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.

One topic of discussion was pay for teachers. Flinders asserted that Kansas City teachers are paid lower than the state average. She is most likely correct, and there is something we can do to fix it. In previous posts we suggested reforming teacher pay schedules to increase the incentive for teachers to stay on.

But the district actually can pay teachers more if it cuts back on hiring non-teacher personnel. According to my colleague Brittany Wagner,

Over the past 60 years, schools have increased non-teaching personnel positions by 702 percent. [A report] also found the U.S. spends more than double what Korea, Mexico, Finland, Portugal, Ireland, Luxembourg, Austria, and Spain spend on non-teaching staff salaries and benefits.

Recall that upon arriving Superintendent John Covington asserted that the district was too big, and in 2010 KCPS closed 30 buildings and eliminated 1,247 full-time equivalent positions. Doing so freed up a great deal of money. According to Wagner,

One study showed that if non-teaching personnel grew at the same rate as the student population, American public schools would have an additional $24.3 billion annually.

This impacts pensions as well, which is far greater than the immediate cost of this educational bloat on salaries. Show-Me Researcher Michael Rathbone writes,

Non-teaching personnel also accrue pension benefits through the Public Education Employee Retirement System of Missouri (PEERS). According to the PEERS annual report, “PEERS is a mandatory cost-sharing multiple employer retirement system for all public school district employees (except the school districts of St. Louis and Kansas City), employees of the Missouri Association of School Administrators, and community college employees (except St. Louis Community College).” Members of the plan and their employers both contribute to the pension.

Over the last five years, the unfunded liabilities (liabilities minus assets) of this plan have increased by more than $64 million. Pension benefits like PEERS benefits are guaranteed and must be paid out. If PEERS can’t make those payments, taxpayers (i.e., you) will have to.

By spending too much on non-teacher personnel, KCPS is draining resources from both funds to pay teachers in the short term and teacher pension funds in the long term. Cutting back on non-teacher staff—or perhaps just restricting growth—would allow school districts to better meet their financial responsibilities to teachers and to demonstrate a real commitment to the children in the classroom.

The post Ideas for Kansas City Schools: Focus on Teachers appeared first on Show-Me Institute.

Sparkly, purple, and lined with a shiny metal band, my retainer was wrapped in a napkin while I ate my school lunch throughout elementary school. “Don’t you lose that retainer,” I can still hear my mother saying. Inevitably, I lost it at lunch, and I knew there was only one place it could be.

Inside the trash can, remnants of sloppy joes and sour milk splattered the edges of the bag. A cafeteria worker, realizing what had happened, pulled the trash out and began to dig. “Here you go,” he said and returned the retainer to me.

I recalled the cafeteria worker who helped me find my retainer after I read Fordham Institute Research Analyst Matt Richmond’s report, The Hidden Half: School Employees Who Don’t Teach.

The report’s findings are startling. Over the past 60 years, schools have increased non-teaching personnel positions by 702 percent. It also found the U.S. spends more than double what Korea, Mexico, Finland, Portugal, Ireland, Luxembourg, Austria, and Spain spend on non-teaching staff salaries and benefits.

As the study’s title, and my own personal vignette, suggests, these workers are both seemingly underappreciated and overlooked. We know little about the non-teaching part of the education industry, except that it has grown at a much faster rate than students. One study showed that if non-teaching personnel grew at the same rate as the student population, American public schools would have an additional $24.3 billion annually.

This is not to say that schools would be better off with less non-teaching personnel, but if Missouri schools want to get serious about spending efficiently, then collecting specific data on non-teaching staff is a good place to start.

The post New Study Looks at Growth of Non-Teaching Personnel appeared first on Show-Me Institute.

Later this month, Gov. Jay Nixon will travel to Taiwan and South Korea in order to lobby to them to buy Missouri agricultural exports. Previously, I discussed how this would lead to the subsidization of foreign consumers by Missouri taxpayers. From an article in the Kansas City Star:

On Wednesday, Nixon announced that a trade mission planned for Dec. 10-16 was expected to produce a letter of intent with Taiwanese businesses that will agree to buy Missouri corn, soybeans and other products during the next five years.

At a rate of about $120 million of exports a year, the new agreement would outpace the $69.1 million worth of exports Missouri sent to Taiwan in 2009.

The governor is traveling to Taiwan with the intention that it will influence their government’s public policy decisions. My fingers are crossed that the direction of this knowledge transfer will be in the reverse. Policymakers in Missouri can learn much from Taiwan.

