Susan Pendergrass speaks with Aaron Renn, author and consultant, and David Stokes, Director of Municipal Policy at the Show-Me Institute, about the recurring debate over whether the city of St. Louis should rejoin St. Louis County. They explore what city county mergers have actually accomplished in places like Indianapolis, Louisville, Nashville, and Lexington, why a full merger in St. Louis would be extraordinarily difficult to pull off, and whether the benefits would even outweigh the costs. They also discuss St. Louis’s demographic challenges, what the Pittsburgh model might offer as a path forward, the cultural barriers that make it hard to attract and retain people from outside the region, and more.

You can find Aaron’s work here.

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Episode Transcript

Susan Pendergrass (00:05): Welcome back, Aaron Renn, to the podcast. So happy to have you and David Stokes, our own expert on cities and counties and all things municipal. I appreciate you coming on, Aaron. There have been murmurings around St. Louis again on a topic that we have revisited for probably a hundred years: should the city of St. Louis be a separate county from St. Louis County?

Before we get to that, I want to ask you something because I was reading the news this morning, and I know that you’ve written about city county mergers before, like cities that are kind of dying and then either pulling in parts of their closest suburbs to sort of make everything look better, broaden their tax base, make their crime numbers look better. I was reading something you wrote a year or two ago about that, and you said that Louisville is a failed example of that. Is that right, basically?

Aaron Renn (01:01): Yeah, I’m a little skeptical of how these things have worked out in practice.

Susan Pendergrass (01:05): Yeah, in terms of losing the flavor and the coolness of the city. Literally this morning I saw an article about how Louisville is having a renaissance and these young professionals are all moving there because they didn’t tear down all their beautiful old Victorian homes, so you can still get one for close to a million dollars. They’ve got a cool art scene and a bourbon scene. So it sounds like maybe Louisville did not lose its personal flavor in the merger. I would be curious to know what you think of that.

Aaron Renn (01:33): Well, I like to put St. Louis in context. I’m glad you mentioned Louisville because many of these river cities have similar characteristics. I like to look at St. Louis as well as three cities in the Ohio Valley: Louisville, Cincinnati, and Pittsburgh. All of them heavily German Catholic in their demographics. All of them are very geopolitically fragmented with many small tiny suburbs throughout. They all have very fragmented neighborhood systems as well, where everybody has a strong sense of neighborhood identity. Where you go to high school is a big social marker. They all have phenomenal collections of urban assets and great historic buildings. They all still have their own unique character in a country where that has sort of bled away.

Aaron Renn (02:31): And they also have curiously underperformed demographically and economically in terms of growth. They’re slow growth places. So one thing I always encourage people is to pan back the lens and don’t just look at St. Louis in isolation. Look at it in comparison or dialogue with some of these other places and see what you can learn from them.

Louisville is actually a quite troubled city in important ways. From a white collar employment perspective it’s doing well, from a blue collar perspective less so. It’s one of the 10 least educated major metros in the country. I don’t want to spend too much time on Louisville, but I want to talk about the city county merger, which is distinct from recombining the city and the county. This has been considered urban planning best practice for 30 or 40 years. There was a book written by David Rusk called Cities Without Suburbs. The idea is that cities that were able to expand their boundaries through either annexation or city county mergers were prospering, whilst cities that did not, like the Clevelands, the Cincinnatis, and the St. Louises, were struggling. So the idea is we need big box government.

Indianapolis, where I live now, had a city county merger in 1970. Louisville did a city county merger, I grew up near Louisville. Jacksonville, Florida, Lexington, Kentucky, and Nashville, Tennessee did as well. What I would say is a few things. Merger is not necessarily bad. For Indianapolis, merger did prevent the city from essentially going down the tubes in important ways. So it really was a win in important ways.

But it did not prevent the historic city from going into the exact same demographic decline as St. Louis. The historic city of Indianapolis has lost almost exactly the same share of its population since 1970 as St. Louis has. Secondly, these are very politically difficult to pull off. They take enormous effort. They often fail multiple times. Louisville had multiple failures.

The most precious resource is always management time and attention. Is this where you want to put all your political chips? And in order to get it passed politically, what happens invariably is that most entities are actually not consolidated. In Louisville, none of the existing incorporated suburban governments were in fact merged. In Indianapolis, the school districts weren’t merged.

This means you don’t necessarily get all of the benefits you think from consolidation, because many things are excluded. And then unlike a corporate merger, where there’s typically a lot of downsizing and cost rationalization, in city county mergers nobody ever loses their job and salaries and benefits might even be harmonized upward to the high watermark. So don’t expect it to save any money. Personally, city county merger might have some benefits for St. Louis. I’m not saying it would have no benefits, but in my opinion it’s not going to be a needle mover and most likely it would be extraordinarily politically difficult and uncertain to pull off.

Susan Pendergrass (06:00): Yeah, no question. It’s been very politically difficult. People don’t want to do it. However, we do have these little tiny school districts and police districts. We have, I don’t know, 28 911 systems. We have a lot of what looks like bureaucratic waste and red tape. To the extent that doesn’t get resolved in a merger, then what’s the point? But I do think, you know, we’ve been talking about the demographics of St. Louis. There were over 800,000 people in the city once. Now there are maybe 280,000 and declining, and we’re in the death spiral of more people dying than being born. We’ve been in that for a while. And I guess it brings up the question of what is St. Louis to do if we are in this death spiral? We’re not having the babies. We’re having fewer babies than we did 15 years ago. So school enrollment is only declining. What is the prescription in that situation?

I’ve been to Cincinnati quite a bit. They’re trying to get people downtown with sports stadiums. It doesn’t really work. Louisville has sports stadiums downtown. I don’t know if people really want to move down there. I don’t see it working in St. Louis. So what is a city in that situation to do?

Aaron Renn (07:18): It’s going to be challenging in a sense because your problems are a little over determined. St. Louis was once a regional capital city, much like a Dallas or an Atlanta or a Denver or a Minneapolis. And it lost a lot of those functions. Many of its headquarters have left. It used to have a lot of professional services firms like ad agencies that did business all over the country, not just for the local market. Now St. Louis, although it’s still bigger than Indianapolis, looks a lot more like an Indianapolis or a Columbus, Ohio, where you have fewer corporate headquarters and most of the service firms are just there to serve the local market. St. Louis has essentially shrunk a little bit in relative importance, and it’s hard to get that back.

The demographics are also quite difficult and create a situation where it’s hard to attract business when you have a shrinking labor force, weak demographic growth, and a weak ability to bring people in from the outside. So it’s a very complicated situation and I don’t think there’s any silver bullet for St. Louis.

Susan Pendergrass (08:39): That’s what I’m asking you for. You have the answers. What’s the silver bullet?

Aaron Renn (08:43): So here are the things I would look at if I were in St. Louis. One of the clear issues that affects all of these river cities is that their wonderful, unique local cultures come with a downside, which is an extreme parochialism that has two negative effects. One, it makes it difficult for the communities to cohesively work together, which I’m not telling you anything you don’t already know. City-suburb divides tend to be bigger. In Indianapolis, regional leadership is mostly all on the same page about the big issues. Same with Columbus, Ohio. Secondly, it makes it very difficult to attract people from out of town because they come there and they can’t make friends, they can’t penetrate the social networks.

