Archives: 05/2008

Surprise! Stadium Predictions Flawed

The Washington Examiner reports:

Attendance at Nationals Park has fallen more than a quarter short of a consultant’s projections for the stadium’s inaugural year, cutting into the revenue needed to pay the ballpark bonds and spurring a D.C. Council member to demand the city’s money back.

The District’s ability to pay down the debt on the publicly financed ballpark depends in part on the number of people who show up to the games, David Catania, independent at-large, wrote in a letter Tuesday to Chief Financial Officer Natwar Gandhi. 

A study was commissioned in 2005 by Gandhi’s office. Written by Los Angeles-based Economics Research Associates, the report predicted attendance at the 41,000-seat ballpark would average 39,130 in year one, dropping to 32,737 in year four.

But paid attendance through 28 games has averaged only 29,141, Catania said, 26 percent lower than the consultant’s estimates. The Nationals are drawing the 15th-best crowd in baseball, according to ESPN, with a team that is in last place in the National League East and a 22-31 record as of Wednesday.

“It appears now,” Catania wrote, “that ERA may have seriously overestimated ticket sales, which represents a major portion of stadium-related revenues.”

Gandhi says it doesn’t matter, the bonds can be paid off with attendance as low as 10,000 per game. Which raises the question: if it’s that easy to pay for the stadium, why didn’t the multi-millionaire team owners agree to pay for it themselves?

Of course, these economic projections for subsidized stadiums are always vastly overstated. As Dennis Coates and Brad Humphreys wrote in a 2004 Cato study criticizing the proposed stadium subsidy, “The wonder is that anyone finds such figures credible.”

Several Cato studies over the years have looked at the absurd economic claims of stadium advocates. In “Sports Pork: The Costly Relationship between Major League Sports and Government,” Raymond Keating finds:

The lone beneficiaries of sports subsidies are team owners and players. The existence of what economists call the “substitution effect” (in terms of the stadium game, leisure dollars will be spent one way or another whether a stadium exists or not), the dubiousness of the Keynesian multiplier, the offsetting impact of a negative multiplier, the inefficiency of government, and the negatives of higher taxes all argue against government sports subsidies. Indeed, the results of studies on changes in the economy resulting from the presence of stadiums, arenas, and sports teams show no positive economic impact from professional sports — or a possible negative effect.

In Regulation magazine, (.pdf) Coates and Humphreys found that the economic literature on stadium subsidies comes to consistent conclusions:

The evidence suggests that attracting a professional sports franchise to a city and building that franchise a new stadium or arena will have no effect on the growth rate of real per capita income and may reduce the level of real per capita income in that city.

And in “Caught Stealing: Debunking the Economic Case for D.C. Baseball,” Coates and Humphreys looked specifically at the economics of the new baseball stadium in Washington, D.C., and found similar results:

Our conclusion, and that of nearly all academic economists studying this issue, is that professional sports generally have little, if any, positive effect on a city’s economy. The net economic impact of professional sports in Washington, D.C., and the 36 other cities that hosted professional sports teams over nearly 30 years, was a reduction in real per capita income over the entire metropolitan area.

And yet millionaire owners and mayors with Edifice Complexes keep commissioning these studies, and council members and editorial boards keep falling for them.

Broad-Minded Failure

Mark Lampkin, Executive Director of ED in ’08, about which I wrote on National Review Online last week, has responded to my piece with a letter to the editor. Apparently, my explanation for why reform efforts within the current system are largely futile, and fundamentally altering the system is the key, was “narrow-minded.” It makes one wonder what’s so broad minded about leaving in place the hidebound, nearly reform-proof government monopoly we currently have, but let’s get to some specifics in Lampkin’s letter.

Lampkin begins with this, which is really the crux of our debate:

McCluskey’s arguments underestimate the severity and urgency of our education crisis and naively bypass the difficult political terrain surrounding education reform. We agree that the system is broken, but we disagree with his suggestion that we should forestall desperately needed reform of the current system.

Now, I don’t think I underestimate the severity of our education problems—I assure you that the day I start saying our system isn’t a shambles is the last day you’ll see me writing on this blog—though I do think Lampkin and Co. tend to overhype national economic threats and education’s ability to negate them. Our real disagreement is on the ability of proposed reforms of the current system to do real, lasting good.

Lampkin seems to assume that ED in ‘08’s proposed reforms will somehow be alive, kicking, and transforming our schools tomorrow if we’ll only hearken back to Nike’s old slogan and “just do it,” while choice and competition are on a much longer timeline:

Choice and competition are very important ingredients in any effort to improve our schools, but we also need a more immediate response to implement a realistic and achievable set of solutions.

