Compromise Is Key

Posted on by Patrick Eckelkamp

As noted in an earlier post by David Stokes, Bradley Ferguson just can’t seem to catch a break these days. His latest, and presumably one of his last, attempts to develop his property into a residential development on the outskirts of Washington, Mo., was recently rebuffed by a judge. Apparently, by not granting a writ of mandamus, the county is not forced to place the village law issue on the ballot.

As a lifelong resident of Washington, I have taken particular interest in the unspooling of this whole ordeal. Long before anyone even knew about the village law, this issue was hotly debated in Washington. Although I live across town from the property in question, I have spent a considerable amount of time near the proposed development (family-owned property) — at least enough to offer some insight, hopefully.

In a general sense, I am in the camp that landowners should be able to do with their land as they please — with some exceptions. I do believe that there should be some “soft” planning and zoning laws on the books, to ensure that surrounding landowners are not adversely affected by the actions of their neighbor. For this reason, I am opposed to the village law as a way to completely get around the system and do with your land as you wish. However, I do think that — as a happy medium — some planning and zoning laws do need to be toned down a bit, and not represent the be-all-end-all of property usage. To me, it appears that the village law was a potentially dangerous and extreme way to make a compromise between land owners and planning and zoning commissions.

To illustrate my point above, I believe that a perfect example can be found in Mr. Ferguson’s hard-fought battle to develop a subdivision, against the wishes of the planning and zoning commission. The commission cited traffic safety as a major reason for not allowing the proposed development. Whether or not this concern was legitimate doesn’t really matter here — the subdivision request was denied.

Under the soon-to-expire village law, one form of recourse would be to petition to incorporate the land as a village, and build the subdivision anyway. This may seem like a good alternative, but the village law could also produce very bad results. For example, if someone wanted to building a shooting range in their backyard, in the middle of a subdivision, they could declare their property a village, vote on it, accept it, and build a shooting range. Although the neighbors could try to protect their safety by taking the matter to court after the fact, that course of action isn’t particularly comforting if a bunch of gun-wielding four-year olds are running around the neighborhood in the meantime.

Planning and zoning laws exist for a good reason. These laws are in place to ensure that complete chaos does not erupt. Are some of these laws arbitrary and overbearing? Sure, but that doesn’t mean that we would be better-served by a free-for-all, where people exercise their Second Amendment rights in the stomping grounds of suburbia.

What You Pay For

Posted on by Audrey Spalding

There are wide gaps in pay and benefits between superintendents at rich and poor districts — even for those with seemingly equal qualifications. I suspect that a large reason several superintendents have been so wary of providing their contracts is that they know how big the range in compensation is.

For teachers, pay is pretty simple. Missouri public school districts have “teacher salary schedules” to determine each teacher’s salary. Generally, there are two factors: relevant experience and education. Think of each level of education as a ladder, with years of experience as rungs. When a teacher comes into the district, he’s placed on a ladder rung, and moves up in pay each year he stays with the district. For example, at Waynesville School District (linked above), a teacher with a Master’s degree and three years of experience earns $40,634, while someone with four years of experience earns $41,164.

Those salary schedules are hyper-public. Many districts, such as Lee’s Summit, also post online salary schedules for other employees, such as custodians.

Notably absent is a superintendent salary schedule. Unlike teacher pay, those figures aren’t standardized within a district. Instead, salaries are negotiated when a superintendent is first hired, and usually amended each year at school board meetings. The contracts vary widely. Sure, superintendents tend to earn more at larger districts than at smaller ones. Other things, like whether a superintendent has an advanced degree, and the number of years he has worked at the district, play a role.

But, sometimes, the district just might have more money to spread around.

Continue reading “What You Pay For”

Update on Franklin County’s Village Law

Posted on by David Stokes

Brad Ferguson’s attempts to develop a subdivision in Franklin County have been dealt another setback (note clever use of planning and zoning term) by the court. According to the Washington Missourian, the Judge denied a writ of mandamus (I’m not a lawyer, so no idea what that means …) and the case was continued until August 22. Because the repeal of the Village Law is effective August 28, the 22nd will likely be the last attempt under the current law allowing greater ease of incorporation. It clearly appears that these attempts to incorporate are going to fail.

My colleague Dave Roland argued a short time ago that Mr. Ferguson should be allowed to develop his property however he sees fit, and the issues that might arise out of that could be dealt with later. I believe that the people of Franklin County have chosen, in a democratic fashion, to enact a planning and zoning system, and there is nothing wrong with requiring developers to go through that process, even if the process might go to far (if it does, that is a legitimate thing for the courts to decide).

There are clearly reasons why the commission has decided that this development is not right for Franklin County. These reasons likely come down to the effects and costs it will have on people outside of the immediate development area. If the people in Franklin County want to change this, they can elect people who want to get rid of planning and zoning entirely. (Charges that this is some kind of Potemkin Court, and that the good ol’ boys network is out to get someone, are going to be ignored here.)

