KIPP Schools Are on the Way

Posted on by Sarah Brodsky

It’s official: Knowledge Is Power Program (KIPP) charter schools are coming to St. Louis:

The announcement today from the San Francisco-based Knowledge is Power Program makes Washington University the sponsor a cluster of five tuition-free, hard-work public schools, aimed at serving roughly 1,500 St. Louis students over the next 10 years. The first, a middle school, would open in the fall of 2009.

This is great news for children in the city, although they’ll have to wait until 2009 to attend. Here’s a map of KIPP schools already operating. These schools share a rigorous academic program and have been very successful. Now some students in St. Louis will have the opportunity to benefit from KIPP.

The Economic Impact of Smoking Bans

Posted on by Eric D. Dixon

One of our scholars, Michael Pakko, has a piece looking at the economic effects of smoking bans in this month’s issue of The Regional Economist, a quarterly journal published by the Federal Reserve Bank of St. Louis. He’s written a few other pieces about smoking bans during the past few years, and this new article (which has been spotlighted by the Kansas City Star, the Post-Dispatch, and KWMU) brings a considerable amount of fresh research to the table, much of which "suggests that at least some businesses do suffer costs." Pakko concludes that, "When they consider passing smoking bans, policymakers should study evidence both from public health professionals and from economists."

Pakko’s conclusion supports a crucial insight about smoking bans — they’re not just a matter of public health. Any general health benefits that may be gained from blanket anti-smoking laws have to be weighed against other measures of human welfare and happiness.

I’ve never smoked, but during the course of my life there have been many occasions that I’ve decided it’s worth the small health risks of some amount of exposure to secondhand smoke in order to, say, see live music (or, when I was much younger, earn money by working at fast food restaurants). In every one of those instances, I would have preferred a non-smoking environment, and I’m sure some other people shared my preference. But all the smokers, had they been forced by a blanket law to cease puffing away, would have enjoyed themselves less, to varying degrees.

Economists have a broadly-defined word for happiness, or satisfaction: utility. Although a mandated non-smoking environment increases my own utility, it simultaneously decreases utility for those who are barred from smoking. I can probably estimate my own utility in general terms, by using thought experiments: For instance, I would put up with a smoke-heavy environment to see King Crimson, but the smoke would probably edge out my desire to see Ben Harper, a performer I enjoy to a significantly lesser extent; so if I consider the amounts I’d be willing to pay for tickets to see each band under ordinary non-smoking conditions, I can roughly calculate the amount of utility I’d lose if a smoky environment made me miss out on music I’d otherwise enjoy.

But I can’t calculate the aggregate utility that all the smokers at an event would lose if a law prevented them from smoking, because they would each have a different marginal utility for the value of smoking at a given concert. Absent the actual observation of each smoker’s preferences over time, there’s no way to measure that aggregate utility — and, so, no way to measure the amount of happiness or satisfaction they lose after a smoking ban is passed, or weigh it against the increased happiness of non-smokers.

This is one reason economists tend to be suspicious of regulation — because centralized authorities have no mechanism to measure the aggregate utility of the people their laws will impact. The economic effect of a regulation on specific businesses is an important subsidiary measurement, but it’s only the tip of the full utility iceberg. Markets, though still far from perfect, ultimately do a better job of maximizing aggregate utility because each individual market participant is able to estimate his or her own utility in a way that no legislator can, and then act accordingly — either buying a product, attending a concert, patronizing a bar, or not.

If a large enough number of other people enjoy smoking, and accept its long-term health risks, I have no place denying them the opportunity to do so. If a privately-owned "public" establishment decides it wants to cater to smokers, I can choose to patronize a different business — or put up with the smoke, if the other aspects of a given opportunity set outweigh my loss of utility from the smoke itself.

At the very least, if the public-health mavens are resolute in their insistence that a regulatory solution is necessary, there are options other than blanket prohibition that at least acknowledge the existence of varying individual preferences, such as proposals to provide incentives for businesses to go smoke-free, or allowing some establishments to opt out of a ban, if they and their customer base want it badly enough. Markets don’t provide results that are good for all people, all the time, but at least markets aim to please large segments of the population, most of the time, by catering to decentralized, individual needs and wants.

Update and Correction to SMI Case Study on Pharmacy Privatization

Posted on by David Stokes

Last year we released a case study on the privatization of the county’s pharmacy services. With the release of the 2008 county budget at the end of last year, we have been able to update and correct come of the information it contains. Here is the original study. Here is a statement explaining the updates and corrections in detail. Finally, here are some things to keep in mind about the update and corrections:

  • Nobody called us on this. Our own follow-up research led to the corrections, and we are making these changes in the interest of accuracy.

  • The error in the 2007 data was not our fault. We used a number provided to us by Saint Louis County. I am certain that nobody intentionally gave us a lower-than-accurate number. It was just an error. These things happen; you correct them and move on.

