A Fantastic Example

Posted on by Dave Roland

The Post-Dispatch has a story today that I really hope garners a lot of attention. A private organization, the Today and Tomorrow Educational Foundation, has collected $12 million to help hundreds of economically disadvantaged students get a better education. The Foundation will award scholarships to roughly 600 children in St. Louis families whose household income qualifies them for the federal free- and reduced-price meals program, allowing them to choose from among 34 private schools for their educational needs.

This kind of charitable effort represents the best in our society. The children who will benefit are currently being failed not only by a school system that lost its accreditation, but by the surrounding public school districts who are refusing to admit students from the city (at the request of St. Louis Public Schools). Where bureaucracy and petty politics are exacerbating the plight of these children, the generosity of private individuals is making an effort to fill the gap and meet at least a small part of the need that exists in this city.

It is also important to note that this sort of private charity is precisely what would be fostered by a tuition tax credit scholarship program. Under such a program, the state would recognize and promote the pro-social behavior represented by such charitable donations, offering limited tax relief for those who contribute to the educational welfare of children in their communities. The availability of such a credit would be especially beneficial, because it would make more people liable to donate to similar foundations and it would allow them to give more than they would otherwise be able to give. As we have remarked before, a tuition tax credit scholarship would be an excellent way for the state to encourage private citizens to invest in the success of their communities’ children.

True Step Forward for Free Markets in Missouri

Posted on by David Stokes

Regular readers may readily recall my writings about utilities. So it is with some surprise that I was not more aware of efforts in the general assembly to deregulate telecom prices in rural Missouri. Then again, I am pleased to report that my job is NOT to sit over the computer and memorize every single bill that gets introduced. So with that happy shrug, let’s get to the point.

The Springfield News-Leader (link via Combest) has the story of a bill passed yesterday that will substantially reduce the regulation requirements for rural telecom companies. I must say that I find parts of this bill to be quaint. The telephone industry seems to be the MOST competitive industry out there. Have you ever noticed that they have these companies that sell these portable and wireless phones that occasionally advertise on TV? Do you remember when Sprint and MCI literally sent checks to people in order to get them to switch their long-distance providers back in the ’90s? Come to think of it, do you remember long-distance charges? Anyway, I think for most people the assumption is that there is plenty of competition in the telecom industry. But apparently there isn’t in some rural parts of Missouri. Isn’t that just adorable?

So when thinking of ways to increase competition, our legislators actually have decided, and I assume the governor will agree, to reduce regulations and price controls. This is exciting and admirable. The concern a few have is that rates will not rise in areas that don’t yet have competition, but if the history of capitalism proves anything, you can be assured that higher rates, and the potential for more profit, along with less regulation, will bring more competition into those areas and ultimately improve access to new services. And by "new," I mean the Internet. I shall gladly point out that this bill passed with substantial majorities and bipartisan support in both houses. All of our legislators deserve to be commended. The Kansas City Star has a story on it here. As one representative I know has an excellent understanding of free markets says:

“This bill is about access for rural Missouri,” said Rep. Charlie Schlottach, an Owensville Republican.

Indeed, it is.

A Contrarian’s View

Posted on by Justin Hauke

A summer gas tax “holiday” seems to be all the rage these days. Last week, the Missouri house approved a bill to rebate the $0.17/gallon Missouri gas tax consumer will pay throughout the summer. On the presidential campaign trail, both Senators Clinton and McCain have voiced their approval of a federal moratorium on summer gas taxes despite, as David pointed out yesterday, overwhelming opposition from economists of all stripes. In fact, more than 200 economists recently signed a petition against the gas tax break — including four Nobel laureates.

Politicians like scapegoats, and big oil companies are an easy target when oil futures trade at more than $120/barrel. But has the run-up in gas prices really made “Joe American” worse off? (Hat tip to Tim Iacono for this idea.)

During the past year, retail gasoline has increased from $2.80/gallon to approximately $3.60. An average American consumes approximately 500 gallons of gasoline per year. So let’s be conservative and assume that the entire purchase was at the higher price, resulting in a $400 higher gasoline bill this year (500 gallons * $0.80 = $400).

But the typical American is also heavily invested in energy stocks through mutual funds in their 401k accounts. A middle-class American family (in their 30s with household income between $40k?$80k) has about $90,000 in retirement accounts. On average, about 70 percent of these accounts are invested in broad U.S. equity indices, of which energy stocks compose about 13 percent. Energy stocks are up about 17 percent during the past year. So the increase in the average American’s wealth from high energy prices is about $1,392 ($90k * 0.7 * 0.13 * 0.17 = $1,392). That means that a typical American family is nearly $1,000 wealthier from the run-up in energy prices during the past year (in a very simplistic sense).