Susan Pendergrass (09:15): 100%, yes.

Aaron Renn (09:40): You hear it over and over again in places like St. Louis, Cleveland, even Minneapolis, Minnesota. There are some sayings there. If you want to make friends in Minnesota, go to kindergarten, because that’s when everybody makes their friends. Or Minnesotans will give you directions anywhere but their house. They’re never going to invite you over. St. Louis has that reputation. I don’t think it’s just a reputation. And I know you just had Ness Sandoval on.

Susan Pendergrass (09:53): Yeah.

Aaron Renn (10:08): He’s talking about you need to get better on migration. Migration isn’t going to improve if migrants are not going to be able to join the social networks here. And that’s not even just international migration, that’s domestic migrants. So I think that’s a huge issue for the city. Cultural issues are hard to solve, but maybe less intractable than infrastructure.

The other thing is looking at Pittsburgh as a sort of model. Pittsburgh hasn’t solved really most of its problems by any means, but it has been able to regenerate in the city a sort of high value economy around Carnegie Mellon and the University of Pittsburgh Medical Center. It’s done quite well. Many Silicon Valley firms have set up shop there. What’s happened in Pittsburgh, although it’s still a demographic decline story, is there’s been a demographic transition in the city. Pittsburgh went from one of the least educated cities in America to now one of the youngest and most educated. Part of it is old people moved and died off and young educated people replaced them. So the total number of people in the city was declining, but there was a churn happening underneath. And the same thing is already happening in St. Louis.

Susan Pendergrass (11:13): How did they do that?

Aaron Renn (11:33): College degree attainment in the city is now well north of 40%. So the people who live in the city of St. Louis are very educated. That demographic churn has raised educational attainment and thus incomes in the city a lot. Now Pittsburgh was different because it was an almost entirely white city. There’s a racial divide in St. Louis and gentrification concerns become more salient. But St. Louis is now an educated city. This is not an old post-industrial blue collar city. The city of St. Louis itself is very educated. And also being very small, it doesn’t necessarily need a massive change to move the needle. In Indianapolis we have a population of over 900,000. Moving that behemoth takes a lot. St. Louis now being smaller has a situation where there could be a big impact from lower numbers of things. So I think a knowledge economy built around Washington University and your medical centers has some possibilities, somewhat similar to Pittsburgh.

Susan Pendergrass (12:45): So much medical.

Aaron Renn (12:58): Carnegie Mellon’s engineering and computer science areas will be a little different. I might also look at Vanderbilt, what’s going on there? What are some peer schools you could watch to see what’s going on? But I think there are actually some reasons to think that the city of St. Louis, believe it or not, could be sort of turning a corner. It has now demographically renewed itself to a higher educational attainment state. Being small, it probably doesn’t have that much further to fall, and you can start building from there. Obviously there are governance challenges, but looking at the Pittsburgh model, studying similar complexes around peer schools, and addressing the culture issues is where I’d look.

David Stokes (13:33): Hopeful.

Susan Pendergrass (13:47): So as a spokesperson for St. Louis, what do you see for the future?

David Stokes (13:52): Well, I would be curious to get Aaron’s thoughts on that size question, about how the city of St. Louis has in fact gotten so small. It’s about 10% of the metro area. How does that affect the pros or cons of any type of a merger? These would not be a merger of equals. St. Louis County would almost subsume St. Louis City into it. How do you think that would affect things for better or worse?

Aaron Renn (14:28): Well, that was the critique of the Louisville merger by two academics at the University of Louisville. I mentioned the book Cities Without Suburbs. They wrote an academic paper called Suburbs Without a City, which basically said if the merger passed in Louisville, it would essentially mean the suburbs take over the city, not the city taking over the suburbs, because the old city of Louisville only had about 260,000 people and the suburbs would numerically dominate. The same thing would certainly happen in St. Louis. If there were a merger, suburban St. Louis County would control the city in essence.

Another consideration, and this is a Cincinnati issue, I interviewed about 15 years ago the mayor of Cincinnati, John Cranley. Here’s what he said, and I think this is an important point. He said, 30 years ago, city county merger was the thing because cities were in decline and you wanted to tap that suburban tax base to fund the city. But now it’s reversed. Now the cities are coming back and it’s the inner suburbs that are actually going down the tubes. And so in Cincinnati today, we have all the corporate headquarters, we have the universities and the medical centers, and we don’t have to share our tax revenue with anybody. If we were merged with the county government, we’d have to prop up all these failing suburbs. And so I think you’re in a similar situation in St. Louis, where the high value activity, not all of it is in the city of St. Louis because of Clayton and so on, but the St. Louis County suburbs are mostly places that are themselves on negative trajectories. Merging the city, which may be on the cusp of being able to bottom out and turn around, with all of these still declining inner suburban areas, might actually be an albatross around the city’s neck.

Susan Pendergrass (15:16): What would that mean?

David Stokes (16:37): I just think one of the differences between St. Louis and Cincinnati, and I don’t know the property tax base of Cincinnati, is that so much of the city of St. Louis is tax exempt right now. Between Washington University, Saint Louis University, and all the government entities, there’s just so much of it. I say that as somebody who supports property tax changes to make them pay something towards it. But I just don’t think the Cincinnati argument applies to the city of St. Louis right now. That property tax exemption part is a huge factor because the most growing, thriving part of it is the entire giant Barnes-WashU-Cortex complex, and the amount of property taxes they pay is miniscule.

Susan Pendergrass (16:38): Hmm.

Aaron Renn (17:26): Well, some of that is a planning issue. And I think the reality is, when you have a complex like that, are all these people going to move to St. Charles? Maybe not. I’ll tell you, I live in the suburb of Indianapolis named Carmel, and a lot of the hospitals and things have been opening facilities here. When these nonprofit hospitals come up here, we will not approve zoning changes for those hospitals unless they agree to make payments in lieu of taxes. You want to come up here and you want a zoning change, you’re going to have to pay. We were actually quite prescient in that one of the local hospital chains opened a for-profit hospital. As part of the approval deal, we said, if you ever convert to nonprofit status, you will continue paying property taxes. And we did that.

So I think there probably is leverage from the city over some of these entities. You don’t have a lot of leverage over a corporation deciding where to put their office, but that’s not a tax exempt situation. The stuff at Cortex is probably not going to leave if you make them pay a little money the next time they come to you for a zoning approval. I think you need to start looking at how to get more money out of these entities that are nonprofits in name only. These universities and hospitals are effectively gigantic hedge funds. Their executives are extremely well compensated and billions of dollars are flowing through there. Undoubtedly the better solution there is to figure out how to tax them rather than figure out how to tax the soon-to-be-dead mall in the suburb over the border.

David Stokes (19:24): Well, yeah, and that’s sort of the trade off, unfortunately, is that they do pay earnings tax. The employees, many of them very highly compensated, pay the earnings tax. And that’s what makes the city more dependent on local income taxes, not less, because they’re either tax exempt or in the case of Cortex, have tax abatements that make them essentially tax exempt.

Susan Pendergrass (19:25): We do have earnings taxes, right? So the folks who work there have to pay an earnings tax.

