Via Andrew Sullivan, here is the classic book, The Road to Serfdom, done starkly and succinctly as a series of eighteen cartoons. I believe Mr. Hayek would approve.
“Quality Jobs” is quality policy
The state is currently considering a proposal to renew and extend the "Quality Jobs Act." This program provides tax incentives for businesses to create jobs in Missouri that pay above the county average and provide at least partial health care coverage. According to the Kansas City Star:
"The Economic Development Department credits the program with creating 12,438 jobs in Missouri in less than two years."
These are quality jobs that pay living wages, the kind of jobs Missouri so desparately needs. The proposal would increase the spending on these tax credits from 12 to 24 million, and extend the life of the program an additional ten years to 2028 from 2018. This program benefits businesses by allowing them to keep the withholding taxes from their employees paychecks. A recent amendment to the program would prohibit businesses knowingly employing illegal immigrants from receiving the credits. This change has drawn some fire because it would allegedly offer a financial incentive for businesses to discriminate against Missouri workers who, despite being here legally, might nonetheless look and sound like illegal aliens. This objection is rubbish.
The proposal, as is, does nothing to punish those who are already employing an illegal workforce, and as such would not adversly affect those businesses. Rather, it offers a positive incentive for those companies to employ legal workers and to pay them well. The key phrase here is "knowingly employing illegals." Those companies who hired a worker and reasonably believed that person to be here legally would not be punished if that worker later turned out to in fact be illegal. This approach to managing the state’s economy-offering positive incentives for desired behaviors without directly meddling in the labor market-is exactly what is needed for a healthy balance between the concerns of Missouri’s businesses and Missouri’s legal workers. On those grounds, the "Quality Jobs Act" should be renewed and expanded with great vigor.
Lingua Franca
The Missouri House is considering a constitutional amendment that would designate English as the language for "official proceedings" in Missouri.
The amendment is a bad idea. The vast majority of official proceedings in Missouri are already conducted in English. And translating a few documents into Spanish isn’t anywhere near as costly as tax breaks for favorite employers, ethanol subsidies, or the educational adequacy lawsuit.
Official proceedings should be conducted in whatever language is convenient for the participants. That’s common sense, and we don’t need a frivolous amendment about it.
Richmond Heights and Clayton Merger Would Benefit Residents
Two of Saint Louis County’s most recognizable municipalities are engaged in discussions of a merger. Clayton, the county seat and region’s second downtown, and Richmond Heights, the area’s shopping and transportation nexus, have been considering a merger since November 2004. A Joint Study Committee was established consisting of equal representation from both cities, and that committee is closing in on issuing its final recommendations. If the JSC recommends moving forward, both cities’ elected bodies would have to agree to put the measure on the ballot, and then voters of both cities would have to approve the merger. A merger would benefit the residents of both communities and improve local government services for the residents and businesses.
The rationale behind the merger is fairly simple: the commercial property tax base of Clayton and the retail sales tax strength of Richmond Heights would combine into a new city with an extremely strong local economic foundation not held hostage to downturns in any one sector of the economy. Richmond Heights currently receives over 50 percent of its city revenues from sales taxes and just 6 percent of its revenues from property taxes. Clayton receives 21 percent of its city revenues from property taxes and 20 percent from sales taxes, though much of that is from restaurants, not retail stores. This commercial strength would go along with the stable residential neighborhoods in both cities. A merged city with shopping centers like the Galleria, a business district as successful as Clayton’s, and neighborhoods as diverse as De Mun and Lake Forest would be able to provide excellent services to residents at lower tax rates for residents and businesses.
The combined suburb would have a population of 25,500 residents. That total includes approximately 2,000 Washington University students in dorms who require almost no local government services. While that total population might be big for Saint Louis County, it’s easy to be big in a county that has 21 municipalities with fewer than 1,000 residents. While the new “Clayton Heights” would be larger than average, it is still substantially smaller than neighboring University City and only slightly larger than nearby Webster Groves, both very well-managed cities.
The arguments against the merger shared by residents who have attended the public meetings should be familiar to anyone from Saint Louis. As a lifelong St. Louisan, I recognize them as having that typical Saint Louis, reflexive opposition to change which caused Saint Louis City voters to reject the recent charter changes and Saint Charles voters to reject MetroLink. “Why not leave things alone? Changing things would upset the balance,” said one opponent at a recent public meeting. Change will come, whether that person wants it or not, as both city managers have stated that their cities can not maintain current service levels beyond the short term without service cuts or tax increases. Opponents continually throw out the issue of combining the schools, despite knowing full well that the school districts are completely separate political entities that the cities have absolutely no control over.
