Page 866 – Show-Me Institute

Are You There, Free Market? It’s Me, Sarah

Posted on May 2, 2008May 5, 2026 by Sarah Brodsky

Following Dave’s example, I couldn’t resist a Judy Blume-inspired titled. The question is about the education market. I wrote the other day about why we shouldn’t extrapolate from a few controlled experiments and conclude that choice is ineffective. Now, I’ve found an interesting podcast at Cato discussing whether there’s an education market in the U.S. at all. John Merrifield points out that the limited choice programs in existence now lack prices, profits, and other essential aspects of markets.

I think the situation in the U.S. is a little better than Meffifield describes it. In Missouri, we have many private schools (including some boarding schools at the high school level), fairly free homeschooling laws, and several charter schools — with an especially strong charter movement in Kansas City. Some people do have educational options. On the other hand, choices for some aren’t the same thing as a free market for everyone. To find out what we need for a real market, listen to the podcast!

Bombardier Tax Credits Revised, But Still a Dangerous, Unjust Idea

Posted on May 1, 2008May 5, 2026 by Dave Roland

The ill-conceived Bombardier tax credit plan is moving forward, albeit in a more limited form. Instead of being worth as much as $880 million, the bill would now grant only a maximum of $240 million in tax credits to the French-Canadian corporation if it relocates to the Kansas City area. While several lawmakers seem to think this adjustment would make the plan worthwhile for the state, even in a best-case scenario the state would not break even on this deal until sometime between 2021 and 2039. That’s a long time to wait for a "payoff" that may never materialize.

The larger problem, however, is that this bill illustrates how the government plays favorites among businesses. Missouri is already home to tens of thousands of businesses that employ millions of people — and they would happily employ more if a lower tax burden freed up the money to do so! The only fair and just way of encouraging this sort of growth is to lower the corporate tax rate across the board so that all companies are treated equally. In the alternative, the General Assembly could offer these tax credit plans to any company that creates new jobs in the state. Either of these ideas would be a far more equitable solution, and it would show loyalty to the businesses already serving Missouri, rather than blatantly offering to bolster the profits of a foreign corporation.

HSAs Are Catching On

Posted on May 1, 2008May 5, 2026 by Sarah Brodsky

Health savings accounts are growing in popularity, according to this article. Six million people are now enrolled in plans that allow them to use HSAs. Critics are still claiming that the plans are just for the wealthy, but that doesn’t match the data:

Karen Ignagni, president and CEO of the trade group America’s Health Insurance Plans, said the GAO’s numbers showed that the typical enrollee deposited $2,100 in a health savings account in 2005 and withdrew $1,000. She said those figures hardly represent amounts that could be described as a tax shelter for the wealthy.

The average HSA owner still has a higher income than the average American, but that’s because most ordinary people haven’t had access to the accounts. Missouri reformed its health care regulations last year, allowing more small business owners and employees to take advantage of the plans. Unfortunately, most states lag behind. Wealthy people are also more likely to have the latest information about which health plans are to their advantage. HSAs are a relatively new addition to the health-care market, and their use will probably spread as people learn about them.

Another criticism of HSAs is that when people have to pay for care themselves (using money saved in an HSA) they receive less health care than they would if they didn’t see the cost. That’s true — and it’s a benefit of HSAs. When everyone uses all the health care services available, without regard for cost, it leads to shortages. Then the people who most need those services may not receive them. HSAs don’t prevent anyone from purchasing health care they need or want — they just give them an incentive to take the cost of care into account.

Judy Blume Does Policy Analysis

Posted on May 1, 2008May 5, 2026 by David Stokes

While I don’t support increasing the gas tax, and would favor more implementation of user-paying instruments like tolls, this is just a horrible, terrible, no-good, very bad idea. We have infrastructure needs that must be addressed, as discussed in depth by yours truly (and Reason) in this study.

The Evidence for Free-Market Education Reform

Posted on April 30, 2008May 5, 2026 by Sarah Brodsky

At Cato-at-Liberty, Andrew J. Coulson and Neal McCluskey respond to Chester E. Finn, Jr.’s criticism of free-market education reform. This criticism takes the form of a quick blog post replying to a book review, rather than a developed argument, but his contention has been brought up by many people so it’s worth addressing. According to Finn, free-market reformers are trying to destroy public education based on crazy philosophies, with no regard for evidence.

