The Michigan House passed a bill that would exempt babysitters like the woman who watched neighbors’ kids at a bus stop from daycare regulations. If the bill becomes law, Michigan won’t require you to get a license just to look out a window at some kids for 20 minutes. This is why I always say to take laws at face value and not to assume the government will allow for reasonable exceptions in practice — because it won’t. (Hat tip: John LaPlante.)
Next Week’s Election Issues
Voters in Saint Louis County and Jackson County have some tax and smoking proposals on the ballot Tuesday. Most of the Show-Me Institute staff will be at a conference next week, so I’m posting some thoughts on the issues now. For the Jackson County voters, you get to choose whether to renew a sales tax focused on fighting drugs / crime / bad stuff everywhere. I highly recommend this column on the COMBAT tax by Patrick Tuohey for the details about the proposal.
The proposed smoking ban is on the ballot in Saint Louis County. Also, given that the city appears poised to do whatever the county does on this issue, the vote will in some ways determine whether there will be a smoking ban in the city, too. I recommend this testimony by Show-Me Institute policy analyst Dave Roland about the smoking ban issue.
Finally, there is a Saint Louis County sales tax increase on the ballot that is supposed to fund improvements to the county’s emergency communications equipment. I wish the proposal had a sunset date, like the above-mentioned COMBAT tax in Kansas City, but I’ll probably still vote in favor of it. I’ll probably also vote in favor of the smoking ban, which will definitely put me in the minority here at the Show-Me Institute.
Finally, it is disturbing — but not surprising — to see all the tiny villages in St. Louis County trying to pass new business taxes through the ballot. The village of Uplands Park has 460 people, and the entire village is about the size of a golf tournament check. Who do they think will pay the 8-percent franchise tax on telephones? This would just dramatically raise the phone bill of every person in the city. I hope the voters realize that.
Amtrak And Tax Dollars
The headline for this AP article on rail subsidies says it all. Shockingly, a government agency has overstated its efficiency and understated its subsidies. This report covered by the article documents the enormous subsidies required to operate Amtrak. It is notable that the totals used in this new study come very close to the totals used by Randal O’Toole in his work for us on high-speed rail. Compare this excerpt from the AP article (emphasis added):
The Northeast corridor has the highest passenger volume of any Amtrak route, greatly enhancing efficiency. The corridor’s high-speed Acela Express made a profit of about $41 per passenger. The more heavily utilized Northeast Regional lost almost $5 per passenger.
With this excerpt from Randal’s paper:
If trains in the most heavily populated corridor in the United States cannot cover their costs, no other trains will come close.
According to the bipartisan Amtrak Reform Council, Amtrak’s trains between Boston and Washington lost nearly $2.30 per passenger in 2001.
They are almost certainly considering different years, so the fact that the estimates are so close is good evidence for the accuracy of O’Toole’s work (not that more evidence was needed). The study claims (and I’ll accept the claim as true) that the northeast high-speed rail system makes money. Before anyone jumps to the conclusion offered in the article:
Rail planners may decide that spending the funds on high-speed rail makes more sense than slower intercity rail, which the Amtrak numbers show need higher subsidies.
You must read the history of high-speed rail in Japan, which O’Toole thoroughly documents in his paper on high-speed rail for the Show-Me Institute. In Japan, the first high-speed rail system was successful because it connected three cities in one of the most densely populated parts of the world. However, for reasons of politics and more, Japan started building high-speed rail all over the place. None of the other routes were anywhere near as successful as the Tokyo–Osaka–Nagoya route, and the national railroad eventually went into serious financial difficulties. The moral of the story is that just because high-speed rail might work in by far the most densely populated part of the United States does not mean it will work elsewhere.
Hat tip to the Beacon for the original link.
If George Soros Pays Me Enough, I Will Stop Working (Hint, Hint)
George Soros believes that the free market is “a dogma whose time has passed,” and according to an article in the Financial Times, he has devised a plan of action for eradicating free market think tanks like the Show-Me Institute.
First, he will throw money at the problem: $50 million over five years. (He made that money as a hedge fund manager in a capitalist society, by the way.)
