One-Size-Fits-All Education is the Wrong Direction

Posted on by Timothy B. Lee

Governor Blunt has proposed that schools be required to devote 65 percent of their budgets to classroom instruction. He deserves credit for highlighting the need for educational improvement, but unfortunately, his plan is more likely to lead to accounting gimmickry than genuine improvements in student performance. Instead of micromanaging the public schools, he should throw his weight behind school choice proposals that will empower parents while spurring public schools to improve.

The governor is right that more resources need to be devoted to instruction rather than to administrative overhead. But such changes will only be effective if they are embraced by principals. If schools merely comply with the letter of the law—say, by assigning a few of their administrators to supervise study hall for one period each day—that won’t do a thing to improve educational outcomes. And it will create added paperwork for schools that are already doing a good job.

Governor Blunt’s proposal rightly focuses on holding schools accountable. However, it’s important to ask: accountable to whom? The governor’s plan holds them accountable to state bean counters, by dictating how they spend their money. But what needed is to hold schools accountable to their customers: parents.

The best way to do that is to give parents more choices, so that if their children are not leaning in their current school, they have the option of taking them to a school that will do a better job. Only then will public school administrators truly feel the urgency to make the tough choices necessary to raise student achievement.

Opponents of the governor’s 65 percent plan have pointed out that out that not all districts—or all children in those districts—are the same. They’re right. Local school boards need the flexibility to decide how to make the best use of their limited resources. Different districts have different student bodies with different needs. One-size-fits-all education won’t work.

But that analysis applies to individual students, too. Just as each school district needs the flexibility to make educational choices tailored to the needs of the children in their districts, each parent needs the flexibility to choose the best educational option for his or her child. There is no reason to think that all the children in a particular school district need the same kind of instruction. One child might do best in a large school with a lot of extracurricular activities. Another might thrive in a small school where each student gets more personal attention. Some children might need an environment of strict discipline, while another might flourish in a school that lets students work at their own pace. Some might be interested in science, while others might be interested in arts or foreign languages.

Instead of further centralizing education with a one-size-fits-all spending rule, we should be exploring ways to increase choice and diversity in our education system. No two school districts are alike. And neither are any two children.

Timothy B. Lee is an editor at the Show-Me Institute. The mission of the Show-Me Institute is to to research, develop, and advance public policies that enhance economic growth and opportunity for all residents of Missouri.

‘A La Carte’ Cable: Bad Economics, Bad for Consumers

Posted on by Timothy B. Lee

In the 1991 remake of the classic movie Father of the Bride, Steve Martin goes into a grocery store and begins ripping open hot dog bun packages. When confronted by a store clerk, he explains: “I’ll tell you what I’m doing. I want to buy eight hot dogs and eight hot dog buns to go with them. But no one sells eight hot dog buns! They only sell twelve hot dog buns. So I end up paying for four buns I don’t need. So I am removing the superfluous buns.”

Martin’s character would probably have favored government regulation of bun-packaging practices. More recently, activists have begun demanding “unbundling” in another industry: they want to require cable TV companies to sell channels “a la carte” rather than bundling them together in “tiers.”

This effort to force cable companies to sell their cable channels individually is just as misguided as Martin’s demand to purchase individual hot dog buns. Companies don’t bundle products together to “force” customers to purchase things they don’t want. Rather, bundling is a mechanism for lowering the per-unit cost of goods and services by spreading costs over a larger number of units. That benefits consumers because the price per bun—or per channel—is lower than it would be if the company were forced to sell their product one piece at a time.

This is easy to see in the case of hot dog buns. The price of a 12-pack of buns includes the manufacturing costs of the buns, but it also includes the labor and materials needed for packaging, shipping, stocking, and ringing up the product. Packaging a 12-pack of buns, for example, might only require three times as much material and labor as packaging an individual bun by itself, thereby reducing the per-bun packaging costs by a factor of four. These savings are passed onto the consumer.

The same can be seen in another example of bundling—the newspaper. Some readers read the business section but not the sports section. So why don’t newspapers let their customers pick and choose which sections of the newspapers they want to receive?

The reason is that most of a newspaper’s costs don’t vary by the number of customers who take a particular section. Delivering the paper, for example, costs virtually the same whether the paper is fat or thin. And the columnists and reporters who produce the content in the sports sections will collect the same salary regardless of how many readers get their section. So the better question is: if it doesn’t cost more, why not include every section in every paper?