Aaron Renn (19:53): Yeah. Again, I don’t know exactly the fiscal architecture there. But I would say you don’t want to do a merger simply to do a tax dollar grab. The lesson of Indianapolis is we did that. We grabbed suburban tax dollars and we used it to rebuild our downtown successfully. But here we are 50 years later, and now we have enormous tracts of decayed suburbia that are an enormous problem. Our entire core county is now in a sense the inner city. We have big challenges because we were not able to invest in ways that allow those suburban areas to retain their allure over the long term.

And I’m not saying that’s impossible, but any short term juice you get, cities always rise and fall. Core cities have proven more resilient and more able to regenerate themselves than suburbs. Part of it is because state governments cannot afford to let their state’s largest city or major urban center go down the tubes.

Susan Pendergrass (21:06): Yeah.

Aaron Renn (21:16): Missouri cannot let St. Louis and Kansas City implode. Michigan cannot just write off Detroit and say who cares. But these suburban areas have proven a lot tougher to save. We don’t have a good model. We’ve spent decades thinking about how to rebuild cities and build districts. There are certain things you can pull off in a city around conventions, civic events, gathering spaces, museums, and government that are very hard to translate to suburban settings. So there’s not a great playbook, especially in declining markets, for renewing suburbs. The playbook for suburban renewal, if you want to call it that, is places like Carmel, Indiana, which are growing and affluent, and therefore can build large mixed use centers, new urbanist developments, trails, and parks. The suburbs of St. Louis County are probably tremendously deficient in infrastructure as we would understand it today.

So again, there may actually be some benefits in having St. Louis City rejoin the county in a sense, because then the county functions are spread and amortized across a larger population.

Susan Pendergrass (22:45): It would immediately improve our murder rate because we would be mixing it in.

Aaron Renn (22:48): Yeah, there is some of that. The murder rate is an artifact of the size of the city more than anything. There are places in Chicago with higher murder rates. A former colleague of mine at the Manhattan Institute, Rafael Mangual, did an analysis of Chicago. He said there are areas on the South Side of Chicago that are larger and have more people than St. Louis with far higher murder rates than St. Louis.

Susan Pendergrass (22:56): We get called out because of the small denominator.

Aaron Renn (23:17): And so there is that. The other thing is Chicago is a good example. New York City was essentially a city county merger. In 1898, the five counties that are the five boroughs of New York were consolidated into one city. Philadelphia was also a city county consolidation from the 19th century. But what happens when you create a very large city of say a million people or more is you really have to scale up your government. You have to have a government that operates at that scale.

What happened with Indianapolis was we merged city and county government, but we didn’t really have a government that could effectively manage this new larger territory. It never built out the infrastructure in the suburbs. In New York, the Bronx has subways, great parks, everything built out with proper infrastructure, because it was part of New York and New York had to expand governance to become a city of eight million. Chicago got big in the 19th century and built a city government that could run a city of three million people. And some of the stuff that gets critiqued there, for example, is a lot of city services were organized by ward or city council district. There are 50 city council districts and every city councilor is sort of a little mini mayor of their district. The alderman essentially has veto power over any zoning changes. It’s called aldermanic privilege. So there are a lot of constraints there.

But if it’s just one mayor and one city council trying to think about a huge city of 77 neighborhoods and three million people, they can’t keep that much in their head. All they can think about is downtown. And that’s what happened in Indianapolis. The mayor and city council can really only think about downtown. We should have built out structures in townships throughout the city so that you had leadership focused on that area and money focused on that area. That’s what made the suburbs work really well. A suburb like Carmel is basically township sized. We have 100,000 people, big enough to do things, but not so big that our mayor and council can’t keep the whole city in their head and plan and manage the whole city.

So if you merge with the county government, you’re going to have to create an entirely new government structure that allows you to essentially manage every sub area of the whole thing and bring it all up to a standard of services. That’s the other thing they often did in Louisville and Nashville. They merge, but they have a two tier service system where there’s an urban services district for the old city which gets more services, and then the others get less. They didn’t do that in New York. There’s one standard of service in New York, one in Philadelphia, one in Chicago. So if you can’t commit to a single standard of service, you’re basically creating a bogus merger in my opinion. If you’re going to do a merger, you need to obliterate every government and entity in St. Louis County and city, merge them all into one with one standard. That’s not going to happen.

Susan Pendergrass (26:35): That’s not going to happen. What do you think, David?

David Stokes (26:37): Yeah, that’s not going to happen.

Aaron Renn (26:43): So you end up with a lot of problems. Louisville didn’t merge any fire departments. Imagine a city that doesn’t have a consolidated fire department. Imagine a city without a single police department. That was actually Indianapolis. When we merged, the Indianapolis Police Department still patrolled the old city, but the new parts of the city that were consolidated in from the county were still controlled by the sheriff.

Susan Pendergrass (27:13): That is 100% what would happen in St. Louis. Everyone would retain their school system and their police department and their fire department. I lived for a long time in Fairfax County, Virginia, which is a single county government. It’s massive, 150,000 students in their school system. It seems to function with a single police department and fire department. But I don’t think you can backwards engineer that into a place that for hundreds of years has been operating as it has been operating.

Aaron Renn (27:43): Lexington, Kentucky worked pretty well because one, the schools were already consolidated, as in the South it’s typically county school districts. Secondly, there were no other government entities, no township governments, no other incorporated municipalities. So it merged everything. And they were sort of able to solve the urban services district issue because the outer areas of Fayette County were horse farms. They actually put in a kind of green belt rule, you can’t develop out there, because they wanted to protect these scenic landscapes. So there was actually a good reason to treat that differently, because it was a very unique American landscape. Lexington, I think, was pretty successful.

Susan Pendergrass (28:15): They are. I appreciate it when I drive across Route 64.

Aaron Renn (28:39): Lexington was pretty successful and wasn’t especially controversial when they did it, in part because there weren’t all these entrenched interests like there are in other places. If you look at places that did the mergers, they weren’t the Cincinnatis and Pittsburghs. They’ve been talking about consolidation in Pittsburgh forever. It was very hard. And Louisville did it, but it was one of the least consolidated so-called consolidated governments. What the Louisville merger functionally did was dissolve the city of Louisville and reorganize county government. The county government now has a mayor and a council instead of the old fiscal court with the judge executive and all that.

Susan Pendergrass (29:21): That’s kind of what would happen in St. Louis, right?

Aaron Renn (29:36): That’s essentially what they did. They basically dissolved the city and the county government was reorganized, but nothing was merged.

Susan Pendergrass (29:43): Did you have a question?

David Stokes (29:45): I want to get back to the fire district point. We’re talking about why this would be so hard. There’s actually a law in St. Louis that only applies in St. Louis County that makes it impossible to consolidate fire districts. Even if a modest mid-sized suburb annexes an unincorporated part of town, they’re not allowed to provide fire services to that new annexed area, or they can, but they have to pay so much to the old unincorporated fire district that it makes it impossible to do so. That’s just one example of how even if you wanted a full scale merger, it would just be impossible to actually carry through.

Susan Pendergrass (30:34): Why do you think people float this idea, David? Why does it come back every couple of years?

