One area where pure free-market ideology has long reigned has been trash pick-up in unincorporated St. Louis County. Other than requiring you to have it, county governnment has not been involved in it at all. Homeowners contract with a hauler and the entire thing is handled privately. Now however, the system is going to change somewhat. St. Louis County is planning to have haulers bid on providing trash services to the residents of soon-to-be-established trash districts. The winning bid will then have the monopoly on doing the trash hauling for that area and contracting with the residents and neighborhoods within it. I think this change could be good for St. Louis County, especially because trash hauling will still be handled entirely by private companies. The changes will decrease the number of trash trucks on unincorporated roads, which all County taxpayers pay for. Better to have one company serve an entire neighborhood once a week than four companies serve one-forth of a neighborhood at four different times each week. The economies of scale produced by a firm serving households closer together than before should reduce costs for all involved. My only concern is that new start-up companies be allowed to compete fairly for the residential bids, (commerical hauling is still unregulated) without favortism shown to established, union companies. We will have to wait and see on that.
More of the Same in Saint Louis Schools
Outstate Missourians are annoyed that so many of Missouri’s tax dollars have gone towards education in St. Louis, with poor results:
Last Thursday, the Missouri Board of Education voted 5-1 to take over control of the St. Louis School District and its 33,000 students. The district was stripped of its accreditation because it met only five of the state’s 14 standards on its last state report card. The district has piled up huge debt while graduation rates and test scores lag. The district has had six superintendents in the last four years.
Of course, this isn’t the first time that an outside entity has had to step in and manage the St. Louis School District.
Even if less state money went to the district, the rest of the state wouldn’t escape the cost of St. Louis’ educational crisis. There remain the costs to the criminal justice system and the costs of offering remedial courses at the college level.
But this op-ed is right that the money is not being spent effectively. It’s time to try something different, like tuition tax credits or another parental choice policy. However, considering the St. Louis Public Schools’ obsession with educational fads, I’d guess they’re more likely to try archery:
"Students can learn the physics behind it and read novels about famous archers," said Knauer, adding that she plans to study whether learning archery in the classroom can help improve Missouri Assessment Program test scores as well. "We want it to be as relevant to schools as possible."
Local Control and Local Funding
The Springfield News-Leader has an insightful editorial arguing that Missouri should be allowed to opt out of No Child Left Behind. They correctly point out that the law puts too much power over the education of our kids in the hands of Washington bureaucrats.
But for some reason, they still insist that the federal government should continue providing funding to the states even after the other red tape is repealed. This doesn’t make any sense to me. The money came from Missouri taxpayers in the first place. What’s the point of sending it to Washington, where the federal bureaucracy can skim off a share, before sending it back here? That doesn’t make sense. Instead, Congress should repeal NCLB entirely—funding included. It can use the savings to cut taxes or reduce the deficit. And then, if Missouri policymakers decide that Missouri’s schools need more money, we can levy taxes here at the state level for that purpose. That way, every dime will stay here in Missouri, and Missourians will have complete control over how it’s spent.
As the editorial puts it:
Next week, voters all over the Ozarks will practice the ultimate in accountability when they go to the polls and elect school board members and say yes or no on various bond issues. Some school districts and school boards will get a pat on the back for a job well done. Others will be told to go back to the drawing board.
It’s a system that puts accountability in the hands of those who know the most about what’s really going on in schools.
I couldn’t have put it better myself. Congress should cut the federal education budget so that Missourians will have full control over education spending in Missouri.
Last of the Vice-Cops
Ticket scalping is in the news due to the discovery that tickets taken by police from scalpers in last year’s World Series were used by family and friends of the police before being turned over as evidence. This is of interest to me on this blog because I can’t think of another crime that should be removed from the books faster than scalping. A ticket is a commodity in the purest form. It has a value to the people who sell it, who are in most cases trying to sell a large number of them which influences the initial pricing decision. It has a value to the person who first buys it. Like many commodities, it has different value to different people. An opera afficianado values tickets to the opera more than someone who has never been to the opera. If someone else values that commodity – the ticket – more than the person who buys it first, there is no reason it should by forbidden to be resold, like a used car or garage sale furniture. There are many silly crimes, many of which made sense at some time in the past. But there is no other crime like scalping which so clearly violates the basic laws of economics. And for the record, I have no intention of scalping my tickets to the NCAA tourny Sunday, and fear of police has nothing to do with it.
