In Defense of Ticket Scalping

In the comments to a South East Missourian editorial, somebody who calls himself (or herself) "trimetrov" asks:

There are no "bargains" in scalping – how is paying MORE than face value ever a bargain??

If people wanted to sit behind home plate, they would have paid for it beforehand, not for more money later…except that the ticket brokers already bought all the seats.

Allow me to address this challenge. This writer posits that the people paying more for tickets through a third party are the same people who would have, had they had the chance, bought them at the original price when they were first sold. I don’t think that’s the case. Ticket brokers aren’t the only ones who want to make money — stadiums want to make money too. If fans were willing to pay a higher price from the start, the tickets would have been given a higher face value. You could argue that the original seller couldn’t price-discriminate, and now ticket-brokers come in and make a profit from charging different prices to different consumers. But that doesn’t make sense either, because stadiums already offer tickets for different seats at a range of prices.

If, on the day of a game, no one is willing to sell a ticket for face value, paying more than face value may indeed be a bargain. I would rather pay twice the face value from a reliable ticket broker than three times the face value from a fan.

Columbia School District Should Abandon Frivolous Lawsuit

To date, Columbia Public Schools has spent roughly $82,000 on the “adequacy” lawsuit, despite the fact it is a no-win venture for the community. Several other plaintiff schools have come to a similar conclusion and have declined to join the appeal. CPS should do the same.

The plaintiff school districts are spending tax dollars to hire private law firms to sue the Legislature — i.e., us — and the attorney general’s office has used tax dollars to hire a private law firm to defend the Legislature. The cost so far, just for private law firms, is more than $4.6 million, and that does not count the time of the attorney general’s staff lawyers or the court. I find it remarkable that some members of our school board think this is an appropriate way to spend education revenues. During the 10 years I spent as chairman of the University of Missouri–Columbia Economics Department, it never occurred to me it would be acceptable to use some of my department budget to sue the Legislature for more money, even though MU is also mentioned in the Missouri Constitution.

Issues of propriety aside, let us turn to some specific reasons I believe CPS is ill-advised to continue its participation in this lawsuit.

First, it would be difficult for the plaintiffs to have lost this case more completely. Judge Richard Callahan’s decision is clear, concise, and logical. The “adequacy” aspect of the lawsuit was based on the Missouri Constitution’s requirement for free public schools and the stipulation that the Legislature must devote at least 25 percent of revenues to that end. Judge Callahan ruled both requirements are being met easily. The plaintiffs asked the judge to read something into the state Constitution that is not there, and this he refused to do. Of course, the notion that a given level of spending can be reliably associated with a given level of MAP achievement — “adequacy” — was never established by the plaintiffs because it is statistically impossible to do so, a point made repeatedly by the three economists, including myself, who testified for the defense.

Second, as the magnitude of this defeat becomes more widely recognized, the “tax base” of paying plaintiff districts is shrinking. Some major districts have publicly dropped out of the case, including St. Joseph, Liberty, and Francis Howell. More are expected to follow. As the number of participating districts falls, Columbia Public Schools and Columbia taxpayers will be left to bear a larger share of the litigation bill. That might make narrow sense if there were reason to believe that, ultimately, there is something in this for Columbia, but that is the biggest folly of all.

Let’s begin with the “equity” issue. Under the current system, CPS fares well. We are a relatively wealthy district that enrolls 1.5 percent of Missouri public school students, yet receives 1.7 percent of state K-12 funding. Our per-pupil spending is higher than the state average. What can CPS hope to gain in an “equity” lawsuit? Is a Cole County judge likely to find Columbia schools relatively impoverished?

Now, let us consider “adequacy” — the argument that almost all districts are underfunded. The plaintiffs are asking for roughly $1 billion in additional state funds for K-12 education. If they are successful and the Supreme Court tells the Legislature it must spend $1 billion more on public education, that money must be found somewhere in the state budget. Given the Hancock limits on raising taxes, we must ask lawsuit proponents where they propose to obtain these additional funds for K-12 education.