Precisely the same considerations apply to cable TV. Most of the costs of delivering cable content to a consumer’s home are fixed costs that don’t change with the number of channels an individual subscriber receives. The Fox News Channel, for example, costs the same to produce whether it has one viewer or a billion. And the infrastructure that delivers that content to a consumer’s home costs virtually the same to deploy whether the consumer takes one channel or 100.

Advocates of a la carte pricing seem to think that, if 50 cable channels cost $50/month, then one cable channel ought to cost $1/month. But that’s absurd. Taking only one channel doesn’t make cable infrastructure any cheaper to build or maintain. In fact, more staff might be needed to cope with the greater administrative overhead of keeping track of which customers have chosen which channels.

But won’t cable companies at least save money by not having to pay as much in license fees to the studios that create television channels? It’s not likely. Cable channels keep their rates low by spreading the costs over tens of millions of households. If the number of subscribers per channel dropped dramatically, the channels would be forced to raise their rates dramatically.

In practice mandating “a la carte” pricing would force cable companies to drastically raise per-channel prices in order to cover their costs. The result would be that consumers would pay about the same, on average, but would get a lot fewer channels for their money. That’s every bit as irrational as Steve Martin’s bun crusade.

Timothy B. Lee is an editor at the Show-Me Institute, a non-partisan public policy research organization based in St. Louis. This article originally appeared in the Chicago Sun-Times.

 

Missouri Needs a Taxpayer’s Bill of Rights

Posted on by Michael J. New

The passage of Referendum C last month in Colorado has editorial boards swooning. Colorado voters had “good reason” to suspend their state’s revenue limit, cheered the St. Louis Post-Dispatch while the New York Times proclaimed that “Colorado Got Its Government Back.” In their eyes, the victory of Referendum C proves that Colorado’s Taxpayer’s Bill of Rights (TABOR) was a failure and cripples efforts to enact similar proposals in other states. However, these editorial boards greatly overstate their case. An honest appraisal of the past 13 years shows that TABOR was a success in Colorado and that similar limits have a bright future in Missouri and across the country.

TABOR was enacted in Colorado in 1992 and took effect in fiscal 1994. It established a low limit for revenue growth and mandated immediate rebates of all surplus revenues to taxpayers. Starting in fiscal 1997, state revenues began to exceed the TABOR limit, and between 1997 and 2001, Colorado taxpayers received $3.2 billion in tax rebates. This tax relief was a boon the state economy. Between 1995 and 2000 Colorado led the country in the growth of gross state product and personal income.

It is true that Colorado began to face fiscal pressures in 2001. However, an honest analysis of Colorado’s recent fiscal history indicates that TABOR is not the culprit. The September 11 terrorist attacks hit Colorado’s economy especially hard because the attacks occurred right before the start of ski season. Visits to slopes declined by 14 percent in the months after September 11. A severe drought in 2002 put the state in even more substantial economic stress. For the first time since the 1970s, each of Colorado’s 64 counties was declared a federal disaster area, and by some measures it was the worst statewide drought since the 1500s. Not surprisingly, it devastated Colorado’s agriculture and tourism industries. Overall, tax revenues declined by over $1 billion between 2001 and 2003–approximately 15 percent of Colorado’s general fund.

Making matters worse, another strain on taxpayers had already been baked into the budget cake. In 2000, teachers unions in Colorado passed Amendment 23, which mandated large annual increases in state spending for K-12 education even if revenue declined–and exempted this spending from the TABOR cap. This led to an increase in education spending of $450 million between 2001 and 2003, at a time when state revenues were falling sharply. Together, the September 11 attacks, a drought, and a ill-conceived education spending mandate are responsible for Colorado’s fiscal woes.

Nonetheless, TABOR opponents in Colorado have opportunistically blamed TABOR for Colorado’s fiscal woes and are rejoicing at the victory of Referendum C. But it’s important to understand that Colorado voters did not abolish TABOR when they voted for Referendum C. They simply voted to allow the state legislature to spend rather than rebate a projected $3.7 billion in excess revenues over the next 5 years. While some are disappointed with the outcome, Colorado voters doubtless appreciate the fact that the choice to increase spending was in their hands, and not the hands of the legislature.