Hopefully, this trip will serve as an opportunity to learn that Taiwan has developed rapidly and meets the needs of its citizens well because it enforces public policies that embrace the free market. If the state government in Missouri were to remove itself from arbitrarily picking winners and losers in the market, the economy would achieve a greater rate of growth. As I have commented before, centrally planned economies have not worked historically, and there is little reason to believe that they will work any differently in Missouri.

I encourage the governor to watch Free to Choose, a multipart PBS television series by Milton and Rose Friedman from the early 1980s that communicates how the economy benefits from free-market principles. Perhaps it would make for good viewing on the flight to Taiwan. (And he might be further interested to know that Arnold Schwarzenegger, a governor from another mother, provides a commentary to the updated 1990 version of the series.)

The first episode, in which Dr. Friedman visits Hong Kong, is particularly relevant to this trip to Taiwan. Friedman explains that Hong Kong has experienced success because it has established basic economic policies that are rooted in free market principles — principles that would benefit Missouri as well. From Friedman’s narrative:

This thriving, bustling, dynamic city, has been made possible by the free market — indeed the freest market in the world. The free market enables people to go into any industry that they want; to trade with whomever they want; to buy in the cheapest market around the world; to sell in the dearest around the world. But most important of all, if they fail, they bear the cost. If they succeed, they get the benefit and it’s that atmosphere of incentive that has induced them to work, to adjust, to save, to produce a miracle. This miracle hasn’t been achieved by government action — by someone sitting in one of those tall buildings and telling people what to do. It’s been achieved by allowing the market to work. Walk down any street in Hong Kong and you will see the impersonal forces of the market in operation.

By increasing American imports to countries like Taiwan, China, and India, the rising living standards in those regions will continue, and this will lead to the demand for more American goods. This change does not require the lead of the government, however. It happens spontaneously and incrementally in unrestricted markets. Missouri could achieve a higher annual rate of growth if it stopped subsidizing and protecting favored industries and instead let the free market work.

The post Policymakers in Missouri Have a Lot to Learn From Taiwan appeared first on Show-Me Institute.

Let me briefly review my empirical evidence. I looked at more than 100 MSAs in the United States. The dependent variable I studied was the ratio of aggregate income reported by the U.S. Census for each primary city in that MSA to the aggregate income for the entire MSA. Basically, I measured the size of the city economy relative to the suburban economy. I then estimated a regression in which the city-to-MSA income ratio was the dependent variable and the earnings tax rate was the independent variable. The result was a significant negative correlation; in other words, cities with higher earnings tax rates tend to have smaller economies relative to their suburbs than cities with lower earnings tax rates. This result held both when using the 1990 Census as the data source and the 2000 Census as the data source.

In the article, I argued that this empirical finding was entirely consistent with sophisticated models of business and household locations within local economies. My analysis was grounded in a widely cited paper by Haughwout and Inman (2001). In it, they analyzed a model economy in which people living in a city took the tax structure as given and made consequent location decisions. When dealing with aggregate economic data, even at the city level, economists do not have a laboratory to run their experiments. Facts are extracted from the data — these are the economists’ observations — and economic theory is employed to account for these facts. Other models exist, but the Haughwout and Inman model can account for the many empirical regularities observed in city growth around the country.

Professor Strauss took an alternative approach and asked a different question. He estimated a regression in which the dependent variable is the growth rate of income in an MSA. The growth rate was computed for the period 1969 through 2007. His regression uses at least two independent variables. One is a dummy variable set equal to one for an MSA in which the primary city has an earnings tax, and set equal to zero otherwise. The other independent variable is the income level for the MSA in 1969, the so-called initial income level. The basis for Prof Strauss’ inquiry was the notion of economic convergence. If the coefficient on the initial income level is negative and statistically significant, the evidence indicates that cities with higher initial income levels tend to grow slower than cities with lower initial income levels. The convergence hypothesis follows, because the evidence suggests that cities starting off poor tend to catch up to the initially richer cities. The convergence hypothesis has been applied to cross-country datasets, and is useful for explaining why Japan and Korea — and, more recently, China — grow so fast. The return to capital is higher in these poor countries, and provides an opportunity for them to catch up to those already-rich countries. The convergence hypothesis cannot explain why Sub-Saharan Africa remains so poor. For our purposes, it is not obvious why convergence should apply to MSAs, but I will blog about this lesson more fully in the future.

