Price Gouging

When the sky darkens and the wind starts to howl, you know what that means: another storm. What happens when the rain or hail stops is equally predictable. There’s a shortage of in-demand goods, and prices go up — then people complain about price gouging.

Over at Knowledge Problem, Michael Giberson has a great post about price fluctuations in response to shortages. He points out that the only way for a store or gas station to stay open and on the right side of the law is to charge high prices all year round.

You’d hope people would conclude that price controls are a bad idea, not that we need more of them. But just in case, Giberson ends with this message:

I’m intending to point out a potential absurdity in the way price gouging laws work, not trying to suggest that the state government become even more involved in fixing prices.

A Good Kind of License

Missouri licenses all kinds of occupations, ranging from geologists to marital counselors. I’m not a fan of state licensure because it keeps out competition and makes professionals conform to bureaucratic standards. Fortunately, there’s a better kind of licensing out there — the kind offered by private organizations.

This is a great example from the Post-Dispatch: certified lactation consultants. You have to take a course and pass an exam to receive the certification from a non-profit board. This could be a useful credential for someone seeking employment in a hospital. At the same time, an experienced mom can be a consultant, too, without acquiring either this certification or a license from the state.

New Charter Schools to Watch For

Two language immersion charter schools, focusing on French and Spanish, are scheduled to open in St. Louis during 2009. When they say “immersion,” they really mean it — no English class until third grade! As should be noted with regard to all charter schools, this model isn’t right for every child — but for families that want early language instruction, it’s a wonderful opportunity. The new charters have a website and even a blog. I’m expecting good things from them, and I hope we’ll see new schools opening to teach additional languages as educational choices expand in Missouri.

The Stock Market Game

In the past, I’ve been skeptical of The Stock Market Game. I thought the curriculum neglected basic principles of investing and gave students the erroneous impression that they can predict the future and pick winners in the stock market. Now, I’ve changed my mind. As reported in the Post-Dispatch, This team at McKinley Classical Leadership Academy has clearly learned from the program:

Lissner, president of Acropolis Investment Management, has studied the market for more than 30 years. Papes, who attends McKinley Middle School in St. Louis, has been purchasing imaginary stocks for about a month.

At this point, their financial philosophies are pretty much the same.

“You just have to be lucky,” said Papes, whose class has been playing the Stock Market Game for the past four weeks.

There are a few more great quotes in the article about the random nature of stock prices and the futility of active management. This is inspiring news from a public school in St. Louis, and it’s also some of the best financial analysis I’ve seen from a newspaper in a long time.

Jefferson City Leadership and Saint Louis

The leadership teams that both parties will have during the next two years in Jefferson City have been announced. It is striking — not necessarily bad, but striking — that for the 21 leadership positions chosen in both houses by both parties, exactly one went to someone from either St. Louis County or city, reports the Star‘s Prime Buzz. That’s one position out of 21 for an area that contains one fourth of the population of the entire state. (Even more on game days, especially those rare Sundays in September when both the Rams and the Cards play at home.)

I realize a little explanation can partly explain this:

  • All three Republican senators that solely represent portions of St. Louis County or city (assuming one holds on after the recount) were just elected this week, so they will be freshmen.
  • If you were to look past leadership positions to committee assignments, I think you would find a number of GOP House members from St. Louis County (Icet, Bivins, etc.) heading important committees next year.
  • During the past session, both Senate leaders were from St. Louis (Gibbons and Coleman), so maybe it’s just a little flow of the political tides.
  • Senate Democrat leadership does have a St. Louisan in the number two spot.

Which really just leads me to ask: Why don’t the House Democrats have anyone from St. Louis in leadership? Perhaps everyone with any seniority at all ran for higher office (Hubbard, Donnelly, Zweifel, Page, Wright-Jones, and probably a few more), and the choices from St. Louis were limited. But considering the overwhelming support for the Democrat ticket in the city, and how most of the gains that the House Democrats made were in St. Louis County, you would think there would be a spot somewhere for a St. Louisan. Maybe I need to remember, though, that we are a statewide think tank, and I should stop being so provincial. …

Two other asides from election day are worthy of posting here, without getting too partisan:

  • I can prove my non-partisan bona fides by the fact that I did vote for one victorious Democrat. I voted for my incumbent state rep because he was A) unopposed and B) is also a very nice person, and a genuinely dedicated public servant (as well as a reader of this blog), so I was pleased to give him my vote. One of these days, I am going to make it to his morning forums at the Pasta House. …
  • I spent election night in 1994 in Chicago. Since then, I have hung out on every major election night with two wonderful friends, Sherman and Tom. Well, I had a great time this year in Kirkwood with Tom (along with my family, until my wife took the baby home). We ended the night perfectly at PJ’s Tavern, after hanging at Allendale, before I took a cab home to University City. (Election nights like Tuesday require a fair amount of drinking.) But it did hit me several times on election day that Sherman was no longer with us, and it reminded me how much I miss him.