While it is too early for exact tax rates to be known for the combined city, supporters of the merger on the JSC from both cities should guarantee that overall taxes will go down for everyone as a result of the merger. That promise should be made clear in the voting language and be required by the enabling ordinances as a condition of the merger. A good start would be guaranteeing the adoption of Richmond Heights’ lower property tax rates for the combined city, if not even lower rates, and the elimination of the annual vehicle fee that Richmond Heights’ residents pay but Clayton residents do not. In the interest of the residents of the newly merged city, the only higher tax that should be kept is Richmond Heights’ sales tax rate of 7.575 percent as compared to Clayton’s rate of 7.325 percent. With so many residents from outside the two cities shopping at the Galleria, it makes sense to keep that rate as it is and use the significant revenues to keep the property taxes and other fees as low as possible for both residents and businesses.
The voters of Clayton and Richmond Heights deserve the opportunity to decide on this issue. Not only does the merger make sense for them in both the short term and long run, but passage would set an excellent example for the 89 other municipalities in Saint Louis County that voters will support farsighted thinking and much-needed changes in our local governments.
David Stokes is a writer living in University City.
The Case for the Electoral College
Legislators in Illinois and Missouri are pondering legislation that would give their states’ electoral votes to the presidential candidate who won the most popular votes nationwide. The idea is to avoid a repeat of the 2000 presidential election, in which one candidate won the popular vote but the other candidate won in the electoral college.
The proposal is premised on the seemingly obvious idea that we’re a democracy, and in a democracy, the majority rules, right?
Well, not really. In fact, the United States is a constitutional republic, not a democracy. And “majority rules” is not, and never has been, the basis of our system of government.
Consider the United States Senate. In the Senate, Wyoming’s half-million voters have the same amount of power as California’s 30 million voters. “Undemocratic?” Probably. A violation of “one man, one vote?” absolutely.
And there are lots of other examples. We have a Bill of Rights that prohibits the government from engaging in censorship, unreasonable searches, or torture, even if the majority of Congress wants to do these things. Those rules are enforced by the Supreme Court, about as undemocratic an institution as one can imagine. Even within the Senate, a minority of 41 Senators can bring legislation to a halt using a technique called the filibuster.
And if you want to change any of these requirements, you have to pass a constitutional amendment, a thoroughly undemocratic process that involves a 2/3 vote in each House of Congress and the approval of 3/4 of the states. In a more democratic nation, all you’d have to do to change the constitution would be to get a majority of Congress, or perhaps a majority of the popular vote in a referendum.
Why did the Founders set up such a crazy, undemocratic system? They could have set up a process more like the mother country. The British have a parliamentary system in which the House of Commons appoints the prime minister. They also have an unwritten constitution, which means that in theory, at least, a majority in parliament can change the law any time it likes. The House of Commons is not only more democratic than the American Congress, it’s arguably more efficient and more accountable, too.
The founders designed our federal system the way they did for an important reason: they believed a system of checks and balances was essential to preserving liberty. They wanted a system in which different branches of government represented different interests and responded to different political incentives. This purpose would be defeated if all three branches of government were elected by a majority vote, because then all three would be likely to reflect the short-term passions of the majority.
The electoral college also symbolizes another extremely important principle of our republic: federalism. Unlike many other nations, our states are not simply administrative districts of the federal government. They are sovereign entities that voluntarily joined together to form a nation. Just as the Bill of Rights prevents a majority of voters from using their power to the detriment of minorities, the structure of the Senate and the Electoral College ensures that the distinct concerns of each of the 50 states has a voice in the national decision-making process.
If Missouri adopted legislation that helped to effectively emasculate the electoral college, it would be encouraging future presidents to ignore the particular concerns of Missouri voters and and undermine the sovereignty of our state. The United States is not a democracy, it’s a federal constitutional republic. I think that’s an important principle, and I hope our elected officials don’t do anything to undermine it.
Ask not for whom the bridge tolls, it tolls for thee, not for free
Discussions about a new bridge over the Mississippi are heating up. The Post-Dispatch has an updated story on today’s meeting of the East-West Gateway Coordinating Council. Quick, how many bridges connect Metro East, Illinois to Missouri? I bet most people would guess low. The answer, and I just did this in my head so feel free to correct me, is nine. Six for cars and trucks, one for trains, one for MetroLink, bikes and pedestrians, and one for bikes and pedestrians only. We absolutely do not need the billion dollar bridge people have proposed over the river. The fact that Missouri can’t afford its share of any bridge, much less the expensive option, has made the goal of our own Golden Gate impossible.