Indeed, during the 1990s, voters repeatedly rejected attempts to spend more than the limit mandated by TABOR. Every year from 1993 to 1999 there was a measure on the Colorado ballot to either raise taxes or spend in excess of the TABOR limit. Each of these measures lost. They included an effort to increase the gasoline tax in 1997 and a 1998 proposal to use half the TABOR rebate for road construction. Overall, despite consistent criticism by the media, unions, and much of the state legislature, TABOR has proven to be both a popular and durable fiscal limit for the past 13 years.

TABOR-style revenue limits merit support in Missouri and across the country. While Missouri does have its Hancock Amendment, the limit has become so loose that it has ceased to be a meaningful constraint on government growth. Colorado’s TABOR experience suggests that a tighter limit would generate tax relief and help spur Missouri’s economy. It would force the state legislature to examine current government programs more critically. Perhaps even more importantly, it would go a long way toward providing the lean and efficient government that Missouri taxpayers deserve.

Michael J. New is an adjunct scholar at the Cato Institute and an assistant professor at the University of Alabama. He holds a Ph.D. in political science from Stanford University.

Telecom Policy is Stuck in the 20th Century

Posted on by Timothy B. Lee

The video marketplace is changing so fast that it’s gotten hard to keep track of it all. In October, Apple Computer unveiled a new iPod that allows users to purchase popular television shows like Lost and Desperate Housewives for $1.99 an episode and watch them on the go. By the end of the month, the company had sold a million episodes over the Internet. Then in November, Yahoo! and TiVo announced an agreement to deliver Yahoo! content via the Internet to TiVo set-top boxes. Not to be outdone, AOL and Warner Brothers announced a new service called In2TV, which will allow consumers to watch older TV shows for free over the Internet.

But while every month brings new developments in the video marketplace, the telecommunications laws that govern it are stuck in the 20th Century. Missouri state law gives local governments the power to decide which companies may do business in their jurisdictions, and in many cases city governments have created soviet-style five-year plans in which only one company is permitted to offer video services. Those “franchise” requirements harm consumers by raising the cost of entry for new companies wishing to offer video services, leading to fewer choices and higher prices.Cable TV franchising was originally created on the assumption that pay television service is a “natural monopoly.” Policymakers worried that without municipal oversight, such monopolies would gouge consumers and fail to provide responsive service. But whatever merit that argument might have had in the early days of the cable television industry, it has no basis in reality today. Virtually all Missouri households enjoy vigorous competition between cable and satellite television. And more competition is on the way. Phone companies like AT&T (formerly SBC) and Verizon have announced plans to build new fiber-optic networks to millions of households nationwide and use them to deliver video, voice, and data services.

Ironically, the franchising rules themselves have become a serious obstacle to competition. A company wishing to offer video services across the state of Missouri is required to negotiate hundreds of local franchise agreements with cities and counties across the state. It’s a time-consuming, burdensome process that is likely to delay the deployment of new services by several years.

To see how Missouri could be doing things better, we need only look to the state of Texas, which passed a sweeping telecommunications reform law this summer. The legislation swept away the old municipal franchising system and replaced it with a streamlined process for obtaining permission to deploy video services state-wide.

Some Texas city officials argued that the change was anti-democratic, because it deprived local communities of the right to regulate their own affairs. That’s nonsense. The Texas law doesn’t empower state government at the expense of local governments. Rather, it empowers consumers to decide for themselves what video services they wish to purchase.

The cable industry, on the other hand, argued that the change was unfair because, in some communities, they are locked into multi-year franchise agreements that have stricter requirements than those of the state franchise. That, they claim, puts them at a disadvantage. It’s a valid point, but the industry vastly overstates its case. The differential treatment will only last until the current franchise agreements expire, after which all service providers will compete on a level playing field. And the industry ignores the tremendous benefits it will continue to enjoy as incumbents: cable companies control more than 70 percent of the pay television market. If they focus on keeping those customers happy, they should have little to fear from additional competition.

Texas’s telecom reform has already begun to pay dividends. On November 17, SBC (now AT&T) cited the state’s telecom reform as it announced $800 million in new technology investments in Texas, bringing new services and increased competition to the state. It’s not surprising that companies would focus their technology investments in states where the regulatory burdens are low. Streamlining our own archaic telecommunication laws will help attract the new investments necessary to put Missouri at the forefront of the broadband Internet revolution.

Timothy B. Lee is editor at the Show-Me Institute.