David Stokes (30:38): You know, it’s the old line. I remember a study I read about Pittsburgh and St. Louis many years ago. The question was, are the St. Louis and Pittsburgh areas really inefficient with all the fragmented government? And the conclusion was, well, you would never design a metro area like this, but they’ve both made it work over the last century better than you would think. The conclusion was that St. Louis and Pittsburgh aren’t actually as inefficient as you might assume when you run the numbers.

I think people have trouble accepting that. People look at so many small municipalities, many of them dysfunctional, many of them until recent times funded themselves primarily with traffic tickets, which is a terrible way to fund local government, and that’s not even an exaggeration. And there’s just this fundamental belief that if you can just plan it better you’ll create a better place. I just think it fails.

One of the reasons it would fail, going back to what Aaron led this conversation off with, is that if St. Louis County and St. Louis City joined together, they’re not actually going to lay any government employees off to save any money. St. Louis City government is not going to fire city employees. It’s never going to happen. So you’re not going to save any money and it’s all just going to collapse.

Aaron Renn (32:12): Yeah, New York City and large governments are not more efficient.

I look at it and say, look, I think merger is a solution for failed states, if you want to call them that, in the St. Louis suburbs. Take some micro-suburb that’s a complete scam or is bankrupt and merge it in with its neighbor. Do some consolidation like that, that probably needs to be led by state government, almost like a receivership sort of thing. That’s just kind of good government as you work through it. But I just don’t think the benefits you would gain from trying to do a complete governmental merger of St. Louis City with St. Louis County would outweigh the opportunity cost of how much time and effort you spend on it, when you could be spending that on other things that I think will actually move the needle more.

The downsides are arguably as high as the upsides. There’s no guarantee it’s even net positive in this environment. The time to have merged was when Indianapolis did it in 1970, not in 2026. Nashville did it in the 60s. Jacksonville did it a long time ago.

And then I think it doesn’t fix the fundamental issues around the culture. You’ve got to take a hard look at that and say, it’s maybe very difficult to change. The idea that people who aren’t from here have to be able to move here and get connected and feel like they belong in the city. There’s a couple we know who lived in St. Louis. The wife taught in St. Louis public schools. They’re big urban people. The husband was from St. Louis, and they moved here to Carmel, Indiana.

Susan Pendergrass (33:47): Tell me more about that.

Aaron Renn (34:10): Basically they said, man, people are just so much friendlier here. They make better eye contact, they engage more. It’s just so much more welcoming than it was in St. Louis, even though they were actually in a sense connected because the husband was from there.

So when even people who lived in St. Louis and liked it notice a difference when they leave, that is a killer when you’re already struggling demographically. I had a guy who owned a business in Cleveland who said to me one time, I learned the hard way never to recruit anyone from out of town to work for my company unless that person or their spouse is from Cleveland, because otherwise they will never stay. When that’s where you are as a place, that is just rough. I think that is one of the killers for these river cities.

Susan Pendergrass (35:16): Yeah, what’s the fix for that? I don’t know what the fix is.

Aaron Renn (35:38): I think the optimistic case for St. Louis, and I actually tweeted this a year or two ago, is that St. Louis City educational attainment is really high now. In a sense, it’s a small, highly educated city that is probably going to continue growing more educated. So I think the Pittsburgh option looks viable in St. Louis.

Susan Pendergrass (36:00): And certainly great medical care. I know that the average age is getting older in St. Louis. I think within 10 years, one in four people will be over the age of 65. But we also have an Alzheimer’s research center and access to medical care, which as you get older gets more important. I do think there’s an opportunity to lean in to the medical services that are available, as the country as a whole gets older. I think St. Louis looks more attractive for that reason. So I think you’re right that with universities and medical centers, there’s an opportunity.

Aaron Renn (36:35): Yeah, I think if America’s demographics keep on this trend, a lot of other places are going to get to where St. Louis is. And the thing to be careful of is that when you’re in a declining market, that often prompts centralization of activity and population. What happened with Japan is that once Japan’s population started falling, everybody started moving to Tokyo. It’s Tokyo and a handful of other cities where everything is concentrated, and they literally have ghost towns there.

I don’t think it’s any accident that Indianapolis’ growth really took off once the Rust Belt era and deindustrialization hit the state. Indianapolis and Columbus, Ohio have grown in large measure through drawing people out of the rest of the state as those states declined. Huge numbers of people move from Cleveland to Columbus every year.

Missouri is a little different than that. One of your challenges is that St. Louis does not draw people from rural Missouri. When I looked at the data, it’s not like there’s a massive flow into St. Louis from the rest of the state. So you don’t have that siphon bringing people in.

Susan Pendergrass (37:55): There are public safety issues around that, but yes.

Aaron Renn (38:00): And the issue we have is that we’ve now eaten our seed corn. There’s not going to be next generations of children in the towns I grew up in in rural Indiana to move to Indianapolis anymore. The cohort sizes are going to be smaller. So that pump, even Tokyo is declining now in population. That siphon is draining the water table. We can only rely on that so long.

But I think this is the risk for St. Louis in that kind of environment. People with opportunity might avoid or flee St. Louis and go to Austin, Texas or Nashville. They go to the handful of places in America that are really still growing. That’s a threat even for Indianapolis and Columbus, Ohio. In a declining market, it’s very hard to get people to want to come to a shrinking city because the opportunity space is shrinking. St. Louis’s opportunity space has been shrinking because you’re losing corporate headquarters and your working age population is declining. That dynamic is really going to be a challenge. But within that, the city of St. Louis might end up doing okay. Again, being small actually helps it here.

Susan Pendergrass (39:25): Any closing thoughts on that, David?

David Stokes (39:27): Just that the part of Missouri that is definitely still growing, and that probably is attracting those young rural people who are moving to a city, is going into southwest Missouri, the Springfield-Branson area. That’s absolutely the growing part of the state. And even Kansas City is growing certainly more than St. Louis is.

Aaron Renn (39:48): Yeah, it’s not a culturally cohesive state. Springfield and that area are definitely growing, and growing despite the fact that they have nowhere close to the urban assets of a St. Louis. It’s interesting to watch, and we’ll just have to see what happens.

Susan Pendergrass (40:05): It is. I think about it a lot. I’ve been talking about this in terms of school enrollment for years and years, where you could see the biggest kindergarten cohort was after the Great Recession of 2009. You know that that’s the biggest kindergarten cohort for the last 15, 16, 17 years. We do nothing but build schools and hire teachers. We are slow to catch on to these things happening. But I think your perspective is certainly very interesting. On the question of the merger, it’s not worth the cost for whatever benefits there might be. But it still gets talked about, so I appreciate you coming and giving us your thoughts on it. Maybe we’ll have to have you back to talk about it again.

David Stokes (41:02): And Aaron, I want you to come back. I want to find out how we get more roundabouts in Missouri. I love roundabouts. I go to Carmel it seems like once a year for these gigantic youth sports tournaments up at Westfield, just a little bit north of you. My kids’ sports take me there. And I love the roundabouts. You cannot get enough of them.

Aaron Renn (41:09): I’d love to talk about that. My favorite topic.

Aaron Renn (41:24): Yeah, it’s great. We hardly ever have to stop. There are barely any stoplights or stop signs left in our city. It’s amazing. We’re one of the few growing places in America where traffic is better today than it was 20 years ago.

