The First Shall Be Last

Posted on by Josh Smith

According to this New York Times article, a number of states were competing for the honor of “first to spend federal stimulus money on infrastructure,” and, by some accounts, Missouri won.

Even die-hard free-marketers will likely agree that once the federal government decides to spend a certain amount on stimulus, the taxes that pay for the program are “gone” in a long-term accounting sense. So, obeying proper economics and ignoring sunk-costs, the question is “why not try to get as much stimulus money as possible?” Someone is going to get it and invest in their infrastructure, why not us?

I am interested in readers’ thoughts on the matter, but I will start with what I think.

Even if we assume that our state government will more efficiently allocate the funds than our neighbors will, it is still dangerous to accept and spend federal funds. Government bureaucracies have a long history of taking every opportunity to ratchet up their budgets, resisting pressure to cut costs. We’ve blogged before about benefits of governments cutting spending in the face of budget pressures. If you already agree that government spends money on things that perhaps it shouldn’t, then take note that stimulus funds will certainly not encourage them to reduce spending. Indeed, before the promise of federal funding, our governor and General Assembly were facing a harrowing budget crisis, and seemed poised to make deep cuts from which Missourians would benefit for years to come. No longer is this the case. The story for the past several weeks has been giddy excitement at new spending opportunities.

Other states will certainly invest in their infrastructures if we don’t. The opportunity we are missing is a chance to discontinue some useless state spending, and trust that the people who will foot the bill for the stimulus package will be wise enough to find their way out of our current economic doldrums without ramped-up state spending.

Only tangentially related, but highly recommended, is this video about the bailout/stimulus from under-appreciated reporter John Stossel. The rest of the program can be found here.

Please weigh in with your thoughts about accepting federal stimulus, tax-funded bailouts, and whether John Stossel is as evil as they say.

The Other Shoe Drops Directly on Commerical Property Owners in St. Louis County

Posted on by David Stokes

The St. Louis Post-Dispatch has done a very good job covering assessment issues through the years. Its coverage of the 2001 drive-by scandal broke that issue wide open, after some great legwork by a few councilmen and others. That coverage continued this weekend, when the Post-Dispatch wrote about how commercial property owners are seeing a substantial increase in assessments while residential owners are seeing a decline.

The obvious question that jumps out is whether the county is intentionally raising commercial assessments to offset the tax revenue declines from residential assessments.

The reassessment left Trampe wondering if the county had manipulated commercial figures to offset a potential drop in revenue from the fall in residential values.

“I guess they have to find money somewhere,” he said.

I have no idea if that is true or not, and the county denies it. However, a little-discussed state law may save the day here and prevent the large tax increases on commercial property. St. Louis County is the only county in the state where local officials are allowed to apply different tax rates for different property classifications. (I have looked for the relevant statute citation, but have not found it yet. I’ll add it when I get it, or correct myself if I am wrong.)

So, there is nothing in the law that guarantees commercial property taxes have to go up. In other counties that set the same rate for everything, this would be a big problem, because the residential averages would dominate the totals. Tax rates would rise in order to offset falling residential assessments, and then the commercial owners would see enormous increases. Here in St. Louis County, various taxing entities can set one rate for residential properties that have experienced an average assessment decline, and a different rate for commercial properties that have had an average assessment increase.

The trick, though, is to make certain that all the school districts, fire districts, cities, etc. within St. Louis County do just that, rather than trying to sneak in commercial property tax increases, along with the legal roll-ups of residential property tax rates that we are seeing. I have no doubt that many taxing entities in the county will try to avoid rolling back the commercial rates — or, at least, keep them level, probably out of a lack of knowledge as much as anything.

The one thing St. Louis County itself should do is roll back the commerical property surcharge by 8.3 percent, in order to offset the tax increase commercial property owners will see from county government. St. Louis County has the highest surcharge in the St. Louis area, and lowering it would be good for business in the county.

Bail Bonds, Repo Men, Process Serving, and Blog Posts

Posted on by David Stokes

Longtime readers might know that I love to write about the bail bonding industry and, starting today, its close cousin: the repossession man. Some of my longer posts (which predated our open-comment policy, so fire away) dealt with this subject. In light of two recent media stories about the subjects (I found the link to one of them — I forget which — from Combest), this is a good time to relink the old stories and share some new thoughts.

