Page 732 – Show-Me Institute

St. Louisans Are Smarter Than the Post-Dispatch Implies

Posted on September 23, 2009May 5, 2026 by Caitlin Hartsell

Last month, the St. Louis Post-Dispatch published an editorial critiquing the Show-Me Institute’s study of earnings taxes. It rejected both the type of study and its conclusions — which is unwarranted, on both counts. In taking issue with the model, the Post-Dispatch mentioned an alternate study as “proof” that the institute was wrong:

In 2005, the East-West Gateway Council of Governments actually asked area residents (what a research concept!) about their most important considerations in deciding where to live over the next eight to 10 years.

My graduate research methods class this semester allows me to apply some knowledge: The Post-Dispatch is referring to a qualitative research study, which is typically an initial model for a topic that has not been well studied, or something that cannot be captured with numbers. (One might conduct a qualitative study to get an idea of what needs to be studied more rigorously.) Qualitative studies are subjective, and are influenced by the researcher, the wording of questions, the population interviewed, and how honest the interviewee chooses to be.

Quantitative studies — manipulating data, like in an “abstract model” — are considered higher-tiered studies. That is not to say that quantitative studies are strictly better than qualitative; both have their purposes and their flaws. However, for something like a tax and housing decision, which involves both people choosing whether to live or not to live in an area, a model is better able to predict and explain phenomena. An interview study given to people living in St. Louis city excludes the data points of those people and businesses that have already lived there and chose to locate elsewhere — people that may be difficult to find.

There are some people who would choose to live in the city whether it has a 10-percent earnings tax or no earnings tax at all — but these are not the people at issue in an economic model. A model studies the people on the margin, the limited subset of people for whom that 1 percent is a tipping point between opportunity sets that otherwise have equal attractiveness. Some marginal group of people who weigh the pros and cons of each jurisdiction and find they add up to similar opportunities will choose to live or create a business in a suburb instead of the city, in order to capture that extra 1 percent. (And, although it may seem small, a 1-percent tax over the lifetime of a career adds up significantly.)

Another point of contention for the Post-Dispatch is the amount of money that the tax generates annually ($153.1 million in 2008). The article pointed out that this is similar to the size of the Metropolitan Police Department budget, and then conflated removing the earnings tax with getting rid of the police department — something that the Show-Me Institute never argued. At any rate, the Post-Dispatch seems unaware of our follow-up earnings tax study, which outlined a viable way to replace revenue lost from eliminating the earnings tax — a land value tax that would provide much less distortion of natural economic growth and development in the city, because of its fixed value.

St. Louis County and the entire metropolitan area is proportionally much larger than the city itself; in 2006, the city ranked 51st-largest in the United States, while the entire metropolitan area ranked 19th. People are not avoiding the St. Louis area in general, they are avoiding St. Louis city in particular — and with good reason. Good economists recognize that some people consider finances and tax rates to help them make rational decisions when choosing a residence or a business location. This confidence in people’s ability to weigh the incentives they face is well supported by actual data.

Kevin Chavous and David Levine Commemorate Milton Friedman

Posted on September 22, 2009May 5, 2026 by Eric D. Dixon

On July 31, the Show-Me Institute hosted a luncheon celebrating the life and ideas of Nobel laureate economist and school choice advocate Milton Friedman. Those who attended were able to experience dynamic presentations from both Kevin Chavous, a former D.C. city councilman and current school reform leader, and Dr. David Levine, a well-known economist at Washington University.

For those who didn’t attend (or those who would like to relive the event), the video has been posted on the Show-Me Institute’s website. I encourage anybody who has even a passing interest in educational quality to watch and learn more about the issues that are facing U.S. schools today.

The video, which is also embedded below for your convenience, is a playlist consisting of eight separate parts. After each individual part has finished playing, the playlist should automatically load the subsequent part until the sequence has finished.

You may also choose to view any individual part on its own:

North Side Removal

Posted on September 22, 2009May 5, 2026 by Caitlin Hartsell

Last night, I attended the latest NorthSide Regeneration, LLC, community meeting, along with Policy Pulse reporter Audrey Spalding (be sure to read her excellent article.) I was impressed with the presentation; the NorthSide development team has obviously spent a lot of time working on the logistics of the more than 4,000 parcels of land involved in their proposal. (You can read more about those plans on Policy Pulse.) However, aside from the generalities, many questions were left unanswered about how the development might affect the future of current area residents.

Meeting organizers requested that nobody record the proceedings, and had a few confrontations with some zealous bloggers. Arguments became heated a number of times, as community members questioned how their own properties fit into the proposed plans. Some people had seen the areas in which their houses and businesses currently stand designated as “green space” on the projected plans. Although the developer and city officials responded to some questions, others were left unanswered. The portions of the plans that are publicly available are still vague and general enough that a standard answer was that no one yet knows what will happen to a specific house or business in question, because the plans are not yet finalized.

