Spending and Jobs

Posted on by Sarah Brodsky

Following Tuesday’s commentary on a Tax Foundation report, MO Rage has written another post that has me scratching my head. This one’s about government spending, and it contains the following statement:

I totally agree that we need to reduce spending but, frankly, not on jobs.

All government spending translates into a job for somebody. Even when it’s as simple as sending checks directly to citizens, government spending keeps people employed producing the envelopes and printing the checks.

So cutting government spending puts people out of work — there’s no way around it. The good news is that governments that spend less can tax less, leaving more wealth available for job creation in the private sector.

It’s something to keep in mind when state agencies try to ward off spending cuts, as they did earlier this week.

This Is Spending On Rail That I Can Support

Posted on by David Stokes

The Kansas City Star is reporting on the opening of a new sidetrack along Missouri’s Amtrak route connecting St. Louis and Kansas City. This expenditure of $8 million will have immediate, quantifiable benefits for transportation in Missouri. It isn’t some pipe dream of spending enormous sums of money in the hope that a small number of people will ride more rail or transit. Rather, it is an engineering-based improvement that will begin improving our rail service right away. I cited this as an example of well-directed resources in my testimony two month ago before the Joint Transportation Oversight Commission.

Needless to day, this improvement is a far better use of tax money than some dream of high-speed rail that will get someone from Kansas City to Chicago in 7 hours at best, when they can fly there for the same price in 1 hour and 20 minutes.

Illinois’ Cup Runneth Over … to Missouri

Posted on by Caitlin Hartsell

When are Pigovian taxes a win? When they happen in a border state!

I wrote back in September about how Illinois’ newly increased liquor tax would be a boon for Missouri stores. The Suburban Journals confirms my prediction:

Missouri tax revenue from wine and spirits has skyrocketed after Illinois lawmakers raised the state’s liquor taxes in September.

September’s increase over August: 41 percent

October’s increase over September 8: 6.5 percent

Not everyone can escape this tax when they want to purchase alcohol, but those who can will drive the extra few miles for cheaper liquor.

Proponents of the higher tax intended for it to fund infrastructure projects in Illinois, but Illinois lawmakers should have also taken into account that some marginal number of people would find other methods to procure their alcohol. At any rate, their state’s tax increase results in additional tax revenue for Missouri, because the state now captures many Illinois residents’ liquor, gas, and cigarette dollars, and whatever other purchases those Illinoisans make during their trips across the border.

(Thanks to MissouriLP for pointing me to this article.)

Keep on Pushing That Boulder, Sisyphus

Posted on by John Payne

Before I get into the meat of this post, I should introduce myself because I am the new guy around here. My name is John Payne, and I am the Show-Me Institute’s newest research assistant. I graduated from Washington University in 2005 with a B.A. in history and then moved just down the road to attend Webster University for my teacher certification. I taught social studies for a year at East Carter County High School before I decided it was not for me, and left to pursue a career in writing, which brings us right up to the present.

My first Show-Me Daily post, appropriately enough, deals with my hometown, Poplar Bluff, and its never-ending quest to banish that devil methamphetamine. From Poplar Bluff’s Daily American Republic:

A request by police chief Danny Whiteley to adopt an ordinance requiring the sale of products containing pseudoephedrine by prescription only was moved by the Poplar Bluff City Council to its Dec. 21 voting session.

Whiteley told council members Monday night the proposed ordinance is based on one enacted July 6 in Washington, Mo.

“This will give our city another tool to fight the ongoing battle against methamphetamine in Poplar Bluff and Butler County. We are all aware of the destructive nature it has on society, families and our children,” Whiteley said. “Adopting this ordinance would be a significant step in thwarting the individuals who manufacture methamphetamine in our area.”

Back in October, my co-blogger Chaya Kristen Chopra pointed out that a similar ban in Union, Mo., would force people with nasal problems to seek out expensive prescriptions for what is for most people a very common problem. I would add that given the expense — both in time and money — of a doctor’s visit, most people would simply be inclined to drive to a neighboring town to purchase pseudoephedrine. Obviously, this will create a huge inconvenience for anyone suffering from a routine cold.

But, more to the point, the ban will not succeed in its goal of reducing methamphetamine use. If someone wants to cook meth badly enough, they will also drive to the next town (and the next, and the next) to purchase enough pseudoephedrine to cook their batch. But suppose the law were extended to cover all of Missouri, or even the country. Would that stop people from getting meth? It seems unlikely. There are no coca or poppy fields in this country, yet the supplies of cocaine and heroin never seem to disappear. The more likely scenario would be for production to get pushed into Mexico, where methamphetamine could be mass produced. In fact, that is what has already happened, to a large degree.

Where there is demand, there will be a supply. Poplar Bluff’s efforts to control methamphetamine are Sisyphean, and have been ever since I can remember. The police department constantly claims victory is around the corner, but they seem no closer to eradicating it than when I was in high school and people did lines in the back of shop class. All this law will succeed in doing is making one of the most common and effective forms of health care available, pesudoephedrine, vastly more expensive for honest citizens.

