huge amount of money, but also potentially their convictions, personal autonomy, and privacy — all for services they do not want, and in some cases may be prohibited from using. This sort of mandate would clearly violate some, if not all, of the constitutional rights listed above, although the Supreme Court might decide that congressional interest in passing the mandate justifies the infringement of those rights.

Certain lawmakers are trying to give Missourians an additional layer of protection. Recognizing that state constitutions are permitted to afford liberties beyond those secured under the U.S. Constitution, half of the state Senate has already agreed to cosponsor Senate Joint Resolution 25, which would amend the Missouri Constitution to specify that citizens have a right to decide for themselves whether they will participate in any health care system.

Under this amendment, government officials would also be denied the authority to prevent citizens from offering or accepting direct payment for health care services, and they would not be permitted to substantially limit the purchase or sale of health insurance in private health care systems. While it is not certain that the Supreme Court would allow state constitutional protections to override a federal statute, this effort could be a useful step toward securing those individual freedoms that ought to be the American birthright.

Dave Roland is a constitutional law expert and a policy analyst with the Show-Me Institute, a Missouri-based think tank.

 

Of Sin Taxes, Substitute Goods, and Libertarian Paternalism

Posted on by Christine Harbin

In a Reason article, “Have a Coke and a Tax: The economic case against soda taxes,” Veronique de Rugy of the Mercatus Center at George Mason University explains that selective sin taxes are ineffectual because consumers tend to substitute one bad habit with another. De Rugy explains that soda taxes will be unsuccessful at slimming American waistlines because consumers are likely to switch to beverages that are higher in calories.

The trouble is that sin taxers don’t appreciate human creativity: Consumers have a knack for replacing one sin with another. When the price of a “sinful” good increases, people often substitute an equally “bad” good in its place.

As I have blogged about previously, selective taxes on sinful goods are an application of libertarian paternalism. I’m skeptical of plans to implement “nudges” à la Sunstein and Thaler for two main reasons.

First, they assume that the government/”choice architect” actually knows what the “right” choice is for other individuals. The answer to the question “What is healthy?” is a subjective one; it depends on who you ask and when. It also depends on who holds political office and which business interests have his ear.

Second, the government/”choice architect” could restrict free choice by artificially raising the cost of “bad” choices too much. I agree with David Friedman’s deducement that nudges can all-too-easily turn into compulsions. When the government has the authority to micromanage the eating habits and desired weights of its citizens, the individual isn’t free to choose how to eat as she desires.

Instead of nudging people into eating habits that are considered to be healthy at the time, choice architects should focus their efforts on improving the quality and availability of information to consumers, who can decide for themselves.

If America were serious about reducing the caloric intake of its citizens, then officials would eliminate the subsidies that it pays to corn producers rather than instituting sin taxes, because that would be more efficacious. Then food products that are made from corn would be relatively more expensive, and the quantity demanded would decrease. It’s a different means to the same end.

American should also stop pretending that such selective taxes (such as those on fatty food, cosmetic surgery, or indoor tanning) are actually implemented in order to improve public health — their real purpose is to raise enough tax revenue to support the government’s spending habit.

An Alternative to Kindergarten Readiness Tests

Posted on by Sarah Brodsky

Samuel Meisels, the president of the Erikson Institute in Chicago, was quoted in this article about kindergarten readiness tests:

Meisels said readiness surveys are not accurate indicators of childhood success. He advocates for teachers to observe children over time, rather than a one-time evaluation.

Districts might be inclined to use a flawed assessment rather than none at all, but Meisels explains the damage a readiness test can cause:

“It changes people’s perceptions. It can change a teacher’s perception of likely success in school. It can create parental anxiety. Worst of all, it can make a small student feel stigmatized and less capable,” Meisels said. “If any one of those consequences occur, based on a poorly designed test, it’s inexcusable to me.”

Meisels’ suggestion to observe students over time is a good one, and districts like Fulton could adopt it in place of the readiness tests they use now. The districts could accept all five-year-olds and observe them in their kindergarten class for a week or two. Then, if it’s determined that some children aren’t ready to continue with kindergarten academics, the district could place them in a separate class, have them repeat a year, or make other arrangements.

This system would give children a better chance to prove themselves ready than a short assessment provides. Kindergartners can easily fail a short readiness test because they’re nervous or distracted at the time; observing them in a classroom over several days gives a better picture of how they interact with their environment. And the only downside is that a few children with below-average hand-eye coordination or counting skills would attend kindergarten with the others for a week. (Serious developmental disabilities are not diagnosed with kindergarten readiness tests, but through more involved — and medically meaningful — assessments. So, abolishing readiness screening for all need not interfere with special education services.)

Districts shouldn’t settle for faulty readiness tests when there are better alternatives.

If We All Went Swimming in the Mississippi …

Posted on by Sarah Brodsky

… would state math standards improve?

Lest you think that’s an odd question, let me assure you that it was inspired by national standards — specifically, by this sample problem from a Common Core State Standards Initiative publication:

If everyone in the world went swimming in Lake Michigan, what would happen to the water level? Would Chicago be flooded?

Ze’ev Wurman, who helped write California’s state math standards, criticizes that problem in an op-ed today. Wurman comments that the problem tests students’ knowledge of facts such as “Lake Michigan’s surface area” and “whether the water will spill over to Lake Huron before flooding Chicago” (as well as testing students’ credulity, I might add), but that only low-level math is required to solve it. Wurman writes that most of the other sample problems suffer from similar deficiencies, and that someone who mastered the standards but didn’t go beyond them would be placed in remedial math in California’s public colleges.

