North Side Grant Project Is a Disaster

The revelations about the North St. Louis Small Business & Non-Profit Grant Program being managed by the St. Louis Development Corporation (SLDC) keep coming. The entire grant program is rife with political favoritism, but at least the places connected to politicians actually exist! It turns out some of the other recipients of the grants are not, shall we say, real entities, like this “museum” just north of the Central West End:

The museum’s website advertises a facility, historical exhibits and a passion for illustrating the history of the Mississippi River and the people who have lived on its banks. But its address leads to a brick four-family structure in a neighborhood just north of the Central West End. No one answers the door, even during advertised business hours. And the building itself is surrounded by weeds and overgrowth.

“I’ve never heard anything about that place being a museum,” said Ray Sims, a longtime neighbor of the building. “How do I get the money?”

It’s almost like word got out that the SLDC was just giving away free money and, shockingly, people started making up reasons to get free money.

Recipients of Large Tax Subsidies Under Indictment

Does the SLDC make better decisions when dealing with big-time developers instead of ordinary people? Apparently not. Last week, the heads of a major St. Louis and Kansas City development firm were indicted in St. Louis for allegedly submitting false documents regarding minority-hiring rules. While this is the first indictment of these men (everyone is, of course, innocent until proven otherwise), their questionable business practices have been well known. Yet they have consistently received massive tax subsidies for work in St. Louis and Kansas City: particularly the latter in recent years.

Five Lux Living projects in Kansas City have been approved for incentives since 2021, including a $200 million apartment/hotel at 14th and Wyandotte streets.

Is it fair of me to blame the SLDC for an act  by private citizens or companies seeking subsidies? Perhaps not, but when politicians and bureaucrats choose who gets subsidies, don’t be surprised when unpleasant actors start circling. After all, political donations and tax subsidies have a strong connection:

For instance, around the country, politicians who make these deals are more likely to receive campaign donations, and they’re more likely to be re-elected. On the flip side, companies that make political donations to relevant officials are four times more likely to enjoy subsidy deals than those that don’t, and their deals are more than 60% bigger, to boot.

Again, it’s shocking, I know . . .

Maryland Heights Uses General Taxes to Make up for Failures

It isn’t just large cities that abuse economic development policy. Suburbs do it all the time, and they don’t always do it with misplaced tax subsidies. Sometimes, cities make the mistakes all on their own.

Several years ago, Maryland Heights decided to get into the ice arena business. Not a normal ice rink for its residents, mind you; that would have been understandable. City leaders apparently wanted to act like private developers and build a massive hockey and skating complex to make money for the city. This is, usually, a big mistake for cities.

It definitely was a big mistake for Maryland Heights. The city has announced that it has again been forced to tap into general tax revenues to fund the bond payments after its predicted ice complex revenues have continued to fall short. Part of the reason revenues fell short is that both Maryland Heights and the ice complex failed to collect a sales tax for several years that was implemented to pay for the bonds. I don’t know if that is funny, sad, or both.

Cities do not have to engage in economic development schemes to succeed. Unilateral disarmament is the best option all around. Until that happens, expect stories like these to be a regular occurrence.

The post It Has Been a Great Week for Economic Development Agencies in Missouri appeared first on Show-Me Institute.

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On March 17, 2022 Senator Jim Talent and Heritage Foundation’s James Jay Carafano joined us for a virtual event to discuss the impact of the Russian invasion of Ukraine and what it means for The United States, China, and more.

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About the Speakers

Senator Jim Talent

Senator Jim Talent brings over 30 years of government and political experience including service in both chambers of Congress. He is a nationally-recognized leader on military affairs whose counsel is frequently sought by administrations and members of the House and Senate on both sides of the political aisle. During his service in the U.S. Senate and U.S. House, Senator Talent served on each chamber’s Armed Services Committee where he worked to advance a strong national defense and military readiness. In the U.S. House, in the aftermath of the end of the Cold War, he was a vocal opponent of cuts in the size and strength of the military On the Senate Armed Services Committee, he fought to rebuild the force, which even then was too small, too stressed and desperately in need of recapitalization. An advocate for expanding the U.S. Navy’s fleet to project American power abroad and keep the peace, he chaired the committee’s Naval Power Subcommittee.

