In 2019, I argued that Kansas City’s debate over “luxury” apartments missed a basic point: housing markets are connected. When higher-income households move into new buildings, they leave something behind. Those vacancies matter. New research now makes that case with concrete evidence.

A recent piece in The Atlantic detailed the study. Researchers studied a 43-story condominium tower in Honolulu and tracked what economists call “vacancy chains”—who moved into the new units and who moved into the homes they left. The results were measurable and citywide.

The building’s 512 units generated at least 557 vacancies elsewhere. On average, residents moving into the tower left homes that were 38 percent cheaper per square foot. One step further down the chain, homes were 44 percent cheaper than the new condos. Each new market-rate unit created roughly 1.6 vacancies elsewhere in the city.

This research builds on earlier national work, which found that new market-rate construction prompts substantial movement out of below-median-income neighborhoods. As households move up, older units filter down. The process is gradual but observable.

Kansas City is not Honolulu. Our housing stock is less geographically constrained, and our prices are lower. But the economics of supply do not change by region. When we restrict new multifamily construction—through zoning caps, parking mandates, or prolonged approval processes—we constrain mobility.

Mobility allows households to adjust to new jobs, schools, and changing family needs. Nationally, residential mobility has fallen sharply over the past half-century. Culture plays a role, but so does housing availability. Fewer vacancies mean fewer options.

Kansas City faces a quieter risk: complacency. Because our prices have not reached coastal extremes, it is easy to assume supply is sufficient. Yet rents and home prices have risen faster than incomes in recent years. If we make it harder to build—luxury or otherwise—we should expect fewer vacancies and higher prices over time.

Certainly, luxury housing construction should not be subsidized. Much of the local controversy over “luxury” projects arises when developers seek public incentives. But housing construction at all levels is welcome. Today’s Class A building becomes tomorrow’s middle-income housing. Aging is built into the market.

The real question is not who benefits from the first occupant of a new building. It is who benefits over the next decade.

If Kansas City wants more affordable options tomorrow, it needs more housing—of all kinds—today.

The post Luxury Housing Still Helps Lower-Income Renters appeared first on Show-Me Institute.

Moving from a system . . . [that has] 1000 of something to one of something sounds a lot like a monopoly, and monopolies don’t always work in consumer interests.

The sheer cost of a Medicare for All program would dwarf our current federal spending levels and require massive new taxes on Americans. The Atlantic reports:

The Urban Institute, a center-left think tank highly respected among Democrats, is projecting that a plan similar to what [two candidates] are pushing would require $34 trillion in additional federal spending over its first decade in operation. That’s more than the federal government’s total cost over the coming decade for Social Security, Medicare, and Medicaid combined, according to the most recent Congressional Budget Office projections.

In recent history, only during the height of World War II has the federal government tried to increase taxes, as a share of the economy, as fast as would be required to offset the cost of a single-payer plan, federal figures show. There are “no analogous peacetime tax increases,” says Leonard Burman, a public-administration professor at Syracuse University and a former top tax official in both the Bill Clinton administration and at the CBO. Raising that much more tax revenue “is plausible in the sense that it is theoretically possible,” Burman told me. “But the revolution that would come along with it would get in the way.”

Health care providers, health insurers and pharmaceutical companies are not always “good guys” in our health care system, but they compete with one another, which serves consumer interests. Policymakers should go much further in compelling such competition and preventing these industries from leveraging government for their own interests. But Medicare for All goes in the very opposite direction—monopolizing control of our health care system, reducing choice and trusting government to provide these services instead.

It was a bad idea last year. And it is still a bad idea this year.

The post “Medicare for All” Remains a Terrible, Terrible Idea appeared first on Show-Me Institute.

Typically, a gift doesn’t require a contribution from the person on the receiving end. But St. Louis taxpayers are ponying up for nearly half the cost of the aquarium, as described in a St. Louis Post Dispatch article:

[Twenty] million of the St. Louis Aquarium’s construction costs will come from an existing tax-increment financing agreement and two special tax districts that carry a 1 percent tax on sales at Union Station. Included is LHM’s intent to use $5 million in historic preservation tax credits to help restore the 11-acre shed.

Show-Me Institute analysts have spent years documenting the failures and abuses of tax-increment financing (TIF), special taxing districts, and historic preservation tax credits. These programs take public dollars and shift investment risk to taxpayers, while allowing private investors to reap the benefits.

If the aquarium is a good idea, why aren’t there private investors lining up to fund the project?

Maybe it’s because aquariums are a pretty risky bet financially. A recent article in The Atlantic outlined the financial struggles of aquariums in big cities across the United States:

The stress of acquisition and maintenance often leads to financial struggle . . . In this century, the Denver aquarium, which opened to much fanfare in 1999, declared bankruptcy in 2002 because of defaults on building loans. (It was purchased by Landry’s, a hospitality company, and reopened in 2003.) More recently, the newly opened Shreveport Aquarium has struggled with almost $500,000 in unpaid construction debt. Many of these spaces are subsidized by tax breaks and bonds, to be paid back when an aquarium becomes profitable. But too often, this goal is not realized. As economic-development projects, aquariums are risky.