Of course, this ignores the several-trillion-dollar loss in home equity values most Americans have suffered lately, so it’s a small consolation. But it’s an interesting way of looking at the world.

A Victory for Alternative Teacher Certification

Posted on by Sarah Brodsky

Great news: Alternative teacher certification in Missouri just got better. The new alternative route, which combines hands-on experience, mentoring, and education training, will help public schools that are trying to fill math and science positions.

Gov. Blunt explains why we need the new law:

“Under the old system, Bill Gates couldn’t teach a class in computer software in a Missouri high school,” Blunt said. “This bill allows experienced professionals to become certified teachers.”

People always ask, "But aren’t the things they teach in ed school important? What if Bill Gates is a genius but a bad teacher?" And that’s a good question. Teaching technique is important. And it’s certainly true that professionals can be knowledgable about their fields but unable to communicate with students. On the other hand, some people are great educators despite a lack of formal education training. Many college professors, for example, teach well but have never taken pedagogy courses.

By giving teaching candidates classroom experience up front, the alternative certification process may actually do a better job than traditional certification at weeding out smart people who shouldn’t teach. It will quickly become apparent to the candidates and their assigned mentors if teaching isn’t the right job for them. Besides, certifying people to teach doesn’t force districts to hire them. Districts won’t become less selective about hiring people — in fact, they’ll get to be choosier because they’ll have more candidates to consider.

Well, I Guess Hillary Would Not Be a Fan of the Show-Me Institute

Posted on by David Stokes

Apparently, Senator Clinton has no intention of listening to anything that an economist might say (via Andrew Sullivan’s Daily Dish):

George Stephanopoulos began his televised interview with Senator Hillary Clinton by asking if she could name a single economist who supports her plan for a gas tax suspension.

She did not. "I’m not going to put in my lot with economists," she said on ABC’s "This Week" program. A few moments later, she added, "Elite opinion is always on the side of doing things that really disadvantages the vast majority of Americans."

So I guess there is no point to asking her about a phase-out of the city earnings tax. Considering that a few months back she listed management of the economy (a terrifying thought that anyone thinks they can or should do that) as her primary interest as president, you’d think she’d at least fake a little respect for all the economists out there.

Kansas City Light Rail Update

Posted on by David Stokes

I am going to take the recent news about light rail in Kansas City as an opportunity to further plug Randal O’Toole’s work on this subject for SMI. In recent days, the lawsuit against the City Council for overturning the voter light-rail initiative was tossed out by the courts. Now, the Star is reporting on the pressure that the mayor and others are facing as they decide how to move forward, pun intended.

Randal O’Toole thinks Kansas City should move forward the responsible way, with expanded bus?rapid transit and the use of competitive contracting in the provision of transit services. I agree, and hope Kansas City oficials give his ideas strong consideration.

Bodyguards and Pay Raises for City Officials

Posted on by David Stokes

Kansas City has an interesting way of setting salaries for its city officials. The salaries of the mayor and City Council members is pegged to what judges make — either equal to that, in the mayor’s case, or a percentage of that, for the council. The end result is that the Mayor makes $114 K and the councilmembers make $57 K per annum. There has been controversy recently about the decision by the mayor and council to accept the most recent increase in salary. For the sake of comparison, the mayor’s salary is very comparable to that of other mayors, while the council’s is somewhat larger than average. It’s about $20 K more per year than a St. Louis City alderman makes, but Kansas City deserves credit for having far fewer councilmembers (12), than St. Louis has aldermen (28, plus 1 president of the board).

I prefer to see an election take place between elected officials’ salary increases, rather than for them to just go and do it — or, in the case of Kansas City, accept one that was scheduled. There is nothing wrong with elected officials getting raises, I just like to see voters get a chance to take those items into consideration when they vote. Other than that timing issue, I do not think Kansas City officials are overpaid.

We have a strange and related item going on in Saint Louis city. The president of the Board of Aldermen and the comptroller have both added a budget item for security to their offices. In short, they both want a deputy sheriff to essentially be a bodyguard for them. In their defense, the positions would be "as needed" and not full-time — which is especially appropriate for the president of the board, as that is not a full-time position itself.  Even with the realization that the bodyguards would not be full time, only the highest-profile public officials really need bodyguards. The county executive of Saint Louis County does not have any security, so I certainly don’t think the comptroller and president of the Board of Aldermen need it.

The best item in the entire article, though, is at the end when State Rep. Tom Villa, formerly president of the Board of Aldermen, commits a classic Kinsley Gaffe. Here’s a quote from Villa, who had security when he was board president:

Tom Villa, the last Board of Aldermen president to have a deputy sheriff assigned to him, said he used the position as an extra staffer, "running errands, delivering papers and, in some cases, serving as a driver."

Just classic. You provide a bodyguard for security so an elected official can have someone else to run errands. Beautiful.

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