Detailed commentary will follow, but I wanted to get Mayor Funkhouser’s new regional Kansas City transit plan up on our blog. Here is the Kansas City Star‘s story. Here is some typical boosterism. Here is some blunt critisicm. Here is the Show-Me Institute’s contribution to the discussion. I do like how the mayor’s plan includes some less expensive and efficient parts, like bus?rapid tranit, express buses, and even commuter rail, assuming there is enough demand for the commuter rail. But $600 million for 11 miles of light rail sounds low, considering it cost St. Louis that same amount to do just seven miles from 2004 to 2006 — although that included two miles with significant tunnelling. As I said, much more analysis of this to come.
Six Feet Under and 40 New Laws
Missourinet covers the continuing drama of the pre-need funeral scandals (seriously, what a bizarre thing for a scandal). It seems the summer will be spent in a series of investigative hearings designed to disentangle the issue:
The state has gotten an agreement with National Prearranged Services to suspend all sales of pre-need contracts in Missouri….and has gotten a consent order with the parent company, Lincoln Memorial Life, to stop manipulating the trust funds without telling those buying the plans.
For a quick refresher, prepaid funerals allow households to set aside money for funeral expenses with an insurance broker. Brokers are then legally required to set aside the money in a trust fund, but they maintain rights to 20 percent of the total amount, in the event of cancellation or other changes. Apparently, unscrupulous insurers haven’t been doing their duty and have skipped town with large sums of their clients’ funds. In April, Nick, our former-intern-turned-law-student, argued:
While we advocate free-market solutions here at the Show-Me Institute that shy away from extensive government interference, I don’t think anyone can reasonably claim that a market with a definite and defined end is truly free, and I hope stronger legislation can be put in place to protect consumers of these unique services.
First of all, better laws aren’t the problem. Enforcing the existing laws is the problem. Whenever a scandal erupts, the gut reaction is to legislate because at least it creates the pretense of doing “something.” But if insurers broke the existing laws, what makes anyone think that they won’t do the same thing with news laws? Not only will we face the same problem, but we’ll invite greater government intrusion into our lives.
Second of all, prepaid funerals are a colossally stupid idea. You could just set aside $1,000 in a savings account for 40 years and have more than enough to pay for a funeral. Plus, you’d have the freedom to do whatever you wanted with that money, without penalty, in the event that you decided not to use it for a funeral. Unless there’s some kind of great tax benefit or significant funeral discount for a prepaid plan, I see no reason not to use a savings account instead. Really, I think David said it best in one of his previous posts:
If agreements are not being honored, then the companies should be prosecuted. But that should not serve as a jumping-off point for more laws or more control. […]
Just because something may be a bad deal […] should not automatically be a reason for the government to jump in to protect us from ourselves. This is the type of reaction that leads to the ever-expanding role of government in our lives.
Indeed.
Health Care and Health Insurance
Check out this new website. The Missouri Foundation for Health set it up to educate people about insurance coverage and collect ideas for policy solutions.
Giving people information about health care options is a great idea. And this website is easy to navigate, and has lots of information. Unfortunately, I don’t think it will be as effective as it should be because it’s more focused on insurance than on health care. The question we should be asking is: Can everyone pay for health care? (There are different ways to pay for care, like using a regular savings account, an HSA, catastrophic insurance coverage, traditional insurance, or some combination of the above.) Instead, this website asks, "Is everyone enrolled in a traditional insurance plan?" and then panics when the answer is no, without considering whether that kind of plan would be appropriate for everyone. Surely, we can all agree that a billionaire doesn’t need traditional insurance to cover routine check-ups, even though he or she might want long-term care insurance or a designated savings account.
This feedback form offers a humorous illustration of the website’s misplaced priorities. Along with basic information like your name, zip code, and email address, you’re supposed to check off whether you are "insured" or "uninsured." But without detailed information about someone’s financial and medical situation, a simple yes-or-no answer to to the "Are you insured?" question doesn’t mean very much.
A Memorial for Civil Society
Every Memorial Day that I can recall while I grew up in Portland, Ore., we went to visit my mom’s parents’ resting place. After moving away, first for college and later for work, I got out of the habit of visiting family members’ graves on Memorial Day. There just weren’t any within driving distance.
Now that I’m living in Missouri, it’s a little easier — my great-great-great-great grandpa is buried about an hour and a half northeast of Kansas City, lying at the bottom of an abandoned well with several other people after they were all murdered. Although I visited the site in March, and had considered going there again over the Memorial Day weekend, a nasty bug has laid me out for the past few days … and the rain would have been a dealbreaker anyway — my car didn’t handle so well on the muddy back roads last time.