If bail bondsmen and repo men are cousins, than another family member is the process server — something I have twice done for a living. In the ’90s, I owned a company that did a lot of this for law firms, and, in 2007, I was a county deputy sheriff serving papers on the dangerous beat of Clayton and Richmond Heights. So, while I have never done any bail or repo work, I think I have a feel for part of what it is like to do them for a living. From my experiences in dealing with the small percentage of people who desperately try to avoid being served, I know exactly what one repo man meant when he said this to the Post-Dispatch:

 “They have to be on their game all the time,” he said of those who try to avoid him. “We only have to be right once.”

From reading the Fox 2 story, I repeat what I previously said: Bail bondsman are one of the occupations that should have some sort of licensing by Missouri government. The article’s subhead about how bondsmen “Can Legally Kick in Your Door” doesn’t bother me, because the act of skipping on bail has long been viewed as the sort of action that results in a forfeit of your rights. However, I understand the problems that can arise from allowing convicted felons to enforce the law.

As for the repossession men (aside: Are there any repo women? Women make great process servers, it’s true), that is a tough line of work. I don’t view them as profiting off of others’ suffering, as some commenters on the Post site have accused them of doing. If they don’t repo the car, or boat, or whatever, then everybody will suffer when the firms for which they repo go out of business.

These two articles taken together, as well a story in the Riverfront Times last year, constitute a very interesting discussion of a very interesting field of work.

Governments Should Make Sense, Not Jobs

Posted on by Josh Smith

There is a lot of talk at present about job creation. During the Great Depression, the federal government engaged in job creation. Currently, our General Assembly is discussing a bill to promote job creation. Some are frustrated that this bill is not being fast-tracked.

There is a mistaken view that governments can solve economic problems such as unemployment. History has shown that government solutions may create short-term fixes, but have long-run unintended consequences often worse than the problem they set out to solve. Our fine editor Eric Dixon recently mentioned to me, “There is a correlation between economic growth and job creation, so government officials tend to think that they can cause economic growth by creating jobs. But it doesn’t work that way.”

Voluntary economic exchange, often coupled with competition, produces wealth and leads to a greater number of people getting what they want, for less — and it brings rising employment. It is true that those who are employed have a lot going for them that the unemployed may lack. For one thing, they have a regular paycheck and are likely self-sufficient. When someone who owns a business decides that hiring a new person will add more value to her business or product than it costs to remunerate the new employee, the business wins, the employee wins, and the customers win.

Tax-incentivized job creation is a cruel parody of this win-win scenario. When the government steps in, there is reason to believe that the legislator who controls the direction of the subsidy knows less about what people need and want than do the people themselves, so incentives are misdirected. Tax dollars go to support things that people may not have wanted, or at least didn’t want at that marginal rate of exchange. When job creation is subsidized, employers and employees win (at least temporarily), and customers may win — but taxpayers lose.

The Governor of Illinois Wants to Help Missouri’s Economy

Posted on by David Stokes

I can’t think of much better for Missouri’s and St. Louis’ economies than Illinois raising its income tax significantly. Thank you, Lieutenant Governor Pat Quinn. There has been a great deal of growth in Metro East (Ill.) during the past decade, as the growth in St. Louis skewed a little too far west for some people. This will help put a stop to that. …

Apparently, It Was “Funny Day” in the Capital Yesterday

Posted on by David Stokes

My own state rep, Jake Zimmerman, crystallized my own thoughts perfectly (to steal a Letterman line) about the repeal of tyrannical laws against tractor parades in Missouri. As he so poetically put it (as reported by blogger extraordinaire Jason Rosenbaum):

“If tractor parades remained outlawed, only outlaws will hold tractor parades,” Zimmerman said. “Every day, every day in the 83rd District people are clamoring to hold tractor parades. But they are prevented by our cruel and unjust statutes.”