James Jay Carafano

James Jay Carafano, a leading expert in national security and foreign policy challenges, is the vice president of Heritage’s Kathryn and Shelby Cullom Davis Institute for National Security and Foreign Policy and the E. W. Richardson Fellow. Carafano is an accomplished historian and teacher as well as a prolific writer and researcher. His most recent publication is “Brutal War” (Lynne Reinner, 2021), a study of combat in the Southwest Pacific. He also authored “Wiki at War: Conflict in a Socially Networked World” (Texas A&M University Press, 2012), a survey of the revolutionary impact of the Internet age on national security. He was selected from thousands to speak on cyber warfare at the 2014 South by Southwest (SXSW) Interactive Conference in Austin, Texas, the nation’s premier tech and social media conference.

The post March 17: Russia, Ukraine, and the Impact on the United States Virtual Event appeared first on Show-Me Institute.

A steep decline in oil demand due to the economy being paused and an increase in oil production from a price war between Russia and Saudi Arabia brought oil prices to a twenty-year low. Recently, 23 countries have agreed to reduce global oil production by around 10 percent, but global demand has dropped nearly 30 percent, leaving significant surplus oil in the market. As such, many American oil producers are on the brink of bankruptcy as low prices combined with loan repayment schedules jeopardize an industry vital to the economy and national security.

Extra storage space in America’s Strategic Petroleum Reserve (SPR) could help offset this oil market turbulence.

The SPR is a stockpile of oil that helps protect American oil supplies from shortages or price spikes. Its rainy-day function deters adversaries from using oil as a weapon against America and provides more leverage for American foreign policy. Occasionally, oil from the SPR is sold to raise money for the Department of Energy (DOE), emergencies, or public works programs, although the merits of using the SPR to fund public-works programs are debated.

So how could the SPR be used at this time?

The president suggested purchasing surplus oil to fill the SPR to the top as part of the recent stimulus. Opponents blocked this idea and will likely block a new bill to purchase oil for the SPR independent of a stimulus.

In light of these developments, the DOE is leasing empty space in the SPR for companies to store surplus oil until the market stabilizes. As Congress has decided to reduce the SPR’s size (another debated matter), this would use existing space while costing taxpayers nothing. Several companies have already submitted bids to store oil, with room for more. The world is scrambling to find enough space to store surplus oil, as too much production risks sending prices further into a tailspin.

The move to lease space in the SPR could benefit taxpayers and remove some oil from an oversaturated market.

The post Stimulus Package Highlights Missed Energy Opportunity appeared first on Show-Me Institute.

As first appearing in the Kansas City Star and the American Spectator:

A surprised and outraged Franklin D. Roosevelt called it “a date which will live in infamy.” But Dec. 7, 1941, may also be remembered as one of the great turning points (for the better) in world history. It had the startling effect of rousing a sleeping giant (the United States) into purposeful action, and that was the primary factor in stopping the forces of evil from cruising to an easy triumph in World War II. In Churchill’s words, the world was in danger of entering “a new dark age made more sinister, and perhaps more protracted, by the lights of perverted science.”

The Japanese Imperial Navy struck Pearl Harbor in two waves beginning at 7:48 a.m. Hawaiian Time. Japanese aircraft destroyed much of the U.S. Pacific fleet and killed a total of 2,403 Americans – which compares to the 2,605 Americans and 372 U.S. residents from other countries who lost their lives in the surprise attack on the United States launched by al Qaeda on 9-11-2001.