The South County Times reports that the St. Louis Aquarium expects 1.5 to 2 million visitors per year. That seems like a curiously optimistic projection. The Shedd Aquarium in Chicago gets just over 2 million visitors per year, and it has 5 million gallons in total volume for tanks and exhibits; the St. Louis Aquarium will have just 1.3 million total gallons.

It’s not clear why planners project the St. Louis Aquarium to nearly the match the Shedd Aquarium in total attendance with a much smaller aquarium in a much smaller city. But if visitor numbers don’t match expectations and revenue lags as a result, (the aquarium is not free; a ticket price of around $24 is expected for adults) will taxpayers be asked to chip in again to cover the shortfall?

If all of this sounds familiar, it should. In 1985, Union Station was renovated in a massive $150 million project that included generous tax breaks. And what was the city left with? A mall in Union Station that was largely abandoned after barely more than 20 years. And thus the cycle begins anew: The mall was sold, was bought by a new developer, and is being renovated with the help of taxpayer dollars.

We all want what’s best for St. Louis, and it’s exciting to see big new projects generate enthusiasm. But the definition of insanity is doing the same thing over and over again and expecting different results. That seems to perfectly describe economic development policy in St. Louis.

The post Aquarium Project Repeats Familiar Mistakes appeared first on Show-Me Institute.

It’s gotten me thinking: Could this “Uber, but for scooters” thing catch on? And if it does, how would it fit into our short-term, or even long-term, public transit future?

For Kansas Citians and St. Louisans, whether scooters catch on is an important question in light of the rail plans that both cities have pursued in recent years and may yet continue to pursue. As we know, streetcar lines are fixed, stop often, and can be dramatically impacted by traffic. Scooters are much more tailored to the user’s needs, though heaven help you if it rains.

But that said, during my Nightcrawler-esque scooter-gathering pursuits it has been fascinating to see so many people using rental scooters zip past Kansas City’s streetcar as the publicly financed, free-to-ride trains trundle on their tracks, from stop to stop, at roughly the same speed. And, according to the Dallas News, it seems the scooters are catching on just about everywhere they’ve been introduced:

Only last week The Atlantic ran a piece about [micro-scooter inventor Wim] Ouboter that said scooters aren’t the future, but only because they were the present long ago. They might have been sold and marketed as kids’ toys—even winning, in 2001, the award for “best toy designed for outdoor play.” But as The Atlantic’s Sarah Holder just wrote, the scooters were always intended “to fundamentally change urban transportation.”

Until now Razor has ceded that transformative micromobile marketplace to Bird, which has 3,000 scooters in Dallas, and Lime, which replaced most of its green-and-yellow rental bikes with around 2,000 rental scooters, according to docs prepared for the briefing. Clearly [scooter manufacturer] Razor grew tired of missing out on the business it essentially created—especially now that Bird is up to $1 billion in funding, making it what CNBC recently called “the burgeoning industry’s first unicorn.”

Lime and Bird have already shown these things work. The companies gave the city stats that show rides span just more than a mile and take, on average, about 13 minutes. The companies say people are riding twice as far on the scooters as they did on the rental bikes—yet their rides are six minutes shorter. Nothing in those docs indicates that scooter riders are less sweaty. But I can attest, yes, you do tend to smell better after 13 minutes on a scooter than 19 minutes on a bike.

What the scooter companies will tell you is that they’re in the business of solving the “last mile” problem in urban areas—that is, replacing the walk from public transit to your home, with a scooter ride instead.

But I also wonder to what extent, at least in Kansas City, the scooter is not just replacing the last-mile walk, but also the first mile of public transit. Granted, the scooters aren’t free to use like the streetcar, but they meet a need that the streetcar doesn’t—transit flexibility over short distances. Keep in mind that in Dallas the average trip is about a mile, which makes the two-mile length (north to south) of the streetcar line in Kansas City particularly notable. And that’s to say nothing of the east-to-west flexibility that scooters provide that Kansas City’s streetcar would seem unlikely to ever satisfy.

Will private rental scooters, or something similar, end up replacing the publicly-financed streetcar? It’s a possibility that I think city leaders here in Missouri and elsewhere need to consider before starting or expanding their urban streetcar systems.

The post How Do Rental Scooters Fit into the Transit Paradigm? appeared first on Show-Me Institute.

The WDAF story goes on to point out:

The city has “banned the box” since 2013 and said it’s been a big success. Employers can still do background checks, which could prevent someone from getting hired. But getting rid of the check box can help eliminate the stigma [that would] prevent qualified candidates from getting hired just because of their criminal history.

