A Good Idea for KC

Posted on by David Stokes

Kansas City-area officials are considering building a new jail to serve to prison needs of the area, not just one individual city.  This is an excellent idea that would serve KC well.  Jails are one area where regionalism, cooperation and privatizsation have been used succesfully in the St. Louia-area.  The Buzz Westfall Justice Center was built by St. Louis County, after a succesfull bond vote, in the mid-1990’s.  While it is owned and operated by St. Louis County, the 91 municipalities in the County use it to house their prisoners, too.  Space has also been rented out to other entities – the City housed inmates there during the recent construction the City’s own, new jail a few years ago.  While the jail itself is operated by the County, parts of its work have been privatized after competitive bidding, primarily the pharmacy department used to serve the (legal) drug needs of the prisoners.

The City of St. Louis has long used its City Workhouse to house prisoners from other cities and counties.  This medium security facility has for a long time served the public safety needs of the City, other municipalities and counties, and made money for the City of St. Louis at the same time.  If Kansas City goes ahead with a regional jail, am I sure they will find it to be a great decision for the KC area.  It will both improve public safety and save money in the long run.  Not much to complain about there…   

Slap Happy Days Are Here Again…

Posted on by David Stokes

It is every elected officials’ favorite question: What to do with a budget surplus?  The Post-Dispatch has a good article on the choices facing Missouri legislators now, and what officials from other states in the fortunate situation of a surplus have chosen to do.  A budget surplus is truly an economic gift that keeps on giving, as a tax cut done because of the surplus expands the economy beyond what the pre-cut economy produced.  A tax cut in response to a surplus, combined with budget discipline in general, can lead to a revolving cycle of healthy economic growth leading to budget surplusses allowing for tax cuts leading to even greater economic growth and continued surplusses.  That is in the theoretical world – in the real world elected officials too often use the surplusses to fund new government programs which must be funded in future years no matter what the economic situation or future needs, resulting in more government programs continuing to hover over and around the economy. 

I like Utah’s answer to the surplus – cut a little bit off every tax rate.

  "Utah reduced its income tax, sales tax and business taxes."

Hawaii is condidering new programs for the state’s homeless – as if the homeless in Hawaii don’t already have it better than the rest of us.  It’s Hawaii, for Christsakes!  Virginia has paid for one-time transportation projects with its surplus, with some help from public-private partnerships.  Missouri could certainly learn from that example.

Oregon and Nebraska are socking money away in rainy day and reserve funds.

Booo!  Where is the fun in that?  Do things really change so much in Nebraska that they need money in a rainy day fund?  In case of emergency, it’s not like that have to get legislation through both houses of the legislature like every other state. 

Missouri’s plans are fine – cutting taxes is good, but I would prefer a small, general cut for everyone to the large, targeted cut for senior citizens that looks likely.  The franchise tax refuction is an excellent idea and will benefit Missouri’s economy.  Maybe with a franchise tax cut we can finally get some outrageously overpriced coffeehouses to open here.  Putting some money ($200 million now counts as ‘some money’) away for the future is ok, at small levels rainy day funds make sense – but I think the people of Missouri could do more with that money than the state could or will.            

 

New Website

Posted on by Timothy B. Lee

Regular visitors to our website might notice that it looks a little different today. That’s because we’ve upgraded to a new and better content management system that will allow us to put more content on our site more easily, and with better organization. If you notice any problems with the site, please shoot and email to [email protected] and let us know about them!

We’ve also belated posted the Winter issue of Show-Me Quarterly, which went out to our sponsors last month. Click here to read about our recent studies on the income and earnings taxes, our various events on education policy, and a profile of the late, great, Milton Friedman.

Eye Exams for Everyone

Posted on by Sarah Brodsky

The state of Missouri may soon require comprehensive eye exams for all students entering kindergarten or first grade:

Parents without insurance will be responsible for the $100 to $165 vision exam.

Children on Medicaid will be covered by the state, and families that can’t afford it can apply for help from civic groups like the Lion’s Club or tap into $99,000 that will be available annually from the Blindness Education, Screening and Treatment Program Fund, Sen. Delbert Scott said.

But school nurses estimate one year’s worth of exams for the 70,000 Missouri children entering kindergarten in the fall will cost the state and private donors $2.4 million to $7 million. (Medicaid reimburses doctors about $43 for a comprehensive eye exam.)

The article includes some horror stories of children who were diagnosed as learning disabled because of vision problems that school nurses couldn’t detect during standard in-school exams.