Susan Pendergrass (41:32): They’re awesome.

David Stokes (41:45): People don’t realize how good that is for air quality and everything. You just keep moving along, not stop and start. We need 100 times more roundabouts in this area.

Susan Pendergrass (41:55): Are you pretending that people stop at stop signs in St. Louis? Because let’s be honest, people don’t stop at stop signs.

David Stokes (42:00): Well, they roll them, but it’s still wrong when they roll them. Maybe all the people blowing red lights on Kings Highway at 50 miles an hour are just being environmentally conscious. I need to give them more of the benefit of the doubt, I guess.

Susan Pendergrass (42:12): That’s exactly right. All right, thanks so much. I really appreciate it.

Aaron Renn (42:19): Thank you.

Produced by Show-Me Opportunity

The post The St. Louis City-County Merger with Aaron Renn and David Stokes appeared first on Show-Me Institute.

Susan Pendergrass speaks with Show-Me Institute policy analyst Avery Frank about his new report, Connecting Nuclear Energy’s Past and Present: Guiding Missouri’s Future. They discuss why electricity demand is rising again, why major companies are turning back to nuclear, and how Missouri can position itself to benefit. From data centers and AI to regulatory hurdles and smart policy steps like a state nuclear advisory council, Avery explains how Missouri could play a leading role in America’s nuclear resurgence.

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Timestamps

00:00 The Resurgence of Nuclear Energy
03:37 Challenges and Historical Context
07:30 Missouri’s Nuclear Potential
12:06 Future of Nuclear Energy and Policy
16:09 Conclusion and Future Outlook

Transcript

Susan Pendergrass (00:00)
This morning we’re joined on the podcast by Avery Frank, policy analyst at the Show-Me Institute. You’ve got a paper out, and I’m really looking forward to talking to you about it because I have a lot of questions. You’ve done a lot of research and analysis around nuclear energy, and I see a lot in the media these days about the resurgence of nuclear energy.

Number one, why does nuclear energy seem to be back, bigger and better than ever? And secondly—well, I’ll start with that. Why is nuclear energy back in the news so much?

Avery Frank (00:34)

Nuclear power surged in the United States during the Cold War. Electricity demand was soaring—it kept going up and up. Nuclear energy is clean, reliable, and powerful. Just in Missouri, we have one nuclear power plant and it supplies 14% of the entire state’s electricity. So when you need a lot of electricity, nuclear power is something you can turn to.

Since 2007, electricity demand has pretty much flatlined as we’ve become more efficient. But with data centers, artificial intelligence, and electric manufacturing, electricity demand is back on the rise, looking similar to Cold War–era growth. Just data centers by themselves are supposed to go from 3% of U.S. electricity demand today to 8–12% by 2030. That’s a huge jump.

Susan Pendergrass (01:56)
Well, if it’s so great, why did it go away? I remember Three Mile Island, and I saw the movie about Chernobyl. When it gets bad, it gets really bad. Why did nuclear go away so hard if it’s such a great, clean, reliable source of energy?

Avery Frank (02:26)
I’d say it went away for three key reasons: public fear, regulation, and regulatory attitude. Most of the time, public fear from events like Three Mile Island drove increased regulation.

Two key events stand out. First, the National Environmental Policy Act (NEPA) *correction* in 1970. That was a huge blow for the nuclear industry. Construction costs went up 25% and projects took two years longer. Then came Three Mile Island in 1979. It was mitigated by safeguards, but public fear skyrocketed. Costs afterwards were three times higher and construction took twice as long. That was the big turning point.

Susan Pendergrass (03:54)
Then if it’s that expensive, why is it coming back?

Avery Frank (04:14)
Companies are turning to nuclear out of desperation. They need a lot of power, as I mentioned with data centers, but they also have clean climate pledges. They can’t really do it with solar or wind. They’re kind of backed into a corner.

Susan Pendergrass (04:20)
Why not solar or wind?

Avery Frank (04:39)
Solar and wind are intermittent resources. Nuclear plants run consistently. Data centers can’t have outages—you need steady, reliable power. That’s what nuclear does best.

Susan Pendergrass (05:08)
Does it generate a lot of nuclear waste?

Avery Frank (05:15)
In the U.S. we use a once-through cycle. We refine uranium, put it in a plant, then seal it up forever. Other countries like France and Japan recycle their fuel. About 96% of spent fuel is still reusable, but the U.S. stopped recycling in the 1970s. If we restarted, we could reduce waste significantly, which already isn’t that large to begin with.

Susan Pendergrass (06:09)
So what could Missouri be doing right now to take advantage of this moment?

Avery Frank (06:32)
Timing is key. Missouri already has advantages: intellectual capital, infrastructure, the Missouri University Research Reactor, and Missouri S&T producing top nuclear engineers. We also have retiring coal plants that could be retrofitted into advanced nuclear plants, cutting costs by up to 35%.

Federal reforms like the ADVANCE Act are making things easier, but Missouri could act too. For example, we could form a Nuclear Advisory Council, like Tennessee did, to identify strengths and weaknesses and make recommendations. That’s attracted significant investment there.

Susan Pendergrass (08:14)
What about public-private partnerships?

Avery Frank (08:37)
That’s a great point. We believe the free market can play a big role, just like it did in space travel. One idea is Consumer Regulated Electricity (CRE), where private developers build small modular reactors for large customers like data centers on their own dime, outside the regulated grid. That takes the burden off ratepayers while meeting rising demand.

Susan Pendergrass (10:26)
Because I assume energy demand forecasts keep being revised up, right?

Avery Frank (11:03)
Exactly, and they’re hard to predict. What if AI suddenly uses less power? Then Missouri could be stuck with excess nuclear capacity. Letting the free market take some of that risk makes sense.

Susan Pendergrass (11:39)
What about the last Missouri legislative session?

Avery Frank (12:06)
Senate Bill 4 passed. It was a big utility bill that allowed “construction work in progress,” meaning utilities can charge ratepayers during construction, not just when a plant comes online. It’s unclear if it applies to nuclear, but it could. I’ve suggested treating it more like a bond, so consumers who shoulder the risk also see some reward, like lower rates or refunds.

Susan Pendergrass (13:44)
Any other signs that Missouri welcomes nuclear investment?

Avery Frank (13:47)
Yes. I attended the Missouri Nuclear Energy Summit in Columbia. Governor Kehoe was there and said we need to develop nuclear at business speed, not bureaucratic speed. That shows real resolve. Legislators are supportive too. Missouri has the advantages and infrastructure—we just need the right regulatory environment.

If Missouri created a Nuclear Advisory Council, like Tennessee, it could attract significant investment and expertise. Energy availability is now one of the top factors for companies deciding where to locate. If Missouri can offer abundant, reliable, clean energy, we’ll be far more competitive.

Susan Pendergrass (16:20)
That’s awesome. You have a paper out on this, available at showmeinstitute.org. Thanks for coming on and explaining it to us.

Avery Frank (16:32)
Awesome, thank you for the interview, Susan.

Produced by Show-Me Opportunity

The post Missouri’s Nuclear Opportunity with Avery Frank appeared first on Show-Me Institute.