That is certainly a noble goal. But research from respected universities and public policy organizations casts doubt on the effort’s effectiveness. According to The Atlantic magazine,

. . . banning the box may actually be hurting some of the exact groups of people it was designed to help, according to a few new studies. In a recent paper from the National Bureau of Economic Research, Jennifer L. Doleac of the University of Virginia’s Frank Batten School of Leadership and Public Policy and Benjamin Hansen of the University of Oregon looked at how the implementation of ban-the-box policies affected the probability of employment for young, low-skilled, black and Hispanic men. They found that ban-the-box policies decreased the probability of being employed by 5.1 percent for young, low-skilled black men, and 2.9 percent for young, low-skilled Hispanic men.

The left-leaning Brookings Institution found the same, detailing what happens when the felony conviction disclosure is removed:

Employers are forced to use other information that is even less perfect to guess who has a criminal record. The likelihood of having a criminal record varies substantially with demographic characteristics like race and gender. Specifically, black and Hispanic men are more likely than others to have been convicted of a crime: the most recent data suggest that a black man born in 2001 has a 32% chance of serving time in prison at some point during his lifetime, compared with 17% for Hispanic men and just 6% for white men. Employers will guess that black and Hispanic men are more likely to have been in prison, and therefore less likely to be job-ready.

In short, ban-the-box policies are likely hurting minorities.  Hiring discrimination is a thorny problem, but not all such problems have easy or obvious solutions. If your proposed solution is hurting the people it is intended to help, it’s probably time to think about a new approach.

The post Does Banning the Box Work? appeared first on Show-Me Institute.

The Obama administration’s guidelines had come under criticism as more and more individuals accused of sexual assault came forward to argue that their due process rights were being violated.

The “Dear Colleague” letter (and subsequent communications by the Department of Education) offered several bits of problematic guidance. First, the letter directed universities to follow what is called a “single investigator” model when pursuing these claims, meaning that a university employee would, as Emily Yoffe of the Atlantic wrote, act as “detective, prosecutor, judge, and jury” for the case. There is a reason why we separate those responsibilities in our court system.

Standard rules of evidence that we would expect any court of law to follow did not have to be followed. Because of the opaque nature of these investigations, those accused did not have a right to submit evidence on their own behalf or cross-examine witnesses or experts. In fact, those accused of these crimes did not even have to be notified of the specific complaint against them. It was a recipe for disaster.

At the core of all investigations is the balance between the rights of the accused and the rights of the accusers. As both Yoffe and Robby Soave of Reason.com have documented in heartbreaking detail, current processes have failed both of these groups. Due process helps to ensure that the guilty are punished and that the innocent are not. With an issue as serious as sexual assault, it is that much more important that fair and transparent procedures are followed. Let’s hope that this period of public comment brings them back into balance.

The post Education Department to Revisit Title IX Guidelines for Sexual Assault Investigations appeared first on Show-Me Institute.

Or, better yet, they may consider how little research there is on the matter. According to a recent article by Haley Glatter in the Atlantic, there are very few studies that thoroughly examine state-run and state-funded pre-K programs. Moreover, these studies are inconclusive on whether or not pre-K offers lasting benefits.

In Georgia and Oklahoma—states with universal pre-K programs—there is evidence that pre-K has reduced achievement gaps. The jury is still out in New York, which established universal pre-K only two years ago. Tennessee, on the other hand, implemented targeted pre-K for low-income children. Positive results were evident when these children entered kindergarten, but the benefits began to fade by first grade. By third grade, these students were performing worse than other students on statewide assessments.

Here are a few things we can take away from these states’ experiences:

• The quality of the pre-K programs offered matters immensely—not all pre-K is created equal.
• Good pre-K programs will not make up for the deficits of a failing K-12 system.
• There are only a handful of programs operating at a state-wide scale which makes it difficult to draw firm conclusions on pre-K.                                                                                                 

One of the lingering questions about Amendment 3 is what exactly the pre-K program it creates will look like. In his recent analysis of Amendment 3, the Show-Me Institute’s Michael McShane writes:

To date, it simply isn’t clear what the regulations for participating schools will be. In one sense, this uncertainty means we should probably reserve judgment, but in another it makes it hard to support a program when we don’t know what that program will ultimately look like.

On the one hand, it makes sense for us to gather as much information as we can about the effectiveness of pre-K programs before Missouri designs a program of its own. But then, does it also make sense to wait until we have a well-researched plan in place before amending the constitution and investing such a significant amount in early childhood education?

The post Is Expanding Pre-K a Good Idea? The Jury Is Still Out. appeared first on Show-Me Institute.

This is the latest effort to spend millions of taxpayer dollars on a problem that stubbornly refuses to be solved. The original effort to build something at 18th and Vine corresponded to the release of Robert Altman’s 1996 movie, “Kansas City.” The movie was a flop, and the efforts since to return life to the so-called district haven’t been any more successful. As KCUR pointed out in 2011, the effort to return the area to its Pendergastian heyday has lasted longer than the heyday itself.

