I’m Just Eager for Tolls

Posted on by Matt Simpson

It would be wonderful if everyone took into account the full social consequences of their actions before making a decision to act. Almost every action you take has some effect on someone other than yourself. And you probably don’t completely take that into account. Consider, for example, your decision to take Eager to Hanley to cross over highway 40. This imposes costs on everyone who must line up behind you in traffic. And, as the Post-Dispatch notes, the traffic is terrible … and confusing:

On most days, getting from Eager to Hanley is a guessing game for drivers unfamiliar with the intersection. Figuring out which lane leads where causes some drivers to cut over at the last minute, triggering road rage.

Hanley Road is one of the most traveled streets in the county, with more than 50,000 vehicles using the stretch near Highway 40 daily, according to the county.

An ideal solution would force drivers to take into account the costs they impose on each other when they drive through congested areas, while also providing an incentive for firms to provide alternatives or improvements to the route. Tolls are about as close to that ideal as you can get. If drivers were forced to pay a small fee to cross the highway at Eager and Hanley when it is congested, many of them would find alternate routes or perhaps try to cross when there is less congestion. This would relieve the congestion and provide a quicker route for those who were willing to pay for it.

The tolls would also send a clear signal to anyone who provides transportation services, both governments and firms: If you can provide an alternate route or means of crossing the highway, or improve the intersection, you can make a tidy profit.

It looks like it’s a bit too late for tolls at Hanley and 40, though:

St. Louis County and Missouri transportation officials announced Monday an agreement to add the intersection to the $535 million Highway 40 (Interstate 64) rebuild. The intersection that leads to dozens of stores and restaurants will be rebuilt as a “jug handle” intersection, eliminating left turns to and from Eager.

Perhaps next time, transportation officials will keep our work in mind when deciding how to fund their next project.

Their Fair Share?

Posted on by Cynthia Juedemann

November elections garner higher turnout. But they cost more, too. So, if a school district puts a finanical issue on the ballot in November, they’ll get more voters to the polls than they would in April — but boosting the voter count will cost them. It’s not a question of just typing a few more lines on the ballot.

How much does the cost increase?

“It varies,” said Darryl Kempf, Cooper County’s clerk. “There is no magic number.”

Political subdivisions — school, fire, and hospital districts, to name a few — help split the election tab.

“Missouri law requires that election costs be shared proportionally,” Betsy Byers, elections outreach and education coordinator for the Missouri Secretary of State, said. When determining how much each subdivision pays, the county charges based on the number of registered voters.

Continue reading “Their Fair Share?”

Cato U

Posted on by Patrick Eckelkamp

Those of you who read this blog for in-depth analysis and riveting commentary, I’m sure you haven’t noticed my absence, but for everyone else: I HAVE RETURNED! After a wonderful week in San Diego, I have returned to my cubicle and have resumed normal intern duties. St. Louis is just as I remember — hot, humid, and no beaches.

The past week was an awesome experience. For those of you who don’t know, my fellow intern Dan Grana and I were Bastiat scholars at Cato University, which is a weeklong seminar organized by the Cato Institute that focuses on enhancing freedom and liberty through lectures and discussions. It is a great experience, and I recommend it to any libertarian — or anyone who is just generally interested in promoting freedom. Although the days were somewhat long (9 a.m. to 9 p.m.), it was completely worth it. The days were filled with incredible speakers, ranging from Tom G. Palmer of the Cato Institute to Rejoice Ngwenya, who is a leader against Zimbabwe’s corrupt president, Robert Mugabe. Even after the daily lectures were finished, the conversation continued. We spent most nights at the Veranda Grill discussing liberty and other issues with like-minded individuals.

The entire week was a first-class experience. The food and hotel were awesome, and the speakers were even better. Before I arrived in San Diego, I was a little apprehensive about the trip. I was worried that the speakers would not be entertaining, or the days would be too long, but it turned out that my notions were unwarranted. Again, if anyone ever has the opportunity to go to Cato University, I highly recommend it. I’m even thinking about going again next year.

Propositioning

Posted on by Audrey Spalding

In 1982, the state of Missouri decided to give more money to schools, and to lower each school district’s property tax levy.

The first part, giving more money to schools, is working well enough. For the 2005–06 school year, the state handed out about $839.5 million from the designated-for-schools one-cent sales tax. That’s up from the $634 million it gave to schools in 1983–84 (both figures adjusted for inflation to 2008 dollars).

But school districts have, through local elections, bypassed the state’s effort to keep property taxes down. While local property taxes are lower than they were before 1982, they have crept up from a little more than $2 to about $4.

To give schools more money, the state levied a one-cent sales tax, in legislation known as Propsition C. Each year, revenues from that tax are collected and divvied up among each public school student.* Very roughly, that comes to about $845 per student, according to Roger Dorson, director of finance for the Missouri Department of Elementary and Secondary Education.

The money is then sent out to schools, but it comes with strings. Half of the Prop. C money is new money for schools — a gift, if you will. But the other half is more complicated.

When a school district takes the second half of the Prop. C money, it must “roll back” the local school property tax levy. By how much? Well, enough to lower its tax revenues by the amount that the state gave it. For example, if a school district were given $1 million from the state, it would have to lower its levy so that it took in $500,000 less in property tax revenues.

Effectively, the state was trying to move some of the burden of funding schools from property owners to the people who spend more.

But school districts have gone to the ballot box to get more money, on top of what the state began to give them in 1982. Since Prop. C took effect, school districts have been asking voters give up the state-mandated reduction in local property taxes.