  • Most importantly, the essential point of the case study, and its conclusions, remain exactly the same: that privatization has been great for county government, patients, and taxpayers. The only change is that the new numbers show lower savings — but there are still savings. If you adjust for inflation, the new numbers still show substantial cost savings. The improvements to patient services brought about by privatization remain a primary argument for the benefits of privatization, and are not changed by these new numbers.

Bellefontaine Habilitation Center Is a Difficult and Emotional Issue

Posted on by David Stokes

The St. Louis Post-Dispatch has a very thoughtful editorial this morning (link via Combest) about the Bellefontaine Habilitation Center in north Saint Louis County. The problems there are heartbreaking and long documented. There have been cases of abuse, neglect, and patient death both at the center and among patients who have been moved to private facilities for care. Each case is awful. The Post states, "As it turns out, privatization is no magic bullet."

Indeed, privatization is not necessarily the best choice for circumstances such as this, which deal with the absolute neediest members of our society. If I may digress a bit, one of larger problems I have with the welfare state is how quickly and easily the definition of "needy" gets expanded to include a very large number of people. You expand Medicare to serve anyone who wants it, and then when the governor merely tightens the eligibility requirements, to try to focus more resources on those who truly deserve it, he gets ripped for destroying families — regardless of whether that actually happened. So, yes, I clearly favor substantial reductions in the welfare state at the state and federal levels.

But that is not really an issue here, because everyone can agree that the patients at Bellefontaine clearly deserve state care if their own families are unable to provide it. And I don’t mean financially unable — the level and difficulty of care required for many of these patients is beyond what most families can perform. The state has a role in providing for these citizens, and the question is whether the state or the private sector should actually perform the job.

As for these patients who require lower levels of care, I don’t see anything wrong with allowing qualified private facilities, with appropriate state oversight, to provide that care. And I certainly see nothing wrong with firing 125 employees who are no longer needed because the patients have been moved. However, for the remaining 160 or so patients who need the greatest level of attention, the state should continue to provide the highest level of care possible. Only after private facilities have proven they can handle the most demanding patients, which may never happen, should the state consider moving them out of Bellefontaine. Until then, resources must be directed to provide for those patients.

Now, I look foward to discussing the SCHIP program and wondering why the hell families at 300 percent of the poverty level deserve to have the taxpayers pay for their kids’ health care, so I can return to being a tightwad.

And the Slippery Slope Award of the Day Goes To …

Posted on by Nicholas Loyal

Missouri Sen. Scott Rupp, for his recently introduced bill that seeks to end cyberbullying in the wake of the tragic "MySpace suicide" of Megan Meier, the Dardenne Prairie girl who hanged herself after being the target of hateful messages on the popular social networking website.

First, the details of this case are harrowing, and should provide an excellent cautionary tale to parents in the age of Web 2.0. Now, more than ever, it is essential that attention be paid to what children do and have access to online (the Washington Post has an excellent discussion about this topic).

The problem I have with Sen. Rupp’s bill, though, is that it sets a dangerous precedent for online regulation. The Internet is an entity that has grown and changed lives largely because of anonymity. This anonymity brings freedom in cyberspace, allows a shield of privacy to protect users from having their lives put on display for the entire world, and protects online residents from the actions of others. After all, a law that punishes a "cyberbully" could be applied to the wrong user of a guilty account, because it’s difficult — if not impossible, in many cases — to prove whether a given users was the one at the keyboard, or whether it was a bystander unaware of the harm being done.

Sen. Rupp’s bill has the good intention of attempting to right a new and unfamiliar wrong, but I cannot agree with his remedy. The Internet may be the greatest common good that the modern economy has ever seen, and any attempt to manage it with a political agenda will bring far more harm than benefit.

There’s No Free Lunch – Even in Banking

Posted on by Sarah Brodsky

In the latest proof that foolishness knows no party, Bill Clinton and Arnold Schwarzenegger have teamed up to write about payday loans in the Wall Street Journal:

Imagine the economic and social benefits of putting more than $8 billion in the hands of low- and middle-income Americans. That is the amount millions of people now spend each year at check-cashing outlets, payday lenders and pawnshops on basic financial services that most Americans receive for free — or very little cost — at their local bank or credit union.

The high interest rates charged on payday loans reflect how much riskier those loans are than the typical transactions higher-income people handle at full-service banks. When a mainstream bank lends money, the borrower is typically someone who has deposited money there and who has a relationship with the bank. Payday lenders don’t have that security.

Payday lenders’ high charges and fees reflect a cost, and that cost won’t go away just because people switch to full-service banks. Someone has to pay for risky loans, and if the lenders don’t, someone else — probably taxpayers — will have to. Or, as a result of usury laws, poor people won’t be able to borrow money at all.

Clinton and Schwarzenegger suggest that their plan won’t be costly because it will just encourage people to use cheap services that are already there. But switching risky loans from one kind of bank to another won’t make the cost go away.

Poor people can escape payday loans if they earn more than they spend, save enough to deposit money in an account, gain financial literacy and form relationships with mainstream banks. That’s a worthwhile goal, but we can’t achieve it with a quick fix.