California doesn’t stand to gain much from national standards, because its state standards are widely acknowledged to be excellent. Other states that signed on to the Common Core State Standards Initiative, including Missouri, might be able to improve their standards slightly by adopting the recommendations. But why should any state agree to the Common Core Standards when there are better standards out there — namely, California’s?

Say It Once, Say It Twice

Posted on by Sarah Brodsky

English is the official language of the state of Missouri. One official language is bad enough, but at least we don’t have two. Ottawa is finding that multiple official languages can cause hassles after a ceremony featuring speeches in official English left out any mention of official French. The mayor apologized — the news report doesn’t say in which language.

I can think of two explanations for the fact that people didn’t speak French at the ceremony: Either it’s reverse psychology, or people just speak whatever language they want without regard for state approval.

Should Farmers Pay More Property Taxes?

Posted on by David Stokes

Last week, the State Tax Commission proposed a plan that would change the levels of taxation for Missouri farmland. Combest had a number of links to stories about this. In short, taxes on higher-quality farmland would rise, and taxes on the lower quality land would decrease. I’ll admit that I learned a lot about how farmland is valued and assessed because of this story — which is nice, because it’s my job to know stuff like that.

Let’s start by admitting that property taxes on farms and farmland in Missouri are very low. That does not mean that I think they should be higher, just that we can all admit they’re low. Under the new plan, the value of an acre of the best farmland, for tax purposes, would be $1,270. An acre of land in a nice part of St. Louis County can easily be valued at $50,000 for tax purposes — and that is the assessed value, not just the appraised value. I realize there is a big difference between someone paying taxes on those higher valuations for one or two acres, and a farmer paying them on hundreds of acres, but still it is quite a difference — especially when the farm land is making money for its owner, while the residential acre just sits there and looks pretty.

Farm buildings and equipment are also valued lower than personal property: 12 percent, compared to 33 percent. So, I pay higher taxes on my car than the farmer does on his or her tractor. Then again, my car just gets me around, while that tractor helps feed the world.

We keep farm property taxes low because high property taxes are an impediment to productivity in a resource-heavy usage like farming. Higher taxes on farms would lead directly to higher food prices for the rest of us. The people of Missouri decided a long time ago to encourage farming by levying lower taxes for it than for other land uses. I think that was a good decision then, and still a good decision now. The changes that would result from an average increase in farm taxes are not a good idea for Missouri.

Learning Math, Ready or Not

Posted on by Sarah Brodsky

My kindergarten readiness posts met with some disagreement from readers, who responded that if children can’t complete the tasks on readiness tests, then they’re not mature enough to learn in a classroom.

I’d like to ask those readers how they explain the success of Building Blocks, a federally-funded preschool curriculum based on neuroscience research. This program takes four-year-olds who, by the customary measures, aren’t ready to learn math:

In one videotaped exam, a 4-year-old boy in a FUBU jersey and long dreadlocks who entered P.S. 99 in 2006 was unable to count or match cards with 3, 5, 2, 1 and 4 on them to cards with equivalent numbers of grapes.

And it teaches them, along with addition and subtraction, math concepts like quantity and cardinality that most schools don’t introduce until students are certifiably ready kindergartners. They learn it, averaging 26 percentile points higher on math tests than their peers who didn’t participate in Building Blocks. A year later, the Building Blocks kids are still ahead by an average of 21 percentile points.

It’s always exciting when you find an intervention that works. But I’m not surprised that the four-year-olds were able to learn, with the right program. Because unlike Building Blocks, kindergarten readiness tests are not based on neuroscience. The “research” behind them consists of not-always-strong correlations between kindergartners who couldn’t tie their shoes and later academic problems. They’re like the personality tests some companies have tried giving employees, reasoning that if the last star employee answered the questions a certain way, maybe the next one will too.

Building Blocks’ creators took the right approach to teaching students who were considered unready. They didn’t wait for them to catch up on their own, which probably would have set them further behind. And they didn’t waste time developing unrelated skills to satisfy a testing requirement. Instead, they developed a curriculum that teaches math despite students’ supposed unpreparedness.

Districts like Fulton Public Schools would do well to learn from Building Blocks and stop asking, “Are the kindergartners ready to learn?” A better question is, “Are we ready to teach them?”

Don’t Judge a School by Its Building

Posted on by Sarah Brodsky

An article in the Columbia Daily Tribune explains the commotion over the Columbia Public Schools’ brand-new elementary school building. The problem with it? It looks too nice — much nicer than the districts’ other buildings. Some people say it’s inequitable for one school in the district to have handsome facilities while other school buildings need repair.

Those people would probably prefer that the district divide up expenditures, improving each building a little bit at a time. But that’s not always practical. It can be more cost-effective to build a new structure than to continually patch up an old one. And seldom (if ever) does any district have the opportunity to build new schools for all students simultaneously.

Some children in Columbia Public Schools enjoy nicer buildings than others, and some districts have more expensive auditoriums and science labs than Columbia Public Schools. However, that’s not the main cause of educational inequity. Much more important than the appearance of buildings is what children learn inside of them. A school that looks drab on the outside may have excellent teachers and a great curriculum. On the other hand, a new building is no proof that classroom materials or teaching practices have been improved.

No matter how good your building is, you’ll always be able to find a school out there that’s physically superior in some way. (For example, although the Ladue School District has many new classrooms, it recently sent out a newsletter stating that various cafeteria and library spaces fall short of Missouri School Improvement Guidelines.) The quest for perfect buildings could be unending, but it would be better to pursue perfect academics instead.

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