Overidentification of learning disabilities is a problem. However, as the school nurses quoted in the article point out, requiring full eye exams for everyone is a costly solution. It would be much cheaper to require full eye exams only for students who are suspected to have learning disabilities. An even better idea would be to publicize the information about private donors who help parents pay for exams, without mandating these comprehensive exams for anyone. Parents can decide which level of exam their kids need.

MOHELA Money II: Biotech Boogaloo

Posted on by Steven Bernstetter

Looks like Gov. Blunt and friends will get their MOHELA money after all. At this juncture, pointing out just how ridiculous this bill is has become something akin to beating a dead horse. Except this horse won’t die, and instead just keeps mutating into something, well, less horse-like and more closely resembling the gross piece of political waste it truly is. So let the beating continue.

For a good synopsis of how it all went down, go here. Basically, those politicians who opposed the bill, on whatever grounds, had their projects stripped and the funds redistributed to more politically friendly districts. No political soup for you, conscientious objectors! However, the most egregious example of wasted political capital lies in the still unfavorable appraisal of pro-life groups who so effectively derailed the original plan to drive Missouri’s budding biotech industry. Blunt and Co. claim the bill’s passage as a success, but as the Springfield News-Leader so accurately surmises:

What the state’s universities still need is a commitment from lawmakers that funding levels — including for much needed construction projects — will match the important role our institutions of higher education play in being a driving economic engine in Missouri. What our colleges and universities need is a commitment that Democrats and Republicans from all corners of the state recognize their incredible value. The passage of SB 389 didn’t accomplish that goal. Victory is still out of reach.

Indeed. Missouri has so much potential to be a future leader inthe life sciences, its almost unfathomable that the state’s leaders could be so ineffective as catalysts in realizing that potential. As a recent editorial in the STL P-D proclaimed:

It’s difficult to think of another state in a better position to lead research into bio-energy and agricultural defense. We have some of the nation’s leading research institutions — the Danforth Center, Washington University, St. Louis University and the University of Missouri-Columbia. We have agricultural powerhouses like Monsanto and energy companies like Peabody Coal. And, of course, we sit astride the most productive farmland the world has ever known.

It’s not too late for legislators to set aside money that only could be used if the federal research grants are awarded to Missouri companies and universities.

The question is whether they want to invest in the future, or run from it.

At this stage of the game, "run from it" seems to be the preferred strategy. But where exactly are we running to? Straight into the arms of whatever is most politically expedient, apparently. That means pet projects for the legislators willing to play "follow the leader" with Gov. Blunt, elmination of the most universally beneficial provisions at the behest of special interests, and the perpetual disappointment of those sincerely trying to help Missouri before they help themselves.

How to Spur Budding Industries

Posted on by Timothy B. Lee

I have to disagree a bit with Steve’s assertion that doling out state money will “drive Missouri’s budding biotech industry.” I don’t know if Missouri’s biotech industry is budding, or if it will thrive in the future. But I rather doubt that a few million dollars of state largesse is going to make the difference. If biotech is economically viable in the Saint Louis area, no subsidies are necessary. And if it’s not economically viable, subsidies aren’t likely to make it so.

No doubt spending more on life sciences will lead to some beneficial science being done, and it may very well lead to important breakthroughs. But by itself, spending more money on biotech research isn’t likely to make the broader Saint Louis area a biotech hub. Carnegie Mellon is one of the best computer science schools in the country, but Pittsburgh isn’t known as a hotbed for tech startups. Nor are subsidies from the state of Pennsylvania likely to make it a hot technology area.

If government wants to make Saint Louis the home of the biotech industry, the best way to do that is to make it hospitable to industry in general: cut taxes and red tape, provide good infrastructure, and then get out of the way. That might spur the growth of the biotech industry here in Saint Louis. But it might also spur the growth of all sorts of other industries as well. After all, the whole reason we have a market economy rather than running our economy using Soviet five-year plans is that government officials don’t know what’s needed and where the economy is headed. If they can’t run the economy as a whole, why should we expect they’d be any better at picking what Saint Louis’s next hot industry is going to be?

The reason, I suspect, is that when you cut taxes and thereby spur the creation of a lot of small businesses, you don’t necessarily get to attend a big ribbon-cutting ceremony and take credit for it on the evening news. So even if tax cuts and deregulation are better for the state’s economy than “targeted” economic programs, they’re not as good for the career of the politician in question. So instead, politicians focus on high-profile projects that make good photo-ops, regardless of whether they’re good policy or not.

NYT on Saint Louis

Posted on by Sarah Brodsky

The New York Times publishes a not-entirely fair article about what a bad place St. Louis has become to live in:

In the past few months, the public schools were stripped of accreditation and taken over by the state; the city was designated the most dangerous in the country in a national crime survey; and 15 police officers and supervisors were disciplined for giving World Series tickets seized from scalpers to friends and family.