‘Jock Tax’ Is Poor Sportsmanship

Posted on by Timothy B. Lee

We were all heartbroken when the Cardinals lost the playoffs to the Astros. Losing hurts, especially when the stakes are as high as they were last month. Still, most of us know the difference between a game and real life. We teach our kids that however much we may hate losing, that doesn’t make it ok to lash out at the other team or at officials. Good sports are fierce competitors on the field, but they’re also friendly and respectful of others after the game.

Rep. Jeffrey Roorda (D-Barnhart), it seems, never learned that lesson. He blames the Cardinals’ loss on bad decisions by the umpires, and he’s decided to express his frustration through legislation. He wants to extend the state’s athletes and entertainers tax–some call it the “jock tax”–which levies taxes on out-of-state athletes who play away games in Missouri, to include the umpires as well.

His proposal isn’t just bad sportsmanship, it’s bad public policy too. For that matter, the “jock tax” itself is ill-conceived. It’s burdensome, unfair, and adds practically nothing to the state’s bottom line. Instead of expanding it, the legislature should be working to eliminate it.

The first “jock tax” was levied by the state of California to punish Michael Jordan for the Chicago Bulls’ defeat of the Los Angeles Lakers in 1991. The next year, Illinois retaliated with a tax of their own, which local papers called “Michael Jordan’s revenge.” Other states jumped on the bandwagon. A 2004 survey by the Tax Foundation found that 20 of the 24 states with professional sports teams now levy income taxes on the employees of professional sports teams.
The result has been a paperwork nightmare for the employees of professional sports teams. The taxes were intended to target the wealthiest athletes, but state tax officials send tax returns to everyone on the team’s payroll who travels to the state. That includes lower-paid athletes, assistant coaches, scouts, and trainers, many of whom have quite modest incomes. Many employees are forced to file more than a dozen income tax forms, each with a different tax rate and a different set of complicated rules. Of course, Albert Pujols can afford to hire an accountant to deal with all that paperwork, but to a scout making $25,000 a year, it’s a significant expense, not to mention a major headache.

Moreover, it’s unfair to single out athletes when other traveling professionals–many of them with earnings comparable to those of professional athletes–generally don’t pay income taxes to the states they visit. Doctors and lawyers often make as much as football players, and corporate executives can make quite a bit more. Yet they are free to travel on business without filling out a new tax form every time they cross a state border. Moreover, although professional athletes enjoy high salaries in their 20s, their short careers mean that their lifetime earnings can be much lower than other high-wage professions.

The irony is that on net, “jock taxes” actually generate very little revenue. Missouri’s gross revenues from the tax are about $20 million, which amounts to three-tenths of one percent of the state’s budget. But Missouri athletes who pay other states’ jock taxes are able to subtract those tax payments from their Missouri tax bills. When you subtract the revenue lost from other states’ jock taxes, the result is practically a wash. If all 20 states repealed their jock taxes simultaneously, states would get virtually the same revenue with a lot less administrative overhead.

States need to put an end to this pointless arms race. Ideally, the Missouri legislature should take the high ground and simply repeal the tax. But if legislators are concerned about unilateral disarmament, here’s a compromise: Missouri should exempt from taxation any visiting athlete whose home state does not tax Missouri’s athletes. That would give other states an incentive to pass similar laws, without allowing other states to take advantage of us.

At the very least, the legislature should reject ill-considered plans to extend the taxes to additional workers, such as umpires, whose salaries are nowhere near those of superstar athletes. Any good high school baseball coach will tell his players that the players on the away team are their guests and should be treated with respect and hospitality. Someone needs to tell that to Rep. Roorda.

Timothy B. Lee is an editor at the Show-Me Institute. This article originally appeared in the St. Louis Business Journal.

School Choice: A Truly Intelligent Design

Posted on by Timothy B. Lee

 

Here we go again. In a bitter 6-4 vote, before a standing-room-only crowd, the Kansas Board of Education adopted new curriculum standards last week that cast doubt on the theory of evolution. Republican board member John Bacon hailed the vote for doing away with “a lot of the dogma that is taught in science class today.” Democrat Janet Waugh countered that the changes undermine science. “We’re becoming a laughingstock, not only of the nation, but of the world,” she said.

Many Kansans are getting a sense of deja vu. Conservatives on the board enacted similar standards in 1999, only to have the changes repealed after they lost the majority in 2000. Liberals hope for another victory when the board comes up for re-election next year

Whatever one thinks of the theory of evolution, there’s a larger issue at stake. The dispute in Kansas isn’t ultimately about the merits of the theory of evolution, or whether all the alternatives are, as opponents argue, based on religious faith. The bigger fight is about who gets to impose their beliefs on whom. It’s just the latest symptom of a deeper illness that necessarily afflicts a school system where all the educational decisions are made by government bureaucrats.