Second, he will use that money to buy conflate economists who agree with him:
[Soros’ new] group, to be called the Institute of New Economic Thinking, will gather luminaries in the field of economics to reflect on the ideas that allowed the latest economic crisis to transpire and to bring new ideas to a profession that some argue has become too deeply entrenched in free-market ideology.
Third, he will rely on market mechanisms when they are convenient to his cause:
He hopes, however, to inspire a groundswell of support from students that will “shift demand” at universities to include economic ideas that are more reality based and less focused on rigid mathematical models.
I think that Soros needs to restructure his incentives. If he really wanted to eliminate free-market think tanks, he should pay them to stop working. If Soros stopped by the Show-Me Institute and offered me, say, $5 million to walk away from my cubicle, I would take the money and run. I love my job, but I am a self-interested individual, just like everybody else.
Are Duomoms as Bad as Octomoms?
A debate on the New York Times website examines the question of regulating twins. Just as many people called for restrictions on in vitro fertilization after Nadya Suleman gave birth to octuplets, some medical experts are outraged by the far more commonplace occurrence of twin births — and they’d like the government to intervene.
The first panelist, Mark I. Evans, correctly points out that twin births have a larger effect on the health care system than do newsworthy events like the birth of octuplets. Twins are more likely to be born prematurely and to experience other complications. Although Evans stops short of recommending policy changes, some of the other panelists suggest regulation to prevent twin births.
I don’t think public opinion sides with the experts who consider any case of twin gestation to involve unacceptable risk. Nor do most casual observers decry Suleman’s actions based on a comparison of the cost of the octuplets’ birth with other burdens on the health care system. Instead, the objection to Suleman seems to arise from rule utilitarianism — the idea that bearing octuplets is morally wrong because it would be disastrous if everyone did so.
Proponents of regulation admit that bans on twins won’t be enacted any time soon. Robert Stillman, another panelist, blames America’s respect for freedom, which he sees as an oddity. I’m amused by the attitude that there’s single-payer health care, and then there’s everything else (emphasis mine):
In our non-single payer health care system and in our national cultural context (with its paramount legacy of individual rights over those of the state), patient autonomy will almost always prevail.
Do Teacher Unions Matter?
A 2009 study in the October issue of the Journal of Labor Economics finds that teacher unions have no effect on teacher pay.
Shocking! As the author, Michael Lovenheim of Stanford University, notes, these results aren’t expected. Unions negotiate for better work conditions and salary increases, so it’s a general assumption that school district unionization would increase teacher pay. Previous studies have shown unionization to increase teacher pay by as much as 12 percent. A paper by Caroline Hoxby, seen here at the Show-Me Institute talking about the effects of collective bargaining, found that majority teacher union membership results in a 5-percent pay boost for teachers (study available here).
Looking at the source of Lovenheim’s data, I wonder whether his findings are attributable to a lack of available details. He calculated monthly teacher pay by dividing a district’s monthly full-time instructional payroll by the number of full-time instructional staff. That pool includes not only teachers, he writes in the study’s appendix, but also educational support staff, school-level administrators, principals, and guidance counselors.
The things I saw while attending teacher-administration contract negotiations at the Lindbergh School District in Saint Louis lead me to believe that educational support staff, school-level administrators, principals, and guidance counselors don’t necessarily benefit from teacher union negotiations, even if the union purports to represent them. In fact, in the Lindbergh case, they lost out slightly. (Administrators and the teacher union ended up agreeing that counselors and librarians should contribute to the “substitute pool” when absent from school, even though substitutes aren’t hired when either counselors or librarians are absent.)
The average pay Lovenheim calculated could be obscuring teacher gains because of the varying salary trends among non-teacher staff. For an example of this in action, see the Miami-Dade School District. After 16 months of negotiations, the district awarded its teachers an average 1.8-percent raise, while “reducing the number of days support staff will work from 260 to 250.” For the unindoctrinated, school districts generally can’t cut pay; instead, they cut days.
Another issue with analyzing the effects of unionization on teacher compensation is that non-salary benefits, such as health, life, and vision insurance, as well as working conditions, are difficult information to find, and can be very hard to quantify. The lack of availability, Lovenheim writes, forced him to leave those measures of compensation out of his study. Non-salary benefits are not inconsequential, and can add up to thousands of dollars more in compensation. If unionization helps teachers negotiate for more non-salary benefits, that could amount to a large positive effect left unaccounted.