It goes on to discuss the storms and power outages we’ve experienced in the past year, and it quotes a city planner and some professors.

I complained as much as anyone (okay, maybe a lot more) when my neighborhood repeatedly lost power. But we don’t have it so bad as places like New Orleans. And Saint Louis’ remaining problems seem to be man-made. What struck me about this article was how little attention it paid to possible solutions.

Changing the tax structure in Saint Louis could do a lot to reverse the trend of flight to the suburbs. School choice and other reforms have the potential to improve the city schools and turn Saint Louis into an attractive place to raise a family. Reforms focused on the economy and education would probably go a long way in reducing crime, too. Unfortunately I don’t have a specific policy proposal to prevent unethical use of confiscated tickets.

In addition, the article left out many positive things about Saint Louis, like Ted Drewes, the zoo and the Gateway Orchestra’s free classical music concerts. There’s more to life here than urban crises.

Midwife Legislation, Continued

Posted on by Sarah Brodsky

There’s been new action on the midwife bill:

On Tuesday, the Senate relented, thanks to a hasty vote that caught opponents off guard.

Last week, those same opponents all but killed the midwife bill, tying up the Senate floor for hours to prevent a vote.

This time around, opponents weren’t even in the Senate chamber when Sen. John Loudon, R-Chesterfield, rushed in to bring the bill to a vote. With no debate, the bill was approved by a voice vote[…]

Sen. Chuck Graham, D-Columbia, said he will once again tie up the Senate floor if the midwife bill comes up for a final vote.

On the subject of occupational licensure, there are many professions besides midwifery that could use less restrictive licenses. Does anybody really think the licensing requirements for "nail technicians" (i.e. manicurists) have a major effect on public health and safety? Here you can find licensed geologists, speech pathologists, martial arts judges, interior designers, and marital therapists. I can’t imagine what you have to do to pass those exams.

The market, not gov’t meddling, should decide the fate of ethanol

Posted on by Steven Bernstetter

There’s recently been a sort of backlash in the local media regarding the state and federal govt’s efforts to  subsidize the ethanol industry and build expensive plants all over the midwest and elsewhere. An article from the STL Post-Dispatch summarizes the general concerns fairly well, and an article in the Southeast Missourian gives a taste of the unease in a city near such a plant. However, the best synopsis of the real issues confronting the current ethanol push can be found over at the Kansas City Star, which makes several good points about the economic difficulties surrounding it. According to the Star:

More water, pesticides and land are being used to grow corn for ethanol, raising environmental concerns. It takes a lot of energy to make ethanol, which, when blended with gasoline, gets fewer miles per gallon than gasoline alone.

The federal government continues to hand out an extravagant 51-cent-a-gallon subsidy for domestic ethanol while slapping a 54-cent-a-gallon tariff on imported ethanol, such as that made from sugar cane in Brazil.

The first paragraph presents an efficiency problem: corn-based ethanol is simply not cost-effective. While ethanol does burn cleaner than conventional gasoline, there are other hidden externalities, such as the water issues discussed in this STL P-D article and the rising costs of feed for animal stock, which in turn drives up the price for associated goods like meat and dairy products. The second paragraph demonstrates how the gov’t, eyes aglow with the political possibilities inherent in helping agribusiness, only serves to exacerbate this inefficiency. If politicians were really concerned about cheap, independant, clean energy, we’d eliminate both the subsidies for the domestic stuff and the tariffs on the imported stuff.

The Brazilians are old pros at the ethanol game, and it’s likely we could benefit from their expertise. Furthermore, let’s not forget basic economics and the gains from trade. If the Brazilians make cheaper ethanol that we can, and we can in turn provide some good or service better than they, then it’s in both our best interests to trade. The KC Star sums up this notion nicely:

Congress should eliminate the tariff on imported ethanol, and reduce or eliminate the federal subsidy for domestic ethanol. Both moves would be positive blows for free markets, making it easier to evaluate the true costs of corn-based ethanol.

It seems a little foolish to be dumping millions of tax-payer dollars into a largely unproven technology. Rather, we should wait for the unfettered decisions of a free market to determine the best alternative to imported gasoline, and then, maybe, look to gov’t to facilitate the transition. As stated in the STL Post-Dispatch:

As the United States — like many other countries of the world — hastens to find ways to curb its dependence on oil, we must make sure we don’t trade one set of environmental, political and economic problems for another.

I couldn’t agree more.

Support Us

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.

Donate
Man on Horse Charging