Voters have said yes. As of this year, 430 school districts (of 524) have full waivers, according to Dorson. That means those districts do not — and, unless their voters asked for it, will never — have to reduce their property taxes because of Prop. C revenues.

I won’t say that Prop. C rollbacks are unfair. After all, district voters are the ones who approve them (though which voters vote is something to watch out for). But it is apparent that the state’s goal to keep local property taxes low is slowly eroding. And that a statewide sales tax now helps foot the ever-growing cost for schools.

* In determining state aid, each school calculates its average daily attendance. Students are weighted differently if they come from low-income families, are not native English speakers, or are special needs students. After those factors are taken into account, the state awards aid based on each school district’s “Weighted Average Daily Attendance.”

Extremely Important?

Posted on by Cynthia Juedemann

Sixty-five percent. If you get it on a test, you’re barely scraping by. If you get it as turnout in a presidential election, you’re thrilled.

In fact, Missouri’s average county turnout in the 2004 presidential election was just about that — 65.12 percent. But that’s in the highest-profile election in the United States. So, what happens in local school board elections? Well, obviously, turnout dips. Or plummets.

In a June 2008 CNN/Opinion Research Corporation poll, 83 percent of Americans said that education was either ‘extremely important’ or ‘very important’ to them in making their decision on who to vote for this November.

If education is so important to so many people, selecting the president is just step one, right? We should expect to see high turnout in local elections, too, because it’s those elections in which voters ostensibly have the most direct influence on their own local education policy.

In Missouri school districts, at least, the exact opposite is true.

Continue reading “Extremely Important?”

Trying to Meet the Minimum

Posted on by Matt Simpson

The Post-Dispatch reports that 2 million Americans will get a raise today. Why, you ask? They probably bet on the Brewers. … Actually, today the federal minimum wage increases by 70 cents, to $6.55 an hour. This is the second of three annual increases that will bring the minimum wage up to $7.25 an hour.

A raise for 2 million Americans sounds like a wonderful thing, almost too good to be true. Indeed, the Post-Dispatch reports one of the negative side effects:

The bad news: […] some small businesses will pass the cost of the wage hike to consumers.

This is one of many things businesses can do to cope with an increase in any of their costs, whether or not that increase takes the form of labor costs, but this isn’t the only option. Suppose you run some sort of business that employs minimum wage workers, such as a restaurant or a car wash. Keep in mind that in running this business, your main goal is to maximize your profit — within the bounds of the law, of course.

Now, suppose the minimum wage rises, increasing your labor costs. What do you do to keep your profit as high as possible? Well, what would you do if anything else you bought increased in price, like, say, gasoline? You’d probably find a way to buy less of it, either by cutting back entirely or by finding some workable substitute. In this case, you would be trying to find ways to cut back on the use of unskilled labor in your business.

There are numerous ways to cut back unskilled labor. The Post-Dispatch already mentioned one: raising prices. How does this cut back on unskilled labor, you might ask? Higher prices will drive some consumers away, so your business won’t need as much unskilled labor as before.

There are also many substitutes for unskilled labor. You could hire someone more skilled, or replace the worker with machinery of some sort. Something as simple as adding a timer onto the fryers at a restaurant can cut the amount of labor needed to produce fried food.

Your could also find ways to decrease compensation without decreasing wages. Cutting benefits is one example. Or, you could remove some costly “luxury” like air conditioning, making the work environment less pleasant in the process.

The main question is, how much of each of these effects actually occurs? If businesses find ways to significantly cut the use of unskilled labor, unemployment among that group will rise, and perhaps so will unemployment in general. If businesses opt primarily to raise prices, low-income individuals will be hurt the most. If businesses instead cut non-monetary compensation, or reduce workplace amenities, the increase in wages seems to be a wash. A classic Show-Me Institute study has even more detail.

The intended goal of a minimum wage, of course, is to reduce poverty by helping low-income families. However, the minimum wage is a terrible policy tool for accomplishing that goal. According to another one of our classic studies, the typical minimum wage worker is still in school, living with a relative, and part of a family earning $57,000 a year. On the other hand, the typical poor worker is older, out of school, earning $9.58/hour, and the sole earner in a family with children. They are poor not because of low wages, but because they don’t work very many hours. In fact, only 25 percent of low-wage workers are below the poverty line. As a result, the study estimated that Missouri’s increase of the minimum wage to $6.50 would only reduce poverty by less than half of a percentage point.

Increasing the minimum wage won’t do much for most of the people it is intended to help, because it does a poor job of targeting them. Something that targets poor families explicitly and directly, like, say, the earned income tax credit, is far more effective at reducing poverty.

Inspiring Policy From the Netherlands

Posted on by Sarah Brodsky

This article from the St. Charles Journal is a few days old, but it’s still an interesting read. The subject: Tom-Jan Meeus, a journalist from the Netherlands who is traveling around the United States, and writing about politics and culture here. The article describes some stories Meeus has reported on recently, and one of them is the midwifery issue in Missouri. Meeus notes that midwifery has gained wider acceptance in the Netherlands:

“My two kids were born with the help of the midwives,” he says.

The author of the article seems more interested in Meeus’ predictions about Obama, and quickly moves on to discuss politics and the upcoming election. The comments to the article, though, pick up on the midwife issue. Here’s what “Natalie” has to say:

I love that he interviewed the woman and her midwife. Very cool. That is definitely a big issue right now, whether women here will have the freedoms women have in other states and countries, and the access to skilled and personal care during pregnancy and birth.

I rarely find myself arguing that Missouri should resemble Scandinavian countries, but on the question of freedom for midwives and expecting parents, I’ve got to agree. Oh, and we could use more parental choice in education, too.

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