He continued:

“To imagine, Mr. Speaker, the horror of not being able to come to synagogue on the tractors… Mr. Speaker, as you can see words fail me,” Zimmerman said.

As one of those very citizens of the fighting 83rd, I am delighted that we will now be able to have a tractor parade at our annual block party this summer, assuming it is not rained out for about the fourth year in a row.

Rep. Mark Parkinson Is Awesome

Posted on by David Stokes

I absolutely must direct you to this article in the Beacon, (link via Combest) about the recent e-mail spat in Jeff City. Rep. Mark Parkinson is a good friend of mine, and I found his e-mail to be hysterical while making a point. Was it mean? You’ll have to decide that for yourself, but this is about as funny as it gets in the think tank world, which may say a lot about me.  

And I can praise Mark without appearing too partisan, because last night, while speaking to the West County (St. Louis) Republican Club about property taxes and assessments, I actually defended County Executive Charlie Dooley’s (D) tax cut plan. I was wearing my Show-Me Institute hat and was on the proverbial “clock,” and while I also voiced some criticism of county government (i.e., they should have rolled back the rates in 2007), I praised this year’s tax cut plan. So, basically, I’m even. …

Brother Neil’s Price-Inflating Ticket Scalping Scheme

Posted on by David Stokes

Because we covered the repeal of scalping laws so heavily awhile back (and I like to think our blog entries played a very small part in Missouri’s silly law being changed), I had to link to this Wall Street Journal article, which I found via the Kansas City Star. It turns out that many of the biggest beneficiaries of free-market ticket exchanges are artists themselves, who withhold some choice seats for sale in select online ticket exchanges.

I see nothing illegal with this; the title of this post is more meant in fun than anger. It is, however, unseemly that so many artists do what is plainly ticket scalping while making it appear that they are just fans exchanging tickets with each other for whatever price buyers want to pay. A more up-front policy is needed, but I don’t think it has to be legislated. I don’t think it is a crime that someone thought the $1,000 they spent to see one of the greatest bands of all time went to a stranger, when it really went to the band, but it is still improper.

If U2 wanted to charge me more to sit in the front row on the stage-left aisle for their 1987 Joshua Tree tour when it came to St. Louis, they could have just told me that up front. Instead, they made me go and win the ticket lottery, which was totally awesome.

P.S. — And now you know what my favorite bands are. Plus, you can add in all the classic rock greats, but you could have guessed that.

Why Limits on Embryo Transfers Are Like Motorcycle Helmet Laws

Posted on by Sarah Brodsky

Some of the arguments I’m hearing for limits on the number of embryos that can be implanted in a woman are similar to the arguments for motorcycle helmet laws. For example, this is from the Post-Dispatch story today:

“If you implant eight embryos into a woman, you’re putting her life at risk and you’re putting the lives of the eight babies at risk, and the taxpayers are going to have the burden of paying for it,” Schaaf said.

That’s State Rep. Robert Schaaf, explaining why he thinks the state is justified in interfering with fertility treatment decisions. Sound familiar? That’s what people say in support of motorcycle helmet laws. If you get into a crash without a helmet on your head, taxpayers pay for the ambulance you ride in, hospital emergency room, and so on. Therefore, the state can’t allow you to take any risks.

The article uncovers another horrible policy idea: forcing insurance companies to pay for in vitro fertilization. The rationale is that people are asking doctors to implant large numbers of embryos to improve their chances, because they don’t want to have to pay for another round of treatment. Obviously, an insurance mandate would raise premiums for everyone–kind of like how when you have octuplets, everyone’s taxes have to help pay for the care if you can’t afford to support them. Except women rarely give birth to octuplets, so one or two cases don’t really have any deleterious effect on taxpayers, although women receive fertility treatments all the time. An insurance mandate would spread a burden across society, all in the hopes of preventing another burden that hasn’t materialized yet and probably never will.

I have my own idea for a new law. Give women the choice of risky fertility treatments. Just make them sign a form that if they give birth to octuplets, they’ll guarantee that the children will always wear helmets when riding motorcycles. You’ll have increased risk from the treatment, and decreased risk from the safe motorcycle riding. They’ll cancel each other out.

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