A 2003 Clemson University study by economists Robert Baade and Victor Matheson puts this into stark perspective. They looked at the 1994 World Cup, hosted in the United States, and found something shocking: Instead of the $4 billion economic boost that event advocates promised, host cities actually lost between $5.5 billion and $9.3 billion. Let that sink in. Instead of making money, these cities were left holding the bag for billions in losses.

The report lays out the problem:

1. Stadium Spending is a Black Hole – FIFA demands that host nations build or upgrade multiple stadiums, often at obscene costs. South Korea and Japan spent $4 billion for the 2002 World Cup. Many of those stadiums are underused today, costing millions just to maintain.
2. The Tourists Don’t Come – One of the biggest myths is that these events bring in a wave of free-spending tourists. In reality, regular tourists stay away to avoid inflated prices and congestion. The net impact is often negative.
3. Jobs? What Jobs? – Yes, major events create work—but mostly low-paying, temporary jobs that vanish once the event is over. Meanwhile, businesses that don’t cater to event-goers—restaurants, retail, theaters—often see a drop in revenue.
4. FIFA (or the IOC, or the NFL) Walks Away with the Money – The real winner? The governing body that runs the event. FIFA collects billions in ticket sales and sponsorships, while host cities are stuck with the bill for security, infrastructure, and maintenance.

The World Cup is far from the only culprit. Cities and nations have been burned time and again. The 2016 Rio Olympics left Brazil with $13 billion in debt, abandoned venues, and zero lasting benefits. The 2014 Sochi Winter Olympics cost $50 billion, much of it wasted on corruption and vanity projects. The Super Bowl, despite constant hype, has been shown in multiple studies to provide a fraction of its promised economic impact.

Politicians and event boosters always paint the same rosy picture. They promise jobs, economic growth, and global prestige. But the reality, as study after study has shown, is that these mega-events rarely—if ever—pay off.

If a city really wants to strengthen its economy, it should focus on investing in infrastructure, public services, and policies that support small businesses and long-term growth. Chasing after one-time spectacles that benefit global organizations far more than local residents is a mistake.

So the next time you hear about a city bending over backward to host the World Cup, the Olympics, or any other mega event, ask the hard question: Who actually benefits? If history is any guide, it’s probably not the taxpayers.

The post Mega Events Fail to Deliver: World Cup Edition appeared first on Show-Me Institute.

The Show-Me Institute has weighed in on such public projects, from the Stan Span to trolley systems in University City and Kansas City. In each instance we asked, just as you would before taking out that home-improvement loan, whether the projected benefit of the project was greater than the projected costs borne by taxpayers. And even if we make the somewhat dangerous assumption that the costs won’t increase as the project goes on, the answer too often is “no.”

Our conclusions are shared by Harvard economics Professor Edward Glaeser. In a recent article that appeared in the City Journal, Glaeser exposes the fairy tale of infrastructure investment as an economic cure-all. It isn’t that he (or we) believes that well-thought-out investment in roads and bridges is unimportant. Quite the contrary. The problem is that the way in which policymakers decide which project goes forward often leads to costly miscalculations that in the end simply do not deliver the promised improvements.

A couple myths about infrastructure that Glaeser dispels are:

• Infrastructure spending stimulates economic growth. Japan, which spent over $6 trillion on “construction-related public investment” between 1991 and 2008, and has arguably one the world’s best train systems, has not experienced sustained economic growth in over two decades. Will building more highways in areas with little population improve economic conditions in U.S. States? It seems unlikely.
• The public benefits, so funding should be done with general tax revenues. It is a near fact of life that funding a project from afar reduces the discipline needed to make sure it is done in a cost-efficient manner, and—perhaps more importantly—makes it less likely that the project will actually benefit the public (and not just those proposing it). Ill-advised, federally funded projects such as Detroit’s People Mover Monorail and Alaska’s Gravina Bridge (a.k.a. “the bridge to nowhere”) serve as cautionary tales. Spending federal funds on local projects like Kansas City’s trolley system is similarly likely to yield little or no economic benefit.

There is much more to Glaeser’s article, and I cannot do it justice in this space. I think you will agree, after reading his article, that maybe that new road or light rail extension being peddled by the local mayor or city council isn’t as critical to the region’s economic vitality as some might have you think.

The post About That New Home Addition . . . appeared first on Show-Me Institute.

With the 2010 Census complete, Congress will soon reapportion seats in the House of Representatives, and it appears that Missouri will lose one of its nine congressional districts. According to a new report by Americans for Tax Reform, our state shares a feature with the other nine states likely to lose representatives: relatively high state income tax rates and government spending. Four of the eight states gaining seats — including the biggest winners, Texas and Florida, with four and two new seats, respectively — have no income tax at all. The average top income tax rate for all eight states is 2.8 percent, compared to 6.05 percent in the losing states, which is just higher than Missouri’s top rate of 6 percent. The governments of states that gained representatives spent only $4,008 per capita — almost 22 percent less than their counterparts in the states that lost seats, which spent $5,117. These figures suggest that high taxes and government spending tend to drive people away. They also lower the standard of living for those who remain. Two new studies released by the Show-Me Institute explain why and suggest alternatives that can once more set Missouri on a path for growth.

In his new policy study, “A Review of Cross-Country Evidence on Government Fiscal Policy and Economic Growth,” University of Missouri–Columbia economics professor Shawn Ni compares economic growth and taxation rates, along with government spending, for a number of countries. He finds that taxes reduce economic growth by discouraging businesses and entrepreneurs from creating the capital that raises productivity and, ultimately, wages. Ni estimates that a 10-percent cut in the corporate income tax rate will lead to a 1- to 2-percent increase in the rate of GDP growth. This may not seem terribly significant, but if two economies started at the same level and one of them grew by an extra 2 percent each year, it would be twice the size of its rival in a little more than 35 years.

The Nobel laureate economist Robert Lucas once remarked when contemplating the differences in international economic growth rates, “The consequences for human welfare involved in questions like these are simply staggering: once one starts to think about them, it is hard to think about anything else.” A similar idea is expressed more succinctly by a quote usually (but inaccurately, in all likelihood) attributed to Albert Einstein: “The most powerful force in the universe is compound interest.”

Long-term economic growth rates are affected not only by the rate of taxation, but also by the form of taxation. Show-Me Institute Chief Economist and University of Missouri–Columbia professor Joseph Haslag, along with Washington University economics doctoral student Grant Casteel, argue in a new essay that replacing Missouri’s income tax with a sales tax will lead to a higher growth rate and therefore higher lifetime consumption than we would have under the current system. Casteel and Haslag concede that shifting the tax burden to a broad-based sales tax would result in consumption falling initially, because it would increase total prices for goods and services. However, eliminating the income tax provides a greater incentive for people to create new income — and, therefore, wealth — for society as a whole. This translates to a higher economic growth rate.

The authors estimate that, absent the state income tax, the average annual growth rate for Missouri would rise from 0.6 percent to 1.4 percent. Over time, consumption would rise along with people’s real incomes. Within nine years, consumption would be as high under the sales tax system as under the income tax — and it would continue to rise. After a generation (29 years), according to Haslag and Casteel’s calculations, consumers would derive more overall satisfaction in a sales tax system, with even bigger gains to come in the future.