As the Japanese readied for their attack, Hitler was sitting pretty – perilously close to winning a two-front war. Having already conquered France and other smaller European nations in 1940, German troops scored one victory after another against the poorly equipped and outmanned British Army in Southern Europe and North Africa in 1941. “Evacuation going fairly well – that’s all we’re really good at!” Alexander Cadogan, at the British Foreign Office, observed in his diary during the British withdrawal from Greece. “Our soldiers are the most pathetic amateurs, pitted against professionals.”

Things looked no better on the eastern front – with the German army on the outskirts of Moscow. In three parallel offenses, German forces invaded Russia in late June – sweeping across the vast countryside with the same lightning speed that marked the earlier invasions of Poland and Western Europe. Desperately short of every kind of war materiel from boots and rifles to tanks and planes, the Russian army was saved by the onset of winter.

Pearl Harbor changed everything – ending the long, enfeebling debate inside the U.S. between isolationists and interventionists. Suddenly, America was at war, and almost everyone – from FDR on down to Charles Lindbergh, hitherto an arch isolationist – agreed that this was a war that had to be fought with everything we had. Overnight Lindbergh turned from dove to hawk. Though unable to regain the Army Air Corps commission which he had resigned in April 1941, Lindbergh flew 50 combat missions in the Pacific Theater as a civilian consultant.

Within days of Pearl Harbor, hundreds of thousands of Americans made up their minds to join the armed forces. That included the two oldest sons of Joseph Kennedy, another isolationist and outspoken advocate of the appeasement of Nazi Germany, whose departure from London where he had served as U.S. ambassador to the Court of St. James’s was a major addition by subtraction for both Roosevelt and Churchill. The older Kennedy left England in October 1940, at the height of the Battle of Britain, which reduced much of London and other cities to rubble.

My late father – then 24, a reporter with the Kansas City Star, with a wife and baby daughter – was one of the many who rushed to serve. He failed his first Navy physical – being exceedingly thin – but passed the second time after gorging on food and water. He was one of the “ninety-day wonders” – sent to officer training school for just 90 days of rigorous physical and classroom training – and went on to skipper a submarine chaser that saw action along the eastern seaboard, off the coast of North Africa, and in the North Atlantic.

If any disaster may be called a good disaster, it was Pearl Harbor, which awakened America with a violent start and averted what might easily have been the greatest setback to human freedom, joy, and advancement in world history.

Andrew B. Wilson is a resident fellow and senior writer at the Show-Me Institute.

The post Remembering Pearl Harbor appeared first on Show-Me Institute.

If you are not in the happy position of earning at least slightly more than you spend, what portion of your household budget comes from borrowing, or selling the family silver? Is it the seemingly modest 3 percent that spelt M-I-S-E-R-Y for Dickens’ character, who wound up in debtors’ prison? Or is it even worse than that? Say, a mind-boggling 43 percent? In percentage terms, that is the expected shortfall between U.S. government receipts and expenditures in the 2011 federal budget.

According to revised numbers released last week, the Barack Obama administration expects its annual revenues for fiscal 2011 to come in at $2.173 trillion, versus annual expenditures of $3.818 trillion. That leaves a deficit of $1.645 trillion. As a result, our government will have to borrow (or find other ways to paper over) 43 cents out of every dollar that it intends to spend.

The Obama administration has more than tripled the national deficit since the last full year of the George W. Bush administration. In doing so, it has achieved a remarkable feat: It has made the gap between federal receipts and outlays even wider than it was at the height of World War II.

U.S. spending during the war increased by a factor of eight, rising from $8.5 billion in 1940 to $70.6 billion in 1945. The huge increase in federal expenditures happened for many reasons. Among other things, it supported the 12 million men and women serving in the U.S. armed forces at the peak of the war. It also supported a hundredfold increase in annual production of military airplanes, on the way to annual production of more than 96,000 fighters, bombers, and transport aircraft in 1944.