Charter schools and state takeovers; a tale of two cities
Yesterday the state Board of Education voted to take control of the St. Louis Public Schools district. In the process, the district also lost its provisional accreditation, failing to meet the necessary 6 of 14 requirements to maintain it. Meanwhile, in Kansas City, a nationally recognized charter school has been approved by the state, and is likely to open in July somewhere in the city’s downtown area. KC leaders hope this development will help attract residents with children to the area, diversifying the downtown population beyond young professional couples and singles, and ensuring its enduring viability.
The disparity between the two cities couldn’t be more stark in this light. Though education in KC certainly has its problems, it at least seems to be making progress, whereas the situation in St. Louis seems locked in a perpetual downward spiral. The difference is in the willingness and ability of KC to try new things, like expanded charter and magnet schools; whereas St. Louis prefers to stay the same misguided course in fear of change.
As I noted in a recent post, charter schools are not a cure-all for the many problems faced by our public school system. However, any measure that gives parents an option beyond their local failing public school is a step in the right direction. Mayor Slay seems to at least recognize this point, as he has asked for the authority to authorize and hold accountable new charter schools in the St. Louis area. As a lifelong St. Louisan, it pains me greatly to say this, but St. Louis and mayor Slay would do well to follow KC’s example and expand its charter school program, enabling city residents to choose an education for their children beyond their failing, unaccredited public school.
MetroLink Ridership High, Numerically Speaking Of Course
Metro, via the Post-Dispatch, is reporting that MetroLink ridership is exceeding expectations since opening six months ago. This is a good thing, obviously, but major fiscal troubles still face Metro in the near future:
Metro faces a $28 million operating deficit next summer, partly due to the $14 million to $15 million in operating costs associated with the Shrewsbury line. Fares cover only about a third of that cost.
Metro has asked that state for a significant increase in funding, and that is not going to happen. They may get a gasoline tax exemption, which would save Metro a few hundred thousand dollars a year, but that is likely the most Metro can realisticly expect from Jefferson City. In order to make up the shortfall, St. Louis County voters can expect to see a tax increase on the ballot late this year or early next year. I predict the tax increase will fail – though I will probably vote for it, and I vote for tax increases about as often as Tom Niedenfuer comes through in the clutch. If and when the tax increase fails, serious cuts to bus service can be expected, and that cycle will more or less continue until bus service is a shell of its former self. My generally positive opinion toward Metro and MetroLink could change drastically though if the train is late Sunday and I am late to the tournament game at the Dome, though. Go Salukis!, and yes, I am a complete fair-weather fan when it comes to Southern Illinois.
Virtual School
Some parents are upset that grades 6 through 8 are left out of Missouri’s new online education program for the first year:
Garry Jones, of Kansas City, has a 12-year-old daughter who is home-schooled by her parents because of her asthma and allergies. She will be in seventh grade next year., falling into the gap in the virtual education program.
He said his family and many others with middle school students traveled to Jefferson City to advocate for the bill and now aren’t reaping its benefits.
Online classes are a good idea for children who live in remote areas or who have health problems. But Missouri’s plan is more complicated than it needs to be. Some states, such as Arizona and Florida, pay for students to enroll in privately run virtual schools like k12. Private programs like this have already developed courses in all subjects, at all grade levels. Rather than reinventing the wheel and creating online courses from scratch, Missouri could allow students to choose from existing online courses. That would be easier and less expensive. Most importantly, there would be less chance of the online courses replicating the mediocrity that plagues many of Missouri’s brick-and-mortar public schools.
Taking the CON Out of Certificate of Need Laws
Most industries are open to all firms willing to make the necessary initial investments to enter the market. If I want to open a bar in my neighborhood, can clear the zoning restrictions, and have the necessary capital to rent a space, fill it with booze, and market it to my prospective customers, then that bar will open, with me as its proprietor. This open process creates an environment in which businesses compete for customers, encouraging the innovation that leads to higher quality and lower prices. Requiring a prospective bar owner to obtain a permission slip showing a need for another bar in their neighborhood would obviously be ridiculous. Unfortunately, this is exactly the requirement made by the state of any entrepreneur looking to offer health care services.