Using statistics from Gapminder, we can see that in 1910 Russia and Japan had very similar per capita GDPs: $1,731 and $1,736, respectively, adjusted for inflation. However, after a century of marginally better than average GDP growth, the average citizen of Japan enjoys a standard of living more than twice that of the average Russian. If we want to give Missourians a higher standard of living, we should strive for better economic growth by keeping taxes and spending low and broadly based. Furthermore, the few necessary taxes should not be designed to punish people for creating new wealth, thereby slowing down the engine of economic growth, as the income tax has been shown to do. Over time, small changes can make a huge difference.

John Payne is a research assistant for the Show-Me Institute, a Missouri-based think tank.

The post Income Taxes Decrease Economic Growth, Prosperity appeared first on Show-Me Institute.

First, the ban wouldn’t even solve the problem, because all of the Toyotas that were recalled in January for malfunctioning gas pedals weren’t manufactured in Japan. They were manufactured in the United States:

As for banning Japanese-made vehicles: All 2.4 million Toyotas recalled Jan. 21 due to sticky gas pedals, and most of the 5.6 million vehicles recalled because floor mats might jam pedals, were assembled in the USA.

Would this ban have anything to do with the fact that the U.S. government has a large financial stake in GM, a major Toyota competitor?

Banning Toyotas would have many negative consequences. For example, the men and women who work in Toyota dealerships and Toyota manufacturing plants would have to join the ranks of the unemployed. This would have a noticeably negative effect in Missouri, which has a high-enough unemployment rate already — 9.6 percent as of December.

Banning foreign imports like Toyota would hurt consumers because it would limit their choice of cars. When free trade is restricted, a people can only consume what their country is able to produce. In an adapted excerpt from their book Free to Choose: A Personal Statement, Milton and Rose Friedman elucidated what this means to consumers:

We cannot eat, wear, or enjoy the goods we send abroad. We eat bananas from Central America, wear Italian shoes, drive German automobiles, and enjoy programs we see on our Japanese TV sets. Our gain from foreign trade is what we import. Exports are the price we pay to get imports. As Adam Smith saw so clearly, the citizens of a nation benefit from getting as large a volume of imports as possible in return for its exports or, equivalently, from exporting as little as possible to pay for its imports.

The ban would also increase consumer prices on all cars by decreasing the total supply. Domestic car producers do not have the capacity to make up for the shortfall in the short run, which would aggravate this effect. In the aforementioned excerpt, Milton and Rose Friedman explained that “‘Protection’ really means exploiting the consumer” because she has to pay more for goods.

The ban would also decrease the quality of vehicles that are available to American consumers, which is the very problem that this policy is intended to alleviate. When a country attempts to protect certain industries, it removes their incentive to innovate in order to compete in the global market. By banning foreign imports such as Toyota, the United States would do the American car industry and American consumers no favors. GM and Ford have difficulty competing with foreign firms like Toyota and Honda in the status quo world economy because they have “benefited” from American protectionist policies on cars for so long. Furthermore, bans on foreign imports become even more disadvantageous in the future if/when the trade restriction is lifted, because domestic car companies would have lower-tech, lower-quality products than their foreign competitors.

Government intervention in international markets hurts business and discourages economic growth. When a country slaps protective measures on its trade policy, it is probable that other nations will retaliate in kind, leading to increased consumer prices. Impeding free trade is very dangerous policy when international economies are so intertwined. We only have to look to the recent past for evidence of this. Last September, Obama placed a 35-percent tariff on tire imports from China. This was effectively a tax on Americans who drive cars, who were predicted to experience a 20- to 30-percent increase in the cost of tires as a result of the policy. China responded the following Sunday in retaliation by placing its own tariffs on imports of American poultry and automobiles.

I have an alternative suggestion: Instead of banning foreign imports, each U.S. senator should complete a refresher course on macroeconomics before assuming office. Based on Sen. Johanns’ proposal, I see no evidence this the former secretary of agriculture ever took one in the first place.

The post Against the Proposed Toyota Ban appeared first on Show-Me Institute.

The Northeast corridor has the highest passenger volume of any Amtrak route, greatly enhancing efficiency. The corridor’s high-speed Acela Express made a profit of about $41 per passenger. The more heavily utilized Northeast Regional lost almost $5 per passenger.

With this excerpt from Randal’s paper:

If trains in the most heavily populated corridor in the United States cannot cover their costs, no other trains will come close.

According to the bipartisan Amtrak Reform Council, Amtrak’s trains between Boston and Washington lost nearly $2.30 per passenger in 2001.

They are almost certainly considering different years, so the fact that the estimates are so close is good evidence for the accuracy of O’Toole’s work (not that more evidence was needed). The study claims (and I’ll accept the claim as true) that the northeast high-speed rail system makes money. Before anyone jumps to the conclusion offered in the article:

Rail planners may decide that spending the funds on high-speed rail makes more sense than slower intercity rail, which the Amtrak numbers show need higher subsidies.

You must read the history of high-speed rail in Japan, which O’Toole thoroughly documents in his paper on high-speed rail for the Show-Me Institute. In Japan, the first high-speed rail system was successful because it connected three cities in one of the most densely populated parts of the world. However, for reasons of politics and more, Japan started building high-speed rail all over the place. None of the other routes were anywhere near as successful as the Tokyo–Osaka–Nagoya route, and the national railroad eventually went into serious financial difficulties. The moral of the story is that just because high-speed rail might work in by far the most densely populated part of the United States does not mean it will work elsewhere.

Hat tip to the Beacon for the original link.

The post Amtrak And Tax Dollars appeared first on Show-Me Institute.

Some of the federal stimulus money may be used to speed things up. This article in the Kansas City Star gives the details: The Obama administration wants to spend $13 billion during the next five years to make train service faster. But not much faster. And Amtrak is blaming its slow-as-a-turtle pace on our free-enterprise economy:

“We are where we are because of where we’ve been,” said Amtrak spokesman Marc Magliari. “Our rail system has functioned on a private ownership model going back to the 1800s. In the much more compact countries of Europe, they work on a government model.”

I’m thinking: What about Japan? Japan’s high-speed rail system is usually held up as a model of excellence. This is what the Mackinac Center concluded in a report on privatization and passenger rail:

In Japan, privatization has reinvigorated development efforts, and the new railways have designed more experimental trains using more advanced technology than the old national railway would have.

And as for Amtrak’s private ownership roots, here’s a lengthy Wikipedia article on the subject of Amtrak’s funding from federal and state governments. Given Amtrak’s extensive support from several levels of government, the comments about being hindered by too much capitalism sound like poor excuses for sticking to the same outdated technologies. Passengers would be better served by private ownership of the railways and healthy competition.

Or Amtrak could just continue on its uphill course, saying, “I think I can, I think I can, I think I can …”

The post The Little Engine That Could appeared first on Show-Me Institute.

The message is clear: While Americans are partying, Asian students are playing the violin, learning math, and preparing to take over the world economy.