Star Headline Whets Appetite

Posted on by David Stokes

The Kansas City Star has a preview of tonight’s State of the Union speech, which I will tune in to only by default, because nothing else is on — if I watch at all. That bit of honestly aside, some parts of it have my tongue wagging, although I have no faith whatsoever that these things will pass Congress — and I have to ask why the President didn’t attempt to do these things earlier in his administration:

Offering modest new plans, Bush proposed a $300 million "Pell Grants
for Kids" program to help poor children in struggling public schools
pay for the cost of attending a private school or a better public
school outside their district.

I love this idea, although as I think about it I don’t know how much I like it as a Federal program…

Bush also was to urge elimination of 150 federal programs that [White House counselor Ed] Gillespie called "wasteful or bloated."

Dare to dream for this to actually happen. Again, why wasn’t this proposed earlier in this administration?

The president will issue an executive order Tuesday ordering federal
agencies to ignore "earmarks" that aren’t explicitly enacted into law,
erasing a common practice in which lawmakers’ projects are outlined in
nonbinding documents that accompany legislation. The move is aimed at
making doubly sure that lawmakers have the opportunity to strike
earmarks during floor debates.

However, Bush’s plan leaves untouched the more than 11,700 earmarks totaling $16.9 billion that Congress approved last year.

If the earmarks from last year are not legally required to be spent, then why on earth is the money going to be spent? Who cares when they were passed? I guess it’s better late than never, but this is awfully damned late.

This is the type of thing one can get very excited about — but this is just a speech, not a piece of legislation. When the latter succeeds in doing these things, then I will get REALLY excited.

Great Ideas Abound for Kansas City’s School District

Posted on by Dave Roland

The Kansas City School District is (once again) stumbling down the path (recently blazed by the Saint Louis School District) toward unaccreditation. Because of the district’s continuing struggles, Superintendent Anthony Amato — who was earning a cool $220,000 per year — has been pressured into stepping down into a "consulting role."

So now that the district is in the market for its 10th superintendent in 30 years, to whom could the Kansas City schools look for "interim" leadership? None other than Dr. John Martin, the deputy superintendent who helped oversee the Saint Louis schools’ descent into unaccreditation. To be fair, my knowledge of Dr. Martin is largely limited to his heated opposition to charter schools, and he surely cannot be blamed for the sorry state the Saint Louis school system was in when he arrived. But if his presence as an administrator has done anything to help that district, I am not aware of it. Martin will reportedly receive compensation on the order of "$20,000 a month" in his new position.

Really, Kansas City School District? There were no other potential interim superintendents out there who, say, hadn’t recently failed to help a district avoid loss of accreditation?

For the sake of the children in those failing schools, I certainly hope that Dr. Martin proves to be more effective in Kansas City than he was in Saint Louis. But if I were a parent in that district, I would be very concerned about this choice of interim superintendent.

Media Round-Up for Kansas City Light-Rail Release

Posted on by David Stokes

The Show-Me Institute’s study on light rail proposals for Kansas City certainly received a good deal of attention yesterday. Many in the KC media, but certainly not all, seemed to focus on the crime aspect of the study, which was a small part of the overall study. Our editor, Eric, previously posted a rebuttal to some of the criticisms of Randal O’Toole’s use of crime stats. I am going to leave that aside, as there are much more important reasons why Kansas City should give very serious thought to reconsider moving forward with light rail, such as the small proportion of jobs downtown in comparison to other downtowns, and the fact that the much-desired new development along light rail lines almost never occurs without additional subsidies. Yes, when I ride MetroLink, I feel very safe — but, then again, I am a total badass …

A quick note to commentators and blog posters everywhere: It is not sufficient to say that Randal O’Toole is simply opposed to light rail, and as such this study should be discounted. You have to actually read the study and then document where you think he may be wrong. So far, after reading various blog comments and news articles, I have not seen anyone do the latter.

So here goes the media roundup, if you are interested — as I am sure you are. The Kansas City Star published a solid article on the study, and linked to the full document as well, so readers can judge the arguments on their own — which we appreciate. Randal O’Toole and Crosby Kemper appeared live on two radio shows yesterday. The podcast of the "Chris Stigall Show" on KCMO AM 710 is here, and we’ll provide a link to the "Shanin and Parks Show" interview on KMBZ AM 980 when we have it.

I can only find one streaming video online for the TV station interviews. The video of the NBC Action News report is embedded here. Two TV stations, Fox 4 and KMBC-9, only have the online text versions of their stories online. KCTV-5 also appeared at the press conference, but I can’t locate the story on their website. We appreciate the coverage from all of these stations!

We will link to additional stories about the study as they appear. We are pleased to be a part of the discussion about this issue in Kansas City. Our primary goal was to give the people of Kansas City additional information about the other options they have for mass transit. If they choose to pay the higher taxes that will be required to move ahead with light rail, that is entirely up to them.

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