Both of the options being considered currently:
Under one plan, Illinois would shoulder the cost of building a companion bridge to the Martin Luther King Bridge. Under another, a private group would pay for and build a bridge and collect tolls ranging from $1 to $6.
are preferable to earlier proposals. The toll road idea is excellent. I believe the fears of Illinois politicians are overblown, as most of their voters will remain on the free bridges while many of the same trucks that so often tie up those bridges will choose the new toll road. Time is money in trucking, and toll expenses are tax write-offs.
The MLK companion / addition is also a good idea. As anyone who had crossed the MLK knows, it is a little tight in the turns. Making the current bridge all eastbound and adding new westbound lanes on a connected bridge will significantly improve flow into north downtown and onto 70 westbound.
The final option I like, not discussed in the article, is expanding MetroLink into Madison County. St. Clair County residents in Illinois use MetroLink more than any other demographic group in the area. Going north from Fairview Heights to add a line and stations in Collisville and Edwardsville would serve many commuters who work in Downtown St. Louis and greatly reduce traffic. Any of these three proposals will cost Illinois a great deal of money and Missouri little to none. So I can’t really understand why Missouri’s reps on the Council all voted against the companion bridge proposal when they are not being asked to pay for it.
Hurray for Cable Franchise Reform
The state senate recently approved a bill to increase the competition amongst video service providers, specifically cable companies. The arguments for cable franchise reform are many. An excellent overview of them can be found here. Though this bill falls a little short of full competition, and gives considerable preference to existing cable providers, it is nonetheless a positive step in the right direction. Under this legislation, a state-wide franchising agreement replaces the current stucture of individual municipality licensing agreements, and, according to the Springfieldnews-Leader:
– Cable providers would be prohibited from withholding services based on race or income. Within three years of providing service, cable firms would have to devote at least 25 percent of their services to households that earn less than $35,000.
– Municipalities would be able to require cable operators to designate up to three channels for public, educational or governmental use.
– Municipalities also would be able to collect a fee, no more than 5 percent of gross revenue, from cable providers. Providers would be able to pass this tax onto customers.
So municipalities still get some say in how their citizens receive their cable services, but without creating the artificial barriers to entry found under our current system that stifle competition and drive up prices. Furthermore, the new plan would encourage the laying of broadband and other kinds of communication infrastructure that benefits industries and consumers well beyond mere cable service. In all, this bill proposes changes that will be beneficial to Missouri consumers.
Statistical Analysis of the Effects of Throwing Money at Problems
Eric Hanushek presents testimony against the claims of school districts that are suing the state:
Hanushek analyzed Missouri test scores and spending levels at the state’s public school districts. That analysis did find a link between higher spending and higher student performance. But Hanushek said the link was extremely weak.
By his estimate, schools would have to triple, or even quadruple spending to raise average student test scores to levels that meet state standards.
The spending-performance relationship is so weak because most of the variation in Missouri Assessment Program (MAP) scores (about 85-90%, depending on the subject and grade level) is within district, not between districts. So if you compare any two students in Missouri, most of the difference in their test scores is caused by their families, teachers, and personal characteristics–what their districts spend doesn’t matter very much.
And as Hanushek points out in his many publications, a weak correlation between spending and achievement at current spending levels won’t necessarily translate into any correlation if you triple spending. We don’t have enough experience with such high spending levels to know what would happen.
Nicklaus on Retirement Tax Cuts
David Nicklaus has a new column on Speaker Jetton’s proposal to exempt Social Security benefits and various other forms of retirement income from the income tax:
f you’re concerned about economic efficiency, this is the wrong kind of tax policy. It’s true that high tax rates make people less motivated to work, save and invest. The best way to stimulate the economy is to cut tax rates, not treat some forms of income differently than others.
Proponents of the senior-citizen tax break have said it will entice retirees to settle in Missouri. That might be true in a few cases. But if we’re trying to entice people to move in, shouldn’t we cut taxes instead on working people and the businesses that employ them?
Sometimes it’s desirable to trade efficiency for other social goals, such as helping the poor. But the senior citizens who would benefit from this tax cut aren’t poor. The Institute for Taxation and Economic Policy estimates that 72 percent of Missouri’s Social Security recipients already pay no tax on their benefits. The benefits of Jetton’s proposal would go overwhelmingly to the wealthiest 3 percent, those earning more than $132,000 a year.
Quite so. I’m always sympathetic to tax cuts, and there are good arguments for Jetton’s proposal. Certainly, I’d rather cut taxes for seniors than have the legislature spend the money. But It’s bad economics for elected officials to be playing favorites, cutting taxes for certain groups while leaving taxes high for others. What this state really needs are broad tax cuts that lighten everyone’s tax burden. Retirees deserve a tax cut, but so do working families and entrepreneurs.