Imagine you live in a town where you are required to pay several thousand dollars of taxes each year into a public fund that is used to buy food for the entire community. There is a publicly elected “Menu Board” that determines each year’s offerings. You wanted rye this year? Sorry! The Board voted for Wonder Bread. Again! You could, in principle, opt out of the public food system and buy rye, pumpernickel, or seven grain oat-nut crunch at a fancy private store. But you’ve already paid thousands in taxes, and can’t afford to pay twice for everything you eat. The Menu Board picks it. You eat it.

Imagine the controversy. Vegetarians (“You’ll get lentil loaf and like it!”) will lock horns with the Atkins lobby (“You can have my bacon when you pry it from my cold, dead fingers!”) to wrest control of the Menu Board. The kosher set will rail against shrimp-lovers; Mormons will fight against the Starbucks crowd; Hindus will agitate against the forces of barbeque.

Public school boards and curriculum committees are like menu boards for our children’s minds. Isn’t what we teach our children more important than what we feed them? Bitter and divisive conflict over curriculum is inevitable. Evolution is to creationists what pork is to Muslims.

The question we should be asking is not whether intelligent design theory deserves a place in the science curriculum, but, rather, why we do education this way in the first place. We live in an incredibly diverse society, and there’s no way we’re all going to agree, even if some of us really are right about the best way to do things. Suppose you knew with absolute certainty that there was one objectively best diet. Would that justify forcing shrimp down unwilling throats? Why treat schools differently?

One simple solution to conflicts like the one in Kansas is to give more control to parents through a system of school choice. Parents would then be free to put their children’s education in the hands of schools that reflect their beliefs, not the beliefs of school boards, curriculum committees, and the teachers unions.

It might also provide our children with better education. Defenders of evolution should take the theory of natural selection to heart. Darwin said that the competition among animals causes the fittest animals to survive and reproduce in higher numbers, leading to a steady improvement in animals’ adaptation to their environment.

Could we unleash the same forces in our education system? Right now, many poor kids see the opposite trend: they’re in bad schools that seem never to improve, they aren’t allowed to leave, and their schools are never held accountable. School choice would change all that: the most effective schools would attract more students and expand, while less effective ones would lose students and eventually go out of business. Over time, the quality of our schools would steadily improve. But such beneficial competition can’t happen if the state imposes the same curriculum on everyone. No variation means no evolution. No wonder our schools are so dismal.

School choice would kill two birds with one stone: parents would bicker less while kids would learn more. We may never agree on the theory of evolution, but surely we can all support that.

Will Wilkinson was born in Independence, Missouri. He is a policy analyst at the Cato Institute in Washington, DC. Timothy B. Lee is an editor at the Show-Me Institute in St. Louis. This article originally appeared in the West End Word.

Law Enforcement Shouldn’t Profit from Forfeiture

Posted on by Timothy B. Lee

Did you know that in many states, if government officials suspect your home, business, car, or other property was used in the commission of a crime, police officers can seize it without proving you guilty or even filing charges against you? It’s true. As journalist Randall Fitzgerald documented in his 2003 book Mugged by the State, it happens all across the country. Even worse, many states allow police departments to auction off the seized property and keep the proceeds. That creates an obvious conflict of interest: the more property they seize, the more money they have to spend.

Here’s the good news: Missouri’s asset forfeiture laws avoid that conflict of interest by prohibiting law enforcement officials from keeping forfeiture profits. Instead, the money is dedicated to a public education fund. And under Missouri law, seized property cannot be auctioned off until its owner has been convicted of a crime.

But some law enforcement officials don’t like those sensible safeguards for property rights. For example, at an October 27 meeting with Governor Blunt in Kansas City, Platte County Prosecutor Eric Zahnd called Missouri’s asset forfeiture system “broken.” He lamented that because law enforcement agencies don’t get a share of the loot, they have little reason to seize assets from the drug trade, leading to “very, very few forfeitures.”

It’s easy to sympathize with officials like Zahnd. He points out that police departments and prosecutors’ offices face tight budgets and competing demands on their limited resources. It’s easy to see why they’d seek additional revenue sources to help pay for their crime-fighting efforts.