In Prof. Strauss’ results, the coefficient on the earnings tax dummy is not significantly different from zero after one includes the MSA’s initial income level as an explanatory variable. He concludes that the earnings tax does not explain economic growth. He interprets these findings as indicating that cities across the United States are catching up and not affected by earnings taxes. I would proffer a slightly different interpretation. Metro areas that started off with lower incomes in 1969 are, on average, catching up to cities that started off with higher incomes. His unit of measurement is the MSA, not the city. This is kind of interesting. At first pass, convergence can characterize MSAs across the United States. The more difficult part is why rural areas are not catching up. If convergence can be attributed to low capital in the low-income metro areas, then it seems that rural areas — ones with low capital accumulation — would catch up to high-income urban areas. For me, the nagging problem about the convergence hypothesis is that Rocheport should start looking like Columbia in terms of capital. But Rocheport’s economy does not look like the Columbia economy. Agglomeration, or increasing returns, probably has something to do with this. As I said, I will save this digression for a future blog.

I do not dispute Strauss’s findings; however, he did mischaracterize my research. He asked a different question than I did. I contend that my question is more relevant for the question of earnings taxes. People can avoid the earnings tax by eschewing the political jurisdiction in which the tax is implemented. Insofar as the suburban area is not a perfect substitute for the city area, economic efficiency is lost and the earnings tax is distorting people’s behavior.

Consider the following situation for illustrative purposes. Suppose there are two cities. In City A, the metro area’s income increased at a 1-percent annual rate between 1969 and 2007. However, all the businesses moved out of a city and into the suburbs in 2000. In City B, the metro area’s income increased at a 1-percent annual rate between 1969 and 2007. In both City A and City B, Prof. Strauss’ measure of income growth would be 1 percent. If I further told you that City A had a 1-percent earnings tax and City B had no earnings tax, then according to Prof. Strauss’ unit of measure — the growth rate of income in the MSA — would indicate no statistical relationship between the earnings tax dummy and the growth rate of MSA income.

In contrast, I estimate the regression for city income to MSA income in 2000 and find a negative relationship between the earnings tax rate and the city-to-MSA income. The purpose of this illustration is to point out that his results do not contradict mine. His findings do not render my interpretation of the evidence as faulty. He asked a different question and got a different answer. Thus, a reasonable person could walk away believing both results are accurately depicted. Because we have different units of measurement for the city economy, we are clearly asking (and answering) different questions.

My results were mischaracterized in the Kansas City Star’s recent op-ed by Prof. Strauss. My goal is to properly characterize both sets of results. I am sure that more “teachable” moments will be forthcoming. Let’s proceed with skepticism before we accept any economic interpretation of the results.

The post New Results on the Earnings Tax – For a Different Question appeared first on Show-Me Institute.

On the day each November that high-school seniors take the college-entrance test — Nov. 13, this year — South Korea is a changed country. Many offices and the stock market open at 10 a.m., an hour later than usual, to keep the roads free for students on their way to the test. All other students get the day off to keep schools quiet for the test takers. And while students are taking the listening portions of the tests, planes can’t land or take off at the nation’s airports. Aircraft arriving from other countries are ordered to circle at altitudes above 10,000 feet.

There’s a large cost to orienting your whole society around one test.

Asian countries must be doing something right — otherwise, their students wouldn’t be so attractive to American universities. Let’s emulate the cultural emphasis on hard work and education; we don’t need to adopt the top-down control of schools and the obsession with testing.

The post Stop the Airplanes, We’re Taking the MAP Test appeared first on Show-Me Institute.

Still, the schools are highly rigorous. Both supplement South Korea’s required, lecture-based national curriculum with Western-style discussion classes. Their academic year is more than a month longer than at American high schools. Daewon, which costs about $5,000 per year to attend, requires two foreign languages besides English. Minjok, where tuition, board and other expenses top $15,000, offers Advanced Placement courses and research projects.

For students who are studying many foreign languages and preparing for AP exams, a state-mandated curriculum is at best unneccesary. At worst, the required lectures could be a waste of time for students who are engaged in more interactive research and could push schools to lengthen their class time in order to fit everything in.

Besides cautioning us against state standards and tests, the case of South Korean education should give us a new perspective on educational innovations in the United States. For example, some people have objected to the Knowledge is Power Program (KIPP) charter schools that are coming to St. Louis because of the schools’ long hours and tough discipline. But compared to the Korean schools profiled in the New York Times article, KIPP school days are really not excessive. And although the KIPP program is definitely not right for every student, we can see that this approach works well for some kids in Asia.

The post Lessons From South Korea 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.

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.

The post Better Teacher Pay Would Improve Math and Science Instruction appeared first on Show-Me Institute.