To raise additional revenues during the war, the government came up with the ingenious device of a withholding tax on payroll checks. Federal tax receipts rose from $8.2 billion in 1940 to $41.5 billion in 1945 — a fivefold increase. That left an annual deficit in 1945 of $29.1 billion, or 41 percent, on total expenditures of $70.6 billion.

Thus, during the greatest war in human history, the United States — supplying not just its own forces, but those of Britain and Russia — had a budget deficit two percentage points below the gap that now looms for fiscal 2011.

When a nation is at war against a deadly enemy, many people accept that the government will demand sacrifices on the part of citizens. During World War II, this included not just increased taxes, but rationing, price controls, conscription, and other limitations on individual freedom. As Nobel laureate economist F.A. Hayek wrote in The Road to Serfdom, “The only exception to the rule that a free society must not be subjected to a single purpose is war and other temporary disasters when subordination of almost everything to the immediate and pressing need is the price at which we preserve our freedom in the long run.”

Does the Obama administration live up to Hayek’s test? I believe not. The all-encompassing unity of national purpose of which Hayek spoke disappears under all but the gravest and most immediate peril.

Federal spending will reach an estimated 25.3 percent of gross domestic product in fiscal 2011, up almost five percentage points since 2008. To what end? Far from kick starting the economy, the government’s heavy reliance on deficit spending has only served to expand an already bloated public sector and to constrict the private sector. This is, indeed, the road to serfdom.

Andrew B. Wilson is senior editor at the Show-Me Institute, an independent think tank promoting free-market solutions for Missouri public policy.

The post A Sky-Is-the-Limit Federal Budget appeared first on Show-Me Institute.

I think the key issue here is the idea of competition. In a report for San Diego, the authors at Reason put it well (emphasis added):

“Taxpayers win whenever there is competition, even when the competition is won by public sector providers” said Adam B. Summers, policy analyst at Reason Foundation and co-author of the report. “They get more accountability, better results, and lower costs. […]”

Private screening companies are used at only 16 airports in the county. Springfield-Branson would have been no. 17. The very existence of competition brings a greater degree of efficiency to the TSA, even if it continues to do the screening in the vast majority of American airports. I know we aren’t used to thinking about the terms “government employees” and “complacency” together, but if the presence of competition in a small number of airports serves to reduce the TSA’s complacency, that benefits all of us.

One six-year-old report found that private screeners did a better job than government employees, but another report said that there are no cost savings because the TSA still overseees the private security companies, which operate according to the same requirements, rules, etc.

I believe the real reason for this denial of the private screening option has more to do with organized labor. From the KMOV Channel 4 report on this story:

The American Federation of Government Employees, the nation’s largest federal employee union, has praised [TSA Administrator John] Pistole’s decision.

TSA employees will be deciding on union representation shortly. Government unions are generally the most ardent opponents of any type of privatization.

Anytime I write anything about Branson, I always think, “What would Yakov say?” So, here is my best attempt at a Yakov Smirnoff–style joke about this situation:

In USA, people worry they the screeners will touch their junk as they board the plane. In Russia, people worry about the plane itself because the whole plane is made of junk!

Fire off better jokes in the comments, if you dare!

The post Private vs. Public Airport Screeners: Who Gets to Touch Your Junk? 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.

What strikes me about the theories is that, in each case, the ultimate perpetrator is the state. And for some reason that seems acceptable to most Russians: practically no one here has questioned the right of the state to resort to extra-legal violence to maintain power, even against journalists.

What amazed me about Kashin’s story was the possibility that he had been beaten for writing something that in America seems unimportant to the point of boring: A proposed highway that city residents oppose but local authorities want. Show-Me Daily authors frequently blog about transportation boondoggles because there’s so much material. We get excited if commenters even bother to respond, and when we go home at night, we don’t bother to check under our cars for stray wires.