A PowerPoint presentation provided some revealing before-and-after statistics about college education. Currently, only 3.4 percent of north side residents have a college education, compared to 15.5 percent nationally. According to NorthSide Regeneration’s presentation, they envision that 75 percent of area residents will have a college education. Not included alongside that 75-percent figure was the likelihood that such a drastic increase in college attendance figures will result not from a greater number of existing north side residents attaining higher education, but from a largely new population of better-educated residents populating the area and displacing many current residents.

Parts of the north side area are undeniably blighted, and do need work. The plans as presented showed the possibility of an attractive new community that might work well for upper-middle class residents who are looking for new parks, transit, and grocery stores within walking distance. However, although the presentation seemed designed to reassure area residents about their community’s bright future, it skirted the fact that many of the people who live there now have the most to lose from the new development, and will likely not be able to afford to continue living there if the plans proceed.

Tea Party Etiquette

Posted on September 22, 2009May 5, 2026 by David Stokes

Last night, Jenifer Roland (that is not a typo, she really just uses one “n”) and I were honored to be invited to address a meeting of the Meramec Township Republican Club in Southwest St. Louis County. (Think of the area around Fenton and Eureka if you are wondering where Meramec Township is.) It was a great opportunity to talk to a very large crowd about the Show-Me Institute and some of our studies. Jen gave an excellent talk about our recent health care study and touched on cap ‘n ~~crunch~~ trade.

I provided background about the Show-Me Institute and spoke briefly about property taxes and assessments. There were a number of Republican local elected officials there, and representatives of federal officeholders like Rep. Todd Akin and Sen. Kit Bond.

This was a township forum, not a tea party protest, but it quickly became clear that a number of tea party protesters also attended this event in order to have an opportunity to talk to some of their representatives. Here, though, the elected officials predominantly agreed with them, and the term “preaching to the choir” was used several times.

I love the tea party movement. I love that people are getting involved in their democracy. I appreciate that many tea party activists used to participate in real-world civics only through voting once — maybe twice — every four years, and now they are becoming more fully involved in the process. I would personally like to have heard a little less lecturing and condescension in some of the comments by the tea party activists last night, but you never get everything you want in life.

All in all, it was a terrific meeting and we thank Meramec Township for inviting us. Remember, Show-Me Institute staff and scholars are always available to speak about public policy to your political or civic group, of any party or affiliation.

Back to Basics: Health Savings Accounts

Posted on September 22, 2009May 5, 2026 by Caitlin Hartsell

In the debate about health care reform, a lot of jargon and acronyms have been thrown around as potential solutions for the complex problem of health care reform. Some have argued that the left has focused on coverage but not cost reduction while the right has focused on cost reduction but not coverage. One thing that would address both has not been emphasized enough in the debate: health savings accounts (HSAs). The Show-Me Institute has long written about how HSAs can be an effective part of reforming health care insurance.

A recent Show-Me Institute policy study about the health care debate highlighted the benefits of HSAs:

HSAs empower individuals to monitor their health care costs and create incentives for individuals to use only those services that are necessary.

Either employers or employees can place money into an HSA before taxes, and that saved money can then be used to pay for any out-of-pocket medical expenditures. Typically, these accounts are used with high-deductible insurance policies that have low monthly premiums, so consumers of health care have an economic incentive to spend wisely. The money in an HSA rolls over every year, so there is no rush to spend the money by a certain date. Once a person has covered medical expenditures up to the amount of the yearly deductible on the policy, the insurance company begins to cover expenses instead.

A health savings account brings health insurance back to its original purpose, as a backup plan to hedge against catastrophic health care costs, like cancer or a car crash, rather than as an insulator from routine, expected health care costs. Part of the problem with health care, as Chrissy mentioned in a recent blog post, is the lack of personal responsibility that the current system fosters. The incentive structure is not aligned to reward people for healthy behaviors. Because health insurance plans pay for every doctor’s appointment or procedure, there is little accountability from patients to monitor their own health and conserve their use of health care resources. This results in what the Show-Me Institute’s study by Arduin, Laffer & Moore Econometrics called a “health care wedge” that drives up costs.

The type of high-deductible policy that generally accompanies an HSA gives customers a fiscal incentive to look for good prices and to stay healthy. When customers have control of their own health care money, doctors and hospitals who hope to attract business must respond in kind by reducing inefficiencies and unnecessary costs. Health savings accounts are also independent of employment; they follow customers even after the loss of a job, which addresses a major flaw of the current employer-based system.

There are many other issues to consider when it comes to health care reform, but HSAs would go along way toward realigning incentives and putting health care decisions in the hands of the patients. Missouri is lucky to have H.B. 818, the Missouri Health Insurance Portability and Accountability Act passed in 2007, which encourages HSAs. Hopefully, national reform will follow the Show-Me State’s lead and incorporate HSAs into the new plan.