I’ve commented on the difference between U.S. test scores and those of other countries, because the gap shows that we could be doing better. However, I do not think that Asian education systems have no problems and we should try to be just like them. With all the recent talk about national standards and tests, we should keep in mind a few reasons not to panic and become just like China or India:

1. In some countries with rigid public education systems, poor children do better in private schools. Their test scores are better, and they’re more likely to have access to a sufficient number of computers, drinking fountains, and bathrooms. That’s right, bathrooms. If we really wanted a public education system just like the ones in Asia, we would need to scale back on our plumbing for the poor.
2. State-run education systems are unjust. For example, in Singapore students are segregated by ability into different tracks in seventh grade. Which track you’re in determines where you’ll go to high school and college, and what kind of job you’ll eventually get. Students who start out behind aren’t given a chance to catch up.
3. Some Asian students get burned out by intense competition as kids, then do nothing when they go to college. Gary Becker notes that this is a problem in Japan.
4. The global economy opens the world to competition, but it also means that the relative position of your country matters less. In every country, good students and hard workers will be rewarded. It’s true that foreign countries can be expected to keep catching up with the U.S. economically. It’s called convergence, and it happens naturally in the absence of wars and other trade barriers. This will happen no matter what our education system is like.

We should improve our education system because we’re not as good as we could be, not because we need to be a certain distance ahead of the rest of the world.

The post Why We Shouldn’t Try to Be Just Like Asia appeared first on Show-Me Institute.

For example, an eighth grader in Tennessee can meet that state’s standards for math proficiency with a state test score that is the equivalent of a 230 on the national test. But in Missouri, an eighth grader would need the equivalent of a 311.

The fact that Missouri’s standards are tougher than those promulgated by some other states is often mentioned by opponents of school reform, It was also brought up in the adequacy lawsuit this year when the state argued that pouring huge amounts of money at school districts wouldn’t make everyone proficient.

Are Missouri’s standards too tough? Yes and no. It’s not realistic to expect 100 percent of kids to meet any standard. But compared to Asian countries, our standards are very low. The Trends in International Mathematics and Science Study website shows that in math, U.S. eighth-grade students are far behind their peers in Singapore, Korea, China, Japan, and several other countries.

It’s not necessarily a bad thing if Americans specialize in skills other than math while foreigners become engineers. But the comparison shows that our idea of a high standard is not really very high.

The post How High is the Bar? appeared first on Show-Me Institute.

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.

The post School Choice Successes Abroad appeared first on Show-Me Institute.

I don’t blame Blunt for pandering to a powerful constituency. Lots of politicians?Democrat and Republican?have used the alleged problem of foreign oil as part of their justification for providing more welfare to corn farmers. But just because everyone says we need to end our “dependence” on foreign oil doesn’t mean it’s true.

The most fundamental thing to understand about oil economics is that oil is that it’s an interchangible global commodity. (It is, in economics jargon, fungible) if we stopped buying oil from Iran or Saudi Arabia, they would just turn around and sell their oil to China, France, or Japan instead. Oil-exporting countries, by and large, don’t care who they sell their oil to, and the laws of supply and demand ensure that they’ll be able to sell their oil to somebody, albeit perhaps at a somewhat lower price.

It’s sometimes argued that all the oil in the Middle East requires us to get involved in foreign conflicts like the war in Iraq. But this doesn’t make a whole lot of sense either. Obviously, there are lots of good reasons to prefer a peaceful, democratic Middle East to one ruled by erratic despots. But despots seem just as willing as anyone else to sell us oil. Foreign countries don’t sell us their oil as a personal favor. They sell us oil because we have the money to pay for it. No matter who’s in charge in Iran or Saudi Arabia, they’ll most likely be interested in the revenues that come with oil exports. And as the richest country on Earth, we’ll have little trouble outbidding other nations for the oil we need.

But doesn’t our dependence on foreign oil make us subject to blackmail from those countries? Jerry Taylor and Peter Van Doren, two economists at the Cato Institute, explain why this is silly:

Even if you think that OPEC has the means and motive to use this alleged oil weapon, there’s not a thing we can do about it. First, even if every drop of oil we consumed came from Oklahoma, Texas, and Alaska, a cutback in OPEC production would raise domestic oil prices as high as if all our oil came from Saudi Arabia. That’s because there are no regional markets for oil — only global markets — and because prices always reflect opportunity costs in free markets, regional prices invariably rise to the world price. In 1979, for instance, Great Britain was “energy independent” — virtually all the crude oil it consumed came from the North Sea. But the oil price spike of 1979 hit Great Britain as hard as it hit Japan, a country dependent upon imports for its oil. No country can wall itself off from the world market.

The post The Oil Weapon Myth appeared first on Show-Me Institute.

In many schools across the country, students hand in lab reports and math homework to teachers who have no background in science or math. The Missouri Department of Elementary and Secondary Education says that Missouri schools suffer from teacher shortages in those subjects. Governor Blunt has pledged to address the problem. He held a Math and Science Summit last month, and he recently named twenty scholars to a Math and Science Alliance.

Such state-wide initiatives are a good start, but we’re unlikely to solve the problem until changes are made at the local level. Unfortunately, when it comes to hiring math and science teachers, school districts’ hands are tied. Under Missouri law, school districts must use rigid salary schedules that apply to all teachers. They can’t offer better pay to teachers of shortchanged subjects, or to teachers with valuable credentials and experience. Those restrictions prevent school districts from hiring the best teachers. Crucial subjects like math and science are the hardest hit.

What causes a teacher shortage? In a recent study, University of Missouri economist Michael Podgursky looked at public school teachers’ wages compared to the wages earned in other professions. He found that teachers as a group aren’t underpaid, but some individual teachers are. Most teachers, if they weren’t teaching, would probably find jobs in nearby fields like social work and library science. Teachers earn more than those professionals on average.

However, math and science teachers might choose to work in architecture or engineering—fields that pay better than teaching. Podgursky found that teaching is an attractive position compared with the other options available to English majors, but that a physics major often has much more lucrative alternatives. Therefore, when school districts offer the same salary to English and physics teachers, physics teachers are in short supply.

A National Center for Education Statistics (NCES) study of biology teachers highlights the problem. Of U.S. secondary-level public school students in biology classes, 39 percent were taught by a teacher who did not have a major or minor in biology. Some of these teachers had studied elementary education, physical education, or English. When science majors go into engineering, preparing the next generation of scientists is left to people who would be better qualified to teach Shakespeare or soccer.

Poor teacher education holds the U.S. back as it struggles to catch up with other countries in math and science instruction. Students in Asian countries such as Japan, Korea, and Singapore consistently score higher than American students on the Trends in International Mathematics and Science Study (TIMSS). The difference between U.S. teachers and teachers in other countries stands out in a TIMSS report on eighth-grade mathematics teachers’ backgrounds. In the U.S., only 41 percent of eighth-grade students were taught by teachers who had majored in mathematics, 30 percentage points below the international average.

In order to solve the math and science teacher shortage, school districts will have to break away from strict salary schedules and offer math and science teachers better pay. This past session State Rep. Allen Icet sponsored a bill that would allow districts to use hiring incentives to attract teachers with desired qualifications or experience. The state of Missouri should give districts the option to reward hard-to-find teachers. If math and science teachers are offered reasonable salaries, they’ll no longer be hard to find.

Timothy B. Lee is a policy analyst, and Sarah Brodsky is a research assistant, at the Show-Me Institute.

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