I’m not quite sure whether the following is a non-salary or a salary benefit. In any case, it’s my favorite teacher union contract provision. From the Mehlville School District’s 2009–2010 agreement with its teacher union:
Any savings exceeding $70,000 between now and August 1 resulting from teacher staff changes will be added to the base salary.
That surely is evidence of teacher union negotiating power, especially during a recession when school districts across the state are looking at ways to make cuts.
Correction
I wrote two posts about Quest to Learn under the impression that it’s a charter school. I was mistaken. Quest to Learn is not a charter school; it’s a New York Department of Education public school. Although in some ways it looks more like a charter than a traditional public school (it has outside sponsors, and students choose to attend rather than being assigned by residence), it is not a charter.
Clearly, I was wrong to criticize Popular Science for leaving out “information” about Quest to Learn that I myself didn’t get right. My apologies go both to Quest to Learn and to Popular Science for my mistake.
One result of competition from charters, online schools, and other options is that public districts respond with innovative schools of their own. In this case, New York did such a good job that I couldn’t tell the difference!
Public Plan and the Health Care Wedge
Today’s edition of the Maneater featured an op-ed attacking the notion that a public option in health care is necessary to keep health care costs in this country low. From the article:
Indulge me in a very simplified thought experiment. You, reader, enjoy beer, and I have deep pockets. We come to an arrangement: you pay me a fixed fee, and I will heavily subsidize each of your purchases of beer over the course of a night.
What would we expect to see happen? I expect that your demand for beer will increase toward over-consumption since the more you use this service, the more attractive the deal becomes. Perhaps an astute bartender notices the strength of your demand and decides to react by raising the price of each beer by 25 percent. As far as you are concerned, you continue to pay the same as before. As far as the bartender is concerned, he’s reacting rationally to forces of supply of demand. As far as I’m concerned, I’m going to have to raise the price of my fee for future nights if I’m going to keep from losing money.
The price of beer will balloon and the culprit is an economic wedge — the difference between the price a consumer pays and a producer receives.
Applying the analogy to health care, we can see that a public option would produce unintended consequences of health care cost inflation by exacerbating the effects of an economic wedge in the health care market. Sounds a lot like the conclusion of this recent Show-Me Institute study.
Caps on Stacked Taxes
The St. Joseph News-Press reports that Missouri lawmakers recently proposed a solution to the problem of “tax stacking” — the practice by which municipalities attempt to pass additional tax increases through referendums in order to circumvent the state-mandated limit of an additional 1.5 percent in sales taxes. The lawmakers proposed two things:
The resolution would protect cities from the threat of lawsuit, as they believed a 1999 letter from the Missouri Department of Revenue condoned the taxes. However, the two legislators want to cap general sales taxes at one cent and other authorized sales taxes — such as St. Joseph’s CIP [Community Improvement Project] tax — at one-half cent.
These extra taxes usually come in the form of CIP taxes (also known as CID, Community Improvement District, taxes). CID taxes are levied when at least 50 percent of the property holders holding at least 50 percent of the property in the area decide to levy a voluntary tax. In practice, this money could be used for landscaping or infrastructure improvements that benefit 51 percent of the owners, to the detriment of the other 49 percent. The use of CIDs is of questionable value, at best, and this proposal would essentially prohibit further CID taxes.
When I wrote about the topic of tax stacking earlier this summer, a Farmington lawyer was suing cities to repeal these taxes. At the time, I was conflicted over my desire to see taxes lowered and my concern that the lawsuit was redistributing city money inappropriately, essentially hurting the taxpayers it was intended to help. Recollecting the money would not solve matters, because the transaction cost of both the initial collection and the recollection process (as well as the difficulty of determining the appropriate reallocation) would be prohibitively costly. Considering the situation, strengthening the tax cap is the best solution to protect Missouri taxpayers from further harm.
Tax caps would require Missouri’s cities to promote further growth if they want to increase tax revenue. Preventing extra taxes from being collected — thereby leaving more money in the hands of consumers — would permit more growth, and would result in a far better long-term outcome than simply raising taxes.
