Underground Restaurants

Posted on by Sarah Brodsky

I’m of two minds about the underground restaurant movement. On one hand, I’m sympathetic to chefs who want to do something fun and different. Forcing underground restaurants to settle down in one place and get a permit would defeat the purpose. And I don’t think you should need a permit just to serve dinner to a bunch of people in someone’s living room.

On the other hand, it’s unfair for these chefs to take “donations” under the table while everybody else is complying with the law and paying taxes.

Anyone want to convince me one way or the other in the comments?

How Not to Hold Teachers Accountable

Posted on by Sarah Brodsky

I love reforms like merit pay, flexibility in hiring and tenure, etc. I thought any idea that held teachers accountable would be fine — until I read this proposal. Scott McLeod of Dangerously Irrelevant suggests schools adopt this approach to weeding out bad teachers:

Every year fire the worst teacher in the school. If you don’t have a robust teacher evaluation system (or if you’re worried about administrator bias), do it like they do on Survivor: everyone gets a vote and the one with the most votes leaves the island. Administrators, teachers, staff, students, parents–everyone involved with the school gets a vote.

Yes, perennially bad teachers can be a problem, but this is not the way to deal with it.

First, this procedure is too rigid. Why fire exactly one teacher every year? If two teachers are terrible, they should both be fired. And some schools probably have a few teachers who would benefit from training or mentoring, but nobody who needs to be fired.

This plan would have a devastating effect on teacher morale and cooperation. Everyone would try to identify the one likeliest loser and give up on that person as soon as possible. Teachers would sabotage each other and point out their colleagues’ faults.

Furthermore, one vote each for all those people doesn’t make sense. A bad fourth-grade teacher won’t get voted out if the kindergartners and first-graders haven’t even met that person yet. And six-year-olds shouldn’t be making decisions about adults’ jobs.

As a consequence of kids voting, school would become a popularity contest. Teachers would be reluctant to discipline students or challenge them, lest they be voted out.

No district is considering this idea (I hope), but I still think it’s worthy of discussion here on Show-Me Daily because it illustrates how difficult it is for organizations to evolve and improve in the absence of market forces. Businesses that have to compete in the marketplace have no qualms about firing workers who aren’t doing their jobs. The flip side of that is, a business that has to compete would never be attracted to a crazy scheme to fire one person each year no matter what.

Public school districts have so much difficulty getting rid of bad teachers that voting someone “off the island” once a year may sound good in comparison. At least they would get rid of one bad teacher every year. The vote would also take pressure off administrators, who don’t want to be the ones to make controversial firing decisions.

If traditional public districts were less like islands and more integrated into a fluid market for education, they would have to adopt flexible rules for hiring and firing teachers. Bad teachers would be let go when necessary — unlike the current practice of keeping them until they retire, and unlike the Survivor scheme of firing one each June as a ritual.

Locavores Clamor for a Piece of the Pie

Posted on by Sarah Brodsky

Missouri locavores are collecting signatures to petition Gov. Jay Nixon for a share of the stimulus funds. They want the state to spend money on local food, and to coerce other people into doing so as well.

The letter states that there is increasing demand for locally grown food, then reports:

This growing demand, however, has been difficult to meet.

No kidding! Is that because nothing grows in our climate when there’s snow on the ground?

I don’t know anyone who doesn’t enjoy fresh produce that was picked just minutes before. The thing is, it’s costly to provide that, and consumers are turned off by the price. So the locavores want the state to step in.

Almost anything can be produced locally, for enough money and effort. We shoudn’t do that, though. Imagine if all our oil had to come from inside the state. We could maybe find some … if we drill deep enough.

The locavores assure us that state spending would improve the “long-term profitability” of local food production. It certainly would, to the detriment of taxpayers. And take a look at this sentence:

You will be facilitating a new economic engine for Missouri based on local values, local ingenuity and local relationships.

“Ingenuity” must refer to their lobbyists. It doesn’t describe the farmers who prefer to rely on state handouts rather than on their own initiative.

Language Learning

Posted on by Sarah Brodsky

The St. Louis Language Immersion Schools blog has posted a series of essays describing immersion schools the faculty have visited recently. These will be of interest to anyone following charter schools and language immersion.

Several people have responded to my writing about charter schools and languages by pointing out the existence of language programs in traditional public schools. In some cases, these programs are indeed comparable to charter schools, like SLLIS. I believe SLLIS has visited some immersion classes within traditional districts.

However, most of the traditional public schools’ language programs are not as innovative as SLLIS and other charters. Often, schools recognize the value of immersion, but students are only immersed in the language for one class period each day — not enough time to gain fluency. Many international magnet schools, such as Bunche International Studies of SLPS, conduct the majority of the school day in English. Students are able to choose from several languages, and the school incorporates different cultures into activities and special events, but a science or math class there looks the same as in a traditional public school.