At a previous eminent domain forum — the arguments from which apply just as well here — a supporter of eminent domain made an absurd statement and left himself open to withering counterattack when he said we need things like eminent domain for private purposes because he “believed in order.” (A very close paraphrase.) Well, his opponent retorted that he believed in freedom, including the freedom not to sell your property if you don’t want to. Well, I have no such concern with order when it comes to issues of property development — and I believe in freedom, too. But I also have a respect for democracy. If the people of Franklin County have chosen a system of planning, residents should either work within the system or work to change the system. The obvious counterargument to this would ask: What if democracy violates a fundamental right, like Jim Crow laws that prevented African-Americans from voting? Of course, there are issues like this that you should never leave to majority rule — but, without going any further, I don’t think zoning rises to that level at all.

At Least They’re Thinking About Incentives

Posted on by Matt Simpson

In an editorial (link via Combest), the Post-Dispatch argues that MoDOT is exposing Missouri drivers to too much risk by allowing contractors to inspect their own work on the reconstruction of highway 40.

The reason is obvious: Contractors have a financial incentive to approve their own work. Do-overs raise costs, and contractors face penalties if a project isn’t completed by deadline. Inspectors working for the contractors know this. Honest though they may be, they also know the financial interests of their employers.

This isn’t a complete picture of the financial interests of the contractors. If contractors cut corners to meet the deadline and put drivers at risk, they also put their business at risk. How many people would hire a contractor who built a bridge that fell into a river? According to the previous Post-Dispatch article covering MoDOT’s change in inspection policy, Jim Ernzen, an Arizona State University professor and director of the Del E. Webb School of Construction, compared inspections from previous projects to inspections from the highway 40 reconstruction:

“We found very little variance,” he said. “These guys realize no matter how fast they get the project done, if they don’t do it correctly, they don’t get the next job.”

Bingo. If a company is really worried about its long-term financial interests, it won’t do a shoddy job. In the end, the contractors really do have the proper incentives.

Scandinavian Education in the News

Posted on by Sarah Brodsky

Andrew Coulson takes issue with a news story that describes Swedish education as “socialist.” Although schools in Sweden are financed by the government, they compete vigorously for students. Some of the schools are run by for-profit companies, which earn a profit when they deliver satisfactory education for less than the amount of state funding they receive. Who decides whether the instruction is satisfactory? The students and parents, who can always switch to whatever school looks better. Coulson points out that if Sweden’s system is socialist, the American public education system, which assigns kids to government-run schools based on geographic location, is far worse.

Coulson’s right: It’s sloppy reporting to assume America’s education system is normal while calling Sweden’s “socialist.” That’s not to say that we should drop everything and try to be just like Sweden. There are some aspects of the Swedish system that we don’t need to emulate. For example, Swedish schools aren’t allowed to charge tuition, so all schools are limited by the amount of the state voucher. They are also required to teach a national curriculum, although they have some leeway to experiment with teaching methods and to make other changes.

The good news is that we already have some of the positive aspects of Sweden’s system in place here. Parents can choose charter schools or the Missouri Virtual Instruction Program as alternatives to their assigned public schools. Unfortunately, these options are limited — charter schools operate in only two cities of Missouri, and the online instruction program is a monolithic virtual academy rather than competing programs. Sweden is impressive because it has made educational choices available to all Swedish families, and the number of independent schools there has soared since they reformed the system. We don’t need to be just like Sweden, but we should learn from them and offer a wider array of choices to everybody.

Stuck Inside of Retail With the Tax Holiday Blues Again

Posted on by Dan Grana

Before I depart for a semester in London, I plan on replacing a portion of my seasoned wardrobe. I’ll be shopping in the States because (thanks, in no small part, to monetary distortions on a much larger level) the value of my wealth will roughly halve when the “fasten seatbelt” sign illuminates.

As my fellow bloggers have noted, with differing degrees of enthusiasm, we are in the midst of a tax “holiday.” My consternation about this practice is mostly explainable by the theory-driven gripe I’m about to offer. However, I’m also upset that the holiday has landed on one of the few weekends where I have better things to do than draw funds out of savings.

The tax holiday is a feel-good gimmick. Many people, maybe even some needy parents gearing up for another costly school year, will return home from the store with a few more bucks than they otherwise might have. The state budget won’t really suffer, either. What’s the harm? If you don’t find yourself frequently daydreaming about monetary policy, there really isn’t any; enjoy your shopping spree.

Still with me? Then you’ll agree that the tax holiday tarnishes the price system’s fidelity as an indicator of value. This distortion is based on the fact that, at least for the foreseeable future, state and local revenues draw heavily from sales tax. In fact, I think it’s reasonable to say that a good’s price after tax is more faithful than its pretax price at representing that good’s real cost. By this reasoning, the expenditures of state and local governments are inputs partially included in the price of a good. This makes sense, considering who builds the roads on which inventories and customers travel. When this input is discounted, the resulting price could (and will) motivate consumers to buy more than they otherwise would in an efficient market. Sarah’s example of a hypothetical shopper driving far away to cash in on tax-free shopping is a great example of how price distortions can affect individual behavior in negative ways.