This is what we should expect when the government pushes something that the people do not want. Even former City Councilman Ed Ford recognized that no one supports the District. “The marketplace has not embraced 18th and Vine,” he told KCUR before saying that the city is committed to its success. “Committed to success” likely means that city leaders will continue throwing good money after bad. The Council voted Thursday to direct the City Manager to find a way to give the district $18 million more.

In two pieces for CityLab, a publication of The Atlantic, Brandon Reynolds argues that government will never succeed at propping up jazz, and he points to the success of Memphis’ Beale Street as an example. The man who made Beale Street a success, John Elkington, argued that only private investment will work. A 1998 Los Angeles Times piece compared Elkington’s reliance on private investment to former Kansas City Mayor Emmanuel Cleaver’s desire for public dollars:

Some black leaders point to Kansas City’s revival of its jazz district as a preferable alternative to Elkington’s Beale project—a community renovation project overseen by a black mayor and tied to public funding that guarantees a role for black businesses and opportunity for neighborhood residents. In fact, Elkington and Kansas City Mayor Cleaver have toured each others’ projects—and both men argue that theirs is the only way to restore blighted black business sectors.

Twenty years later, we have a clear and irrefutable conclusion: Cleaver was wrong. Beale Street is a success, and 18th and Vine is a failure. While some may point to past mismanagement or insufficient funding for 18th and Vine, the point is that jazz is not as popular today in Kansas City as we want to believe. Kansas City was the top market for the Women’s World Cup in 2015, but it didn’t make it into the top 10 markets for the PBS documentary “Jazz” by Ken Burns. We’re just not that into it. Kansas City isn’t alone. Jazz pianist and blogger Bill Anschell wrote that, “People who want to play jazz actually outnumber those who enjoy or even tolerate it, let alone pay to hear it.” The plan in Kansas City is to force people to pay for it.

The jazz heyday was a product of seedy bars, corrupt politics, segregation, and prohibition. Jazz musician and band leader David Basse said, 

You can’t start a string of bars and have them owned by the city or corporations and make them fun. You can’t do that. You’ll open one little corner dirty place and you sweep the floor and you start selling booze.

Despite the best intentions, it’s unlikely that the same city government that banned smoking in bars and restaurants, raised the age to buy tobacco products, and regularly closes down bars and restaurants for small violations is going to be able to fund a resurgence in speakeasy-era entertainment. We have 20 years of failure to make that point.

The post Taxpayer Dollars and All That Jazz appeared first on Show-Me Institute.

Is such an out-migration happening? Let’s dig into the numbers.

One frequently hyperlinked story comes from Sam Zeff of KCUR.  (A transcript can be found here.)  Unfortunately, it only offers two real data points. First:

“With just six weeks to go before classes begin, there are about 700 open jobs in Kansas, double, Wilson says, the number they usually have this close to school.”

The problem with this statistic? It has no context. On Monday, The New York Times dedicated its front page  to a story on states all across the country struggling to recruit and retain teachers. As author Motoko Rich points out:

“In California, the number of people entering teacher preparation programs dropped by more than 55 percent from 2008 to 2012, according to the California Commission on Teacher Credentialing. Nationally, the drop was 30 percent from 2010 to 2014, according to federal data. Alternative programs like Teach for America, which will place about 4,000 teachers in schools across the country this fall, have also experienced recruitment problems.”

This is a macro-trend in education right now, not just an issue for Kansas. To wit, the Times story focuses on California, where voters dramatically raised taxes via Prop 30 at roughly the same time Kansas was cutting them. They’re struggling just as much, if not more.

The second bit of hard evidence from the KCUR story is even more underwhelming:

“Data from the Missouri Department of Elementary and Secondary Education suggest there is indeed a migration of teachers from Kansas to Missouri. In 2011 before huge tax cuts were enacted, only 85 applications for Missouri teaching licenses were filed with a Kansas address. In the next three years, as school budgets were slashed, applications doubled.”

That would be around 170 teachers total, and only 85 more than normal.  For a little perspective, Kansas has 41,243 teachers, so those 85 teachers represent 0.2% of Kansas’s teaching force. I’m not sure “migration” is the right word for that.

Probably the second most cited resource is this AP report that found 3,720 Kansas teachers leaving either Kansas or the profession entirely last school year, compared to an unnamed date in the recent past when only 2,150 left.  

Again, context: Using the numbers above, 3,720 teachers make up roughly 9 percent of Kansas’s teaching force. According to the National Center for Education Statistics, 8 percent of teachers leave the profession nationally every year, and an additional 8 percent move to different schools.  That means Kansas’s numbers are right in line with, or possibly even better than, national averages.

Kansas has not been immune to national trends affecting the number of people becoming or remaining teachers, but I see little justification for Kansas-specific alarm. I know it doesn’t fit the preferred narrative, but the truth often doesn’t.

The post Is there evidence of a “teacher exodus” from Kansas? appeared first on Show-Me Institute.