I did, however, spend some time on Monday thinking about the value of civil society. Because we live in a country largely founded on principles of freedom, tolerance, and the rule of law, people with wildly different cultures, backgrounds, and belief systems can live comfortably together in the same communities. And although from time to time tragic incidents may occur — like the one that killed one of my progenitors, and drove several others out of Missouri — they are by far the exception rather than the rule. There are places in the world where this sort of organized persecution and violent purging happens all the time.
Ultimately, this is one of the most important historical innovations of the United States — despite our differences, for the most part we all manage to live and work together in peace.
Incentives for Students
This week, Gary Becker and Richard Posner discuss programs like the one in New York City that pay children to attend school and do well on exams. I’m surprised that this idea isn’t considered more seriously in St. Louis. After all, St. Louis suffers from some of the same problems as New York, such as a high drop-out rate and low test scores. And many economists support the effort. Becker is enthusiastic in his praise of the incentive programs:
I am confident that it will raise the performance of the students participating. The reason is simply that boys and girls as well as adults respond to incentives, as every parent realizes time after time.
Posner, on the other hand, is more cautious:
The largest indirect cost, I would guess, would consist in relaxed pressure to improve the public schools or to allow them to be bypassed by means of voucher systems. High rates of truancy may be due in significant part to low quality of schools. Paying children to attend school will reduce truancy rates some but without improving school quality, and perhaps without improving the education of the children receiving the payments.
Posner’s point makes sense because the evidence in favor of incentive programs comes from developing countries where children leave school to work and help support their families. They would like to be in school, but they can’t give up the income from their jobs. An incentive program allows them to earn money while attending school.
Before implementing incentive programs, we need to consider whether children are being pulled away or pushed out. If children are leaving to earn money, as is the case in some developing countries, paying them to stay might be appropriate. But if children are leaving because the schools are bad, an incentive program would just keep them in an unproductive environment.
My guess is that both of these factors are at play in St. Louis, at least in the older grades. There’s no reason we couldn’t try to address both. For example, a charter school with afternoon and evening classes would allow students to work during the mornings — like this school in Texas. Or students could combine high school classes with paid internships and apprenticeships. A combined choice/incentive program would keep students in school and improve the quality of their educational experience.
Beating a Dead Horse (With Some New Evidence)
Devotees will remember my reservations about the passage of the property tax reform bill (which prevents backdoor tax increases through reassessment). Well it turns out that compliance with the new legislation is going to cost St. Louis County more than $700,000.
And it may not just cost the county government, but the state government as well. Eugene Leung, St. Louis County’s revenue director, argues that the property tax bill’s requirements amount to an unfunded mandate, in violation of the Missouri Constitution, and therefore the state may have to pony up the bill anyway.
So not only will the bill subsidize existing homeowners at the expense of new homeowners (as I’ve argued), but it also will require taxpayers across the state to pay for the bill’s compliance costs.
“Those Who Can, Do. Those Who Can’t, Close”
Here’s a good way to make a positive out of a negative. The Missouri State Board of Education has decided to close down the Can! Academies of St. Louis, a charter school that began operations this year.
The Can! Academy never really succeeded. Beginning with 440 students (mostly former high school dropouts), it dropped to only 118 by the end of its first year of operation. Administrators decided that the school wasn’t meeting its performance obligations and the decision was made to suspend operations.
The positive, however, is that this is a perfect example of educational choice at work. If Can! were a traditional public school, it would continue to operate regardless of how bad things got. But that’s the beauty of choice. If a school doesn’t work, then it’s discontinued. Competition among schools helps to ensure that only schools that are actually succeeding continue to operate.
In other words, at least the Can! students aren’t forced to remain in a failing school.
The Earnings Tax in Action
Perhaps there is no finer crucible with which to test criticisms of the earnings tax than a general economic downturn. Nationwide, material costs and unease over the economy have slowed the construction industry. An article by the Post-Dispatch claims that St. Louis is no exception.
The same piece concedes that there is a lone exception, office construction in St. Louis County. Although there are certainly more variables behind a developer’s decision than just the earnings tax, examples like these demonstrate the practical insight behind academic musings. As commercial buildings continue to flee city limits despite their heightened desirability in somewhat uncertain times, lawmakers would be well-served to heed suggested solutions.
While We Are Talking About The Farm Bill …
I would be remiss if I did not highly recommend this article from David Nicklaus with the St. Louis Post-Dispatch.