Changing the School Lunch Menu

Posted on by Sarah Brodsky

The University of Missouri Extension isn’t alone in promoting food ideologies to students. This article about school food in Southampton, N.Y., describes how teachers there urge students to lobby for different cafeteria food:

“What do I keep telling you guys you have to be?” she asked her class.

“The Generation of Change!” they responded.

Besides alluding to a presidential campaign, the exchange belies the familiar assertion that students are clamoring for local food without any prompting by adults.

Alongside the praise of local food, the article reports on a valuable perspective that receives too little attention in the school lunch debates. It’s from a district administrator, who explains that nutritious food doesn’t have to be local. This is what I’ve been saying all along:

Even if the food is not coming from a local farm, Ms. Kiembock said that she works hard to bring healthy food to students through other means. For instance, she said that she does not allow fried foods in the cafeterias, uses either brown rice or a mixture between brown and white rices, and encourages her staff to use as much produce in its recipes as possible.

It’s the best answer I can think of to this editorial about the University of Missouri Extension, which claims that “having locally produced food in public schools would make a lot of folks happier and a lot of kids healthier.” You may think local food is nutritious, but if you want public schools to give it precedence over food from other sources, you need to show that it confers benefits that similar foods from other places can’t.

Local food advocates like to point out that homegrown vegetables are healthier than imported junk food; however, that’s isn’t the relevant comparison. We should ask: Is whole wheat or brown rice from our state healthier than the same grains from far away? Advocates haven’t made that case.

Pharmaceuticals Won’t Speak for Themselves

Posted on by Sarah Brodsky

Prescription drugs: They come in little white bottles. They take the shape of tablets, gels, or liquids. And they can’t talk.

That last fact usually goes without saying. No one would expect medications to speak, right? Actually, proposed regulations seem to anticipate just that. If drug companies couldn’t advertise in the first three years after a drug’s approval, doctors and patients wouldn’t find out about them unless they somehow promoted themselves.

It’s hard to imagine a situation in which doctors don’t know about medical advances and patients don’t benefit from the latest drugs. But that’s because drug companies do a fantastic job of getting the word out. Prohibit companies from mentioning new drugs, and fewer people will know about them.

Tax Foundation Report on Nonpayers

Posted on by Sarah Brodsky

MO Rage completely misunderstands this Tax Foundation report (link via Kansas City Prime Buzz). The report notes the rising percentage of tax filers who don’t owe any income tax, then states (emphasis mine):

A record had been set every year since 2002, as tax cuts throughout the Bush years, especially the refundable child tax credit, pushed low-to-middle income people off the tax rolls.

Here’s MO Rage’s reaction:

Shouldn’t we ALL pay at least something on our taxes, so we can keep our infrastructure and schools–everything–running?
[…]
But no, we let corporations and wealthy people, mostly, pay for tax breaks–mostly by buying their Senators–and then jockeying up the books.

MO Rage suggests we institute a minimum tax that everyone has to pay.

I don’t know how you can read a report about fewer low- to middle-income people paying taxes and conclude that the wealthy are to blame. And I wouldn’t support a tax that everyone — including homeless people earning $500 a year — has to pay. A code that doesn’t tax some people or that gives them a credit can be more efficient than other anti-poverty policies, as this op-ed about minimum wage laws explains.

Peer Effects for Teachers

Posted on by Abhi Sivasailam

In a very recent paper, “Teaching Students and Teaching Each Other: The Importance of Peer Learning for Teachers,” authors C. Kirabo Jackson and Elias Bruegmann present a case for peer effects in teacher quality. From the abstract:

Using longitudinal elementary school teacher and student data, we document that students have larger test score gains when their teachers experience improvements in the observable characteristics of their colleagues. Using within-school and within-teacher variation, we further show that a teacher’s students have larger achievement gains in math and reading when she has more effective colleagues (based on estimated value-added from an out-of-sample pre-period). Spillovers are strongest for less-experienced teachers and persist over time, and historical peer quality explains away about twenty percent of the own-teacher effect, results that suggest peer learning.

The findings appeal to our intuitions about the labor market. In manual labor, when high-capacity workers develop new methods to make production more efficient, these “technologies” are soon replicated by the rest of the labor cohort to maximize efficiency. In education, the interaction between teachers allows the “technologies” of teachers with particularly effective techniques to diffuse to lower-quality teachers.

Peer effects have long been studied at the student level: Students appear to benefit from greater heterogeneity of skills in their cohort. For those of us interested in the economics of education, this novel research on peer effects for educators is exciting news. Usually, schools seeking to improve student performance at the margin will employ a cost-based approach that can include: reducing classroom size, increasing teacher pay, or increasing per-student spending and resources. This research provides the basis for a simple qualitative adjustment: school administrators should use the evidence to more carefully match teachers to their positions in order to exploit the full benefits of the heterogeneity of teacher quality.

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