It sounds funny to use terms like “immediate” and “realistic” regarding an education system where everyone seems to have a five-year plan that is replaced every third year with someone else’s five-year plan, and in which the No Child Left Behind Act has a twelve-year, full-proficiency timeline almost no one thinks is realistic. It sounds funny, because it is funny. In fact, it might be crazy: Talking about “immediate,” meaningful changes in hugely bureaucratic, politicized, government-run public schooling, is about as grounded in reality as my assuming I’ll wake up tomorrow morning with my male-pattern baldness transformed into rocker-pattern abundance.

Look at this in the context of ED in ‘08’s big goals.

After laying out his basic beef with my piece, Lampkin argues for uniform, national standards—preferably benchmarked to the standards of “the best performing nations in the world”—instead of the “hodge-podge of 50 states with 50 different standards.” 

Perhaps Lampkin didn’t re-read his entire letter when it was done, because all by himself he offers sufficient evidence that our public schools are nearly incapable of real reform to make my case for me. Start with this: State K-12 systems, though they differ from each other in some relatively minor ways, are all top-down monopolies. They also have something else in common:

Currently, no state benchmarks their standards against the best performing nations in the world and many do not even set standards high enough to meet the basic level of achievement on the National Assessment of Educational Progress (NAEP). A Department of Education study found that out of 32 states, none had set performance benchmarks for fourth-grade reading that were high enough to meet the proficient level on NAEP and 24 states had set them so low they did not reach even the most basic level.

So out of 50 states—each with the same basic governing structure—not one has apparently come close to the ED in ‘08’ ideal. You might think the common governing structure had something to do with it, a centralized, highly bureaucratic, special-interest-dominated structure that would become even more centralized were Washington or a consortium of states to establish a single standard for everyone. You’d be right, as the next example will make even more clear.

ED in ‘08’s next major goal is getting “effective teachers in every classroom.” In my piece, I identified this as a nice rhetorical goal, but one just about anyone doing anything related to education offers. Lampkin suggests that this was an unfair caricature and that unlike most people, Ed in ‘08’ is actually “talking about ways to get and keep these effective teachers in the classroom,” including merit pay and competition.

I suggested that ED in ‘08’s effective-teachers goal hardly seemed new because, well, it doesn’t seem new, and I was trying to explain why ED in ’08 is having little success at putting education on the presidential election map. And merit pay? While a nice idea that might help a little, discussion of it is far from new and hardly unique to Lampkin’s group. It will also be of very limited value without school choice even if enacted because money won’t flow to the schools with the best teachers, allowing them to get paid more.

But what’s the tie-in between effective teachers and my overall point that the current system can’t be reformed? Here’s Lampkin:

Unfortunately, often politically potent teachers unions often thwart efforts to reform teacher pay and tenure. In Washington, D.C., new Chancellor Michelle Rhee has met extreme resistance in her efforts to fire ineffective teachers and administrators, yet the District has consistently scored at the bottom of national assessments. Even New York City’s Chancellor Joel Klein, although somewhat successful in implementing performance pay, has decried the difficulty in implementing accountability measures for teachers and culling deadwood.

So even two of the hottest within-the-system reform spots—New York City and Washington—have seen efforts to infuse competition in their labor forces largely thwarted by teachers unions.

How did the unions get such power? Government monopoly, that’s how! By their nature unions are strongest when they can control an entire industry’s workers and negotiate with just one authority, which is why they are very strong in the public sector and near death in the private. They are also political juggernauts because teachers’ livelihoods come from the political system that employs them, giving them huge incentives to be heavily involved in politicking, lobbying, and just plain dominating the school system that’s supposed to be serving not them, but children and parents. And since children can’t even vote, and parents who have full-time jobs and lots of other concerns can’t possibly organize with sufficient political force to defeat the unions, the unions succeed in killing most meaningful in-system accountability and reform.

So what’s ED in ‘08’s solution to the problem? Have the federal government “partner with states to promote and support state and local programs that work,” writes Lampkin. Again, this solution sounds like rhetoric, but that’s not its biggest flaw. Its biggest problem is the underlying assumption that the teachers unions won’t have outsized influence over a federal system just as they have in most state systems. But the National Education Association has been campaigning for more federal involvement in education since before it was ever a teachers union, and the unionized version almost single-handedly established the U.S. Department of Education. Centralizing the system a little more is the opposite of a solution on teacher quality—and almost everything else that smacks of real standards or accountability—because it is likely to empower unions first and foremost.

Finally, Lampkin argues that extended learning time—longer school days and/or years—has been implemented in traditional public school districts just as in the KIPP charter schools I mentioned in my piece. Lampkin notes that Massachusetts has a pilot program for expanded learning time that appears to have paid dividends in at least one district.

My point in discussing KIPP—whose co-founder was a  panelist at the ED in ‘08 event I was writing about—was not to say that it is impossible for some districts or even states to enact longer days or years, but it is much harder than for autonomous schools. Why? Because politics controls traditional public schooling, and as one of the other panelists mentioned (I think it was Joel Klein, but I’m not sure) it was much easier for KIPP to extend their year than regular public schools because they didn’t have to get the approval of non-education interests like the tourism industry.