But in a free society, citizens’ rights have to come first. To see what could happen if the state’s asset forfeiture laws were loosened, we need only look to other states that lack the safeguards present in Missouri’s law. Take the case of Cheryl Sanders, whose story Fitzgerald tells in Mugged by the State. The California resident was driving through Louisiana in 1995 when police officers in the town of Sulphur asked to search her car, which she had purchased used six months earlier. Under a false bottom in her trunk, police officers discovered a compartment capable of carrying drugs. Despite the fact that the compartment was empty, no drugs were found in the car, and she had no criminal record, they hauled her down to the police station for a search. Finding no drugs on her person, the police let her go. But they kept the car on “suspicion of involvement with drugs.”

It took her seven months in court to get it back. And it was a hollow victory. The legal battle cost so much that she had to sell the car to pay her lawyer.

Sanders might be forgiven for wondering if the police officers who seized her car might have had an ulterior motive. Under Louisiana law, the Sulphur police department would have received 60 percent of the revenue from selling Sanders’s car. In the previous five years the Sulphur police department, which served 20,000 people, had taken about $5 million in property using asset forfeiture laws.

Fitzgerald documents equally troubling examples in Washington state, Arkansas, Alabama, and Texas. Law enforcement officials seized cash, vehicles, homes, and businesses without convicting their owners of any crime. In some cases, the property was recovered, but only after months in court and tens of thousands of dollars in legal fees.

Of course, the vast majority of public officials, in Missouri as in other states, are honest individuals dedicated to public safety. But when it comes to protecting our rights, it’s better to be safe than sorry. The Missouri legislature, recognizing the importance of property rights, enacted legislation in 2001 to ensure that all profits from asset forfeitures would be spent on education. It’s a good rule, and legislators in Jefferson City should resist calls to revisit it. There’s nothing “broken” about a system that provides strong protections for private property.

Timothy B. Lee is an editor at the Show-Me Institute.

Eminent Domain Destroys Affordable Housing

Posted on by Timothy B. Lee

On October 6, the St. Louis Post-Dispatch criticized two attempted eminent domain seizures in the suburban communities ofSt. Charles and Sunset Hills. The editorial board wrote movingly about the injustice of booting middle-class families out of their homes to make room for a shopping mall or luxury condo simply because it will bring in more tax revenue. But the Post-Dispatch insisted that eminent domain is needed for “clearing crime-ridden slums for replacement with better housing.” They cite the McRee Town redevelopment as an example of how eminent domain can be used for good.

It’s true that McRee Town was a neighborhood in distress. Some buildings had problems so serious that condemnation and demolition was the only option. But the use of eminent domain to seize and demolish entire city blocks was unfair, unnecessary, and wasteful. It destroyed badly needed affordable housing and uprooted dozens of poor people, most of whom were forced to start over in another bad neighborhood.

A better renovation plan for McRee Town would have focused on helping those already living and working in the neighborhood by expanding the stock of affordable housing. That’s what a housing ministry called Neighborhood Enterprises (NE) has been doing for a quarter century. NE managed 23 buildings in the McRee Town area demolished by the city. The story illustrates what’s wrong with “blight” condemnations, and suggests that state policymakers should be very reluctant to give city governments the power to condemn entire neighborhoods.

The properties renovated and managed by NE were nothing fancy, but they consistently passed city inspections and they provided decent, low-rent housing to people struggling to make ends meet. According to NE president Jim Roos, many other buildings in the demolition area needed repairs, but were structurally sound and could have been easily renovated. Instead, the city “clear cut” the old housing and replaced it with town homes starting at $130,000 and single-family homes starting at $180,000. That was simply out of reach for Roos’s McRee Town tenants, who paid $275 to $550 per month in rent.

It didn’t have to happen that way. For five years, Jim Roos, the president of Neighborhood Enterprises, pleaded with the Garden District Commission to employ a selective re-development plan that demolished the worst buildings but saved those that were structurally sound. Roos argued that he could help the city expand the stock of affordable housing at minimal cost to taxpayers.

Instead, Roos says, he and other property owners were ignored and excluded from the planning process. The GDC pressed ahead with their vision of the new McRee Town—a vision without much room for low-income residents. Because the Commission had sweeping eminent domain authority, there was nothing property owners and residents could do to stop the plan. When NE refused to sell their buildings, the GDC used the power of eminent domain to seize the property, relocate the tenants, and demolish their homes. Because the compensation NE received was about half of what they would need to acquire comparable property anywhere in the city, they have been forced to cut back on the number of units they offer to low-income residents. And no new affordable housing was built in the McRee Town neighborhood.