There is little doubt that once the coming elections are over Kansas City leaders will start pushing for a convention hotel. The mayor has talked about it, and Star editorial writer Yael Abouhalkah champions it. When the GOP decided not to have their 2016 convention in Kansas City, those involved in the bid sought to blame a lack of hotel capacity.

According to CityLab, a think tank attached to The Atlantic Monthly magazine,

Over the last 20 years, convention space in the United States has increased by 50 percent; since 2005, 44 new convention spaces have been planned or constructed in this country alone. That boom hasn’t come cheap. In the last ten years, spending on convention centers has doubled to $2.4 billion annually, much of it from public coffers.

“It’s a very, very, very competitive thing,” says Susan S. Gregg, managing editor of Association Conventions and Facilities magazine, one of a large number of trade publications devoted to the convention industry. “All these cities that are so competitive are constantly having to upgrade and expand and improve.”

So if Kansas City built a convention hotel it would just be the latest comer to an already crowded market. Worse off, the convention industry is shrinking. Again according to CityLab:

But there’s a problem with this building bonanza, and it’s a doozy: There aren’t really enough conventions to go around. The actual number of conventions hosted in the U.S. has fallen over the last decade. Attendance at the 200 largest conventions peaked at about 5 million in the mid-1990s and has fallen steadily since then.

Even Las Vegas, a leader in the industry, has yet to get back to its pre-recession peak. According to CalculatedRiskBlog, Vegas reports that

There were 39,668,221 visitors to Las Vegas in 2013, just below the record 39,727,022 visitors  in 2012.  The pre-recession high was 39,196,761 in 2007. Convention attendance was at 5,107,416 in 2013, still well below the record of 6,307,961 in 2006.

The post Nationwide Convention Business Declining appeared first on Show-Me Institute.

• Strongly agree — 26 percent
• Agree — 9 percent
• Disagree — 14 percent
• Absolutely not — 51 percent

That’s a pretty strong vote of 65 percent opposition to the idea. Readers offered several dozen comments.

We at Show-Me had some immediate comments too. The least of which not being that you’d certainly have to work at the Star to be surprised by this result. Kansas City has had ruinous results in building big projects like this. For example:

• The Power & Light District remains a drain on city resources, having never lived up to the promises made by boosters.
• The Citadel Plaza project was never even built, yet it cost the city millions.
• The city got itself into a horrible bind by taking on huge responsibilities with Kemper Arena and then not meeting them.
• The city spent money studying a proposed streetcar expansion before voters had a chance to voice their views. They rejected it.
• The city spent hundreds of thousands pitching itself for the Republican Convention even though the economic impacts claimed by supporters were specious.
• The city proposed a $1.2 billion new airport terminal based on at least one false premise.

Furthermore, just as mega-events such as Republican Conventions and Super Bowls fail to generate economic benefits, stadiums and arenas fail as well. (Read here for studies by The Brookings Institution and The Atlantic.) Kansas City voters are wary of such promises, and they are either defeating such efforts as translational medicine taxes and streetcars or are demanding sign-off on efforts to build new airport terminals. Why this well-founded skepticism is surprising to anyone is itself a surprise. The city should focus on delivering basic and necessary services and leave the economic speculation to others.

The post Star Survey Results Actually No Surprise at All appeared first on Show-Me Institute.

Solutions like requiring developers to include affordable housing units in new projects and developing metropolitan-wide transportation are politically unpopular. But they are a necessary part of any effort to restore economic mobility and the American Dream.

While everyone supports economic mobility and the American Dream, there is not adequate evidence to back the authors’ call for more regulation and transportation subsidies.

According to the report, “Mobility and the Metropolis: How Communities Factor Into Economic Mobility,” income segregation in a city leads to low economic mobility. This is important for Missouri cities such as Saint Louis, where income segregation is high and income mobility is low. The authors of the study would have Saint Louis expand transit and entice developers to build mixed-income housing. However, the track record of Saint Louis-area transit-oriented development has been less than ideal, as exemplified by a subsidized apartment complex near the Richmond Heights Metrolink station. A closer look at statistical models of the report calls their entire conclusion into question.

Without getting into too much detail, the problem with the report is that their model only finds an effect from income segregation when they don’t include other relevant explanatory factors. For instance, analyze New York City, which has among the highest income segregation (A) and lowest economic mobility (B) ratings. The report would have you believe that A contributes to/causes B, so improving A improves B. But what if (C), the dominance of financial services or legal professions, causes both A and B in New York City? Then fixing A will have no practical impact on B. In the complicated areas of income segregation, we must account for many possible factors like C.

However, the report promotes a simplified model that only shows a relationship between income segregation and economic mobility without including enough alternative variables. The report did not even mention that their model demographic variables did not show that income segregation was associated with economic immobility. Despite this shortcoming, both the report and media coverage have used the report to make irresponsibly expansive policy recommendations.