MetroLink Conversations on the Road

This morning, I had the pleasure of driving my brother Ben and his wife Jenna to the airport. Ben and Jenna are a bright pair of semi-newlyweds with a two-story on the Hill and a little dog named Rocco. Ben is a resident at Barnes Jewish Hospital, and Jenna works in deaf education at the Central Institute for the Deaf. Naturally, the pair care a great deal about St. Louis and their community.

With the election still fresh in all of our minds, politics was the topic of discussion — more specifically, Proposition M. At some point, right around Eager and I-64, the two were surprised to hear that I was not shedding tears for the half-cent sales tax’s failure to pass.

While I tried to defend my position, noting how Metro has a poor history of managing funds, the possible reallocation of crime, and, of course, how just because you throw tax money at something doesn’t mean the problem will be solved. But, to my brother and sister-in-law, they saw no possible downside to public transportation.

There are always externalities, whether they are positive or negative. Yes, public transportation does lower carbon emissions and can lower our dependence on foreign oil, but I bet shop owners in the Galleria would say those benefits do not justify the costs of increased shoplifting.

Are there ways around this negative externality? Sure. The Galleria has already put into effect an age limit and curfew for young shoppers. Anyone younger than 16 is required to be accompanied by a parent after 3 p.m. How about on the Metro side? Is the honor system truly cost effective? I rode the MetroLink twice a day this summer for three months, and not once was I asked for a ticket. In fact, the first time I was asked for a ticket was this Monday. New York and Chicago have turnstiles and gates for their public trains. Would increased security in St. Louis be too big of a hurdle?

I see three occurrences that might result from adding new security infrastructure. First, people who need to ride the MetroLink and already buy tickets would continue to do so with little or no effect on their commutes. Second, people who frequent the Metro on a semi-regular basis, who sometimes buy a ticket and sometimes do not, will find only a minimal increase to their MetroLink costs. Third, individuals who often abuse the honor system — constituting a majority of the free rider problem — will either finally pay for their passes or use a different form of transportation. Either way, the only real cost Metro would incur is the initial installation of turnstiles and gates, and whatever maintenance and upkeep costs they require.

While Ben and Jenna are devoted to keeping public transportation cheap and available, I hope I can convince them that there are alternatives to a tax hike that might achieve the same end. I agree that any cuts in line service would be devastating to some people, but it is not up to the taxpayers to dig Metro out of trouble they put themselves in. Apparently, judging by the election results, a majority of people agree with me.

We Love the Kids

Back in October, I discussed some of my thoughts about Proposition 1. Just to refresh your memory, Saint Louis County was faced with a new annual tax of one quarter of a cent to fund programs for the mental health and well-being of area youth. Well, the proposition passed on Tuesday by an overwhelming 61 percent of the vote. Now, St. Louis County tax dollars will help to collect $40 million to create a steady stream of funding for emergency shelters, transitional living programs for older youth, outpatient substance abuse treatment, and services to teen mothers.

Here at the Show-Me Institute, we truly love the kids. The purpose of my op-ed was to just open up new alternatives to old problems. It would have been really interesting to see if/how the community might have come together to support at-risk youth through charitable tax credits. Whether or not we could have collected $40 million just from charitable giving is debatable. Nonetheless, it think it could help strengthen some of that social fabric that we seem to have lost in our society.

Unlike most of the staff here at Show-Me, I do not have an economics background (I am sure many of you might be able to tell. Wink wink, Vroman). I did, however, major in sociology as an undergrad, and am currently studying social policy in graduate school. One of my favorite books of all time is Bowling Alone, by Robert Putnam. The book talks about many issues, such as the drastic decrease in civic engagement in the United States, and the demise of social capital. I always thought that social capital and civic virtue were closely related. The only difference is that social capital focuses on the fact that civic virtue is most powerful when it is embedded in a sense network of common social relations. A society of many benevolent but isolated individuals does not have a strong social fabric. Thus, forcing a tax on St. Louis County will not solve the issues plaguing the region’s youth.

This is evident from the reaction of the campaign manager of Putting Kids First, who “praised St. Louis Countians’ concern for children.” Making people pay taxes for youth programs does not show that the constituency cares. It just shows that they are obedient taxpayers. Only close interactions enable people to build communities and allow them to commit themselves to each other, therefore knitting social fabric.

Not a Great Day for Light Rail in Missouri

They weren’t the most popular or eye catching items on the ballot yesterday, but both Proposition M in St. Louis County and the Kansas City Light Rail Proposal were voted down. While we here at the Show-Me Institute never take an official stance on specific political proposals, we do have several pieces of literature about Metro and Missouri transportation. Here are two pieces specifically about Proposition M. Here is a review of Kansas City’s transit plan. Although it’s too late to vote, it’s never too late to become informed about these measures. Now, if you’ll excuse me, I have to catch my bus before its line is shut down.*

* That was just a joke. Everyone knows I drive a Danger Ranger.

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