Charter schools have the flexibility to center the entire school day around a foreign language. They also have the parental support for long hours of immersion. These aspects of the charter model let them adopt immersion programs more completely than traditional districts — and with greater success.

Amazing Statistics

Posted on by Sarah Brodsky

I blogged about David Nicklaus’ immigration column a few days ago. Now I see that he’s returned to the topic, directing Mound City Money readers to some surprising numbers about immigration. He quotes L. Gordon Crovitz:

Half of Silicon Valley start-ups were founded by immigrants, up from 25% a decade ago. […] A recent study by the Kauffman Foundation found that immigrants are 50% likelier to start businesses than natives. Immigrant-founded technology firms employ 450,000 workers in the U.S. And according to the National Venture Capital Association, immigrants have started one quarter of all U.S. venture-backed firms.

Nicklaus also highlights a National Bureau of Economic Research paper that documents immigrants’ exceptional productivity.

Just as fascinating as those numbers is the reasoning behind the first comment to the post. “Ted44” argues that we should send foreign college students back to their countries of origin, so they can start their innovative businesses and employ thousands of people in those places rather than in the United States, because if they stay here they’ll be competing with Americans for “limited resources.”

Knowledge and industriousness are limited resources too, which immigrants can provide in abundance.

Unbelievable

Posted on by Sarah Brodsky

One unfortunate consequence of inflationary government spending is that it gives people that crazy idea that it’s good to spend money you don’t have. The government spends in hopes that things will get better, so why shouldn’t you? This thinking has even made an impression on a Harvard student who should know better. Here’s a quote from his column in the Harvard Crimson:

Because of the service it provides, Harvard should think of itself more like a government than an individual or a business firm. With its reputation and available funds, the university is not going anywhere, but delaying improvements will have dismal effects on future endowment performance.

In other words, Harvard is too big to fail.

I almost expect the column to suggest Harvard should wage wars or establish a post office “like a government.” Instead, it acknowledges a downside to spending during lean times (only to conclude Harvard should spend anyway):

Crises often spur efficiency reviews that help organizations in the long run by improving performance.

True. And, I might add, when governement officials — or Harvard administrators — spend without regard to current resources, they tend to fund hastily-adopted schemes, which become firmly entrenched by the time the economy turns around.

State Sen. Jeff Smith on Fixing Schools

Posted on by Sarah Brodsky

State Sen. Jeff Smith writes about education reform in the St. Louis Beacon and touches on several different ideas. I agree with many of his statements, but I don’t know why he backs off from endorsing parental choice.

Smith mentions choice (“vouchers,” in his words, but he could just as well be describing tuition tax credits) in the opening of the essay, and comments that neither choice nor more funding will fix the school system. I’m with him on funding. Now, here’s how he defends his opposition to harnessing market forces in education:

Competition for competition’s sake doesn’t necessarily mean that kids will perform better in private schools or that surrounding public schools will improve. Plus, diverting public money to selective private schools can’t pass in the Missouri Legislature in the near future.

We see from places where choice has been tried that students do learn more, parents are more satisfied, and the public schools do improve. There’s no guarantee that will happen, but it’s highly likely. Perhaps Smith’s judgment that choice isn’t politically feasible here prevents him from considering it further.

Smith goes on to discuss KIPP charter schools and says that they prove choice isn’t the answer. The conclusion makes no sense, because families choose KIPP and can choose to go back to the traditional public schools if they don’t like it. KIPP is an example of choice that works, albeit on a smaller scale than a citywide tuition tax credit program.

Smith struggles to establish KIPP as distinct from other schools of choice:

KIPP schools are public schools that accept all comers on a first-come, first-served basis. They do not teach religion.

Not entirely true — KIPP students have to agree to KIPP’s policies or they’ll be turned away. And so what if they don’t teach religion? Not every private school teaches religion either!

Smith next praises the quality of teaching in KIPP schools and identifies it as the key to their success. He’s right, but he leaves out a crucial point. Good teachers can be found anywhere, whether in traditional public schools or in choice schools. However, choice schools tend to seek out those teachers, support them, and retain them, because they have to if they want to keep operating. Traditional public schools never go out of business, so they don’t face the same pressure to help their best teachers. Yes, at the classroom level, good teaching is what helps students learn — and that good teaching is encouraged by a parental choice system.

Smith goes on to describe some excellent proposals for merit pay, charter schools, and open enrollment. He laments the fact that politics stands in the way of these reforms with one of the best lines of the op-ed:

The first education hurdle Missouri must overcome is in Jefferson City.

My question for Smith is: Since even these proposals to inject a limited amount of competition into schools face opposition, why not support the equally maligned and potentially more beneficial tuition tax credits idea?