This over-hyping of statistical data can be all too common in the social sciences, so Missouri policymakers and citizens have to be vigilant. It is easy to twist data to justify government intervention if no one challenges the strength of the result.

The post Using Questionable Data To Back City Planning appeared first on Show-Me Institute.

Fallacy 4: State-by-state comparisons need not adjust for the cost of living

Teachers in Missouri are among the worst paid in the nation, right? That is what the editorial board of the Post-Dispatch would have you believe. As evidence, they link to a piece in The Atlantic, which lists the 10 best and 10 worst states in terms of teacher salaries. Missouri ranks 3rd on the 10 worst list.

As with almost everything else written in the editorial piece, there is a huge problem with this comparison — the cost of living.

The average teacher salary listed for Missouri is $46,411. This seems much lower than the $72,708 salary listed for New York or the $69,434 salary listed for California. Of course, it costs much more to live in those places.

A quick visit to a cost-of-living calculator can help us understand the difference between Missouri’s teacher salaries and those of the highest-paying states.

A salary of $45,000 in Saint Louis, Mo., would be approximately equal to:

$90,246 in Brooklyn, N.Y.

$108,079 in Manhattan, N.Y.

$67,821 in Boston, Mass.

$65,598 in Long Beach, Calif.

$74,242 in San Jose, Calif.

$64,807 in Newark-Elizabeth, N.J.

$61,152 in Hartford, Conn.

$72,810 in Stamford, Conn.

It is disappointing that the Post-Dispatch piece misses the mark on so many levels, because there is room for good debate on these issues.

Because I have spent the past four blog posts explaining where the Post-Dispatch went wrong, I think I should close with an area of agreement. The editors note that the legislature is not meeting its obligation because they are under-funding the foundation formula. To that, I agree.

The post Dismantling The Post-Dispatch’s Piece About Education (Part 4 of 4) appeared first on Show-Me Institute.

This is what has happened in Saint Louis and what would happen in Kansas City. Ridership from valuable and successful bus transit is depleted in favor of a much more expensive and much less flexible rail transit. In 1999, Tom Irwin, who was executive director of Saint Louis’ transit authority, the Bi-State Development Agency (now Metro), indicated that increases in rail ridership — in the face of a fare increase — seemed to come directly from bus ridership. From a 1999 St. Louis Post-Dispatch article:

The increase in light-rail riders is canceled out by the drop in bus ridership, meaning the agency’s revenue remains relatively flat, Irwin said. That’s because there are more bus passengers than rail riders, so each percentage point signifies a greater number of riders.

Years later, in 2008, Metro threatened to cut about half of its bus routes in Saint Louis if a sales tax, partially to expand light rail, was not approved. In other words, they would sacrifice efficient bus transit to pay for inefficient rail transit.

Kansas City voters have rejected light rail multiple times, so city officials contrived a special tax district in which only 300 affirmative votes were necessary to embark on a multi-million dollar city outlay. The line they propose will be along existing roads, and likely will not attract the traffic (or the convention business) to fill them. What is certain is that it will never be self-funding, but instead will require taxpayer subsidies in perpetuity.

Supporters of light rail will never be dissuaded from their vision. Economics will not do it, studies such as these will not do it, and in Kansas City, even repeated rejection from voters will not do it.

The post Light Rail Does Not Replace Cars appeared first on Show-Me Institute.

All told, some 17,000,000 Americans with college degrees are doing jobs that the [Bureau of Labor Statistics] says require less than the skill levels associated with a bachelor’s degree.

The author includes the following chart:

Source: The Chronicle of Higher Education

This strikes me as consistent with the signaling model in education, à la Charles Murray and Bryan Caplan. In short, it says that it is difficult to distinguish between the skill sets of workers initially (i.e., by visual inspection), and having a college degree provides a way for a person to “signal” to potential employers that he or she is a higher quality candidate. Good grades can signal many traits about a person that an employer may find attractive — that he or she is conformist, obedient, smart, dedicated, motivated, hard-working, etc.

Central to the signaling model is the fact that, in most higher-education classes, a student learns no job skills. I have a bachelor’s degree in French, so I have personal experience with this. Although I enjoyed my French classes and found them very challenging and fulfilling, I did not learn any skills that I use professionally — with the possible exception of having the ability to read Frédéric Bastiat in his original French, of course.

Certainly, there are social benefits to education. An educated population is, in general, a very good thing. Even if they don’t use skills that they developed through higher education, it’s probable that these janitors and flight attendants are leading more fulfilled lives as a consequence of their education. Perhaps the time that they spend outside of work, in leisure, is more fulfilling than it would have otherwise been.

On the other hand, there are also negative consequences to having a high number of degree holders. If one person becomes more educated, then he or she has a good chance of making more money. However, when a majority of the population becomes more educated, they compete for the jobs requiring that knowledge. This is the phenomenon that we see in the article — that’s why 29.80 percent of flight attendants have a bachelor’s degree or more. An additional negative consequence is degree inflation. As a greater number of people seek education, it will become increasingly difficult to distinguish between the quality of individuals (i.e., it will mute the signal), and employers will demand even more education, contributing to degree inflation.