“Clearing” slums is easy. But it doesn’t solve the problems of the people who inhabit them. Affordable housing is scarce, and it gets scarcer every time more of it is condemned by the city. Instead of taking a bulldozer to distressed neighborhoods, we should find ways of rebuilding them in a way that gives a leg up to their current residents. But sadly, city officials seemed more interested in attending ribbon-cutting ceremonies for grandiose re-development plans than meeting the needs of actual residents. And because they have sweeping eminent domain powers, they had little reason to pay attention to the concerns of existing property owners or residents.

It’s certainly troubling when a city government seizes a middle-class person’s home in the suburbs to build a shopping center simply because the shopping center will generate more tax revenue. But how is it any better to demolish the homes of poor people in the city to build homes for middle-class people? Low-income Missourians, most of whom are already struggling to find safe, affordable housing, deserve better.

Timothy B. Lee is an editor at the Show-Me Institute.

Tax Hike is Unfair to Smokers

Posted on by Timothy B. Lee

A group calling itself the Coalition for a Healthy Future has a suggestion to help the poor pay for medical care: raise their taxes.

Well, that’s not how the Coalition describes their plan. The group wants to more than quintuple Missouri’s cigarette excise tax, to 97 cents a pack, and use the proceeds to help finance Medicaid, the government health care program for the poor. The proposal, which the group hopes to put on the November 2006 ballot, is bad policy. It’s regressive, and it’s unfair to smokers. Voters should reject it, just as they rejected a similar tax hike in 2002.

Excise taxes are inherently regressive because the poor spend a larger share of their incomes on consumer goods. But cigarette taxes fall especially hard on poor Americans. According to a 2002 Centers for Disease Control survey, 33 percent of adults with incomes below the poverty line smoked, compared with only 22 percent of other adults. The Committee for a Healthy Future’s plan would raise taxes the most on precisely the people they’re trying to help.

But don’t smokers impose higher costs on society? Advocates of higher cigarette taxes point out that the health problems associated with smoking are treated at state expense by Medicaid. It’s only fair, they reason, that smokers pay for those higher costs through higher taxes.

It’s a good argument. The only problem is that it isn’t true. It’s true that treating smoking-related illnesses costs money. But that ignores the tragic reality that smokers die younger than non-smokers. As a result, they impose fewer costs on the retirement system. It’s hardly fair to demand that smokers pay for the costs of smoking-related illnesses while ignoring the benefits they never live to collect.

But in fact, the value of benefits not received by smokers is substantial. According to a 1998 study by Jane Gravelle of the Congressional Research Service, after accounting for the lower costs of smokers’ retirement benefits, state governments nationwide saved about $2.1 billion each year due to smoking. And that’s before considering the added revenue from excise taxes. The federal government saves even more as a result of smoking—$29 billion annually, according to Gravelle’s calculation.

Obviously, smoker deaths are nothing to celebrate. But the point is that smokers are already paying more than their fair share for the services they receive. They don’t owe the rest of us anything.

It’s no secret that the real goal of cigarette tax hikes isn’t to shore up Medicaid or compensate for the health costs of smoking, but to encourage smokers to quit. Mayor Michael Bloomberg, who signed a bill giving New York City among the nation’s highest cigarette taxes, has said as much. When signing the 2002 legislation, he stated that his purpose was not to raise revenue, but to “save peoples’ lives.” If it were up to him, he said, he would “raise the cigarette tax so high the revenues from it would go to zero.”

The American Heart Association, a member of the Coalition for a Healthy Future, agrees. “We, in the public health community, already know the value of increasing state tobacco taxes, particularly in terms of saving lives,” said Katherine Krause, executive vice president of Advocacy.

Saving lives is a worthy goal, but it shouldn’t come at the price of personal freedom. Fortunately, average Missourians understand that, however much non-smokers might disapprove of the habit, it’s not right to try to force others to change their behavior. Voters rejected a 2002 proposal that would have raised taxes by 55 cents per pack. If the new proposal makes it onto the ballot next year, voters should reject it too, making it clear that in a free society, people have a right to smoke if they choose to. State government shouldn’t be using tax policy to manipulate smokers into changing their behavior.

Timothy B. Lee is an editor at the Show-Me Institute.

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Man on Horse Charging