Presently, any firm wishing to create a new service or spend a certain amount of money on improving an existing service must apply for and receive a Certificate of Need from the state demonstrating a need for that particular service within the health care market. This procedure was introduced by the federal government in the 1970s to control the rising costs of healthcare by eliminating duplication of services. But costs continued to soar, and the federal legislation was repealed in the 1980s, though many states, Missouri among them, still maintain CON requirements. The process of fulfilling these requirements is both costly and time consuming, creating an unnatural barrier to entry that stifles innovation and inflates prices.
Proponents of maintaining current CON laws make two key arguments. First, they assert that CON laws keep prices down and assure both quality and availability of service. Evidence for these claims is spotty at best. Success with and without the program varies greatly from state to state, and it is extremely difficult to separate the differences in care created by CON laws from differences created by other variations in healthcare systems between states. Additional study is required before any solid conclusions can be drawn as to the affect of CON laws on price, quality, and availability. However, conventional economic wisdom holds that when multiple firms compete, quality rises and prices drop. There’s no reason to assume that the health care industry would be exempt from this effect.
Proponents of current CON laws also argue that eliminating those laws would result in a “cherry-picking” effect, in which new specialty hospitals and services would systematically drain the most profitable patients away from the general service hospitals most likely to serve the poorly insured and indigent. They argue that this would render those hospitals incapable of administering those less profitable services. These proponents essentially argue that removing CON laws would foster unfair competition that would further marginalize those already unable to afford decent general health care. The data surrounding this issue is largely inconclusive. However, reforms could be structured to provide incentives for firms serving those customers, thus curbing any “cherry-picking” effect, should one actually emerge.
The cost of care for those who cannot afford it ultimately gets passed on to those who can, driving up the overall cost of health care for everyone. The ideal system provides a variety of options, in both price and quality, for all. Such a system is best achieved in a market where firms are free to specialize to meet consumer demand. Such a market depends on consumers with a variety of options making informed decisions. As such, CON law reforms should focus on increasing the transparency of the market while simultaneously fostering competitive growth within it. A balanced approach to competition, in which artificial barriers to entry, such as CON laws, are eliminated and the healthcare needs of all are well represented, offers the best chance for guaranteeing all Missourians access to affordable, quality health care.
Steve Bernstetter is an intern at the Show-Me Institute and a graduate student in Public Policy Administration at the University of Missouri-St. Louis.
School Choice Successes Abroad
There’s been an interesting debate going on about school choice. A persistent theme of the school choice critics is that a free market in education is a pie-in-the-sky fantasy that’s never been tried in the real world, and that the private schools couldn’t expand to meet the increased demand from a wide-spread choice program. Over at the Cato blog, Andrew Coulson sets the record straight:
There are two well-established nationwide school voucher programs, one in the Netherlands, the other in Chile. The first was created in 1917, the second in 1982. In both cases, the supply of private schools rose dramatically to meet demand. Roughly three quarters of Dutch students are now enrolled in private schools. In Chile, private sector enrollment doubled within the first decade and passed the 50 percent mark in December of 2005.
Sweden and Denmark enacted voucher programs more recently, and both are seeing the creation of new private schools as a result. Swedish private sector enrollment rose from 1 percent to 10 percent of the student population in a decade, and continues to rise. I discuss this issue at greater length in my chapter in the Cato book: What America Can Learn from School Choice in other Countries.
Turning to Mr. Rotherham’s assertion, I pointed out at our forum that there are vibrant, unregulated, rapidly growing education markets all over the world. In some areas, such as the U.S., Japan, and South Korea, these are niche markets ? mainly after-school tutoring. In other parts of the globe, particularly South Asia and Africa, they are mainstream elementary and secondary schools.
It’s frustrating that special interest groups in Missouri spend so much money opposing a school reform strategy that worked so well around the world.