As Coulson points out, free-market proposals like tuition tax credits are not incompatible with the ideals of public education, such as preparing children for citizenship. And Coulson has done extensive research on education markets around the world. I’m guessing that one reason people like Finn discredit that evidence is that it’s from other countries. Here in the U.S., the public education system has a tight hold on the education sector, and the only experience we have with a free-market system are a few limited voucher programs. People are then left to make judgments about free-market education from these programs (which are a good start, but not big enough to transform the education sector the way universal parental choice would).

Caroline Hoxby’s research on charter schools presents evidence that’s a bit closer to home. Although charter schools are still public schools, they face incentives more like the ones private schools face. Consequently, they do things differently from the traditional public schools. Here you can watch Hoxby explain why incentives matter.

In short, there’s evidence that free-market reforms work. And there’s evidence that the traditional public system is failing — as Finn himself writes, the nation is "still at risk." That doesn’t look like a crazy philosophy to me.

Terrible Economics in Poll on Stltoday.com

Posted on April 30, 2008May 5, 2026 by David Stokes

I know Internet polls are just for fun, and one should not read anything into them, but that does not mean the people who design the polls should actively promote ignorance and errors. The poll today at stltoday.com does just that. If you go to the poll they have on the main page now, you’ll see that the question is, "Who do you blame for the economic slowdown?" They give you five choices: Congress, the president, the Federal Reserve, private business, or all of the above. This is just absurdity, and promotes a lack of understanding of economics. At least they could have given a sixth choice, along the lines of: "A series of events, often beyond the control of American policymakers, and including the natural movements of the business cycle, leading to a general slowdown in our economy."

This is not to say everyone is blameless. I blame the president and Congress for overspending on programs of all types (particularly entitlement programs) that have us in such debt. Many private businesses and banks have made obvious mistakes with poorly researched loans. Left unmentioned in the poll is the responsibility of individual Americans who took out substantial loans they could not afford, certainly a prime cause of the housing problems we face. I don’t know why the banks get all the blame there. But to attempt to lay blame teaches people that the government controls the economy, which it does not, could not, and should not.

‘Good Fiscal Planning’

Posted on April 30, 2008May 5, 2026 by Dave Roland

Look here for a story that ought to get any taxpayer’s blood boiling. The Post-Dispatch reports that the Foundry Art Centre in St. Charles wants $100,000 to help it pursue some of its programs. Rather than, say, earning the money based on services provided to consumers, and rather than raising the money from appreciative patrons, the Centre’s first priority was to ask the city government for the desired funds. As Dick Sacks, the head of the Centre’s board, put it, "The obvious thing is to go to your daddy[.]" Sacks also said that the request for taxpayer funds was not because the Centre was "broke" or "in trouble," but rather the move was just "good fiscal planning."

I’m sure that many people (and businesses!) would be thrilled if they could figure out how to pursue their pet projects by having their government forcibly extract the funding from their neighbors. But to suggest that this sort of extortion represents "good fiscal planning" is especially sick at a time when so many of the people who would be compelled to bear those costs are already struggling to avoid foreclosure, or fill their gas tanks or grocery baskets.

Sergio Leone Analyzes the Missouri Legislature and More!

Posted on April 30, 2008May 5, 2026 by David Stokes

The good, the bad, the depressingly ugly, a fistful of dollars, just a few dollars more, and once upon a time in Missouri.

P.S. — Thanks to Combest for the links, MOPNS for the videos, and all the newspapers for the articles!

P.P.S. — Just to be clear, the "bad" refers to biodiesel mandates, not KY3, the latter of which I’m a big fan of.

Early Childhood Education

Posted on April 30, 2008May 5, 2026 by Sarah Brodsky

Preschool education has been in the news lately, so I was interested to find this article in the Chicago Tribune. Here’s a word of warning about "universal" versus targeted preschool programs:

Bruce Fuller, a professor of education and public policy at the University of California-Berkeley, said he feared focusing on universal prekindergarten?making preschool a middle-class entitlement?could divert help from low-income families that need it most.

"Why would we use scarce public dollars to subsidize all families if we know the biggest impact is with poor kids?" he said.

The article quotes James Heckman, too; Heckman is a Nobel laureate in economics who’s found that early childhood education has a large positive effect on social and academic outcomes when kids get older. I was disappointed that the article doesn’t mention Heckman’s support for voucher programs that would allow parents to choose between competing preschools. Just because the state subsidizes preschool for low-income children, that doesn’t mean it needs to reinvent the wheel and actually operate preschools, too.

The work of the Show-Me Institute would not be possible without the generous support of people who are inspired by the vision of liberty and free enterprise. We hope you will join our efforts and become a Show-Me Institute sponsor.