Once again, politics nearly destroys reform within the current system, whereas autonomous schools chosen by parents can move quickly. Which is the main point: A system based on top-down government control is almost impervious to change because the people whose behavior we want to alter control the system. Parental choice and independent schools, in contrast, lead to a system that can and must respond quickly to parents and children—the people the schools are supposed to serve—because when schools don’t, the customers simply take their money elsewhere. And this is not just theoretical. As I noted in my piece, the superiority of freedom over socialism—which is what American public schooling really is—can be seen not just in KIPP, but the opening economies of China and India, the heavy use of private education in other nations, and the still-too-small but fast-growing school choice programs in states across the country. Of course, there’s also the fall of the Soviet Union, the consumer electronics industry, automobiles, package-delivery services….

All of this brings me back to Lampkin’s most baffling assertion: that my critique of ED in ‘08’s inside-the-box reforms, and my championing of putting power in the hands of parents instead of government, is “narrow-minded.” As a matter of definition this makes little sense—how is trying something new narrow minded?—but if giving up on a demonstrably broken, reform-impervious system is indeed narrow minded, then may my mind never measure more than a micron in width. 

Today, In the Role of David Brooks, Mike Huckabee

A few weeks back, David Brooks was telling George Packer that philosophies of limited government were “politically unpopular and fundamentally un-American.” Now we have Mike Huckabee telling the Huffington Post the same thing:

The greatest threat to classic Republicanism is not liberalism; it’s this new brand of libertarianism, which is social liberalism and economic conservatism, but it’s a heartless, callous, soulless type of economic conservatism because it says “look, we want to cut taxes and eliminate government. If it means that elderly people don’t get their Medicare drugs, so be it. If it means little kids go without education and healthcare, so be it.” Well, that might be a quote pure economic conservative message, but it’s not an American message. It doesn’t fly. People aren’t going to buy that, because that’s not the way we are as a people. That’s not historic Republicanism. Historic Republicanism does not hate government; it’s just there to be as little of it as there can be. But they also recognize that government has to be paid for.

If you have a breakdown in the social structure of a community, it’s going to result in a more costly government … police on the streets, prison beds, court costs, alcohol abuse centers, domestic violence shelters, all are very expensive. What’s the answer to that? Cut them out? Well, the libertarians say “yes, we shouldn’t be funding that stuff.” But what you’ve done then is exacerbate a serious problem in your community. You can take the cops off the streets and just quit funding prison beds. Are your neighborhoods safer? Is it a better place to live? The net result is you have now a bigger problem than you had before.

First, there’s nothing “new” about libertarianism, although it appears someone’s just alerted Mike Huckabee to the phenomenon. Second, this business of the “un-Americanism” of libertarianism is ahistorical, although not particularly surprising coming from a Know Nothing demagogue like Mike Huckabee. Someday, advertising one’s own ignorance about the world won’t be considered a mark in one’s favor by conservatives. Until then, Mike Huckabee.

The E-Verify Debate as it Stands in Kansas

Here’s a good article in the Wichita Eagle on the debate over E-Verify, with particular reference to the state of Kansas, where the legislature recently considered requiring employers to use this system for a federal background check on all new hires.

My paper, “Electronic Employment Eligibility Verification: Franz Kafka’s Solution to Illegal Immigration,” is here.

High Prices for Snickers? Feds Shouldn’t Point Fingers

Recently I blogged about the federal government investigating businesses for keeping the price of milk too high, even though the government’s own policies push up milk prices.

Government policies also seem to work at cross purposes with respect to chocolate. The Wall Street Journal reports that the price of a Snickers bar is up 6 percent over last year as a result of rising cocoa prices, and the government is looking for culprits. ”Chocolate makers are accused of colluding as far back as 2002. The U.S. Justice Department has inquired into their pricing practices….” For their part, chocolate makers are blaming high prices on speculation by hedge funds.

I don’t know why cocoa prices are high, but the other big input to chocolate is sugar. And we know that government sugar controls keep U.S. sugar prices about twice as high as world prices, which hurts consumers and has led to an exodus of sugar-using food manufacturers to Canada and Mexico.

In a report on the sugar industry in 2006, the Department of Commerce found that sugar represents 18 percent of the input costs of chocolate products, which indicates that the government’s high-price policy for sugar is taking a substantial bite out of the budgets of America’s chocoholics. 

Government Pensions

The Washington Post reports that a local police officer has been convicted of shooting and killing an unarmed furniture deliveryman.  The judge handed down a sentence of 45 years imprisonment.  But get this:

His disability benefits and police pension are not affected by his convictions, county spokesman John Erzen said.

So taxpayers must keep paying this guy’s pension?  Good grief.  Are there any circumstances in which a government employee’s pension can be canceled?