With tax increases off the table, K-12 gains must come at the expense of the rest of the state budget. One billion dollars more for K-12 implies a 21-percent cut in spending for the non-K-12 budget. Assuming those cuts are across the board, the MU budget would be cut by 21 percent as well, in which case MU would lose more than the entire state funding of CPS. Whatever the size of the boost in K-12 spending, every dollar CPS would gain through this litigation implies at least a $2.25 cut in the MU budget. This assumes Medicaid is subjected to the 21-percent cut. If Medicaid escapes the across-the-board cut, the MU loss is even larger.

Along with making higher education even less affordable, a plaintiff victory must lead to cuts in a wide range of state-provided social services. The primary recipients of those programs, poor families and children, would end up worse off. We elect legislators to make these difficult spending decisions and to balance the complicated tradeoffs. That is not the job of our courts.

The most likely outcome of the appeal is that CPS simply will have wasted tax dollars on frivolous litigation. Our school board, however, is playing with fire. In the remote chance the plaintiffs win on appeal, the broader Columbia community might well be seriously harmed because of large cuts to the MU budget. It is time to stop participating in this nonsense and spend our education tax dollars on education — and not on $250-an-hour legal fees.

Michael Podgursky is a professor of economics at the University of Missouri–Columbia and a member of the Show-Me Institute board of directors.

Why Don’t They Just Designate the Building as Blighted? It’d Save Some Time

This has been a hot topic around the office, but as I was skimming through our recent posts, I realized that we have yet to mention it here.

Jim Roos, a veteran activist against eminent domain abuse in Missouri (and a notable contributor to our recent eminent domain study), has painted a two-story mural on the side of a brick apartment building near Soulard, owned by his housing ministry, which advocates an end to state eminent domain abuse. The mural is visible to drivers heading north toward downtown on I-55.

The city of St. Louis has cited Roos for displaying a sign that officials say violates city zoning ordinances. This has prompted a federal lawsuit challenging the ordinance on free speech grounds. In the Post-Dispatch‘s coverage of the issue, Roos has a really great quip:

“I think if it said, ‘Go Cardinals,’ we wouldn’t have any problems."

How sadly true.

The city of St. Louis routinely approves exemptions for large signs, but argues that its opposition to Roos’ particular sign is in the interest of “clutter” and neighborhood complaints — not political message. One city official commented:

"Can you imagine what our city would look like if everyone were allowed to paint a 363-square-foot, two-story sign on their buildings?"

I’m not sure, but I can guess that it would probably look something like all the buildings downtown with two-story “Go Cardinals” signs displayed on them.

But apparently that’s not “clutter.”

Clarification on Quote in Columbia Daily Tribune

This past Friday, MoDOT held a forum on future transportation funding in Missouri. It was a very worthwhile event, and the Columbia Daily-Tribune had a good article on it in their Saturday edition. I wanted to quickly clarify my quote in the article (and, by extension, alert you to it). Here is my quote:

David Stokes, a policy analyst for the Clayton-based Show Me Institute, said the state should seriously look at public-private partnerships as a way of operating new toll roads, as has been done in Illinois and Indiana.

"There’s many different ways to do it," Stokes said. "But you would have a private company get a contract under authority from the state. The state would own the road or the bridge. The private partner would build it and operate it and collect tolls to pay for it, but it would not own in any way the assets."

I think I also used Texas and Virginia as other examples, along with Illinois and Indiana. But I probably should have been more clear with the reporter that Texas and Virgina are better examples for Missouri, because they are building new toll roads via PPP from scratch, whereas Illinois (more specifically, Chicago) and Indiana took existing toll roads and turned them over to private operators. While I think those moves have been a great success for Chicago and Indiana, they don’t really apply to Missouri, as we have no toll roads to turn over to private firms. Just a small point I wanted to make.

Please don’t think I am criticising the reporter at all. Jason Rosenbaum quoted me accurately, I just should have had a different emphasis in my examples.

Take Two

Tax incentives for film producers might not be such a good idea after all. The Post-Dispatch reports that two directors complained about St. Louis after filming their movie:

They said the state of Missouri had offered the best tax incentives for the story, which was set in a nameless Midwestern city, but that the weather was too hot, rental-property owners were greedy and the local crew was inexperienced.