Government subsidization of education is one of the biggest reasons why these 17 million degree-holders are in positions that do not require a degree. Despite the aforementioned positive consequences of an educated society, subsidizing education should not be the objective of government. When the government makes something less expensive, individuals will consume more of it than they would otherwise — more than the socially optimal level. The housing market is an analogous example: The government subsidized homeownership, so many individuals over-consumed housing, including those who were poorly suited for homeownership. (The United States experienced a housing bubble; is an education bubble in our future?) Although a particular project may have some social benefits, when that project is subsidized with taxpayer monies, it should be weighed against the costs.

Please don’t mistake my statements as being anti-education; on the contrary, I am a supporter. This post is an argument against current funding mechanisms. The policy of subsidizing education is quite regressive. Public universities, including my own alma mater, are largely funded by tax revenues taken from the general population, not by consumers of education. It would be more efficient if everybody paid for the true cost of their consumption through private means (i.e., private loans, savings, scholarships), just like they do for other goods and services. The government could then devote the tax money that they would save on higher education to other programs instead — on primary and secondary education, perhaps — or return it to taxpayers, to spend in the private sector.

I encourage our readers to watch the video “So You Want To Get a Ph.D. in the Humanities,” which former Show-Me Institute intern Martha King recently posted on her Facebook wall. It’s simultaneously hilarious and depressing.

The post The Subsidization and Consequent Overconsumption of Education appeared first on Show-Me Institute.

The quick growth, according to real estate data firm Clear Capital, was driven largely by sales that involved the $8,000 tax credit for first-time homebuyers. Many of the places where sale prices grew most are less-expensive Midwestern markets where $8,000 has a bigger impact.

This stimulus is artificial, and it will end as soon as the state and federal governments stop propping up housing prices with programs like this one.

Owning a home is suitable for those who can afford the investment commitment and associated risks. Nudging people into homes that they can’t afford has overwhelmingly negative consequences and could prolong the housing crisis or provoke another one.

Because this tax credit keeps housing prices artificially high, it defeats its ostensible intended purpose of nudging people into owning homes. As I have discussed previously, the rate of homeownership tends to remain constant over time in Saint Louis and elsewhere, despite the government’s nudging. Although this tax credit gives an individual the ability to make a larger down payment on a house, he or she will incur tens of thousands of dollars in additional debt by purchasing a house that is overpriced.

Furthermore, this tax credit program largely shifts transactions from the future to the present, instead of inciting new transactions to occur. Many of these beneficiaries would have purchased a home independent of the tax credit. This program is similar to sales tax holidays and last year’s cash for clunkers program in this regard.

Given that encouraging homeownership is such bad policy, why does government extend and introduce new programs? In an article in The Atlantic, Megan McArdle provides an answer (link via Audrey Spalding):

[P]oliticians want to help poor people with capital formation, and homeownership is the way that the American middle class has traditionally gone about capital formation.

Too bad that real estate is not a good investment!

The post Home Sweet Home? appeared first on Show-Me Institute.

I think the real problem with the current setup is the political economy of it.  A very large percentage of our electorate has nothing at stake when they vote for new spending.  Since that spending imposes real costs on other people, and the economy at large, this is a problem.  We don’t want to end up in a situation where 65% of the population is systematically voting to take the stuff possessed by the other 35%.

Which leads me to property taxation in Missouri. Exactly in line with what McArdle writes on income taxes, the Lincoln Institute of Land Policy wrote in a study about property tax circuit breakers (which are targeted relief laws) that circuit breakers should not eliminate the entire property tax burden:

Circuit breakers can lead to overspending by local governments, because some taxpayers will vote for additional public services knowing that higher property taxes will be entirely offset by circuit breaker benefits.

Missouri has a circuit breaker, as well as another property tax relief program called the Homestead Preservation Act. But, aside from real estate taxes, Missouri also taxes personal property — which brings me to my main point. Although there might be legitimate arguments against personal property taxes (such as the double-tax issue; buying a car also entails a substantial sales tax), the main thing I like about the personal property tax is that, for many people, it gives them the necessary “skin in the game.”

This might seem silly to like a tax just because more people pay it, and perhaps it is. However, if roughly half of Americans pay no income tax, than we can assume roughly half of Missourians pay no state income tax (although, as I said earlier, it probably totals a little less than half). Certainly some of that portion own homes, but for most people even those taxes are partially hidden in monthly mortgage payments — or hidden to an even greater extent in rent payments. We all know that sales taxes are paid in bits and pieces, except when you buy very large items. But the large majority of Missourians own cars or trucks, and — unlike with real estate — you owe a tax on your car even if the bank that loaned you the money still has the title.