Chess champion Garry Kasparov, at a recent Show-Me Institute lecture, spoke about how he has spoken out strongly against government tyranny in Russia in recent years. Stories like his and Kashin’s make me thankful that, despite all of the waste and favoritism in Missouri, at least I, my coworkers, and anyone else can write about it.

But I shouldn’t get too warm and fuzzy about how great it is that bloggers and policy analysts aren’t beaten for criticizing Missouri government. There have been recent cases when the politically powerful have worked either to quash the rights of those who aren’t so well connected to government power, or simply used the system to their own benefit.

• In late November 2009, Gustavo Rendon, an anti–eminent domain activist, was arrested for distributing flyers critical of a development project heavily subsidized by the government. Perhaps it is a coincidence that he happened to be distributing those flyers outside the church of Alderwoman April Ford-Griffin, a staunch supporter of the project.
• In February 2010, the Columbia Police Department’s SWAT officers kicked down Jonathon Whitworth’s door, held him, his wife, and seven-year-old son at gunpoint, and shot two of his dogs, killing one, and leaving the other, a corgi, wounded. This was all on the suspicion (unfounded) that Whitworth “was dealing a significant amount of marijuana.” Fortunately, the incident has prompted an investigation and review of the police department’s practices.
• Because Missouri still severely limits where a child can go to school, students at failing school districts are being prohibited from transferring to better districts. As discussed in the documentary Waiting for “Superman,” some schools have student dropout rates of greater than 50 percent. It is atrocious that a lack of educational choice (charter schools, voucher programs) can limit students to these “dropout factories.”
• In September, the state auditor reported that the Department of Economic Development (DED), which awards hundreds of millions of dollars in tax credits each year, was inflating estimates of the economic investment that would come about if tax credits were awarded. In one case, the DED reported a number 10 times too high.
• Occupational licensing, whereby the government limits who can do what for a living, generally allows a small group of people who stand to benefit greatly (those already in a particular industry) to limit future competition. This year, HVAC contractors were hit with increased licensing requirements.

I hope that 2011 will be a better year for Missouri government. I hope legislators will come to know that it really isn’t their job to tell people what to wear, do, say, or how to work. And if they don’t learn, I and the super-awesome champions of government restraint that are my coworkers will continue to point that out.

The post More Freedom, Please! appeared first on Show-Me Institute.

It’s easy to make fun of North Korea’s state television station, but reading about advertising regulations in Russia makes the North Korean ad seem like a paragon of free expression. At least the North Korean ad had people in it — people you can see. The people even pick up glasses of beer during the course of the commercial and move them around. None of that would be permitted on Russian television.

A Russian regulator explains why people speaking or clinking beer glasses off screen is also unacceptable:

“It creates the impression that someone is present,” says Andrei Kashevarov, deputy head of the FAS. “We don’t want this trend to continue.”

You wouldn’t want viewers to get the impression that live people drink the beer being advertised!

In the United States, we enjoy a freedom to communicate and share ideas that people in other countries can only dream of. Clink clink.

The post Beer Ads Around the World appeared first on Show-Me Institute.

In 2005, Congress passed the “Real ID Act” as an addendum to an appropriations bill, for the Iraq war and tsunami relief. The “Real ID” Act set national standards for the data that is included on state driver’s licenses, and required states to build and share databases containing licensees’ personal information.

Libertarians find such identifying requirements to be a blatant violation of privacy rights, and a very dangerous precedent (not to mention a fiscal burden to the states).

Rep. Jim Guest (R-Kingwood) has succeeded in suspending the Missouri provision — at least temporarily. It prohibits the state Department of Revenue from amending its procedures to comply with the Real ID Act. It further prohibits the department from collecting, storing, or sharing additional personal data mandated by the act.

I, for one, would like to be free to move around the country without a constant border check and ID scan. If I wanted those, I would have moved to Russia back in the mid-80s … when I was like two years old.

The post Big Brother Is Watching You appeared first on Show-Me Institute.