I also feel shorted because of the arbitrary nature of the holiday. In general, I’m enthusiastic about reducing taxes and regulation in hopes of bettering economic freedom. However, this instance of a tax break slightly benefits those who shop during this weekend at a tiny cost to those who make purchases on the other 362 days. In order to retain the tax revenue that would be available without a holiday, Missouri officials will have to marginally increase the sales tax rate. If they choose not to do so, the state will have less revenue than it otherwise would. Although it’s certainly not the case that tax revenue necessarily benefits me or any other voter effectively, it does so to at least some extent. The holiday also unnecessarily benefits those who spend relatively more money during these three days. There’s just no good reason for rewarding people who shop this weekend rather than any other.

So, is the tax holiday highly damaging? Absolutely not. However, any humanitarian advocate for it should research more direct methods to promote their desired outcomes. In the end, we are only billing ourselves to indulge in a weekend of slightly less expensive shopping. I think the only really unfortunate outcome of this event is that we further distance public sentiment from good economic thought by allowing shoppers to get excited about a gimmick.

Where Is the Focus?

Posted on by Cynthia Juedemann

Two superintendents recently asked me to disclose a list of donors to the Show-Me Institute, as well as the amount of their donations. This came after my request for their employment contracts with their respective school districts. I asked how their school districts paid them; they asked who paid for my research.

But there’s a crucial difference. Their districts pay them with taxpayer dollars. The Show-Me Institute pays me with private ones. The two situations just aren’t comparable.

Classifying superintendent compensation as part of public record isn’t arbitrary. Missouri citizens fund superintendents, and they have a right to know where their tax dollars are going.

When denying our request to waive research and copying fees, one superintendent wrote that this research wouldn’t serve the public good, but rather personal agendas.

While I understand asking about compensation can be a touchy subject, superintendents signed up for this. They made themselves public figures the moment they took a job with a public entity. But the knee-jerk protectionist tendency is still there. Even when superintendents comply with my requests and send their contracts, the information sometimes come with comments.

“I understand it is your intent to lobby against public schools with this information,” wrote one superintendent on a cover page sent with his contract. “What a shame, the focus continues to be on anything but the students.”

I am not writing this post because I feel the need to defend or justify my research. I would hardly be working for the education branch of an organization if my intent were to fight against public education. I am a product of public education, from elementary school clear through to the public university I attended. But I do want to address, again, the purpose of what Audrey and I are doing.

Continue reading “Where Is the Focus?”

Horrible, No Good, Very Bad Sales Tax Holidays

Posted on by Sarah Brodsky

This policy is egregious enough to warrant another reference to Judith Viorst.

When I argue with people about tax holidays, I usually say something abstract about “economic distortion” and their eyes glaze over. But now I have a concrete example of the harm that tax holidays do:

This will be the 5th time the Show me state has participated in the holiday although nearly 200 cities and over 50 counties have decided not to participate in the event.

The people in the counties that aren’t participating can still buy school supplies without paying taxes — if they drive far enough. Parents decide whether the extra gas costs will be lower than the retail savings — and, if the answer is yes, they make an extra-long trip. They’re going out of their way and using lots of gas in response to arbitrary rules, not because school supplies are naturally more plentiful in the participating counties. If a legislator gave a speech encouraging his constituents to drive far away to buy something they could easily get close to home, everyone would think he (or she) was crazy. But when you call it a “holiday,” it sounds more legitimate, when in fact it’s just a state mandate to waste gasoline. It’s sort of like an ethanol mandate, except not even the corn growers benefit from this one.

Tax Holidays: Love ‘Em, Hate ‘Em? You Decide!

Posted on by Patrick Eckelkamp

For those in Missouri, it’s that time of year again. The Cardinals are fighting for the playoffs, the Royals are fighting to stay out of last place, the temperature and humidity are becoming too high, and it’s a tax holiday weekend! Yes, this is the weekend where all parents with school aged children will flock to the nearest big box store, desperate to cash in on the no-sales-tax weekend during which they will probably end up spending more money then they intended. But who cares? NO TAXES!

The validity of these types of tax holidays has long been debated on this blog, with both sides offering convincing arguments. Personally, I don’t mind the tax holidays. I don’t like taxes in any form, and any time I can get rid of them, I am happy. I know some people will take a more complicated viewpoint that the tax holiday is just distorting regular consumer behavior, and I agree, but I just don’t mind it happening this weekend. The net effects, one way or another, will probably be so minuscule that there will be no real impact on the economy.

Of course, I would favor lower taxes year-round, but for now, I will take what I can get. This argument has sparked uproar in the office, and I suspect several related blog posts will follow this one. I realize that this sales tax holiday is really nothing more than a gimmick conjured up by legislatures, and I guess they found a sucker.

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