Even after that bad experience, the Joplin Globe now urges lawmakers to keep expanding tax breaks:

Movies are a multibillion-dollar business. Missouri and Kansas think they can get a chunk of the action. It is worth a try. Let the cameras roll!

It’s true there’s a lot of money in movie-making, but it’s not fair to give tax incentives to huge industries while small businesses struggle under full tax burdens. Lowering taxes for everybody would be more equitable. And if you don’t play favorites, you don’t have to worry about bad press after people who don’t really want to be in Missouri come just for the tax "opportunities."

Mizzou 38, OU 35

No, this is not a post about football.

The University of Missouri?Columbia has won approval to drop the hyphen from its name, in all but its most official communications.

This name change follows a series of identity crises suffered among Missouri universities. The University of Missouri?Rolla recently changed its name to Missouri University of Science and Technology; Southwest Missouri State University is now Missouri State University; and Central Missouri State University is now the University of Central Missouri.

OK, good — I’m glad that we’ve got that all cleared up now.

This name change bothers me. Yes, Mizzou, we all realize that you’re the flagship school of the University of Missouri system, but do you really have to change your name to prove it? UM?Columbia fears that the hyphen gives it the appearance of being a “regional” school.

Yes, in the same way the University of California?Berkeley is a “regional” school. Or how about that regional school, the University of Michigan?Ann Arbor. And UNC?Chapel Hill?

Maybe now that the “University of Missouri” has solved its name issue, it can concetrate on competing with those other “regional” schools in the most recent U.S. News and World Report rankings.

Online Harassment Legislation

I just listened to State Sen. Rupp on KMOX (thanks, Combest), discussing legislation that targets online harassment. The Dardenne Prairie law was drafted in response to the tragic suicide of a teen girl after a woman claiming to be a 16-year-old boy allegedly made hurtful comments to her on the MySpace website.

I agree with Rupp that legislators need to be careful when writing this kind of legislation. An op-ed in the Harvard Crimson explains why the law should be rethought:

The law is also extremely vague. It defines harassment as engaging in a “pattern of conduct” that would cause a reasonable person to suffer “substantial emotional distress.” But what period of time results in the distinction of a “pattern” rather than haphazard nastiness? And what does “substantial” entail for the “average” person? Suicide? A few tears?

However, I think the op-ed might be going too far when it compares what happened in this case with the usual teasing all teens experience at some point. Creating a fake Internet personality for the purpose of humiliating someone isn’t quite the same as merely saying to her face, "You look like a dork." Some online harassment is so pernicious that the law should address it. But we want to be careful not to criminalize every tactless email-writer.

Health Care: Cheaper Than Ever Before

This looks like an interesting report about Missourians’ health insurance coverage and spending on health care. I enjoy learning new statistics (or facts, or numbers — whatever Dave and Justin want to call them) about Missourians’ medical spending. Unfortunately, Families USA has taken what could have been a great opportunity to analyze data and turned it into an opportunity to spread fear and panic about health insurance.

The report details the percentage of income spent on health care for various segments of Missouri’s population. It shows that 1,225,000 Missourians under age 65 are projected to spend more than 10 percent of their pre-tax income on health care, and 341,000 are projected to spend more than 25 percent. The press release concludes that this is a "health care affordability crisis."

I’m not convinced. First, the quality of health care is continually rising. All kinds of new drugs and procedures are available now that didn’t exist in the past. These are often expensive when first introduced, but their cost decreases with time. Some drugs are now so cheap that stores can give them away for free. Health care consumers have more options now than they once did, and treatments that have been around for a while are getting cheaper and cheaper.

Second, looking at percentage of income is the wrong way to go. Once, we were all hunter-gatherers who spent 100 percent of our "income" on food and shelter. Health care wasn’t really available at all. Fast forward through a lot of economic growth, and today we spend larger percentages of our income on human capital investments like health care and education. Likewise, we spend larger percentages of our income on computers than we did 30 years ago. That’s not because computers are becoming more expensive — they’re getting cheaper all the time — but because they used to be so expensive that most people didn’t spend any part of their income that way. Computer spending and health care spending are rising. Computer costs and health care costs are not.

Finally, there’s one obvious way to give people more pre-tax income to spend on stuff other than health care: lower taxes!

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