The Model School, According to Two Million Minutes

Posted on September 21, 2009May 5, 2026 by Sarah Brodsky

A post on the Two Million Minutes blog reveals the subject of the newest documentary: the BASIS charter school in Arizona. Bob Compton describes the school as “low-cost, high performance, easily replicable.”

I’ve read some BASIS publications and parents’ reviews online, and it sounds like BASIS offers a challenging curriculum that most parents are very happy with.

The catch? It’s tiny. There are about a dozen students in each of the highest grades. More students attend the middle school, but there are fewer than 100 students in almost every grade. Based on the information available at publicschoolreview.com, only three percent of students are black or Hispanic.

I don’t want to imply that those facts detract from BASIS’s achievements; schools vary in size and demographic makeup. But I don’t see BASIS as an easily replicable model to improve U.S. education. The gap in test scores between whites and minorities is one of the most pressing issues education reformers grapple with, and a school that teaches few minority students doesn’t look like a promising model — unless it can show that its approach works with a diverse student body. Not only has BASIS failed to demonstrate success in closing that gap, but the school’s small size suggests that kids who are already doing well are self-selecting in. This is a common argument against lending too much credence to the high test scores that some charters achieve, and although I disagree with the argument in most cases, it’s hard to defend a school against that charge when it has only 13 kids in a grade.

In addition, BASIS’s small class sizes can’t be replicated across the U.S. school system without hiring many more teachers, which would be anything but “low cost.”

It could be that I just don’t know enough about BASIS, and that Two Million Minutes is on to something. I’ll keep following the coverage of Two Million Minutes, in case I’ve missed any evidence that the BASIS model has been scaled up.

Personal Responsibility Is the Best Medicine

Posted on September 19, 2009May 5, 2026 by Christine Harbin

Bill Maher and I can agree on something: Americans are fat and lazy.

Yesterday on the Huffington Post, Maher posted an editorial, “New Rule: You Can’t Complain About Health Care Reform If You’re Not Willing to Reform Your Own Health.”

President Obama has identified all the problems with the health care system, but there’s one tiny issue he refuses to tackle, and that’s our actual health.

The best thing that a person can do to improve for his or her health is to abandon unhealthy habits. These are lifestyle changes that are simple and inexpensive. If a person quits smoking, he or she will even save money.

This week, the British Medical Journal published a study showing that men who stopped smoking and switched to a low-fat diet elongated their lives by an average of 10 years. The researchers followed 19,000 men, starting in the late 1960s. PLOS-Medicine published a similar study in 2008 that demonstrated a 14-year increase in longevity, not just 10, with four items only: non-smoking, daily exercise, eating vegetables and fruits, and weight control.

There is a farrago of other lifestyle changes that can positively affect a person’s longevity, such as flossing and moving to a rural area.

If Americans do not stop shirking personal responsibility for their own health, any effort at health care reform will be inefficacious.

But I suppose that it’s easier to blame fast food restaurants or the government.

How Is Service of Process Fees Like the School Funding Formula?

Posted on September 18, 2009May 5, 2026 by David Stokes

They are alike because the smaller counties in Missouri choose not to tax themselves to pay enough for their sheriff deputies, so the state then taxes all counties, including the larger counties that already pay their deputies a decent salary, in order to make up the disparity.

As a former St. Louis County deputy sheriff, I am uniquely qualified to comment on this story. The Political Fix has a post here about the decision in a lawsuit brought by St. Charles and St. Louis counties. Now, my own post is not a comment on the decision in the lawsuit. I have no idea whether the specific legal claims have merit. I just know that this is one more example in which the taxpayers in our larger counties have to pay higher taxes (or, in this case, a higher fee) for something because the smaller counties refuse to tax themselves enough.

I have absolutely no problem with smaller counties choosing to tax themselves less, but I do have a problem with taxing the larger counties more in order to pay employees in smaller counties more. I do not know whether this could be considered “socialism” or not, as County Executive Steve Ehlmann said, but I do know that it is terrible public policy, and blatantly biased as well. Both county executives Ehlmann and Charlie Dooley deserve credit for fighting this new law.

Surveying Economists

Posted on September 18, 2009May 5, 2026 by Abhi Sivasailam

The results of a new survey of members of the American Economic Association suggest that the Show-Me Institute is in good company.

The survey finds economists in consensus on several key policy issues:

51.6 percent agree: “The U.S. should place more stringent caps on medical malpractice awards.”

63.7 percent agree: “Barriers to entering the medical profession should be reduced.”

78.3 percent agree: “Government subsidies on ethanol in the U.S. should be” reduced at least somewhat.

42.4 percent agree: “State governments in the U.S. should eliminate mandates about what health insurance must cover.”

62 percent disagree: “Employers in the U.S. should be required to provide health insurance to their full-time employees.”

Other interesting results:

83.3 percent agree: “The U.S. should eliminate remaining tariffs and other barriers to trade.”

70.3 percent agree: “The U.S. should allow payments to organ donors and their families.”

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