I really think that there is a significant number of Missourians for whom the only time they make a tax payment of any substance at all (automobile property taxes likely average around $200) is when they pay their personal property tax. Hopefully, everyone who makes this payment — which is not due on April 15 but Dec. 31 every year — they take a moment to think about tax rates and government services, and contemplate whether they believe they get what they pay for. If this tax gets a large number of Missourians to realize that they are taxing themselves when they vote on tax increases, rather than just taxing other people, the structure of this particular tax may have a beneficial silver lining.

The post Overall Tax Burdens and the Good Thing About Missouri’s Personal Property Tax appeared first on Show-Me Institute.

I agree that gardening should not be a top priority for most schools, but I think Flanagan overstates her case. For one thing, students don’t spend that much time in gardens. Flanagan gives the example of a school where students spend an hour and a half per week on gardening and food preparation; that translates into less than 20 minutes per school day. Supposing students spend twice as long on the cross-curricular activities Flanagan condemns so bitterly, there still remain several hours in the day for all the sound academics she believes students miss out on when they’re working with plants.

Second, gardening needn’t be as demeaning and stultifying as it is in Flanagan’s portrayal. Flanagan likens a gardening curriculum for immigrants’ children in California to a sharecropping curriculum for African-American children in the South. This is an unduly harsh analogy. I’m sure schools don’t send children out to the gardens when weather conditions would make the work difficult. And tending to a variety of plants is a small plot can be far more interesting and rewarding than picking a single crop in a vast field. Also, in the event that students don’t like the gardening, they’re free to slack off without fear of retribution from a taskmaster, or of losing their livelihood.

Flanagan is right that some students would gain more from books in the library than from plants in the garden. The problem is not gardening but the monolithic public school system, which mandates that if an activity is beneficial for some children, everyone has to spend time on it. For children who want to work in botany or landscaping when they grow up, or whose parents value gardening experience, offering gardening in school would be worthwhile. (So the garden at Clyde C. Miller Career Academy is entirely appropriate, because some students there study biotechnology and plant science.) Everyone else should be free to opt out. Whenever a public school incorporates gardening, or any task besides basic academics, parents should be able to choose whether their children participate.

The post Gardens Vs. Blackboards appeared first on Show-Me Institute.

Postrel’s article lists suggestions for ways both to decrease the transplant wait time and to increase the supply of kidneys, which currently stands at approximately 16,000 per year. One of her suggestions, “donor chains,” would essentially allow a patient’s friends or family, who may be willing to donate a kidney but are not a match, to trade places with other willing donors who do match. The longer these chains of donor-recipients are allowed to grow, the more kidneys can be closely matched to existing biological needs. For people with lots of relatives and friends who are willing and able to donate, this would be a boon.

There are plenty of people who cannot take part in such a chain, though, and for them another interesting solution presented is to purchase healthy kidneys. Donating a kidney is not without cost, and there are very few people who would be willing to donate one to a complete stranger. Any major surgery comes with the risk of potential complications. While a person can live a very healthy life with only one kidney, this lifestyle has additional risks: A single kidney expands to compensate for its missing counterpart, making it more vulnerable to collisions or contact sports, for example. Offering compensation for a kidney donor is a way of taking into account and making up for the risks that the donor decides to undertake. (Also, as Andrew Sullivan’s blog notes, a kidney donor is thereafter limited to one alcoholic beverage per day, which might affect some people’s quality of life.)

The Atlantic article suggests that if Medicare paid donors even $25,000 or $50,000 for a kidney, the resulting equilibrium would cost less than than the current expense incurred by the government-guaranteed dialysis treatments — not to mention the immeasurable quality-of-life benefit for patients who would otherwise waste years of their lives on dialysis.

Some question the morality of “selling” organs like kidneys. They voice legitimate concerns that unscrupulous people would take advantage of the poor, or that debtors or drug addicts would rashly sell their kidneys. Internationally, the kidney market is not benevolent, because some kidneys for sale are taken from unwilling donors in prison.

However, if such a plan were implemented in the United States, each donor would first be required to undergo both a psychological and medical evaluation to ensure that he or she could undertake the ordeal. Waiting periods or payment plans could also be instituted that would prevent people from making snap decisions about becoming a compensated donor. A legitimate American market would also discourage coercive international practices, which mostly arise from transplant tourism. If kidneys are more readily available at home, gray-market transplants abroad would no longer fill a significant economic niche.

If morality is to enter the equation of whether to allow kidney sales in the United States, however, a better question to pose might be whether it is moral to let people die or linger for decades on a waiting list when there are already plenty of healthy kidneys available from willing donors.

The post Kidney Swapping and Selling appeared first on Show-Me Institute.

I would never support manadatory consolidations, but there is no doubt that at the very smallest population levels, economies of scale can be achieved quickly as counties or cities grow somewhat, and also little doubt that those same economies of scale are quickly leveled off. It’s neat to see the graphs of New Jersey towns and Missouri counties look almost the same. As H.I. McDonough’s boss says to him in Raising Arizona, "It’s a crazy world."

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