Missouri Would Be Better Off Without an Income Tax

Posted on by Rik W. Hafer

This article first appeared in the St. Louis Beacon.

The Missouri House recently took an ambitious step toward improving the state’s economic competitiveness. House Joint Resolution 36 calls for a popular vote in 2010 to repeal the state’s income, corporate, and estate taxes. This amendment of the state constitution would, as a number of studies show, improve Missourians’ economic well-being.

H.J.R. 36 would replace the revenue lost from eliminating these taxes primarily through raising existing sales taxes. The resolution would ask voters to raise the state’s sales tax to 5.11 percent from its current rate of 4.225 percent. The new sales tax would cover more services and goods than the existing sales tax.

Vocal opponents of the resolution are quick to point out that sales taxes are more regressive than income taxes. That is true.

But this undesirable outcome can be circumvented as the tax plans are developed in switching from income tax to sales tax revenue. One method is to means-test the sales tax. Individuals below a certain income level would pay no sales taxes on purchases up to some established amount. Of course, means testing is straightforward for someone filing an income tax form. For those who do not, it is more difficult, but not insurmountable.

Another approach is to exclude certain items or services — such as food, medicine, or medical services — from the sales tax.

Arguing that repealing the income tax would put the tax burden on the backs of the poor is simply a scare tactic that diverts reasoned debate.

Opponents also argue that if the proposed change is revenue neutral — meaning the state would receive the same amount of tax revenues after the switch as it does before — why bother?

Isn’t a dollar in taxes the same regardless of its origin? The answer is no.

According to standard economics, imposing a tax on income, whether a tax on individuals’ labor or on corporations’ earnings, diminishes those activities generating taxable income.

Think of it this way: In a world with no taxation, employers and workers settle on some market clearing wage that is beneficial to each. With an income tax, a worker’s take-home income must go down for the same hours worked. Unless firms raise wages to make up the difference, rational workers supply less after the tax is imposed. The tax reduces the amount of work, which reduces the goods and services available to consume.

Proponents argue that eliminating the existing income tax will be economically beneficial. Economic theory says the change should lead to more work, more goods and services being produced. And that equals an overall increase in economic well-being. Is there hard evidence to support this notion?

An oft-cited study conducted by the Federal Reserve Bank of Atlanta found that — after holding constant the effects of many different factors explaining state economic growth — a state’s marginal tax rate has a significant and negative affect on its relative growth rate. The higher a state’s marginal income tax rate, the lower is its rate of economic growth compared with low marginal income tax states.

This important finding has been replicated many times across states (and countries). The weight of the evidence is that low-tax states economically outperform high-tax states. On average, low-tax states have higher comparative growth rates in personal income and in employment.

Why should voters in Missouri seriously consider this proposed change?

Missouri ranks in the lower third of states when it comes to economic improvement. Using data from 2006, on a per-capita basis, Missouri ranked 37th in real output growth, 31st in personal income growth, and 36th in the growth of wage and salary income.

Missouri did rank high in one category: It was 6th in firm termination. Not an enviable economic track record.

I am not Pollyannaish enough to think that eliminating the state’s individual and corporate income tax would vault Missouri to the upper echelon of high-growth states. But doesn’t that possibility beg for open and informative dialogue on the issue?

Rik Hafer is distinguished research professor and chair of the Department of Economics and Finance at Southern Illinois University Edwardsville and a scholar at the Show-Me Institute.

 

Flying Under the Radar

Posted on by Ryan Davisson

“Government should be transparent. Transparency promotes accountability and provides information for citizens about what their Government is doing.”
— Barack Obama, Memorandum for the Heads of Executive Departments and Agencies, January 21, 2009

This sort of appreciation for the idea of open and transparent government has been one of the higher points of the new presidency. It’s a principle that we take seriously at the Show-Me Institute, as well. The actions taken by our government officials should be open to public scrutiny. Apparently, however, 81 legislators in Missouri’s House feel that the Sunshine Law should not apply to the state’s General Assembly, while only 79 do. That vote defeated an amendment that would have clarified the existing Sunshine Law.

I have a hard time understanding why it wouldn’t, given that the Sunshine Law applies to all other government officials in Missouri. Some speculate that the measure might have failed because legislators are concerned about the privacy of their constituents, but as this Maneater editorial notes (link via Combest), “Many agencies abide by the Sunshine Law and they still get plenty of calls from constituents.”

The laws surrounding this issue are murky themselves; legislators have different ways of interpreting the Sunshine Law with respect to lawmakers being individually exempted. The movement of House Bill 316 is a step in the right direction, but as this News-Leader editorial remarks, “What’s good for the goose may not be so good for the gander after all.”

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